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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 811-02699
AIM Growth Series
(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: 12/31
Date of reporting period: 12/31/07
Item 1. Reports to Stockholders.
AIM Basic Value Fund
Annual Report to Shareholders o December 31, 2007
DOMESTIC EQUITY
Large-Cap Value
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............. 11
Notes to Financial Statements.... 14
Financial Highlights............. 21
Auditor's Report................. 25
Fund Expenses.................... 26
Tax Information.................. 27 [COVER GLOBE IMAGE]
Trustees and Officers............ 28
[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 Basic Value Fund
Dear Shareholders:
I'm pleased to provide you with this report, which includes
a discussion of how your Fund was managed during the period
[TAYLOR under review, and factors that affected its performance. The
PHOTO] following pages contain important information that answers
questions you may have about your investment.
Despite notable volatility at points throughout the year
ended December 31, 2007, major stock market indexes in the
U.S. and abroad generally performed well. Reasons for their
favorable performance included positive economic growth,
particularly overseas; strong corporate profits; and action
by the U.S. Federal Reserve Board (the Fed) to lower
short-term interest rates, among other factors.
At its mid-September 2007 meeting, the Fed cut its
Philip Taylor federal funds target rate for the first time since June
2003.(1) That cut followed 17 rate increases from June 2004
to June 2006(1) and was intended to address concerns about a
weak housing market and problems in the subprime mortgage
market, which some feared could adversely affect the U.S.
economy. The Fed cut the federal funds target rate again in
late October and mid-December in response to continued
economic uncertainty.
This kind of uncertainty can affect equity, fixed-income
and other markets--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.
I encourage you to talk with your financial advisor if
you have concerns about your portfolio. We believe in the
value of working with a trusted financial advisor who can
recommend AIM funds that are appropriate for your portfolio
and that address your long-term investment goals and risk
tolerance regardless of prevailing short-term market
conditions.
In conclusion
In May, AIM Investments' parent company changed its name
from AMVESCAP PLC to Invesco Ltd., uniting our worldwide
operations and global expertise under a new name. While the
name of our parent company may be new to you, I can assure
you that AIM's 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.
We 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
February 11, 2008
Source: (1)U.S. Federal Reserve Board
AIM Investments--REGISTERED TRADEMARK-- is a registered
service mark of A I M Management Group Inc. A I M Advisors,
Inc., A I M Capital Management, Inc., AIM Private Asset
Management, Inc. and PowerShares Capital Management LLC are
the investment advisors for the products and services
represented by AIM Investments; they each provide investment
advisory services to individual and institutional clients
and do not sell securities. A I M Distributors, Inc. is the
distributor for the retail mutual funds and U.S.
institutional money market funds represented by AIM
Investments and the exchange-traded funds managed by
PowerShares Capital Management LLC. All entities are
indirect wholly owned subsidiaries of Invesco Ltd.
2
AIM Basic Value Fund
Dear Fellow AIM Fund Shareholders:
The lines of communication are open: More than 250 of you
[CROCKETT have responded to the invitation I extended in my previous
PHOTO] letter to complete an online survey, and more than 50
shareholders have contacted me directly by e-mail. When I
could respond quickly and easily to a shareholder's specific
concern I did, but the messages for the most part raised
consistent issues that I respond to here.
I have received many suggestions, a few complaints, and
one offer to buy a gold mine! In general, your letters
expressed an appreciation for transparency, frankness and
the opportunity to comment. Nevertheless, several
shareholders found room for improvement in communications.
Some would like more concise letters while others would
prefer reports to be more customized for their particular
Bruce L. Crockett information needs. With these reports going to tens of
thousands of people, shareholder communications necessarily
have to cover those issues common to a diverse population as
well as the information required by law. The ability to
change or further customize letters and reports is also
affected by technology, timeliness and cost.
Online survey responders preferred electronic
communications to paper at a ratio of 63% to 37%. Direct
responders expressed more of a preference for paper,
especially for long reports. Electronic communications are
more cost-effective than paper communications that have to
be printed and mailed, so I encourage those who have
resisted electronic communications to give them a try.
The correspondence shows that improving fund performance
and reducing shareholder costs remain the key shareholder
concerns. Several letters noted individual funds where
performance had changed for the better, while others
remained dissatisfied with the returns from funds they hold.
Although 75% of the online survey responders wanted to see
more overall fund performance data in these letters, and 58%
wanted more information on individual funds, Securities and
Exchange Commission (SEC) and Financial Industry Regulatory
Authority (FINRA) rules are very specific about the way fund
performance can be discussed in print. Respect for those
rules prevents me from commenting on individual funds or
very recent results here, but I can assure you that your
Board and all of its Investments subcommittees continue to
work with AIM Investments to make improved performance a top
priority for all fund managers.
Expense levels came up as another dominant issue, and no
respondent felt these were too low. Several shareholders
questioned the need for 12b-1 fees, which cover the cost of
distributing fund shares and thereby help the fund to
attract new assets. Your Board reviews the funds' 12b-1 fees
annually with the shareholders' best interests in mind.
While your Board keeps its eye on containing or lowering
these fees wherever possible, we also are mindful that 12b-1
fees may be necessary in order to maintain an effective
distribution system for fund shares.
The value of communication between the Board and
shareholders has been noted within and beyond the AIM
community. In the online survey, 87% of the respondents felt
it was either somewhat or very important to hear directly
from the Board, with 55% saying it was very important.
Morningstar--TRADEMARK--, the mutual fund tracking company,
also commented favorably on this channel of communication in
its fall 2007 update of fund stewardship grades, where AIM
was one of fewer than 10 fund boards to get an A for board
quality, according to BoardIQ (11/13/07).
In other news, Ruth Quigley retired from your Board at
the end of 2007, and we thank her for her many years of
dedicated service. Larry Soll has assumed Ruth's place as a
vice chair of the Investments Committee. The Valuation
Committee, which Ruth used to chair, has been reorganized as
the Valuation, Distribution and Proxy Oversight Committee
under the chairmanship of Carl Frischling. The elevation of
proxy oversight to standing committee status responds to
suggestions from shareholders. In addition, Prema
Mathi-Davis assumed my seat on the Governance Committee, and
I moved to the Audit Committee.
Your Board looks forward to another year of diligent
effort on your behalf, and we are even more strongly
motivated by your feedback. The invitation remains open to
e-mail me at bruce@brucecrockett.com. I look forward to
hearing from you.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
February 11, 2008
3
AIM Basic Value Fund
Management's discussion of Fund performance tations of our process. First, the
investment strategy is intended to
======================================================================================= preserve your capital while growing it at
PERFORMANCE SUMMARY above-market rates over the long term.
Second, our investments have little in
For the year ended December 31, 2007, Class A shares of AIM Basic Value Fund, at net common with popular benchmark indexes and
asset value (NAV), outperformed the Russell 1000 Value Index and underperformed the most of our peers. And third, the Fund's
S&P 500 Index and the Lipper Large Cap Value Funds Index. short-term relative performance will
naturally be different than the market and
We attribute the Fund's outperformance versus its style-specific index to peers and have little information value
above-market returns from selected investments in the energy, health care and since we simply don't own the same stocks.
consumer staples sectors. Selected investments in the financials, consumer
discretionary and materials sectors contributed to the Fund's underperformance versus Market conditions and your Fund
the broad market index.
Beginning in July, most financial markets
Your Fund's long-term performance appears later in this report. witnessed an increase in price volatility
from housing-related stress and the aging
FUND VS. INDEXES of our economic expansion. It is important
to understand that these periods of stress
Total returns, 12/31/06-12/31/07, at NAV. Performance shown does not include are healthy for financial markets in
applicable CDSC or front-end sales charges, which would have reduced performance. general and typically create opportunities
for our investment strategy in particular.
Class A Shares 1.06% We are hopeful that stock valuation
Class B Shares 0.31 dispersion will increase as credit spreads
Class C Shares 0.31 and market volatility return to normal
Class R Shares 0.82 levels, potentially creating opportunities
S&P 500 Index(triangle) (Broad Market Index) 5.49 for us to grow the portfolio's estimated
Russell 1000 Value Index(triangle) (Style-Specific Index) -0.17 intrinsic value at an above-average rate.
Lipper Large-Cap Value Funds Index(triangle) (Peer Group Index) 2.46 While investment results can be uneven
SOURCE: (triangle)LIPPER INC. during these periods of stress,
======================================================================================= historically these times have yielded
How we invest fair business value is independent of the attractive opportunities for future
company's stock price. capital growth.
We seek to create wealth by maintaining a
long-term investment horizon and investing o Market prices are more volatile than Aided by strong earnings and a more
in companies that are selling at a business values, partly because investors than 50% increase in oil prices,(1) energy
significant discount to their estimated regularly overreact to negative news. stocks extended their multi-year market
intrinsic value--a value that is based on outperformance. Drilling company
the estimated future cash flows generated o Long-term investment results are a Transocean and oil service company
by the business. The Fund's philosophy is function of the level and growth of Weatherford International made significant
based on key elements that we believe have business value in the portfolio. contributions to performance.
extensive empirical evidence:
Since our application of this strategy Waters Corp. was also among the top
o Company intrinsic values can be is highly disciplined and relatively contributors to performance. A long-time
reasonably estimated. Importantly, this unique, it is important to understand the fund holding, Waters' stock rose more than
estimated benefits and limi- 60% in 2007, making it one of the Fund's
========================================== ========================================== best performers.
PORTFOLIO COMPOSITION TOP 10 EQUITY HOLDINGS*
The largest detractors from performance
By sector 1. UnitedHealth Group Inc. 5.5% were Citigroup, Interpublic Group and
Financials 19.4% 2. Dell Inc. 3.7 Fannie Mae. We were surprised by the
Information Technology 17.9 3. Western Union Co. 3.7 extent of Citigroup's collaterized debt
Consumer Discretionary 17.0 4. Weatherford International Ltd. 3.4 obligation (CDO) losses, which came at a
Health Care 16.4 5. Halliburton Co. 3.3 time when the company lacked an excess
Industrials 11.0 6. Fannie Mae 3.1 capital cushion to absorb sizable losses.
Energy 9.5 7. KLA-Tencor Corp. 3.0 Citigroup has a new chief executive
Consumer Staples 4.6 8. Waters Corp. 3.0 officer as a result of the incident, Wall
Materials 2.7 9. Cardinal Health, Inc. 3.0 Street veteran Vikram Pandit. Earlier in
Telecommunication Services 1.3 10. Citigroup Inc. 2.9 the year, the company hired a world-class
Money Market Funds Plus chief financial officer in Gary
Other Assets Less Liabilities 0.2 Total Net Assets $4.20 billion Crittenden. We believe this management
team will realize the potential of
Total Number of Holdings* 44 Citigroup's global banking franchise--one
The Fund's holdings are subject to change, of the best growth opportunities of any
and there is no assurance that the Fund large financial company in the world, in
will continue to hold any particular our opinion.
security.
* Excluding money market fund holdings.
========================================== ==========================================
4
AIM Basic Value Fund
INTERPUBLIC GROUP's stock declined by As managers and shareholders, we know a The views and opinions expressed in
33% during 2007 as investors continued to long-term investment horizon and management's discussion of Fund
express concern over the pace of the attractive potential upside to our performance are those of A I M Advisors,
company's turnaround as well as fears of estimate of portfolio intrinsic value are Inc. These views and opinions are subject
the potential impact of a slowing global critical to creating wealth. But we to change at any time based on factors
economy. We remain dissatisfied with the understand maintaining a long-term such as market and economic conditions.
pace of improvement at Interpublic. investment horizon is a challenge. So, These views and opinions may not be relied
However, we believe the magnitude of the when you consider our short-term results upon as investment advice or
opportunity combined with the progress to we encourage you to review our long-term recommendations, or as an offer for a
date justify our continued investment. results. We are long-term investors who particular security. The information is
provide a portfolio that in our opinion is not a complete analysis of every aspect of
FANNIE MAE has been affected by distinct from market indexes and most of any market, country, industry, security or
increased mortgage losses as well as our peers. the Fund. Statements of fact are from
accounting complexities that create sources considered reliable, but A I M
volatility in regulatory capital. We Recent studies have shown short-term Advisors, Inc. makes no representation or
believe accounting and capital standards results have little information value and warranty as to their completeness or
required of the company are in conflict the frequent trading of stocks or mutual accuracy. Although historical performance
with the economics of the business. We funds is a costly exercise--reducing is no guarantee of future results, these
believe this situation is inconsistent actual returns by several percentage insights may help you understand our
with sound regulatory policy, and we points per year as shareholders investment management philosophy.
expect it to eventually be resolved. More unknowingly exchange tomorrow's winner for
importantly, we believe mortgage credit tomorrow's loser.(2) In addition, a recent See important Fund and index
losses to be manageable and believe Fannie Yale University study reveals half of all disclosures later in this report.
Mae may ultimately emerge as an even more mutual funds charge an active management
dominate player in the mortgage industry. fee for essentially a closet-index Bret W. Stanley
portfolio. While this creates smooth and [STANLEY Chartered Financial Analyst,
Portfolio assessment innocuous short-term relative performance, PHOTO] senior portfolio manager, is
it typically leads to long-term lead manager of AIM Basic Value
We believe the single most important underperformance.(3) Considering these Fund. He earned a B.B.A. in finance from
indicator of the way AIM Basic Value Fund factors, your Fund is doing something The University of Texas at Austin and an
is positioned for potential success is not different and old fashioned--investing for M.S. in finance from the University of
our historical investment results or the long term and following a common-sense Houston.
popular statistical measures, but the approach that has produced a portfolio
portfolio's estimated intrinsic value--the that is different from common stock market R. Canon Coleman II
aggregate business value of the portfolio indexes and more attractively valued, in [COLEMAN Chartered Financial Analyst,
based on our estimate of intrinsic value our opinion. PHOTO] portfolio manager, is manager
for each individual holding. During the of AIM Basic Value Fund. He
year, we believe the estimated intrinsic We remain optimistic about AIM Basic earned a B.S. and an M.S. in accounting
value of the portfolio grew at an Value Fund's portfolio. As always, we are from the University of Florida. He also
attractive rate despite modest impairments continually searching for opportunities to earned an M.B.A. from the Wharton School
in the business values of some of our increase the portfolio's estimated at the University of Pennsylvania.
financial service investments. intrinsic value. We thank you for your
investment and for sharing our long-term Matthew W. Seinsheimer
At the close of the year, and in our horizon. [SEINSHEIMER Chartered Financial Analyst,
opinion, the difference between the market PHOTO] senior portfolio manager, is
price and the estimated intrinsic value of Sources: (1)WRTG Economics; (2)"The Mutual manager of AIM Basic Value
the portfolio was above the Fund's Fund Industry Sixty Years Later: For Fund. He earned a B.B.A. in finance from
historical average, and we believed this Better or Worse," Financial Analysts Southern Methodist University and an
value content was greater than what was Journal, essay by John C. Bogle, 2005; M.B.A. from The University of Texas at
available in the broad market. While there (3)"How Active is Your Fund Manager: A New Austin
is no assurance that market value will Measure That Predicts Performance,"
ever reflect our estimate of the Martijn Cremens and Antti Petajistto, Yale
portfolio's intrinsic value, we believe School of Management, August 2006 Michael J. Simon
this provides the best indication that [SIMON Chartered Financial Analyst,
your Fund is positioned to potentially PHOTO] senior portfolio manager, is
achieve its objective of long-term growth manager of AIM Basic Value Fund.
of capital. He earned a B.B.A. in finance from Texas
Christian University and an M.B.A. from
Context for results the University of Chicago.
During the year, the Fund distributed a Assisted by the Basic Value Team
long-term capital gain representing
approximately 16% of your investment,
despite only a modest return during this
year. Further information about this
capital gain can be found on page 7.
5
AIM Basic Value Fund
Your Fund's long-term performance
Past performance cannot guarantee table(s) does not reflect deduction of change, in the value of the investment. In
comparable future results. taxes a shareholder would pay on Fund other words, the space between $5,000 and
distributions or sale of Fund shares. $10,000 is the same size as the space
The data shown in the chart include Performance of the indexes does not between $10,000 and $20,000, and so on.
reinvested distributions, applicable sales reflect the effects of taxes.
charges, Fund expenses and management
fees. Results for Class B shares are This chart, which is a logarithmic
calculated as if a hypothetical chart, presents the fluctuations in the
shareholder had liquidated his entire value of the Fund and its indexes. We
investment in the Fund at the close of the believe that a logarithmic chart is more
reporting period and paid the applicable effective than other types of charts in
contingent deferred sales charges. Index illustrating changes in value during the
results include reinvested dividends, but early years shown in the chart. The
they do not reflect sales charges. vertical axis, the one that indicates the
Performance of an index of funds reflects dollar value of an investment, is
fund expenses and management fees; constructed with each segment representing
performance of a market index does not. a percent change in the value of the
Performance shown in the chart and investment. In this chart, each segment
represents a doubling, or 100%
6
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND DATA FROM 10/18/95, INDEX DATA FROM 10/31/95
AIM BASIC VALUE FUND- AIM BASIC VALUE FUND- RUSSELL 1000 VALUE LIPPER LARGE-CAP VALUE
DATE CLASS A SHARES CLASS B SHARES S&P 500 INDEX(1) INDEX(1) FUNDS INDEX(1)
10/18/95 $ 9450 $10000
10/95 9466 10009 $10000 $10000 $10000
11/95 10276 10867 10438 10506 10433
12/95 10550 11156 10640 10771 10603
1/96 10880 11488 11001 11106 10929
2/96 10855 11462 11104 11190 11051
3/96 11095 11707 11211 11380 11171
4/96 11566 12196 11376 11424 11323
5/96 12145 12809 11669 11567 11533
6/96 11888 12528 11713 11576 11539
7/96 11177 11775 11196 11139 11087
8/96 11392 11985 11432 11457 11375
9/96 12021 12640 12075 11913 11932
10/96 12136 12763 12408 12374 12184
11/96 12327 12956 13345 13271 13057
12/96 12144 12754 13081 13101 12836
1/97 12708 13342 13898 13737 13484
2/97 12907 13543 14007 13938 13592
3/97 12336 12938 13432 13437 13073
4/97 12626 13237 14233 14002 13654
5/97 13363 13991 15104 14784 14441
6/97 13860 14509 15775 15418 15044
7/97 15261 15965 17030 16578 16177
8/97 14805 15491 16077 15988 15485
9/97 15625 16334 16957 16954 16278
10/97 14820 15483 16391 16480 15787
11/97 15060 15720 17149 17209 16304
12/97 15451 16127 17443 17711 16491
1/98 15146 15804 17636 17460 16515
2/98 16275 16977 18907 18636 17601
3/98 16857 17573 19875 19776 18383
4/98 17098 17810 20078 19908 18570
5/98 16471 17148 19734 19613 18254
6/98 16453 17120 20535 19864 18596
7/98 16237 16884 20318 19514 18273
8/98 13586 14130 17382 16610 15779
9/98 14374 14934 18497 17563 16538
10/98 15510 16108 19999 18923 17862
11/98 16308 16931 21211 19805 18774
12/98 16531 17150 22432 20479 19499
1/99 16915 17536 23370 20643 19823
2/99 16213 16803 22643 20351 19369
3/99 17116 17728 23549 20772 19957
4/99 19250 19927 24461 22713 21133
5/99 19760 20447 23884 22463 20773
6/99 20726 21420 25206 23115 21688
7/99 20061 20726 24422 22438 21072
8/99 19513 20148 24301 21606 20688
9/99 18729 19328 23636 20851 19923
10/99 19467 20080 25131 22051 20883
11/99 20170 20792 25642 21878 20956
12/99 21828 22487 27150 21984 21601
1/00 21068 21693 25786 21267 20688
2/00 20373 20966 25299 19687 19818
3/00 22836 23493 27772 22089 21632
4/00 22763 23397 26937 21832 21392
5/00 23275 23921 26385 22062 21408
6/00 22507 23117 27034 21054 21171
7/00 22635 23233 26612 21317 21076
8/00 24145 24773 28264 22503 22295
9/00 24915 25548 26772 22709 21943
10/00 25685 26322 26659 23267 22119
11/00 24961 25567 24559 22404 21171
12/00 26249 26876 24679 23526 22023
1/01 26792 27413 25554 23617 22206
2/01 26663 27268 23226 22960 21136
3/01 25842 26420 21755 22148 20315
4/01 27468 28058 23444 23235 21466
====================================================================================================================================
SOURCE: (1)LIPPER INC.
====================================================================================================================================
[MOUNTAIN CHART]
5/01 28187 28790 23602 23757 21811
6/01 27976 28557 23027 23230 21218
7/01 27828 28383 22801 23180 21074
8/01 26628 27143 21375 22252 20087
9/01 23127 23571 19649 20686 18519
10/01 23580 24009 20024 20508 18640
11/01 25473 25932 21559 21700 19836
12/01 26283 26726 21748 22211 20135
1/02 26063 26491 21431 22040 19763
2/02 25565 25974 21018 22075 19654
3/02 27469 27896 21808 23120 20521
4/02 26500 26892 20486 22327 19647
5/02 26343 26717 20336 22439 19673
6/02 23664 23995 18888 21150 18301
7/02 21049 21319 17416 19184 16720
8/02 21382 21652 17530 19329 16833
9/02 18739 18958 15627 17180 14887
10/02 19914 20139 17001 18453 15980
11/02 21551 21779 18000 19615 16981
12/02 20211 20411 16943 18763 16173
1/03 19758 19942 16500 18309 15788
2/03 19027 19190 16253 17821 15393
3/03 18934 19092 16410 17850 15383
4/03 20662 20820 17761 19422 16682
5/03 22799 22966 18696 20675 17708
6/03 22910 23065 18935 20934 17911
7/03 23586 23739 19269 21246 18160
8/03 24391 24529 19644 21577 18467
9/03 23883 24011 19436 21366 18260
10/03 25068 25183 20535 22674 19267
11/03 25559 25652 20715 22981 19504
12/03 27039 27134 21801 24398 20701
1/04 27455 27533 22201 24827 21014
2/04 28002 28059 22509 25359 21457
3/04 27909 27952 22170 25137 21201
4/04 27513 27542 21822 24523 20810
5/04 27772 27776 22121 24773 20962
6/04 28447 28439 22551 25358 21423
7/04 26885 26867 21805 25001 20908
8/04 26710 26671 21892 25356 21059
9/04 27025 26972 22129 25749 21308
10/04 27506 27441 22467 26178 21535
11/04 28959 28866 23376 27501 22470
12/04 29987 29882 24171 28422 23184
1/05 29450 29326 23582 27917 22734
2/05 30080 29930 24078 28843 23372
3/05 29506 29355 23652 28447 22992
4/05 28839 28671 23204 27937 22537
5/05 29404 29219 23942 28610 23064
6/05 29922 29716 23976 28923 23298
7/05 30921 30690 24867 29760 24057
8/05 30429 30184 24640 29631 23953
9/05 30706 30447 24840 30047 24184
10/05 29883 29606 24425 29283 23680
11/05 31049 30737 25348 30246 24494
12/05 31651 31312 25357 30427 24635
1/06 32797 32424 26029 31608 25354
2/06 32630 32239 26099 31801 25400
3/06 33223 32803 26424 32232 25721
4/06 33446 32996 26779 33051 26360
5/06 32272 31825 26009 32216 25716
6/06 31959 31494 26043 32423 25734
7/06 31857 31378 26204 33211 26128
8/06 32392 31886 26826 33766 26610
9/06 33224 32686 27517 34439 27229
10/06 34298 33713 28413 35567 28040
11/06 34843 34238 28953 36379 28524
12/06 35819 35173 29359 37195 29139
1/07 36338 35659 29803 37671 29514
2/07 35651 34953 29222 37084 28987
3/07 35983 35264 29548 37657 29357
4/07 37598 36829 30856 39049 30615
5/07 38967 38144 31932 40457 31742
6/07 38566 37728 31402 39512 31258
7/07 36753 35925 30429 37685 30003
8/07 37084 36234 30885 38107 30359
9/07 37340 36451 32038 39416 31320
10/07 38553 37621 32548 39420 31566
11/07 36618 35706 31187 37493 30208
12/07 36165 36360 30971 37131 29856
====================================================================================================================================
AIM Basic Value Fund
========================================== =======================================================================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURN COMPARISON
As of 12/31/07, including maximum
applicable sales charges As of 12/31/07, excluding applicable sales charges. If sales charges were included,
returns would be lower.
CLASS A SHARES SINCE LEAD
Inception (10/18/95) 11.11% PORTFOLIO MANAGER
10 Years 8.27 1 YEAR 5 YEARS INCEPTION(1)
5 Years 11.09
1 Year -4.49 AIM Basic Value Fund Class A Shares 1.06% 12.35% 10.96%
Russell 1000 Value Index(triangle) -0.17 14.63 8.90(square)
CLASS B SHARES Lipper Large-Cap Value Funds Index(triangle) 2.46 13.04 6.88(square)
Inception (10/18/95) 11.16% S&P 500 Index(triangle) 5.49 12.82 6.17(square)
10 Years 8.31
5 Years 11.32 SOURCES: (triangle)LIPPER INC.; (square)StyleADVISOR
1 Year -3.91
(1) Since Bret Stanley became lead portfolio manager on September 8, 1998
CLASS C SHARES
Inception (5/3/99) 6.59% During the year, the Fund distributed a long-term capital gain representing
5 Years 11.58 approximately 16% of your investment, despite only a modest return during this year.
1 Year -0.54 Since the current lead manager began managing the Fund on September 8, 1998, the
cumulative total return for Class A shares at net asset value was 163.45% through
CLASS R SHARES December 31, 2007, but the cumulative gains to shareholders have been less than 25%. As
10 Years 8.68% fellow taxable shareholders, we never like paying taxes but are pleased that the gains
5 Years 12.12 have been deferred for so many years, thus benefiting our after-tax results.* The
1 Year 0.82 long-term nature of our strategy could continue to defer gains to the future, but
========================================== considering the strong results of the past several years, it is only natural that
portfolio turnover may produce additional capital gains.
* This information is not intended as tax advice. Consult your tax advisor about your
particular situation.
=======================================================================================
CLASS R SHARES' inception date is June 03, AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT THE SEVENTH YEAR. THE CDSC ON CLASS C
2002. Returns since that date are YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES IS 1% FOR THE FIRST YEAR AFTER
historical returns. All other returns are SHARES. PURCHASE. CLASS R SHARES DO NOT HAVE A
blended returns of HISTORICAL CLASS R FRONT-END SALES CHARGE; RETURNS SHOWN ARE
SHARE PERFORMANCE AND RESTATED CLASS A THE TOTAL ANNUAL FUND OPERATING EXPENSE AT NET ASSET VALUE AND DO NOT REFLECT A
SHARE PERFORMANCE (FOR PERIODS PRIOR TO RATIO SET FORTH IN THE MOST RECENT FUND 0.75% CDSC THAT MAY BE IMPOSED ON A TOTAL
THE INCEPTION DATE OF CLASS R SHARES) AT PROSPECTUS AS OF THE DATE OF THIS REPORT REDEMPTION OF RETIREMENT PLAN ASSETS
NET ASSET VALUE, ADJUSTED TO REFLECT THE FOR CLASS A, CLASS B, CLASS C AND CLASS R WITHIN THE FIRST YEAR.
HIGHER RULE 12B-1 FEES APPLICABLE TO CLASS SHARES WAS 1.15%, 1.90%, 1.90% AND 1.40%,
R SHARES. CLASS A SHARES' inception date RESPECTIVELY. THE EXPENSE RATIOS PRESENTED THE PERFORMANCE OF THE FUND'S SHARE
is October 18, 1995. ABOVE MAY VARY FROM THE EXPENSE RATIOS CLASSES WILL DIFFER PRIMARILY DUE TO
PRESENTED IN OTHER SECTIONS OF THIS REPORT DIFFERENT SALES CHARGE STRUCTURES AND
THE PERFORMANCE DATA QUOTED REPRESENT THAT ARE BASED ON EXPENSES INCURRED DURING CLASS EXPENSES.
PAST PERFORMANCE AND CANNOT GUARANTEE THE PERIOD COVERED BY THIS REPORT.
COMPARABLE FUTURE RESULTS; CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE CLASS A SHARE PERFORMANCE REFLECTS THE
VISIT AIMINVESTMENTS.COM FOR THE MOST MAXIMUM 5.50% SALES CHARGE, AND CLASS B
RECENT MONTH-END PERFORMANCE. PERFORMANCE AND CLASS C SHARE PERFORMANCE REFLECTS THE
FIGURES REFLECT REINVESTED DISTRIBUTIONS, APPLICABLE CONTINGENT DEFERRED SALES
CHANGES IN NET ASSET VALUE AND THE EFFECT CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE ==========================================
OF THE MAXIMUM SALES CHARGE UNLESS CDSC ON CLASS B SHARES DECLINES FROM 5% FOR A DISCUSSION OF THE RISKS OF INVESTING
OTHERWISE STATED. INVESTMENT RETURN BEGINNING AT THE TIME OF PURCHASE TO 0% AT IN YOUR FUND AND INDEXES USED IN THIS
THE BEGINNING OF REPORT, PLEASE TURN THE PAGE.
==========================================
7
AIM Basic Value Fund
AIM BASIC VALUE FUND's INVESTMENT OBJECTIVE IS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL.
o Unless otherwise stated, information presented in this report is as of
December 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 of time and may never realize their full Other information
value.
o Class B shares are not available as an o The returns shown in the management's
investment for retirement plans maintained o Because a large percentage of the Fund's discussion of Fund performance are based
pursuant to Section 401 of the Internal assets may be invested in a limited number on net asset values calculated for
Revenue Code, including 401(k) plans, of securities, a change in the value of shareholder transactions. Generally
money purchase pension plans and profit these securities could significantly accepted accounting principles require
sharing plans. Plans that had existing affect the value of your investment in the adjustments to be made to the net assets
accounts invested in Class B shares prior Fund. of the Fund at period end for financial
to September 30, 2003, will continue to be reporting purposes, and as such, the net
allowed to make additional purchases. About indexes used in this report asset values for shareholder transactions
and the returns based on those net asset
o Class R shares are available only to o The S&P 500--registered trademark-- values may differ from the net asset
certain retirement plans. Please see the Index is a market capitalization-weighted values and returns reported in the
prospectus for more information. index covering all major areas of the U.S. Financial Highlights.
economy. It is not the 500 largest
Principal risks of investing in the Fund companies, but rather the most widely held o Industry classifications used in this
500 companies chosen with respect to report are generally according to the
o Prices of equity securities change in market size, liquidity, and their Global Industry Classification Standard,
response to many factors including the industry. which was developed by and is the
historical and prospective earnings of the exclusive property and a service mark of
issuer, the value of its assets, general o The Russell 1000--registered trademark-- Morgan Stanley Capital International Inc.
economic conditions, interest rates, Value Index measures the performance of and Standard & Poor's.
investor perceptions and market liquidity. those Russell 1000 companies with lower
price-to-book ratios and lower forecasted o The Chartered Financial
o Foreign securities have additional growth values. The Russell 1000 Value Analyst--REGISTERED TRADEMARK--
risks, including exchange rate changes, Index is a trademark/service mark of the (CFA--REGISTERED TRADEMARK--)
political and economic upheaval, the Frank Russell Company. Russell--REGISTERED designation is a globally recognized
relative lack of information, relatively TRADEMARK-- is a trademark of the Frank standard for measuring the competence and
low market liquidity, and the potential Russell Company. integrity of investment professionals.
lack of strict financial and accounting
controls and standards. o The Lipper Large-Cap Value Funds Index
is an equally weighted representation of
o The Fund may use enhanced investment the largest funds in the Lipper Large-Cap
techniques such as leveraging and Value Funds category. These funds
derivatives. Leveraging entails risks such typically have a below-average
as magnifying changes in the value of the price-to-earnings ratio, price-to-book
portfolio's securities. Derivatives are ratio, and three-year sales-per-share
subject to counter-party risk--the risk growth value, compared to the S&P
that the other party will not complete the 500--REGISTERED TRADEMARK-- Index.
transaction with the Fund.
o The Fund is not managed to track the
o There is no guarantee that the performance of any particular index,
investment techniques and risk analyses including the indexes defined here, and
used by the Fund's portfolio managers will consequently, the performance of the Fund
produce the desired results. may deviate significantly from the
performance of the indexes.
o The prices of securities held by the
Fund may decline in response to market o A direct investment cannot be made in an
risks. index. Unless otherwise indicated, index
results include reinvested dividends, and
o The Fund invests in "value" stocks, they do not reflect sales charges.
which can continue to be inexpensive for Performance of an index of funds reflects
long periods fund expenses; performance of a market
index does not.
=======================================================================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, ==========================================
WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. FUND NASDAQ SYMBOLS
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING.
======================================================================================= Class A Shares GTVLX
Class B Shares GTVBX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class C Shares GTVCX
AIMINVESTMENTS.COM Class R Shares GTVRX
==========================================
8
AIM Basic Value Fund
SCHEDULE OF INVESTMENTS(a)
December 31, 2007
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-99.79%
ADVERTISING-5.22%
Interpublic Group of Cos., Inc. (The)(b) 13,322,465 $ 108,045,191
- --------------------------------------------------------------------------
Omnicom Group Inc. 2,335,771 111,019,196
==========================================================================
219,064,387
==========================================================================
APPAREL RETAIL-2.52%
Gap, Inc. (The) 4,974,998 105,867,958
==========================================================================
ASSET MANAGEMENT & CUSTODY BANKS-1.27%
Bank of New York Mellon Corp. (The) 1,096,901 53,484,893
==========================================================================
AUTO PARTS & EQUIPMENT-0.65%
WABCO Holdings Inc. 548,238 27,461,241
==========================================================================
BREWERS-2.68%
Molson Coors Brewing Co.-Class B 2,181,918 112,630,607
==========================================================================
BUILDING PRODUCTS-1.84%
Trane, Inc. 1,654,864 77,298,697
==========================================================================
COMPUTER HARDWARE-3.73%
Dell Inc.(b) 6,389,729 156,612,258
==========================================================================
CONSTRUCTION MATERIALS-2.70%
Cemex S.A.B. de C.V.-ADR (Mexico)(b) 4,391,184 113,512,106
==========================================================================
DATA PROCESSING & OUTSOURCED SERVICES-3.68%
Western Union Co. 6,359,613 154,411,404
==========================================================================
EDUCATION SERVICES-2.10%
Apollo Group, Inc.-Class A(b) 1,259,416 88,348,032
==========================================================================
ELECTRONIC MANUFACTURING SERVICES-1.25%
Tyco Electronics Ltd. 1,415,982 52,575,412
==========================================================================
ENVIRONMENTAL & FACILITIES SERVICES-0.81%
Waste Management, Inc. 1,036,101 33,849,420
==========================================================================
GENERAL MERCHANDISE STORES-2.64%
Target Corp. 2,215,325 110,766,250
==========================================================================
HEALTH CARE DISTRIBUTORS-2.98%
Cardinal Health, Inc. 2,166,044 125,089,041
==========================================================================
HOME IMPROVEMENT RETAIL-1.97%
Home Depot, Inc. (The) 3,078,063 82,923,017
==========================================================================
</Table>
<Table>
SHARES VALUE
- --------------------------------------------------------------------------
<Caption>
HUMAN RESOURCE & EMPLOYMENT SERVICES-1.61%
Robert Half International, Inc. 2,497,386 $ 67,529,317
==========================================================================
INDUSTRIAL CONGLOMERATES-3.95%
General Electric Co. 2,566,426 95,137,412
- --------------------------------------------------------------------------
Tyco International Ltd. 1,782,063 70,658,798
==========================================================================
165,796,210
==========================================================================
INDUSTRIAL MACHINERY-2.82%
Illinois Tool Works Inc. 2,213,682 118,520,534
==========================================================================
INSURANCE BROKERS-1.33%
Marsh & McLennan Cos., Inc. 2,109,342 55,834,283
==========================================================================
INVESTMENT BANKING & BROKERAGE-3.46%
Merrill Lynch & Co., Inc. 1,325,739 71,165,670
- --------------------------------------------------------------------------
Morgan Stanley 1,399,437 74,324,099
==========================================================================
145,489,769
==========================================================================
LIFE SCIENCES TOOLS & SERVICES-3.04%
Waters Corp.(b) 1,615,592 127,744,860
==========================================================================
MANAGED HEALTH CARE-5.52%
UnitedHealth Group Inc. 3,981,486 231,722,485
==========================================================================
MOVIES & ENTERTAINMENT-1.52%
Walt Disney Co. (The) 1,976,193 63,791,510
==========================================================================
MULTI-LINE INSURANCE-1.78%
American International Group, Inc. 1,285,433 74,940,744
==========================================================================
OIL & GAS DRILLING-2.72%
Transocean Inc. 798,427 114,294,825
==========================================================================
OIL & GAS EQUIPMENT & SERVICES-6.75%
Halliburton Co. 3,683,677 139,648,195
- --------------------------------------------------------------------------
Weatherford International Ltd.(b) 2,097,605 143,895,703
==========================================================================
283,543,898
==========================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-5.18%
Citigroup Inc. 4,094,891 120,553,591
- --------------------------------------------------------------------------
JPMorgan Chase & Co. 2,216,397 96,745,729
==========================================================================
217,299,320
==========================================================================
PACKAGED FOODS & MEATS-1.93%
Unilever N.V. (Netherlands)(c) 2,217,003 81,020,407
==========================================================================
</Table>
9
AIM Basic Value Fund
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------
PHARMACEUTICALS-4.85%
Sanofi-Aventis (France)(c)(d) 1,207,960 $ 110,204,196
- --------------------------------------------------------------------------
Wyeth 2,111,175 93,292,823
==========================================================================
203,497,019
==========================================================================
PROPERTY & CASUALTY INSURANCE-1.30%
ACE Ltd. 883,415 54,577,379
==========================================================================
SEMICONDUCTOR EQUIPMENT-3.05%
KLA-Tencor Corp. 2,655,532 127,890,421
==========================================================================
SEMICONDUCTORS-0.53%
Maxim Integrated Products, Inc. 833,617 22,074,178
==========================================================================
SPECIALIZED CONSUMER SERVICES-0.37%
H&R Block, Inc. 830,760 15,427,213
==========================================================================
SPECIALIZED FINANCE-1.93%
Moody's Corp. 2,266,693 80,920,940
==========================================================================
SYSTEMS SOFTWARE-5.69%
CA Inc. 4,799,622 119,750,569
- --------------------------------------------------------------------------
Microsoft Corp. 3,344,444 119,062,206
==========================================================================
238,812,775
==========================================================================
THRIFTS & MORTGAGE FINANCE-3.10%
Fannie Mae 3,260,057 130,337,079
==========================================================================
</Table>
<Table>
SHARES VALUE
- --------------------------------------------------------------------------
<Caption>
WIRELESS TELECOMMUNICATION SERVICES-1.32%
Sprint Nextel Corp. 4,211,292 $ 55,294,264
==========================================================================
Total Common Stocks & Other Equity
Interests (Cost $3,196,379,023) 4,190,254,153
==========================================================================
MONEY MARKET FUNDS-1.59%
Liquid Assets Portfolio-Institutional
Class(e) 33,426,461 33,426,461
- --------------------------------------------------------------------------
Premier Portfolio-Institutional Class(e) 33,426,461 33,426,461
==========================================================================
Total Money Market Funds (Cost
$66,852,922) 66,852,922
==========================================================================
TOTAL INVESTMENTS (excluding investments
purchased with cash collateral from
securities on loan)-101.38% (Cost
$3,263,231,945) 4,257,107,075
==========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES ON LOAN MONEY MARKET
FUNDS-0.30%
Liquid Assets Portfolio-Institutional Class
(Cost $12,645,940)(e)(f) 12,645,940 12,645,940
==========================================================================
TOTAL INVESTMENTS-101.68% (Cost
$3,275,877,885) 4,269,753,015
==========================================================================
OTHER ASSETS LESS LIABILITIES-(1.68)% (70,589,579)
==========================================================================
NET ASSETS-100.00% $4,199,163,436
__________________________________________________________________________
==========================================================================
</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) 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 December 31, 2007 was $191,224,603,
which represented 4.55% of the Fund's Net Assets. See Note 1A.
(d) All or a portion of this security was out on loan at December 31, 2007.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
(f) The security has been segregated to satisfy the 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.
10
AIM Basic Value Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2007
<Table>
ASSETS:
Investments, at value (Cost $3,196,379,023)* $4,190,254,153
- ------------------------------------------------------------
Investments in affiliated money market funds
(Cost $79,498,862) 79,498,862
============================================================
Total investments (Cost $3,275,877,885) 4,269,753,015
============================================================
Foreign currencies, at value (Cost $1,018) 1,036
- ------------------------------------------------------------
Receivables for:
Investments sold 9,710,686
- ------------------------------------------------------------
Fund shares sold 4,547,760
- ------------------------------------------------------------
Dividends 3,814,653
- ------------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 114,742
- ------------------------------------------------------------
Other assets 70,896
============================================================
Total assets 4,288,012,788
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 33,167,410
- ------------------------------------------------------------
Fund shares reacquired 37,868,529
- ------------------------------------------------------------
Amount due custodian 11,132
- ------------------------------------------------------------
Trustee deferred compensation and
retirement plans 515,412
- ------------------------------------------------------------
Collateral upon return of securities
loaned 12,645,940
- ------------------------------------------------------------
Accrued distribution fees 1,787,825
- ------------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 2,785
- ------------------------------------------------------------
Accrued transfer agent fees 2,431,109
- ------------------------------------------------------------
Accrued operating expenses 419,210
============================================================
Total liabilities 88,849,352
============================================================
Net assets applicable to shares outstanding $4,199,163,436
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,045,739,382
- ------------------------------------------------------------
Undistributed net investment income 3,180,196
- ------------------------------------------------------------
Undistributed net realized gain 156,368,710
- ------------------------------------------------------------
Unrealized appreciation 993,875,148
============================================================
$4,199,163,436
____________________________________________________________
============================================================
NET ASSETS:
Class A $2,404,899,536
____________________________________________________________
============================================================
Class B $1,015,776,193
____________________________________________________________
============================================================
Class C $ 399,261,542
____________________________________________________________
============================================================
Class R $ 51,572,051
____________________________________________________________
============================================================
Institutional Class $ 327,654,114
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 76,333,889
____________________________________________________________
============================================================
Class B 35,525,396
____________________________________________________________
============================================================
Class C 13,966,371
____________________________________________________________
============================================================
Class R 1,657,141
____________________________________________________________
============================================================
Institutional Class 10,089,660
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 31.51
- ------------------------------------------------------------
Maximum offering price per share
(Net asset value of $31.51 divided by
94.50%) $ 33.34
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 28.59
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 28.59
____________________________________________________________
============================================================
Class R:
Net asset value and offering price per
share $ 31.12
____________________________________________________________
============================================================
Institutional Class:
Net asset value and offering price per
share $ 32.47
____________________________________________________________
============================================================
</Table>
* At December 31, 2007, securities with an aggregate value of $11,863,852 were
on loan to brokers.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
11
AIM Basic Value Fund
STATEMENT OF OPERATIONS
For the year ended December 31, 2007
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $953,825) $ 68,843,337
- ---------------------------------------------------------------------------
Dividends from affiliated money market funds (includes
securities lending income of $292,838) 3,071,602
===========================================================================
Total investment income 71,914,939
===========================================================================
EXPENSES:
Advisory fees 31,971,628
- ---------------------------------------------------------------------------
Administrative services fees 639,343
- ---------------------------------------------------------------------------
Custodian fees 317,132
- ---------------------------------------------------------------------------
Distribution fees:
Class A 7,117,239
- ---------------------------------------------------------------------------
Class B 12,672,218
- ---------------------------------------------------------------------------
Class C 4,702,758
- ---------------------------------------------------------------------------
Class R 274,282
- ---------------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 10,439,294
- ---------------------------------------------------------------------------
Transfer agent fees -- Institutional 338,766
- ---------------------------------------------------------------------------
Trustees' and officer's fees and benefits 166,058
- ---------------------------------------------------------------------------
Other 1,044,366
===========================================================================
Total expenses 69,683,084
===========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangement(s) (1,653,049)
===========================================================================
Net expenses 68,030,035
===========================================================================
Net investment income 3,884,904
===========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (includes net gains from securities
sold to affiliates of $7,089,501) 759,098,502
- ---------------------------------------------------------------------------
Foreign currencies (277,712)
===========================================================================
758,820,790
===========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (685,222,107)
- ---------------------------------------------------------------------------
Foreign currencies (52,935)
===========================================================================
(685,275,042)
===========================================================================
Net realized and unrealized gain 73,545,748
===========================================================================
Net increase in net assets resulting from operations $ 77,430,652
___________________________________________________________________________
===========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12
AIM Basic Value Fund
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2007 and 2006
<Table>
<Caption>
2007 2006
- -----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 3,884,904 $ 6,372,052
- -----------------------------------------------------------------------------------------------
Net realized gain 758,820,790 414,926,570
- -----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (685,275,042) 271,661,616
===============================================================================================
Net increase in net assets resulting from operations 77,430,652 692,960,238
===============================================================================================
Distributions to shareholders from net investment income:
Class A (1,654,275) (2,392,855)
- -----------------------------------------------------------------------------------------------
Institutional Class (216,875) (1,608,510)
===============================================================================================
Total distributions from net investment income (1,871,150) (4,001,365)
===============================================================================================
Distributions to shareholders from net realized gains:
Class A (365,648,122) (180,090,186)
- -----------------------------------------------------------------------------------------------
Class B (167,237,726) (84,887,923)
- -----------------------------------------------------------------------------------------------
Class C (65,066,160) (29,993,312)
- -----------------------------------------------------------------------------------------------
Class R (7,678,455) (3,040,333)
- -----------------------------------------------------------------------------------------------
Institutional Class (47,936,462) (17,918,036)
===============================================================================================
Total distributions from net realized gains (653,566,925) (315,929,790)
===============================================================================================
Decrease in net assets resulting from distributions (655,438,075) (319,931,155)
===============================================================================================
Share transactions-net:
Class A (451,904,987) (743,316,966)
- -----------------------------------------------------------------------------------------------
Class B (269,082,080) (334,742,885)
- -----------------------------------------------------------------------------------------------
Class C (48,799,986) (88,209,746)
- -----------------------------------------------------------------------------------------------
Class R 3,042,611 20,077,535
- -----------------------------------------------------------------------------------------------
Institutional Class 29,523,641 113,585,737
===============================================================================================
Net increase (decrease) in net assets resulting from
share transactions (737,220,801) (1,032,606,325)
===============================================================================================
Net increase (decrease) in net assets (1,315,228,224) (659,577,242)
===============================================================================================
NET ASSETS:
Beginning of year 5,514,391,660 6,173,968,902
===============================================================================================
End of year (including undistributed net investment income
of $3,180,196 and $1,444,154, respectively) $ 4,199,163,436 $5,514,391,660
_______________________________________________________________________________________________
===============================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13
AIM Basic Value Fund
NOTES TO FINANCIAL STATEMENTS
December 31, 2007
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Basic Value Fund (the "Fund") is a series portfolio of AIM Growth Series
(the "Trust"). The Trust is organized as a Delaware statutory trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate series 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.
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.
14
AIM Basic Value Fund
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds as 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.
The Fund files tax returns in the U.S. federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for tax periods after 2003.
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.
15
AIM Basic Value Fund
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
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.
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 0.725%
- --------------------------------------------------------------------
Next $500 million 0.70%
- --------------------------------------------------------------------
Next $500 million 0.675%
- --------------------------------------------------------------------
Over $1.5 billion 0.65%
___________________________________________________________________
====================================================================
</Table>
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 annual rate of the Fund's average daily net assets as follows:
<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>
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 December 31, 2007, AIM waived advisory fees of
$1,364,003.
At the request of the Trustees of the Trust, Invesco Ltd. ("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 December 31, 2007, Invesco reimbursed expenses of the Fund in the amount
of $27,183.
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
December 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 December 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
16
AIM Basic Value Fund
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. Rules of the Financial
Industry Regulatory Authority ("FINRA"), formerly known as National Association
of Securities Dealers, 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 December 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 December 31, 2007, ADI advised the Fund that it retained $269,104 in
front-end sales commissions from the sale of Class A shares and $9,691,
$599,042, $15,473 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
December 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 12/31/07 INCOME
- --------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $32,604,151 $ 740,736,569 $ (739,914,259) $33,426,461 $1,390,657
- --------------------------------------------------------------------------------------------------
Premier
Portfolio-Institutional
Class 32,604,151 740,736,569 (739,914,259) 33,426,461 1,388,107
==================================================================================================
Subtotal $65,208,302 $1,481,473,138 $(1,479,828,518) $66,852,922 $2,778,764
==================================================================================================
</Table>
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 12/31/06 AT COST FROM SALES 12/31/07 INCOME*
- --------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $402,677,294 $ 897,523,431 $(1,287,554,785) $12,645,940 $ 158,389
- --------------------------------------------------------------------------------------------------
STIC Prime
Portfolio-Institutional
Class 402,677,295 398,217,534 (800,894,829) -- 134,449
==================================================================================================
Subtotal $805,354,589 $1,295,740,965 $(2,088,449,614) $12,645,940 $ 292,838
==================================================================================================
Total
Investments
in
Affiliates $870,562,891 $2,777,214,103 $(3,568,278,132) $79,498,862 $3,071,602
__________________________________________________________________________________________________
==================================================================================================
</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 December 31, 2007, the Fund
engaged in securities sales of $28,731,662, which resulted in net realized gains
of $7,089,501, and securities purchases of $2,531,562.
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 December
31, 2007, the Fund received credits from these arrangements, which resulted in
the reduction of the Fund's total expenses of $261,863.
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
17
AIM Basic Value Fund
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 December 31, 2007, the Fund paid legal fees of $19,812
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 December 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 by the
securities lending provider. 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 December 31, 2007, securities with an aggregate value of $11,863,852 were
on loan to brokers. The loans were secured by cash collateral of $12,645,940
received by the Fund and subsequently invested in an affiliated money market
fund. For the year ended December 31, 2007, the Fund received dividends on cash
collateral investments of $292,838 for securities lending transactions, which
are net of compensation to counterparties.
18
AIM Basic Value Fund
NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years December 31, 2007 and
2006 was as follows:
<Table>
<Caption>
2007 2006
- ------------------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 38,027,691 $ 4,001,365
- ------------------------------------------------------------------------------------------
Long-term capital gain 617,410,384 315,929,790
==========================================================================================
Total distributions $655,438,075 $319,931,155
__________________________________________________________________________________________
==========================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of December 31, 2007, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2007
- ------------------------------------------------------------------------------
Undistributed ordinary income $ 35,097,450
- ------------------------------------------------------------------------------
Undistributed long-term gain 133,220,590
- ------------------------------------------------------------------------------
Net unrealized appreciation-investments 985,603,636
- ------------------------------------------------------------------------------
Temporary book/tax differences (497,622)
- ------------------------------------------------------------------------------
Shares of beneficial interest 3,045,739,382
==============================================================================
Total net assets $4,199,163,436
______________________________________________________________________________
==============================================================================
</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 $18.
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 December 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 December 31, 2007 was $1,139,767,550 and
$2,592,712,283, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $1,273,760,320
- ------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (288,156,702)
==============================================================================
Net unrealized appreciation of investment securities $ 985,603,618
______________________________________________________________________________
==============================================================================
Cost of investments for tax purposes is $3,284,149,397.
</Table>
NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency
transactions on December 31, 2007, undistributed net investment income was
decreased by $277,712 and undistributed net realized gain was increased by
$277,712. This reclassification had no effect on the net assets of the Fund.
19
AIM Basic Value Fund
NOTE 12--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
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2007(a) 2006
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 6,775,041 $ 254,644,145 12,021,288 $ 426,664,207
- ------------------------------------------------------------------------------------------------------------------------------
Class B 1,025,803 35,573,860 1,862,210 61,700,737
- ------------------------------------------------------------------------------------------------------------------------------
Class C 701,160 24,291,861 1,068,291 35,329,911
- ------------------------------------------------------------------------------------------------------------------------------
Class R 372,110 13,830,638 778,423 27,632,092
- ------------------------------------------------------------------------------------------------------------------------------
Institutional Class 3,158,529 121,772,791 3,867,925 141,217,934
==============================================================================================================================
Issued as reinvestment of dividends:
Class A 11,163,101 352,931,546 4,786,581 175,332,476
- ------------------------------------------------------------------------------------------------------------------------------
Class B 5,457,199 155,800,362 2,316,895 78,751,245
- ------------------------------------------------------------------------------------------------------------------------------
Class C 2,137,511 60,812,171 831,411 28,251,345
- ------------------------------------------------------------------------------------------------------------------------------
Class R 248,012 7,678,455 83,686 3,040,295
- ------------------------------------------------------------------------------------------------------------------------------
Institutional Class 1,319,782 42,628,948 517,707 19,388,139
==============================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 3,145,381 117,286,990 2,350,962 83,480,941
- ------------------------------------------------------------------------------------------------------------------------------
Class B (3,409,196) (117,286,990) (2,516,658) (83,480,941)
==============================================================================================================================
Reacquired:
Class A (31,455,727) (1,176,767,668) (40,067,363) (1,428,794,590)
- ------------------------------------------------------------------------------------------------------------------------------
Class B (9,845,262) (343,169,312) (11,802,787) (391,713,926)
- ------------------------------------------------------------------------------------------------------------------------------
Class C (3,859,927) (133,904,018) (4,575,142) (151,791,002)
- ------------------------------------------------------------------------------------------------------------------------------
Class R (498,251) (18,466,482) (298,817) (10,594,852)
- ------------------------------------------------------------------------------------------------------------------------------
Institutional Class (3,470,740) (134,878,098) (1,289,826) (47,020,336)
==============================================================================================================================
(17,035,474) $ (737,220,801) (30,065,214) $(1,032,606,325)
______________________________________________________________________________________________________________________________
==============================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate they own 15% of the
outstanding shares of the Fund. ADI has an agreement with these entities
to sell Fund shares. The Fund, AIM and/or AIM affiliates may make
payments to these entities, which are considered to be related to the
Fund, for providing services to the Fund, AIM and/or AIM affiliates
including but not limited to services such as securities brokerage,
distribution, third party record keeping and account servicing. The
Trust has no knowledge as to whether all or any portion of the shares
owned of record by these entities are also owned beneficially.
NOTE 13--SIGNIFICANT EVENT
At a meeting held on December 13, 2007, the Board of Trustees of Trust approved
certain proposals to be presented for shareholder approval at a special meeting
of the shareholders of the Trust intended to be held on February 29, 2008 (the
"Special Meeting"). At the Special Meeting, shareholders of record as of the
close of business on November 30, 2007, are entitled to vote their respective
shares on several proposals that including, among others the following
proposal(s).
New proposed sub-advisory agreement between A I M Advisors, Inc. ("AIM") and
each of AIM Funds Management Inc., Invesco Asset Management Deutschland, GmbH,
Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited,
Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco
Hong Kong Limited, Invesco Institutional (N.A.), Inc. and Invesco Senior Secured
Management, Inc. (collectively, the "Affiliated Sub-Advisers") (the "New
Sub-advisory Arrangements"). This proposal is intended to benefit the Fund and
its shareholders by permitting AIM to utilize the additional resources and
talent of these affiliated sub-advisers in managing the Fund. Because AIM would
pay all of the sub-advisory fees of the sub-advisers, the new sub-advisory
arrangements would not affect the fees the Fund pays pursuant to the advisory
agreement. If approved by shareholders, the New Sub-advisory Arrangements are
expected to become effective on or about May 1, 2008.
20
AIM Basic Value Fund
NOTE 14--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
---------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
2007 2006 2005 2004 2003
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 36.61 $ 34.22 $ 32.42 $ 29.24 $ 21.86
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.12 0.14 0.06 (0.03) (0.06)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.24 4.38 1.74 3.21 7.44
=================================================================================================================================
Total from investment operations 0.36 4.52 1.80 3.18 7.38
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.02) (0.03) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (5.44) (2.10) -- -- --
=================================================================================================================================
Total distributions (5.46) (2.13) -- -- --
=================================================================================================================================
Net asset value, end of period $ 31.51 $ 36.61 $ 34.22 $ 32.42 $ 29.24
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(a) 1.07% 13.20% 5.55% 10.88% 33.76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,404,900 $3,173,889 $3,682,420 $4,480,701 $3,812,300
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.14%(b) 1.15% 1.19% 1.29% 1.34%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.17%(b) 1.20% 1.25% 1.31% 1.34%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets 0.31%(b) 0.36% 0.15% (0.11)% (0.28)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 23% 14% 12% 15% 20%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges.
(b) Ratios are based on average daily net assets of $2,846,895,786.
<Table>
<Caption>
CLASS B
---------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
2007 2006 2005 2004 2003
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 33.95 $ 32.09 $ 30.62 $ 27.80 $ 20.91
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15) (0.14) (0.19) (0.23) (0.21)
- ---------------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.23 4.10 1.66 3.05 7.10
=================================================================================================================================
Total from investment operations 0.08 3.96 1.47 2.82 6.89
=================================================================================================================================
Less distributions from net realized gains (5.44) (2.10) -- -- --
=================================================================================================================================
Net asset value, end of period $ 28.59 $ 33.95 $ 32.09 $ 30.62 $ 27.80
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(a) 0.31% 12.33% 4.80% 10.14% 32.95%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,015,776 $1,436,084 $1,682,608 $1,985,690 $1,946,590
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.89%(b) 1.90% 1.89% 1.94% 1.99%
- ---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.92%(b) 1.95% 1.95% 1.96% 1.99%
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.44)%(b) (0.39)% (0.55)% (0.76)% (0.93)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 23% 14% 12% 15% 20%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges.
(b) Ratios are based on average daily net assets of $1,267,221,776.
21
AIM Basic Value Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS C
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2007 2006 2005 2004 2003
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 33.95 $ 32.08 $ 30.61 $ 27.79 $ 20.91
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.15) (0.14) (0.19) (0.23) (0.21)
- -------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.23 4.11 1.66 3.05 7.09
=========================================================================================================================
Total from investment operations 0.08 3.97 1.47 2.82 6.88
=========================================================================================================================
Less distributions from net realized gains (5.44) (2.10) -- -- --
=========================================================================================================================
Net asset value, end of period $ 28.59 $ 33.95 $ 32.08 $ 30.61 $ 27.79
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(a) 0.31% 12.37% 4.80% 10.15% 32.90%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $399,262 $508,775 $566,685 $681,234 $667,412
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.89%(b) 1.90% 1.89% 1.94% 1.99%
- -------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.92%(b) 1.95% 1.95% 1.96% 1.99%
=========================================================================================================================
Ratio of net investment income (loss) to average net assets (0.44)%(b) (0.39)% (0.55)% (0.76)% (0.93)%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 23% 14% 12% 15% 20%
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges.
(b) Ratios are based on average daily net assets of $470,275,769.
<Table>
<Caption>
CLASS R
------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------
2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 36.29 $ 34.00 $ 32.28 $ 29.16 $ 21.84
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.02 0.03 (0.02) (0.06) (0.06)
- --------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.25 4.36 1.74 3.18 7.38
====================================================================================================================
Total from investment operations 0.27 4.39 1.72 3.12 7.32
====================================================================================================================
Less distributions from net realized gains (5.44) (2.10) -- -- --
====================================================================================================================
Net asset value, end of period $ 31.12 $ 36.29 $ 34.00 $ 32.28 $ 29.16
____________________________________________________________________________________________________________________
====================================================================================================================
Total return(a) 0.82% 12.91% 5.33% 10.70% 33.52%
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $51,572 $55,718 $33,049 $29,245 $12,097
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.39%(b) 1.40% 1.39% 1.44% 1.49%
- --------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.42%(b) 1.45% 1.45% 1.46% 1.49%
====================================================================================================================
Ratio of net investment income (loss) to average net assets 0.06%(b) 0.11% (0.05)% (0.26)% (0.43)%
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate 23% 14% 12% 15% 20%
____________________________________________________________________________________________________________________
====================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions.
(b) Ratios based on average daily net assets of $54,856,372.
22
AIM Basic Value Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
---------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
2007 2006 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 37.43 $ 34.95 $ 32.96 $ 29.56 $21.95
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.23 0.24 0.17 0.02 0.08
- -----------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.27 4.53 1.82 3.38 7.53
=======================================================================================================================
Total from investment operations 0.50 4.77 1.99 3.40 7.61
=======================================================================================================================
Less distributions:
Dividends from net investment income (0.02) (0.19) -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (5.44) (2.10) -- -- --
=======================================================================================================================
Total distributions (5.46) (2.29) -- -- --
=======================================================================================================================
Net asset value, end of period $ 32.47 $ 37.43 $ 34.95 $ 32.96 $29.56
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return(a) 1.42% 13.64% 6.04% 11.50% 34.67%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $327,654 $339,915 $209,208 $103,219 $2,123
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.76%(b) 0.75% 0.72% 0.71% 0.71%
- -----------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.79%(b) 0.80% 0.78% 0.73% 0.71%
=======================================================================================================================
Ratio of net investment income to average net assets 0.69%(b) 0.76% 0.62% 0.47% 0.35%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate 23% 14% 12% 15% 20%
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions.
(b) Ratios based on average daily net assets of $338,858,254.
23
AIM Basic Value Fund
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 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 Ltd. ("Invesco") 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.
24
AIM Basic Value Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Growth Series
and Shareholders of AIM Basic 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 Basic Value Fund (one of the
funds constituting AIM Growth Series, hereafter referred to as the "Fund") at
December 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 five years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2007 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
February 15, 2008
Houston, Texas
25
AIM Basic Value Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments or
contingent deferred sales charges on redemptions, and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and/or service
(12b-1) fees; and other Fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with ongoing costs of investing in other mutual funds. The
example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period July 1, 2007, through December 31, 2007.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the hypothetical
information is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $938.60 $5.57 $1,019.46 $5.80 1.14%
B 1,000.00 935.00 9.22 1,015.68 9.60 1.89
C 1,000.00 935.30 9.22 1,015.68 9.60 1.89
R 1,000.00 937.40 6.79 1,018.20 7.07 1.39
</Table>
(1) The actual ending account value is based on the actual total return of
the Fund for the period July 1, 2007, through December 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 12/31/07
AIM Basic Value Fund
==========================================
Institutional Class Shares AVERAGE ANNUAL TOTAL RETURNS PLEASE NOTE THAT PAST PERFORMANCE IS
For periods ended 12/31/07 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 (3/15/02) 5.44% THOSE SHOWN. ALL RETURNS ASSUME
shareholders with a performance overview 5 Years 12.91 REINVESTMENT OF DISTRIBUTIONS AT NAV.
specific to their holdings. Institutional 1 Year 1.42 INVESTMENT RETURN AND PRINCIPAL VALUE WILL
Class shares are offered exclusively to ========================================== FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
institutional investors, including defined MAY BE WORTH MORE OR LESS THAN THEIR
contribution plans that meet certain INSTITUTIONAL CLASS SHARES HAVE NO SALES ORIGINAL COST. SEE FULL REPORT FOR
criteria. CHARGE; THEREFORE, PERFORMANCE IS AT NET INFORMATION ON COMPARATIVE BENCHMARKS.
ASSET VALUE (NAV). PERFORMANCE OF PLEASE CONSULT YOUR FUND PROSPECTUS FOR
INSTITUTIONAL CLASS SHARES WILL DIFFER MORE INFORMATION. FOR THE MOST CURRENT
FROM PERFORMANCE OF OTHER SHARE CLASSES MONTH-END PERFORMANCE, PLEASE CALL
PRIMARILY DUE TO DIFFERING SALES CHARGES 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
AND CLASS EXPENSES.
==========================================
NASDAQ SYMBOL GTVVX
==========================================
Over for information on your Fund's expenses.
=======================================================================================
THIS SUPPLEMENT 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 BVA-INS-1 A I M Distributors, Inc. -- REGISTERED TRADEMARK --
AIM Basic Value Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management fees
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period July 1, 2007, through December 31, 2007.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. Therefore, the hypothetical information is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
Institutional $1,000.00 $ 940.30 $ 3.77 $1,021.32 $3.92 0.77%
</Table>
(1) The actual ending account value is based on the actual total return of
the Fund for the period July 1, 2007, through December 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.
AIM Basic Value 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 December
31, 2007:
FEDERAL AND STATE INCOME TAX
<Table>
Long-Term Capital Gain Dividends $617,410,384
Qualified Dividend Income* 100%
Corporate Dividends Received
Deduction* 89.29%
</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 March 31, 2007, June 30, 2007, September 30, 2007 and
December 31, 2007 were 9.18%, 7.56%, 7.78%, and 8.70%, respectively.
27
AIM Basic Value Fund
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Growth Series (the "Trust"), is
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees
104 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 Ltd. (ultimate parent
of AIM and a global investment
management firm) and, Invesco Holding
Company (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); and INVESCO
North American Holdings, Inc. (holding
company); Chairman and President,
INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of
Funds--Registered Trademark--; Vice
Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox
School of Business
Formerly: Chairman, Investment Company
Institute; 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, AIM Mutual Fund Dealer Inc.
Principal (registered broker dealer), A I M
Executive Officer Advisors, Inc., AIM Funds Management
Inc. d/b/a INVESCO Enterprise Services
(registered investment advisor and
registered transfer agent), 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), and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Management Group Inc. (financial
services holding company) and 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) 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); 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: Director and Chairman, Fund
Management Company (registered broker
dealer); 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 2001 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 1985 Retired None
Trustee
Formerly: Partner, law firm of Baker &
McKenzie and Director, Badgley Funds,
Inc. (registered investment company) (2
portfolios)
- -------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm);
Formerly: Director, Policy Studies, Inc.
and Van Gilder Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2001 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 2001 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 2001 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) 15
Trustee Naftalis and Frankel LLP portfolios)
- -------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 2003 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 Ltd., ultimate 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.
28
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Basic 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,
AIM Investment Services, Inc. and
INVESCO Distributors, Inc.; Director,
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: Director, Vice President and
Secretary, Fund Management Company; 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 N/A
Vice President Ltd.; 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 General Counsel, Secretary and Senior
Vice President Managing Director, Invesco Ltd.;
Director and Secretary, Invesco Holding
Company Limited, IVZ, Inc. and INVESCO
Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO
North American Holdings, Inc.; and Vice
President of The AIM Family of
Funds--Registered Trademark--
Formerly: Senior Managing Director, N/A
Invesco Holding Company Limited;
Director, Senior Vice 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 2004 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; Executive
Vice President, A I M Distributors,
Inc.; Senior Vice President, A I M
Management Group Inc.; 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: Director and President, Fund
Management Company; 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. and The AIM Family of
Funds--Registered Trademark--
Formerly: Anti-Money Laundering
Compliance Officer, Fund Management
Company; and 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.
and AIM Investment Services, Inc.
Formerly: Vice President, A I M Capital
Management, Inc. and Fund Management
Company; 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>
29
Fund holdings and proxy voting information
[EDELIVERY
GO PAPERLESS The Fund provides a complete list of its
AIMINVESTMENTS.COM/EDELIVERY holdings four times in each fiscal year,
GRAPHIC] at the quarter-ends. For the second and
fourth quarters, the lists appear in the
Fund's semiannual and annual reports to
shareholders. For the first and third
quarters, the Fund files the lists with
REGISTER FOR EDELIVERY the Securities and Exchange Commission
(SEC) on Form N-Q. The most recent list of
eDelivery is the process of receiving your portfolio holdings is available at
fund and account information via e-mail. AIMinvestments.com. From our home page,
Once your quarterly statements, tax forms, click on Products & Performance, then
fund reports, and prospectuses are Mutual Funds, then Fund Overview. Select
available, we will send you an e-mail your Fund from the drop-down menu and
notification containing links to these click on Complete Quarterly Holdings.
documents. For security purposes, you will Shareholders can also look up the Fund's
need to log in to your account to view Forms N-Q on the SEC Web site at sec.gov.
your statements and tax forms. Copies of the Fund's Forms N-Q may be
reviewed and copied at the SEC Public
WHY SIGN UP? Reference Room in Washington, D.C. You can
obtain information on the operation of the
Register for eDelivery to: Public Reference Room, including
information about duplicating fee charges,
o save your Fund the cost of printing and by calling 202-942-8090 or 800-732-0330,
postage. or by electronic request at the following
e-mail address: publicinfo@sec.gov. The
o reduce the amount of paper you receive. SEC file numbers for the Fund are
811-02699 and 002-57526.
o gain access to your documents faster by
not waiting for the mail. A description of the policies and
procedures that the Fund uses to determine
o view your documents online anytime at how to vote proxies relating to portfolio
your convenience. securities is available without charge,
upon request, from our Client Services
o save the documents to your personal department at 800-959-4246 or on the AIM
computer or print them out for your Web site, AIMinvestments.com. On the home
records. page, scroll down and click on Proxy
Policy. The information is also available
HOW DO I SIGN UP? on the SEC Web site, sec.gov.
It's easy. Just follow these simple steps: Information regarding how the Fund voted
proxies related to its portfolio
1. Log in to your account. securities during the 12 months ended June
30, 2007, is available at our Web site. Go
2. Click on the "Service Center" tab. to AIMinvestments.com, access the About Us
tab, click on Required Notices and then
3. Select "Register for eDelivery" and click on Proxy Voting Activity. Next,
complete the consent process. select the Fund from the drop-down menu.
The information is also available on the
This AIM service is provided by AIM SEC Web site, sec.gov.
Investment Services, Inc.
If used after April 20, 2008, this report
must be accompanied by a Fund fact sheet
or by an AIM Quarterly Performance Review
for the most recent quarter-end. Mutual
funds and exchange-traded funds
distributed by A I M Distributors, Inc.
BVA-AR-1 A I M Distributors, Inc.
[AIM INVESTMENTS LOGO]
-- REGISTERED TRADEMARK --
AIM Allocation Funds
Annual Report to Shareholders - December 31, 2007
TARGET RISK
Table of Contents
Long-term Fund Performance ......... 3
Letters to Shareholders ............ 8
Performance Summary ................ 10
Management Discussion .............. 10
Supplemental Information ........... 20
Schedule of Investments ............ 24
Financial Statements ............... 27
Notes to Financial Statements ...... 32
Financial Highlights ............... 42
Auditor's Report ................... 68
Fund Expenses ...................... 69
Tax Information .................... 71
Trustees and Officers .............. 72
[COVER GLOBE IMAGE]
AIM Conservative Allocation Fund
[AIM INVESTMENT SOLUTIONS]
AIM Growth Allocation Fund
[GRAPHIC] [GRAPHIC]
AIM Moderate Allocation Fund
[DOMESTIC [FIXED
EQUITY] INCOME] AIM Moderate Growth Allocation Fund
[GRAPHIC] [GRAPHIC] [GRAPHIC] AIM Moderately Conservative Allocation Fund
[TARGET [TARGET [DIVERSIFIED
RISK] MATURITY] PORTFOLIOS]
[GRAPHIC] [GRAPHIC]
=========================================
[SECTOR [INTERNATIONAL/ CONSIDER THE INVESTMENT OBJECTIVES,
EQUITY] GLOBAL EQUITY] RISKS, AND CHARGES AND EXPENSES
CAREFULLY. FOR THIS AND OTHER INFORMATION
ABOUT AIM FUNDS, OBTAIN A PROSPECTUS FROM
YOUR FINANCIAL ADVISOR AND READ IT
CAREFULLY BEFORE INVESTING.
=========================================
[AIM INVESTMENTS LOGO]
-- REGISTERED TRADEMARK --
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
THIS PAGE INTENTIONALLY LEFT BLANK.
AIM Allocation Funds
AIM Conservative Allocation Fund long-term performance
Past performance cannot guarantee investment in the Fund at the close of the not. Performance shown in the chart and
comparable future results. reporting period and paid the applicable table(s) does not reflect deduction of
contingent deferred sales charges. Index taxes a shareholder would pay on Fund
The data shown in the chart include results include reinvested dividends, but distributions or sale of Fund shares.
reinvested distributions, applicable sales they do not reflect sales charges. Performance of the indexes does not
charges, Fund expenses and management Performance of an index of funds reflects reflect the effects of taxes.
fees. Results for Class B shares are fund expenses and management fees;
calculated as if a hypothetical performance of a market index does
shareholder had liquidated his entire
====================================================================================================================================
AVERAGE ANNUAL TOTAL RETURNS VALUE AND THE EFFECT OF THE MAXIMUM SALES (CDSC) FOR THE PERIOD INVOLVED. THE CDSC
CHARGE UNLESS OTHERWISE STATED. INVESTMENT ON CLASS B SHARES DECLINES FROM 5%
As of 12/31/07, including maximum RETURN AND PRINCIPAL VALUE WILL FLUCTUATE BEGINNING AT THE TIME OF PURCHASE TO 0% AT
applicable sales charges SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN THE BEGINNING OF THE SEVENTH YEAR. THE
YOU SELL SHARES. CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
CLASS A SHARES YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
Inception (4/30/04) 3.65% THE NET ANNUAL FUND OPERATING EXPENSE HAVE A FRONTEND SALES CHARGE; RETURNS
1 Year -0.98 RATIO SET FORTH IN THE MOST RECENT FUND SHOWN ARE AT NET ASSET VALUE AND DO NOT
CLASS B SHARES PROSPECTUS AS OF THE DATE OF THIS REPORT REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
Inception (4/30/04) 3.72% FOR CLASS A, CLASS B, CLASS C AND CLASS R ON A TOTAL REDEMPTION OF RETIREMENT PLAN
1 Year -1.07 SHARES WAS 1.10%, 1.85%, 1.85% AND 1.35%, ASSETS WITHIN THE FIRST YEAR.
CLASS C SHARES RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND
Inception (4/30/04) 4.46% OPERATING EXPENSE RATIO SET FORTH IN THE THE PERFORMANCE OF THE FUND'S SHARE
1 Year 2.98 MOST RECENT FUND PROSPECTUS AS OF THE DATE CLASSES WILL DIFFER PRIMARILY DUE TO
CLASS R SHARES OF THIS REPORT FOR CLASS A, CLASS B, CLASS DIFFERENT SALES CHARGE STRUCTURES AND
Inception (4/30/04) 4.98% C AND CLASS R SHARES WAS 1.33%, 2.08%, CLASS EXPENSES.
1 Year 4.46 2.08% AND 1.58%, RESPECTIVELY.(2) THE
========================================== EXPENSE RATIOS PRESENTED ABOVE MAY VARY HAD THE ADVISOR NOT WAIVED FEES AND/OR
FROM THE EXPENSE RATIOS PRESENTED IN OTHER REIMBURSED EXPENSES IN THE PAST,
THE PERFORMANCE DATA QUOTED REPRESENT PAST SECTIONS OF THIS REPORT THAT ARE BASED ON PERFORMANCE WOULD HAVE BEEN LOWER.
PERFORMANCE AND CANNOT GUARANTEE EXPENSES INCURRED DURING THE PERIOD
COMPARABLE FUTURE RESULTS; CURRENT COVERED BY THIS REPORT. (1) Total annual operating expenses less
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE any contractual fee waivers and/or
VISIT AIMINVESTMENTS.COM FOR THE MOST CLASS A SHARE PERFORMANCE REFLECTS THE expense reimbursements by the advisor
RECENT MONTH-END PERFORMANCE. PERFORMANCE MAXIMUM 5.50% SALES CHARGE, AND CLASS B in effect through at least June 30,
FIGURES REFLECT REINVESTED DISTRIBUTIONS, AND CLASS C SHARE PERFORMANCE REFLECTS THE 2008. See current prospectus for more
CHANGES IN NET ASSET APPLICABLE CONTINGENT DEFERRED SALES information
CHARGE
(2) The expense ratio includes acquired
fund fees and expenses of the
underlying funds in which the Fund
invests of 0.61% for Class A, B, C and
R shares of AIM Conservative
Allocation Fund.
3
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Fund and index data from 4/30/04
AIM AIM AIM AIM
CONSERVATIVE CONSERVATIVE CONSERVATIVE CONSERVATIVE CUSTOM LIPPER MIXED-ASSET
ALLOCATION ALLOCATION ALLOCATION ALLOCATION CONSERVATIVE TARGET ALLOCATION
FUND-CLASS A FUND-CLASS B FUND-CLASS C FUND-CLASS R S&P 500 ALLOCATION LIPPER INCOME CONSERVATIVE
DATE SHARES SHARES SHARES SHARES INDEX(1) INDEX(2) FUNDS INDEX(1) FUNDS INDEX(1)
4/30/04 $ 9450 $10000 $10000 $10000 $10000 $10000 $10000 $10000
5/04 9469 10010 10010 10010 10137 10001 10004 10003
6/04 9545 10080 10080 10090 10334 10094 10110 10080
7/04 9479 10000 10000 10020 9992 10071 10035 9992
8/04 9526 10050 10040 10071 10032 10212 10138 10074
9/04 9592 10111 10111 10141 10141 10281 10247 10133
10/04 9649 10160 10160 10201 10296 10391 10373 10206
11/04 9733 10251 10251 10291 10712 10477 10555 10323
12/04 9846 10359 10359 10405 11077 10642 10759 10476
1/05 9808 10319 10309 10364 10807 10615 10672 10394
2/05 9846 10359 10359 10405 11034 10653 10751 10460
3/05 9799 10299 10289 10334 10839 10558 10616 10358
4/05 9780 10269 10268 10324 10633 10585 10584 10296
5/05 9876 10370 10369 10425 10971 10759 10748 10475
6/05 9943 10430 10429 10485 10987 10829 10853 10547
7/05 10001 10480 10479 10546 11395 10890 10979 10683
8/05 10039 10520 10519 10586 11291 10963 11033 10738
9/05 10039 10509 10508 10576 11383 10934 11046 10764
10/05 9972 10439 10427 10515 11193 10826 10901 10644
11/05 10095 10560 10559 10647 11616 10965 11056 10811
12/05 10186 10645 10643 10735 11620 11052 11147 10887
1/06 10314 10768 10767 10859 11928 11166 11339 11079
2/06 10314 10768 10756 10859 11960 11203 11377 11074
3/06 10372 10820 10817 10920 12109 11195 11401 11143
4/06 10421 10861 10858 10972 12271 11231 11485 11205
5/06 10314 10748 10734 10848 11919 11133 11354 11086
6/06 10314 10748 10734 10859 11934 11153 11386 11092
7/06 10373 10799 10786 10911 12008 11258 11513 11162
8/06 10480 10902 10899 11024 12293 11446 11696 11331
9/06 10588 11005 10992 11128 12610 11576 11846 11466
10/06 10715 11138 11126 11273 13021 11741 12066 11641
11/06 10843 11261 11249 11397 13268 11904 12249 11814
12/06 10883 11299 11287 11444 13454 11916 12311 11845
1/07 10965 11373 11361 11520 13657 11977 12410 11916
2/07 11016 11416 11404 11574 13391 12059 12452 11965
3/07 11098 11491 11478 11649 13540 12102 12538 12039
4/07 11241 11630 11628 11801 14140 12276 12801 12237
5/07 11303 11694 11692 11866 14633 12334 12945 12333
6/07 11282 11662 11649 11834 14390 12253 12846 12240
7/07 11221 11598 11585 11779 13944 12200 12698 12167
8/07 11252 11619 11606 11800 14153 12333 12791 12226
9/07 11385 11746 11746 11941 14682 12526 13070 12480
10/07 11518 11875 11863 12081 14915 12669 13254 12640
11/07 11405 11757 11746 11962 14291 12653 13110 12537
12/07 11405 11436 11737 11955 14192 12655 13003 12515
====================================================================================================================================
Sources: (1)Lipper Inc., (2) A I M MANAGEMENT GROUP INC., LIPPER INC.
AIM Allocation Funds
AIM Growth Allocation Fund long-term performance
Past performance cannot guarantee investment in the Fund at the close of the not. Performance shown in the chart and
comparable future results. reporting period and paid the applicable table(s) does not reflect deduction of
contingent deferred sales charges. Index taxes a shareholder would pay on Fund
The data shown in the chart include results include reinvested dividends, but distributions or sale of Fund shares.
reinvested distributions, applicable sales they do not reflect sales charges. Performance of the indexes does not
charges, Fund expenses and management Performance of an index of funds reflects reflect the effects of taxes.
fees. Results for Class B shares are fund expenses and management fees;
calculated as if a hypothetical performance of a market index does
shareholder had liquidated his entire
====================================================================================================================================
AVERAGE ANNUAL TOTAL RETURNS VALUE AND THE EFFECT OF THE MAXIMUM SALES (CDSC) FOR THE PERIOD INVOLVED. THE CDSC
CHARGE UNLESS OTHERWISE STATED. INVESTMENT ON CLASS B SHARES DECLINES FROM 5%
As of 12/31/07, including maximum RETURN AND PRINCIPAL VALUE WILL FLUCTUATE BEGINNING AT THE TIME OF PURCHASE TO 0% AT
applicable sales charges SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN THE BEGINNING OF THE SEVENTH YEAR. THE
YOU SELL SHARES. CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
CLASS A SHARES YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
Inception (4/30/04) 11.30% THE NET ANNUAL FUND OPERATING EXPENSE HAVE A FRONT-END SALES CHARGE; RETURNS
1 Year 1.82 RATIO SET FORTH IN THE MOST RECENT FUND SHOWN ARE AT NET ASSET VALUE AND DO NOT
CLASS B SHARES PROSPECTUS AS OF THE DATE OF THIS REPORT REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
Inception (4/30/04) 11.59% FOR CLASS A, CLASS B, CLASS C AND CLASS R ON A TOTAL REDEMPTION OF RETIREMENT PLAN
1 Year 1.89 SHARES WAS 1.30%, 2.05%, 2.05% AND 1.55%, ASSETS WITHIN THE FIRST YEAR.
CLASS C SHARES RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND
Inception (4/30/04) 12.20% OPERATING EXPENSE RATIO SET FORTH IN THE THE PERFORMANCE OF THE FUND'S SHARE
1 Year 5.97 MOST RECENT FUND PROSPECTUS AS OF THE DATE CLASSES WILL DIFFER PRIMARILY DUE TO
CLASS R SHARES OF THIS REPORT FOR CLASS A, CLASS B, CLASS DIFFERENT SALES CHARGE STRUCTURES AND
Inception (4/30/04) 12.77% C AND CLASS R SHARES WAS 1.46%, 2.21%, CLASS EXPENSES.
1 Year 7.52 2.21% AND 1.71%, RESPECTIVELY.(2) THE
========================================== EXPENSE RATIOS PRESENTED ABOVE MAY VARY HAD THE ADVISOR NOT WAIVED FEES AND/OR
FROM THE EXPENSE RATIOS PRESENTED IN OTHER REIMBURSED EXPENSES IN THE PAST,
THE PERFORMANCE DATA QUOTED REPRESENT PAST SECTIONS OF THIS REPORT THAT ARE BASED ON PERFORMANCE WOULD HAVE BEEN LOWER.
PERFORMANCE AND CANNOT GUARANTEE EXPENSES INCURRED DURING THE PERIOD
COMPARABLE FUTURE RESULTS; CURRENT COVERED BY THIS REPORT. (1) Total annual operating expenses less
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE any contractual fee waivers and/or
VISIT AIMINVESTMENTS.COM FOR THE MOST CLASS A SHARE PERFORMANCE REFLECTS THE expense reimbursements by the advisor
RECENT MONTH-END PERFORMANCE. PERFORMANCE MAXIMUM 5.50% SALES CHARGE, AND CLASS B in effect through at least June 30,
FIGURES REFLECT REINVESTED DISTRIBUTIONS, AND CLASS C SHARE PERFORMANCE REFLECTS THE 2008. See current prospectus for more
CHANGES IN NET ASSET APPLICABLE CONTINGENT DEFERRED SALES information
CHARGE
(2) The expense ratio includes acquired
fund fees and expenses of the
underlying funds in which the Fund
invests of 0.83% for Class A, B, C and
R shares of AIM Growth Allocation
Fund.
4
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Fund and index data from 4/30/04
AIM GROWTH AIM GROWTH AIM GROWTH AIM GROWTH
ALLOCATION ALLOCATION ALLOCATION ALLOCATION CUSTOM GROWTH LIPPER
FUND-CLASS A FUND-CLASS B FUND-CLASS C FUND-CLASS R S&P 500 ALLOCATION MULTI-CAP CORE
DATE SHARES SHARES SHARES SHARES INDEX(1) INDEX(2) FUNDS INDEX(1)
4/30/04 $ 9450 $10000 $10000 $10000 $10000 $10000 $10000
5/04 9582 10130 10130 10140 10137 10133 10120
6/04 9819 10380 10380 10390 10334 10341 10344
7/04 9356 9880 9880 9891 9992 10010 9920
8/04 9337 9860 9860 9881 10032 10097 9912
9/04 9592 10120 10120 10141 10141 10266 10124
10/04 9800 10330 10330 10351 10296 10495 10277
11/04 10329 10879 10879 10911 10712 11010 10793
12/04 10691 11260 11260 11298 11077 11418 11172
1/05 10444 10990 10990 11027 10807 11124 10918
2/05 10738 11301 11301 11348 11034 11418 11139
3/05 10520 11060 11060 11107 10839 11208 10964
4/05 10254 10779 10779 10836 10633 11020 10665
5/05 10586 11120 11120 11177 10971 11318 11102
6/05 10776 11310 11310 11379 10987 11440 11224
7/05 11194 11741 11741 11810 11395 11869 11700
8/05 11204 11741 11741 11820 11291 11856 11647
9/05 11356 11891 11891 11981 11383 12054 11752
10/05 11119 11640 11640 11730 11193 11800 11509
11/05 11537 12071 12071 12172 11616 12199 11952
12/05 11787 12327 12317 12429 11620 12352 12091
1/06 12443 12996 12997 13111 11928 12855 12540
2/06 12376 12925 12926 13049 11960 12877 12490
3/06 12684 13239 13240 13376 12109 13155 12769
4/06 12916 13472 13473 13610 12271 13379 12927
5/06 12385 12905 12906 13049 11919 12951 12479
6/06 12365 12884 12875 13028 11934 13001 12442
7/06 12317 12834 12825 12977 12008 13056 12293
8/06 12539 13047 13048 13202 12293 13388 12584
9/06 12742 13249 13241 13416 12610 13606 12854
10/06 13204 13726 13717 13895 13021 14105 13332
11/06 13571 14101 14092 14282 13268 14451 13648
12/06 13748 14270 14261 14458 13454 14662 13801
1/07 14038 14563 14553 14764 13657 14930 14102
2/07 13858 14363 14366 14574 13391 14796 13916
3/07 14088 14593 14596 14817 13540 14973 14062
4/07 14588 15105 15098 15334 14140 15532 14609
5/07 15099 15617 15620 15873 14633 15964 15156
6/07 14878 15377 15379 15630 14390 15698 15025
7/07 14438 14917 14920 15166 13944 15235 14544
8/07 14568 15042 15035 15302 14153 15377 14638
9/07 15149 15627 15631 15903 14682 15988 15148
10/07 15690 16182 16175 16473 14915 16352 15454
11/07 14899 15355 15349 15639 14291 15677 14759
12/07 14814 14957 15257 15545 14192 15490 14625
====================================================================================================================================
Sources: (1)Lipper Inc., (2) A I M MANAGEMENT GROUP INC., LIPPER INC.
AIM Allocation Funds
AIM Moderate Allocation Fund long-term performance
Past performance cannot guarantee investment in the Fund at the close of the not. Performance shown in the chart and
comparable future results. reporting period and paid the applicable table(s) does not reflect deduction of
contingent deferred sales charges. Index taxes a shareholder would pay on Fund
The data shown in the chart include results include reinvested dividends, but distributions or sale of Fund shares.
reinvested distributions, applicable sales they do not reflect sales charges. Performance of the indexes does not
charges, Fund expenses and management Performance of an index of funds reflects reflect the effects of taxes.
fees. Results for Class B shares are fund expenses and management fees;
calculated as if a hypothetical performance of a market index does
shareholder had liquidated his entire
====================================================================================================================================
AVERAGE ANNUAL TOTAL RETURNS VALUE AND THE EFFECT OF THE MAXIMUM (CDSC) FOR THE PERIOD INVOLVED. THE
SALES CHARGE UNLESS OTHERWISE STATED. CDSC ON CLASS B SHARES DECLINES
As of 12/31/07, including maximum INVESTMENT RETURN AND PRINCIPAL VALUE FROM 5% BEGINNING AT THE TIME OF
applicable sales charges WILL FLUCTUATE SO THAT YOU MAY HAVE A PURCHASE TO 0% AT THE BEGINNING OF
GAIN OR LOSS WHEN YOU SELL SHARES. THE SEVENTH YEAR. THE CDSC ON CLASS
CLASS A SHARES C SHARES IS 1% FOR THE FIRST YEAR AFTER
Inception (4/30/04) 8.21% THE NET ANNUAL FUND OPERATING EXPENSE PURCHASE. CLASS R SHARES DO NOT HAVE
1 Year 1.27 RATIO SET FORTH IN THE MOST RECENT FUND A FRONT-END SALES CHARGE; RETURNS
CLASS B SHARES PROSPECTUS AS OF THE DATE OF THIS REPORT SHOWN ARE AT NET ASSET VALUE AND DO
Inception (4/30/04) 8.43% FOR CLASS A, CLASS B, CLASS C AND CLASS R NOT REFLECT A 0.75% CDSC THAT MAY
1 Year 1.33 SHARES WAS 1.18%, 1.93%, 1.93% AND 1.43%, BE IMPOSED ON A TOTAL REDEMPTION OF
CLASS C SHARES RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND RETIREMENT PLAN ASSETS WITHIN THE FIRST
Inception (4/30/04) 9.08% OPERATING EXPENSE RATIO SET FORTH IN THE YEAR.
1 Year 5.33 MOST RECENT FUND PROSPECTUS AS OF THE DATE
CLASS R SHARES OF THIS REPORT FOR CLASS A, CLASS B, CLASS THE PERFORMANCE OF THE FUND'S
Inception (4/30/04) 9.64% C AND CLASS R SHARES WAS 1.33%, 2.08%, SHARE CLASSES WILL DIFFER PRIMARILY DUE
1 Year 6.90 2.08% AND 1.58%, RESPECTIVELY.(2) THE TO DIFFERENT SALES CHARGE STRUCTURES
========================================== EXPENSE RATIOS PRESENTED ABOVE MAY VARY AND CLASS EXPENSES.
FROM THE EXPENSE RATIOS PRESENTED IN OTHER
THE PERFORMANCE DATA QUOTED REPRESENT PAST SECTIONS OF THIS REPORT THAT ARE BASED ON HAD THE ADVISOR NOT WAIVED FEES
PERFORMANCE AND CANNOT GUARANTEE EXPENSES INCURRED DURING THE PERIOD AND/OR REIMBURSED EXPENSES IN THE
COMPARABLE FUTURE RESULTS; CURRENT COVERED BY THIS REPORT. PAST, PERFORMANCE WOULD HAVE BEEN
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE LOWER.
VISIT AIMINVESTMENTS.COM FOR THE MOST CLASS A SHARE PERFORMANCE REFLECTS THE
RECENT MONTH-END PERFORMANCE. PERFORMANCE MAXIMUM 5.50% SALES CHARGE, AND CLASS B (1) Total annual operating expenses less
FIGURES REFLECT REINVESTED DISTRIBUTIONS, AND CLASS C SHARE PERFORMANCE REFLECTS THE any contractual fee waivers and/or
CHANGES IN NET ASSET APPLICABLE CONTINGENT DEFERRED SALES expense reimbursements by the advisor
CHARGE in effect through at least June 30,
2008. See current prospectus for more
information
(2) The expense ratio includes acquired
fund fees and expenses of the
underlying funds in which the Fund
invests of 0.80% for Class A, B, C and
R shares of AIM Moderate Allocation
Fund.
5
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Fund and index data from 4/30/04
LIPPER
MIXED-ASSET
AIM AIM AIM AIM TARGET
MODERATE MODERATE MODERATE MODERATE CUSTOM LIPPER ALLOCATION
ALLOCATION ALLOCATION ALLOCATION ALLOCATION MODERATE BALANCED MODERATE
FUND-CLASS A FUND-CLASS B FUND-CLASS C FUND-CLASS R S&P 500 ALLOCATION FUNDS FUNDS
DATE SHARES SHARES SHARES SHARES INDEX(1) INDEX(2) INDEX(1) INDEX(1)
4/30/04 $ 9450 $10000 $10000 $10000 $10000 $10000 $10000 $10000
5/04 9488 10030 10040 10040 10137 10045 10044 10016
6/04 9658 10210 10210 10220 10334 10196 10201 10143
7/04 9412 9940 9940 9960 9992 10018 10009 10014
8/04 9450 9980 9980 9990 10032 10122 10070 10131
9/04 9639 10179 10179 10200 10141 10251 10220 10234
10/04 9790 10329 10329 10360 10296 10421 10330 10357
11/04 10121 10669 10669 10710 10712 10725 10608 10609
12/04 10381 10943 10943 10980 11077 11013 10873 10879
1/05 10276 10823 10823 10869 10807 10878 10733 10754
2/05 10457 11003 11004 11051 11034 11044 10885 10889
3/05 10295 10832 10832 10879 10839 10884 10735 10741
4/05 10134 10651 10651 10707 10633 10792 10606 10630
5/05 10343 10872 10873 10929 10971 11017 10849 10857
6/05 10506 11023 11024 11091 10987 11105 10927 10985
7/05 10725 11255 11255 11323 11395 11326 11170 11234
8/05 10782 11306 11306 11383 11291 11386 11202 11242
9/05 10868 11386 11386 11463 11383 11475 11247 11274
10/05 10697 11195 11205 11282 11193 11288 11070 11071
11/05 10964 11477 11477 11564 11616 11545 11339 11290
12/05 11158 11672 11672 11771 11620 11688 11438 11393
1/06 11528 12049 12049 12150 11928 11986 11711 11662
2/06 11499 12008 12008 12120 11960 12010 11697 11669
3/06 11664 12181 12181 12295 12109 12125 11811 11733
4/06 11819 12334 12335 12458 12271 12276 11939 11837
5/06 11490 11978 11978 12099 11919 12018 11703 11648
6/06 11451 11926 11927 12058 11934 12035 11696 11662
7/06 11470 11947 11947 12079 12008 12117 11750 11776
8/06 11683 12160 12161 12305 12293 12377 11976 11976
9/06 11839 12314 12314 12468 12610 12543 12149 12139
10/06 12130 12609 12610 12766 13021 12857 12432 12425
11/06 12344 12824 12824 12992 13268 13105 12671 12646
12/06 12468 12938 12940 13116 13454 13221 12765 12762
1/07 12652 13129 13131 13308 13657 13345 12903 12887
2/07 12631 13098 13100 13287 13391 13353 12854 12875
3/07 12814 13278 13280 13481 13540 13473 12964 12974
4/07 13150 13618 13620 13825 14140 13839 13337 13309
5/07 13436 13906 13897 14115 14633 14059 13623 13553
6/07 13333 13789 13790 14008 14390 13927 13496 13421
7/07 13079 13512 13513 13739 13944 13717 13266 13200
8/07 13130 13554 13555 13793 14153 13828 13373 13296
9/07 13466 13894 13895 14136 14682 14221 13751 13652
10/07 13803 14234 14235 14491 14915 14482 13993 13869
11/07 13375 13799 13800 14050 14291 14205 13665 13594
12/07 13358 13459 13759 14021 14192 14129 13598 13487
====================================================================================================================================
Sources: (1) Lipper Inc., (2) A I M MANAGEMENT GROUP INC., LIPPER INC.
AIM Allocation Funds
AIM Moderate Growth Allocation Fund long-term performance
Past performance cannot guarantee investment in the Fund at the close of the not. Performance shown in the chart and
comparable future results. reporting period and paid the applicable table(s) does not reflect deduction of
contingent deferred sales charges. Index taxes a shareholder would pay on Fund
The data shown in the chart include results include reinvested dividends, but distributions or sale of Fund shares.
reinvested distributions, applicable sales they do not reflect sales charges. Performance of the indexes does not
charges, Fund expenses and management Performance of an index of funds reflects reflect the effects of taxes.
fees. Results for Class B shares are fund expenses and management fees;
calculated as if a hypothetical performance of a market index does
shareholder had liquidated his entire
====================================================================================================================================
AVERAGE ANNUAL TOTAL RETURNS VALUE AND THE EFFECT OF THE MAXIMUM (CDSC) FOR THE PERIOD INVOLVED. THE
SALES CHARGE UNLESS OTHERWISE STATED. CDSC ON CLASS B SHARES DECLINES
As of 12/31/07, including maximum INVESTMENT RETURN AND PRINCIPAL VALUE FROM 5% BEGINNING AT THE TIME OF
applicable sales charges WILL FLUCTUATE SO THAT YOU MAY HAVE A PURCHASE TO 0% AT THE BEGINNING OF
GAIN OR LOSS WHEN YOU SELL SHARES. THE SEVENTH YEAR. THE CDSC ON CLASS
CLASS A SHARES C SHARES IS 1% FOR THE FIRST YEAR AFTER
Inception (4/29/05) 11.06% THE NET ANNUAL FUND OPERATING PURCHASE. CLASS R SHARES DO NOT HAVE
1 Year 1.31 EXPENSE RATIO SET FORTH IN THE MOST A FRONT-END SALES CHARGE; RETURNS
CLASS B SHARES RECENT FUND PROSPECTUS AS OF THE DATE SHOWN ARE AT NET ASSET VALUE AND DO
Inception (4/29/05) 11.72% OF THIS REPORT FOR CLASS A, CLASS B, NOT REFLECT A 0.75% CDSC THAT MAY
1 Year 1.44 CLASS C AND CLASS R SHARES WAS BE IMPOSED ON A TOTAL REDEMPTION OF
CLASS C SHARES 1.20%, 1.95%, 1.95% AND 1.45%, RETIREMENT PLAN ASSETS WITHIN THE FIRST
Inception (4/29/05) 12.61% RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND YEAR.
1 Year 5.45 OPERATING EXPENSE RATIO SET FORTH IN
CLASS R SHARES THE MOST RECENT FUND PROSPECTUS AS THE PERFORMANCE OF THE FUND'S SHARE
Inception (4/29/05) 13.15% OF THE DATE OF THIS REPORT FOR CLASS A, CLASSES WILL DIFFER PRIMARILY DUE TO
1 Year 6.98 CLASS B, CLASS C AND CLASS R SHARES DIFFERENT SALES CHARGE STRUCTURES AND
========================================== WAS 1.53%, 2.28%, 2.28% AND CLASS EXPENSES.
1.78%, RESPECTIVELY.(2) THE EXPENSE
THE PERFORMANCE DATA QUOTED RATIOS PRESENTED ABOVE MAY VARY FROM HAD THE ADVISOR NOT WAIVED FEES AND/OR
REPRESENT PAST PERFORMANCE AND THE EXPENSE RATIOS PRESENTED IN OTHER REIMBURSED EXPENSES, PERFORMANCE WOULD
CANNOT GUARANTEE COMPARABLE FUTURE SECTIONS OF THIS REPORT THAT ARE BASED HAVE BEEN LOWER.
RESULTS; CURRENT PERFORMANCE MAY BE ON EXPENSES INCURRED DURING THE
LOWER OR HIGHER. PLEASE VISIT PERIOD COVERED BY THIS REPORT. (1) Total annual operating expenses less
AIMINVESTMENTS.COM FOR THE MOST any contractual fee waivers and/or
RECENT MONTH-END PERFORMANCE. CLASS A SHARE PERFORMANCE REFLECTS expense reimbursements by the advisor
PERFORMANCE FIGURES REFLECT REINVESTED THE MAXIMUM 5.50% SALES CHARGE, in effect through at least June 30,
DISTRIBUTIONS, CHANGES IN NET ASSET AND CLASS B AND CLASS C SHARE 2008. See current prospectus for more
PERFORMANCE REFLECTS THE APPLICABLE information
CONTINGENT DEFERRED SALES CHARGE
(2) The expense ratio includes acquired
fund fees and expenses of the
underlying funds in which the Fund
invests of 0.82% for Class A, B, C and
R shares of AIM Moderate Growth
Allocation Fund.
6
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Fund data from 4/29/05, index data from 4/30/05
LIPPER
AIM AIM AIM AIM MIXED-ASSET
MODERATE MODERATE MODERATE MODERATE CUSTOM TARGET
GROWTH GROWTH GROWTH GROWTH MODERATE ALLOCATION
ALLOCATION ALLOCATION ALLOCATION ALLOCATION GROWTH GROWTH
FUND-CLASS A FUND-CLASS B FUND-CLASS C FUND-CLASS R S&P 500 ALLOCATION FUNDS
DATE SHARES SHARES SHARES SHARES INDEX(1) INDEX(2) INDEX(1)
4/29/05 $9450 $10000 $10000 $10000
4/05 9450 10000 10000 10000 $10000 $10000 $10000
5/05 9769 10338 10328 10338 10318 10243 10211
6/05 9948 10517 10507 10517 10333 10340 10304
7/05 10249 10834 10825 10834 10717 10649 10525
8/05 10276 10844 10835 10854 10619 10668 10547
9/05 10399 10973 10973 10993 10705 10806 10608
10/05 10210 10775 10765 10794 10526 10600 10439
11/05 10548 11123 11113 11141 10924 10908 10678
12/05 10752 11325 11315 11359 10928 11045 10757
1/06 11244 11836 11825 11870 11217 11423 11082
2/06 11206 11786 11776 11830 11248 11443 11014
3/06 11424 12016 12005 12060 11388 11630 11112
4/06 11613 12206 12195 12251 11541 11808 11274
5/06 11225 11786 11785 11840 11209 11486 11073
6/06 11187 11736 11736 11800 11224 11515 11084
7/06 11187 11726 11725 11791 11293 11576 11207
8/06 11395 11946 11935 12011 11561 11850 11415
9/06 11566 12116 12104 12182 11859 12028 11576
10/06 11926 12476 12465 12563 12245 12408 11858
11/06 12200 12765 12756 12853 12478 12684 12081
12/06 12355 12915 12905 13005 12653 12840 12215
1/07 12579 13139 13129 13240 12844 13022 12356
2/07 12472 13028 13018 13128 12593 12959 12322
3/07 12665 13211 13201 13322 12734 13100 12447
4/07 13073 13629 13620 13752 13298 13534 12827
5/07 13451 14027 14007 14151 13761 13842 13136
6/07 13305 13853 13844 13987 13533 13659 13026
7/07 12917 13446 13436 13577 13114 13343 12762
8/07 13014 13537 13527 13669 13310 13457 12860
9/07 13460 13985 13976 14141 13807 13927 13236
10/07 13868 14413 14404 14571 14027 14218 13468
11/07 13305 13812 13802 13976 13440 13769 13102
12/07 13240 13449 13739 13913 13347 13645 13013
====================================================================================================================================
Sources: (1) Lipper Inc., (2) A I M MANAGEMENT GROUP INC., LIPPER INC.
AIM Allocation Funds
AIM Moderately Conservative Allocation Fund long-term performance
Past performance cannot guarantee investment in the Fund at the close of the not. Performance shown in the chart and
comparable future results. reporting period and paid the applicable table(s) does not reflect deduction of
contingent deferred sales charges. Index taxes a shareholder would pay on Fund
The data shown in the chart include results include reinvested dividends, but distributions or sale of Fund shares.
reinvested distributions, applicable sales they do not reflect sales charges. Performance of the indexes does not
charges, Fund expenses and management Performance of an index of funds reflects reflect the effects of taxes.
fees. Results for Class B shares are fund expenses and management fees;
calculated as if a hypothetical performance of a market index does
shareholder had liquidated his entire
====================================================================================================================================
AVERAGE ANNUAL TOTAL RETURNS DISTRIBUTIONS, CHANGES IN NET ASSET PERFORMANCE REFLECTS THE APPLICABLE
VALUE AND THE EFFECT OF THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE (CDSC)
As of 12/31/07, including maximum SALES CHARGE UNLESS OTHERWISE STATED. FOR THE PERIOD INVOLVED. THE CDSC ON CLASS
applicable sales charges INVESTMENT RETURN AND PRINCIPAL VALUE B SHARES DECLINES FROM 5% BEGINNING AT THE
WILL FLUCTUATE SO THAT YOU MAY HAVE A TIME OF PURCHASE TO 0% AT THE BEGINNING OF
CLASS A SHARES GAIN OR LOSS WHEN YOU SELL SHARES. THE SEVENTH YEAR. THE CDSC ON CLASS C
Inception (4/29/05) 5.77% SHARES IS 1% FOR THE FIRST YEAR AFTER
1 Year 0.35 THE NET ANNUAL FUND OPERATING EXPENSE PURCHASE. CLASS R SHARES DO NOT HAVE A
CLASS B SHARES RATIO SET FORTH IN THE MOST RECENT FUND FRONTEND SALES CHARGE; RETURNS SHOWN ARE
Inception (4/29/05) 6.19% PROSPECTUS AS OF THE DATE OF THIS REPORT AT NET ASSET VALUE AND DO NOT REFLECT A
1 Year 0.40 FOR CLASS A, CLASS B, CLASS C AND CLASS R 0.75% CDSC THAT MAY BE IMPOSED ON A TOTAL
CLASS C SHARES SHARES WAS 1.14%, 1.89%, 1.89% AND 1.39%, REDEMPTION OF RETIREMENT PLAN ASSETS
Inception (4/29/05) 7.23% RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND WITHIN THE FIRST YEAR.
1 Year 4.49 OPERATING EXPENSE RATIO SET FORTH IN THE
CLASS R SHARES MOST RECENT FUND PROSPECTUS AS OF THE DATE THE PERFORMANCE OF THE FUND'S SHARE
Inception (4/29/05) 7.73% OF THIS REPORT FOR CLASS A, CLASS B, CLASS CLASSES WILL DIFFER PRIMARILY DUE TO
1 Year 5.91 C AND CLASS R SHARES WAS 2.11%, 2.86%, DIFFERENT SALES CHARGE STRUCTURES AND
========================================== 2.86% AND 2.36%, RESPECTIVELY.(2) THE CLASS EXPENSES.
EXPENSE RATIOS PRESENTED ABOVE MAY VARY
THE PERFORMANCE DATA QUOTED REPRESENT PAST FROM THE EXPENSE RATIOS PRESENTED IN OTHER HAD THE ADVISOR NOT WAIVED FEES AND/OR
PERFORMANCE AND CANNOT GUARANTEE SECTIONS OF THIS REPORT THAT ARE BASED ON REIMBURSED EXPENSES, PERFORMANCE WOULD
COMPARABLE FUTURE RESULTS; CURRENT EXPENSES INCURRED DURING THE PERIOD HAVE BEEN LOWER.
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE COVERED BY THIS REPORT.
VISIT AIMINVESTMENTS.COM FOR THE MOST (1) Total annual operating expenses less
RECENT MONTH-END PERFORMANCE. PERFORMANCE CLASS A SHARE PERFORMANCE REFLECTS THE any contractual fee waivers and/or
FIGURES REFLECT REINVESTED MAXIMUM 5.50% SALES CHARGE, AND CLASS B expense reimbursements by the advisor
AND CLASS C SHARE in effect through at least June 30,
2008. See current prospectus for more
information
(2) The expense ratio includes acquired
fund fees and expenses of the
underlying funds in which the Fund
invests of 0.74% for Class A, B, C and
R shares of AIM Moderately
Conservative Allocation Fund.
7
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Fund data from 4/29/05, index data from 4/30/05
LIPPER
MIXED-ASSET
AIM MODERATELY AIM MODERATELY AIM MODERATELY AIM MODERATELY CUSTOM TARGET
CONSERVATIVE CONSERVATIVE CONSERVATIVE CONSERVATIVE MODERATELY ALLOCATION
ALLOCATION ALLOCATION ALLOCATION ALLOCATION CONSERVATIVE CONSERVATIVE
FUND-CLASS A FUND-CLASS B FUND-CLASS C FUND-CLASS R S&P 500 ALLOCATION FUNDS
DATE SHARES SHARES SHARES SHARES INDEX(1) INDEX(2) INDEX(1)
4/29/05 $9450 $10000 $10000 $10000
4/05 9450 10000 10000 10000 $10000 $10000 $10000
5/05 9638 10189 10189 10199 10318 10194 10174
6/05 9733 10279 10289 10299 10333 10269 10244
7/05 9845 10398 10399 10408 10717 10385 10376
8/05 9874 10418 10429 10438 10619 10449 10429
9/05 9911 10448 10459 10478 10705 10455 10454
10/05 9817 10338 10350 10368 10526 10318 10338
11/05 9987 10518 10529 10558 10924 10498 10500
12/05 10112 10648 10649 10683 10928 10598 10574
1/06 10322 10860 10861 10906 11217 10771 10760
2/06 10313 10840 10840 10886 11248 10801 10756
3/06 10380 10900 10910 10957 11388 10831 10823
4/06 10447 10971 10970 11027 11541 10900 10883
5/06 10246 10760 10759 10815 11209 10745 10767
6/06 10226 10729 10728 10795 11224 10762 10773
7/06 10275 10770 10779 10845 11293 10855 10841
8/06 10417 10911 10910 10986 11561 11065 11005
9/06 10532 11023 11032 11107 11859 11208 11137
10/06 10713 11204 11212 11299 12245 11421 11306
11/06 10865 11356 11364 11451 12478 11609 11474
12/06 10934 11426 11424 11522 12653 11652 11505
1/07 11042 11530 11538 11636 12844 11732 11574
2/07 11052 11530 11538 11646 12593 11785 11621
3/07 11160 11644 11642 11750 12734 11849 11693
4/07 11377 11862 11860 11979 13298 12084 11885
5/07 11525 12007 12005 12135 13761 12196 11979
6/07 11455 11924 11932 12062 13533 12092 11888
7/07 11297 11758 11767 11895 13114 11981 11817
8/07 11356 11810 11808 11948 13310 12108 11875
9/07 11573 12027 12036 12177 13807 12366 12121
10/07 11800 12256 12263 12417 14027 12543 12276
11/07 11603 12049 12056 12208 13440 12438 12177
12/07 11619 11741 12051 12202 13347 12414 12156
====================================================================================================================================
Sources: (1) Lipper Inc., (2) A I M MANAGEMENT GROUP INC., LIPPER INC.
AIM Allocation Funds
Dear Shareholders:
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 factors that affected its performance. The
[TAYLOR following pages contain important information that answers
PHOTO] questions you may have about your investment.
Despite notable volatility at points throughout the year
ended December 31, 2007, major stock market indexes in the
U.S. and abroad generally performed well. Reasons for their
favorable performance included positive economic growth,
particularly overseas; strong corporate profits; and action
by the U.S. Federal Reserve Board (the Fed) to lower
short-term interest rates, among other factors.
At its mid-September 2007 meeting, the Fed cut its
Philip Taylor federal funds target rate for the first time since June
2003.(1) That cut followed 17 rate increases from June 2004
to June 2006(1) and was intended to address concerns about a
weak housing market and problems in the subprime mortgage
market, which some feared could adversely affect the U.S.
economy. The Fed cut the federal funds target rate again in
late October and mid-December in response to continued
economic uncertainty.
This kind of uncertainty can affect equity, fixed-income
and other markets--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.
I encourage you to talk with your financial advisor if
you have concerns about your portfolio. We believe in the
value of working with a trusted financial advisor who can
recommend AIM funds that are appropriate for your portfolio
and that address your long-term investment goals and risk
tolerance regardless of prevailing short-term market
conditions.
In conclusion
In May, AIM Investments' parent company changed its name
from AMVESCAP PLC to Invesco Ltd., uniting our worldwide
operations and global expertise under a new name. While the
name of our parent company may be new to you, I can assure
you that AIM's 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.
We 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
February 11, 2008
Source: (1) U.S. Federal Reserve Board
AIM Investments--REGISTERED TRADEMARK-- is a registered
service mark of A I M Management Group Inc. A I M Advisors,
Inc., A I M Capital Management, Inc., AIM Private Asset
Management, Inc. and PowerShares Capital Management LLC are
the investment advisors for the products and services
represented by AIM Investments; they each provide investment
advisory services to individual and institutional clients
and do not sell securities. A I M Distributors, Inc. is the
distributor for the retail mutual funds and U.S.
institutional money market funds represented by AIM
Investments and the exchange-traded funds managed by
PowerShares Capital Management LLC. All entities are
indirect wholly owned subsidiaries of Invesco Ltd.
8
AIM Allocation Funds
Dear Fellow AIM Fund Shareholders:
The lines of communication are open: More than 250 of you
have responded to the invitation I extended in my previous
letter to complete an online survey, and more than 50
shareholders have contacted me directly by e-mail. When I
[CROCKETT could respond quickly and easily to a shareholder's specific
PHOTO] concern I did, but the messages for the most part raised
consistent issues that I respond to here.
I have received many suggestions, a few complaints, and
one offer to buy a gold mine! In general, your letters
Bruce L. Crockett expressed an appreciation for transparency, frankness and
the opportunity to comment. Nevertheless, several
shareholders found room for improvement in communications.
Some would like more concise letters while others would
prefer reports to be more customized for their particular
information needs. With these reports going to tens of
thousands of people, shareholder communications necessarily
have to cover those issues common to a diverse population as
well as the information required by law. The ability to
change or further customize letters and reports is also
affected by technology, timeliness and cost.
Online survey responders preferred electronic
communications to paper at a ratio of 63% to 37%. Direct
responders expressed more of a preference for paper,
especially for long reports. Electronic communications are
more cost-effective than paper communications that have to
be printed and mailed, so I encourage those who have
resisted electronic communications to give them a try.
The correspondence shows that improving fund performance
and reducing shareholder costs remain the key shareholder
concerns. Several letters noted individual funds where
performance had changed for the better, while others
remained dissatisfied with the returns from funds they hold.
Although 75% of the online survey responders wanted to see
more overall fund performance data in these letters, and 58%
wanted more information on individual funds, Securities and
Exchange Commission (SEC) and Financial Industry Regulatory
Authority (FINRA) rules are very specific about the way fund
performance can be discussed in print. Respect for those
rules prevents me from commenting on individual funds or
very recent results here, but I can assure you that your
Board and all of its Investments subcommittees continue to
work with AIM Investments to make improved performance a top
priority for all fund managers.
Expense levels came up as another dominant issue, and no
respondent felt these were too low. Several shareholders
questioned the need for 12b-1 fees, which cover the cost of
distributing fund shares and thereby help the fund to
attract new assets. Your Board reviews the funds' 12b-1 fees
annually with the shareholders' best interests in mind.
While your Board keeps its eye on containing or lowering
these fees wherever possible, we also are mindful that 12b-1
fees may be necessary in order to maintain an effective
distribution system for fund shares.
The value of communication between the Board and
shareholders has been noted within and beyond the AIM
community. In the online survey, 87% of the respondents felt
it was either somewhat or very important to hear directly
from the Board, with 55% saying it was very important.
Morningstar--TRADEMARK--, the mutual fund tracking company,
also commented favorably on this channel of communication in
its fall 2007 update of fund stewardship grades, where AIM
was one of fewer than 10 fund boards to get an A for board
quality, according to BoardIQ (11/13/07).
In other news, Ruth Quigley retired from your Board at
the end of 2007, and we thank her for her many years of
dedicated service. Larry Soll has assumed Ruth's place as a
vice chair of the Investments Committee. The Valuation
Committee, which Ruth used to chair, has been reorganized as
the Valuation, Distribution and Proxy Oversight Committee
under the chairmanship of Carl Frischling. The elevation of
proxy oversight to standing committee status responds to
suggestions from shareholders. In addition, Prema
Mathi-Davis assumed my seat on the Governance Committee, and
I moved to the Audit Committee.
Your Board looks forward to another year of diligent
effort on your behalf, and we are even more strongly
motivated by your feedback. The invitation remains open to
e-mail me at bruce@brucecrockett.com. I look forward to
hearing from you.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
February 11, 2008
9
AIM Allocation Funds
AIM Conservative Allocation Fund management's discussion of Fund performance
=======================================================================================
PERFORMANCE SUMMARY given period. Additionally, the broad
diversification attempts to limit exposure
For the 12 months ended December 31, 2007, AIM Conservative Allocation Fund produced to any one area of the market that may be
positive performance at net asset value (NAV). underperforming.
In this market environment, where equity markets provided positive returns but on We establish target asset class
average underperformed fixed income markets, the Fund underperformed the broad-based weightings and underlying fund selections
S&P 500 Index.(triangle) Additionally, the Fund underperformed the Custom Conservative for the Fund and also monitor the Fund on
Allocation Index, which approximates the performance of the types of holdings owned by an ongoing basis. The underlying funds are
the Fund's underlying funds. actively managed by their respective
management teams based on individual fund
Your Fund's long-term performance appears on page 3 of this report. objectives, investment strategies and
management techniques.
FUND VS. INDEXES
While the weightings of various
Total returns, 12/31/06-12/31/07, at NAV. Performance shown does not include applicable underlying funds in the portfolio may vary
CDSC or front-end sales charges, which would have reduced performance. from their targets during the year due to
market movements, we rebalance the
Class A Shares 4.79% portfolio annually to maintain its target
Class B Shares 3.88 asset class allocations.
Class C Shares 3.98
Class R Shares 4.46 Market conditions and your Fund
S&P 500 Index(triangle) (Broad Market Index) 5.49
Custom Conservative Allocation Index(square) (Style-Specific Index) 6.20 Market volatility increased during 2007 as
Lipper Mixed-Asset Target Allocation Conservative Funds Index(triangle) subprime mortgage issues and record high
(Peer Group Index) 5.66 oil prices fueled concerns that slower
Lipper Income Funds Index(triangle) (Former Peer Group Index) 5.63 economic growth and rising inflation would
reduce corporate profits.(1) Despite these
SOURCES: (TRIANGLE) LIPPER INC.; (SQUARE) A I M MANAGEMENT GROUP INC., LIPPER INC. concerns, most major market indexes
======================================================================================= finished the fiscal year with respectable
gains.(2)
How we invest (mid and large). These underlying funds
include five bond funds and eight stock Across asset classes, international
AIM Conservative Allocation Fund is funds, which represent 65% and 25% of the equities continued their trend of
intended for investors with relatively low portfolio, respectively. The portfolio outperforming
risk tolerance. The Fund invests in 13 also maintains a 10% allocation to cash
underlying funds diversified among asset equivalents.
classes (stocks, bonds and cash),
investment styles (value and blend/core), While no fund can guarantee positive
regions (domestic and international) and performance, the broad portfolio
market capitalizations diversification provides exposure to areas
of the market that may perform well in any
====================================================================================================================================
PORTFOLIO COMPOSITION TOTAL NET ASSETS
% OF TOTAL NET Total Net Assets $121.75 million
TARGET ASSETS AS OF
ASSET CLASS ALLOCATION 12/31/07
- ----------- ---------- --------------
Intermediate Term Taxable Investment Grade 26.00% 26.88%
International Global/Blend 2.50 2.45
Large Cap Blend 5.00 4.87
Large Cap Growth 5.00 5.21 The Fund purchases Institutional Class
Large Cap Value 5.00 4.59 shares of the underlying mutual funds.
Mid Cap Blend 5.00 4.26 Institutional Class shares have no sales
Sector 2.50 2.42 charge. The Fund's portfolio is subject to
Short Term Taxable Investment Grade 32.00 32.50 change, and there is no assurance that the
Taxable Non-Investment Grade 7.00 6.80 Fund will continue to hold any particular
Cash Equivalent Plus Other Assets Less Liabilities 10.00 10.02 fund.
====================================================================================================================================
10
AIM Allocation Funds
domestic equities.(1) A weak U.S. dollar AIM International Total Return Fund was THE VIEWS AND OPINIONS EXPRESSED IN
helped boost international equity the portfolio's only positive fixed income MANAGEMENT'S DISCUSSION OF FUND
returns.(2) As the dollar declined, large contributor to performance relative to the PERFORMANCE ARE THOSE OF A I M ADVISORS,
caps generally outperformed small caps as Fund's custom style-specific index as the INC. THESE VIEWS AND OPINIONS ARE SUBJECT
investors sought more exposure to global declining dollar aided foreign bonds. TO CHANGE AT ANY TIME BASED ON FACTORS
corporations with the ability to leverage SUCH AS MARKET AND ECONOMIC CONDITIONS.
currency weakness through their presence Within the Fund's 25% equity component, THESE VIEWS AND OPINIONS MAY NOT BE RELIED
in foreign markets.(2) For the most part, two of the largest positive contributors UPON AS INVESTMENT ADVICE OR
growth outperformed value as subprime to absolute performance were AIM Large Cap RECOMMENDATIONS, OR AS AN OFFER FOR A
issues weighed on financial stocks and Growth Fund and AIM Structured Growth PARTICULAR SECURITY. THE INFORMATION IS
real estate, both of which are mostly Fund. Additionally, these underlying funds NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF
found in value indexes.(2) were the largest contributors to relative ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR
performance when compared with the THE FUND. STATEMENTS OF FACT ARE FROM
Largely in response to subprime components of the Custom Conservative SOURCES CONSIDERED RELIABLE, BUT A I M
mortgage issues, the U.S. Federal Reserve Allocation Index and benefited from ADVISORS, INC. MAKES NO REPRESENTATION OR
Board (the Fed) lowered its Federal Funds exposure to growth equities which WARRANTY AS TO THEIR COMPLETENESS OR
target rate by 100 basis points during the outperformed during the fiscal year. AIM ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
year with a .50% cut in September and .25% Charter Fund was also a solid positive IS NO GUARANTEE OF FUTURE RESULTS, THESE
cuts in October and December.(3) These contributor to both absolute and relative INSIGHTS MAY HELP YOU UNDERSTAND OUR
cuts served to help bonds generally performance during the year. INVESTMENT MANAGEMENT PHILOSOPHY.
outperform equities during the fiscal
year.(2) For the most part, high quality The largest single relative detractor See important Fund and index
bonds outperformed lower quality bonds as within the Fund's 25% equity component was disclosures later in this report.
investors sought the safety of U.S. AIM Trimark Endeavor Fund, which was
Treasury securities.(2) Longer maturity hindered by the underperformance of the Gary Wendler
issues outperformed shorter maturity mid-cap style. AIM Structured Value Fund [WENDLER Director of Product Strategy
issues in response to interest rate and AIM Large Cap Basic Value Fund also PHOTO] and Investment Services, is
reductions.(2) As with equities, foreign detracted from relative performance. These manager of AIM Conservative
bonds generally outperformed domestic funds underperformed in part because Allocation Fund. He began his career in
bonds due to the declining dollar.(2) large-cap domestic value funds struggled the investment industry in 1986 and joined
against issues with financial stocks AIM in 1995. Mr. Wendler earned a B.B.A in
Eleven of the 13 underlying investments caused by subprime mortgage concerns. finance from Texas A&M University.
contributed positively to absolute
performance for the fiscal year. Within Finally, the annual rebalancing of the
the Fund's 65% fixed income component, AIM underlying funds to their target
Short Term Bond Fund and AIM Total Return investment percentages was completed in
Bond Fund were the Fund's largest absolute June 2007.
contributors because of their large
allocations within the portfolio. We remain committed to our asset
allocation strategies, and as always, we
On the other hand, AIM Short Term Bond thank you for your continued investment in
Fund and AIM Total Return Bond Fund also AIM Conservative Allocation Fund.
detracted from the Fund's relative fixed
income performance when compared with the Sources: (1) Bloomberg L.P.; (2) Lipper
components of the Custom Conservative Inc.; (3) Federal Reserve
Allocation Index, the Fund's
style-specific index. This was due in part
to having a lower portfolio duration
structure as the Fed cut interest rates.
Additionally, these funds' higher exposure ==========================================
to short term bonds detracted as the FOR A DISCUSSION OF THE RISKS OF INVESTING
style-specific index has a higher IN YOUR FUND AND INDEXES USED IN THIS
allocation to intermediate bonds. REPORT, PLEASE TURN TO PAGE 20.
==========================================
11
AIM Allocation Funds
AIM Growth Allocation Fund management's discussion of Fund performance
=======================================================================================
PERFORMANCE SUMMARY diversification attempts to limit exposure
to any one area of the market that may be
For the 12 months ended December 31, 2007, AIM Growth Allocation Fund produced positive underperforming.
performance at net asset value (NAV).
We establish target asset class
In this market environment, where equity markets provided positive returns but on weightings and underlying fund selections
average underperformed fixed income markets, the Fund outperformed the broad-based S&P for the Fund and also monitor the Fund on
500 Index.(triangle) Additionally, the Fund outperformed the Custom Growth Allocation an ongoing basis. The underlying funds are
Index, which approximates the performance of the types of holdings owned by the Fund's actively managed by their respective
underlying funds. management teams based on individual fund
objectives, investment strategies and
Your Fund's long-term performance appears on page 4 of this report. management techniques.
FUND VS. INDEXES While the weightings of various
underlying funds in the portfolio may vary
Total returns, 12/31/06-12/31/07, at NAV. Performance shown does not include applicable from their targets during the year due to
CDSC or front-end sales charges, which would have reduced performance. market movements, we rebalance the
portfolio annually to maintain its target
Class A Shares 7.75% asset class allocations.
Class B Shares 6.89
Class C Shares 6.97 Market conditions and your Fund
Class R Shares 7.52
S&P 500 Index(triangle) (Broad Market Index) 5.49 Market volatility increased during 2007 as
Custom Growth Allocation Index(square) (Style-Specific Index) 5.64 subprime mortgage issues and record high
Lipper Multi-Cap Core Funds Index(triangle) (Peer Group Index) 5.97 oil prices fueled concerns that slower
economic growth and rising inflation would
SOURCES: (TRIANGLE) LIPPER INC.; (SQUARE)A I M MANAGEMENT GROUP INC., LIPPER INC. reduce corporate profits.(1) Despite these
======================================================================================= concerns, most major market indexes
finished the fiscal year with respectable
How we invest funds include 10 stock funds, which gains.(2)
represent 95% of the portfolio, and one
AIM Growth Allocation Fund is intended for bond fund, which represents the remaining Across asset classes, international
investors with a relatively high risk 5% of the portfolio. equities continued their trend of
tolerance. The Fund invests in 11 outperforming domestic equities.(1) A weak
underlying funds diversified among asset While no fund can guarantee positive U.S. dollar helped
classes (stocks and bonds), investment performance, the broad portfolio
styles (value, blend/core and growth), diversification provides exposure to areas
regions (domestic and international) and of the market that may perform well in any
market capitalizations (small, mid and given period. Additionally, the broad
large). These underlying
====================================================================================================================================
PORTFOLIO COMPOSITION TOTAL NET ASSETS
TARGET % OF TOTAL NET ASSETS Total Net Assets $731.68 million
ASSET CLASS ALLOCATION AS OF 12/31/07
- ----------- ---------- ---------------------
International/Global Blend 12.50% 12.58%
International/Global Growth 12.50 12.84
Large Cap Growth 20.00 21.43
Large Cap Value 17.50 16.43 The Fund purchases Institutional Class
Mid Cap Growth 5.00 4.93 shares of the underlying mutual funds.
Real Estate 5.00 4.53 Institutional Class shares have no sales
Sector 12.50 12.41 charge. The Fund's portfolio is subject to
Small Cap 10.00 9.94 change, and there is no assurance that the
Taxable Non-Investment Grade 5.00 4.97 Fund will continue to hold any particular
Other Assets Less Liabilities -0.06 fund.
====================================================================================================================================
12
AIM Allocation Funds
boost international equity returns.(2) As equities and the growth style. Gary Wendler
the dollar declined, large caps generally [WENDLER Director of Product Strategy
outperformed small caps as investors The largest relative detractors from PHOTO] and Investment Services, is
sought more exposure to global performance within the equity component manager of AIM Growth
corporations with the ability to leverage were AIM Structured Value Fund and AIM Allocation Fund. He began his career in
currency weakness through their presence Large Cap Basic Value Fund. These funds the investment industry in 1986 and joined
in foreign markets.(2) For the most part, underperformed in part because large-cap AIM in 1995. Mr. Wendler earned a B.B.A in
growth outperformed value as subprime domestic value funds struggled against finance from Texas A&M University.
issues weighed on financial stocks and issues with financial stocks caused by
real estate, both of which are mostly subprime mortgage concerns.
found in value indexes.(2)
The Fund's only fixed income holding,
Largely in response to subprime AIM High Yield Fund, was a relative
mortgage issues, the U.S. Federal Reserve detractor from performance mainly due to
Board lowered its Federal Funds target the its investment strategy of investing
rate by 100 basis points during the year in lower quality, higher yielding bonds
with a .50% cut in September and .25% cuts which underperformed during the fiscal
in October and December.(3) These cuts year.
served to help bonds generally outperform
equities during the fiscal year.(2) For Finally, the annual rebalancing of the
the most part, high quality bonds underlying funds to their target
outperformed lower quality bonds as investment percentages was completed in
investors sought the safety of U.S. June 2007.
Treasury securities.(2) Longer maturity
issues outperformed shorter maturity We remain committed to our asset
issues in response to interest rate allocation strategies, and as always, we
reductions.(2) As with equities, foreign thank you for your continued investment in
bonds generally outperformed domestic AIM Growth Allocation Fund.
bonds due to the declining dollar.(2)
Sources: (1) Bloomberg L.P.; (2) Lipper
Nine of the 11 underlying funds Inc.; (3) Federal Reserve
contributed positively to Fund performance
on an absolute basis for the fiscal year. THE VIEWS AND OPINIONS EXPRESSED IN
Within the Fund's 95% equity component, MANAGEMENT'S DISCUSSION OF FUND
AIM International Growth Fund, AIM Large PERFORMANCE ARE THOSE OF A I M ADVISORS,
Cap Growth Fund, AIM Structured Growth INC. THESE VIEWS AND OPINIONS ARE SUBJECT
Fund, AIM Small Cap Growth Fund and AIM TO CHANGE AT ANY TIME BASED ON FACTORS
International Core Equity Fund were the SUCH AS MARKET AND ECONOMIC CONDITIONS.
largest absolute contributors to Fund THESE VIEWS AND OPINIONS MAY NOT BE RELIED
performance. AIM Real Estate Fund and AIM UPON AS INVESTMENT ADVICE OR
Structured Value Fund both detracted from RECOMMENDATIONS, OR AS AN OFFER FOR A
the Fund's absolute performance. PARTICULAR SECURITY. THE INFORMATION IS
NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF
AIM Large Cap Growth Fund and AIM ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR
Structured Growth Fund contributed the THE FUND. STATEMENTS OF FACT ARE FROM
most to the Fund's performance on a SOURCES CONSIDERED RELIABLE, BUT A I M
relative basis when compared with the ADVISORS, INC. MAKES NO REPRESENTATION OR
components of the Custom Growth Allocation WARRANTY AS TO THEIR COMPLETENESS OR
Index, the Fund's custom style-specific ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
index. Both funds benefited from exposure IS NO GUARANTEE OF FUTURE RESULTS, THESE
to growth equities. AIM International INSIGHTS MAY HELP YOU UNDERSTAND OUR ==========================================
Growth Fund also positively contributed to INVESTMENT MANAGEMENT PHILOSOPHY. FOR A DISCUSSION OF THE RISKS OF INVESTING
performance, relative to the Custom Growth IN YOUR FUND AND INDEXES USED IN THIS
Allocation Index, as it benefited from See important Fund and index REPORT, PLEASE TURN TO PAGE 20.
performance trends in foreign disclosures later in this report. ==========================================
13
AIM Allocation Funds
AIM Moderate Allocation Fund management's discussion of Fund performance
=======================================================================================
PERFORMANCE SUMMARY remaining 40% of the portfolio.
For the 12 months ended December 31, 2007, Class A shares of AIM Moderate Allocation While no fund can guarantee positive
Fund produced positive performance at net asset value (NAV). performance, the broad portfolio
diversification provides exposure to areas
In this market environment, where equity markets provided positive returns but on of the market that may perform well in any
average underperformed fixed income markets, the Fund outperformed the broad-based S&P given period. Additionally, the broad
500 Index.(triangle) Additionally, the Fund outperformed the Custom Moderate Allocation diversification attempts to limit exposure
Index, which approximates the performance of the types of holdings owned by the Fund's to any one area of the market that may be
underlying funds. underperforming.
Your Fund's long-term performance appears on page 5 of this report. We establish target asset class
weightings and underlying fund selections
FUND VS. INDEXES for the Fund and also monitor the Fund on
an ongoing basis. The underlying funds are
Total returns, 12/31/06-12/31/07, at NAV. Performance shown does not include applicable actively managed by their respective
CDSC or front-end sales charges, which would have reduced performance. management teams based on individual fund
objectives, investment strategies and
Class A Shares 7.14% management techniques.
Class B Shares 6.33
Class C Shares 6.33 While the weightings of various
Class R Shares 6.90 underlying funds in the portfolio may vary
S&P 500 Index(triangle) (Broad Market Index) 5.49 from their targets during the year due to
Custom Moderate Allocation Index(square) (Style-Specific Index) 6.87 market movements, we rebalance the
Lipper Mixed-Asset Target Allocation Moderate Funds Index(triangle) portfolio annually to maintain its target
(Peer Group Index) 5.67 asset class allocations.
Lipper Balanced Funds Index(triangle) (Former Peer Group Index) 6.53
Market conditions and your Fund
SOURCES: (TRIANGLE)LIPPER INC.; (SQUARE)A I M MANAGEMENT GROUP INC., LIPPER INC.
======================================================================================= Market volatility increased during 2007 as
subprime mortgage issues and record high
How we invest and growth), regions (domestic and oil prices fueled concerns that slower
international) and market capitalizations economic
AIM Moderate Allocation Fund is intended (small, mid and large). These underlying
for investors with moderate risk funds include 10 stock funds, which
tolerance. The Fund invests in 15 represent 60% of the portfolio's target
underlying funds diversified among asset allocation, and five bond funds, which
classes (stocks and bonds), investment represent the
styles (value, blend/core
====================================================================================================================================
PORTFOLIO COMPOSITION TOTAL NET ASSETS
TARGET % OF TOTAL NET ASSETS Total Net Assets $782.25 million
ASSET CLASS ALLOCATION AS OF 12/31/07
- ----------- ---------- ---------------------
Intermediate Term Investment Grade 23.00% 23.91%
International/Global Blend 2.50 7.62
International/Global Growth 7.50 2.75
Large Cap Growth 12.50 13.24
Large Cap Value 10.00 9.28
Mid Cap Growth 5.00 4.78
Mid Cap Value 5.00 4.72
Sector 5.00 4.91 The Fund purchases Institutional Class
Short Term Investment Grade 2.50 2.56 shares of the underlying mutual funds.
Short Term Maturity 3.00 2.95 Institutional Class shares have no sales
Small Cap 5.00 4.58 charge. The Fund's portfolio is subject to
Taxable Fixed Income 10.00 9.95 change, and there is no assurance that the
Taxable Non-Investment Grade 9.00 8.85 Fund will continue to hold any particular
Other Assets Less Liabilities -0.10 fund.
====================================================================================================================================
14
AIM Allocation Funds
growth and rising inflation would reduce benefited from exposure to growth We remain committed to our asset
corporate profits.(1) Despite these equities. AIM Capital Development Fund and allocation strategies, and as always, we
concerns, most major market indexes AIM International Growth Fund also thank you for your continued investment in
finished the fiscal year with respectable contributed positively on a relative AIM Moderate Allocation Fund.
gains.(2) basis. AIM International Growth benefited
from performance trends in foreign Sources: (1) Bloomberg L.P.; (2) Lipper
Across asset classes, international equities and the growth style. Inc.; (3) Federal Reserve
equities continued their trend of
outperforming domestic equities.(1) A weak The largest relative detractors from THE VIEWS AND OPINIONS EXPRESSED IN
U.S. dollar helped boost international performance within the Fund's 60% equity MANAGEMENT'S DISCUSSION OF FUND
equity returns.(2) As the dollar declined, component were AIM Structured Value Fund PERFORMANCE ARE THOSE OF A I M ADVISORS,
large caps generally outperformed small and AIM Large Cap Basic Value Fund. These INC. THESE VIEWS AND OPINIONS ARE SUBJECT
caps as investors sought more exposure to funds underperformed in part because TO CHANGE AT ANY TIME BASED ON FACTORS
global corporations with the ability to largecap domestic value funds struggled SUCH AS MARKET AND ECONOMIC CONDITIONS.
leverage currency weakness through their against issues with financial stocks THESE VIEWS AND OPINIONS MAY NOT BE RELIED
presence in foreign markets.(2) For the caused by subprime mortgage concerns. UPON AS INVESTMENT ADVICE OR
most part, growth outperformed value as RECOMMENDATIONS, OR AS AN OFFER FOR A
subprime issues weighed on financial Within the Fund's 40% fixed income PARTICULAR SECURITY. THE INFORMATION IS
stocks and real estate, both of which are component, AIM Total Return Bond Fund, AIM NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF
mostly found in value indexes.(2) International Total Return Fund, AIM High ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR
Yield Fund and AIM Short Term Bond Fund THE FUND. STATEMENTS OF FACT ARE FROM
Largely in response to subprime were the largest positive contributors to SOURCES CONSIDERED RELIABLE, BUT A I M
mortgage issues, the U.S. Federal Reserve absolute performance. ADVISORS, INC. MAKES NO REPRESENTATION OR
Board (the Fed) lowered its Federal Funds WARRANTY AS TO THEIR COMPLETENESS OR
target rate by 100 basis points during the AIM International Total Return Fund was ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
year with a .50% cut in September and .25% the only fund that positively contributed IS NO GUARANTEE OF FUTURE RESULTS, THESE
cuts in October and December.(3) These to the Fund's relative fixed income INSIGHTS MAY HELP YOU UNDERSTAND OUR
cuts served to help bonds generally performance, when compared with the INVESTMENT MANAGEMENT PHILOSOPHY.
outperform equities during the fiscal components of the Fund's custom
year.(2) For the most part, high quality style-specific index. This was due in part See important Fund and index
bonds outperformed lower quality bonds as to the declining dollar, which aided disclosures later in this report.
investors sought the safety of U.S. foreign bonds.
Treasury securities.(2) Longer maturity Gary Wendler
issues outperformed shorter maturity The single largest detractor from [WENDLER Director of Product Strategy
issues in response to interest rate performance relative to the Fund's PHOTO] and Investment Services, is
reductions.(2) As with equities, foreign stylespecific index was AIM Total Return manager of AIM Moderate
bonds generally outperformed domestic Bond Fund. This underperformance was in Allocation Fund. He began his career in
bonds due to the declining dollar.(2) part due to having a lower portfolio the investment industry in 1986 and joined
duration structure as the Fed cut interest AIM in 1995. Mr. Wendler earned a B.B.A in
Fourteen of the 15 underlying funds rates. Additionally, AIM Total Return Bond finance from Texas A&M University.
contributed positively to Fund performance Fund's dedicated exposure to short term
on an absolute basis for the fiscal year. bonds detracted as the style-specific
Within the Fund's 60% equity component, index has a higher allocation to
AIM International Growth Fund, AIM Large intermediate bonds. Two additional
Cap Growth Fund, AIM International Core detractors from relative performance were
Equity Fund and AIM Structured Growth Fund AIM High Yield Fund and AIM Short Term
were the largest absolute contributors to Bond Fund. AIM High Yield Fund
Fund performance. AIM Capital Development underperformed in part because the Custom
Fund also made a healthy contribution to Moderate Allocation Index has a larger
results during the fiscal year. AIM allocation to higher quality issues which
Structured Value Fund was the only performed better during 2007. AIM Short
detractor from absolute performance. Term Bond Fund struggled due to its lower
duration structure compared with the
AIM Large Cap Growth Fund and AIM custom style-specific index which has a
Structured Growth Fund also contributed longer duration structure.
the most to the Fund's performance on a ==========================================
relative basis when compared with the Finally, the annual rebalancing of the FOR A DISCUSSION OF THE RISKS OF INVESTING
components of the Custom Moderate underlying funds to their target IN YOUR FUND AND INDEXES USED IN THIS
Allocation Index, the Fund's custom investment percentages was completed in REPORT, PLEASE TURN TO PAGE 20.
style-specific index. Both funds June 2007. ==========================================
15
AIM Allocation Funds
AIM Moderate Growth Allocation Fund management's discussion of Fund performance
=======================================================================================
PERFORMANCE SUMMARY may perform well in any given period.
Additionally, the broad diversification
For the 12 months ended December 31, 2007, AIM Moderate Growth Allocation Fund produced attempts to limit exposure to any one area
positive performance at net asset value (NAV). of the market that may be underperforming.
In this market environment, where equity markets provided positive returns but on We establish target asset class
average underperformed fixed income markets, the Fund outperformed the broad-based S&P weightings and underlying fund selections
500 Index.(triangle) Additionally, the Fund outperformed the Custom Moderate Growth for the Fund and also monitor the Fund on
Allocation Index, which approximates the performance of the types of holdings owned by an ongoing basis. The underlying funds are
the Fund's underlying funds. actively managed by their respective
management teams based on individual fund
Your Fund's long-term performance appears on page 6 of this report. objectives, investment strategies and
management techniques.
FUND VS. INDEXES
While the weightings of various
Total returns, 12/31/06-12/31/07, at NAV. Performance shown does not include applicable underlying funds in the portfolio may vary
CDSC or front-end sales charges, which would have reduced performance. from their targets during the year due to
market movements, we rebalance the
Class A Shares 7.19% portfolio annually to maintain its target
Class B Shares 6.44 asset class allocations.
Class C Shares 6.45
Class R Shares 6.98 Market conditions and your Fund
S&P 500 Index(triangle) (Broad Market Index) 5.49
Custom Moderate Growth Allocation Index(square) (Style-Specific Index) 6.28 Market volatility increased during 2007 as
Lipper Mixed-Asset Target Allocation Growth Funds Index(triangle) subprime mortgage issues and record high
(Peer Group Index) 6.53 oil prices fueled concerns that slower
economic growth and rising inflation would
SOURCES: (TRIANGLE)LIPPER INC.; (SQUARE) A I M MANAGEMENT GROUP INC., LIPPER INC. reduce corporate profits.(1) Despite these
concerns, most major market indexes
======================================================================================= finished the fiscal year with respectable
gains.(2)
How we invest capitalizations (small, mid and large).
The 13 underlying funds include 11 stock
AIM Moderate Growth Allocation Fund is funds, which represent 80% of the
intended for investors with a moderate to portfolio, and two bond funds, which
high risk tolerance. The Fund invests in represent the remaining 20% of the
13 underlying funds diversified among portfolio.
asset classes (stocks and bonds),
investment styles (value, blend/core and While no fund can guarantee positive
growth), regions (domestic and performance, the broad portfolio
international) and market diversification provides exposure to areas
of the market that
====================================================================================================================================
PORTFOLIO COMPOSITION TOTAL NET ASSETS
TARGET % OF TOTAL NET ASSETS Total Net Assets $503.88 million
ASSET CLASS ALLOCATION AS OF 12/31/07
- ----------- --------- ---------------------
Intermediate Term Investment Grade 10.00% 10.46%
International/Global Blend 11.00 11.03
International/Global Growth 11.00 11.26
Large Cap Growth 16.50 17.61
Large Cap Value 14.00 13.11
Mid Cap Growth 5.00 4.91 The Fund purchases Institutional Class
Mid Cap Value 5.00 4.77 shares of the underlying mutual funds.
Real Estate 2.50 2.26 Institutional Class shares have no sales
Sector 7.50 7.42 charge. The Fund's portfolio is subject to
Small Cap 7.50 7.28 change, and there is no assurance that the
Taxable Non-Investment Grade 10.00 9.91 Fund will continue to hold any particular
Other Assets Less Liabilities -0.02 fund.
====================================================================================================================================
16
AIM Allocation Funds
Across asset classes, international The largest relative detractors from Gary Wendler
equities continued their trend of performance within the equity component [WENDLER Director of Product Strategy
outperforming domestic equities.(1) A weak were AIM Structured Value Fund and AIM PHOTO] and Investment Services, is
U.S. dollar helped boost international Large Cap Basic Value Fund. These funds manager of AIM Moderate Growth Allocation
equity returns.(2) As the dollar declined, underperformed in part because large-cap Fund. He began his career in the
large caps generally outperformed small domestic value funds struggled against investment industry in 1986 and joined AIM
caps as investors sought more exposure to issues with financial stocks caused by in 1995. Mr. Wendler earned a B.B.A in
global corporations with the ability to subprime mortgage concerns. finance from Texas A&M University.
leverage currency weakness through their
presence in foreign markets.(2) For the The Fund's 20% fixed income component,
most part, growth outperformed value as consisting of AIM High Yield Fund and AIM
subprime issues weighed on financial Total Return Bond Fund, contributed to
stocks and real estate, both of which are absolute performance. However, both fixed
mostly found in value indexes.(2) income components detracted from the
Fund's relative fixed income performance.
Largely in response to subprime AIM High Yield Bond Fund was hurt by its
mortgage issues, the U.S. Federal Reserve investment strategy which entails
Board (the Fed) lowered its Federal Funds investing in lower quality, higher
target rate by 100 basis points during the yielding bonds. AIM Total Return Bond
year with a .50% cut in September and .25% Fund's underperformance was in part due to
cuts in October and December.(3) These having a lower portfolio duration
cuts served to help bonds generally structure as the Fed cut interest rates.
outperform equities during the fiscal Additionally, AIM Total Return Bond Fund's
year.(2) For the most part, high quality dedicated exposure to short term bonds
bonds outperformed lower quality bonds as detracted as the style-specific index has
investors sought the safety of U.S. a higher allocation to intermediate bonds.
Treasury securities.(2) Longer maturity
issues outperformed shorter maturity Finally, the annual rebalancing of the
issues in response to interest rate underlying funds to their target
reductions.(2) As with equities, foreign investment percentages was completed in
bonds generally outperformed domestic June 2007.
bonds due to the declining dollar.(2)
We remain committed to our asset
Eleven of the 13 underlying funds allocation strategies, and as always, we
contributed positively to Fund performance thank you for your continued investment in
on an absolute basis for the fiscal year. AIM Moderate Growth Allocation Fund.
Within the Fund's 80% equity component,
AIM International Growth Fund, AIM Large
Cap Growth Fund, AIM Structured Growth Sources: (1) Bloomberg L.P.; (2) Lipper
Fund and AIM International Core Equity Inc.; (3) Federal Reserve
Fund were the largest absolute
contributors to Fund performance. AIM THE VIEWS AND OPINIONS EXPRESSED IN
Structured Value Fund and AIM Real Estate MANAGEMENT'S DISCUSSION OF FUND
Fund were both absolute detractors from PERFORMANCE ARE THOSE OF A I M ADVISORS,
performance. INC. THESE VIEWS AND OPINIONS ARE SUBJECT
TO CHANGE AT ANY TIME BASED ON FACTORS
AIM Large Cap Growth Fund and AIM SUCH AS MARKET AND ECONOMIC CONDITIONS.
Structured Growth Fund contributed the THESE VIEWS AND OPINIONS MAY NOT BE RELIED
most to the Fund's performance on a UPON AS INVESTMENT ADVICE OR
relative basis when compared with the RECOMMENDATIONS, OR AS AN OFFER FOR A
components of the Custom Moderate Growth PARTICULAR SECURITY. THE INFORMATION IS
Allocation Index, the Fund's custom NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF
style-specific index. Both funds benefited ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR
from exposure to growth equities. AIM THE FUND. STATEMENTS OF FACT ARE FROM
International Growth Fund also positively SOURCES CONSIDERED RELIABLE, BUT A I M
contributed to performance relative to the ADVISORS, INC. MAKES NO REPRESENTATION OR
style-specific index as it benefited from WARRANTY AS TO THEIR COMPLETENESS OR
performance trends in foreign equities and ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
the growth style. IS NO GUARANTEE OF FUTURE RESULTS, THESE
INSIGHTS MAY HELP YOU UNDERSTAND OUR ==========================================
INVESTMENT MANAGEMENT PHILOSOPHY. FOR A DISCUSSION OF THE RISKS OF INVESTING
IN YOUR FUND AND INDEXES USED IN THIS
See important Fund and index REPORT, PLEASE TURN TO PAGE 20.
disclosures later in this report. ==========================================
17
AIM Allocation Funds
AIM Moderately Conservative Allocation Fund management's discussion of Fund performance
=======================================================================================
PERFORMANCE SUMMARY performance, the broad portfolio
diversification provides exposure to areas
For the 12 months ended December 31, 2007, Class A shares of AIM Moderately of the market that may perform well in any
Conservative Allocation Fund produced positive performance at net asset value (NAV). given period. Additionally, the broad
diversification attempts to limit exposure
In this market environment, where equity markets provided positive returns but on to any one area of the market that may be
average underperformed fixed income markets, the Fund outperformed the broad-based S&P underperforming.
500 Index.(triangle) Additionally, the Fund underperformed the Custom Moderately
Conservative Allocation Index, which approximates the performance of the types of We establish target asset class
holdings owned by the Fund's underlying funds. weightings and underlying fund selections
for the Fund and also monitor the Fund on
Your Fund's long-term performance appears on page 7 of this report. an ongoing basis. The underlying funds are
actively managed by their respective
FUND VS. INDEXES management teams based on individual fund
objectives, investment strategies and
Total returns, 12/31/06-12/31/07, at NAV. Performance shown does not include applicable management techniques.
CDSC or front-end sales charges, which would have reduced performance.
While the weightings of various
Class A Shares 6.23% underlying funds in the portfolio may vary
Class B Shares 5.40 from their targets during the year due to
Class C Shares 5.49 market movements, we rebalance the
Class R Shares 5.91 portfolio annually to maintain its target
S&P 500 Index(triangle) (Broad Market Index) 5.49 asset class allocations.
Custom Moderately Conservative Allocation Index(square) (Style-Specific Index) 6.54
Lipper Mixed-Asset Target Allocation Conservative Funds Index. Market conditions and your Fund
(Peer Group Index) 5.66
Market volatility increased during 2007 as
SOURCES: (TRIANGLE)LIPPER INC.; (SQUARE)A I M MANAGEMENT GROUP INC., LIPPER INC. subprime mortgage issues and record high
======================================================================================= oil prices fueled concerns that slower
economic growth and rising inflation would
How we invest (domestic and international) and market reduce corporate profits.(1) Despite these
capitalizations (mid and large). The 15 concerns,
AIM Moderately Conservative Allocation underlying funds include six bond funds,
Fund is intended for investors with a low which represent 60% of the portfolio, and
to moderate risk tolerance. The Fund nine stock funds, which represent the
invests in 15 underlying funds diversified remaining 40% of the portfolio.
among asset classes (stocks and bonds),
investment styles (value, blend/core and While no fund can guarantee positive
growth), regions
====================================================================================================================================
PORTFOLIO COMPOSITION TOTAL NET ASSETS
TARGET % OF TOTAL NET ASSETS Total Net Assets $110.14 million
ASSET CLASS ALLOCATION AS OF 12/31/07
- ----------- ---------- ---------------------
Intermediate Maturity 2.50% 3.78%
Intermediate Term Investment Grade 27.50 36.59
International Global/Blend 3.50 4.90
International Global/Growth 13.00 2.50
Large Cap Growth 11.25 11.74
Large Cap Value 11.25 10.32
Mid Cap Growth 2.50 2.36 The Fund purchases Institutional Class
Mid Cap Value 5.00 4.67 shares of the underlying mutual funds.
Sector 2.50 2.42 Institutional Class shares have no sales
Short Term Maturity 5.00 4.85 charge. The Fund's portfolio is subject to
Short Term Taxable Investment Grade 12.00 12.11 change, and there is no assurance that the
Taxable Non-Investment Grade 4.00 3.89 Fund will continue to hold any particular
Other Assets Less Liabilities -0.13 fund.
====================================================================================================================================
18
AIM Allocation Funds
most major market indexes finished the Conversely, AIM Total Return Bond Fund Gary Wendler
fiscal year with respectable gains.(2) and AIM Short Term Bond Fund hindered [WENDLER Director of Product Strategy
performance relative to the custom PHOTO] and Investment Services, is
Across asset classes, international stylespecific index due in part to having manager of AIM Moderately
equities continued their trend of a lower portfolio duration structure as Conservative Allocation Fund. He began his
outperforming domestic equities.(1) A weak the Fed cut interest rates. Additionally, career in the investment industry in 1986
U.S. dollar helped boost international these funds' higher exposure to short term and joined AIM in 1995. Mr. Wendler earned
equity returns.(2) As the dollar declined, bonds detracted as the Custom Moderately a B.B.A in finance from Texas A&M
large caps generally outperformed small Conservative Allocation Index has a higher University.
caps as investors sought more exposure to allocation to intermediate bonds.
global corporations with the ability to
leverage currency weakness through their Within the Fund's 40% equity component,
presence in foreign markets.2 For the most the largest positive contributors to both
part, growth outperformed value as absolute and relative performance were AIM
subprime issues weighed on financial Large Cap Growth Fund and AIM Structured
stocks and real estate, both of which are Growth Fund. Both funds benefited from
mostly found in value indexes.(2) exposure to growth equities. AIM Mid Cap
Basic Value Fund was also a key
Largely in response to subprime contributor to both absolute and relative
mortgage issues, the U.S. Federal Reserve performance during the year.
Board (the Fed) lowered its Federal Funds
target rate by 100 basis points during the The largest relative detractors within
year with a .50% cut in September and .25% the Fund's equity component were AIM
cuts in October and December.(3) These Structured Value Fund and AIM Large Cap
cuts served to help bonds generally Basic Value Fund. These funds
outperform equities during the fiscal underperformed in part because large-cap
year.(2) For the most part, high quality domestic value funds struggled against
bonds outperformed lower quality bonds as issues with financial stocks caused by
investors sought the safety of U.S. subprime mortgage concerns.
Treasury securities.(2) Longer maturity
issues outperformed shorter maturity Finally, the annual rebalancing of the
issues in response to interest rate underlying funds to their target
reductions.(2) As with equities, foreign investment percentages was completed in
bonds generally outperformed domestic June 2007.
bonds due to the declining dollar.(2)
We remain committed to our asset
Fourteen of the 15 underlying funds allocation strategies, and as always, we
contributed positively to absolute Fund thank you for your investment in AIM
performance for the fiscal year. Within Moderately Conservative Allocation Fund.
the Fund's 60% fixed income component, AIM
Total Return Bond Fund, AIM Intermediate Sources: (1) Bloomberg L.P.; (2) Lipper
Government Fund and AIM Short Term Bond Inc.; (3) Federal Reserve
Fund were the Fund's largest absolute
contributors because of their large THE VIEWS AND OPINIONS EXPRESSED IN
allocations within the portfolio. MANAGEMENT'S DISCUSSION OF FUND
PERFORMANCE ARE THOSE OF A I M ADVISORS,
AIM International Total Return Fund and INC. THESE VIEWS AND OPINIONS ARE SUBJECT
AIM Intermediate Government Fund were the TO CHANGE AT ANY TIME BASED ON FACTORS
only funds that positively contributed to SUCH AS MARKET AND ECONOMIC CONDITIONS.
the Fund's relative fixed income THESE VIEWS AND OPINIONS MAY NOT BE RELIED
performance when compared with the UPON AS INVESTMENT ADVICE OR
components of the Fund's custom RECOMMENDATIONS, OR AS AN OFFER FOR A
style-specific index, the Custom PARTICULAR SECURITY. THE INFORMATION IS
Moderately Conservative Allocation Index. NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF
AIM International Total Return was helped ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR
by the declining dollar, and AIM THE FUND. STATEMENTS OF FACT ARE FROM
Intermediate Government Fund was helped by SOURCES CONSIDERED RELIABLE, BUT A I M
the outperformance of high quality bonds. ADVISORS, INC. MAKES NO REPRESENTATION OR
WARRANTY AS TO THEIR COMPLETENESS OR
ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS, THESE
INSIGHTS MAY HELP YOU UNDERSTAND OUR ==========================================
INVESTMENT MANAGEMENT PHILOSOPHY. FOR A DISCUSSION OF THE RISKS OF INVESTING
IN YOUR FUND AND INDEXES USED IN THIS
See important Fund and index REPORT, PLEASE TURN TO PAGE 20.
disclosures later in this report. ==========================================
19
AIM Allocation Funds
AIM CONSERVATIVE ALLOCATION FUND'S AND AIM MODERATELY CONSERVATIVE ALLOCATION
FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE TOTAL RETURN CONSISTENT WITH A LOWER
LEVEL OF RISK RELATIVE TO THE BROAD STOCK MARKET.
AIM MODERATE GROWTH ALLOCATION FUND'S AND AIM GROWTH ALLOCATION FUND'S
INVESTMENT OBJECTIVE IS TO PROVIDE LONG-TERM GROWTH OF CAPITAL CONSISTENT WITH A
HIGHER LEVEL OF RISK RELATIVE TO THE BROAD STOCK MARKET.
AIM MODERATE ALLOCATION FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE TOTAL RETURN
CONSISTENT WITH A MODERATE LEVEL OF RISK RELATIVE TO THE BROAD STOCK MARKET.
o Unless otherwise stated, information presented in this report is as of
December 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 Prices of equity securities change in underlying funds. Because the Fund is a
response to many factors including the fund of funds, the Fund is subject to the
o Class B shares are not available as an historical and prospective earnings of the risks associated with the underlying funds
investment for retirement plans maintained issuer, the value of its assets, general in which it invests. There are additional
pursuant to Section 401 of the Internal economic conditions, interest rates, risks of investing in the underlying
Revenue Code, including 401(k) plans, investor perceptions and market liquidity. funds.
money purchase pension plans and profit
sharing plans, except for plans that have o Foreign securities have additional o Interest rate risk refers to the risk
existing accounts invested in Class B risks, including exchange rate changes, that bond prices generally fall as
shares. political and economic upheaval, the interest rates rise; conversely, bond
relative lack of information, relatively prices generally rise as interest rates
o Class R shares are available only to low market liquidity, and the potential fall.
certain retirement plans. Please see the lack of strict financial and accounting
prospectus for more information. controls and standards. o The Fund may use enhanced investment
techniques such as leveraging and
Principal risks of investing in all AIM o The Fund pursues its investment derivatives. Leveraging entails risks such
Allocation funds: objectives by investing its assets in as magnifying changes in the value of the
other underlying funds that are a part of portfolio's securities. Derivatives are
THE RISKS DETAILED BELOW ARE THE RISKS OF The AIM Family of Funds rather than subject to counterparty risk--the risk
THE UNDERLYING FUNDS, WHICH THE FUND MAY investing directly in stocks, bonds, cash that the other party will not complete the
EXPERIENCE AS A RESULT OF ITS INVESTMENTS or other investments. The Fund's transaction with the Fund.
IN THE UNDERLYING FUNDS. investment performance depends on the
investment performance of the underlying o Lower rated securities may be more
o Certain of the underlying funds may funds. There is risk that the advisor's susceptible to real or perceived adverse
engage in active and frequent trading of evaluations and assumptions regarding the economic and competitive industry
securities to achieve their investment Fund's broad asset classes or the conditions, and may be less liquid than
objectives. This may cause them to incur underlying funds may be incorrect based on higher grade securities. The loans in
increased costs, which may lower the actual market conditions, or that the Fund which the Fund may invest are typically
actual return of the underlying funds. will vary from the target weightings in noninvestment-grade and involve a greater
Active trading may also increase short the underlying funds due to factors such risk of default on interest and principal
term gains and losses, which may affect as market fluctuations. There can be no payments and of price changes due to the
the taxes that must be paid. assurance that the underlying funds will changes in the credit quality of the
achieve their investment objectives, and issuer.
o The value of convertible securities in the performance of the underlying funds
which the Fund invests may be affected by may be lower than the asset class. The o The Fund invests in "growth" stocks,
market interest rates--the risk that the underlying funds may change their which may be more volatile than other
issuer may default on interest or investment objectives or policies without investment styles because growth stocks
principal payments and the value of the the approval of the Allocation Funds. If are more sensitive to investor perceptions
underlying common stock into which these that were to occur, the Allocation Funds of an issuing company's growth potential.
securities may be converted may decline as might be forced to withdraw their
a result. investments from the underlying funds at o There is no guarantee that the
an unfavorable time. The advisor has the investment techniques and risk analyses
o Credit risk is the risk of loss on an ability to select and substitute the used by the Fund's portfolio managers will
investment due to the deterioration of an underlying funds in which the Fund invests produce the desired results.
issuer's financial health. Such a and may be subject to potential conflicts
deterioration of financial health may of interest in selecting underlying funds o The prices of securities held by the
result in a reduction of the credit rating because it may receive higher fees from Fund may decline in response to market
of the issuer's securities and may lead to certain underlying funds than others. risks.
the issuer's inability to honor its However, as a fiduciary of the Fund, the
contractual obligations, including making advisor is required to act in the Fund's o The Fund may invest in obligations
timely payment of interest and principal. best interest when selecting the issued by agencies and instrumentalities
of the U.S. government that may vary in
the level of support they receive from the
U.S. government. The U.S. government may
choose not to provide financial support to
U.S. government-
20
AIM Allocation Funds
sponsored agencies or instrumentalities if o The value of, payment of interest on, on its obligation, such that the Fund is
it is not legally obligated to do so. In repayment of principal for and the ability delayed or prevented from completing the
this case, if the issuer defaulted, the of the Fund to sell a municipal security transaction.
fund holding securities of such issuer may be affected by constitutional
might not be able to recover its amendments, legislative enactments, o High-coupon, U.S. government agency
investment from the U.S. government executive orders, administrative mortgage-backed securities provide a
regulations, voter initiatives and the higher coupon than current prevailing
o The Fund invests in "value" stocks, economics of the regions in which the market interest rates, and the Fund may
which can continue to be inexpensive for issuers in which the Fund invests are purchase such securities at a premium. If
long periods of time and may never realize located. these securities experience a faster
their full value. principal prepayment rate than expected,
o Nondiversification increases the risk both the market value and income from such
Additional principal risks of investing in that the value of the Fund's shares may securities will decrease.
AIM Conservative Allocation Fund: vary more widely, and the Fund may be
subject to greater investment and credit o The Fund may invest in mortgage- and
THE RISKS DETAILED BELOW ARE THE RISKS OF risk than if the Fund invested more asset-backed securities. These securities
THE UNDERLYING FUNDS, WHICH THE FUND MAY broadly. are subject to prepayment or call risk,
EXPERIENCE AS A RESULT OF ITS INVESTMENTS which is the risk that payments from the
IN THE UNDERLYING FUNDS. o If the seller of a repurchase agreement borrower may be received earlier or later
in which the Fund invests defaults on its than expected due to changes in the rate
o The Fund is subject to currency/exchange obligation or declares bankruptcy, the at which the underlying loans are prepaid.
rate risk because it may buy or sell Fund may experience delays in selling the
currencies other than the U.S. dollar. securities underlying the repurchase o Nondiversification increases the risk
agreement. that the value of the Fund's shares may
o Dollar-roll transactions involve the vary more widely, and the Fund may be
risk that the market value of securities o To the extent that the Fund is subject to greater investment and credit
to be purchased by the Fund may decline concentrated in securities of issuers in risk than if the Fund invested more
below the price at which the Fund is the banking and financial services broadly.
obligated to repurchase the securities or industries, the Fund's performance will
that the other party may default on its depend on the overall condition of those o Reinvestment risk is the risk that a
obligation, such that the Fund is delayed industries. The value of these securities bond's cash flows will be reinvested at an
or prevented from completing the can be sensitive to changes in government interest rate below that on the original
transaction. regulation and interest rates and economic bond.
downturns in the United States and abroad.
o High-coupon, U.S. government agency o To the extent that the Fund is
mortgage-backed securities provide a o The Fund may invest in senior-secured, concentrated in securities of issuers in
higher coupon than current prevailing floating rate loans and debt securities the banking and financial services
market interest rates, and the Fund may that require collateral. There is a risk industries, the Fund's performance will
purchase such securities at a premium. If that the value of the collateral may not depend on the overall condition of those
these securities experience a faster be sufficient to cover the amount owed, industries. The value of these securities
principal prepayment rate than expected, collateral securing a loan may be found can be sensitive to changes in government
both the market value and income from such invalid, and collateral may be used to pay regulation and interest rates and economic
securities will decrease. other outstanding obligations of the downturns in the United States and abroad.
borrower under applicable law or may be
o The value of lower quality debt difficult to sell. There is also the risk Additional principal risks of investing in
securities and floating rate loans can be that the collateral may be difficult to AIM Moderately Conservative Allocation
volatile due to increased sensitivity to liquidate or that a majority of the Fund:
adverse issuer, political, regulatory, collateral may be illiquid.
market or economic developments. THE RISKS DETAILED BELOW ARE THE RISKS OF
Additional principal risks of investing in THE UNDERLYING FUNDS, WHICH THE FUND MAY
o An investment in the Fund is not a AIM Moderate Allocation Fund: EXPERIENCE AS A RESULT OF ITS INVESTMENTS
deposit in a bank and is not insured or IN THE UNDERLYING FUNDS.
guaranteed by the Federal Deposit THE RISKS DETAILED BELOW ARE THE RISKS OF
Insurance Corporation or any other THE UNDERLYING FUNDS, WHICH THE FUND MAY o The Fund is subject to currency/exchange
government agency. Although the Fund seeks EXPERIENCE AS A RESULT OF ITS INVESTMENTS rate risk because it may buy or sell
to preserve the value of your investment IN THE UNDERLYING FUNDS. currencies other than the U.S. dollar.
at $1 per share, it is possible to lose
money by investing in the Fund, and the o The Fund is subject to currency/exchange o Dollar-roll transactions involve the
yield will vary. rate risk because it may buy or sell risk that the market value of securities
currencies other than the U.S. dollar. to be purchased by the Fund may decline
o The Fund may invest in mortgage- and below the price at which the Fund is
asset-backed securities. These securities o Dollar-roll transactions involve the obligated to repurchase the securities or
are subject to prepayment or call risk, risk that the market value of securities that the other party may default on its
which is the risk that payments from the to be purchased by the Fund may decline obligation, such that the Fund is delayed
borrower may be received earlier or later below the price at which the Fund is or prevented from completing the
than expected due to changes in the rate obligated to repurchase the securities or transaction.
at which the underlying loans are prepaid. that the other party may default
Continued on page 22
21
AIM Allocation Funds
o High-coupon, U.S. government agency o Dollar-roll transactions involve the nies. Investments in these sized companies
mortgage-backed securities provide a risk that the market value of securities may involve special risks, including those
higher coupon than current prevailing to be purchased by the Fund may decline associated with dependence on a small
market interest rates, and the Fund may below the price at which the Fund is management group, little or no operating
purchase such securities at a premium. If obligated to repurchase the securities or history, little or no track record of
these securities experience a faster that the other party may default on its success, limited product lines, less
principal prepayment rate than expected, obligation, such that the Fund is delayed publicly available information,
both the market value and income from such or prevented from completing the illiquidity, restricted resale or less
securities will decrease. transaction. frequent trading.
o The Fund may invest in mortgage- and o High-coupon, U.S. government agency o The Fund's investments are concentrated
asset-backed securities. These securities mortgage-backed securities provide a in a comparatively narrow segment of the
are subject to prepayment or call risk, higher coupon than current prevailing economy. Consequently, the Fund may tend
which is the risk that payments from the market interest rates, and the Fund may to be more volatile than other mutual
borrower may be received earlier or later purchase such securities at a premium. If funds, and the value of the Fund's
than expected due to changes in the rate these securities experience a faster investments may tend to rise and fall more
at which the underlying loans are prepaid. principal prepayment rate than expected, rapidly.
both the market value and income from such
o Nondiversification increases the risk securities will decrease. o Start-up companies or earlier stage
that the value of the Fund's shares may companies, such as venture capital
vary more widely, and the Fund may be o Small- and mid-capitalization companies companies, generally have limited
subject to greater investment and credit tend to be more vulnerable to adverse operating histories, no present market for
risk than if the Fund invested more developments and more volatile than larger their technologies or products and no
broadly. companies. Investments in these sized history of earnings or financial services.
companies may involve special risks,
o Reinvestment risk is the risk that a including those associated with dependence About indexes used in this report
bond's cash flows will be reinvested at an on a small management group, little or no
interest rate below that on the original operating history, little or no track o The S&P 500--REGISTERED TRADEMARK--
bond. record of success, limited product lines, INDEX is a market capitalization-weighted
less publicly available information, index covering all major areas of the U.S.
o Reverse repurchase agreements and illiquidity, restricted resale or less Economy. It is not the 500 largest
dollarroll transactions involve the risk frequent trading. companies, but rather the most widely held
that the market value of securities to be 500 companies chosen with respect to
purchased by the Fund may decline below o Reinvestment risk is the risk that a market size, liquidity, and their
the price at which the Fund is obligated bond's cash flows will be reinvested at an industry.
to repurchase the securities or that the interest rate below that on the original
other party may default on its obligation, bond. o The Custom Conservative Allocation Index
such that the Fund is delayed or prevented is an index created by A I M Advisors,
from completing the transaction. Additional principal risks of investing in Inc. to benchmark the AIM Conservative
AIM Growth Allocation Fun: Allocation Fund. This index may change
o To the extent that the Fund is from time to time based upon the target
concentrated in securities of issuers in THE RISKS DETAILED BELOW ARE THE RISKS OF asset allocation of the Fund. The index
the banking and financial services THE UNDERLYING FUNDS, WHICH THE FUND MAY currently consists of the following
industries, the Fund's performance will EXPERIENCE AS A RESULT OF ITS INVESTMENTS indexes: 22.5% Russell 3000--REGISTERED
depend on the overall condition of those IN THE UNDERLYING FUNDS. TRADEMARK-- Index, 2.5% MSCI
industries. The value of these securities EAFE--REGISTERED TRADEMARK-- Index, 65%
can be sensitive to changes in government o Investing in developing countries can Lehman Brothers U.S. Universal Index, and
regulation and interest rates and economic add additional risk, such as high rates of 10% 3-Month Treasury Bill Index. The
downturns in the United States and abroad. inflation or sharply devalued currencies Russell 3000 Index measures the
against the U.S. dollar. Transaction costs performance of the 3,000 largest U.S.
Additional principal risks of investing in are often higher, and there may be delays companies based on total market
AIM Moderate Growth Allocation Fund: in settlement procedures. capitalization, which represents
approximately 98% of the investable U.S.
THE RISKS DETAILED BELOW ARE THE RISKS OF o The Fund's investments in different, equity market. The Russell
THE UNDERLYING FUNDS, WHICH THE FUND MAY independently managed sectors creates 3000--REGISTERED TRADEMARK-- Index is a
EXPERIENCE AS A RESULT OF ITS INVESTMENTS allocation risk, which is the risk that trademark/service mark of the Frank
IN THE UNDERLYING FUNDS. the allocation of investments among the Russell Company. Russell-- REGISTERED
sectors may have a more significant effect TRADEMARK-- is a trademark of the Frank
o The Fund is subject to currency/exchange on the Fund's net asset value when one of Russell Company. The MSCI EAFE--REGISTERED
rate risk because it may buy or sell the sectors is performing more poorly than TRADEMARK-- Index is a free float-adjusted
currencies other than the U.S. dollar. the other(s). Active rebalancing of the market capitalization index that is
Fund among the sectors may result in designed to measure developed market
increased transaction costs. equity performance, excluding the U.S. and
Canada. The Lehman Brothers U.S. Universal
o Small- and mid-capitalization companies Index represents the union of the U.S.
tend to be more vulnerable to adverse Aggregate Index, the U.S. High-Yield
developments and more volatile than larger Corporate Index, the 144A Index, the
compa- Eurodollar Index, the Emerging Markets
Index, and the non-ERISA portion of the
22
AIM Allocation Funds
CMBS Index. The 3-Month Treasury Bill o The LIPPER MIXED-ASSET TARGET ALLOCATION Other information
Index is tracked by Lipper Inc. to provide CONSERVATIVE FUNDS INDEX is an equally
performance for the 3-month U.S. Treasury weighted representation of the largest o The returns shown in management's
Bill. funds in the Lipper Mixed-Asset Target discussion of Fund performance are based
Allocation Conservative Funds category. on net asset values calculated for
o The CUSTOM MODERATE ALLOCATION INDEX is These funds, by portfolio practice, shareholder transactions. Generally
an index created by A I M Advisors, Inc. maintain a mix of between 20%-40% equity accepted accounting principles require
to benchmark the Fund. This index may securities, with the remainder invested in adjustments to be made to the net assets
change from time to time based upon the bonds, cash, and cash equivalents. of the Fund at period end for financial
target asset allocation of the Fund. The reporting purposes, and as such, the net
index currently consists of the following o The LIPPER MIXED-ASSET TARGET ALLOCATION asset values for shareholder transactions
indexes: 42.5% Russell 3000--REGISTERED MODERATE FUNDS INDEX is an equally and the returns based on those net asset
TRADEMARK-- Index, 17.5% MSCI weighted representation of the largest values may differ from the net asset
EAFE--REGISTERED TRADEMARK-- Index, and funds in the Lipper Mixed-Asset Target values and returns reported in the
40% Lehman Brothers U.S. Universal Index. Allocation Moderate Funds category. These Financial Highlights.
funds, by portfolio practice, maintain a s
o The CUSTOM GROWTH ALLOCATION INDEX is an mix of between 40%-60% equity securities,
index created by A I M Advisors, Inc. to with the remainder invested in bonds,
benchmark the AIM Growth Allocation Fund. cash, and cash equivalents.
This index may change from time to time
based upon the target asset allocation of o The LIPPER MIXED-ASSET TARGET ALLOCATION
the Fund. The index currently consists of GROWTH FUNDS INDEX is an equally weighted
the following indexes: 65% Russell representation of the largest funds in the
3000--REGISTERED TRADEMARK-- Index, 25% Lipper Mixed-Asset Target Allocation
MSCI EAFE--REGISTERED TRADEMARK-- Index, Growth Funds category. These funds, by
5% FTSE NAREIT Equity REITs Index, and 5% portfolio practice, maintain a mix of
Lehman Brothers U.S. Universal Index. The between 60%- 80% equity securities, with
FTSE NAREIT Equity REITs Index is a the remainder invested in bonds, cash, and
market-cap weighted index of all equity cash equivalents.
REITs traded on the NYSE, NASDAQ National
Market System, and the American Stock o The LIPPER INCOME FUNDS INDEX is an
Exchange. equally weighted representation of the
largest funds in the Lipper Income Funds
o The CUSTOM MODERATE GROWTH ALLOCATION category. These funds normally seek a high
INDEX is an index created by A I M level of current income through investing
Advisors, Inc. to benchmark the AIM in incomeproducing stocks, bonds, and
Moderate Growth Allocation Fund. This money market instruments.
index may change from time to time based ==========================================
upon the target asset allocation of the o The LIPPER BALANCED FUNDS INDEX is an FUND NASDAQ SYMBOLS
Fund. The index currently consists of the equally weighted representation of the AIM CONSERVATIVE ALLOCATION FUND
following indexes: 55.5% Russell largest funds in the Lipper Balanced Funds
3000--REGISTERED TRADEMARK-- Index, 22% category. These funds have a primary Class A Shares ACNAX
MSCI EAFE--REGISTERED TRADEMARK-- Index, objective of conserving principal by Class B Shares ACNBX
2.5% FTSE NAREIT Equity REITs Index, and maintaining at all times a balanced Class C Shares ACNCX
20% Lehman Brothers U.S. Universal Index. portfolio of both stocks and bonds. Class R Shares ACNRX
Typically, the stock/bond ratio ranges AIM GROWTH ALLOCATION FUND
o The CUSTOM MODERATELY CONSERVATIVE around 60%/40%. Class A Shares AADAX
ALLOCATION INDEX is an index created by A Class B Shares AAEBX
I M Advisors, Inc. to benchmark the AIM o The Fund is not managed to track the Class C Shares AADCX
Moderately Conservative Allocation Fund. performance of any particular index, Class R Shares AADRX
This index may change from time to time including the indexes defined here, and AIM MODERATE ALLOCATION FUND
based upon the target asset allocation of consequently, the performance of the Fund Class A Shares AMKAX
the Fund. The index currently consists of may deviate significantly from the Class B Shares AMKBX
the following indexes: 32.5% Russell performance of the indexes. Class C Shares AMKCX
3000--REGISTERED TRADEMARK-- Index, 7.5% Class R Shares AMKRX
MSCI EAFE--REGISTERED TRADEMARK-- Index o A direct investment cannot be made in an AIM MODERATE GROWTH ALLOCATION FUND
and 60% Lehman Brothers U.S. Universal index. Unless otherwise indicated, index Class A Shares AAMGX
Index. results include reinvested dividends, and Class B Shares AMBGX
they do not reflect sales charges. Class C Shares ACMGX
o The LIPPER MULTI-CAP CORE FUNDS INDEX is Performance of an index of funds reflects Class R Shares RAMGX
an equally weighted representation of the fund expenses; performance of a market AIM MODERATELY CONSERVATIVE ALLOCATION
largest funds in the Lipper Multi-Cap Core index does not. FUND
Funds category. These funds typically have Class A Shares CAAMX
an average price-to-earnings ratio, Class B Shares CMBAX
price-to-book ratio, and three-year Class C Shares CACMX
sales-per-share growth value, compared to Class R Shares CMARX
the S&P SuperComposite 1500 Index. ==========================================
23
AIM Allocation Funds
SCHEDULE OF INVESTMENTS
December 31, 2007
AIM CONSERVATIVE ALLOCATION FUND
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.12%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET VALUE PURCHASES PROCEEDS APPRECIATION
ASSETS 12/31/06 AT COST FROM SALES (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------
AIM Charter Fund 4.87% $ 4,635,648 $ 2,514,124 $ (1,569,596) $ (42,710)
- ---------------------------------------------------------------------------------------------------------
AIM Floating Rate Fund 6.80% 6,061,100 4,152,712 (1,438,031) (454,322)
- ---------------------------------------------------------------------------------------------------------
AIM International Core Equity Fund 2.45% 2,305,904 1,488,641 (759,543) (253,128)
- ---------------------------------------------------------------------------------------------------------
AIM International Total Return
Fund 4.33% 3,412,538 2,542,242 (868,484) 154,277
- ---------------------------------------------------------------------------------------------------------
AIM Large Cap Basic Value Fund 2.29% 2,341,691 1,458,530 (767,750) (367,388)
- ---------------------------------------------------------------------------------------------------------
AIM Large Cap Growth Fund(b) 2.63% 2,285,908 1,204,544 (717,467) 267,218
- ---------------------------------------------------------------------------------------------------------
AIM Limited Maturity Treasury Fund 8.25% 6,878,691 4,666,565 (1,695,315) 202,753
- ---------------------------------------------------------------------------------------------------------
AIM Multi-Sector Fund 2.42% 2,305,888 1,340,541 (764,906) (143,224)
- ---------------------------------------------------------------------------------------------------------
AIM Short-Term Bond Fund 24.25% 20,669,185 14,367,597 (5,063,752) (311,910)
- ---------------------------------------------------------------------------------------------------------
AIM Structured Growth Fund 2.58% 2,307,786 1,304,295 (737,308) 155,306
- ---------------------------------------------------------------------------------------------------------
AIM Structured Value Fund 2.30% 2,292,957 1,293,064 (658,543) (193,710)
- ---------------------------------------------------------------------------------------------------------
AIM Total Return Bond Fund 22.55% 19,034,753 13,345,140 (4,662,945) (135,251)
- ---------------------------------------------------------------------------------------------------------
AIM Trimark Endeavor Fund 4.26% 4,921,751 2,903,722 (1,895,217) (1,285,553)
- ---------------------------------------------------------------------------------------------------------
Liquid Assets Portfolio 10.14% -- 14,125,536 (1,787,913) --
=========================================================================================================
TOTAL INVESTMENTS IN AFFILIATED
MUTUAL FUNDS (Cost $121,544,393) 100.12% $79,453,800 $66,707,253 $(23,386,770) $(2,407,642)
=========================================================================================================
OTHER ASSETS LESS LIABILITIES (0.12)%
=========================================================================================================
NET ASSETS 100.00%
_________________________________________________________________________________________________________
=========================================================================================================
<Caption>
REALIZED DIVIDEND SHARES VALUE
GAIN (LOSS) INCOME 12/31/07 12/31/07
- ----------------------------------------------------------------------------------------------
AIM Charter Fund $ 390,325 $ 105,036 351,172 $ 5,927,791
- ----------------------------------------------------------------------------------------------
AIM Floating Rate Fund (40,595) 539,774 966,262 8,280,864
- ----------------------------------------------------------------------------------------------
AIM International Core Equity Fund 411,719 76,156 207,337 2,985,651
- ----------------------------------------------------------------------------------------------
AIM International Total Return
Fund 27,050 271,976 485,495 5,267,623
- ----------------------------------------------------------------------------------------------
AIM Large Cap Basic Value Fund 336,544 40,309 195,508 2,787,949
- ----------------------------------------------------------------------------------------------
AIM Large Cap Growth Fund(b) 164,298 -- 236,669 3,204,501
- ----------------------------------------------------------------------------------------------
AIM Limited Maturity Treasury Fund (6,560) 375,775 982,988 10,046,134
- ----------------------------------------------------------------------------------------------
AIM Multi-Sector Fund 322,428 24,323 103,730 2,949,052
- ----------------------------------------------------------------------------------------------
AIM Short-Term Bond Fund (141,151) 1,522,225 3,055,897 29,519,969
- ----------------------------------------------------------------------------------------------
AIM Structured Growth Fund 119,135 95,170 262,271 3,144,633
- ----------------------------------------------------------------------------------------------
AIM Structured Value Fund 73,919 81,434 256,700 2,800,602
- ----------------------------------------------------------------------------------------------
AIM Total Return Bond Fund (126,432) 1,371,875 2,691,693 27,455,265
- ----------------------------------------------------------------------------------------------
AIM Trimark Endeavor Fund 944,613 89,626 373,778 5,184,307
- ----------------------------------------------------------------------------------------------
Liquid Assets Portfolio -- 520,843 12,337,623
==============================================================================================
TOTAL INVESTMENTS IN AFFILIATED
MUTUAL FUNDS (Cost $121,544,393) $2,475,293(c) $5,114,522 $121,891,964
==============================================================================================
OTHER ASSETS LESS LIABILITIES (144,238)
==============================================================================================
NET ASSETS $121,747,726
______________________________________________________________________________________________
==============================================================================================
</Table>
Notes to Schedule of Investments:
(a) Each underlying fund and the Fund are affiliated by either having the
same investment advisor or an investment advisor under common control
with the Fund's investment advisor. The Fund invests in Institutional
Class shares of the mutual funds listed.
(b) Non-income producing security. A security is determined to be a
non-income producing if the security has not declared a distribution
within one year from the report date.
(c) Includes $949,970 of capital gains distributed from affiliated
underlying funds.
AIM GROWTH ALLOCATION FUND
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.06%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET VALUE PURCHASES PROCEEDS APPRECIATION
ASSETS 12/31/06 AT COST FROM SALES (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------
AIM Dynamics Fund(b) 4.93% $22,388,480 $12,840,776 $ (2,798,321) $ 2,417,245
- ---------------------------------------------------------------------------------------------------------
AIM High Yield Fund 4.97% 21,370,007 18,325,887 (1,055,009) (2,283,644)
- ---------------------------------------------------------------------------------------------------------
AIM International Core Equity Fund 12.58% 54,794,569 41,924,441 (2,731,727) (2,933,637)
- ---------------------------------------------------------------------------------------------------------
AIM International Growth Fund 12.84% 56,771,994 37,872,437 (6,320,625) 2,712,447
- ---------------------------------------------------------------------------------------------------------
AIM Large Cap Basic Value Fund 8.20% 38,919,285 28,292,489 (1,877,946) (5,696,508)
- ---------------------------------------------------------------------------------------------------------
AIM Large Cap Growth Fund(b) 10.82% 43,436,779 27,746,973 (2,191,506) 9,684,712
- ---------------------------------------------------------------------------------------------------------
AIM Multi-Sector Fund 12.41% 54,760,244 37,115,724 (2,800,537) 729,866
- ---------------------------------------------------------------------------------------------------------
AIM Real Estate Fund 4.53% 22,847,294 24,205,638 (1,106,312) (12,995,775)
- ---------------------------------------------------------------------------------------------------------
AIM Small Cap Growth Fund 9.94% 44,836,188 33,265,169 (4,395,331) (1,903,740)
- ---------------------------------------------------------------------------------------------------------
AIM Structured Growth Fund 10.61% 43,825,902 29,840,807 (2,184,710) 5,745,222
- ---------------------------------------------------------------------------------------------------------
AIM Structured Value Fund 8.23% 38,132,356 26,834,740 (1,862,099) (3,104,976)
=========================================================================================================
TOTAL INVESTMENTS IN AFFILIATED
MUTUAL FUNDS (Cost $689,111,383) 100.06% $442,083,098 $318,265,081 $(29,324,123) $ (7,628,788)
=========================================================================================================
OTHER ASSETS LESS LIABILITIES (0.06)%
=========================================================================================================
NET ASSETS 100.00%
_________________________________________________________________________________________________________
=========================================================================================================
<Caption>
REALIZED DIVIDEND SHARES VALUE
GAIN (LOSS) INCOME 12/31/07 12/31/07
- ----------------------------------------------------------------------------------------------
AIM Dynamics Fund(b) $ 1,200,619 $ -- 1,466,591 $ 36,048,799
- ----------------------------------------------------------------------------------------------
AIM High Yield Fund 27,263 2,467,007 8,561,060 36,384,504
- ----------------------------------------------------------------------------------------------
AIM International Core Equity Fund 7,297,571 2,305,339 6,392,813 92,056,511
- ----------------------------------------------------------------------------------------------
AIM International Growth Fund 7,891,727 805,179 2,894,722 93,962,662
- ----------------------------------------------------------------------------------------------
AIM Large Cap Basic Value Fund 4,838,089 851,761 4,204,788 59,960,276
- ----------------------------------------------------------------------------------------------
AIM Large Cap Growth Fund(b) 478,220 -- 5,846,025 79,155,178
- ----------------------------------------------------------------------------------------------
AIM Multi-Sector Fund 4,401,518 735,581 3,194,847 90,829,497
- ----------------------------------------------------------------------------------------------
AIM Real Estate Fund 5,380,283 1,742,322 1,453,474 33,168,286
- ----------------------------------------------------------------------------------------------
AIM Small Cap Growth Fund 8,492,656 -- 2,422,903 72,711,325
- ----------------------------------------------------------------------------------------------
AIM Structured Growth Fund 501,470 2,304,506 6,473,542 77,617,766
- ----------------------------------------------------------------------------------------------
AIM Structured Value Fund 402,470 1,721,229 5,522,706 60,252,728
==============================================================================================
TOTAL INVESTMENTS IN AFFILIATED
MUTUAL FUNDS (Cost $689,111,383) $40,911,886(c) $12,932,924 $732,147,532
==============================================================================================
OTHER ASSETS LESS LIABILITIES (467,371)
==============================================================================================
NET ASSETS $731,680,161
______________________________________________________________________________________________
==============================================================================================
</Table>
Notes to Schedule of Investments:
(a) Each underlying fund and the Fund are affiliated by either having the
same investment advisor or an investment advisor under common control
with the Fund's investment advisor. The Fund invests in Institutional
Class shares of the mutual funds listed.
(b) Non-income producing security. A security is determined to be a
non-income producing if the security has not declared a distribution
within one year from the report date.
(c) Includes $32,159,622 of capital gains distributed from affiliated
underlying funds.
24
AIM Allocation Funds
SCHEDULE OF INVESTMENTS--(CONTINUED)
December 31, 2007
AIM MODERATE ALLOCATION FUND
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.10%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET VALUE PURCHASES PROCEEDS APPRECIATION
ASSETS 12/31/06 AT COST FROM SALES (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------
AIM Capital Development Fund 4.78% $30,213,975 $11,497,575 $ (4,456,220) $ (806,484)
- ---------------------------------------------------------------------------------------------------------
AIM Floating Rate Fund 2.95% 16,904,124 8,043,270 (559,545) (1,331,583)
- ---------------------------------------------------------------------------------------------------------
AIM High Yield Fund 8.85% 52,696,201 22,411,140 (1,708,403) (4,217,851)
- ---------------------------------------------------------------------------------------------------------
AIM International Core Equity Fund 9.95% 60,034,156 23,164,099 (4,363,200) (2,515,080)
- ---------------------------------------------------------------------------------------------------------
AIM International Growth Fund 7.62% 46,672,519 15,574,955 (6,787,297) 1,054,025
- ---------------------------------------------------------------------------------------------------------
AIM International Total Return
Fund 2.75% 13,879,865 7,402,850 (487,061) 730,470
- ---------------------------------------------------------------------------------------------------------
AIM Large Cap Basic Value Fund 4.63% 30,481,054 11,184,129 (2,453,548) (3,533,498)
- ---------------------------------------------------------------------------------------------------------
AIM Large Cap Growth Fund(b) 6.69% 37,194,213 9,920,113 (1,779,570) 6,526,615
- ---------------------------------------------------------------------------------------------------------
AIM Mid Cap Basic Value Fund 4.72% 30,460,149 11,565,328 (4,807,177) (1,599,737)
- ---------------------------------------------------------------------------------------------------------
AIM Multi-Sector Fund 4.91% 30,013,732 9,679,425 (2,269,565) 174,384
- ---------------------------------------------------------------------------------------------------------
AIM Short Term Bond Fund 2.56% 14,051,652 6,740,888 (475,003) (286,618)
- ---------------------------------------------------------------------------------------------------------
AIM Structured Growth Fund 6.55% 37,552,644 11,520,200 (2,243,480) 4,115,507
- ---------------------------------------------------------------------------------------------------------
AIM Structured Value Fund 4.65% 29,848,277 9,068,198 (1,052,400) (1,612,057)
- ---------------------------------------------------------------------------------------------------------
AIM Total Return Bond Fund 23.91% 129,475,175 63,682,326 (4,402,119) (1,602,704)
- ---------------------------------------------------------------------------------------------------------
AIM Trimark Small Companies Fund 4.58% 30,269,773 9,910,270 (3,306,851) (2,224,359)
=========================================================================================================
TOTAL INVESTMENTS IN AFFILIATED
MUTUAL FUNDS (Cost $745,252,539) 100.10% $589,747,509 $231,364,766 $(41,151,439) $(7,128,970)
=========================================================================================================
OTHER ASSETS LESS LIABILITIES (0.10)%
=========================================================================================================
NET ASSETS 100.00%
_________________________________________________________________________________________________________
=========================================================================================================
<Caption>
REALIZED DIVIDEND SHARES VALUE
GAIN (LOSS) INCOME 12/31/07 12/31/07
- ----------------------------------------------------------------------------------------------
AIM Capital Development Fund $ 3,886,429 $ 656,387 1,957,578 $ 37,430,178
- ----------------------------------------------------------------------------------------------
AIM Floating Rate Fund (12,213) 1,500,452 2,688,921 23,044,053
- ----------------------------------------------------------------------------------------------
AIM High Yield Fund 14,611 4,927,994 16,281,341 69,195,698
- ----------------------------------------------------------------------------------------------
AIM International Core Equity Fund 6,853,720 1,954,680 5,405,310 77,836,457
- ----------------------------------------------------------------------------------------------
AIM International Growth Fund 6,252,780 512,203 1,836,364 59,608,366
- ----------------------------------------------------------------------------------------------
AIM International Total Return
Fund 12,794 1,096,049 1,985,154 21,538,918
- ----------------------------------------------------------------------------------------------
AIM Large Cap Basic Value Fund 3,236,615 515,484 2,537,321 36,182,198
- ----------------------------------------------------------------------------------------------
AIM Large Cap Growth Fund(b) 452,004 -- 3,863,617 52,313,375
- ----------------------------------------------------------------------------------------------
AIM Mid Cap Basic Value Fund 4,103,467 842,362 2,649,581 36,935,154
- ----------------------------------------------------------------------------------------------
AIM Multi-Sector Fund 2,225,586 311,791 1,350,405 38,392,019
- ----------------------------------------------------------------------------------------------
AIM Short Term Bond Fund (9,722) 1,024,238 2,072,588 20,021,197
- ----------------------------------------------------------------------------------------------
AIM Structured Growth Fund 407,271 1,526,605 4,276,786 51,278,660
- ----------------------------------------------------------------------------------------------
AIM Structured Value Fund 191,159 1,041,488 3,332,040 36,352,557
- ----------------------------------------------------------------------------------------------
AIM Total Return Bond Fund (139,356) 9,283,584 18,334,639 187,013,322
- ----------------------------------------------------------------------------------------------
AIM Trimark Small Companies Fund 2,597,560 592,981 2,420,054 35,865,195
==============================================================================================
TOTAL INVESTMENTS IN AFFILIATED
MUTUAL FUNDS (Cost $745,252,539) $30,072,705(c) $25,786,298 $783,007,347
==============================================================================================
OTHER ASSETS LESS LIABILITIES (762,133)
==============================================================================================
NET ASSETS $782,245,214
______________________________________________________________________________________________
==============================================================================================
</Table>
Notes to Schedule of Investments:
(a) Each underlying fund and the Fund are affiliated by either having the
same investment advisor or an investment advisor under common control
with the Fund's investment advisor. The Fund invests in Institutional
Class shares of the mutual funds listed.
(b) Non-income producing security. A security is determined to be a
non-income producing if the security has not declared a distribution
within one year from the report date.
(c) Includes $19,897,224 of capital gains distributed from affiliated
underlying funds.
AIM MODERATE GROWTH ALLOCATION FUND
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.02%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET VALUE PURCHASES PROCEEDS APPRECIATION
ASSETS 12/31/06 AT COST FROM SALES (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------
AIM Dynamics Fund(b) 4.91% $ 11,584,401 $ 12,382,911 $(1,385,501) $ 1,743,653
- ---------------------------------------------------------------------------------------------------------
AIM High Yield Fund 9.91% 22,228,266 31,208,473 (404,970) (3,091,710)
- ---------------------------------------------------------------------------------------------------------
AIM International Core Equity Fund 11.03% 25,053,803 32,822,677 (684,884) (1,792,899)
- ---------------------------------------------------------------------------------------------------------
AIM International Growth Fund 11.26% 25,918,155 30,722,228 (2,787,464) 1,860,628
- ---------------------------------------------------------------------------------------------------------
AIM Large Cap Basic Fund 6.54% 16,140,151 20,383,697 (463,478) (3,155,031)
- ---------------------------------------------------------------------------------------------------------
AIM Large Cap Growth Fund(b) 8.89% 18,599,829 20,980,622 (344,232) 5,498,543
- ---------------------------------------------------------------------------------------------------------
AIM Mid Cap Basic Value Fund 4.77% 11,518,867 14,734,633 (1,312,459) (1,130,719)
- ---------------------------------------------------------------------------------------------------------
AIM Multi-Sector Fund 7.42% 17,046,219 20,371,931 (540,641) 393,236
- ---------------------------------------------------------------------------------------------------------
AIM Real Estate Fund 2.26% 5,903,555 10,000,735 (102,120) (4,425,449)
- ---------------------------------------------------------------------------------------------------------
AIM Small Cap Equity Fund 7.28% 17,129,363 21,758,255 (348,464) (1,898,510)
- ---------------------------------------------------------------------------------------------------------
AIM Structured Growth Fund 8.72% 18,724,039 22,397,936 (348,143) 3,101,271
- ---------------------------------------------------------------------------------------------------------
AIM Structured Value Fund 6.57% 15,842,099 19,277,385 (281,848) (1,749,439)
- ---------------------------------------------------------------------------------------------------------
AIM Total Return Bond Fund 10.46% 21,435,513 32,262,405 (439,351) (524,305)
=========================================================================================================
TOTAL INVESTMENTS IN AFFILIATED
MUTUAL FUNDS (Cost $497,067,107) 100.02% $227,124,260 $289,303,888 $(9,443,555) $(5,170,731)
=========================================================================================================
OTHER ASSETS LESS LIABILITIES (0.02)%
=========================================================================================================
NET ASSETS 100.00%
_________________________________________________________________________________________________________
=========================================================================================================
<Caption>
REALIZED DIVIDEND SHARES VALUE
GAIN (LOSS) INCOME 12/31/07 12/31/07
- ----------------------------------------------------------------------------------------------
AIM Dynamics Fund(b) $ 427,018 $ -- 1,007,017 $ 24,752,482
- ----------------------------------------------------------------------------------------------
AIM High Yield Fund (1,057) 3,187,204 11,750,353 49,939,002
- ----------------------------------------------------------------------------------------------
AIM International Core Equity Fund 3,987,436 1,390,709 3,860,334 55,588,814
- ----------------------------------------------------------------------------------------------
AIM International Growth Fund 4,000,495 485,553 1,747,374 56,719,771
- ----------------------------------------------------------------------------------------------
AIM Large Cap Basic Fund 2,527,870 467,691 2,310,941 32,954,012
- ----------------------------------------------------------------------------------------------
AIM Large Cap Growth Fund(b) 45,129 -- 3,307,230 44,779,891
- ----------------------------------------------------------------------------------------------
AIM Mid Cap Basic Value Fund 2,020,733 545,845 1,723,470 24,025,178
- ----------------------------------------------------------------------------------------------
AIM Multi-Sector Fund 1,526,634 302,654 1,315,786 37,407,786
- ----------------------------------------------------------------------------------------------
AIM Real Estate Fund 1,778,756 585,388 498,904 11,384,984
- ----------------------------------------------------------------------------------------------
AIM Small Cap Equity Fund 2,511,721 593,917 3,064,955 36,656,856
- ----------------------------------------------------------------------------------------------
AIM Structured Growth Fund 121,372 1,303,139 3,664,199 43,933,750
- ----------------------------------------------------------------------------------------------
AIM Structured Value Fund 115,093 945,278 3,035,842 33,121,041
- ----------------------------------------------------------------------------------------------
AIM Total Return Bond Fund (14,735) 2,364,701 5,168,581 52,719,527
==============================================================================================
TOTAL INVESTMENTS IN AFFILIATED
MUTUAL FUNDS (Cost $497,067,107) $19,046,465(c) $12,172,079 $503,983,094
==============================================================================================
OTHER ASSETS LESS LIABILITIES (103,637)
==============================================================================================
NET ASSETS $503,879,457
______________________________________________________________________________________________
==============================================================================================
</Table>
Notes to Schedule of Investments:
(a) Each underlying fund and the Fund are affiliated by either having the
same investment advisor or an investment advisor under common control
with the Fund's investment advisor. The Fund invests in Institutional
Class shares of the mutual funds listed.
(b) Non-income producing security. A security is determined to be a
non-income producing if the security has not declared a distribution
within one year from the report date.
(c) Includes $16,877,233 of capital gains distributed from affiliated
underlying funds.
25
AIM Allocation Funds
SCHEDULE OF INVESTMENTS--(CONTINUED)
December 31, 2007
AIM MODERATELY CONSERVATIVE ALLOCATION FUND
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.13%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET VALUE PURCHASES PROCEEDS APPRECIATION
ASSETS 12/31/06 AT COST FROM SALES (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------
AIM Capital Development Fund 2.36% $ 1,014,115 $ 1,983,288 $ (304,810) $ (118,322)
- ---------------------------------------------------------------------------------------------------------
AIM Floating Rate Fund 4.85% 1,902,233 4,027,635 (280,555) (297,531)
- ---------------------------------------------------------------------------------------------------------
AIM High Yield Fund 3.89% 1,577,815 3,194,793 (225,536) (269,462)
- ---------------------------------------------------------------------------------------------------------
AIM Intermediate Government Fund 13.55% 4,928,406 10,630,211 (758,531) 150,847
- ---------------------------------------------------------------------------------------------------------
AIM International Core Equity Fund 4.90% 2,019,736 3,977,096 (406,309) (294,794)
- ---------------------------------------------------------------------------------------------------------
AIM International Growth Fund 2.50% 1,045,130 1,905,455 (316,834) 7,255
- ---------------------------------------------------------------------------------------------------------
AIM International Total Return
Fund 3.78% 1,313,182 2,935,001 (209,838) 119,379
- ---------------------------------------------------------------------------------------------------------
AIM Large Cap Basic Value Fund 5.15% 2,303,227 4,414,260 (482,731) (614,408)
- ---------------------------------------------------------------------------------------------------------
AIM Large Cap Growth Fund(b) 5.93% 2,250,898 3,907,213 (424,264) 736,359
- ---------------------------------------------------------------------------------------------------------
AIM Mid Cap Basic Value Fund 4.67% 2,045,389 3,976,303 (623,287) (344,864)
- ---------------------------------------------------------------------------------------------------------
AIM Multi-Sector Fund 2.42% 1,008,531 1,857,254 (223,747) (20,795)
- ---------------------------------------------------------------------------------------------------------
AIM Short Term Bond Fund 12.11% 4,543,105 9,683,467 (688,799) (190,898)
- ---------------------------------------------------------------------------------------------------------
AIM Structured Growth Fund 5.81% 2,268,381 4,109,412 (404,199) 364,061
- ---------------------------------------------------------------------------------------------------------
AIM Structured Value Fund 5.17% 2,258,540 4,087,052 (322,493) (359,349)
- ---------------------------------------------------------------------------------------------------------
AIM Total Return Bond Fund 23.04% 8,547,063 18,491,957 (1,411,731) (224,610)
=========================================================================================================
TOTAL INVESTMENTS IN AFFILIATED
MUTUAL FUNDS (Cost $110,697,242) 100.13% $39,025,751 $79,180,397 $(7,083,664) $(1,357,132)
=========================================================================================================
OTHER ASSETS LESS LIABILITIES (0.13)%
=========================================================================================================
NET ASSETS 100.00%
_________________________________________________________________________________________________________
=========================================================================================================
<Caption>
REALIZED DIVIDEND SHARES VALUE
GAIN (LOSS) INCOME 12/31/07 12/31/07
- ----------------------------------------------------------------------------------------------
AIM Capital Development Fund $ 229,251 $ 45,477 135,888 $ 2,602,249
- ----------------------------------------------------------------------------------------------
AIM Floating Rate Fund (7,713) 304,772 623,579 5,344,069
- ----------------------------------------------------------------------------------------------
AIM High Yield Fund 2,472 261,119 1,007,078 4,280,082
- ----------------------------------------------------------------------------------------------
AIM Intermediate Government Fund (23,238) 634,511 1,735,779 14,927,695
- ----------------------------------------------------------------------------------------------
AIM International Core Equity Fund 471,536 135,108 374,886 5,398,355
- ----------------------------------------------------------------------------------------------
AIM International Growth Fund 256,501 23,569 84,786 2,752,161
- ----------------------------------------------------------------------------------------------
AIM International Total Return
Fund 8,762 202,923 384,008 4,166,486
- ----------------------------------------------------------------------------------------------
AIM Large Cap Basic Value Fund 474,423 80,471 397,489 5,668,195
- ----------------------------------------------------------------------------------------------
AIM Large Cap Growth Fund(b) 56,863 -- 482,058 6,527,069
- ----------------------------------------------------------------------------------------------
AIM Mid Cap Basic Value Fund 471,950 116,801 368,656 5,139,067
- ----------------------------------------------------------------------------------------------
AIM Multi-Sector Fund 145,348 21,589 93,826 2,667,466
- ----------------------------------------------------------------------------------------------
AIM Short Term Bond Fund (11,204) 601,224 1,380,504 13,335,671
- ----------------------------------------------------------------------------------------------
AIM Structured Growth Fund 75,452 190,032 534,108 6,403,960
- ----------------------------------------------------------------------------------------------
AIM Structured Value Fund 48,049 162,664 522,241 5,697,645
- ----------------------------------------------------------------------------------------------
AIM Total Return Bond Fund (29,517) 1,107,779 2,487,565 25,373,162
==============================================================================================
TOTAL INVESTMENTS IN AFFILIATED
MUTUAL FUNDS (Cost $110,697,242) $2,168,935(c) $3,888,039 $110,283,332
==============================================================================================
OTHER ASSETS LESS LIABILITIES (144,634)
==============================================================================================
NET ASSETS $110,138,698
______________________________________________________________________________________________
==============================================================================================
</Table>
Notes to Schedule of Investments:
(a) Each underlying fund and the Fund are affiliated by either having the
same investment advisor or an investment advisor under common control
with the Fund's investment advisor.
() The Fund invests in Institutional Class shares of the mutual funds
listed.
(b) Non-income producing security. A security is determined to be a
non-income producing if the security has not declared a distribution
within one year from the report date.
(c) Includes $1,650,955 of capital gains from affiliated underlying funds.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
26
AIM Allocation Funds
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2007
<Table>
<Caption>
AIM MODERATE AIM MODERATELY
AIM CONSERVATIVE AIM GROWTH AIM MODERATE GROWTH ALLOCATION CONSERVATIVE
ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND FUND ALLOCATION FUND
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in affiliated underlying
funds, at value $121,891,964 $732,147,532 $783,007,347 $503,983,094 $110,283,332
- ---------------------------------------------------------------------------------------------------------------------------------
Receivables for:
Investments sold -- affiliated
underlying funds 303,476 -- -- -- 81,372
- ---------------------------------------------------------------------------------------------------------------------------------
Fund shares sold 210,505 3,035,037 1,922,162 1,304,435 55,969
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends from affiliated funds 50,415 -- 1,807,284 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Fund expenses absorbed -- 15,055 -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Investment for trustee deferred
compensation and retirement plans 11,297 13,561 14,531 9,252 8,115
- ---------------------------------------------------------------------------------------------------------------------------------
Other assets 8,770 29,679 20,835 22,826 9,698
=================================================================================================================================
Total assets 122,476,427 735,240,864 786,772,159 505,319,607 110,438,486
_________________________________________________________________________________________________________________________________
=================================================================================================================================
LIABILITIES:
Payables for:
Investments purchased -- affiliated
underlying funds -- 2,150,115 2,353,944 223,768 --
- ---------------------------------------------------------------------------------------------------------------------------------
Fund shares reacquired 552,620 703,466 1,473,235 745,801 159,171
- ---------------------------------------------------------------------------------------------------------------------------------
Trustee deferred compensation and
retirement plans 14,574 28,519 35,296 15,961 9,262
- ---------------------------------------------------------------------------------------------------------------------------------
Accrued distribution fees 53,866 306,007 359,188 196,790 39,785
- ---------------------------------------------------------------------------------------------------------------------------------
Accrued trustees' and officer's fees
and benefits 430 852 878 747 684
- ---------------------------------------------------------------------------------------------------------------------------------
Accrued transfer agent fees 46,592 280,783 220,399 188,981 45,760
- ---------------------------------------------------------------------------------------------------------------------------------
Accrued operating expenses 60,619 90,961 84,005 68,102 45,126
=================================================================================================================================
Total liabilities 728,701 3,560,703 4,526,945 1,440,150 299,788
=================================================================================================================================
Net assets applicable to shares
outstanding $121,747,726 $731,680,161 $782,245,214 $503,879,457 $110,138,698
_________________________________________________________________________________________________________________________________
=================================================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $120,812,676 $656,976,618 $724,916,417 $480,763,609 $109,424,651
- ---------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 96,522 262,168 898,882 283,708 279,361
- ---------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain 490,957 31,405,226 18,675,107 15,916,153 848,596
- ---------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation
(depreciation) 347,571 43,036,149 37,754,808 6,915,987 (413,910)
=================================================================================================================================
$121,747,726 $731,680,161 $782,245,214 $503,879,457 $110,138,698
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
27
STATEMENT OF ASSETS AND LIABILITIES--(CONTINUED)
December 31, 2007
AIM Allocation Funds
<Table>
<Caption>
AIM MODERATE AIM MODERATELY
AIM CONSERVATIVE AIM GROWTH AIM MODERATE GROWTH ALLOCATION CONSERVATIVE
ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND FUND ALLOCATION FUND
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Class A $ 74,782,808 $486,834,016 $466,752,939 $358,335,346 $ 83,101,436
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class B $ 19,795,898 $129,577,416 $155,058,914 $ 70,657,036 $ 11,156,352
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class C $ 22,326,724 $102,941,342 $141,089,746 $ 69,400,284 $ 14,453,760
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class R $ 4,831,387 $ 12,230,608 $ 19,331,615 $ 5,475,091 $ 1,395,784
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Institutional Class $ 10,909 $ 96,779 $ 12,000 $ 11,700 $ 31,366
_________________________________________________________________________________________________________________________________
=================================================================================================================================
SHARES OUTSTANDING, $0.01 par value
per share, unlimited number of
shares authorized:
Class A 7,088,916 34,265,881 37,804,688 27,281,730 7,395,680
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class B 1,888,107 9,187,626 12,632,729 5,414,803 999,587
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class C 2,130,562 7,301,602 11,495,887 5,322,666 1,294,308
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class R 459,243 862,659 1,568,247 418,304 124,485
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Institutional Class 1,041 6,790 968.43 889 2,783
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class A:
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value per share $ 10.55 $ 14.21 $ 12.35 $ 13.13 $ 11.24
- ---------------------------------------------------------------------------------------------------------------------------------
Maximum offering price per share
(Net asset value divided by 94.50%) $ 11.16 $ 15.04 $ 13.07 $ 13.89 $ 11.89
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class B:
Net asset value and offering price
per share $ 10.48 $ 14.10 $ 12.27 $ 13.05 $ 11.16
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class C:
Net asset value and offering price
per share $ 10.48 $ 14.10 $ 12.27 $ 13.04 $ 11.17
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class R:
Net asset value and offering price
per share $ 10.52 $ 14.18 $ 12.33 $ 13.09 $ 11.21
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Institutional Class:
Net asset value and offering price
per share $ 10.48 $ 14.25 $ 12.39 $ 13.16 $ 11.27
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Cost of Investments in affiliated
underlying funds $121,544,393 $689,111,383 $745,252,539 $497,067,107 $110,697,242
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
28
AIM Allocation Funds
STATEMENT OF OPERATIONS
For the year ended December 31, 2007
<Table>
<Caption>
AIM
AIM MODERATE MODERATELY
AIM CONSERVATIVE AIM GROWTH AIM MODERATE GROWTH CONSERVATIVE
ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends from affiliated underlying
funds $ 5,114,522 $12,932,924 $25,786,298 $12,172,079 $ 3,888,039
- ---------------------------------------------------------------------------------------------------------------------------------
Interest Income 34,033 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Other Income -- 791 852 509 451
=================================================================================================================================
Total investment income 5,148,555 12,933,715 25,787,150 12,172,588 3,888,490
=================================================================================================================================
EXPENSES:
Administrative services fees 50,000 189,151 206,131 136,022 50,000
- ---------------------------------------------------------------------------------------------------------------------------------
Custodian fees 9,211 7,963 8,679 7,115 7,748
- ---------------------------------------------------------------------------------------------------------------------------------
Distribution fees:
Class A 161,285 1,044,528 1,046,828 723,865 156,718
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 203,138 1,261,838 1,547,517 648,422 96,245
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 201,632 932,005 1,315,086 589,160 122,368
- ---------------------------------------------------------------------------------------------------------------------------------
Class R 23,805 55,735 86,128 20,736 7,894
- ---------------------------------------------------------------------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 202,715 1,497,640 1,255,554 826,321 150,233
- ---------------------------------------------------------------------------------------------------------------------------------
Transfer agent fees -- Institutional 34 10 19 9 8
- ---------------------------------------------------------------------------------------------------------------------------------
Trustees' and officer's fees and
benefits 19,480 33,708 36,523 27,186 19,242
- ---------------------------------------------------------------------------------------------------------------------------------
Registration and filing fees 57,610 95,646 93,774 91,150 64,898
- ---------------------------------------------------------------------------------------------------------------------------------
Professional services fees 52,138 59,457 63,383 51,798 42,982
- ---------------------------------------------------------------------------------------------------------------------------------
Other 41,274 117,822 116,232 70,647 31,184
=================================================================================================================================
Total expenses 1,022,322 5,295,503 5,775,854 3,192,431 749,520
=================================================================================================================================
Less: Expenses reimbursed and expense
offset arrangement(s) (178,958) (640,030) (913,029) (712,997) (245,786)
=================================================================================================================================
Net expenses 843,364 4,655,473 4,862,825 2,479,434 503,734
=================================================================================================================================
Net investment income 4,305,191 8,278,242 20,924,325 9,693,154 3,384,756
=================================================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
FROM:
Net realized gain on sales of
affiliated underlying fund shares 1,525,323 8,752,264 10,175,481 2,169,232 517,980
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized gain from distributions of
affiliated underlying fund shares 949,970 32,159,622 19,897,224 16,877,233 1,650,955
=================================================================================================================================
Net realized gain from affiliated
underlying fund shares 2,475,293 40,911,886 30,072,705 19,046,465 2,168,935
=================================================================================================================================
Change in net unrealized appreciation
(depreciation) of affiliated
underlying fund shares (2,407,642) (7,628,788) (7,128,970) (5,170,731) (1,357,132)
=================================================================================================================================
Net gain from affiliated underlying
funds 67,651 33,283,098 22,943,735 13,875,734 811,803
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Net increase in net assets resulting
from operations $ 4,372,842 $41,561,340 $43,868,060 $23,568,888 $ 4,196,559
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
29
AIM Allocation Funds
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2007 and 2006
<Table>
<Caption>
AIM CONSERVATIVE AIM GROWTH AIM MODERATE
ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND
--------------------------- ---------------------------- ----------------------------
2007 2006 2007 2006 2007 2006
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 4,305,191 $ 2,364,733 $ 8,278,242 $ 1,974,261 $20,924,325 $ 11,181,860
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized gain 2,475,293 1,346,818 40,911,886 20,413,474 30,072,705 22,138,033
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net unrealized
appreciation (depreciation) (2,407,642) 1,451,438 (7,628,788) 29,775,402 (7,128,970) 21,499,883
=================================================================================================================================
Net increase in net assets
resulting from operations 4,372,842 5,162,989 41,561,340 52,163,137 43,868,060 54,819,776
=================================================================================================================================
Distributions to shareholders from
net investment income:
Class A (2,712,663) (1,313,188) (6,440,810) (1,693,949) (13,255,061) (6,733,129)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (590,695) (486,395) (843,218) (104,909) (3,392,062) (2,232,749)
- ---------------------------------------------------------------------------------------------------------------------------------
Class C (657,014) (431,714) (661,995) (71,829) (3,058,087) (1,733,287)
- ---------------------------------------------------------------------------------------------------------------------------------
Class R (172,904) (114,886) (135,859) (46,480) (498,244) (292,847)
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class (86,011) (3,697) (1,602) (1,398) (370) (3,720)
=================================================================================================================================
Total distributions from net
investment income (4,219,287) (2,349,880) (8,083,484) (1,918,565) (20,203,824) (10,995,732)
=================================================================================================================================
Distributions to shareholders from
net realized gains:
Class A (1,314,422) (599,825) (12,291,555) (7,249,541) (13,145,250) (7,981,141)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (355,623) (287,884) (3,355,676) (3,290,814) (4,478,775) (3,813,341)
- ---------------------------------------------------------------------------------------------------------------------------------
Class C (395,549) (255,499) (2,634,702) (2,253,421) (4,039,483) (2,959,755)
- ---------------------------------------------------------------------------------------------------------------------------------
Class R (89,604) (56,952) (313,880) (282,837) (538,830) (385,706)
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class (39,182) (1,570) (2,445) (4,334) (338) (3,986)
=================================================================================================================================
Total distributions from net
realized gains (2,194,380) (1,201,730) (18,598,258) (13,080,947) (22,202,676) (15,143,929)
=================================================================================================================================
Decrease in net assets resulting
from distributions (6,413,667) (3,551,610) (26,681,742) (14,999,512) (42,406,500) (26,139,661)
=================================================================================================================================
Share transactions-net:
Class A 31,577,778 7,801,428 231,711,523 94,082,900 154,849,580 88,612,666
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (538,937) 1,799,221 15,605,194 32,028,409 6,941,328 21,647,957
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 4,200,015 4,401,898 25,047,092 30,189,084 25,819,939 31,661,987
- ---------------------------------------------------------------------------------------------------------------------------------
Class R 715,287 510,474 2,318,456 2,461,798 3,996,397 4,234,537
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class 23,801 5,267 (63,487) 5,733 (153,923) 5,989
=================================================================================================================================
Net increase in net assets
resulting from share
transactions 35,977,944 14,518,288 274,618,778 158,767,924 191,453,321 146,163,136
=================================================================================================================================
Net increase in net assets 33,937,119 16,129,667 289,498,376 195,931,549 192,914,881 174,843,251
=================================================================================================================================
NET ASSETS:
Beginning of year 87,810,607 71,680,940 442,181,785 246,250,236 589,330,333 414,487,082
=================================================================================================================================
End of year* $121,747,726 $87,810,607 $731,680,161 $442,181,785 $782,245,214 $589,330,333
=================================================================================================================================
* Includes accumulated
undistributed net investment
income $ 96,522 $ 10,618 $ 262,168 $ 67,410 $ 898,882 $ 187,381
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
30
AIM Allocation Funds
STATEMENT OF CHANGES IN NET ASSETS--(CONTINUED)
For the years ended December 31, 2007 and 2006
<Table>
<Caption>
AIM MODERATE GROWTH AIM MODERATELY CONSERVATIVE
ALLOCATION FUND ALLOCATION FUND
-------------------------------- -------------------------------
2007 2006 2007 2006
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 9,693,154 $ 2,358,559 $ 3,384,756 $ 829,473
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized gain 19,046,465 7,319,196 2,168,935 671,201
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (5,170,731) 10,352,751 (1,357,132) 760,304
=================================================================================================================================
Net increase in net assets resulting from operations 23,568,888 20,030,506 4,196,559 2,260,978
=================================================================================================================================
Distributions to shareholders from net investment income:
Class A (7,353,632) (1,570,301) (2,458,720) (512,601)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (1,018,349) (391,583) (264,969) (145,732)
- ---------------------------------------------------------------------------------------------------------------------------------
Class C (989,996) (313,094) (342,643) (162,166)
- ---------------------------------------------------------------------------------------------------------------------------------
Class R (102,750) (24,479) (34,184) (10,202)
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class (267) (910) (988) (1,490)
=================================================================================================================================
Total distributions from net investment income (9,464,994) (2,300,367) (3,101,504) (832,191)
=================================================================================================================================
Distributions to shareholders from net realized gains:
Class A (6,151,082) (1,380,844) (1,299,940) (181,207)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (1,241,039) (567,537) (177,767) (66,588)
- ---------------------------------------------------------------------------------------------------------------------------------
Class C (1,206,490) (453,684) (229,877) (73,899)
- ---------------------------------------------------------------------------------------------------------------------------------
Class R (95,968) (24,752) (19,475) (3,915)
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class (201) (710) (491) (491)
=================================================================================================================================
Total distributions from net realized gains (8,694,780) (2,427,527) (1,727,550) (326,100)
=================================================================================================================================
Decrease in net assets resulting from distributions (18,159,774) (4,727,894) (4,829,054) (1,158,291)
=================================================================================================================================
Share transactions-net:
Class A 225,281,895 87,842,706 62,115,787 12,607,652
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 16,875,875 31,284,150 3,203,250 3,759,618
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 26,129,286 27,864,794 5,600,512 5,721,903
- ---------------------------------------------------------------------------------------------------------------------------------
Class R 3,114,974 1,848,525 865,609 337,855
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class (58,532) 1,621 (28,540) 1,981
=================================================================================================================================
Net increase in net assets resulting from share
transactions 271,343,498 148,841,796 71,756,618 22,429,009
=================================================================================================================================
Net increase in net assets 276,752,612 164,144,408 71,124,123 23,531,696
=================================================================================================================================
NET ASSETS:
Beginning of year 227,126,845 62,982,437 39,014,575 15,482,879
=================================================================================================================================
End of year* $503,879,457 $227,126,845 $110,138,698 $39,014,575
=================================================================================================================================
* Includes accumulated undistributed net investment
income $ 283,708 $ 55,548 $ 279,361 $ (3,891)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
31
AIM Allocation Funds
NOTES TO FINANCIAL STATEMENTS
December 31, 2007
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Growth Series (the "Trust") is organized as a Delaware statutory trust and
is registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate series portfolios (each constituting a "Fund"), each
authorized to issue an unlimited number of shares of beneficial interest. The
Funds covered in this report are AIM Conservative Allocation Fund, AIM Growth
Allocation Fund, AIM Moderate Allocation Fund, AIM Moderate Growth Allocation
Fund, and AIM Moderately Conservative Allocation Fund (collectively, the
"Funds"). Each Fund currently offers multiple classes of shares. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. The assets, liabilities and operations of each Fund are
accounted for separately. Information presented in these financial statements
pertains only to the Funds.
The investment objectives of the Funds are: to provide total return
consistent with a lower level of risk relative to the broad stock market for AIM
Conservative Allocation Fund and AIM Moderately Conservative Allocation Fund, to
provide long-term growth of capital consistent with a higher level of risk
relative to the broad stock market for AIM Growth Allocation Fund and AIM
Moderate Growth Allocation Fund, and to provide total return consistent with a
moderate level of risk relative to the broad stock market. Each Fund is a "fund
of funds", in that it invests in the Institutional Class of other mutual Funds
("underlying funds") advised by A I M Advisor, Inc ("AIM"). AIM may change the
Fund's asset class allocations, the underlying funds or target weightings in the
underlying funds without shareholder approval. The underlying funds may engage
in a number of investment techniques and practices, which involve certain risks.
Each underlying fund's accounting policies are outlined in the underlying fund's
financial statements and are available upon request.
A. SECURITY VALUATIONS -- Investments in underlying funds are valued at the
end of the day net asset value per share.
Securities in the underlying funds, 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.
32
AIM Allocation Funds
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.
The following is a summary of the significant accounting policies
followed by the Funds in the preparation of their financial statements.
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. Distributions from income from underlying funds, if any, are recorded
as ordinary income and short-term gains on ex-dividend date. Distributions
from net realized capital gains from underlying funds, if any, are recorded
as realized gains on the ex-dividend date. Interest income is recorded on
the accrual basis from settlement date.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid annually and recorded on ex-dividend date. The
Funds may elect to treat a portion of the proceeds from redemptions as
distributions for federal tax purposes.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
D. FEDERAL INCOME TAXES -- The Funds intend 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
Funds' taxable earnings to shareholders. As such, the Funds 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.
Each Fund files tax returns in the U.S. federal jurisdiction and certain
other jurisdictions. Generally each Fund is subject to examinations by such
taxing authorities for up to three years after the tax period.
E. EXPENSES -- Expenses included in the accompanying financial statements
reflect the expenses of the Fund and do not include any expenses of the
underlying funds. The effects of the underlying funds expenses are included
in earnings from the investments in the underlying funds.
Fees provided for under the Rule 12b-1 plan of a particular class of the
Fund are charged to the operations of such class. Transfer agency fees and
expenses and other shareholder recordkeeping fees and expenses attributable
to the Institutional Class are charged to such class. Transfer agency fees
and expenses and other shareholder recordkeeping fees and expenses relating
to all other classes are allocated among those classes based on relative
net assets. All other expenses are allocated among the classes based on
relative net assets.
F. 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.
G. 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 Funds. Additionally, in
the normal course of business, the Funds enter into contracts that contain
a variety of indemnification clauses. Each Fund's maximum exposure under
these arrangements is unknown as this would involve future claims that may
be made against such 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 AIM.
Under the terms of the investment advisory agreement, the Funds do not pay an
advisory fee. However, each Fund pays advisory fees to AIM indirectly as a
shareholder of the underlying funds.
Through at least June 30, 2008, AIM has contractually agreed to reimburse
expenses to the extent necessary to limit total annual operating expenses
(excluding certain items discussed below which includes 12b-1 plan payments) as
a percentage of average daily net assets of Class A, Class B, Class C, Class R
and Institutional Class shares for each Fund as follows:
<Table>
AIM Conservative Allocation Fund 0.23%
- -------------------------------------------------------------------
AIM Growth Allocation Fund 0.21%
- -------------------------------------------------------------------
AIM Moderate Allocation Fund 0.12%
- -------------------------------------------------------------------
AIM Moderate Growth Allocation Fund 0.12%
- -------------------------------------------------------------------
AIM Moderately Conservative Allocation Fund 0.14%
__________________________________________________________________
===================================================================
</Table>
In determining the advisor's obligation to reimburse expenses, the following
expenses are not taken into account, and will cause other 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 Funds have incurred but did not actually pay because of an expense
offset arrangement. Currently, in addition to the expense reimbursement with
Invesco Ltd. ("Invesco") described more fully below, the expense offset
arrangements from which the Funds may benefit are in the form of credits that
the Funds receive from banks where the Funds or its transfer agent have deposit
accounts in which it holds uninvested cash. These credits are used to pay
certain expenses incurred by the Funds.
33
AIM Allocation Funds
For the year ended December 31, 2007, AIM reimbursed expenses of:
<Table>
<Caption>
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
- --------------------------------------------------------------------------------------------------------------------------
AIM Conservative Allocation Fund $101,387 $31,924 $31,688 $7,482 $--
- --------------------------------------------------------------------------------------------------------------------------
AIM Growth Allocation Fund 383,504 115,822 85,547 10,232 --
- --------------------------------------------------------------------------------------------------------------------------
AIM Moderate Allocation Fund 506,597 187,224 159,104 20,840 --
- --------------------------------------------------------------------------------------------------------------------------
AIM Moderate Growth Allocation Fund 479,649 107,415 97,598 6,870 7
- --------------------------------------------------------------------------------------------------------------------------
AIM Moderately Conservative Allocation Fund 176,851 27,152 34,522 4,454 57
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
The Trust has entered into a master administrative services agreement with
AIM pursuant to which each Fund has agreed to pay AIM for certain administrative
costs incurred in providing accounting services to such Fund. For the year ended
December 31, 2007, expenses incurred under the agreement are shown in the
Statement of Operations as administrative services fees.
At the request of the Trustees of the Trust, Invesco Ltd. ("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 December 31, 2007, Invesco reimbursed expenses of:
<Table>
AIM Conservative Allocation Fund $ 434
- ----------------------------------------------------------------------
AIM Growth Allocation Fund 3,537
- ----------------------------------------------------------------------
AIM Moderate Allocation Fund 3,151
- ----------------------------------------------------------------------
AIM Moderate Growth Allocation Fund 1,651
- ----------------------------------------------------------------------
AIM Moderately Conservative Allocation Fund 214
______________________________________________________________________
======================================================================
</Table>
The Trust has entered into a transfer agency and service agreement with AIM
Investment Services, Inc. ("AIS") pursuant to which each 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 each Fund, subject to certain limitations
approved by the Trust's Board of Trustees. For the year ended December 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 each Fund. The Trust has
adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to each
Fund's Class A, Class B, Class C and Class R shares (collectively the "Plans").
Each 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. Rules of the Financial Industry
Regulatory Authority ("FINRA"), formerly known as National Association of
Securities Dealers, impose a cap on the total sales charges, including
asset-based sales charges that may be paid by any class of shares of each Fund.
For the year ended December 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")
are not recorded as expenses of the Funds. Front-end sales commissions are
deducted from proceeds from the sales of Fund shares prior to investment in
Class A shares of the Funds. CDSC are deducted from redemption proceeds prior to
remittance to the shareholder. During the year ended December 31, 2007, ADI
advised the Funds that ADI retained the following in front-end sales commissions
from the sale of Class A shares:
<Table>
AIM Conservative Allocation Fund $ 45,860
- ------------------------------------------------------------------------
AIM Growth Allocation Fund 391,168
- ------------------------------------------------------------------------
AIM Moderate Allocation Fund 323,738
- ------------------------------------------------------------------------
AIM Moderate Growth Allocation Fund 282,131
- ------------------------------------------------------------------------
AIM Moderately Conservative Allocation Fund 47,756
________________________________________________________________________
========================================================================
</Table>
34
AIM Allocation Funds
ADI advised the Funds that ADI retained the following in CDSC imposed on
redemptions by shareholders:
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS R
- -------------------------------------------------------------------------------------------------------
AIM Conservative Allocation Fund $ 37 $33,264 $8,754 $ --
- -------------------------------------------------------------------------------------------------------
AIM Growth Allocation Fund 351 154,942 18,596 --
- -------------------------------------------------------------------------------------------------------
AIM Moderate Allocation Fund 6,809 162,986 20,192 --
- -------------------------------------------------------------------------------------------------------
AIM Moderate Growth Allocation Fund 5,883 67,640 20,436 --
- -------------------------------------------------------------------------------------------------------
AIM Moderately Conservative Allocation Fund 12 14,757 3,144 --
_______________________________________________________________________________________________________
=======================================================================================================
</Table>
The underlying funds pay no distribution fees and the Fund's pays no sales
loads or other similar compensation to ADI for acquiring underlying fund shares.
Certain officers and trustees of the Trust are officers and directors of
AIM, AIS and/or ADI.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the year
ended December 31, 2007, the Funds received credits from these arrangements,
which resulted in the reduction of the Funds' total expenses of:
<Table>
<Caption>
TRANSFER AGENT CUSTODIAN
CREDITS CREDITS
- -----------------------------------------------------------------------------------------
AIM Conservative Allocation Fund $ 4,973 $1,070
- -----------------------------------------------------------------------------------------
AIM Growth Allocation Fund 41,055 333
- -----------------------------------------------------------------------------------------
AIM Moderate Allocation Fund 35,787 326
- -----------------------------------------------------------------------------------------
AIM Moderate Growth Allocation Fund 19,417 390
- -----------------------------------------------------------------------------------------
AIM Moderately Conservative Allocation Fund 2,536 --
_________________________________________________________________________________________
=========================================================================================
</Table>
NOTE 4--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by each Fund
to pay remuneration to certain Trustees and Officers of such Fund. Trustees have
the option to defer compensation payable by the Funds, and "Trustees' and
Officer's Fees and Benefits" also include amounts accrued by each 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 each Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Funds.
During the year ended December 31, 2007, the Funds paid legal fees for
services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees as shown below. A member of that firm is a Trustee of the
Trust.
<Table>
<Caption>
LEGAL FEES
- --------------------------------------------------------------------------
AIM Conservative Allocation Fund $3,813
- --------------------------------------------------------------------------
AIM Growth Allocation Fund 5,215
- --------------------------------------------------------------------------
AIM Moderate Allocation Fund 5,536
- --------------------------------------------------------------------------
AIM Moderate Growth Allocation Fund 4,523
- --------------------------------------------------------------------------
AIM Moderately Conservative Allocation Fund 3,705
__________________________________________________________________________
==========================================================================
</Table>
NOTE 5--BORROWINGS
The Funds 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 December 31, 2007, the Fund did not borrow or lend
under the interfund lending facility or borrow under the uncommitted unsecured
revolving credit facility.
35
AIM Allocation Funds
Additionally, the Funds are permitted to temporarily carry a negative or
overdrawn balance in their 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 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended December 31, 2007
and 2006 was as follows:
<Table>
<Caption>
2007 2006
------------------------------------------- -------------------------------------------
LONG-TERM LONG-TERM
ORDINARY CAPITAL TOTAL ORDINARY CAPITAL TOTAL
INCOME GAIN DISTRIBUTIONS INCOME GAIN DISTRIBUTIONS
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Conservative Allocation Fund $ 4,324,110 $2,089,557 $ 6,413,667 $ 2,353,063 $1,198,547 $ 3,551,610
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Growth Allocation Fund 8,582,898 18,098,844 26,681,742 1,967,993 13,031,519 14,999,512
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Moderate Allocation Fund 20,515,342 21,891,158 42,406,500 11,000,325 15,139,336 26,139,661
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Moderate Growth Allocation Fund 9,509,150 8,650,623 18,159,773 2,922,663 1,805,232 4,727,895
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Moderately Conservative
Allocation Fund 3,145,370 1,683,684 4,829,054 933,433 224,858 1,158,291
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of December 31, 2007, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
NET UNREALIZED
UNDISTRIBUTED UNDISTRIBUTED APPRECIATION TEMPORARY SHARES OF
ORDINARY LONG-TERM (DEPRECIATION) - BOOK/TAX BENEFICIAL TOTAL
INCOME GAIN INVESTMENTS DIFFERENCES INTEREST NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Conservative Allocation
Fund $130,193 $ 1,076,099 $ (258,420) $(12,822) $120,812,676 $121,747,726
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Growth Allocation Fund 345,579 31,367,909 43,016,471 (26,416) 656,976,618 731,680,161
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Moderate Allocation Fund 984,870 18,890,302 37,486,668 (33,043) 724,916,417 782,245,214
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Moderate Growth Allocation
Fund 299,746 16,024,968 6,805,661 (14,527) 480,763,609 503,879,457
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Moderately Conservative
Allocation Fund 292,300 997,965 (568,214) (8,004) 109,424,651 110,138,698
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</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 Funds net unrealized
appreciation (depreciation) differences are 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 Funds temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan benefits.
The Funds do not have a capital loss carryforward as of December 31, 2007.
NOTE 7--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
each Fund during the year ended December 31, 2007 were as follows:
<Table>
<Caption>
PURCHASES SALES
- --------------------------------------------------------------------------------------------------------------------
AIM Conservative Allocation Fund $ 52,581,717 $21,598,857
- --------------------------------------------------------------------------------------------------------------------
AIM Growth Allocation Fund 318,265,081 29,324,123
- --------------------------------------------------------------------------------------------------------------------
AIM Moderate Allocation Fund 231,364,766 41,151,439
- --------------------------------------------------------------------------------------------------------------------
AIM Moderate Growth Allocation Fund 289,303,888 9,443,555
- --------------------------------------------------------------------------------------------------------------------
AIM Moderately Conservative Allocation Fund 79,180,397 7,083,664
____________________________________________________________________________________________________________________
====================================================================================================================
</Table>
36
AIM Allocation Funds
At December 31, 2007, the aggregate cost and the net unrealized appreciation
(depreciation) of investments for tax purposes are as follows:
<Table>
<Caption>
NET UNREALIZED
FEDERAL TAX UNREALIZED UNREALIZED APPRECIATION
COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------------
AIM Conservative Allocation Fund $122,150,384 $ 2,150,906 $ (2,409,326) $ (258,420)
- ------------------------------------------------------------------------------------------------------------------------------
AIM Growth Allocation Fund 689,131,060 58,588,677 (15,572,205) 43,016,472
- ------------------------------------------------------------------------------------------------------------------------------
AIM Moderate Allocation Fund 745,520,679 47,128,873 (9,642,205) 37,486,668
- ------------------------------------------------------------------------------------------------------------------------------
AIM Moderate Growth Allocation Fund 497,177,433 21,854,613 (15,048,952) 6,805,661
- ------------------------------------------------------------------------------------------------------------------------------
AIM Moderately Conservative Allocation Fund 110,851,546 1,831,783 (2,399,997) (568,214)
______________________________________________________________________________________________________________________________
==============================================================================================================================
</Table>
NOTE 8--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.
AIM CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
2007(A) 2006
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 4,701,629 $ 51,516,142 1,847,610 $ 19,665,071
- ----------------------------------------------------------------------------------------------------------------------
Class B 627,681 6,793,367 721,918 7,614,177
- ----------------------------------------------------------------------------------------------------------------------
Class C 954,471 10,394,277 1,075,055 11,324,656
- ----------------------------------------------------------------------------------------------------------------------
Class R 198,445 2,171,739 195,366 2,092,060
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class 228,461 2,562,014 -- --
======================================================================================================================
Issued as reinvestment of dividends:
Class A 363,910 3,817,452 170,266 1,813,364
- ----------------------------------------------------------------------------------------------------------------------
Class B 81,356 848,548 62,516 662,676
- ----------------------------------------------------------------------------------------------------------------------
Class C 94,324 983,757 62,097 657,604
- ----------------------------------------------------------------------------------------------------------------------
Class R 24,992 261,416 16,098 170,964
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class 11,912 125,192 493 5,267
======================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 221,709 2,402,405 102,688 1,093,997
- ----------------------------------------------------------------------------------------------------------------------
Class B (223,433) (2,402,405) (103,463) (1,093,997)
======================================================================================================================
Reacquired:
Class A (2,388,778) (26,158,221) (1,386,910) (14,771,004)
- ----------------------------------------------------------------------------------------------------------------------
Class B (532,433) (5,778,447) (510,224) (5,383,635)
- ----------------------------------------------------------------------------------------------------------------------
Class C (660,678) (7,178,019) (719,844) (7,580,362)
- ----------------------------------------------------------------------------------------------------------------------
Class R (158,109) (1,717,868) (162,607) (1,752,550)
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class (250,216) (2,663,405) -- --
======================================================================================================================
3,295,243 $ 35,977,944 1,371,059 $ 14,518,288
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
(a) There is an entity that is a record owner of more than 5% of the
outstanding shares of the Fund and it owns 7% 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
owned beneficially.
In addition, 18% of the outstanding shares of the Fund are owned by
affiliated entities. These affiliated entities are other investment
products that are also advised by AIM or an investment advisor under
common control with AIM.
37
AIM Allocation Funds
NOTE 8--SHARE INFORMATION--(CONTINUED)
AIM GROWTH ALLOCATION FUND
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
2007(a) 2006
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 19,142,362 $274,937,740 8,524,143 $111,811,344
- ----------------------------------------------------------------------------------------------------------------------
Class B 2,821,441 40,448,466 3,511,967 45,631,101
- ----------------------------------------------------------------------------------------------------------------------
Class C 2,657,398 38,199,447 3,159,352 40,962,257
- ----------------------------------------------------------------------------------------------------------------------
Class R 456,877 6,636,932 346,999 4,546,359
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class 8,665 126,671 -- --
======================================================================================================================
Issued as reinvestment of dividends:
Class A 1,317,636 18,367,626 632,662 8,686,353
- ----------------------------------------------------------------------------------------------------------------------
Class B 294,407 4,074,532 243,586 3,322,504
- ----------------------------------------------------------------------------------------------------------------------
Class C 233,564 3,229,384 166,875 2,276,188
- ----------------------------------------------------------------------------------------------------------------------
Class R 32,329 449,688 24,036 329,296
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class 289 4,047 417 5,733
======================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 714,866 10,425,005 377,845 4,947,083
- ----------------------------------------------------------------------------------------------------------------------
Class B (722,234) (10,425,005) (381,085) (4,947,083)
======================================================================================================================
Reacquired:
Class A (4,872,891) (72,018,848) (2,385,952) (31,361,880)
- ----------------------------------------------------------------------------------------------------------------------
Class B (1,284,388) (18,492,799) (923,067) (11,978,113)
- ----------------------------------------------------------------------------------------------------------------------
Class C (1,135,346) (16,381,739) (1,011,159) (13,049,361)
- ----------------------------------------------------------------------------------------------------------------------
Class R (328,318) (4,768,164) (184,433) (2,413,857)
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class (12,816) (194,205) -- --
======================================================================================================================
19,323,841 $274,618,778 12,102,186 $158,767,924
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
(a) 19% of the outstanding shares of the Fund are owned by affiliated
entities. These affiliated entities are other investment products that
are also advised by AIM or an investment advisor under common control
with AIM.
38
AIM Allocation Funds
NOTE 8--SHARE INFORMATION--(CONTINUED)
AIM MODERATE ALLOCATION FUND
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- -------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2007(a) 2006
----------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 14,863,957 $189,608,287 9,144,545 $109,839,654
- -------------------------------------------------------------------------------------------------------------------------
Class B 3,040,515 38,727,508 3,903,812 46,520,580
- -------------------------------------------------------------------------------------------------------------------------
Class C 3,231,435 41,101,588 3,894,252 46,477,303
- -------------------------------------------------------------------------------------------------------------------------
Class R 618,550 7,923,366 473,024 5,670,741
- -------------------------------------------------------------------------------------------------------------------------
Institutional Class -- -- 2 24
=========================================================================================================================
Issued as reinvestment of dividends:
Class A 2,105,291 25,663,296 1,167,138 14,273,997
- -------------------------------------------------------------------------------------------------------------------------
Class B 620,917 7,524,510 473,694 5,764,851
- -------------------------------------------------------------------------------------------------------------------------
Class C 563,570 6,830,042 372,731 4,532,399
- -------------------------------------------------------------------------------------------------------------------------
Class R 83,749 1,019,223 54,700 667,884
- -------------------------------------------------------------------------------------------------------------------------
Institutional Class 59 708 628 7,705
=========================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 1,309,372 16,780,750 869,807 10,445,866
- -------------------------------------------------------------------------------------------------------------------------
Class B (1,320,759) (16,780,750) (876,653) (10,445,866)
=========================================================================================================================
Reacquired:
Class A (6,008,823) (77,202,753) (3,815,468) (45,946,851)
- -------------------------------------------------------------------------------------------------------------------------
Class B (1,771,007) (22,529,940) (1,692,971) (20,191,608)
- -------------------------------------------------------------------------------------------------------------------------
Class C (1,738,060) (22,111,691) (1,625,558) (19,347,715)
- -------------------------------------------------------------------------------------------------------------------------
Class R (386,398) (4,946,192) (175,223) (2,104,088)
- -------------------------------------------------------------------------------------------------------------------------
Institutional Class (11,801.57) (154,631) (143) (1,740)
=========================================================================================================================
15,200,566.43 $191,453,321 12,168,317 $146,163,136
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
(a) There is an entity that is a record owner of more than 5% of the
outstanding shares of the Fund and it owns 7% 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
owned beneficially.
() In addition, 7% of the outstanding shares of the Fund are owned by
affiliated entities. These affiliated entities are other investment
products that are also advised by AIM or an investment advisor under
common control with AIM.
39
AIM Allocation Funds
NOTE 8--SHARE INFORMATION--(CONTINUED)
AIM MODERATE GROWTH ALLOCATION FUND
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
2007(a) 2006
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 18,007,457 $238,631,685 7,860,002 $ 95,196,771
- ----------------------------------------------------------------------------------------------------------------------
Class B 2,141,964 28,363,240 3,022,022 36,196,627
- ----------------------------------------------------------------------------------------------------------------------
Class C 2,528,182 33,500,611 2,723,949 32,790,090
- ----------------------------------------------------------------------------------------------------------------------
Class R 298,566 4,031,967 159,518 1,916,225
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class -- -- 2 25
======================================================================================================================
Issued as reinvestment of dividends:
Class A 1,025,387 13,268,548 224,927 2,863,322
- ----------------------------------------------------------------------------------------------------------------------
Class B 171,081 2,200,088 73,502 930,535
- ----------------------------------------------------------------------------------------------------------------------
Class C 165,961 2,132,534 57,989 733,383
- ----------------------------------------------------------------------------------------------------------------------
Class R 15,416 198,717 3,881 49,231
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class 36 468 127 1,620
======================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 405,378 5,438,094 184,803 2,236,055
- ----------------------------------------------------------------------------------------------------------------------
Class B (408,989) (5,438,094) (185,940) (2,236,055)
======================================================================================================================
Reacquired:
Class A (2,369,948) (32,056,432) (1,021,982) (12,453,442)
- ----------------------------------------------------------------------------------------------------------------------
Class B (620,146) (8,249,359) (299,773) (3,606,957)
- ----------------------------------------------------------------------------------------------------------------------
Class C (710,582) (9,503,859) (473,172) (5,658,679)
- ----------------------------------------------------------------------------------------------------------------------
Class R (82,956) (1,115,710) (9,678) (116,931)
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class (4,291) (59,000) (2) (24)
======================================================================================================================
20,562,516 $271,343,498 12,320,175 $148,841,796
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
(a) 30% of the outstanding shares of the Fund are owned by affiliated
entities. These affiliated entities are other investment products that
are also advised by AIM.
40
AIM Allocation Funds
NOTE 8--SHARE INFORMATION--(CONTINUED)
AIM MODERATELY CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------
2007(a) 2006
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------
Sold:
Class A 5,729,536 $65,618,780 1,305,156 $14,213,405
- ------------------------------------------------------------------------------------------------------------------
Class B 510,423 5,820,590 461,426 4,974,879
- ------------------------------------------------------------------------------------------------------------------
Class C 685,102 7,800,557 612,569 6,643,652
- ------------------------------------------------------------------------------------------------------------------
Class R 266,416 3,087,568 31,941 347,082
- ------------------------------------------------------------------------------------------------------------------
Institutional Class 1,719 19,981 2 22
==================================================================================================================
Issued as reinvestment of dividends:
Class A 332,695 3,702,895 59,227 657,369
- ------------------------------------------------------------------------------------------------------------------
Class B 37,142 410,787 17,969 198,403
- ------------------------------------------------------------------------------------------------------------------
Class C 50,177 555,456 20,761 229,210
- ------------------------------------------------------------------------------------------------------------------
Class R 4,572 50,800 1,096 12,151
- ------------------------------------------------------------------------------------------------------------------
Institutional Class 132 1,479 179 1,981
==================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 76,282 875,190 44,766 487,889
- ------------------------------------------------------------------------------------------------------------------
Class B (76,968) (875,190) (45,066) (487,889)
==================================================================================================================
Reacquired:
Class A (701,012) (8,081,078) (251,601) (2,751,011)
- ------------------------------------------------------------------------------------------------------------------
Class B (188,927) (2,152,937) (85,824) (925,775)
- ------------------------------------------------------------------------------------------------------------------
Class C (241,628) (2,755,501) (106,329) (1,150,959)
- ------------------------------------------------------------------------------------------------------------------
Class R (191,176) (2,272,759) (1,992) (21,378)
- ------------------------------------------------------------------------------------------------------------------
Institutional Class (4,299) (50,000) (2) (22)
==================================================================================================================
6,290,186 $71,756,618 2,064,278 $22,429,009
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
(a) 45% of the outstanding shares of the Fund are owned by affiliated
entities. These affiliated entities are other investment products that
are also advised by AIM.
NOTE 9--SIGNIFICANT EVENT
At a meeting held on December 13, 2007, the Board of Trustees of Trust approved
certain proposals to be presented for shareholder approval at a special meeting
of the shareholders of the Trust intended to be held on February 29, 2008 (the
"Special Meeting"). At the Special Meeting, shareholders of record as of the
close of business on November 30, 2007, are entitled to vote their respective
shares on several proposals that including, among others the following
proposal(s).
New proposed sub-advisory agreement between A I M Advisors, Inc. ("AIM") and
each of AIM Funds Management Inc., Invesco Asset Management Deutschland, GmbH,
Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited,
Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco
Hong Kong Limited, Invesco Institutional (N.A.), Inc. and Invesco Senior Secured
Management, Inc. (collectively, the "Affiliated Sub-Advisers") (the "New
Sub-advisory Arrangements"). This proposal is intended to benefit the Fund and
its shareholders by permitting AIM to utilize the additional resources and
talent of these affiliated sub-advisers in managing the Fund. Because AIM would
pay all of the sub-advisory fees of the sub-advisers, the new sub-advisory
arrangements would not affect the fees the Fund pays pursuant to the advisory
agreement. If approved by shareholders, the New Sub-advisory Arrangements are
expected to become effective on or about May 1, 2008.
41
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of each Fund
outstanding throughout the periods indicated.
AIM CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
CLASS A
-------------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
-------------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.64 $ 10.41 $ 10.32 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.46(a) 0.35(a) 0.25(a) 0.06
- ---------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.05 0.36 0.11 0.36
=====================================================================================================================
Total from investment operations 0.51 0.71 0.36 0.42
=====================================================================================================================
Less distributions:
Dividends from net investment income (0.40) (0.33) (0.21) (0.10)
- ---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.20) (0.15) (0.06) (0.00)
=====================================================================================================================
Total distributions (0.60) (0.48) (0.27) (0.10)
=====================================================================================================================
Net asset value, end of period $ 10.55 $ 10.64 $ 10.41 $ 10.32
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(b) 4.79% 6.84% 3.44% 4.19%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $74,783 $44,595 $35,981 $20,124
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.49%(c) 0.49% 0.50% 0.55%(d)
- ---------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.65%(c) 0.72% 0.91% 1.41%(d)
=====================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.62% 0.61% 0.60% 0.63%
=====================================================================================================================
Ratio of net investment income to average net assets 4.18%(c) 3.32% 2.36% 1.74%(d)
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate(f) 22% 34% 24% 9%
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America 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 $64,514,185.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
42
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
CLASS B
-------------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
-------------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.59 $ 10.36 $ 10.28 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.37(a) 0.27(a) 0.17(a) 0.04
- ---------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.04 0.37 0.11 0.32
=====================================================================================================================
Total from investment operations 0.41 0.64 0.28 0.36
=====================================================================================================================
Less distributions:
Dividends from net investment income (0.32) (0.26) (0.14) (0.08)
- ---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.20) (0.15) (0.06) (0.00)
=====================================================================================================================
Total distributions (0.52) (0.41) (0.20) (0.08)
=====================================================================================================================
Net asset value, end of period $ 10.48 $ 10.59 $ 10.36 $ 10.28
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(b) 3.88% 6.14% 2.76% 3.59%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $19,796 $20,482 $18,281 $10,436
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.24%(c) 1.24% 1.20% 1.20%(d)
- ---------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.40%(c) 1.47% 1.61% 2.06%(d)
=====================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.62% 0.61% 0.60% 0.63%
=====================================================================================================================
Ratio of net investment income to average net assets 3.43%(c) 2.57% 1.66% 1.09%(d)
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate(f) 22% 34% 24% 9%
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America 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 $20,313,826.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
43
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
CLASS C
-------------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
-------------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.58 $ 10.36 $ 10.28 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.37(a) 0.27(a) 0.17(a) 0.04
- ---------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.05 0.36 0.11 0.32
=====================================================================================================================
Total from investment operations 0.42 0.63 0.28 0.36
=====================================================================================================================
Less distributions:
Dividends from net investment income (0.32) (0.26) (0.14) (0.08)
- ---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.20) (0.15) (0.06) (0.00)
=====================================================================================================================
Total distributions (0.52) (0.41) (0.20) (0.08)
=====================================================================================================================
Net asset value, end of period $ 10.48 $ 10.58 $ 10.36 $ 10.28
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(b) 3.98% 6.04% 2.76% 3.59%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $22,327 $18,436 $13,726 $11,751
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.24%(c) 1.24% 1.20% 1.20%(d)
- ---------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.40%(c) 1.47% 1.61% 2.06%(d)
=====================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.62% 0.61% 0.60% 0.63%
=====================================================================================================================
Ratio of net investment income to average net assets 3.43%(c) 2.57% 1.66% 1.09%(d)
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate(f) 22% 34% 24% 9%
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America 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 $20,163,210.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
44
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
CLASS R
----------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
----------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.62 $10.39 $10.31 $10.00
- ------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.43(a) 0.33(a) 0.22(a) 0.06
- ------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.04 0.36 0.11 0.34
==================================================================================================================
Total from investment operations 0.47 0.69 0.33 0.40
==================================================================================================================
Less distributions:
Dividends from net investment income (0.37) (0.31) (0.19) (0.09)
- ------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.20) (0.15) (0.06) (0.00)
==================================================================================================================
Total distributions (0.57) (0.46) (0.25) (0.09)
==================================================================================================================
Net asset value, end of period $10.52 $10.62 $10.39 $10.31
__________________________________________________________________________________________________________________
==================================================================================================================
Total return(b) 4.46% 6.60% 3.18% 4.05%
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $4,831 $4,182 $3,584 $1,584
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.74%(c) 0.74% 0.70% 0.70%(d)
- ------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.90%(c) 0.97% 1.11% 1.56%(d)
==================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.62% 0.61% 0.60% 0.63%
==================================================================================================================
Ratio of net investment income to average net assets 3.93%(c) 3.07% 2.16% 1.59%(d)
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate(f) 22% 34% 24% 9%
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America 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 $4,761,054.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
45
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
INSTITUTIONAL CLASS
----------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
----------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.66 $10.42 $10.32 $10.00
- ------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.50(a) 0.38(a) 0.28(a) 0.14
- ------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.05) 0.37 0.11 0.29
==================================================================================================================
Total from investment operations 0.45 0.75 0.39 0.43
==================================================================================================================
Less distributions:
Dividends from net investment income (0.43) (0.36) (0.23) (0.11)
- ------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.20) (0.15) (0.06) (0.00)
==================================================================================================================
Total distributions (0.63) (0.51) (0.29) (0.11)
==================================================================================================================
Net asset value, end of period $10.48 $10.66 $10.42 $10.32
__________________________________________________________________________________________________________________
==================================================================================================================
Total return(b) 4.13% 7.16% 3.79% 4.31%
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 11 $ 116 $ 108 $ 104
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.21%(c) 0.23% 0.20% 0.20%(d)
- ------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.21%(c) 0.31% 0.45% 0.96%(d)
==================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.62% 0.61% 0.60% 0.63%
==================================================================================================================
Ratio of net investment income to average net assets 4.45%(c) 3.57% 2.66% 2.09%(d)
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate(f) 22% 34% 24% 9%
__________________________________________________________________________________________________________________
==================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America 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 $546,477.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
46
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM GROWTH ALLOCATION FUND
<Table>
<Caption>
CLASS A
----------------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
----------------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.73 $ 12.22 $ 11.26 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.22(a) 0.10 0.10(a) 0.03(a)
- ------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.83 1.93 1.05 1.28
========================================================================================================================
Total from investment operations 1.05 2.03 1.15 1.31
========================================================================================================================
Less distributions:
Dividends from net investment income (0.19) (0.10) (0.07) (0.05)
- ------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.38) (0.42) (0.12) (0.00)
========================================================================================================================
Total distributions (0.57) (0.52) (0.19) (0.05)
========================================================================================================================
Net asset value, end of period $ 14.21 $ 13.73 $ 12.22 $ 11.26
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(b) 7.75% 16.63% 10.24% 13.12%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $486,834 $246,635 $132,159 $39,368
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.47%(c) 0.47% 0.46% 0.52%(d)
- ------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.56%(c) 0.63% 0.75% 1.31%(d)
========================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.80% 0.83% 0.87% 0.96%
========================================================================================================================
Ratio of net investment income to average net assets 1.53%(c) 0.90% 0.89% 0.40%(d)
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate(f) 5% 24% 14% 2%
________________________________________________________________________________________________________________________
========================================================================================================================
</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 $417,811,363.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
47
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM GROWTH ALLOCATION FUND
<Table>
<Caption>
CLASS B
---------------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
---------------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.64 $ 12.16 $ 11.23 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.11(a) 0.02 0.02(a) (0.02)(a)
- -----------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.82 1.90 1.05 1.28
=======================================================================================================================
Total from investment operations 0.93 1.92 1.07 1.26
=======================================================================================================================
Less distributions:
Dividends from net investment income (0.09) (0.02) (0.02) (0.03)
- -----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.38) (0.42) (0.12) (0.00)
=======================================================================================================================
Total distributions (0.47) (0.44) (0.14) (0.03)
=======================================================================================================================
Net asset value, end of period $ 14.10 $ 13.64 $ 12.16 $ 11.23
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return(b) 6.89% 15.77% 9.49% 12.61%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $129,577 $110,172 $68,411 $22,384
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.22%(c) 1.22% 1.17% 1.17%(d)
- -----------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.31%(c) 1.38% 1.46% 1.96%(d)
=======================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.80% 0.83% 0.87% 0.96%
=======================================================================================================================
Ratio of net investment income (loss) to average net assets 0.78%(c) 0.15% 0.18% (0.25)%(d)
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate(f) 5% 24% 14% 2%
_______________________________________________________________________________________________________________________
=======================================================================================================================
</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 $126,183,787.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
48
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM GROWTH ALLOCATION FUND
<Table>
<Caption>
CLASS C
--------------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
--------------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.63 $ 12.15 $ 11.23 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.11(a) 0.02 0.02(a) (0.02)(a)
- ----------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.83 1.90 1.04 1.28
======================================================================================================================
Total from investment operations 0.94 1.92 1.06 1.26
======================================================================================================================
Less distributions:
Dividends from net investment income (0.09) (0.02) (0.02) (0.03)
- ----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.38) (0.42) (0.12) (0.00)
======================================================================================================================
Total distributions (0.47) (0.44) (0.14) (0.03)
======================================================================================================================
Net asset value, end of period $ 14.10 $ 13.63 $ 12.15 $ 11.23
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(b) 6.97% 15.78% 9.40% 12.61%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $102,941 $75,611 $39,271 $11,543
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.22%(c) 1.22% 1.17% 1.17%(d)
- ----------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.31%(c) 1.38% 1.46% 1.96%(d)
======================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.80% 0.83% 0.87% 0.96%
======================================================================================================================
Ratio of net investment income (loss) to average net assets 0.78%(c) 0.15% 0.18% (0.25)%(d)
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate(f) 5% 24% 14% 2%
______________________________________________________________________________________________________________________
======================================================================================================================
</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 $93,200,493.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
49
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM GROWTH ALLOCATION FUND
<Table>
<Caption>
CLASS R
-----------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
------------------------------ TO DECEMBER 31,
2007 2006 2005 2004
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.70 $12.20 $11.25 $10.00
- -------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.19(a) 0.07 0.08(a) 0.02(a)
- -------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.83 1.92 1.05 1.28
===================================================================================================================
Total from investment operations 1.02 1.99 1.13 1.30
===================================================================================================================
Less distributions:
Dividends from net investment income (0.16) (0.07) (0.06) (0.05)
- -------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.38) (0.42) (0.12) (0.00)
===================================================================================================================
Total distributions (0.54) (0.49) (0.18) (0.05)
===================================================================================================================
Net asset value, end of period $ 14.18 $13.70 $12.20 $11.25
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) 7.52% 16.34% 10.01% 12.98%
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,231 $9,617 $6,285 $1,342
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.72%(c) 0.72% 0.67% 0.67%(d)
- -------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.81%(c) 0.88% 0.96% 1.46%(d)
===================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.80% 0.83% 0.87% 0.96%
===================================================================================================================
Ratio of net investment income to average net assets 1.28%(c) 0.65% 0.68% 0.25%(d)
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate(f) 5% 24% 14% 2%
___________________________________________________________________________________________________________________
===================================================================================================================
</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 $11,146,957.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
50
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM GROWTH ALLOCATION FUND
<Table>
<Caption>
INSTITUTIONAL CLASS
----------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
----------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $13.77 $12.25 $11.28 $10.00
- ------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.28(a) 0.16 0.14(a) 0.05(a)
- ------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.82 1.92 1.05 1.29
==================================================================================================================
Total from investment operations 1.10 2.08 1.19 1.34
==================================================================================================================
Less distributions:
Dividends from net investment income (0.24) (0.14) (0.10) (0.06)
- ------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.38) (0.42) (0.12) (0.00)
==================================================================================================================
Total distributions (0.62) (0.56) (0.22) (0.06)
==================================================================================================================
Net asset value, end of period $14.25 $13.77 $12.25 $11.28
__________________________________________________________________________________________________________________
==================================================================================================================
Total return(b) 8.09% 16.98% 10.52% 13.44%
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 97 $ 147 $ 125 $ 113
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.08%(c) 0.12% 0.17% 0.17%(d)
- ------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.08%(c) 0.12% 0.19% 0.75%(d)
==================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.80% 0.83% 0.87% 0.96%
==================================================================================================================
Ratio of net investment income to average net assets 1.91%(c) 1.24% 1.18% 0.75%(d)
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate(f) 5% 24% 14% 2%
__________________________________________________________________________________________________________________
==================================================================================================================
</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 $138,774.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
51
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATE ALLOCATION FUND
<Table>
<Caption>
CLASS A
----------------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
----------------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.23 $ 11.49 $ 10.89 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.41 0.31 0.24 0.11
- ------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.45 1.04 0.57 0.87
========================================================================================================================
Total from investment operations 0.86 1.35 0.81 0.98
========================================================================================================================
Less distributions:
Dividends from net investment income (0.37) (0.28) (0.18) (0.09)
- ------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.37) (0.33) (0.03) (0.00)
========================================================================================================================
Total distributions (0.74) (0.61) (0.21) (0.09)
========================================================================================================================
Net asset value, end of period $ 12.35 $ 12.23 $ 11.49 $ 10.89
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(b) 7.14% 11.73% 7.47% 9.85%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $466,753 $312,300 $208,841 $71,431
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.38%(c) 0.38% 0.34% 0.40%(d)
- ------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.50%(c) 0.53% 0.62% 0.87%(d)
========================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.76% 0.80% 0.82% 0.92%
========================================================================================================================
Ratio of net investment income to average net assets 3.20%(c) 2.56% 2.19% 1.56%(d)
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate(f) 6% 21% 2% 1%
________________________________________________________________________________________________________________________
========================================================================================================================
</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 $418,731,165.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
52
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATE ALLOCATION FUND
<Table>
<Caption>
CLASS B
----------------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
----------------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.17 $ 11.45 $ 10.87 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.31 0.21 0.16 0.06
- ------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.44 1.03 0.57 0.88
========================================================================================================================
Total from investment operations 0.75 1.24 0.73 0.94
========================================================================================================================
Less distributions:
Dividends from net investment income (0.28) (0.19) (0.12) (0.07)
- ------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.37) (0.33) (0.03) (0.00)
========================================================================================================================
Total distributions (0.65) (0.52) (0.15) (0.07)
========================================================================================================================
Net asset value, end of period $ 12.27 $ 12.17 $ 11.45 $ 10.87
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(b) 6.24% 10.86% 6.75% 9.44%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $155,059 $146,751 $117,373 $45,846
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.13%(c) 1.13% 1.05% 1.05%(d)
- ------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.25%(c) 1.28% 1.33% 1.52%(d)
========================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.76% 0.80% 0.82% 0.92%
========================================================================================================================
Ratio of net investment income to average net assets 2.45%(c) 1.81% 1.48% 0.91%(d)
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate(f) 6% 21% 2% 1%
________________________________________________________________________________________________________________________
========================================================================================================================
</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 $154,751,712.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
53
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATE ALLOCATION FUND
<Table>
<Caption>
CLASS C
---------------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
---------------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.17 $ 11.45 $ 10.87 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.31 0.21 0.16 0.06
- -----------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.44 1.03 0.57 0.88
=======================================================================================================================
Total from investment operations 0.75 1.24 0.73 0.94
=======================================================================================================================
Less distributions:
Dividends from net investment income (0.28) (0.19) (0.12) (0.07)
- -----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.37) (0.33) (0.03) (0.00)
=======================================================================================================================
Total distributions (0.65) (0.52) (0.15) (0.07)
=======================================================================================================================
Net asset value, end of period $ 12.27 $ 12.17 $ 11.45 $ 10.87
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return(b) 6.24% 10.86% 6.75% 9.44%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $141,090 $114,828 $77,801 $27,339
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.13%(c) 1.13% 1.05% 1.05%(d)
- -----------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.25%(c) 1.28% 1.33% 1.52%(d)
=======================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.76% 0.80% 0.82% 0.92%
=======================================================================================================================
Ratio of net investment income to average net assets 2.45%(c) 1.81% 1.48% 0.91%(d)
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate(f) 6% 21% 2% 1%
_______________________________________________________________________________________________________________________
=======================================================================================================================
</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 $131,508,591.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
54
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATE ALLOCATION FUND
<Table>
<Caption>
CLASS R
-------------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
-------------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.21 $ 11.48 $ 10.89 $10.00
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.38 0.28 0.22 0.10
- ---------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.45 1.03 0.57 0.88
=====================================================================================================================
Total from investment operations 0.83 1.31 0.79 0.98
=====================================================================================================================
Less distributions:
Dividends from net investment income (0.34) (0.25) (0.17) (0.09)
- ---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.37) (0.33) (0.03) (0.00)
=====================================================================================================================
Total distributions (0.71) (0.58) (0.20) (0.09)
=====================================================================================================================
Net asset value, end of period $ 12.33 $ 12.21 $ 11.48 $10.89
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(b) 6.90% 11.41% 7.21% 9.80%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $19,332 $15,294 $10,332 $2,161
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.63%(c) 0.63% 0.55% 0.55%(d)
- ---------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.75%(c) 0.78% 0.83% 1.02%(d)
=====================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.76% 0.80% 0.82% 0.92%
=====================================================================================================================
Ratio of net investment income to average net assets 2.95%(c) 2.31% 1.98% 1.41%(d)
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate(f) 6% 21% 2% 1%
_____________________________________________________________________________________________________________________
=====================================================================================================================
</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 $17,225,593.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
55
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATE ALLOCATION FUND
<Table>
<Caption>
INSTITUTIONAL CLASS
----------------------------------------------------
YEAR ENDED APRIL 30, 2004
DECEMBER 31, (COMMENCEMENT DATE)
----------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.26 $11.52 $10.91 $10.00
- ------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.45 0.34 0.28 0.13
- ------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.46 1.04 0.57 0.88
==================================================================================================================
Total from investment operations 0.91 1.38 0.85 1.01
==================================================================================================================
Less distributions:
Dividends from net investment income (0.41) (0.31) (0.21) (0.10)
- ------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.37) (0.33) (0.03) (0.00)
==================================================================================================================
Total distributions (0.78) (0.64) (0.24) (0.10)
==================================================================================================================
Net asset value, end of period $12.39 $12.26 $11.52 $10.91
__________________________________________________________________________________________________________________
==================================================================================================================
Total return(b) 7.49% 11.96% 7.76% 10.16%
__________________________________________________________________________________________________________________
==================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 12 $ 156 $ 141 $ 110
__________________________________________________________________________________________________________________
==================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.09%(c) 0.10% 0.05% 0.05%(d)
- ------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.09%(c) 0.10% 0.15% 0.40%(d)
==================================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.76% 0.80% 0.82% 0.92%
==================================================================================================================
Ratio of net investment income to average net assets 3.49%(c) 2.83% 2.48% 1.91%(d)
__________________________________________________________________________________________________________________
==================================================================================================================
Portfolio turnover rate(f) 6% 21% 2% 1%
__________________________________________________________________________________________________________________
==================================================================================================================
</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 $90,725.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
56
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATE GROWTH ALLOCATION FUND
<Table>
<Caption>
CLASS A
----------------------------------------------
YEAR ENDED APRIL 29, 2005
DECEMBER 31, (COMMENCEMENT DATE)
----------------------- TO DECEMBER 31,
2007 2006 2005
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.74 $ 11.35 $ 10.06
- ------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.34 0.24 0.20
- ------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.57 1.45 1.19
============================================================================================================
Total from investment operations 0.91 1.69 1.39
============================================================================================================
Less distributions:
Dividends from net investment income (0.28) (0.16) (0.10)
- ------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.24) (0.14) (0.00)
============================================================================================================
Total distributions (0.52) (0.30) (0.10)
============================================================================================================
Net asset value, end of period $ 13.13 $ 12.74 $ 11.35
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) 7.19% 14.92% 13.78%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $358,335 $130,088 $33,667
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.37%(c) 0.38% 0.37%(d)
- ------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.54%(c) 0.71% 1.16%(d)
============================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.78% 0.82% 0.78%
============================================================================================================
Ratio of net investment income to average net assets 2.54%(c) 1.97% 2.65%(d)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate(f) 2% 21% 1%
____________________________________________________________________________________________________________
============================================================================================================
</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 $289,545,851.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
57
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATE GROWTH ALLOCATION FUND
<Table>
<Caption>
CLASS B
--------------------------------------------
YEAR ENDED APRIL 29, 2005
DECEMBER 31, (COMMENCEMENT DATE)
--------------------- TO DECEMBER 31,
2007 2006 2005
- ----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.67 $ 11.32 $ 10.06
- ----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.24 0.15 0.14
- ----------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.57 1.44 1.19
==========================================================================================================
Total from investment operations 0.81 1.59 1.33
==========================================================================================================
Less distributions:
Dividends from net investment income (0.19) (0.10) (0.07)
- ----------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.24) (0.14) (0.00)
==========================================================================================================
Total distributions (0.43) (0.24) (0.07)
==========================================================================================================
Net asset value, end of period $ 13.05 $ 12.67 $ 11.32
__________________________________________________________________________________________________________
==========================================================================================================
Total return(b) 6.44% 14.04% 13.26%
__________________________________________________________________________________________________________
==========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $70,657 $52,329 $17,221
__________________________________________________________________________________________________________
==========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.12%(c) 1.13% 1.12%(d)
- ----------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.29%(c) 1.46% 1.91%(d)
==========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.78% 0.82% 0.78%
==========================================================================================================
Ratio of net investment income to average net assets 1.79%(c) 1.22% 1.90%(d)
__________________________________________________________________________________________________________
==========================================================================================================
Portfolio turnover rate(f) 2% 21% 1%
__________________________________________________________________________________________________________
==========================================================================================================
</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 $64,842,249.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
58
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATE GROWTH ALLOCATION FUND
<Table>
<Caption>
CLASS C
--------------------------------------------
YEAR ENDED APRIL 29, 2005
DECEMBER 31, (COMMENCEMENT DATE)
--------------------- TO DECEMBER 31,
2007 2006 2005
- ----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.66 $ 11.31 $ 10.06
- ----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.24 0.15 0.14
- ----------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.57 1.44 1.18
==========================================================================================================
Total from investment operations 0.81 1.59 1.32
==========================================================================================================
Less distributions:
Dividends from net investment income (0.19) (0.10) (0.07)
- ----------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.24) (0.14) (0.00)
==========================================================================================================
Total distributions (0.43) (0.24) (0.07)
==========================================================================================================
Net asset value, end of period $ 13.04 $ 12.66 $ 11.31
__________________________________________________________________________________________________________
==========================================================================================================
Total return(b) 6.45% 14.05% 13.16%
__________________________________________________________________________________________________________
==========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $69,400 $42,266 $11,656
__________________________________________________________________________________________________________
==========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.12%(c) 1.13% 1.12%(d)
- ----------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.29%(c) 1.46% 1.91%(d)
==========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.78% 0.82% 0.78%
==========================================================================================================
Ratio of net investment income to average net assets 1.79%(c) 1.22% 1.90%(d)
__________________________________________________________________________________________________________
==========================================================================================================
Portfolio turnover rate(f) 2% 21% 1%
__________________________________________________________________________________________________________
==========================================================================================================
</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 $58,916,018.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
59
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATE GROWTH ALLOCATION FUND
<Table>
<Caption>
CLASS R
------------------------------------------
YEAR ENDED APRIL 29, 2005
DECEMBER 31, (COMMENCEMENT DATE)
------------------- TO DECEMBER 31,
2007 2006 2005
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.70 $11.34 $10.06
- --------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.31 0.21 0.18
- --------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.57 1.43 1.19
========================================================================================================
Total from investment operations 0.88 1.64 1.37
========================================================================================================
Less distributions:
Dividends from net investment income (0.25) (0.14) (0.09)
- --------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.24) (0.14) (0.00)
========================================================================================================
Total distributions (0.49) (0.28) (0.09)
========================================================================================================
Net asset value, end of period $13.09 $12.70 $11.34
________________________________________________________________________________________________________
========================================================================================================
Total return(b) 6.98% 14.47% 13.61%
________________________________________________________________________________________________________
========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $5,475 $2,378 $ 380
________________________________________________________________________________________________________
========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.62%(c) 0.63% 0.62%(d)
- --------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.79%(c) 0.96% 1.41%(d)
========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.78% 0.82% 0.78%
========================================================================================================
Ratio of net investment income to average net assets 2.29%(c) 1.72% 2.40%(d)
________________________________________________________________________________________________________
========================================================================================================
Portfolio turnover rate(f) 2% 21% 1%
________________________________________________________________________________________________________
========================================================================================================
</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 $4,147,108.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
60
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATE GROWTH ALLOCATION FUND
<Table>
<Caption>
INSTITUTIONAL CLASS
------------------------------------------
YEAR ENDED APRIL 29, 2005
DECEMBER 31, (COMMENCEMENT DATE)
------------------- TO DECEMBER 31,
2007 2006 2005
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.76 $11.36 $10.06
- --------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.38 0.27 0.21
- --------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.57 1.45 1.19
========================================================================================================
Total from investment operations 0.95 1.72 1.40
========================================================================================================
Less distributions:
Dividends from net investment income (0.31) (0.18) (0.10)
- --------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.24) (0.14) (0.00)
========================================================================================================
Total distributions (0.55) (0.32) (0.10)
========================================================================================================
Net asset value, end of period $13.16 $12.76 $11.36
________________________________________________________________________________________________________
========================================================================================================
Total return(b) 7.42% 15.17% 13.95%
________________________________________________________________________________________________________
========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 12 $ 66 $ 57
________________________________________________________________________________________________________
========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.10%(c) 0.12% 0.12%(d)
- --------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.12%(c) 0.26% 0.69%(d)
========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.78% 0.82% 0.78%
========================================================================================================
Ratio of net investment income to average net assets 2.82%(c) 2.22% 2.90%(d)
________________________________________________________________________________________________________
========================================================================================================
Portfolio turnover rate(f) 2% 21% 1%
________________________________________________________________________________________________________
========================================================================================================
</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 $37,088.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
61
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATELY CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
CLASS A
--------------------------------------------
YEAR ENDED APRIL 29, 2005
DECEMBER 31, (COMMENCEMENT DATE)
--------------------- TO DECEMBER 31,
2007 2006 2005
- ----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.09 $10.60 $10.03
- ----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.48 0.36 0.22
- ----------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.21 0.50 0.49
==========================================================================================================
Total from investment operations 0.69 0.86 0.71
==========================================================================================================
Less distributions:
Dividends from net investment income (0.35) (0.27) (0.13)
- ----------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.19) (0.10) (0.01)
==========================================================================================================
Total distributions (0.54) (0.37) (0.14)
==========================================================================================================
Net asset value, end of period $ 11.24 $11.09 $10.60
__________________________________________________________________________________________________________
==========================================================================================================
Total return(b) 6.23% 8.13% 7.01%
__________________________________________________________________________________________________________
==========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $83,101 $21,713 $8,489
__________________________________________________________________________________________________________
==========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.39%(c) 0.40% 0.40%(d)
- ----------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.67%(c) 1.37% 2.81%(d)
==========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.70% 0.74% 0.69%
==========================================================================================================
Ratio of net investment income to average net assets 4.12%(c) 3.26% 3.04%(d)
__________________________________________________________________________________________________________
==========================================================================================================
Portfolio turnover rate(f) 8% 29% 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 $62,687,179.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
62
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATELY CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
CLASS B
-------------------------------------------
YEAR ENDED APRIL 29, 2005
DECEMBER 31, (COMMENCEMENT DATE)
-------------------- TO DECEMBER 31,
2007 2006 2005
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.03 $10.57 $10.03
- ---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.39 0.27 0.16
- ---------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.21 0.50 0.49
=========================================================================================================
Total from investment operations 0.60 0.77 0.65
=========================================================================================================
Less distributions:
Dividends from net investment income (0.28) (0.21) (0.10)
- ---------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.19) (0.10) (0.01)
=========================================================================================================
Total distributions (0.47) (0.31) (0.11)
=========================================================================================================
Net asset value, end of period $ 11.16 $11.03 $10.57
_________________________________________________________________________________________________________
=========================================================================================================
Total return(b) 5.40% 7.29% 6.49%
_________________________________________________________________________________________________________
=========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $11,156 $7,916 $3,904
_________________________________________________________________________________________________________
=========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.14%(c) 1.15% 1.14%(d)
- ---------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.42%(c) 2.12% 3.55%(d)
=========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.70% 0.74% 0.69%
=========================================================================================================
Ratio of net investment income to average net assets 3.37%(c) 2.51% 2.30%(d)
_________________________________________________________________________________________________________
=========================================================================================================
Portfolio turnover rate(f) 8% 29% 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 $9,624,526.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
63
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATELY CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
CLASS C
-------------------------------------------
YEAR ENDED APRIL 29, 2005
DECEMBER 31, (COMMENCEMENT DATE)
-------------------- TO DECEMBER 31,
2007 2006 2005
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.03 $10.57 $10.03
- ---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.39 0.27 0.16
- ---------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.22 0.50 0.49
=========================================================================================================
Total from investment operations 0.61 0.77 0.65
=========================================================================================================
Less distributions:
Dividends from net investment income (0.28) (0.21) (0.10)
- ---------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.19) (0.10) (0.01)
=========================================================================================================
Total distributions (0.47) (0.31) (0.11)
=========================================================================================================
Net asset value, end of period $ 11.17 $11.03 $10.57
_________________________________________________________________________________________________________
=========================================================================================================
Total return(b) 5.49% 7.29% 6.49%
_________________________________________________________________________________________________________
=========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $14,454 $8,833 $2,893
_________________________________________________________________________________________________________
=========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.14%(c) 1.15% 1.14%(d)
- ---------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.42%(c) 2.12% 3.55%(d)
=========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.70% 0.74% 0.69%
=========================================================================================================
Ratio of net investment income to average net assets 3.37%(c) 2.51% 2.30%(d)
_________________________________________________________________________________________________________
=========================================================================================================
Portfolio turnover rate(f) 8% 29% 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 $12,236,816.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
64
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATELY CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
CLASS R
-------------------------------------------
YEAR ENDED APRIL 29, 2005
DECEMBER 31, (COMMENCEMENT DATE)
-------------------- TO DECEMBER 31,
2007 2006 2005
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.07 $10.59 $10.03
- ---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.45 0.33 0.20
- ---------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.20 0.50 0.49
=========================================================================================================
Total from investment operations 0.65 0.83 0.69
=========================================================================================================
Less distributions:
Dividends from net investment income (0.32) (0.25) (0.12)
- ---------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.19) (0.10) (0.01)
=========================================================================================================
Total distributions (0.51) (0.35) (0.13)
=========================================================================================================
Net asset value, end of period $ 11.21 $11.07 $10.59
_________________________________________________________________________________________________________
=========================================================================================================
Total return(b) 5.91% 7.84% 6.84%
_________________________________________________________________________________________________________
=========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,396 $ 495 $ 144
_________________________________________________________________________________________________________
=========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.64%(c) 0.65% 0.64%(d)
- ---------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.92%(c) 1.62% 3.05%(d)
=========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.70% 0.74% 0.69%
=========================================================================================================
Ratio of net investment income to average net assets 3.87%(c) 3.01% 2.80%(d)
_________________________________________________________________________________________________________
=========================================================================================================
Portfolio turnover rate(f) 8% 29% 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 $1,578,693.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
65
AIM Allocation Funds
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM MODERATELY CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
INSTITUTIONAL CLASS
------------------------------------------
YEAR ENDED APRIL 29, 2005
DECEMBER 31, (COMMENCEMENT DATE)
------------------- TO DECEMBER 31,
2007 2006 2005
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.11 $10.61 $10.03
- --------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.50 0.38 0.23
- --------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.22 0.51 0.49
========================================================================================================
Total from investment operations 0.72 0.89 0.72
========================================================================================================
Less distributions:
Dividends from net investment income (0.37) (0.29) (0.13)
- --------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.19) (0.10) (0.01)
========================================================================================================
Total distributions (0.56) (0.39) (0.14)
========================================================================================================
Net asset value, end of period $11.27 $11.11 $10.61
________________________________________________________________________________________________________
========================================================================================================
Total return(b) 6.51% 8.41% 7.19%
________________________________________________________________________________________________________
========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 31 $ 58 $ 54
________________________________________________________________________________________________________
========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.14%(c) 0.14% 0.14%(d)
- --------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.27%(c) 0.99% 2.40%(d)
========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.70% 0.74% 0.69%
========================================================================================================
Ratio of net investment income to average net assets 4.37%(c) 3.51% 3.30%(d)
________________________________________________________________________________________________________
========================================================================================================
Portfolio turnover rate(f) 8% 29% 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 $43,424.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 11--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.
66
AIM Allocation Funds
NOTE 11--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 Ltd. ("Invesco") 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.
67
AIM Allocation Funds
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Growth Series and Shareholders of;
AIM Conservative Allocation Fund
AIM Growth Allocation Fund
AIM Moderate Allocation Fund
AIM Moderate Growth Allocation Fund
AIM Moderately Conservative Allocation Fund:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules 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 Conservative Allocation Fund,
AIM Growth Allocation Fund, AIM Moderate Allocation Fund, AIM Moderate Growth
Allocation Fund, AIM Moderately Conservative Allocation Fund (five of the funds
constituting AIM Growth Series, hereafter referred to as the "Funds") at
December 31, 2007, the results of each of their operations for the year then
ended, the changes in each of their net assets for the two years in the period
then ended, and each of their 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
December 31, 2007 by correspondence with the custodian, provide a reasonable
basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
February 20, 2008
Houston, Texas
68
AIM Allocation Funds
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments or
contingent deferred sales charges on redemptions, and redemption fees, if any;
and (2) ongoing costs, including distribution and/or service (12b-1) fees; and
other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period July 1, 2007, through December 31, 2007.
In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the underlying
funds in which your Fund invests. The amount of fees and expenses incurred
indirectly by your Fund will vary because the underlying funds have varied
expenses and fee levels and the Fund may own different proportions of the
underlying funds at different times. Estimated underlying fund expenses are not
expenses that are incurred directly by your Fund. They are expenses that are
incurred directly by the underlying funds and are deducted from the value of the
funds your Fund invests in. The effect of the estimated underlying fund expenses
that you bear indirectly are included in your Fund's total return.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the hypothetical
information is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition,
expenses shown in the table do not include the expenses of the underlying funds,
which are borne indirectly by the Fund. If transaction costs and indirect
expenses were included, your costs would have been higher.
AIM CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $1,010.90 $2.43 $1,022.79 $2.45 0.48%
B 1,000.00 1,006.50 6.22 1,019.00 6.26 1.23
C 1,000.00 1,007.40 6.22 1,019.00 6.26 1.23
R 1,000.00 1,010.40 3.70 1,021.53 3.72 0.73
</Table>
69
AIM Allocation Funds
AIM GROWTH ALLOCATION FUND
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $995.60 $2.36 $1,022.84 $2.40 0.47%
B 1,000.00 991.80 6.12 1,019.06 6.21 1.22
C 1,000.00 991.80 6.12 1,019.06 6.21 1.22
R 1,000.00 994.60 3.62 1,021.58 3.67 0.72
</Table>
AIM MODERATE ALLOCATION FUND
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $1,001.80 $1.92 $1,023.29 $1.94 0.38%
B 1,000.00 997.60 5.69 1,019.51 5.75 1.13
C 1,000.00 997.60 5.69 1,019.51 5.75 1.13
R 1,000.00 1,001.00 3.18 1,022.03 3.21 0.63
</Table>
AIM MODERATE GROWTH ALLOCATION FUND
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $995.40 $1.86 $1,023.34 $1.89 0.37%
B 1,000.00 992.40 5.62 1,019.56 5.70 1.12
C 1,000.00 992.40 5.62 1,019.56 5.70 1.12
R 1,000.00 994.60 3.12 1,022.08 3.16 0.62
</Table>
AIM MODERATELY CONSERVATIVE ALLOCATION FUND
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
SHARE ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $1,013.80 $1.98 $1,023.24 $1.99 0.39%
B 1,000.00 1,010.00 5.78 1,019.46 5.80 1.14
C 1,000.00 1,010.00 5.78 1,019.46 5.80 1.14
R 1,000.00 1,011.60 3.25 1,021.98 3.26 0.64
</Table>
(1) The actual ending account value is based on the actual total return of
the Fund for the period July 1, 2007, through December 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.
70
Supplement to Annual Report dated 12/31/07
AIM Allocation Funds
o AIM Conservative Allocation Fund
o AIM Growth Allocation Fund
o AIM Moderate Allocation Fund
o AIM Moderate Growth Allocation Fund
o AIM Moderately Conservative Allocation Fund
Institutional Class Shares
The following information has been prepared to provide Institutional Class shareholders with a performance overview specific to
their holdings. Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans
that meet certain criteria.
==========================================
NASDAQ SYMBOLS
AIM CONSERVATIVE ALLOCATION FUND ACNIX
AIM GROWTH ALLOCATION FUND AADIX
AIM MODERATE ALLOCATION FUND AMLIX
AIM MODERATE GROWTH ALLOCATION FUND AIMGX
AIM MODERATELY CONSERVATIVE
ALLOCATION FUND CMAIX
==========================================
=======================================================================================
CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES CAREFULLY. FOR THIS
AND OTHER INFORMATION ABOUT AIM FUNDS, OBTAIN A PROSPECTUS FROM YOUR FINANCIAL ADVISOR
AND READ IT CAREFULLY BEFORE INVESTING.
=======================================================================================
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 AAS-INS-1 A I M Distributors, Inc. -- REGISTERED TRADEMARK --
Information about your Fund's expenses
AIM Conservative Allocation Fund long-term performance
Past performance cannot guarantee Performance shown in the chart and in the annual report is that of the Fund's
comparable future results. table(s) does not reflect deduction of Class A, B, C and R shares. The
taxes a shareholder would pay on Fund performance of the Fund's other share
The data shown in the chart above distributions or sale of Fund shares. classes will differ primarily due to
includes reinvested distributions, Fund Performance of the indexes does not different sales charge structures and
expenses and management fees. Index reflect the effects of taxes. class expenses, and may be greater than or
results include reinvested dividends. less than the performance of the Fund's
Performance of an index of funds reflects The performance data shown in the chart Institutional Class shares shown in the
fund expenses and management fees; above is that of the Fund's institutional chart above.
performance of a market index does not. share class. The performance data shown in
the chart
AIM Conservative Allocation Fund HAD THE ADVISOR NOT WAIVED FEES AND/OR REPORT FOR INFORMATION ON COMPARATIVE
========================================== REIMBURSED EXPENSES IN THE PAST, BENCHMARKS. PLEASE CONSULT YOUR FUND
AVERAGE ANNUAL TOTAL RETURNS PERFORMANCE WOULD HAVE BEEN LOWER. PROSPECTUS FOR MORE INFORMATION. FOR THE
For periods ended 12/31/07 MOST CURRENT MONTH-END PERFORMANCE, PLEASE
PLEASE NOTE THAT PAST PERFORMANCE IS CALL 800-451-4246 OR VISIT
Inception (4/30/04) 5.28% NOT INDICATIVE OF FUTURE RESULTS. MORE AIMINVESTMENTS.COM.
1 Year 4.13 RECENT RETURNS MAY BE MORE OR LESS THAN
========================================== THOSE SHOWN. ALL RETURNS ASSUME
REINVESTMENT OF DISTRIBUTIONS AT NAV.
INSTITUTIONAL CLASS SHARES HAVE NO SALES INVESTMENT RETURN AND PRINCIPAL VALUE WILL
CHARGE; THEREFORE, PERFORMANCE IS AT NET FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
ASSET VALUE (NAV). PERFORMANCE OF MAY BE WORTH MORE OR LESS THAN THEIR
INSTITUTIONAL CLASS SHARES WILL DIFFER ORIGINAL COST. SEE FULL
FROM PERFORMANCE OF OTHER SHARE CLASSES
PRIMARILY DUE TO DIFFERING SALES CHARGES
AND CLASS EXPENSES.
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 4/30/04
AIM CONSERVATIVE LIPPER MIXED-ASSET
ALLOCATION FUND- TARGET ALLOCATION
INSTITUTIONAL CLASS CUSTOM CONSERVATIVE LIPPER INCOME FUNDS CONSERVATIVE FUNDS
DATE SHARES S&P 500 INDEX(1) ALLOCATION INDEX(2) INDEX(1) INDEX(1)
4/30/04 $10000 $10000 $10000 $10000 $10000
5/04 10020 10137 10001 10004 10003
6/04 10100 10334 10094 10110 10080
7/04 10030 9992 10071 10035 9992
8/04 10081 10032 10212 10138 10074
9/04 10160 10141 10281 10247 10133
10/04 10220 10296 10391 10373 10206
11/04 10310 10712 10477 10555 10323
12/04 10431 11077 10642 10759 10476
1/05 10401 10807 10615 10672 10394
2/05 10451 11034 10653 10751 10460
3/05 10391 10839 10558 10616 10358
4/05 10380 10633 10585 10584 10296
5/05 10481 10971 10759 10748 10475
6/05 10562 10987 10829 10853 10547
7/05 10613 11395 10890 10979 10683
8/05 10664 11291 10963 11033 10738
9/05 10664 11383 10934 11046 10764
10/05 10603 11193 10826 10901 10644
11/05 10734 11616 10965 11056 10811
12/05 10827 11620 11052 11147 10887
1/06 10962 11928 11166 11339 11079
2/06 10973 11960 11203 11377 11074
3/06 11035 12109 11195 11401 11143
4/06 11087 12271 11231 11485 11205
5/06 10973 11919 11133 11354 11086
6/06 10983 11934 11153 11386 11092
7/06 11045 12008 11258 11513 11162
8/06 11170 12293 11446 11696 11331
9/06 11274 12610 11576 11846 11466
10/06 11420 13021 11741 12066 11641
11/06 11554 13268 11904 12249 11814
12/06 11603 13454 11916 12311 11845
1/07 11690 13657 11977 12410 11916
2/07 11745 13391 12059 12452 11965
3/07 11832 13540 12102 12538 12039
4/07 11995 14140 12276 12801 12237
5/07 12060 14633 12334 12945 12333
6/07 12038 14390 12253 12846 12240
7/07 11973 13944 12200 12698 12167
8/07 12005 14153 12333 12791 12226
9/07 12158 14682 12526 13070 12480
10/07 12299 14915 12669 13254 12640
11/07 12191 14291 12653 13110 12537
12/07 12081 14192 12655 13003 12515
====================================================================================================================================
SOURCES: (1)LIPPER INC., (2)A I M MANAGEMENT GROUP INC., LIPPER INC.
Information about your Fund's expenses
AIM Growth Allocation Fund long-term performance
Past performance cannot guarantee Performance shown in the chart and in the annual report is that of the Fund's
comparable future results. table(s) does not reflect deduction of Class A, B, C and R shares. The
taxes a shareholder would pay on Fund performance of the Fund's other share
The data shown in the chart above distributions or sale of Fund shares. classes will differ primarily due to
includes reinvested distributions, Fund Performance of the indexes does not different sales charge structures and
expenses and management fees. Index reflect the effects of taxes. class expenses, and may be greater than or
results include reinvested dividends. less than the performance of the Fund's
Performance of an index of funds reflects The performance data shown in the chart Institutional Class shares shown in the
fund expenses and management fees; above is that of the Fund's institutional chart above.
performance of a market index does not. share class. The performance data shown in
the chart
AIM Growth Allocation Fund HAD THE ADVISOR NOT WAIVED FEES AND/OR REPORT FOR INFORMATION ON COMPARATIVE
========================================== REIMBURSED EXPENSES IN THE PAST, BENCHMARKS. PLEASE CONSULT YOUR FUND
AVERAGE ANNUAL TOTAL RETURNS PERFORMANCE WOULD HAVE BEEN LOWER. PROSPECTUS FOR MORE INFORMATION. FOR THE
For periods ended 12/31/07 MOST CURRENT MONTH-END PERFORMANCE, PLEASE
PLEASE NOTE THAT PAST PERFORMANCE IS CALL 800-451-4246 OR VISIT
Inception (4/30/04) 13.37% NOT INDICATIVE OF FUTURE RESULTS. MORE AIMINVESTMENTS.COM.
1 Year 8.09 RECENT RETURNS MAY BE MORE OR LESS THAN
========================================== THOSE SHOWN. ALL RETURNS ASSUME
REINVESTMENT OF DISTRIBUTIONS AT NAV.
INSTITUTIONAL CLASS SHARES HAVE NO SALES INVESTMENT RETURN AND PRINCIPAL VALUE WILL
CHARGE; THEREFORE, PERFORMANCE IS AT NET FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
ASSET VALUE (NAV). PERFORMANCE OF MAY BE WORTH MORE OR LESS THAN THEIR
INSTITUTIONAL CLASS SHARES WILL DIFFER ORIGINAL COST. SEE FULL
FROM PERFORMANCE OF OTHER SHARE CLASSES
PRIMARILY DUE TO DIFFERING SALES CHARGES
AND CLASS EXPENSES.
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 4/30/04
AIM GROWTH ALLOCATION
FUND-INSTITUTIONAL CLASS CUSTOM GROWTH LIPPER MULTI-CAP CORE
DATE SHARES S&P 500 INDEX(2) ALLOCATION INDEX(1) FUNDS INDEX(2)
4/30/04 $10000 $10000 $10000 $10000
5/04 10140 10137 10133 10120
6/04 10390 10334 10341 10344
7/04 9900 9992 10010 9920
8/04 9890 10032 10097 9912
9/04 10160 10141 10266 10124
10/04 10381 10296 10495 10277
11/04 10950 10712 11010 10793
12/04 11344 11077 11418 11172
1/05 11082 10807 11124 10918
2/05 11393 11034 11418 11139
3/05 11162 10839 11208 10964
4/05 10890 10633 11020 10665
5/05 11242 10971 11318 11102
6/05 11443 10987 11440 11224
7/05 11886 11395 11869 11700
8/05 11907 11291 11856 11647
9/05 12067 11383 12054 11752
10/05 11816 11193 11800 11509
11/05 12269 11616 12199 11952
12/05 12538 11620 12352 12091
1/06 13233 11928 12855 12540
2/06 13172 11960 12877 12490
3/06 13510 12109 13155 12769
4/06 13756 12271 13379 12927
5/06 13193 11919 12951 12479
6/06 13173 11934 13001 12442
7/06 13132 12008 13056 12293
8/06 13367 12293 13388 12584
9/06 13583 12610 13606 12854
10/06 14084 13021 14105 13332
11/06 14482 13268 14451 13648
12/06 14666 13454 14662 13801
1/07 14986 13657 14930 14102
2/07 14794 13391 14796 13916
3/07 15050 13540 14973 14062
4/07 15593 14140 15532 14609
5/07 16136 14633 15964 15156
6/07 15902 14390 15698 15025
7/07 15433 13944 15235 14544
8/07 15572 14153 15377 14638
9/07 16200 14682 15988 15148
10/07 16786 14915 16352 15454
11/07 15945 14291 15677 14759
12/07 15853 14192 15490 14625
====================================================================================================================================
SOURCES: (1)A I M MANAGEMENT GROUP INC., LIPPER INC., (2)LIPPER INC.
Information about your Fund's expenses
AIM Moderate Allocation Fund long-term performance
Past performance cannot guarantee Performance shown in the chart and in the annual report is that of the Fund's
comparable future results. table(s) does not reflect deduction of Class A, B, C and R shares. The
taxes a shareholder would pay on Fund performance of the Fund's other share
The data shown in the chart above distributions or sale of Fund shares. classes will differ primarily due to
includes reinvested distributions, Fund Performance of the indexes does not different sales charge structures and
expenses and management fees. Index reflect the effects of taxes. class expenses, and may be greater than or
results include reinvested dividends. less than the performance of the Fund's
Performance of an index of funds reflects The performance data shown in the chart Institutional Class shares shown in the
fund expenses and management fees; above is that of the Fund's institutional chart above.
performance of a market index does not. share class. The performance data shown in
the chart
AIM Moderate Allocation Fund HAD THE ADVISOR NOT WAIVED FEES AND/OR REPORT FOR INFORMATION ON COMPARATIVE
========================================== REIMBURSED EXPENSES IN THE PAST, BENCHMARKS. PLEASE CONSULT YOUR FUND
AVERAGE ANNUAL TOTAL RETURNS PERFORMANCE WOULD HAVE BEEN LOWER. PROSPECTUS FOR MORE INFORMATION. FOR THE
For periods ended 12/31/07 MOST CURRENT MONTH-END PERFORMANCE, PLEASE
PLEASE NOTE THAT PAST PERFORMANCE IS CALL 800-451-4246 OR VISIT
Inception (4/30/04) 10.20% NOT INDICATIVE OF FUTURE RESULTS. MORE AIMINVESTMENTS.COM.
1 Year 7.49 RECENT RETURNS MAY BE MORE OR LESS THAN
========================================== THOSE SHOWN. ALL RETURNS ASSUME
REINVESTMENT OF DISTRIBUTIONS AT NAV.
INSTITUTIONAL CLASS SHARES HAVE NO SALES INVESTMENT RETURN AND PRINCIPAL VALUE WILL
CHARGE; THEREFORE, PERFORMANCE IS AT NET FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
ASSET VALUE (NAV). PERFORMANCE OF MAY BE WORTH MORE OR LESS THAN THEIR
INSTITUTIONAL CLASS SHARES WILL DIFFER ORIGINAL COST. SEE FULL
FROM PERFORMANCE OF OTHER SHARE CLASSES
PRIMARILY DUE TO DIFFERING SALES CHARGES
AND CLASS EXPENSES.
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 4/30/04
AIM MODERATE
ALLOCATION FUND- LIPPER MIXED-ASSET
INSTITUTIONAL CLASS CUSTOM MODERATE LIPPER BALANCED FUNDS TARGET ALLOCATION
DATE SHARES S&P 500 INDEX(1) ALLOCATION INDEX(2) INDEX(1) MODERATE FUNDS INDEX(1)
4/30/04 $10000 $10000 $10000 $10000 $10000
5/04 10040 10137 10045 10044 10016
6/04 10220 10334 10196 10201 10143
7/04 9969 9992 10018 10009 10014
8/04 10009 10032 10122 10070 10131
9/04 10219 10141 10251 10220 10234
10/04 10380 10296 10421 10330 10357
11/04 10730 10712 10725 10608 10609
12/04 11016 11077 11013 10873 10879
1/05 10905 10807 10878 10733 10754
2/05 11097 11034 11044 10885 10889
3/05 10935 10839 10884 10735 10741
4/05 10763 10633 10792 10606 10630
5/05 10985 10971 11017 10849 10857
6/05 11156 10987 11105 10927 10985
7/05 11398 11395 11326 11170 11234
8/05 11459 11291 11386 11202 11242
9/05 11549 11383 11475 11247 11274
10/05 11368 11193 11288 11070 11071
11/05 11651 11616 11545 11339 11290
12/05 11870 11620 11688 11438 11393
1/06 12262 11928 11986 11711 11662
2/06 12231 11960 12010 11697 11669
3/06 12417 12109 12125 11811 11733
4/06 12582 12271 12276 11939 11837
5/06 12232 11919 12018 11703 11648
6/06 12191 11934 12035 11696 11662
7/06 12221 12008 12117 11750 11776
8/06 12447 12293 12377 11976 11976
9/06 12612 12610 12543 12149 12139
10/06 12921 13021 12857 12432 12425
11/06 13157 13268 13105 12671 12646
12/06 13289 13454 13221 12765 12762
1/07 13495 13657 13345 12903 12887
2/07 13473 13391 13353 12854 12875
3/07 13679 13540 13473 12964 12974
4/07 14036 14140 13839 13337 13309
5/07 14339 14633 14059 13623 13553
6/07 14230 14390 13927 13496 13421
7/07 13960 13944 13717 13266 13200
8/07 14026 14153 13828 13373 13296
9/07 14383 14682 14221 13751 13652
10/07 14751 14915 14482 13993 13869
11/07 14296 14291 14205 13665 13594
12/07 14286 14192 14129 13598 13487
====================================================================================================================================
SOURCES: (1)LIPPER INC., (2)A I M MANAGEMENT GROUP INC., LIPPER INC.
Information about your Fund's expenses
AIM Moderate Growth Allocation Fund long-term performance
Past performance cannot guarantee Performance shown in the chart and in the annual report is that of the Fund's
comparable future results. table(s) does not reflect deduction of Class A, B, C and R shares. The
taxes a shareholder would pay on Fund performance of the Fund's other share
The data shown in the chart above distributions or sale of Fund shares. classes will differ primarily due to
includes reinvested distributions, Fund Performance of the indexes does not different sales charge structures and
expenses and management fees. Index reflect the effects of taxes. class expenses, and may be greater than or
results include reinvested dividends. less than the performance of the Fund's
Performance of an index of funds reflects The performance data shown in the chart Institutional Class shares shown in the
fund expenses and management fees; above is that of the Fund's institutional chart above.
performance of a market index does not. share class. The performance data shown in
the chart
AIM Moderate Growth HAD THE ADVISOR NOT WAIVED FEES AND/OR REPORT FOR INFORMATION ON COMPARATIVE
Allocation Fund REIMBURSED EXPENSES, PERFORMANCE WOULD BENCHMARKS. PLEASE CONSULT YOUR FUND
========================================== HAVE BEEN LOWER. PROSPECTUS FOR MORE INFORMATION. FOR THE
AVERAGE ANNUAL TOTAL RETURNS MOST CURRENT MONTH-END PERFORMANCE, PLEASE
For periods ended 12/31/07 PLEASE NOTE THAT PAST PERFORMANCE IS CALL 800-451-4246 OR VISIT
NOT INDICATIVE OF FUTURE RESULTS. MORE AIMINVESTMENTS.COM.
Inception (4/29/05) 13.74% RECENT RETURNS MAY BE MORE OR LESS THAN
1 Year 7.50 THOSE SHOWN. ALL RETURNS ASSUME
========================================== REINVESTMENT OF DISTRIBUTIONS AT NAV.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL
INSTITUTIONAL CLASS SHARES HAVE NO SALES FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
CHARGE; THEREFORE, PERFORMANCE IS AT NET MAY BE WORTH MORE OR LESS THAN THEIR
ASSET VALUE (NAV). PERFORMANCE OF ORIGINAL COST. SEE FULL
INSTITUTIONAL CLASS SHARES WILL DIFFER
FROM PERFORMANCE OF OTHER SHARE CLASSES
PRIMARILY DUE TO DIFFERING SALES CHARGES
AND CLASS EXPENSES.
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND DATA FROM 4/29/05, INDEX DATA FROM 4/30/05
AIM MODERATE GROWTH
ALLOCATION FUND- CUSTOM MODERATE LIPPER MIXED-ASSET
INSTITUTIONAL CLASS GROWTH ALLOCATION TARGET ALLOCATION
DATE SHARES S&P 500 INDEX(1) INDEX(2) GROWTH FUNDS INDEX(1)
4/29/05 $10000
4/05 10000 $10000 $10000 $10000
5/05 10338 10318 10243 10211
6/05 10527 10333 10340 10304
7/05 10856 10717 10649 10525
8/05 10875 10619 10668 10547
9/05 11024 10705 10806 10608
10/05 10826 10526 10600 10439
11/05 11184 10924 10908 10678
12/05 11397 10928 11045 10757
1/06 11919 11217 11423 11082
2/06 11878 11248 11443 11014
3/06 12119 11388 11630 11112
4/06 12320 11541 11808 11274
5/06 11919 11209 11486 11073
6/06 11878 11224 11515 11084
7/06 11867 11293 11576 11207
8/06 12098 11561 11850 11415
9/06 12278 11859 12028 11576
10/06 12659 12245 12408 11858
11/06 12960 12478 12684 12081
12/06 13123 12653 12840 12215
1/07 13359 12844 13022 12356
2/07 13256 12593 12959 12322
3/07 13462 12734 13100 12447
4/07 13894 13298 13534 12827
5/07 14305 13761 13842 13136
6/07 14151 13533 13659 13026
7/07 13739 13114 13343 12762
8/07 13842 13310 13457 12860
9/07 14325 13807 13927 13236
10/07 14768 14027 14218 13468
11/07 14161 13440 13769 13102
12/07 14109 13347 13645 13013
====================================================================================================================================
SOURCES: (1)LIPPER INC., (2)A I M MANAGEMENT GROUP INC., LIPPER INC.
Information about your Fund's expenses
AIM Moderately Conservative Allocation Fund long-term performance
Past performance cannot guarantee Performance shown in the chart and in the annual report is that of the Fund's
comparable future results. table(s) does not reflect deduction of Class A, B, C and R shares. The
taxes a shareholder would pay on Fund performance of the Fund's other share
The data shown in the chart above distributions or sale of Fund shares. classes will differ primarily due to
includes reinvested distributions, Fund Performance of the indexes does not different sales charge structures and
expenses and management fees. Index reflect the effects of taxes. class expenses, and may be greater than or
results include reinvested dividends. less than the performance of the Fund's
Performance of an index of funds reflects The performance data shown in the chart Institutional Class shares shown in the
fund expenses and management fees; above is that of the Fund's institutional chart above.
performance of a market index does not. share class. The performance data shown in
the chart
AIM Moderately Conservative HAD THE ADVISOR NOT WAIVED FEES AND/OR REPORT FOR INFORMATION ON COMPARATIVE
Allocation Fund REIMBURSED EXPENSES, PERFORMANCE WOULD BENCHMARKS. PLEASE CONSULT YOUR FUND
========================================== HAVE BEEN LOWER. PROSPECTUS FOR MORE INFORMATION. FOR THE
AVERAGE ANNUAL TOTAL RETURNS MOST CURRENT MONTH-END PERFORMANCE, PLEASE
For periods ended 12/31/07 PLEASE NOTE THAT PAST PERFORMANCE IS CALL 800-451-4246 OR VISIT
NOT INDICATIVE OF FUTURE RESULTS. MORE AIMINVESTMENTS.COM.
Inception (4/29/05) 8.30% RECENT RETURNS MAY BE MORE OR LESS THAN
1 Year 6.51 THOSE SHOWN. ALL RETURNS ASSUME
========================================== REINVESTMENT OF DISTRIBUTIONS AT NAV.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL
INSTITUTIONAL CLASS SHARES HAVE NO SALES FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
CHARGE; THEREFORE, PERFORMANCE IS AT NET MAY BE WORTH MORE OR LESS THAN THEIR
ASSET VALUE (NAV). PERFORMANCE OF ORIGINAL COST. SEE FULL
INSTITUTIONAL CLASS SHARES WILL DIFFER
FROM PERFORMANCE OF OTHER SHARE CLASSES
PRIMARILY DUE TO DIFFERING SALES CHARGES
AND CLASS EXPENSES.
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND DATA FROM 4/29/05, INDEX DATA FROM 4/30/05
AIM MODERATELY LIPPER MIXED-ASSET
CONSERVATIVE ALLOCATION CUSTOM MODERATELY TARGET ALLOCATION
FUND-INSTITUTIONAL CLASS CONSERVATIVE ALLOCATION CONSERVATIVE FUNDS
DATE SHARES S&P 500 INDEX(1) INDEX(2) INDEX(1)
4/29/05 $10000
4/05 10000 $10000 $10000 $10000
5/05 10199 10318 10194 10174
6/05 10299 10333 10269 10244
7/05 10429 10717 10385 10376
8/05 10459 10619 10449 10429
9/05 10499 10705 10455 10454
10/05 10399 10526 10318 10338
11/05 10588 10924 10498 10500
12/05 10718 10928 10598 10574
1/06 10940 11217 10771 10760
2/06 10930 11248 10801 10756
3/06 11011 11388 10831 10823
4/06 11082 11541 10900 10883
5/06 10880 11209 10745 10767
6/06 10859 11224 10762 10773
7/06 10909 11293 10855 10841
8/06 11061 11561 11065 11005
9/06 11183 11859 11208 11137
10/06 11385 12245 11421 11306
11/06 11547 12478 11609 11474
12/06 11620 12653 11652 11505
1/07 11735 12844 11732 11574
2/07 11745 12593 11785 11621
3/07 11871 12734 11849 11693
4/07 12101 13298 12084 11885
5/07 12258 13761 12196 11979
6/07 12196 13533 12092 11888
7/07 12039 13114 11981 11817
8/07 12090 13310 12108 11875
9/07 12320 13807 12366 12121
10/07 12571 14027 12543 12276
11/07 12373 13440 12438 12177
12/07 12376 13347 12414 12156
====================================================================================================================================
SOURCES: (1)LIPPER INC., (2)A I M MANAGEMENT GROUP INC., LIPPER INC.
AIM Allocation Funds
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs. This example is intended
to help you understand your ongoing costs (in dollars) of investing in the Fund
and to compare these costs with ongoing costs of investing in other mutual
funds. The example is based on an investment of $1,000 invested at the beginning
of the period and held for the entire period July 1, 2007, through December 31,
2007.
In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the underlying
funds in which your Fund invests. The amount of fees and expenses incurred
indirectly by your Fund will vary because the underlying funds have varied
expenses and fee levels and the Fund may own different proportions of the
underlying funds at different times. Estimated underlying fund expenses are not
expenses that are incurred directly by your Fund. They are expenses that are
incurred directly by the underlying funds and are deducted from the value of the
funds your Fund invests in. The effect of the estimated underlying fund expenses
that you bear indirectly are included in your Fund's total return.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. Therefore, the hypothetical information is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, expenses shown in the table do not
include the expenses of the underlying funds, which are borne indirectly by the
Fund. If indirect expenses were included, your costs would have been higher.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
INSTITUTIONAL CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
AIM Conservative
Allocation Fund $1,000.00 $1,003.60 $1.01 $1,024.20 $1.02 0.20%
AIM Growth Allocation
Fund 1,000.00 997.00 0.30 1,024.90 0.31 0.06
AIM Moderate Allocation
Fund 1,000.00 1,003.60 0.66 1,024.55 0.66 0.13
AIM Moderate Growth
Allocation Fund 1,000.00 996.90 0.55 1,024.65 0.56 0.11
AIM Moderately
Conservative Allocation
Fund 1,000.00 1,014.80 0.71 1,024.50 0.71 0.14
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period July 1, 2007, through December 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.
AIM Allocation Funds
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 Funds designates the following amounts or, if subsequently determined to
be different, the maximum amount allowable for its fiscal year ended December
31, 2007:
FEDERAL AND STATE INCOME TAX
<Table>
<Caption>
CORPORATE
LONG TERM QUALIFIED DIVIDENDS
CAPITAL GAIN DIVIDEND RECEIVED U.S. TREASURY
DISTRIBUTIONS INCOME* DEDUCTION* OBLIGATIONS*
------------- --------- ---------- -------------
AIM Conservative Allocation Fund $ 2,089,557 7.00% 7.00% 7.59%
AIM Growth Allocation Fund 18,098,845 65.00% 33.50% 0.12%
AIM Moderate Allocation Fund 21,891,158 22.00% 12.00% 0.37%
AIM Moderate Growth Allocation Fund 8,650,623 39.00% 22.00% 0.08%
AIM Moderately Conservative Allocation Fund 1,683,685 14.00% 10.00% 0.29%
</Table>
* The above percentage is 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
Funds are as follows:
<Table>
<Caption>
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
2007 2007 2007 2007
- --------------------------------------------------------------------------------------------------------------------
AIM Conservative Allocation Fund 64.82% 64.82% 64.28% 64.92%
AIM Growth Allocation Fund 35.99% 35.85% 35.36% 36.41%
AIM Moderate Allocation Fund 58.48% 59.63% 59.22% 59.30%
AIM Moderate Growth Allocation Fund 46.72% 46.42% 46.10% 46.56%
AIM Moderately Conservative Allocation Fund 65.07% 64.96% 64.67% 65.12%
____________________________________________________________________________________________________________________
====================================================================================================================
</Table>
71
AIM Allocation Funds
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Growth Series (the "Trust"), is
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees
104 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 Ltd. (ultimate parent
of AIM and a global investment
management firm) and, Invesco Holding
Company (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); and INVESCO
North American Holdings, Inc. (holding
company); Chairman and President,
INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of
Funds(R); Vice Chairman, Investment
Company Institute; and Member of
Executive Board, SMU Cox School of
Business
Formerly: Chairman, Investment Company
Institute; 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, AIM Mutual Fund Dealer Inc.
Principal (registered broker dealer), A I M
Executive Officer Advisors, Inc., AIM Funds Management
Inc. d/b/a INVESCO Enterprise Services
(registered investment advisor and
registered transfer agent), 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), and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Management Group Inc. (financial
services holding company) and 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) 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); 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: Director and Chairman, Fund
Management Company (registered broker
dealer); 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 2001 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 1985 Retired None
Trustee Formerly: Partner, law firm of Baker &
McKenzie and Director, Badgley Funds,
Inc. (registered investment company) (2
portfolios)
- -------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm)
Formerly: Director, Policy Studies, Inc.
and Van Gilder Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2001 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 2001 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)
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company), and Discovery Global Education
Fund (non-profit)
- -------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) (15
Trustee Naftalis and Frankel LLP portfolios)
- -------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 2003 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 Ltd., ultimate 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.
72
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Allocation Funds
<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,
AIM Investment Services, Inc. and
INVESCO Distributors, Inc.; Director,
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: Director, Vice President and
Secretary, Fund Management Company; 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 N/A
Vice President Ltd.; 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 General Counsel, Secretary and Senior
Vice President Managing Director, Invesco Ltd.;
Director and Secretary, Invesco Holding
Company Limited, IVZ, Inc. and INVESCO
Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO
North American Holdings, Inc.; and Vice
President of The AIM Family of
Funds--Registered Trademark--
Formerly: Senior Managing Director, N/A
Invesco Holding Company Limited;
Director, Senior Vice 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 2004 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; Executive
Vice President, A I M Distributors,
Inc.; Senior Vice President, A I M
Management Group Inc.; 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: Director and President, Fund
Management Company; 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. and The AIM Family of
Funds--Registered Trademark--
Formerly: Anti-Money Laundering
Compliance Officer, Fund Management
Company; and 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.
and AIM Investment Services, Inc.
Formerly: Vice President, A I M Capital
Management, Inc. and Fund Management
Company; 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>
73
[EDELIVERY Fund holdings and proxy voting information
GO PAPERLESS
AIMINVESTMENTS.COM/EDELIVERY The Fund provides a complete list of its
GRAPHIC] holdings four times in each fiscal year,
at the quarter-ends. For the second and
REGISTER FOR EDELIVERY fourth quarters, the lists appear in the
Fund's semiannual and annual reports to
eDelivery is the process of receiving your shareholders. For the first and third
fund and account information via e-mail. quarters, the Fund files the lists with
Once your quarterly statements, tax forms, the Securities and Exchange Commission
fund reports, and prospectuses are (SEC) on Form N-Q. The most recent list of
available, we will send you an e-mail portfolio holdings is available at
notification containing links to these AIMinvestments.com. From our home page,
documents. For security purposes, you will click on Products & Performance, then
need to log in to your account to view Mutual Funds, then Fund Overview. Select
your statements and tax forms. your Fund from the drop-down menu and
click on Complete Quarterly Holdings.
WHY SIGN UP? Shareholders can also look up the Fund's
Forms N-Q on the SEC Web site at sec.gov.
Register for eDelivery to: Copies of the Fund's Forms N-Q may be
reviewed and copied at the SEC Public
o save your Fund the cost of printing and Reference Room in Washington, D.C. You can
postage. obtain information on the operation of the
Public Reference Room, including
o reduce the amount of paper you receive. information about duplicating fee charges,
by calling 202-942-8090 or 800-732-0330,
o gain access to your documents faster by or by electronic request at the following
not waiting for the mail. e-mail address: publicinfo@sec.gov. The
SEC file numbers for the Fund are
o view your documents online anytime at 811-02699 and 002-57526.
your convenience.
A description of the policies and
o save the documents to your personal procedures that the Fund uses to determine
computer or print them out for your how to vote proxies relating to portfolio
records. securities is available without charge,
upon request, from our Client Services
HOW DO I SIGN UP? department at 800-959-4246 or on the AIM
Web site, AIMinvestments.com. On the home
It's easy. Just follow these simple steps: page, scroll down and click on Proxy
Policy. The information is also available
1. Log in to your account. on the SEC Web site, sec.gov.
2. Click on the "Service Center" tab. Information regarding how the Fund voted
proxies related to its portfolio
3. Select "Register for eDelivery" and securities during the 12 months ended June
complete the consent process. 30, 2007, is available at our Web site. Go
to AIMinvestments.com, access the About Us
This AIM service is provided by AIM tab, click on Required Notices and then
Investment Services, Inc. click on Proxy Voting Activity. Next,
select the Fund from the drop-down menu.
The information is also available on the
SEC Web site, sec.gov.
If used after April 20, 2008, this report
must be accompanied by a Fund fact sheet
or by an AIM Quarterly Performance Review
for the most recent quarter-end. Mutual
funds and exchange-traded funds
distributed by A I M Distributors, Inc.
AAS-AR-1 A I M Distributors, Inc.
[AIM INVESTMENTS LOGO]
-- REGISTERED TRADEMARK --
INTERNATIONAL/
GLOBAL EQUITY
International/Global Blend
AIM Global Equity Fund
Annual Report to Shareholders - December 31, 2007
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
Tax Information.................. 29 [COVER GLOBE IMAGE]
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 Global Equity Fund
Dear Shareholders:
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 factors that affected its performance. The
following pages contain important information that answers
questions you may have about your investment.
[TAYLOR Despite notable volatility at points throughout the year
PHOTO] ended December 31, 2007, major stock market indexes in the
U.S. and abroad generally performed well. Reasons for their
favorable performance included positive economic growth,
particularly overseas; strong corporate profits; and action
by the U.S. Federal Reserve Board (the Fed) to lower
short-term interest rates, among other factors.
Philip Taylor At its mid-September 2007 meeting, the Fed cut its
federal funds target rate for the first time since June
2003.(1) That cut followed 17 rate increases from June 2004
to June 2006(1) and was intended to address concerns about a
weak housing market and problems in the subprime mortgage
market, which some feared could adversely affect the U.S.
economy. The Fed cut the federal funds target rate again in
late October and mid-December in response to continued
economic uncertainty.
This kind of uncertainty can affect equity, fixed-income
and other markets--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.
I encourage you to talk with your financial advisor if
you have concerns about your portfolio. We believe in the
value of working with a trusted financial advisor who can
recommend AIM funds that are appropriate for your portfolio
and that address your long-term investment goals and risk
tolerance regardless of prevailing short-term market
conditions.
In conclusion
In May, AIM Investments' parent company changed its name
from AMVESCAP PLC to Invesco Ltd., uniting our worldwide
operations and global expertise under a new name. While the
name of our parent company may be new to you, I can assure
you that AIM's 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.
We 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
February 11, 2008
Source: (1) U.S. Federal Reserve Board
AIM Investments--REGISTERED TRADEMARK-- is a registered
service mark of AIM Management Group Inc. AIM Advisors,
Inc., AIM Capital Management, Inc., AIM Private Asset
Management, Inc. and PowerShares Capital Management LLC are
the investment advisors for the products and services
represented by AIM Investments; they each provide investment
advisory services to individual and institutional clients
and do not sell securities. AIM Distributors, Inc. is the
distributor for the retail mutual funds and U.S.
institutional money market funds represented by AIM
Investments and the exchange-traded funds managed by
PowerShares Capital Management LLC. All entities are
indirect wholly owned subsidiaries of Invesco Ltd.
2
AIM Global Equity Fund
Dear Fellow AIM Fund Shareholders:
The lines of communication are open: More than 250 of you
[CROCKETT have responded to the invitation I extended in my previous
PHOTO] letter to complete an online survey, and more than 50
shareholders have contacted me directly by e-mail. When I
could respond quickly and easily to a shareholder's specific
concern I did, but the messages for the most part raised
consistent issues that I respond to here.
I have received many suggestions, a few complaints, and
one offer to buy a gold mine! In general, your letters
expressed an appreciation for transparency, frankness and
Bruce L. Crockett the opportunity to comment. Nevertheless, several sharehold-
ers found room for improvement in communications. Some would
like more concise letters while others would prefer reports
to be more customized for their particular information
needs. With these reports going to tens of thousands of
people, shareholder communications necessarily have to cover
those issues common to a diverse population as well as the
information required by law. The ability to change or
further customize letters and reports is also affected by
technology, timeliness and cost.
Online survey responders preferred electronic
communications to paper at a ratio of 63% to 37%. Direct
responders expressed more of a preference for paper,
especially for long reports. Electronic communications are
more cost-effective than paper communications that have to
be printed and mailed, so I encourage those who have
resisted electronic communications to give them a try.
The correspondence shows that improving fund performance
and reducing shareholder costs remain the key shareholder
concerns. Several letters noted individual funds where
performance had changed for the better, while others
remained dissatisfied with the returns from funds they hold.
Although 75% of the online survey responders wanted to see
more overall fund performance data in these letters, and 58%
wanted more information on individual funds, Securities and
Exchange Commission (SEC) and Financial Industry Regulatory
Authority (FINRA) rules are very specific about the way fund
performance can be discussed in print. Respect for those
rules prevents me from commenting on individual funds or
very recent results here, but I can assure you that your
Board and all of its Investments subcommittees continue to
work with AIM Investments to make improved performance a top
priority for all fund managers.
Expense levels came up as another dominant issue, and no
respondent felt these were too low. Several shareholders
questioned the need for 12b-1 fees, which cover the cost of
distributing fund shares and thereby help the fund to
attract new assets. Your Board reviews the funds' 12b-1 fees
annually with the shareholders' best interests in mind.
While your Board keeps its eye on containing or lowering
these fees wherever possible, we also are mindful that 12b-1
fees may be necessary in order to maintain an effective
distribution system for fund shares.
The value of communication between the Board and
shareholders has been noted within and beyond the AIM com-
munity. In the online survey, 87% of the respondents felt it
was either somewhat or very important to hear directly from
the Board, with 55% saying it was very important.
Morningstar--TRADEMARK--, the mutual fund tracking company,
also commented favorably on this channel of communication in
its fall 2007 update of fund stewardship grades, where AIM
was one of fewer than 10 fund boards to get an A for board
quality, according to BoardIQ (11/13/07).
In other news, Ruth Quigley retired from your Board at
the end of 2007, and we thank her for her many years of
dedicated service. Larry Soll has assumed Ruth's place as a
vice chair of the Investments Committee. The Valuation
Committee, which Ruth used to chair, has been reorganized as
the Valuation, Distribution and Proxy Oversight Committee
under the chairmanship of Carl Frischling. The elevation of
proxy oversight to standing committee status responds to
suggestions from shareholders. In addition, Prema
Mathi-Davis assumed my seat on the Governance Committee, and
I moved to the Audit Committee.
Your Board looks forward to another year of diligent
effort on your behalf, and we are even more strongly
motivated by your feedback. The invitation remains open to
e-mail me at bruce@brucecrockett.com. I look forward to
hearing from you.
Sincerely,
/S/ BRUCE L. CROCKETT
------------------------------
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
February 11, 2008
3
AIM Global Equity Fund
Management's discussion of Fund performance o Stocks should be selected on the merits
of each individual company.
=======================================================================================
PERFORMANCE SUMMARY o Risk management is as important as stock
selection.
For the year ending December 31, 2007, AIM Global Equity Fund Class A shares
delivered a return of 5.19% at net asset value (NAV). However, the Fund Mindful of these principles, portfolio
underperformed its style-specific benchmark, the MSCI World Index, which returned managers have developed a quantitative
9.04%. The information technology (IT) sector was the largest contributor to the investment process with stock selection
Fund's positive return for the year, while underperformance versus the index was and risk management as its two main
attributable to specific stocks in the utilities sector and our underexposure to components.
energy stocks.
1. Our stock selection model
Your Fund's long-term performance appears later in this report.
o We believe securities exhibit certain
FUND VS. INDEXES qualities--such as growth and stability of
earnings, profitability and financial
Total returns, 12/31/06-12/31/07, at NAV. Performance shown does not include strength--that identify them as probable
applicable CDSC or front-end sales charges, which would have reduced performance. strong performers.
Class A Shares 5.19% o Our model measures these qualities for
Class B Shares 4.33 each company in the Fund's global
Class C Shares 4.35 universe, taking into account that the
Class R Shares 4.91 significance of each quality varies
MSCI World Index(triangle) (Broad Market Index and Style-Specific Index) 9.04 depending on the industry and region.
Lipper Global Multi-Cap Core Funds Index(triangle) (Peer Group Index) 8.20
2. Our risk model
SOURCE: (triangle)LIPPER INC.
======================================================================================= o Simultaneously, our risk model analyzes
how changes in economic factors such as
How we invest Our investment philosophy balances stock interest rates, currencies and the price
selection with risk management. To help of oil will affect the stocks of companies
Our global equity investment strategy mitigate geopolitical risk, the Fund owns identified by our stock selection model.
gives your Fund primary exposure to stocks across a variety of regions and
large-cap companies and secondary exposure countries. We believe that a o We try to reduce the Fund's volatility
to mid-and small-cap firms. As part of our geographically well-diversified portfolio by creating a portfolio that pairs stocks
overall asset allocation strategy, the helps minimize foreign exchange risk. that benefit from an increase in a
Fund can complement domestic holdings with specific economic factor with stocks that
exposure to both domestic and The Fund's investment philosophy is benefit from a decrease in the same
international companies that are based on three key principles: factor. Our goal is to neutralize the
diversified by geography, sector and impact of these risk factors on the
market capitalization. o An investment process must be structured overall portfolio.
and disciplined.
We combine the results of these
analyses with a trading and transaction
cost analysis to construct a portfolio
that contains the optimal combination of
securities with potential to deliver
favorable returns without assuming
excessive risk.
========================================== ========================================== ==========================================
PORTFOLIO COMPOSITION TOP FIVE COUNTRIES* TOP 10 EQUITY HOLDINGS*
By sector
Financials 20.4% 1. United States 45.4% 1. JPMorgan Chase & Co. 2.9%
Information Technology 18.6 2. Germany 8.3 2. Chevron Corp. 2.9
Materials 12.6 3. France 6.2 3. Nestle S.A. 2.8
Consumer Staples 9.8 4. Japan 6.2 4. Nokia Oyj 2.6
Energy 9.8 5. Australia 5.5 5. BNP Paribas 2.6
Health Care 8.8 Total Net Assets $516.24 million 6. Daimler A.G. 2.5
Consumer Discretionary 7.7 Total Number of Holdings* 93 7. Westpac Banking Corp. 2.5
Utilities 5.9 8. Methanex Corp. 2.4
Industrials 4.4 9. Tesco PLC 2.4
U.S. Treasury Bills, Money Market 10. Texas Instruments Inc. 2.3
Funds Plus Other Assets Less
Liabilities 2.0
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 Global Equity Fund
We consider selling or reducing our upward but hurt consumers at the gas pump Thank you for your continued investment in
holding of a particular stock if: as the per-barrel oil price increased from the AIM Global Equity Fund.
$61.05 in December 2006 to $95.98 at the
o It no longer exhibits characteristics close of 2007.(2) More broadly, rising oil Sources: (1)Lipper Inc.;
that drive performance. costs hurt companies, who offset their (2)Bloomberg L.P.;
higher input costs by increasing consumer (3)Bureau of Labor Statistics;
o Holding the security no longer provides prices for finished goods. At fiscal year (4)The Wall Street Journal
risk management benefits. end, the Fund was only modestly
underweight in the energy sector versus The views and opinions expressed in
Market conditions and your Fund the style-specific benchmark. Contributors management's discussion of Fund
to Fund performance included Exxon Mobil performance are those of AIM Advisors,
AIM Global Equity Fund delivered another Corporation and Chevron Corporation, a new Inc. These views and opinions are subject
year of positive results for shareholders. Fund holding in 2007. The Fund also to change at any time based on factors as
The Fund's performance lagged its underperformed within the utilities market and economic conditions. These
style-specific benchmark but was in line sector, which staged a strong finish for views and opinions may not be relied upon
with the domestic-only markets as measured the year as investors rotated into the as investment advice or recommendations,
by the S&P 500 Index, which returned sector as a "flight to safety" following or as an offer for a particular security.
5.49%.(1) diminished economic prospects for 2008. The information is not a complete analysis
of every aspect of any market, country,
Global equities delivered generally The Fund's top contributor for the year industry, security or the Fund. Statements
strong results for 2007, despite increased was Apple Inc. The company has of fact are from sources considered
volatility in the latter half of the year. historically designed, manufactured and reliable, but AIM Advisors, Inc. makes no
Fueled by economic growth in China and marketed personal computers and software representation or warranty as to their
India, Asian equities continued to lead but has in recent years expanded into completeness or accuracy. Although
other major markets. Fiscal year 2007 other computer services and personal historical performance is no guarantee of
marked the fifth year of an extended bull devices such as the iPod--TRADEMARK-- and future results, these insights may help
run for Asian stock markets, which have iPhone--TRADEMARK--. This expansion has you understand our investment management
outperformed the MSCI World Index every allowed Apple to better leverage resources philosophy.
year since 2003.(1) European equities also across the organization and capitalize on
delivered attractive results for the year. new areas of growth. The company's share See important Fund and index
However, the markets started to show signs of the global personal computer market disclosures later in this report.
of weakness toward the latter half of the continues to rise as a result of faster
year as the European Central Bank injected processors and the October release of its Derek S. Izuel
an unprecedented liquidity into the Leopard operating system, which assists Chartered Financial Analyst,
banking system as part of a global effort users with running Microsoft applications. [IZUEL senior portfolio manager, is
to ease gridlock in credit markets. PHOTO] lead manager of AIM Global Equity
Moody's Corporation, a global provider Fund. Mr. Izuel began his
This turbulence in the credit markets of credit ratings and research on investment career in 1997. He earned a
was evident in the U.S. as a weakening fixed-income securities and other debt B.A. in computer science from the
residential housing market and increased instruments, was a key detractor from University of California-Berkeley and also
default rates on subprime mortgages led to returns for the year. The company was earned an M.B.A. from the University of
a broader liquidity crunch and took an under pressure as investors worried about Michigan.
especially large toll on the financials a potential peak in credit markets, an
sector. Although the S&P 500 Index indicator of a less robust growth Duy Nguyen
finished the year with positive returns, environment for the firm. Moody's also Chartered Financial Analyst,
the index hit its high for the year as came under SEC scrutiny regarding a [NGUYEN portfolio manager, is manager of
late as October 9.(2) Then the markets potential conflict of interest with fees PHOTO] AIM Global Equity Fund. Mr.
sold off during the last two months of that bond issuers pay rating agencies to Nguyen joined AIM in 2000. He
2007 as concerns mounted over the grade their securities. The Fund no longer earned a B.S. from The University of Texas
prospects for slower gross domestic holds the stock. and an M.S. in finance from the University
product growth with higher inflation. of Houston.
Inflation, as measured by the consumer At the end of 2007, the Fund's largest
price index, increased 4.1% in 2007, overweight sectors were IT and materials. Assisted by the Global Quantitative
largely due to energy costs, which were up The largest underweight sectors included Strategies Team
17.4%.(3) This represents the fastest industrials and telecommunication
increase in almost two decades(4) and a services. That being said, we believe the
sharp increase versus 2.5% in 2006.(3) market is geared toward rewarding
individual stock selection rather than
The Fund's underexposure versus the predictions of macroeconomic scenarios or
style-specific benchmark to the energy large-scale trends.
sector was a key detractor from relative
returns. For the overall equity markets, We believe that a systematic investment
strength within the energy sector process that is consistently applied
represented both an opportunity and a across market cycles is the best way to
headwind--it propelled energy stocks meet your Fund's objective of long-term
growth.
5
AIM Global Equity Fund
Your Fund's long-term performance
Past performance cannot guarantee ment fees; performance of a market index chart. The vertical axis, the one that
comparable future results. does not. Performance shown in the chart indicates the dollar value of an
and table(s) does not reflect deduction of investment, is constructed with each
The data shown in the chart include taxes a shareholder would pay on Fund segment representing a percent change in
reinvested distributions, applicable sales distributions or sale of Fund shares. the value of the investment. In this
charges, Fund expenses and management Performance of the indexes does not chart, each segment represents a doubling,
fees. Results for Class B shares are reflect the effects of taxes. or 100% change, in the value of the
calculated as if a hypothetical investment. In other words, the space
shareholder had liquidated his entire This chart, which is a logarithmic between $5,000 and $10,000 is the same
investment in the Fund at the close of the chart, presents the fluctuations in the size as the space between $10,000 and
reporting period and paid the applicable value of the Fund and its indexes. We $20,000, and so on.
contingent deferred sales charges. Index believe that a logarithmic chart is more
results include reinvested dividends, but effective than other types of charts in
they do not reflect sales charges. illustrating changes in value during the
Performance of an index of funds reflects early years shown in the
fund expenses and manage-
====================================================================================================================================
Continued from page 8
o Industry classifications used in this o The Chartered Financial
report are generally according to the Analyst--REGISTERED TRADEMARK--
Global Industry Classification Standard, (CFA--REGISTERED TRADEMARK--) des-
which was developed by and is the ignation is a globally recognized standard
exclusive property and a service mark of for measuring the competence and integrity
Morgan Stanley Capital International Inc. of investment professionals.
and Standard & Poor's.
6
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
INDEX DATA FROM 8/31/97, FUND DATA FROM 9/15/97
AIM GLOBAL EQUITY AIM GLOBAL EQUITY MSCI WORLD
DATE FUND-CLASS A SHARES FUND-CLASS B SHARES INDEX(1)
8/31/97 $10000
9/97 $ 9648 $10201 10542
10/97 9243 9773 9985
11/97 9103 9624 10160
12/97 9196 9716 10282
1/98 8963 9470 10567
2/98 9698 10239 11280
3/98 10217 10778 11755
4/98 10321 10888 11868
5/98 10070 10622 11717
6/98 10251 10797 11994
7/98 10027 10568 11973
8/98 8314 8756 10374
9/98 8418 8866 10556
10/98 8790 9241 11508
11/98 9344 9827 12191
12/98 10059 10575 12785
1/99 10401 10927 13063
2/99 10049 10556 12713
3/99 10576 11103 13241
4/99 11190 11743 13761
5/99 10769 11298 13256
6/99 11453 12012 13873
7/99 11339 11891 13829
8/99 11259 11808 13803
9/99 11382 11929 13667
10/99 12128 12708 14376
11/99 13234 13856 14778
12/99 15280 15988 15973
1/00 14505 15179 15056
2/00 15522 16223 15095
3/00 15551 16263 16136
4/00 14642 15291 15452
5/00 14012 14636 15059
6/00 14574 15210 15564
7/00 14313 14933 15124
8/00 15504 16171 15614
9/00 14865 15495 14782
10/00 13694 14267 14533
11/00 13064 13602 13649
12/00 14075 14660 13868
1/01 13557 14113 14135
2/01 12712 13220 12939
3/01 11709 12181 12087
4/01 12627 13131 12977
5/01 12553 13052 12808
6/01 12225 12694 12405
7/01 11993 12448 12239
8/01 11655 12102 11650
9/01 10630 11041 10622
10/01 10936 11353 10825
11/01 11285 11711 11464
12/01 11676 12104 11535
1/02 11390 11813 11184
2/02 11454 11869 11086
3/02 11995 12431 11596
4/02 12112 12543 11180
5/02 12165 12588 11199
6/02 11826 12240 10518
7/02 10881 11252 9630
8/02 10912 11286 9647
9/02 10106 10434 8585
10/02 10584 10928 9217
11/02 10892 11241 9713
12/02 10563 10894 9241
1/03 10457 10782 8959
2/03 10266 10580 8802
3/03 10266 10580 8773
====================================================================================================================================
SOURCE: (1)LIPPER INC.
====================================================================================================================================
[MOUNTAIN CHART]
4/03 10988 11321 9551
5/03 11773 12118 10095
6/03 11953 12308 10268
7/03 12452 12813 10475
8/03 12759 13126 10700
9/03 12759 13115 10765
10/03 13566 13933 11402
11/03 14001 14393 11575
12/03 14523 14911 12300
1/04 14932 15319 12497
2/04 15232 15626 12707
3/04 15264 15660 12622
4/04 14995 15366 12364
5/04 15305 15695 12467
6/04 15734 16126 12733
7/04 15251 15615 12317
8/04 15272 15638 12371
9/04 15798 16161 12605
10/04 16077 16444 12914
11/04 16989 17374 13592
12/04 17665 18055 14111
1/05 17428 17792 13793
2/05 18218 18592 14230
3/05 17970 18330 13955
4/05 17350 17685 13650
5/05 17723 18067 13892
6/05 17881 18210 14012
7/05 18467 18796 14502
8/05 18366 18689 14611
9/05 18660 18964 14991
10/05 18141 18425 14627
11/05 18750 19046 15114
12/05 19332 19616 15449
1/06 20414 20694 16139
2/06 20475 20761 16115
3/06 20948 21222 16469
4/06 21445 21708 16969
5/06 20712 20959 16390
6/06 20799 21038 16385
7/06 20599 20815 16487
8/06 21110 21315 16915
9/06 21148 21340 17117
10/06 21932 22115 17745
11/06 22478 22668 18180
12/06 22982 23153 18549
1/07 23485 23639 18768
2/07 23248 23389 18671
3/07 23583 23714 19012
4/07 24686 24802 19851
5/07 25301 25405 20407
6/07 24939 25021 20250
7/07 24465 24536 19801
8/07 24409 24448 19786
9/07 25261 25301 20727
10/07 26322 26346 21363
11/07 24590 24594 20490
12/07 24171 24565 20225
====================================================================================================================================
AIM Global Equity Fund
========================================== AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT
AVERAGE ANNUAL TOTAL RETURNS YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL
SHARES.
As of 12/31/07, including maximum
applicable sales charges THE TOTAL ANNUAL FUND OPERATING EXPENSE
RATIO SET FORTH IN THE MOST RECENT FUND
CLASS A SHARES PROSPECTUS AS OF THE DATE OF THIS REPORT
Inception (9/15/97) 8.95% FOR CLASS A, CLASS B, CLASS C AND CLASS R
10 Years 9.53 SHARES WAS 1.46%, 2.21%, 2.21% AND 1.71%,
5 Years 16.68 RESPECTIVELY. THE EXPENSE RATIOS PRESENTED
1 Year -0.60 ABOVE MAY VARY FROM THE EXPENSE RATIOS
PRESENTED IN OTHER SECTIONS OF THIS REPORT
CLASS B SHARES THAT ARE BASED ON EXPENSES INCURRED DURING
Inception (9/15/97) 9.12% THE PERIOD COVERED BY THIS REPORT.
10 Years 9.70
5 Years 17.05 CLASS A SHARE PERFORMANCE REFLECTS THE
1 Year -0.13 MAXIMUM 5.50% SALES CHARGE, AND CLASS B
AND CLASS C SHARE PERFORMANCE REFLECTS THE
CLASS C SHARES APPLICABLE CONTINGENT DEFERRED SALES
Inception (1/2/98) 9.55% CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
5 Years 17.24 CDSC ON CLASS B SHARES DECLINES FROM 5%
1 Year 3.46 BEGINNING AT THE TIME OF PURCHASE TO 0% AT
THE BEGINNING OF THE SEVENTH YEAR. THE
CLASS R SHARES CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
10 Years 9.96% YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
5 Years 17.79 HAVE A FRONT-END SALES CHARGE; RETURNS
1 Year 4.91 SHOWN ARE AT NET ASSET VALUE AND DO NOT
========================================== REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
ON A TOTAL REDEMPTION OF RETIREMENT PLAN
CLASS R SHARES' inception date is October ASSETS WITHIN THE FIRST YEAR.
31, 2005. Returns since that date are
historical RETURNS. ALL OTHER RETURNS ARE THE PERFORMANCE OF THE FUND's share
BLENDED RETURNS OF HISTORICAL CLASS R classes will differ primarily due to
SHARE PERFORMANCE AND RESTATED CLASS A different sales CHARGE STRUCTURES AND
SHARE PERFORMANCE (FOR PERIODS PRIOR TO CLASS EXPENSES.
THE INCEPTION DATE OF CLASS R SHARES) AT
NET ASSET VALUE, ADJUSTED TO REFLECT THE A REDEMPTION FEE OF 2% WILL BE IMPOSED
HIGHER RULE 12B-1 FEES APPLICABLE TO CLASS ON CERTAIN REDEMPTIONS OR EXCHANGES OUT OF
R SHARES. CLASS A SHARES' inception date THE FUND WITHIN 30 DAYS OF PURCHASE.
is September 15, 1997. EXCEPTIONS TO THE REDEMPTION FEE ARE
LISTED IN THE FUND's PROSPECTUS.
THE PERFORMANCE DATA QUOTED REPRESENT
PAST PERFORMANCE AND CANNOT GUARANTEE
COMPARABLE FUTURE RESULTS; CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE
VISIT AIMINVESTMENTS.COM FOR THE MOST
RECENT MONTH-END PERFORMANCE. PERFORMANCE
FIGURES REFLECT REINVESTED DISTRIBUTIONS, ==========================================
CHANGES IN NET ASSET VALUE AND THE EFFECT FOR A DISCUSSION OF THE RISKS OF INVESTING
OF THE MAXIMUM SALES CHARGE UNLESS IN YOUR FUND AND INDEXES USED IN THIS
OTHERWISE STATED. INVESTMENT RETURN REPORT, PLEASE TURN THE PAGE.
==========================================
7
AIM Global Equity Fund
AIM GLOBAL EQUITY FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE LONG-TERM GROWTH OF
CAPITAL.
o Unless otherwise stated, information presented in this report is as of
December 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 Investing in developing countries can o The LIPPER GLOBAL MULTI-CAP CORE FUNDS
add additional risk, such as high rates of INDEX is an equally weighted
o Class B shares are not available as an inflation or sharply devalued currencies representation of the largest funds in the
investment for retirement plans maintained against the U.S. dollar. Transaction costs Lipper Global Multi-Cap Core Funds
pursuant to Section 401 of the Internal are often higher, and there may be delays category. These funds typically have an
Revenue Code, including 401(k) plans, in settlement procedures. average price-to-cash flow ratio,
money purchase pension plans and profit price-to-book ratio, and three-year
sharing plans. Plans that had existing o Prices of equity securities change in sales-per-share growth value, compared to
accounts invested in Class B shares prior response to many factors including the the S&P/Citigroup BMI.
to September 30, 2003, will continue to be historical and prospective earnings of the
allowed to make additional purchases. issuer, the value of its assets, general o The S&P 500--registered trademark--
economic conditions, interest rates, Index is a market capitalization-weighted
o Class R shares are available only to investor perceptions and market liquidity. index covering all major areas of the U.S.
certain retirement plans. Please see the economy. It is not the 500 largest
prospectus for more information. o Foreign securities have additional companies, but rather the most widely held
risks, including exchange rate changes, 500 companies chosen with respect to
Principal risks of investing in the Fund political and economic upheaval, the market size, liquidity and their industry.
relative lack of information, relatively
o Portfolio turnover is greater than most low market liquidity, and the potential o The Fund is not managed to track the
funds, which may affect the Fund's lack of strict financial and accounting performance of any particular index,
performance due to higher brokerage controls and standards. including the indexes defined here, and
commissions. Active trading may also consequently, the performance of the Fund
increase short-term gains and losses, o Interest rate risk refers to the risk may deviate significantly from the
which may also result in taxable gain that bond prices generally fall as performance of the indexes.
distributions to the Fund's shareholders. interest rates rise; conversely, bond
prices generally rise as interest rates o A direct investment cannot be made in an
o The value of convertible securities in fall. index. Unless otherwise indicated, index
which the Fund invests may be affected by results include reinvested dividends, and
market interest rates--the risk that the o The Fund may use enhanced investment they do not reflect sales charges.
issuer may default on interest or techniques such as leveraging and Performance of an index of funds reflects
principal payments and the value of the derivatives. Leveraging entails risks such fund expenses; performance of a market
underlying common stock into which these as magnifying changes in the value of the index does not.
securities may be converted may decline as portfolio's securities. Derivatives are
a result. subject to counter-party risk--the risk Other information
that the other party will not complete the
o Credit risk is the risk of loss on an transaction with the Fund. o The returns shown in the management's
investment due to the deterioration of an discussion of Fund performance are based
issuer's financial health. Such a o There is no guarantee that the on net asset values calculated for
deterioration of financial health may investment techniques and risk analyses shareholder transactions. Generally
result in a reduction of the credit rating used by the Fund's portfolio managers will accepted accounting principles require
of the issuer's securities and may lead to produce the desired results. adjustments to be made to the net assets
the issuer's inability to honor its of the Fund at period end for financial
contractual obligations, including making o The prices of securities held by the reporting purposes, and as such, the net
timely payment of interest and principal. Fund may decline in response to market asset values for shareholder transactions
risks. and the returns based on those net asset
o The Fund is subject to currency/exchange values may differ from the net asset
rate risk because it may buy or sell About indexes used in this report values and returns reported in the
currencies other than the U.S. dollar. Financial Highlights.
o The MSCI WORLD INDEX--SERVICE MARK-- is
a free float-adjusted market
capitalization index that is designed to
measure global developed market equity
performance.
======================================================================================= Continued on page 6
==========================================
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 GTNDX
======================================================================================= Class B Shares GNDBX
Class C Shares GNDCX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class R Shares GTNRX
AIMINVESTMENTS.COM ==========================================
8
AIM Global Equity Fund
SCHEDULE OF INVESTMENTS(a)
December 31, 2007
<Table>
<Caption>
SHARES VALUE
- -------------------------------------------------------------------------
FOREIGN COMMON STOCKS-52.85%
AUSTRALIA-5.52%
Commonwealth Bank of Australia (Diversified
Banks)(b) 181,552 $ 9,354,472
- -------------------------------------------------------------------------
Westpac Banking Corp. (Diversified Banks)(b) 530,666 12,898,939
- -------------------------------------------------------------------------
Zinifex Ltd. (Diversified Metals & Mining)(b) 579,235 6,230,373
=========================================================================
28,483,784
=========================================================================
BELGIUM-2.55%
Dexia SA (Diversified Banks)(b) 394,561 9,898,290
- -------------------------------------------------------------------------
EVS Broadcast Equipment S.A. (Communications
Equipment)(b) 21,494 2,489,344
- -------------------------------------------------------------------------
Fortis (Other Diversified Financial
Services)(b) 29,427 766,456
=========================================================================
13,154,090
=========================================================================
CANADA-5.08%
Methanex Corp. (Commodity Chemicals) 452,500 12,477,106
- -------------------------------------------------------------------------
Metro Inc (Food Retail) 337,800 9,025,450
- -------------------------------------------------------------------------
Research in Motion Ltd (Communications
Equipment)(c) 41,500 4,704,197
=========================================================================
26,206,753
=========================================================================
DENMARK-1.41%
A.S. Dampsskibsselskabet Torm (Oil & Gas
Storage & Transportation)(b)(d) 132,250 4,597,179
- -------------------------------------------------------------------------
Novo Nordisk A.S.-Class B
(Pharmaceuticals)(b) 40,800 2,658,379
=========================================================================
7,255,558
=========================================================================
FINLAND-2.58%
Nokia Oyj (Communications Equipment)(b) 347,050 13,338,288
=========================================================================
FRANCE-6.16%
Axa (Multi-Line Insurance)(b) 215,951 8,582,497
- -------------------------------------------------------------------------
BNP Paribas (Diversified Banks)(b) 124,154 13,321,282
- -------------------------------------------------------------------------
Electricite de France (Electric Utilities)(b) 9,813 1,160,739
- -------------------------------------------------------------------------
Rallye S.A. (Food Retail)(b)(d) 85,727 6,051,869
- -------------------------------------------------------------------------
UbiSoft Entertainment S.A. (Home
Entertainment Software)(b)(c) 26,815 2,697,741
=========================================================================
31,814,128
=========================================================================
GERMANY-8.34%
Altana A.G. (Specialty Chemicals)(b) 163,690 3,950,756
- -------------------------------------------------------------------------
BASF A.G. (Diversified Chemicals)(b) 27,932 4,120,421
- -------------------------------------------------------------------------
Daimler A.G. (Automobile Manufacturers)(b) 135,782 13,127,870
- -------------------------------------------------------------------------
Deutsche Bank A.G. (Diversified Capital
Markets)(b)(c) 35,396 4,570,036
- -------------------------------------------------------------------------
</Table>
<Table>
SHARES VALUE
- -------------------------------------------------------------------------
<Caption>
GERMANY-(CONTINUED)
Norddeutsche Affinerie A.G. (Diversified
Metals & Mining)(b)(d) 240,687 $ 9,301,413
- -------------------------------------------------------------------------
Volkswagen A.G. (Automobile
Manufacturers)(b)(d) 35,269 8,008,728
=========================================================================
43,079,224
=========================================================================
HONG KONG-0.17%
Orient Overseas International Ltd.
(Marine)(b) 59,000 433,173
- -------------------------------------------------------------------------
Seaspan Corp (Marine)(d) 17,700 433,473
=========================================================================
866,646
=========================================================================
ITALY-1.43%
Eni S.p.A. (Integrated Oil & Gas)(b) 202,266 7,356,278
=========================================================================
JAPAN-6.15%
Chuo Mitsui Trust Holdings (Diversified
Banks)(b) 707,000 5,493,002
- -------------------------------------------------------------------------
Circle K Sunkus Co., Ltd. (Food Retail)(d) 83,800 1,244,461
- -------------------------------------------------------------------------
Funai Electric Co., Ltd. (Consumer
Electronics)(b)(d) 241,100 10,436,252
- -------------------------------------------------------------------------
Matsushita Electric Industrial Co., Ltd.
(Consumer Electronics)(b) 97,000 1,989,270
- -------------------------------------------------------------------------
Nissan Shatai Co., Ltd. (Auto Parts &
Equipment)(b) 66,000 536,245
- -------------------------------------------------------------------------
Resona Holdings, Inc. (Regional Banks)(b)(d) 1,542 2,827,813
- -------------------------------------------------------------------------
Takeda Pharmaceutical Co. Ltd.
(Pharmaceuticals)(b) 94,900 5,561,041
- -------------------------------------------------------------------------
Tohoku Electric Power Co., Inc. (Electric
Utilities)(b) 14,800 334,658
- -------------------------------------------------------------------------
Trans Cosmos Inc. (Data Processing &
Outsourced Services)(d) 54,000 637,175
- -------------------------------------------------------------------------
Yodogawa Steel Works, Ltd. (Steel)(b)(d) 526,000 2,688,297
=========================================================================
31,748,214
=========================================================================
NETHERLANDS-2.08%
Aegon N.V. (Life & Health Insurance)(b) 35,681 624,846
- -------------------------------------------------------------------------
Heineken Holding N.V. (Brewers)(b) 46,313 2,604,475
- -------------------------------------------------------------------------
Heineken N.V. (Brewers)(b) 13,767 885,024
- -------------------------------------------------------------------------
ING Groep N.V. (Other Diversified Financial
Services)(b) 170,348 6,636,839
=========================================================================
10,751,184
=========================================================================
POLAND-0.67%
KGHM Polska Miedz S.A. (Diversified Metals &
Mining)(b) 81,800 3,469,443
=========================================================================
SINGAPORE-0.13%
Wing Tai Holdings Ltd. (Real Estate
Management & Development)(b) 358,000 660,868
=========================================================================
</Table>
9
AIM Global Equity Fund
<Table>
<Caption>
SHARES VALUE
- -------------------------------------------------------------------------
SOUTH KOREA-0.60%
S-Oil Corp. (Oil & Gas Refining &
Marketing)(b) 36,977 $ 3,111,867
=========================================================================
SWEDEN-0.49%
Industrivarden A.B.-Class C (Multi-Sector
Holdings)(b)(d) 158,800 2,544,815
=========================================================================
SWITZERLAND-2.79%
Nestle S.A. (Packaged Foods & Meats)(b) 31,497 14,416,438
=========================================================================
TAIWAN-1.77%
China Steel Corp. (Steel)(b) 6,115,757 8,146,749
- -------------------------------------------------------------------------
Formosa Petrochemical Corp. (Oil & Gas
Refining & Marketing)(b) 332,000 988,473
=========================================================================
9,135,222
=========================================================================
UNITED KINGDOM-4.93%
Antofagasta PLC (Diversified Metals &
Mining)(b) 226,039 3,188,759
- -------------------------------------------------------------------------
British Energy Group PLC (Electric
Utilities)(b) 909,939 9,857,935
- -------------------------------------------------------------------------
Tesco PLC (Food Retail)(b) 1,316,055 12,404,002
=========================================================================
25,450,696
=========================================================================
Total Foreign Common Stocks (Cost
$266,671,017) 272,843,496
=========================================================================
DOMESTIC COMMON STOCKS-45.11%
AEROSPACE & DEFENSE-2.53%
Lockheed Martin Corp. 106,199 11,178,507
- -------------------------------------------------------------------------
Northrop Grumman Corp. 23,628 1,858,106
=========================================================================
13,036,613
=========================================================================
AIRLINES-1.44%
Continental Airlines, Inc.-Class B(c) 54,515 1,212,959
- -------------------------------------------------------------------------
UAL Corp.(c) 175,149 6,245,813
=========================================================================
7,458,772
=========================================================================
COMMUNICATIONS EQUIPMENT-0.49%
QUALCOMM Inc. 63,940 2,516,039
=========================================================================
COMPUTER & ELECTRONICS RETAIL-0.14%
RadioShack Corp.(d) 42,583 717,949
=========================================================================
COMPUTER HARDWARE-3.51%
Apple Inc.(c) 34,376 6,809,198
- -------------------------------------------------------------------------
International Business Machines Corp. 104,505 11,296,990
=========================================================================
18,106,188
=========================================================================
CONSTRUCTION & ENGINEERING-0.07%
Perini Corp.(c) 8,279 342,916
=========================================================================
CONSUMER FINANCE-0.42%
Capital One Financial Corp. 36,837 1,740,917
- -------------------------------------------------------------------------
Discover Financial Services 29,290 441,693
=========================================================================
2,182,610
=========================================================================
</Table>
<Table>
SHARES VALUE
- -------------------------------------------------------------------------
<Caption>
DATA PROCESSING & OUTSOURCED SERVICES-2.05%
DST Systems, Inc.(c) 128,383 $ 10,598,017
=========================================================================
FOOD RETAIL-0.54%
SUPERVALU Inc. 74,922 2,811,073
=========================================================================
GAS UTILITIES-3.69%
Energen Corp. 140,199 9,004,982
- -------------------------------------------------------------------------
Southern Union Co. 342,750 10,063,140
=========================================================================
19,068,122
=========================================================================
HEALTH CARE DISTRIBUTORS-1.48%
AmerisourceBergen Corp. 23,323 1,046,503
- -------------------------------------------------------------------------
McKesson Corp. 100,598 6,590,175
=========================================================================
7,636,678
=========================================================================
HEALTH CARE EQUIPMENT-1.47%
IDEXX Laboratories, Inc.(c) 129,618 7,599,503
=========================================================================
HEALTH CARE SUPPLIES-0.16%
Alcon, Inc.(c)(d) 5,649 808,033
=========================================================================
HOUSEHOLD PRODUCTS-0.23%
Energizer Holdings, Inc.(c) 10,443 1,170,974
=========================================================================
INDUSTRIAL CONGLOMERATES-0.14%
Tyco International Ltd. 18,729 742,605
=========================================================================
INTEGRATED OIL & GAS-4.85%
Chevron Corp. 160,682 14,996,451
- -------------------------------------------------------------------------
Exxon Mobil Corp. 107,256 10,048,815
=========================================================================
25,045,266
=========================================================================
INTERNET RETAIL-0.88%
Blue Nile, Inc.(c)(d) 66,984 4,558,931
=========================================================================
INVESTMENT BANKING & BROKERAGE-1.80%
Goldman Sachs Group, Inc. (The) 43,141 9,277,472
=========================================================================
IT CONSULTING & OTHER SERVICES-3.38%
Accenture Ltd.-Class A 175,736 6,331,768
- -------------------------------------------------------------------------
SAIC, Inc.(c) 553,438 11,135,173
=========================================================================
17,466,941
=========================================================================
LEISURE PRODUCTS-0.11%
JAKKS Pacific, Inc.(c) 24,232 572,117
=========================================================================
MANAGED HEALTH CARE-3.66%
Aetna Inc. 81,981 4,732,763
- -------------------------------------------------------------------------
AMERIGROUP Corp.(c) 160,845 5,862,800
- -------------------------------------------------------------------------
Coventry Health Care, Inc.(c) 15,585 923,411
- -------------------------------------------------------------------------
Humana Inc.(d) 25,452 1,916,790
- -------------------------------------------------------------------------
Molina Healthcare Inc.(c)(d) 141,132 5,461,809
=========================================================================
18,897,573
=========================================================================
</Table>
10
AIM Global Equity Fund
<Table>
<Caption>
SHARES VALUE
- -------------------------------------------------------------------------
OIL & GAS EQUIPMENT & SERVICES-0.47%
Cameron International Corp.(c) 50,630 $ 2,436,822
=========================================================================
OIL & GAS REFINING & MARKETING-1.39%
Valero Energy Corp. 102,174 7,155,245
=========================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-2.94%
JPMorgan Chase & Co. 348,192 15,198,581
=========================================================================
PHARMACEUTICALS-0.42%
Endo Pharmaceuticals Holdings Inc.(c) 81,375 2,170,271
=========================================================================
SEMICONDUCTORS-2.32%
Texas Instruments Inc. 358,111 11,960,907
=========================================================================
STEEL-2.23%
Reliance Steel & Aluminum Co. 212,184 11,500,373
=========================================================================
SYSTEMS SOFTWARE-2.23%
Microsoft Corp. 323,055 11,500,758
=========================================================================
THRIFTS & MORTGAGE FINANCE-0.07%
Corus Bankshares, Inc.(d) 33,407 356,453
=========================================================================
Total Domestic Common Stocks (Cost
$224,456,198) 232,893,802
=========================================================================
</Table>
<Table>
SHARES VALUE
- -------------------------------------------------------------------------
<Caption>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------
U.S. TREASURY BILLS-0.32%
U.S. Treasury Bill 3.12%, 01/10/08 (Cost
$849,171)(e) $ 850,000(f) $ 849,171
- -------------------------------------------------------------------------
U.S. Treasury Bill 4.11%, 04/03/08 (Cost
$791,527)(e)(g) 800,000(f) 793,344
=========================================================================
Total U.S. Treasury Securities (Cost
$1,640,698) 1,642,515
=========================================================================
<Caption>
SHARES
MONEY MARKET FUNDS-1.66%
Liquid Assets Portfolio-Institutional
Class(h) 4,277,781 4,277,781
- -------------------------------------------------------------------------
Premier Portfolio-Institutional Class(h) 4,277,781 4,277,781
=========================================================================
Total Money Market Funds (Cost
$8,555,562) 8,555,562
=========================================================================
TOTAL INVESTMENTS (excluding investments
purchased with cash collateral from
securities on loan)-99.94% (Cost
$501,323,475) 515,935,375
=========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES ON LOAN MONEY MARKET
FUNDS-6.56%
Liquid Assets Portfolio-Institutional Class
(Cost $33,855,193)(h)(i) 33,855,193 33,855,193
=========================================================================
TOTAL INVESTMENTS-106.50% (Cost $535,178,668) 549,790,568
=========================================================================
OTHER ASSETS LESS LIABILITIES-(6.50)% (33,554,543)
=========================================================================
NET ASSETS-100.00% $516,236,025
_________________________________________________________________________
=========================================================================
</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) 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 December 31, 2007 was $244,321,634,
which represented 47.33% of the Fund's Net Assets. See Note 1A.
(c) Non-income producing security.
(d) All or a portion of this security was out on loan at December 31, 2007.
(e) Security traded on a discount basis. The interest rate shown represents the
discount rate at the time of purchase by the Fund.
(f) All or a portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 1L and Note 9.
(g) In accordance with the procedures established by the Board of Trustees,
security fair valued based on an evaluated quote provided by an independent
pricing service. The value of this security at December 31, 2007 represented
0.15% of the Fund's Net Assets. See Note 1A.
(h) The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
(i) 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 Global Equity Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2007
<Table>
ASSETS:
Investments, at value (Cost $492,767,913)* $507,379,813
- -----------------------------------------------------------
Investments in affiliated money market funds
(Cost $42,410,755) 42,410,755
- -----------------------------------------------------------
Total investments (Cost $535,178,668) 549,790,568
- -----------------------------------------------------------
Foreign currencies, at value (Cost
$1,078,979) 1,079,432
- -----------------------------------------------------------
Cash 53,848
- -----------------------------------------------------------
Receivables for:
Fund shares sold 729,053
- -----------------------------------------------------------
Dividends 527,318
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 24,213
- -----------------------------------------------------------
Other assets 35,456
===========================================================
Total assets 552,239,888
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Fund shares reacquired 1,442,264
- -----------------------------------------------------------
Trustee deferred compensation and
retirement plans 49,382
- -----------------------------------------------------------
Variation margin 140,267
- -----------------------------------------------------------
Collateral upon return of securities loaned 33,855,193
- -----------------------------------------------------------
Accrued distribution fees 173,653
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 564
- -----------------------------------------------------------
Accrued transfer agent fees 229,363
- -----------------------------------------------------------
Accrued operating expenses 113,177
===========================================================
Total liabilities 36,003,863
===========================================================
Net assets applicable to shares outstanding $516,236,025
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $490,031,618
- -----------------------------------------------------------
Undistributed net investment income (955,278)
- -----------------------------------------------------------
Undistributed net realized gain 12,887,408
- -----------------------------------------------------------
Unrealized appreciation 14,272,277
===========================================================
$516,236,025
___________________________________________________________
===========================================================
NET ASSETS:
Class A $317,180,511
___________________________________________________________
===========================================================
Class B $ 78,325,786
___________________________________________________________
===========================================================
Class C $ 40,480,214
___________________________________________________________
===========================================================
Class R $ 487,805
___________________________________________________________
===========================================================
Institutional Class $ 79,761,709
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 21,422,832
___________________________________________________________
===========================================================
Class B 5,577,096
___________________________________________________________
===========================================================
Class C 2,887,446
___________________________________________________________
===========================================================
Class R 32,938
___________________________________________________________
===========================================================
Institutional Class 5,339,874
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 14.81
- -----------------------------------------------------------
Maximum offering price per share
(Net asset value of $14.81 divided by
94.50%) $ 15.67
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 14.04
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 14.02
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per
share $ 14.81
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per
share $ 14.94
___________________________________________________________
===========================================================
</Table>
* At December 31, 2007, securities with an aggregate value of $32,264,485 were
on loan to brokers.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12
AIM Global Equity Fund
STATEMENT OF OPERATIONS
For the year ended December 31, 2007
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $1,234,661) $ 13,284,313
- --------------------------------------------------------------------------
Dividends from affiliated money market funds (includes
securities lending income of $673,500) 1,554,836
- --------------------------------------------------------------------------
Interest 27,716
==========================================================================
Total investment income 14,866,865
==========================================================================
EXPENSES:
Advisory fees 4,930,100
- --------------------------------------------------------------------------
Administrative services fees 169,040
- --------------------------------------------------------------------------
Custodian fees 165,140
- --------------------------------------------------------------------------
Distribution fees:
Class A 852,539
- --------------------------------------------------------------------------
Class B 945,512
- --------------------------------------------------------------------------
Class C 439,275
- --------------------------------------------------------------------------
Class R 1,225
- --------------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 1,118,782
- --------------------------------------------------------------------------
Transfer agent fees -- Institutional 77,551
- --------------------------------------------------------------------------
Trustees' and officer's fees and benefits 32,407
- --------------------------------------------------------------------------
Other 285,103
==========================================================================
Total expenses 9,016,674
==========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangement(s) (567,816)
==========================================================================
Net expenses 8,448,858
==========================================================================
Net investment income 6,418,007
==========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain from:
Investment securities (includes net gains from securities
sold to affiliates of $428,696) 73,610,771
- --------------------------------------------------------------------------
Foreign currencies 217,800
- --------------------------------------------------------------------------
Futures contracts 269,309
==========================================================================
74,097,880
==========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (51,324,036)
- --------------------------------------------------------------------------
Foreign currencies (22,567)
- --------------------------------------------------------------------------
Futures contracts (343,764)
==========================================================================
(51,690,367)
==========================================================================
Net realized and unrealized gain 22,407,513
==========================================================================
Net increase in net assets resulting from operations $ 28,825,520
__________________________________________________________________________
==========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13
AIM Global Equity Fund
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2007 and 2006
<Table>
<Caption>
2007 2006
- ------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 6,418,007 $ 4,478,093
- ------------------------------------------------------------------------------------------
Net realized gain 74,097,880 58,283,864
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (51,690,367) 20,090,260
==========================================================================================
Net increase in net assets resulting from operations 28,825,520 82,852,217
==========================================================================================
Distributions to shareholders from net investment income:
Class A (5,939,578) (3,606,125)
- ------------------------------------------------------------------------------------------
Class B (858,998) (452,271)
- ------------------------------------------------------------------------------------------
Class C (435,707) (184,182)
- ------------------------------------------------------------------------------------------
Class R (8,313) (1,251)
- ------------------------------------------------------------------------------------------
Institutional Class (1,600,517) (958,582)
==========================================================================================
Total distributions from net investment income (8,843,113) (5,202,411)
==========================================================================================
Distributions to shareholders from net realized gains:
Class A (41,556,306) (31,569,940)
- ------------------------------------------------------------------------------------------
Class B (10,873,397) (10,327,714)
- ------------------------------------------------------------------------------------------
Class C (5,515,532) (4,205,620)
- ------------------------------------------------------------------------------------------
Class R (68,352) (13,790)
- ------------------------------------------------------------------------------------------
Institutional Class (9,127,643) (6,279,362)
==========================================================================================
Total distributions from net realized gains (67,141,230) (52,396,426)
==========================================================================================
Decrease in net assets resulting from distributions (75,984,343) (57,598,837)
==========================================================================================
Share transactions-net:
Class A 23,552,976 43,441,460
- ------------------------------------------------------------------------------------------
Class B (14,781,365) (723,229)
- ------------------------------------------------------------------------------------------
Class C 3,282,172 4,052,639
- ------------------------------------------------------------------------------------------
Class R 395,091 158,753
- ------------------------------------------------------------------------------------------
Institutional Class 19,245,458 24,139,613
==========================================================================================
Net increase in net assets resulting from share
transactions 31,694,332 71,069,236
==========================================================================================
Net increase (decrease) in net assets (15,464,491) 96,322,616
==========================================================================================
NET ASSETS:
Beginning of year 531,700,516 435,377,900
==========================================================================================
End of year (including undistributed net investment income
of $(955,278) and $(84,463), respectively) $516,236,025 $531,700,516
__________________________________________________________________________________________
==========================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
14
AIM Global Equity Fund
NOTES TO FINANCIAL STATEMENTS
December 31, 2007
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Global Equity Fund (the "Fund") is a series portfolio of AIM Growth Series
(the "Trust"). The Trust is organized as a Delaware statutory trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate series 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.
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 Global Equity Fund
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds as 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.
The Fund files tax returns in the U.S. federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for tax periods after 2003.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund are charged to the operations of such class. Transfer
agency fees and expenses and other shareholder recordkeeping fees and
expenses attributable to the Institutional Class are charged to such class.
Transfer agency fees and expenses and other shareholder recordkeeping fees
and expenses relating to all other classes are allocated among those
classes based on relative net assets. All other expenses are allocated
among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period including estimates and assumptions related to
taxation. Actual results could differ from those estimates.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust (including the
Trust's investment manager) is indemnified against certain liabilities that
may arise out of performance of their duties to the Fund. Additionally, in
the normal course of business, the Fund enters into contracts that contain
a variety of indemnification clauses. The Fund's maximum exposure under
these arrangements is unknown as this would involve future claims that may
be made against the Fund that have not yet occurred. The risk of material
loss as a result of such indemnification claims is considered remote.
I. REDEMPTION FEES -- The Fund has a 2% redemption fee that is to be retained
by the Fund to offset transaction costs and other expenses associated with
short-term redemptions and exchanges. The fee, subject to certain
exceptions, is imposed on certain redemptions, including exchanges of
shares held less than 30 days. The redemption fee is recorded as an
increase in shareholder capital and is allocated among the share classes
based on the relative net assets of each class.
J. 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.
16
AIM Global Equity Fund
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.
K. 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
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.
L. 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.
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 0.975%
- --------------------------------------------------------------------
Next $500 million 0.95%
- --------------------------------------------------------------------
Next $500 million 0.925%
- --------------------------------------------------------------------
Over $1.5 billion 0.90%
___________________________________________________________________
====================================================================
</Table>
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 annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $250 million 0.80%
- -------------------------------------------------------------------
Next $250 million 0.78%
- -------------------------------------------------------------------
Next $500 million 0.76%
- -------------------------------------------------------------------
Next $1.5 billion 0.74%
- -------------------------------------------------------------------
Next $2.5 billion 0.72%
- -------------------------------------------------------------------
Next $2.5 billion 0.70%
- -------------------------------------------------------------------
Next $2.5 billion 0.68%
- -------------------------------------------------------------------
Over $10 billion 0.66%
__________________________________________________________________
===================================================================
</Table>
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 December 31, 2007, AIM waived advisory fees of $530,272.
At the request of the Trustees of the Trust, Invesco Ltd. ("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 December 31, 2007, Invesco reimbursed expenses of the Fund in the amount
of $3,670.
17
AIM Global Equity Fund
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
December 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 December 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. Rules of the Financial Industry
Regulatory Authority ("FINRA"), formerly known as National Association of
Securities Dealers, 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 December 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 December 31, 2007, ADI advised the Fund that it retained $73,547 in
front-end sales commissions from the sale of Class A shares and $1,716, $63,167,
$2,098 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
December 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 12/31/07 INCOME
- -------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $ 6,497,631 $102,074,123 $(104,293,973) $4,277,781 $441,229
- -------------------------------------------------------------------------------------------------
Premier
Portfolio-Institutional
Class 6,497,631 102,074,123 (104,293,973) 4,277,781 440,107
=================================================================================================
Subtotal $12,995,262 $204,148,246 $(208,587,946) $8,555,562 $881,336
=================================================================================================
</Table>
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 12/31/06 AT COST FROM SALES 12/31/07 INCOME*
- --------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $22,269,452 $305,229,534 $(293,643,793) $33,855,193 $ 468,919
- --------------------------------------------------------------------------------------------------
STIC Prime
Portfolio-Institutional
Class 22,269,452 121,265,883 (143,535,335) -- 204,581
- --------------------------------------------------------------------------------------------------
Subtotal $44,538,904 $426,495,417 $(437,179,128) $33,855,193 $ 673,500
==================================================================================================
Total
Investments
in
Affiliates $57,534,166 $630,643,663 $(645,767,074) $42,410,755 $1,554,836
__________________________________________________________________________________________________
==================================================================================================
</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
18
AIM Global Equity Fund
current market price. Pursuant to these procedures, for the year ended December
31, 2007, the Fund engaged in securities sales of $4,998,470, which resulted in
net realized gains of $428,696, and securities purchases of $663,004.
NOTE 5--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the year
ended December 31, 2007, the Fund received credits from this arrangement, which
resulted in the reduction of the Fund's total expenses of $33,874.
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 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 December 31, 2007, the Fund paid legal fees of $5,205
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 December 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 by the
securities lending provider. 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 December 31, 2007, securities with an aggregate value of $32,264,485 were
on loan to brokers. The loans were secured by cash collateral of $33,855,193
received by the Fund and subsequently invested in affiliated money market funds.
For the year ended December 31, 2007, the Fund received dividends on cash
collateral investments of $673,500 for securities lending transactions, which
are net of compensation to counterparties.
19
AIM Global Equity Fund
NOTE 9--FUTURES CONTRACTS
On December 31, 2007, $1,650,000 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
- ------------------------------------------------------------------------------------------------------------------------
UNREALIZED
NUMBER OF MONTH/ VALUE APPRECIATION
CONTRACT CONTRACTS COMMITMENT 12/31/07 (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------
E-Mini S &P 500 63 Mar-08/Long $4,653,180 $ (37,359)
- ------------------------------------------------------------------------------------------------------------------------
Nikkei 225 (USD) Index 120 Mar-08/Long 9,123,000 (300,360)
- ------------------------------------------------------------------------------------------------------------------------
FTSE 100 Index (United Kingdom) 36 Mar-08/Long 4,617,158 (6,045)
========================================================================================================================
$18,393,338 $(343,764)
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
NOTE 10--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years December 31, 2007 and
2006 was as follows:
<Table>
<Caption>
2007 2006
- ----------------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $41,137,308 $21,208,449
- ----------------------------------------------------------------------------------------
Long-term capital gain 34,847,035 36,390,388
========================================================================================
Total distributions $75,984,343 $57,598,837
________________________________________________________________________________________
========================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of December 31, 2007, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2007
- ----------------------------------------------------------------------------
Undistributed ordinary income $ 1,277,312
- ----------------------------------------------------------------------------
Undistributed long-term gain 12,231,577
- ----------------------------------------------------------------------------
Net unrealized appreciation -- investments 12,749,957
- ----------------------------------------------------------------------------
Temporary book/tax differences (45,629)
- ----------------------------------------------------------------------------
Post-October currency loss deferral (8,810)
- ----------------------------------------------------------------------------
Shares of beneficial interest 490,031,618
============================================================================
Total net assets $516,236,025
____________________________________________________________________________
============================================================================
</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 to losses on wash sales and the
recognition for tax purposes of unrealized gains on passive foreign investment
companies and futures contracts. The tax-basis net unrealized appreciation on
investments amount includes appreciation (depreciation) on foreign futures
contracts of $(6,045) and appreciation on foreign currencies of $4,141.
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 December 31, 2007.
NOTE 11--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 December 31, 2007 was $855,575,976 and
$887,058,842, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 32,341,731
- ------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (19,589,870)
==============================================================================
Net unrealized appreciation of investment securities $ 12,751,861
______________________________________________________________________________
==============================================================================
Cost of investments for tax purposes is $537,038,707.
</Table>
20
AIM Global Equity Fund
NOTE 12--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of treatment of passive
foreign investment companies, foreign currency transactions and partnerships, on
December 31, 2007, undistributed net investment income was increased by
$1,554,291, undistributed net realized gain was decreased by $1,554,199 and
shares of beneficial interest decreased by $92. This reclassification had no
effect on the net assets of the Fund.
NOTE 13--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
- --------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------
2007(a) 2006
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------
Sold:
Class A 2,695,620 $46,498,238 4,252,161 $71,292,997
- --------------------------------------------------------------------------------------------------------------------
Class B 595,531 9,814,196 1,197,789 19,259,215
- --------------------------------------------------------------------------------------------------------------------
Class C 473,706 7,801,642 568,227 9,124,165
- --------------------------------------------------------------------------------------------------------------------
Class R 27,712 486,177 9,394 158,927
- --------------------------------------------------------------------------------------------------------------------
Institutional Class 2,897,972 50,074,391 1,276,659 21,729,210
====================================================================================================================
Issued as reinvestment of dividends:
Class A 3,033,601 44,836,660 2,024,428 33,180,370
- --------------------------------------------------------------------------------------------------------------------
Class B 785,736 11,023,881 649,805 10,169,462
- --------------------------------------------------------------------------------------------------------------------
Class C 400,405 5,605,731 298,769 4,669,788
- --------------------------------------------------------------------------------------------------------------------
Class R 5,187 76,665 918 15,041
- --------------------------------------------------------------------------------------------------------------------
Institutional Class 711,186 10,603,784 433,909 7,163,832
====================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 838,355 14,456,246 554,881 9,322,967
- --------------------------------------------------------------------------------------------------------------------
Class B (881,595) (14,456,246) (580,061) (9,322,967)
====================================================================================================================
Reacquired:(b)
Class A (4,820,592) (82,238,168) (4,205,149) (70,354,874)
- --------------------------------------------------------------------------------------------------------------------
Class B (1,288,797) (21,163,196) (1,295,788) (20,828,939)
- --------------------------------------------------------------------------------------------------------------------
Class C (613,782) (10,125,201) (610,757) (9,741,314)
- --------------------------------------------------------------------------------------------------------------------
Class R (10,296) (167,751) (927) (15,215)
- --------------------------------------------------------------------------------------------------------------------
Institutional Class (2,246,043) (41,432,717) (279,187) (4,753,429)
====================================================================================================================
2,603,906 $31,694,332 4,295,071 $71,069,236
____________________________________________________________________________________________________________________
====================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate they own 25% 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) Net of redemption fees of $14,787 and $11,309 which were allocated among
the classes based on relative net assets of each class for the years
ended December 31, 2007 and 2006, respectively.
21
AIM Global Equity Fund
NOTE 14--SIGNIFICANT EVENT
At a meeting held on December 13, 2007, the Board of Trustees of Trust approved
certain proposals to be presented for shareholder approval at a special meeting
of the shareholders of the Trust intended to be held on February 29, 2008 (the
"Special Meeting"). At the Special Meeting, shareholders of record as of the
close of business on November 30, 2007, are entitled to vote their respective
shares on several proposals that including, among others the following
proposal(s).
New proposed sub-advisory agreement between A I M Advisors, Inc. ("AIM") and
each of AIM Funds Management Inc., Invesco Asset Management Deutschland, GmbH,
Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited,
Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco
Hong Kong Limited, Invesco Institutional (N.A.), Inc. and Invesco Senior Secured
Management, Inc. (collectively, the "Affiliated Sub-Advisers") (the "New
Sub-advisory Arrangements") . This proposal is intended to benefit the Fund and
its shareholders by permitting AIM to utilize the additional resources and
talent of these affiliated sub-advisers in managing the Fund. Because AIM would
pay all of the sub-advisory fees of the sub-advisers, the new sub-advisory
arrangements would not affect the fees the Fund pays pursuant to the advisory
agreement. If approved by shareholders, the New Sub-advisory Arrangements are
expected to become effective on or about May 1, 2008.
NOTE 15--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2007 2006 2005 2004 2003
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.47 $ 15.54 $ 15.65 $ 13.54 $ 9.95
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.22(a) 0.19 0.15(a) (0.02)(a) (0.06)(a)
- -------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.63 2.73 1.34 2.93 3.79
=========================================================================================================================
Total from investment operations 0.85 2.92 1.49 2.91 3.73
=========================================================================================================================
Less distributions:
Dividends from net investment income (0.31) (0.20) (0.13) -- --
- -------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (2.20) (1.79) (1.47) (0.80) (0.14)
=========================================================================================================================
Total distributions (2.51) (1.99) (1.60) (0.80) (0.14)
=========================================================================================================================
Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 0.00 0.00
=========================================================================================================================
Net asset value, end of period $ 14.81 $ 16.47 $ 15.54 $ 15.65 $ 13.54
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) 5.19% 18.88% 9.43% 21.64% 37.51%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $317,181 $324,111 $264,868 $182,416 $109,205
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.39%(c) 1.45% 1.50% 1.94% 2.00%
- -------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.49%(c) 1.64% 1.68% 1.96% 2.05%
=========================================================================================================================
Ratio of net investment income (loss) to average net assets 1.27%(c) 1.09% 0.91% (0.11)% (0.50)%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 160% 166% 120% 115% 178%
_________________________________________________________________________________________________________________________
=========================================================================================================================
</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.
(c) Ratios are based on average daily net assets of $341,015,612.
22
AIM Global Equity Fund
NOTE 15--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS B
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
2007 2006 2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.73 $ 14.92 $ 15.10 $ 13.15 $ 9.71
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.09(a) 0.06 0.03(a) (0.09)(a) (0.11)(a)
- ------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.59 2.62 1.28 2.84 3.69
========================================================================================================================
Total from investment operations 0.68 2.68 1.31 2.75 3.58
========================================================================================================================
Less distributions:
Dividends from net investment income (0.17) (0.08) (0.03) -- --
- ------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (2.20) (1.79) (1.46) (0.80) (0.14)
========================================================================================================================
Total distributions (2.37) (1.87) (1.49) (0.80) (0.14)
========================================================================================================================
Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 0.00 0.00
========================================================================================================================
Net asset value, end of period $ 14.04 $ 15.73 $ 14.92 $ 15.10 $ 13.15
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(b) 4.33% 18.02% 8.65% 21.06% 36.90%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $78,326 $100,141 $95,379 $74,120 $62,424
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.14%(c) 2.20% 2.21% 2.44% 2.50%
- ------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.24%(c) 2.39% 2.39% 2.46% 2.55%
========================================================================================================================
Ratio of net investment income (loss) to average net assets 0.52%(c) 0.34% 0.20% (0.61)% (1.00)%
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate 160% 166% 120% 115% 178%
________________________________________________________________________________________________________________________
========================================================================================================================
</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.
(c) Ratios are based on average daily net assets of $94,551,192.
<Table>
<Caption>
CLASS C
---------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
2007 2006 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.71 $ 14.89 $ 15.08 $ 13.14 $ 9.71
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.09(a) 0.06 0.03(a) (0.09)(a) (0.11)(a)
- -----------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.59 2.63 1.27 2.83 3.68
=======================================================================================================================
Total from investment operations 0.68 2.69 1.30 2.74 3.57
=======================================================================================================================
Less distributions:
Dividends from net investment income (0.17) (0.08) (0.03) -- --
- -----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (2.20) (1.79) (1.46) (0.80) (0.14)
=======================================================================================================================
Total distributions (2.37) (1.87) (1.49) (0.80) (0.14)
=======================================================================================================================
Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 0.00 0.00
=======================================================================================================================
Net asset value, end of period $ 14.02 $ 15.71 $ 14.89 $ 15.08 $ 13.14
_______________________________________________________________________________________________________________________
=======================================================================================================================
Total return(b) 4.35% 18.12% 8.58% 21.00% 36.79%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $40,480 $41,261 $35,313 $20,375 $ 9,993
_______________________________________________________________________________________________________________________
=======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 2.14%(c) 2.20% 2.21% 2.44% 2.50%
- -----------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 2.24%(c) 2.39% 2.39% 2.46% 2.55%
=======================================================================================================================
Ratio of net investment income (loss) to average net assets 0.52%(c) 0.34% 0.20% (0.61)% (1.00)%
_______________________________________________________________________________________________________________________
=======================================================================================================================
Portfolio turnover rate 160% 166% 120% 115% 178%
_______________________________________________________________________________________________________________________
=======================================================================================================================
</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.
(c) Ratios are based on average daily net assets of $43,927,511.
23
AIM Global Equity Fund
NOTE 15--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS R
------------------------------------------
YEAR ENDED OCTOBER 31, 2005
DECEMBER 31, (COMMENCEMENT DATE)
------------------- TO DECEMBER 31,
2007 2006 2005
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $16.46 $15.53 $16.07
- --------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.18(a) 0.12 0.02(a)
- --------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.63 2.76 1.03
========================================================================================================
Total from investment operations 0.81 2.88 1.05
========================================================================================================
Less distributions:
Dividends from net investment income (0.26) (0.16) (0.13)
- --------------------------------------------------------------------------------------------------------
Distributions from net realized gains (2.20) (1.79) (1.46)
========================================================================================================
Total distributions (2.46) (1.95) (1.59)
========================================================================================================
Redemption fees added to shares of beneficial interest 0.00 0.00 --
========================================================================================================
Net asset value, end of period $14.81 $16.46 $15.53
________________________________________________________________________________________________________
========================================================================================================
Total return(b) 4.97% 18.62% 6.46%
________________________________________________________________________________________________________
========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 488 $ 170 $ 15
________________________________________________________________________________________________________
========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.64%(c) 1.70% 1.73%(d)
- --------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.74%(c) 1.89% 1.91%(d)
========================================================================================================
Ratio of net investment income to average net assets 1.02%(c) 0.84% 0.68%(d)
________________________________________________________________________________________________________
========================================================================================================
Portfolio turnover rate(e) 160% 166% 120%
________________________________________________________________________________________________________
========================================================================================================
</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 $245,067.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
24
AIM Global Equity Fund
NOTE 15--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
-------------------------------------------------------
APRIL 30, 2004
YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE)
-------------------------------- TO DECEMBER 31,
2007 2006 2005 2004
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.60 $ 15.64 $ 15.73 $ 13.98
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.29(a) 0.23 0.23(a) 0.07(a)
- ---------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.63 2.79 1.34 2.48
=====================================================================================================================
Total from investment operations 0.92 3.02 1.57 2.55
=====================================================================================================================
Less distributions:
Dividends from net investment income (0.38) (0.27) (0.21) --
- ---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (2.20) (1.79) (1.45) (0.80)
=====================================================================================================================
Total distributions (2.58) (2.06) (1.66) (0.80)
=====================================================================================================================
Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 0.00
=====================================================================================================================
Net asset value, end of period $ 14.94 $ 16.60 $ 15.64 $ 15.73
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(b) 5.58% 19.40% 9.97% 18.39%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $79,762 $66,018 $39,803 $13,158
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.99%(c) 1.03% 0.99% 1.18%(d)
- ---------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.09%(c) 1.22% 1.17% 1.20%(d)
=====================================================================================================================
Ratio of net investment income to average net assets 1.67%(c) 1.50% 1.42% 0.65%(d)
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate(e) 160% 166% 120% 115%
_____________________________________________________________________________________________________________________
=====================================================================================================================
</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 $81,301,684.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 16--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING
On July 6, 2007, the Securities and Exchange Commission ("SEC") published notice
of two proposed distribution plans ("Distribution Plans") for the distribution
of monies placed into two separate Fair Funds created pursuant to a settlement
reached on October 8, 2004 between Invesco Funds Group, Inc. ("IFG"), A I M
Advisors, Inc. ("AIM") and A I M Distributors, Inc. and the SEC (the "Order").
One of the Fair Funds consists of $325 million, plus interest and any
contributions by other settling parties, for distribution to shareholders of
certain mutual funds formerly advised by IFG who may have been harmed by market
timing and related activity. The second Fair Fund consists of $50 million, plus
interest and any contributions by other settling parties, for distribution to
shareholders of mutual funds advised by AIM who may have been harmed by market
timing and related activity. Comments on the Distribution Plans were due no
later than August 6, 2007 and the Distribution Plans are awaiting final approval
by the SEC. Distributions from the Fair Funds will begin after the SEC finally
approves the Distribution Plans. The proposed Distribution Plans provide for
distribution to all eligible investors, for the periods spanning January 1, 2000
through July 31, 2003 (for the IFG Fair Fund) and January 1, 2001 through
September 30, 2003 (for the AIM Fair Fund), their proportionate share of the
applicable Fair Fund to compensate such investors for injury they may have
suffered as a result of market timing in the affected funds. The Distribution
Plans include a provision for any residual amounts in the Fair Funds to be
distributed in the future to the affected funds. Because the Distribution Plans
have not received final approval from the SEC and distribution of the Fair Funds
has not yet commenced, management of AIM and the Fund are unable to estimate the
amount of distribution to be made to the Fund, if any.
At the request of the trustees of the AIM Funds, Invesco Ltd. ("Invesco"),
the parent company of IFG and AIM, has agreed to reimburse expenses incurred by
the AIM Funds related to market timing matters.
PENDING LITIGATION AND REGULATORY INQUIRIES
On August 30, 2005, the West Virginia Office of the State
Auditor -- Securities Commission ("WVASC") issued a Summary Order to Cease and
Desist and Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The
WVASC makes findings of fact that AIM and ADI entered into certain arrangements
permitting market timing of the AIM Funds and failed to disclose these
arrangements in the prospectuses for such Funds, and conclusions of law to the
effect that AIM and ADI violated the West Virginia securities laws. The WVASC
orders AIM and ADI to cease any further violations and seeks to
25
AIM Global Equity Fund
NOTE 16--LEGAL PROCEEDINGS--(CONTINUED)
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, IFG, AIM, ADI and/or
related entities and individuals, depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity
in the AIM Funds; 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 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 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 Global Equity Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Growth Series
and Shareholders of AIM Global Equity 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 Global Equity Fund (one of the
funds constituting AIM Growth Series, hereafter referred to as the "Fund") at
December 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 December 31, 2007 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
February 15, 2008
Houston, Texas
27
AIM Global Equity Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments or
contingent deferred sales charges on redemptions, and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and/or service
(12b-1) fees; and other Fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with ongoing costs of investing in other mutual funds. The
example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period July 1, 2007, through December 31, 2007.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the hypothetical
information is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $969.50 $ 6.85 $1,018.25 $ 7.02 1.38%
B 1,000.00 965.40 10.55 1,014.47 10.82 2.13
C 1,000.00 965.40 10.55 1,014.47 10.82 2.13
R 1,000.00 968.50 8.09 1,016.99 8.29 1.63
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period July 1, 2007, through December 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 12/31/07
AIM Global Equity Fund
==========================================
Institutional Class Shares AVERAGE ANNUAL TOTAL RETURNS PLEASE NOTE THAT PAST PERFORMANCE IS
For periods ended 12/31/07 NOT INDICATIVE OF FUTURE RESULTS. MORE
The following information has been RECENT RETURNS MAY BE MORE OR LESS THAN
prepared to provide Institutional Class 10 Years 10.35% THOSE SHOWN. ALL RETURNS ASSUME
shareholders with a performance overview 5 Years 18.44 REINVESTMENT OF DISTRIBUTIONS AT NAV.
specific to their holdings. Institutional 1 Year 5.58 INVESTMENT RETURN AND PRINCIPAL VALUE WILL
Class shares are offered exclusively to ========================================== FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
institutional investors, including defined MAY BE WORTH MORE OR LESS THAN THEIR
contribution plans that meet certain INSTITUTIONAL CLASS SHARES' INCEPTION DATE ORIGINAL COST. SEE FULL REPORT FOR
criteria. IS APRIL 30, 2004. RETURNS SINCE THAT DATE INFORMATION ON COMPARATIVE BENCHMARKS.
ARE HISTORICAL RETURNS. ALL OTHER RETURNS PLEASE CONSULT YOUR FUND PROSPECTUS FOR
ARE BLENDED RETURNS OF HISTORICAL MORE INFORMATION. FOR THE MOST CURRENT
INSTITUTIONAL CLASS SHARE PERFORMANCE AND MONTH-END PERFORMANCE, PLEASE CALL
RESTATED CLASS A SHARE PERFORMANCE (FOR 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
PERIODS PRIOR TO THE INCEPTION DATE OF
INSTITUTIONAL CLASS SHARES) AT NET ASSET
VALUE (NAV) AND REFLECT THE HIGHER RULE
12B-1 FEES APPLICABLE TO CLASS A SHARES.
CLASS A SHARES' INCEPTION DATE IS
SEPTEMBER 15, 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 GNDIX A REDEMPTION FEE OF 2% WILL BE IMPOSED
========================================== ON CERTAIN REDEMPTIONS OR EXCHANGES OUT OF
THE FUND WITHIN 30 DAYS OF PURCHASE.
EXCEPTIONS TO THE REDEMPTION FEE ARE
LISTED IN THE FUND'S PROSPECTUS.
Over for information on your Fund's expenses.
=======================================================================================
THIS SUPPLEMENT 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 MCBV-INS-1 A I M Distributors, Inc. -- REGISTERED TRADEMARK --
AIM Global Equity Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management fees
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period July 1, 2007, through December 31, 2007.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. Therefore, the hypothetical information is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (7/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
Institutional $1,000.00 $971.00 $4.92 $1,020.21 $5.04 0.99%
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period July 1, 2007, through December 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.
AIM Global Equity 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 December
31, 2007:
FEDERAL AND STATE INCOME TAX
<Table>
Long-Term Capital Gain Dividends $34,847,034
Qualified Dividend Income* 25.00%
Corporate Dividends Received
Deduction* 8.52%
U.S. Treasury Obligations 0.10%
</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 March 31, 2007, June 30, 2007, September 30, 2007 and
December 31, 2007 were 53.68%, 53.42%, 52.14%, and 54.93%, respectively.
29
AIM Global Equity Fund
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Growth Series (the "Trust"), is
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees
104 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 Ltd. (ultimate parent
of AIM and a global investment
management firm) and, Invesco Holding
Company (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); and INVESCO
North American Holdings, Inc. (holding
company); Chairman and President,
INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of
Funds(R); Vice Chairman, Investment
Company Institute; and Member of
Executive Board, SMU Cox School of
Business
Formerly: Chairman, Investment Company
Institute; 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, AIM Mutual Fund Dealer Inc.
Principal (registered broker dealer), A I M
Executive Officer Advisors, Inc., AIM Funds Management
Inc. d/b/a INVESCO Enterprise Services
(registered investment advisor and
registered transfer agent), 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), and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Management Group Inc. (financial
services holding company) and 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) 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); 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: Director and Chairman, Fund
Management Company (registered broker
dealer); 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 2001 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 1985 Retired None
Trustee
Formerly: Partner, law firm of Baker &
McKenzie and Director, Badgley Funds,
Inc. (registered investment company) (2
portfolios)
- -------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm)
Formerly: Director, Policy Studies, Inc.
and Van Gilder Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2001 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 2001 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)
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company) and Discovery Global Education
Fund (non-profit)
- -------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) (15
Trustee Naftalis and Frankel LLP portfolios)
- -------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Raymond Stickel, Jr. -- 1944 2005 Retired
Trustee
Formerly: Partner, Deloitte & Touche; None
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 Ltd., ultimate 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 Global Equity 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,
AIM Investment Services, Inc. and
INVESCO Distributors, Inc.; Director,
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: Director, Vice President and
Secretary, Fund Management Company; 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 N/A
Vice President Ltd.; 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 General Counsel, Secretary and Senior
Vice President Managing Director, Invesco Ltd.;
Director and Secretary, Invesco Holding
Company Limited, IVZ, Inc. and INVESCO
Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO
North American Holdings, Inc.; and Vice
President of The AIM Family of
Funds--Registered Trademark--
Formerly: Senior Managing Director, N/A
Invesco Holding Company Limited;
Director, Senior Vice 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 2004 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; Executive
Vice President, A I M Distributors,
Inc.; Senior Vice President, A I M
Management Group Inc.; 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: Director and President, Fund
Management Company; 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. and The AIM Family of
Funds--Registered Trademark--
Formerly: Anti-Money Laundering
Compliance Officer, Fund Management
Company; and 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.
and AIM Investment Services, Inc.
Formerly: Vice President, A I M Capital
Management, Inc. and Fund Management
Company; 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>
31
Fund holdings and proxy voting information
[EDELIVERY
GO PAPERLESS The Fund provides a complete list of its
AIMINVESTMENTS.COM/EDELIVERY holdings four times in each fiscal year,
GRAPHIC] at the quarter-ends. For the second and
fourth quarters, the lists appear in the
REGISTER FOR EDELIVERY Fund's semiannual and annual reports to
shareholders. For the first and third
eDelivery is the process of receiving your quarters, the Fund files the lists with
fund and account information via e-mail. the Securities and Exchange Commission
Once your quarterly statements, tax forms, (SEC) on Form N-Q. The most recent list of
fund reports, and prospectuses are portfolio holdings is available at
available, we will send you an e-mail AIMinvestments.com. From our home page,
notification containing links to these click on Products & Performance, then
documents. For security purposes, you will Mutual Funds, then Fund Overview. Select
need to log in to your account to view your Fund from the drop-down menu and
your statements and tax forms. click on Complete Quarterly Holdings.
Shareholders can also look up the Fund's
WHY SIGN UP? Forms N-Q on the SEC Web site at sec.gov.
Copies of the Fund's Forms N-Q may be
Register for eDelivery to: reviewed and copied at the SEC Public
Reference Room in Washington, D.C. You can
o save your Fund the cost of printing and obtain information on the operation of the
postage. Public Reference Room, including
information about duplicating fee charges,
o reduce the amount of paper you receive. by calling 202-942-8090 or 800-732-0330,
or by electronic request at the following
o gain access to your documents faster by e-mail address: publicinfo@sec.gov. The
not waiting for the mail. SEC file numbers for the Fund are
811-02699 and 002-57526.
o view your documents online anytime at
your convenience. A description of the policies and
procedures that the Fund uses to determine
o save the documents to your personal how to vote proxies relating to portfolio
computer or print them out for your securities is available without charge,
records. upon request, from our Client Services
department at 800-959-4246 or on the AIM
HOW DO I SIGN UP? Web site, AIMinvestments.com. On the home
page, scroll down and click on Proxy
It's easy. Just follow these simple steps: Policy. The information is also available
on the SEC Web site, sec.gov.
1. Log in to your account.
Information regarding how the Fund voted
2. Click on the "Service Center" tab. proxies related to its portfolio
securities during the 12 months ended June
3. Select "Register for eDelivery" and 30, 2007, is available at our Web site. Go
complete the consent process. to AIMinvestments.com, access the About Us
tab, click on Required Notices and then
This AIM service is provided by AIM click on Proxy Voting Activity. Next,
Investment Services, Inc. select the Fund from the drop-down menu.
The information is also available on the
SEC Web site, sec.gov.
If used after April 20, 2008, this report
must be accompanied by a Fund fact sheet
or by an AIM Quarterly Performance Review
for the most recent quarter-end. Mutual
funds and exchange-traded funds
distributed by A I M Distributors, Inc.
GEQ-AR-1 A I M Distributors, Inc.
[AIM INVESTMENTS LOGO]
-- REGISTERED TRADEMARK --
DIVERSIFIED PORTFOLIOS
AIM Income
Allocation Fund
Annual Report to Shareholders - December 31, 2007
Table of Contents
Letters to Shareholders........ 2
Performance Summary............ 4
Management Discussion.......... 4
Long-term Fund Performance..... 6
Supplemental Information....... 8
Schedule of Investments........ 10
Financial Statements........... 11
Notes to Financial Statements.. 14
Financial Highlights........... 19
Auditor's Report............... 25
Fund Expenses.................. 26
Tax Information................ 27
Trustees and Officers.......... 28
[COVER GLOBE IMAGE]
[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 Income Allocation Fund
Dear Shareholders:
I'm pleased to provide you with this report, which includes
[TAYLOR a discussion of how your Fund was managed during the period
PHOTO] under review, and factors that affected its performance. The
following pages contain important information that answers
Philip Taylor questions you may have about your investment.
Despite notable volatility at points throughout the year
ended December 31, 2007, major stock market indexes in the
U.S. and abroad generally performed well. Reasons for their
favorable performance included positive economic growth,
particularly overseas; strong corporate profits; and action
by the U.S. Federal Reserve Board (the Fed) to lower
short-term interest rates, among other factors.
At its mid-September 2007 meeting, the Fed cut its
federal funds target rate for the first time since June
2003.(1) That cut followed 17 rate increases from June 2004
to June 2006(1) and was intended to address concerns about a
weak housing market and problems in the subprime mortgage
market, which some feared could adversely affect the U.S.
economy. The Fed cut the federal funds target rate again in
late October and mid-December in response to continued
economic uncertainty.
This kind of uncertainty can affect equity, fixed-income
and other markets--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.
I encourage you to talk with your financial advisor if
you have concerns about your portfolio. We believe in the
value of working with a trusted financial advisor who can
recommend AIM funds that are appropriate for your portfolio
and that address your long-term investment goals and risk
tolerance regardless of prevailing short-term market
conditions.
In conclusion
In May, AIM Investments' parent company changed its name
from AMVESCAP PLC to Invesco Ltd., uniting our worldwide
operations and global expertise under a new name. While the
name of our parent company may be new to you, I can assure
you that AIM's 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.
We 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
February 11, 2008
Source: (1)U.S. Federal Reserve Board
AIM Investments--REGISTERED TRADEMARK-- is a registered
service mark of A I M Management Group Inc. A I M Advisors,
Inc., A I M Capital Management, Inc., AIM Private Asset
Management, Inc. and PowerShares Capital Management LLC are
the investment advisors for the products and services
represented by AIM Investments; they each provide investment
advisory services to individual and institutional clients
and do not sell securities. A I M Distributors, Inc. is the
distributor for the retail mutual funds and U.S.
institutional money market funds represented by AIM
Investments and the exchange-traded funds managed by
PowerShares Capital Management LLC. All entities are
indirect wholly owned subsidiaries of Invesco Ltd.
2
AIM Income Allocation Fund
Dear Fellow AIM Fund Shareholders:
The lines of communication are open: More than 250 of you
[CROCKETT have responded to the invitation I extended in my previous
PHOTO] letter to complete an online survey, and more than 50
shareholders have contacted me directly by e-mail. When I
Bruce L. Crockett could respond quickly and easily to a shareholder's specific
concern I did, but the messages for the most part raised
consistent issues that I respond to here.
I have received many suggestions, a few complaints, and
one offer to buy a gold mine! In general, your letters
expressed an appreciation for transparency, frankness and
the opportunity to comment. Nevertheless, several
shareholders found room for improvement in communications.
Some would like more concise letters while others would
prefer reports to be more customized for their particular
information needs. With these reports going to tens of
thousands of people, shareholder communications necessarily
have to cover those issues common to a diverse population as
well as the information required by law. The ability to
change or further customize letters and reports is also
affected by technology, timeliness and cost.
Online survey responders preferred electronic
communications to paper at a ratio of 63% to 37%. Direct
responders expressed more of a preference for paper,
especially for long reports. Electronic communications are
more cost-effective than paper communications that have to
be printed and mailed, so I encourage those who have
resisted electronic communications to give them a try.
The correspondence shows that improving fund performance
and reducing shareholder costs remain the key shareholder
concerns. Several letters noted individual funds where
performance had changed for the better, while others
remained dissatisfied with the returns from funds they hold.
Although 75% of the online survey responders wanted to see
more overall fund performance data in these letters, and 58%
wanted more information on individual funds, Securities and
Exchange Commission (SEC) and Financial Industry Regulatory
Authority (FINRA) rules are very specific about the way fund
performance can be discussed in print. Respect for those
rules prevents me from commenting on individual funds or
very recent results here, but I can assure you that your
Board and all of its Investments subcommittees continue to
work with AIM Investments to make improved performance a top
priority for all fund managers.
Expense levels came up as another dominant issue, and no
respondent felt these were too low. Several shareholders
questioned the need for 12b-1 fees, which cover the cost of
distributing fund shares and thereby help the fund to
attract new assets. Your Board reviews the funds' 12b-1 fees
annually with the shareholders' best interests in mind.
While your Board keeps its eye on containing or lowering
these fees wherever possible, we also are mindful that 12b-1
fees may be necessary in order to maintain an effective
distribution system for fund shares.
The value of communication between the Board and
shareholders has been noted within and beyond the AIM
community. In the online survey, 87% of the respondents felt
it was either somewhat or very important to hear directly
from the Board, with 55% saying it was very important.
Morningstar--TRADEMARK--, the mutual fund tracking company,
also commented favorably on this channel of communication in
its fall 2007 update of fund stewardship grades, where AIM
was one of fewer than 10 fund boards to get an A for board
quality, according to BoardIQ (11/13/07).
In other news, Ruth Quigley retired from your Board at
the end of 2007, and we thank her for her many years of
dedicated service. Larry Soll has assumed Ruth's place as a
vice chair of the Investments Committee. The Valuation
Committee, which Ruth used to chair, has been reorganized as
the Valuation, Distribution and Proxy Oversight Committee
under the chairmanship of Carl Frischling. The elevation of
proxy oversight to standing committee status responds to
suggestions from shareholders. In addition, Prema
Mathi-Davis assumed my seat on the Governance Committee, and
I moved to the Audit Committee.
Your Board looks forward to another year of diligent
effort on your behalf, and we are even more strongly
motivated by your feedback. The invitation remains open to
e-mail me at bruce@brucecrockett.com. I look forward to
hearing from you.
Sincerely,
/S/ BRUCE L. CROCKETT
-------------------------
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
February 11, 2008
3
AIM Income Allocation Fund
Management's discussion of Fund performance While no fund can guarantee positive
performance, the broad portfolio
======================================================================================= diversification provides exposure to areas
PERFORMANCE SUMMARY of the market that may perform well in any
given period. Additionally, the broad
For the year ended December 31, 2007, AIM Income Allocation Fund produced positive diversification attempts to limit exposure
performance at net asset value (NAV). to any one area of the market that may be
underperforming.
In this market environment, where equity markets generally provided positive returns
but on average underperformed fixed income markets, the Fund underperformed the We determine target asset class
broad-based S&P 500 Index. Additionally, the Fund underperformed the Custom Income weightings and underlying fund selections
Allocation Index, which approximates the performance of the types of holdings owned by for the Fund and also monitor the Fund on
the Fund's underlying funds. This underperformance was due in part to the relative an ongoing basis. The underlying funds are
underperformance of the Fund's underlying funds within the large-cap core, high yield actively managed by their respective
bond and leveraged loan allocations. management teams based on the individual
fund objectives, investment strategies and
Your Fund's long-term performance is shown later in this report. management techniques.
FUND VS. INDEXES While the weightings of various
underlying funds in the portfolio may vary
Total returns, 12/31/06 - 12/31/07 at NAV. Performance shown does not include from their targets during the year due to
applicable CDSC or front-end sales charges, which would have reduced performance. market movements, we rebalance the
portfolio annually to maintain its target
Class A Shares 3.40% asset class allocations.
Class B Shares 2.62
Class C Shares 2.62 Market conditions and your Fund
Class R Shares 3.14
S&P 500 Index(triangle) (Broad Market Index) 5.49 Market volatility increased during 2007 as
Custom Income Allocation Index(square) (Style-Specific Index) 4.92 subprime mortgage issues and record high
Lipper Mixed-Asset Target Allocation Conservative Funds Index(triangle) oil prices fueled concerns that slower
(Peer Group Index) 5.66 economic growth and rising inflation would
reduce corporate profits. Despite these
SOURCES: (triangle)LIPPER INC.; (square)A I M MANAGEMENT GROUP INC., LIPPER INC. concerns most major market indexes
======================================================================================= finished the fiscal year with respectable
gains.(1)
How we invest bond funds, which represent 65% of the
portfolio, and four stock funds, which Across asset classes, international
The Fund invests in 11 underlying funds represent the remaining 35% of the equities continued their trend of
diversified among asset classes (bonds, portfolio. The underlying funds invest in outperforming domestic equities.(1) A weak
stocks and cash), investment styles (value a wide range of income-producing U.S. dollar helped boost international
and blend/core), regions (domestic and securities, which may generate an equity returns.(2) As the dol-
international) and market capitalizations attractive yield with less price
(large and mid). These underlying funds volatility than individual asset classes.
include seven
====================================================================================================================================
PORTFOLIO COMPOSITION TOTAL NET ASSETS
TARGET % OF TOTAL NET ASSETS Total Net Assets $97.30 million
ASSET CLASS ALLOCATION AS OF 12/31/07
- ----------- ---------- ---------------------
Intermediate-Term Taxable Investment Grade 38.00% 39.64%
International/Global Blend 5.00 4.98 The Fund purchases Institutional Class
Large-Cap Blend 15.00 14.21 shares of the underlying mutual funds.
Real Estate 7.00 6.30 Institutional Class shares have no sales
Sector 8.00 8.52 charge. The Fund's portfolio is subject to
Short-Term Taxable Investment Grade 6.00 6.14 change, and there is no assurance that the
Taxable Non-Investment Grade 21.00 20.71 Fund will continue to hold any particular
Other Assets Less Liabilities -0.50 fund.
====================================================================================================================================
4
AIM Income Allocation Fund
lar declined, large caps primarily the largest positive contributors to Gary Wendler
outperformed small caps as investors absolute performance were AIM Utilities [WENDLER Director of Product Strategy
sought more exposure to global Fund, AIM International Core Equity Fund PHOTO] and Investment Services is
corporations with the ability to leverage and AIM Diversified Dividend Fund. AIM manager of AIM Income
currency weakness through their presence Real Estate Fund detracted from absolute Allocation Fund. He began his career in
in foreign markets.1 Growth stocks performance as the real estate sector was the investment industry in 1986 and joined
generally outperformed value stocks as hurt by ongoing housing and subprime AIM in 1995. Mr. Wendler earned a B.B.A.
subprime issues weighed on financial issues. in finance from Texas A&M University.
stocks and real estate both which are
mostly found in value indexes.(1) AIM Utilities Fund and AIM Real Estate
Fund were the only two positive
Largely in response to subprime contributors to relative equity
mortgage issues, the U.S. Federal Reserve performance when compared with the
Board lowered its Federal Funds target components of the Fund's custom
rate by 100 basis points during the year style-specific index. The largest relative
with a .50% cut in September and .25% cuts detractor within the equity component was
in October and December.(3) These cuts AIM Diversified Dividend Fund, which has
served to help bonds generally outperform an investment strategy that involves
equities. High quality bonds generally avoiding high growth stocks with high
outperformed lower quality bonds as valuations that, on balance, were more
investors sought the safety of U.S. rewarded during 2007.
Treasury securities.(1) Longer maturity
issues primarily outperformed shorter Finally, the annual rebalancing of the
maturity issues in response to interest underlying funds to their target
rate reductions.(1) As with equities, investment percentages was completed in
foreign bonds tended to outperformed June 2007. We remain committed to our
domestic bonds due to the declining asset allocation strategies, and as
dollar.(1) always, we thank you for your continued
investment in AIM Income Allocation Fund.
Ten of the 11 underlying funds
contributed positively to absolute Sources: (1)Lipper Inc.; (2)Bloomberg
performance for the year. Within the L.P.; (3)U.S. Federal Reserve Board
Fund's 65% fixed income component, AIM
Total Return Bond Fund, AIM International The views and opinions expressed in
Total Return Fund and AIM Intermediate management's discussion of Fund
Government Fund were the Fund's largest performance are those of A I M Advisors,
absolute contributors. Inc. These views and opinions are subject
to change at any time based on factors
AIM International Total Return Fund, such as market and economic conditions.
which was helped by the declining dollar, These views and opinions may not be relied
and AIM Intermediate Government Fund, upon as investment advice or
which was helped by the outperformance of recommendations, or as an offer for a
high quality bonds, were the only funds particular security. The information is
that contributed positively to the Fund's not a complete analysis of every aspect of
relative fixed income performance when any market, country, industry, security or
compared with the components of the Fund's the Fund. Statements of fact are from
custom-style specific index. sources considered reliable, but A I M
Advisors, Inc. makes no representation or
AIM High Yield Fund was the largest warranty as to their completeness or
detractor from the fixed income component accuracy. Although historical performance
as its investment philosophy of holding is no guarantee of future results, these
lower quality, higher yielding bonds insights may help you understand our
underperformed during the year. investment management philosophy.
Additionally, AIM Floating Rate Fund and
AIM Total Return Bond Fund had a relative See important Fund and index
negative effect on the portfolio during disclosures later in this report.
the year.
Within the Fund's 35% equity component,
5
AIM Income Allocation Fund
Your Fund's long-term performance
Past performance cannot guarantee include reinvested dividends, but they do
comparable future results. not reflect sales charges. Performance of
an index of funds reflects fund expenses
The data shown in the chart include and management fees; performance of a
reinvested distributions, applicable sales market index does not. Performance shown
charges, Fund expenses and management in the chart and table(s) does not reflect
fees. Results for Class B shares are deduction of taxes a shareholder would pay
calculated as if a hypothetical on Fund distributions or sale of Fund
shareholder had liquidated his entire shares. Performance of the indexes does
investment in the Fund at the close of the not reflect the effects of taxes.
reporting period and paid the applicable
contingent deferred sales charges. Index
results
6
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Fund and index data from 10/31/05
LIPPER MIXED-ASSET
AIM INCOME AIM INCOME AIM INCOME AIM INCOME CUSTOM INCOME TARGET ALLOCATION
ALLOCATION FUND- ALLOCATION FUND- ALLOCATION FUND- ALLOCATION FUND- S&P 500 ALLOCATION CONSERVATIVE FUNDS
DATE CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES INDEX(1) INDEX(2) INDEX(1)
- -------- ---------------- ---------------- ---------------- ---------------- -------- ------------- ------------------
10/31/05 $ 9450 $10000 $10000 $10000 $10000 $10000 $10000
11/05 9573 10120 10120 10120 10378 10163 10157
12/05 9672 10218 10217 10220 10382 10251 10229
1/06 9825 10380 10379 10392 10656 10423 10409
2/06 9882 10430 10429 10443 10685 10466 10404
3/06 9917 10457 10456 10482 10818 10502 10469
4/06 9955 10487 10496 10513 10963 10517 10528
5/06 9888 10426 10425 10452 10648 10389 10415
6/06 9947 10469 10477 10507 10662 10441 10421
7/06 10092 10622 10621 10661 10728 10562 10487
8/06 10267 10796 10804 10845 10983 10771 10645
9/06 10353 10876 10884 10929 11266 10905 10773
10/06 10549 11081 11080 11135 11633 11117 10937
11/06 10725 11256 11265 11321 11854 11311 11100
12/06 10782 11315 11314 11385 12020 11316 11129
1/07 10902 11429 11428 11510 12202 11438 11196
2/07 10991 11523 11522 11594 11964 11496 11241
3/07 11048 11571 11570 11658 12097 11522 11311
4/07 11238 11749 11759 11848 12633 11697 11497
5/07 11299 11822 11822 11921 13073 11756 11587
6/07 11130 11624 11634 11726 12856 11599 11500
7/07 10907 11390 11400 11500 12458 11474 11431
8/07 11019 11496 11506 11618 12644 11645 11487
9/07 11254 11741 11740 11858 13117 11877 11725
10/07 11408 11891 11901 12021 13325 12030 11875
11/07 11203 11666 11676 11793 12768 11923 11779
12/07 11153 11311 11611 11744 12680 11873 11759
====================================================================================================================================
Sources: (1)Lipper Inc., (2)A I M Management Group Inc., Lipper Inc.
AIM Income Allocation Fund
==========================================
AVERAGE ANNUAL TOTAL RETURNS CLASS A SHARE PERFORMANCE REFLECTS THE
MAXIMUM 5.50% SALES CHARGE, AND CLASS B
As of 12/31/07, including maximum AND CLASS C SHARE PERFORMANCE REFLECTS THE
applicable sales charges APPLICABLE CONTINGENT DEFERRED SALES
CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
CLASS A SHARES CDSC ON CLASS B SHARES DECLINES FROM 5%
Inception (10/31/05) 5.16% BEGINNING AT THE TIME OF PURCHASE TO 0% AT
1 Year -2.28 THE BEGINNING OF THE SEVENTH YEAR. THE
CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
CLASS B SHARES YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
Inception (10/31/05) 5.85% HAVE A FRONT-END SALES CHARGE; RETURNS
1 Year -2.27 SHOWN ARE AT NET ASSET VALUE AND DO NOT
REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
CLASS C SHARES ON A TOTAL REDEMPTION OF RETIREMENT PLAN
Inception (10/31/05) 7.14% ASSETS WITHIN THE FIRST YEAR.
1 Year 1.64
THE PERFORMANCE OF THE FUND'S SHARE
CLASS R SHARES CLASSES WILL DIFFER PRIMARILY DUE TO
Inception (10/31/05) 7.70% DIFFERENT SALES CHARGE STRUCTURES AND
1 Year 3.14 CLASS EXPENSES.
==========================================
HAD THE ADVISOR NOT WAIVED FEES AND/OR
THE PERFORMANCE DATA QUOTED REPRESENT REIMBURSED EXPENSES, PERFORMANCE WOULD
PAST PERFORMANCE AND CANNOT GUARANTEE HAVE BEEN LOWER.
COMPARABLE FUTURE RESULTS; CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE (1)Total annual operating expenses less
VISIT AIMINVESTMENTS.COM FOR THE MOST any contractual fee waivers and/or expense
RECENT MONTH-END PERFORMANCE. PERFORMANCE reimbursements by the advisor in effect
FIGURES REFLECT REINVESTED DISTRIBUTIONS, through at least June 30, 2008. See
CHANGES IN NET ASSET VALUE AND THE EFFECT current prospectus for more information.
OF THE MAXIMUM SALES CHARGE UNLESS
OTHERWISE STATED. INVESTMENT RETURN AND (2)The expense ratio includes acquired
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU fund fees and expenses of the underlying
MAY HAVE A GAIN OR LOSS WHEN YOU SELL funds in which the Fund invests of 0.64%
SHARES. for Class A, B, C and R shares of AIM
Income Allocation Fund.
THE NET 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, CLASS C AND CLASS R
SHARES WAS 0.93%, 1.68%, 1.68% AND 1.18%,
RESPECTIVELY.(1,2) 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, CLASS
C AND CLASS R SHARES WAS 2.60%, 3.35%,
3.35% AND 2.85%, RESPECTIVELY.(2) THE ==========================================
EXPENSE RATIOS PRESENTED ABOVE MAY VARY FOR A DISCUSSION OF THE RISKS OF INVESTING
FROM THE EXPENSE RATIOS PRESENTED IN OTHER IN YOUR FUND AND INDEXES USED IN THIS
SECTIONS OF THIS REPORT THAT ARE BASED ON REPORT, PLEASE TURN THE PAGE.
EXPENSES INCURRED DURING THE PERIOD ==========================================
COVERED BY THIS REPORT.
7
AIM Income Allocation Fund
AIM INCOME ALLOCATION FUND'S INVESTMENT OBJECTIVE IS TO ACHIEVE A HIGH LEVEL OF CURRENT INCOME WITH GROWTH OF CAPITAL AS A SECONDARY
OBJECTIVE.
o Unless otherwise stated, information presented in this report is as of December 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 the Fund, the advisor is required to act securities. In that event, an investment
in the Fund's best interest when selecting in the Fund may have additional risks
o Class B shares are not available as an the underlying funds. Because the Fund is relating to direct ownership of real
investment for retirement plans maintained a fund of funds, the Fund is subject to estate.
pursuant to Section 401 of the Internal the risks associated with the underlying
Revenue Code, including 401(k) plans, funds in which it invests. There are o Dollar-roll transactions involve the
money purchase pension plans and profit additional risks of investing in the risk that the market value of securities
sharing plans, except for plans that have underlying funds. to be purchased by the Fund may decline
existing accounts invested in Class B below the price at which the Fund is
shares. Principal risks of investing in the obligated to repurchase the securities or
underlying Funds that the other party may default on its
o Class R shares are available only to obligation, such that the Fund is delayed
certain retirement plans. Please see the o Certain of the underlying funds may or prevented from completing the
prospectus for more information. engage in active and frequent trading of transaction.
securities to achieve their investment
Principal risks of investing in the Fund objectives. This may cause them to incur o Prices of equity securities change in
increased costs, which may lower the response to many factors including the
o The Fund pursues its investment actual return of the underlying funds. historical and prospective earnings of the
objectives by investing its assets in Active trading may also increase short issuer, the value of its assets, general
other underlying funds that are a part of term gains and losses, which may affect economic conditions, interest rates,
The AIM Family of Funds rather than the taxes that must be paid. investor perceptions and market liquidity.
investing directly in stocks, bonds, cash
or other investments. The Fund's o The value of convertible securities in o Foreign securities have additional
investment performance depends on the which the Fund invests may be affected by risks, including exchange rate changes,
investment performance of the underlying market interest rates-the risk that the political and economic upheaval, the
funds. There is risk that the advisor's issuer may default on interest or relative lack of information, relatively
evaluations and assumptions regarding the principal payments and the value of the low market liquidity, and the potential
Fund's broad asset classes or the underlying common stock into which these lack of strict financial and accounting
underlying funds may be incorrect based on securities may be converted may decline as controls and standards.
actual market conditions, or that the Fund a result.
will vary from the target weightings in o High-coupon, U.S. government agency
the underlying funds due to factors such o Credit risk is the risk of loss on an mortgage-backed securities provide a
as market fluctuations. There can be no investment due to the deterioration of an higher coupon than current prevailing
assurance that the underlying funds will issuer's financial health. Such a market interest rates, and the Fund may
achieve their investment objectives, and deterioration of financial health may purchase such securities at a premium. If
the performance of the underlying funds result in a reduction of the credit rating these securities experience a faster
may be lower than the asset class. The of the issuer's securities and may lead to principal prepayment rate than expected,
underlying funds may change their the issuer's inability to honor its both the market value and income from such
investment objectives or policies without contractual obligations, including making securities will decrease.
the approval of the Allocation Funds. If timely payment of interest and principal.
that were to occur, the Allocation Funds o Lower rated securities may be more
might be forced to withdraw their o The Fund is subject to currency/exchange susceptible to real or perceived adverse
investments from the underlying funds at rate risk because it may buy or sell economic and competitive industry
an unfavorable time. The advisor has the currencies other than the U.S. dollar. conditions, and may be less liquid than
ability to select and substitute the higher grade securities. The loans in
underlying funds in which the Fund invests o Investing in developing countries can which the Fund may invest are typically
and may be subject to potential conflicts add additional risk, such as high rates of noninvestment-grade and involve a greater
of interest in selecting underlying funds inflation or sharply devalued currencies risk of default on interest and principal
because it may receive higher fees from against the U.S. dollar. Transaction costs payments and of price changes due to the
certain underlying funds than others. are often higher, and there may be delays changes in the credit quality of the
However, as a fiduciary of in settlement procedures. issuer.
o The Fund could conceivably hold real o Interest rate risk refers to the risk
estate directly if a company defaults on that bond prices generally fall as
debt interest rates rise; conversely, bond
prices generally rise as interest rates
======================================================================================= fall.
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, Continued
WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. ==========================================
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. FUND NASDAQ SYMBOLS
=======================================================================================
Class A Shares ALAAX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class B Shares BLIAX
Class C Shares CLIAX
AIMINVESTMENTS.COM Class R Shares RLIAX
==========================================
8
o The Fund may use enhanced investment nies related to the real estate industry, The MSCI EAFE Index is a free
techniques such as leveraging and the value of shares may rise and fall more float-adjusted market capitalization index
derivatives. Leveraging entails risks such than the value of shares of a fund that that is designed to measure developed
as magnifying changes in the value of the invests in a broader range of companies. market equity performance, excluding the
portfolio"s securities. Derivatives are U.S. and Canada. The FTSE NAREIT Equity
subject to counterparty risk-the risk that o The Fund may invest in senior-secured, REITs Index is a market- cap weighted
the other party will not complete the floating rate loans and debt securities index of all equity REITs traded on the
transaction with the Fund. that require collateral. There is a risk NYSE, NASDAQ National Market System and
that the value of the collateral may not the American Stock Exchange. The Lehman
o The value of lower quality debt be sufficient to cover the amount owed, Brothers U.S. Universal Index represents
securities and floating rate loans can be collateral securing a loan may be found the union of the U.S. Aggregate Index, the
volatile due to increased sensitivity to invalid, and collateral may be used to pay U.S. High-Yield Corporate Index, the 144A
adverse issuer, political, regulatory, other outstanding obligations of the Index, the Eurodollar Index, the Emerging
market or economic developments. borrower under applicable law or may be Markets Index and the non-ERISA portion of
difficult to sell. There is also the risk the CMBS Index.
o There is no guarantee that the that the collateral may be difficult to
investment techniques and risk analyses liquidate or that a majority of the o The LIPPER MIXED-ASSET TARGET ALLOCATION
used by the Fund's portfolio managers will collateral may be illiquid. CONSERVATIVE FUNDS INDEX is an equally
produce the desired results. weighted representation of the largest
o The Fund may invest in obligations funds in the Lipper Mixed-Asset Target
o Small- and mid-capitalization companies issued by agencies and instrumentalities Allocation Conservative Funds category.
tend to be more vulnerable to adverse of the U.S. government that may vary in These funds, by portfolio practice,
developments and more volatile than larger the level of support they receive from the maintain a mix of between 20%-40% equity
companies. Investments in these sized U.S. government. The U.S. government may securities, with the remainder invested in
companies may involve special risks, choose not to provide financial support to bonds, cash, and cash equivalents.
including those associated with dependence U.S. governmentsponsored agencies or
on a small management group, little or no instrumentalities if it is not legally o The Fund is not managed to track the
operating history, little or no track obligated to do so. In this case, if the performance of any particular index,
record of success, limited product lines, issuer defaulted, the fund holding including the indexes defined here, and
less publicly available information, securities of such issuer might not be consequently, the performance of the Fund
illiquidity, restricted resale or less able to recover its investment from the may deviate significantly from the
frequent trading. U.S. government. performance of the indexes.
About indexes used in this report o A direct investment cannot be made in an
o The prices of securities held by the index. Unless otherwise indicated, index
Fund may decline in response to market o The S&P 500--REGISTERED TRADEMARK-- results include reinvested dividends, and
risks. INDEX is a market capitalization-weighted they do not reflect sales charges.
index covering all major areas of the U.S. Performance of an index of funds reflects
o The Fund may invest in mortgage- and economy. It is not the 500 largest fund expenses; performance of a market
asset-backed securities. These securities companies, but rather the most widely held index does not.
are subject to prepayment or call risk, 500 companies chosen with respect to
which is the risk that payments from the market size, liquidity, and their Other information
borrower may be received earlier or later industry.
than expected due to changes in the rate o The returns shown in the management's
at which the underlying loans are prepaid. o The CUSTOM INCOME ALLOCATION INDEX is an discussion of Fund performance are based
index created by A I M Advisors, Inc. to on net asset values calculated for
o Nondiversification increases the risk benchmark the Fund. This index may change shareholder transactions. Generally
that the value of the Fund's shares may from time to time based upon the target accepted accounting principles require
vary more widely, and the Fund may be asset allocation of the Fund. The index adjustments to be made to the net assets
subject to greater investment and credit currently consists of the following of the Fund at period end for financial
risk than if the Fund invested more indices: 23% Russell 3000--REGISTERED reporting purposes, and as such, the net
broadly. TRADEMARK-- Index, 5% MSCI asset values for shareholder transactions
EAFE--REGISTERED TRADEMARK-- Index, 7% and the returns based on those net asset
o Because the Fund concentrates its assets FTSE NAREIT Equity REITs Index, and 65% values may differ from the net asset
in the real estate industry, an investment Lehman Brothers U.S. Universal Index. The values and returns reported in the
in the Fund will be closely linked to the Russell 3000 Index measures the Financial Highlights.
performance of the real estate markets. performance of the 3,000 largest U.S.
companies based on total market
o Reinvestment risk is the risk that a capitalization, which represents
bond's cash flows will be reinvested at an approximately 98% of the investable U.S.
interest rate below that on the original equity market. The Russell 3000 Index is a
bond. trademark/service mark of the Frank
Russell Company. Russell--REGISTERED
o Because the Fund focuses its investments TRADEMARK-- is a trademark of the Frank
in real estate investment trusts (REITs), Russell Company.
real estate operating companies and other
compa-
9
AIM Income Allocation Fund
SCHEDULE OF INVESTMENTS
December 31, 2007
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.50%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND
ASSETS 12/31/06 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME
- ----------------------------------------------------------------------------------------------------------------------------
AIM
Diversified
Dividend
Fund 14.21% $ 5,701,953 $10,524,461 $(1,042,224) $(1,425,884) $1,018,583 $ 234,887
- ----------------------------------------------------------------------------------------------------------------------------
AIM Floating
Rate Fund 6.90% 2,542,260 5,071,172 (522,752) (363,542) (16,407) 382,447
- ----------------------------------------------------------------------------------------------------------------------------
AIM High
Yield Fund 13.81% 5,231,431 10,034,249 (990,404) (828,290) (8,978) 833,232
- ----------------------------------------------------------------------------------------------------------------------------
AIM Income
Fund 8.60% 3,081,518 6,255,472 (637,675) (311,123) (22,517) 388,551
- ----------------------------------------------------------------------------------------------------------------------------
AIM
Intermediate
Government
Fund 7.40% 2,532,246 5,128,918 (534,153) 75,162 (4,711) 308,824
- ----------------------------------------------------------------------------------------------------------------------------
AIM
International
Core Equity
Fund 4.98% 1,910,709 3,510,883 (382,059) (254,013) 401,441 123,773
- ----------------------------------------------------------------------------------------------------------------------------
AIM
International
Total
Return Fund 5.48% 1,795,868 3,761,800 (388,245) 152,234 9,188 270,343
- ----------------------------------------------------------------------------------------------------------------------------
AIM Real
Estate Fund 6.30% 2,749,665 6,268,542 (488,455) (2,387,108) 961,462 323,335
- ----------------------------------------------------------------------------------------------------------------------------
AIM Short
Term Bond
Fund 6.14% 2,168,968 4,343,281 (452,079) (82,187) (4,047) 270,945
- ----------------------------------------------------------------------------------------------------------------------------
AIM Total
Return Bond
Fund 18.16% 6,333,459 12,820,177 (1,322,574) (146,474) (13,728) 775,549
- ----------------------------------------------------------------------------------------------------------------------------
AIM Utilities
Fund 8.52% 3,073,683 4,878,567 (585,588) 780,902 143,188 138,163
============================================================================================================================
TOTAL
INVESTMENTS
IN
AFFILIATED
MUTUAL
FUNDS (Cost
$101,776,024) 100.50% $37,121,760 $72,597,522 $(7,346,208) $(4,790,323) $2,463,474(b) $4,050,049
============================================================================================================================
OTHER ASSETS
LESS
LIABILITIES (0.50%)
============================================================================================================================
NET ASSETS 100.00%
____________________________________________________________________________________________________________________________
============================================================================================================================
<Caption>
SHARES VALUE
12/31/07 12/31/07
- -------------
AIM
Diversified
Dividend
Fund 1,101,251 $13,820,701
- -------------
AIM Floating
Rate Fund 783,049 6,710,731
- -------------
AIM High
Yield Fund 3,161,884 13,438,008
- -------------
AIM Income
Fund 1,396,607 8,365,675
- -------------
AIM
Intermediate
Government
Fund 836,914 7,197,462
- -------------
AIM
International
Core Equity
Fund 336,736 4,848,999
- -------------
AIM
International
Total
Return Fund 491,322 5,330,845
- -------------
AIM Real
Estate Fund 268,662 6,130,868
- -------------
AIM Short
Term Bond
Fund 618,420 5,973,936
- -------------
AIM Total
Return Bond
Fund 1,732,437 17,670,860
- -------------
AIM Utilities
Fund 418,091 8,290,752
=============
TOTAL
INVESTMENTS
IN
AFFILIATED
MUTUAL
FUNDS (Cost
$101,776,024) $97,778,837
=============
OTHER ASSETS
LESS
LIABILITIES (483,798)
=============
NET ASSETS $97,295,039
_____________
=============
</Table>
Notes to Schedule of Investments:
(a) Each underlying fund and the Fund are affiliated by either having the
same investment advisor or an investment advisor under common control
with the Fund's investment advisor. The Fund invests in Institutional
Class shares of the mutual funds listed.
(b) Includes $2,267,388 of capital gains distributed from affiliated
underlying funds.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
10
AIM Income Allocation Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2007
<Table>
ASSETS:
Investments in affiliated underlying funds, at
value (Cost $101,776,024) $97,778,837
- -----------------------------------------------------------
Receivables for:
Investments sold -- affiliated underlying
funds 127,732
- -----------------------------------------------------------
Fund shares sold 218,765
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 6,793
- -----------------------------------------------------------
Other assets 28,312
===========================================================
Total assets 98,160,439
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Fund shares reacquired 739,738
- -----------------------------------------------------------
Trustee deferred compensation and retirement
plans 7,677
- -----------------------------------------------------------
Fund expenses advanced 8,803
- -----------------------------------------------------------
Accrued distribution fees 44,790
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 683
- -----------------------------------------------------------
Accrued transfer agent fees 22,507
- -----------------------------------------------------------
Accrued operating expenses 41,202
===========================================================
Total liabilities 865,400
===========================================================
Net assets applicable to shares outstanding $97,295,039
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $99,510,364
- -----------------------------------------------------------
Undistributed net investment income 102,608
- -----------------------------------------------------------
Undistributed net realized gain 1,679,254
- -----------------------------------------------------------
Unrealized appreciation (depreciation) (3,997,187)
===========================================================
$97,295,039
___________________________________________________________
===========================================================
NET ASSETS:
Class A $60,192,727
___________________________________________________________
===========================================================
Class B $11,411,922
___________________________________________________________
===========================================================
Class C $25,285,931
___________________________________________________________
===========================================================
Class R $ 394,182
___________________________________________________________
===========================================================
Institutional Class $ 10,277
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 par value per share,
unlimited number of shares authorized:
Class A 5,678,066
___________________________________________________________
===========================================================
Class B 1,075,905
___________________________________________________________
===========================================================
Class C 2,382,920
___________________________________________________________
===========================================================
Class R 37,160
___________________________________________________________
===========================================================
Institutional Class 969.2
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 10.60
- -----------------------------------------------------------
Maximum offering price per share (Net asset
value of
$10.60 divided by 94.50%) $ 11.22
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per share $ 10.61
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per share $ 10.61
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per share $ 10.61
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per share $ 10.60
___________________________________________________________
===========================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
11
AIM Income Allocation Fund
STATEMENT OF OPERATIONS
For the year ended December 31, 2007
<Table>
INVESTMENT INCOME:
Dividends from affiliated funds $4,050,049
- ------------------------------------------------------------------------
Other Income 396
========================================================================
Total investment income 4,050,445
========================================================================
EXPENSES:
Administrative services fees 50,000
- ------------------------------------------------------------------------
Custodian fees 7,746
- ------------------------------------------------------------------------
Distribution fees:
Class A 118,534
- ------------------------------------------------------------------------
Class B 97,868
- ------------------------------------------------------------------------
Class C 203,724
- ------------------------------------------------------------------------
Class R 1,136
- ------------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 116,979
- ------------------------------------------------------------------------
Transfer agent fees -- Institutional 9
- ------------------------------------------------------------------------
Trustees' and officer's fees and benefits 18,623
- ------------------------------------------------------------------------
Registration and filing fees 80,053
- ------------------------------------------------------------------------
Professional services fees 41,783
- ------------------------------------------------------------------------
Other 36,270
========================================================================
Total expenses 772,725
========================================================================
Less: Expenses reimbursed and expense offset arrangement(s) (328,188)
========================================================================
Net expenses 444,537
========================================================================
Net investment income 3,605,908
========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS IN
AFFILIATED UNDERLYING FUND SHARES:
Net realized gain on sales of affiliated underlying fund
shares 196,086
- ------------------------------------------------------------------------
Net realized gain from distributions of affiliated
underlying fund shares 2,267,388
- ------------------------------------------------------------------------
Net realized gain from affiliated underlying fund shares 2,463,474
========================================================================
Change in net unrealized appreciation (depreciation) of
affiliated underlying fund shares (4,790,323)
========================================================================
Net gain (loss) from affiliated underlying funds (2,326,849)
========================================================================
Net increase in net assets resulting from operations $1,279,059
________________________________________________________________________
========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12
AIM Income Allocation Fund
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2007 and 2006
<Table>
<Caption>
2007 2006
- ----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 3,605,908 $ 756,221
- ----------------------------------------------------------------------------------------
Net realized gain 2,463,474 513,992
- ----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (4,790,323) 786,044
========================================================================================
Net increase in net assets resulting from operations 1,279,059 2,056,257
========================================================================================
Distributions to shareholders from net investment income:
Class A (2,309,555) (480,775)
- ----------------------------------------------------------------------------------------
Class B (381,445) (109,544)
- ----------------------------------------------------------------------------------------
Class C (815,332) (163,544)
- ----------------------------------------------------------------------------------------
Class R (10,702) (2,882)
- ----------------------------------------------------------------------------------------
Institutional Class (879) (2,151)
========================================================================================
Total distributions from net investment income (3,517,913) (758,896)
========================================================================================
Distributions to shareholders from net realized gains:
Class A (768,827) (33,898)
- ----------------------------------------------------------------------------------------
Class B (151,841) (9,690)
- ----------------------------------------------------------------------------------------
Class C (323,589) (15,135)
- ----------------------------------------------------------------------------------------
Class R (4,173) (186)
- ----------------------------------------------------------------------------------------
Institutional Class (137) (112)
========================================================================================
Total distributions from net realized gains (1,248,567) (59,021)
========================================================================================
Decrease in net assets resulting from distributions (4,766,480) (817,917)
========================================================================================
Share transactions-net:
Class A 41,386,756 18,650,534
- ----------------------------------------------------------------------------------------
Class B 5,781,101 5,597,360
- ----------------------------------------------------------------------------------------
Class C 16,255,572 9,102,369
- ----------------------------------------------------------------------------------------
Class R 297,851 50,309
- ----------------------------------------------------------------------------------------
Institutional Class (48,001) 2,263
========================================================================================
Net increase in net assets resulting from share
transactions 63,673,279 33,402,835
========================================================================================
Net increase in net assets 60,185,858 34,641,175
========================================================================================
NET ASSETS:
Beginning of year 37,109,181 2,468,006
========================================================================================
End of year (including undistributed net investment income
of $102,608 and $15,300, respectively) $97,295,039 $37,109,181
________________________________________________________________________________________
========================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13
AIM Income Allocation Fund
NOTES TO FINANCIAL STATEMENTS
December 31, 2007
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Income Allocation Fund (the "Fund") is a series portfolio of AIM Growth
Series (the "Trust"). The Trust is organized as a Delaware statutory trust and
is registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate series portfolios, each authorized to issue an unlimited
number of shares of beneficial interest. The Fund currently offers multiple
classes of shares. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is to achieve a high level of current income
with growth of capital as a secondary objective. The Fund is a "fund of funds",
in that it invests in the Institutional Class of other mutual funds ("underlying
funds") advised by A I M Advisors, Inc. ("AIM"). AIM may change the Fund's asset
class allocations, the underlying funds or the target weightings in the
underlying funds without shareholder approval. The underlying funds may engage
in a number of investment techniques and practices, which involve certain risks.
Each underlying fund's accounting policies are outlined in the underlying fund's
financial statements and are available upon request.
A. SECURITY VALUATIONS -- Investments in underlying funds are valued at the
end of the day net asset value per share.
Securities in the underlying funds, 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.
14
AIM Income Allocation Fund
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. Distributions from ordinary income and short-term gains from
underlying funds, if any, are recorded as dividend income on ex-dividend
date. Distributions from net realized capital gains from underlying funds,
if any, are recorded as realized gains on the ex-dividend date. Interest
income is recorded on the accrual basis from settlement date. Bond premiums
and discounts are amortized and/or accreted for financial reporting
purposes.
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds as 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.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income are declared and paid quarterly
and are recorded on ex-dividend date. Distributions from net realized
capital gain, if any, are generally paid annually and recorded on
ex-dividend date. The Fund may elect to treat a portion of the proceeds
from redemptions as distributions for federal income tax purposes.
D. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of
Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and 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.
The Fund files tax returns in the U.S. federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities up to three years after the tax period.
E. EXPENSES -- Expenses included in the accompanying financial statements
reflect the expenses of the Fund and do not include any expenses of the
underlying funds. The effects of underlying funds expenses are included
earnings from the investments in the underlying funds.
Fees provided for under the Rule 12b-1 plan of a particular class of the
Fund are charged to the operations of such class. Transfer agency fees and
expenses and other shareholder recordkeeping fees and expenses attributable
to the Institutional Class are charged to such class. Transfer agency fees
and expenses and other shareholder recordkeeping fees and expenses relating
to all other classes are allocated among those classes based on relative
net assets. All other expenses are allocated among the classes based on
relative net assets.
F. 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.
G. 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 AIM.
Under the terms of the investment advisory agreement, the Fund does not pay an
advisory fee. However, the Fund pays advisory fees to AIM indirectly as a
shareholder of the underlying funds
AIM has contractually agreed to reimburse expenses to the extent necessary
to limit other expenses (excluding certain items discussed below which includes
12b-1 plan payments) of Class A, Class B, Class C, Class R and Institutional
Class shares to 0.03% of average daily net assets, respectively, through at
least June 30, 2008. In determining the advisor's obligation to reimburse
expenses, the following expenses are not taken into account, and will cause
other expenses to exceed the numbers reflected above: (i) Rule 12b-1 plan fees,
if any; (ii) interest; (iii) taxes; (iv) dividend expense on short sales; (v)
extraordinary items; (vi) expenses related to a merger or reorganization, as
approved by the Fund's Board of Trustees; (vii) expenses of the underlying funds
that are paid indirectly as a result of share ownership of the underlying funds;
and (viii) expenses that the Fund has incurred but did not actually pay because
of an expense offset arrangement. Currently, in addition to the expense
reimbursement with Invesco Ltd. ("Invesco") 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. These credits are used
to pay certain expenses incurred by the Fund.
For the year ended December 31, 2007, AIM reimbursed fund level expenses of
$210,700 and reimbursed class level expenses of $69,472, $14,340, $29,851, $333
and $9 for Class A, Class B, Class C, Class R and Institutional Class shares,
respectively.
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
December 31, 2007, expenses incurred under the agreement are shown in the
Statement of Operations as administrative services fees.
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
December 31, 2007, Invesco reimbursed expenses of the Fund in the amount of
$237.
15
AIM Income Allocation Fund
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 December 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. Rules of the Financial Industry
Regulatory Authority ("FINRA"), formerly known as National Association of
Securities Dealers, 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 December 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")
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 December 31, 2007, ADI
advised the Fund that ADI retained $86,175 in front-end sales commissions from
the sale of Class A shares and $1, $19,892, $6,359 and $0 from Class A, Class B,
Class C and Class R shares, respectively, for CDSC imposed on redemptions by
shareholders.
The underlying funds pay no distribution fees and the Fund pays no sales
loads or other similar compensation to ADI for acquiring underlying fund shares.
Certain officers and trustees of the Trust are officers and directors of
AIM, AIS and/or ADI.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the year
ended December 31, 2007, the Fund received credits from these arrangements,
which resulted in the reduction of the Fund's total expenses of $3,246.
NOTE 4--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to 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 December 31, 2007, the Fund paid legal fees of $3,690
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--BORROWINGS
The Fund 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 December 31, 2007, the Fund did not 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.
16
AIM Income Allocation Fund
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years December 31, 2007 and
2006 was as follows:
<Table>
<Caption>
2007 2006
- ---------------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $3,523,368 $ 808,775
- ---------------------------------------------------------------------------------------
Long-term capital gain 1,243,112 9,142
=======================================================================================
Total distributions $4,766,480 $ 817,917
_______________________________________________________________________________________
=======================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of December 31, 2007, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2007
- -----------------------------------------------------------------------------
Undistributed ordinary income $ 109,231
- -----------------------------------------------------------------------------
Undistributed long-term gain 1,834,972
- -----------------------------------------------------------------------------
Net unrealized appreciation (depreciation)- investments (4,152,905)
- -----------------------------------------------------------------------------
Temporary book/tax differences (6,623)
- -----------------------------------------------------------------------------
Shares of beneficial interest 99,510,364
=============================================================================
Total net assets $97,295,039
_____________________________________________________________________________
=============================================================================
</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 December 31, 2007.
NOTE 7--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 December 31, 2007 was $72,597,522 and $7,346,208,
respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- -------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $ 1,306,781
- -------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (5,459,686)
===============================================================================
Net unrealized appreciation (depreciation) of investment
securities $(4,152,905)
_______________________________________________________________________________
===============================================================================
Cost of investments for tax purposes is $101,931,742.
</Table>
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of excise tax and
distribution reclass, on December 31, 2007, undistributed net investment income
was decreased by $687, undistributed net realized gain was increased by $705 and
shares of beneficial interest decreased by $18. This reclassification had no
effect on the net assets of the Fund.
17
AIM Income Allocation Fund
NOTE 9--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A, Class B,
Class C, Class R and Institutional Class. Class A shares are sold with a
front-end sales charge 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
- -------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 2007(a) DECEMBER 31, 2006
------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------------
Sold:
Class A 5,130,980 $56,581,689 1,978,777 $20,800,689
- -------------------------------------------------------------------------------------------------------------------
Class B 799,736 8,821,716 624,102 6,554,792
- -------------------------------------------------------------------------------------------------------------------
Class C 1,845,603 20,353,103 952,348 10,065,624
- -------------------------------------------------------------------------------------------------------------------
Class R 32,811 358,816 4,654 49,054
- -------------------------------------------------------------------------------------------------------------------
Institutional Class -- -- -- --
===================================================================================================================
Issued as reinvestment of dividends:
Class A 244,883 2,632,745 41,255 437,818
- -------------------------------------------------------------------------------------------------------------------
Class B 43,684 469,636 8,769 93,384
- -------------------------------------------------------------------------------------------------------------------
Class C 88,454 950,169 12,993 138,448
- -------------------------------------------------------------------------------------------------------------------
Class R 1,390 14,875 291 3,068
- -------------------------------------------------------------------------------------------------------------------
Institutional Class 92 1,017 215 2,263
===================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 113,934 1,243,065 29,480 317,463
- -------------------------------------------------------------------------------------------------------------------
Class B (113,945) (1,243,065) (29,482) (317,463)
===================================================================================================================
Reacquired:
Class A (1,748,799) (19,070,743) (273,970) (2,905,436)
- -------------------------------------------------------------------------------------------------------------------
Class B (207,894) (2,267,186) (69,807) (733,353)
- -------------------------------------------------------------------------------------------------------------------
Class C (463,254) (5,047,700) (104,746) (1,101,703)
- -------------------------------------------------------------------------------------------------------------------
Class R (6,882) (75,840) (175) (1,813)
- -------------------------------------------------------------------------------------------------------------------
Institutional Class (4,413) (49,018) -- --
===================================================================================================================
5,756,380 $63,673,279 3,174,704 $33,402,835
___________________________________________________________________________________________________________________
===================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate they own 32% of the
outstanding shares of the Fund. ADI has an agreement with these entities
to sell Fund shares. The Fund, AIM and/or AIM affiliates may make
payments to these entities, which are considered to be related to the
Fund, for providing services to the Fund, AIM and/or AIM affiliates
including but not limited to services such as securities brokerage,
distribution, third party record keeping and account servicing. The
Trust has no knowledge as to whether all or any portion of the shares
owned of record by these entities are also owned beneficially.
NOTE 10--SIGNIFICANT EVENT
At a meeting held on December 13, 2007, the Board of Trustees of Trust approved
certain proposals to be presented for shareholder approval at a special meeting
of the shareholders of the Trust intended to be held on February 29, 2008 (the
"Special Meeting"). At the Special Meeting, shareholders of record as of the
close of business on November 30, 2007, are entitled to vote their respective
shares on several proposals that including, among others the following
proposal(s).
New proposed sub-advisory agreement between A I M Advisors, Inc. ("AIM") and
each of AIM Funds Management Inc., Invesco Asset Management Deutschland, GmbH,
Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited,
Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco
Hong Kong Limited, Invesco Institutional (N.A.), Inc. and Invesco Senior Secured
Management, Inc. (collectively, the "Affiliated Sub-Advisers") (the "New
Sub-advisory Arrangements") . This proposal is intended to benefit the Fund and
its shareholders by permitting AIM to utilize the additional resources and
talent of these affiliated sub-advisers in managing the Fund. Because AIM would
pay all of the sub-advisory fees of the sub-advisers, the new sub-advisory
arrangements would not affect the fees the Fund pays pursuant to the advisory
agreement. If approved by shareholders, the New Sub-advisory Arrangements are
expected to become effective on or about May 1, 2008.
18
AIM Income Allocation Fund
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
-----------------------------------------
OCTOBER 31, 2005
YEAR ENDED (COMMENCEMENT
DECEMBER 31, DATE) TO
--------------------- DECEMBER 31,
2007 2006 2005
- -------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.85 $ 10.12 $10.03
- -------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.54(a) 0.39 0.11(a)
- -------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.17) 0.75 0.13
=======================================================================================================
Total from investment operations 0.37 1.14 0.24
=======================================================================================================
Less distributions:
Dividends from net investment income (0.47) (0.39) (0.15)
- -------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.15) (0.02) --
=======================================================================================================
Total distributions (0.62) (0.41) (0.15)
=======================================================================================================
Net asset value, end of period $ 10.60 $ 10.85 $10.12
_______________________________________________________________________________________________________
=======================================================================================================
Total return(b) 3.40% 11.48% 2.35%
_______________________________________________________________________________________________________
=======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $60,193 $21,022 $1,634
_______________________________________________________________________________________________________
=======================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.28%(c) 0.29% 0.29%(d)
- -------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.70%(c) 1.96% 20.85%(d)
=======================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.69% 0.64% 0.69%
=======================================================================================================
Ratio of net investment income to average net assets 4.92%(c) 4.86% 6.45%(d)
_______________________________________________________________________________________________________
=======================================================================================================
Portfolio turnover rate(f) 10% 21% 0.99%
_______________________________________________________________________________________________________
=======================================================================================================
</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 $47,413,397.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
19
AIM Income Allocation Fund
NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS B
-------------------------------------------
OCTOBER 31, 2005
YEAR ENDED (COMMENCEMENT
DECEMBER 31, DATE) TO
-------------------- DECEMBER 31,
2007 2006 2005
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.86 $10.12 $10.03
- ---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.46(a) 0.31 0.10(a)
- ---------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.17) 0.76 0.12
=========================================================================================================
Total from investment operations 0.29 1.07 0.22
=========================================================================================================
Less distributions:
Dividends from net investment income (0.39) (0.31) (0.13)
- ---------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.15) (0.02) --
=========================================================================================================
Total distributions (0.54) (0.33) (0.13)
=========================================================================================================
Net asset value, end of period $ 10.61 $10.86 $10.12
_________________________________________________________________________________________________________
=========================================================================================================
Total return(b) 2.62% 10.74% 2.17%
_________________________________________________________________________________________________________
=========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $11,412 $6,018 $ 210
_________________________________________________________________________________________________________
=========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.03%(c) 1.04% 1.04%(d)
- ---------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.45%(c) 2.71% 21.60%(d)
=========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.69% 0.64% 0.69%
=========================================================================================================
Ratio of net investment income to average net assets 4.17%(c) 4.11% 5.70%(d)
_________________________________________________________________________________________________________
=========================================================================================================
Portfolio turnover rate(f) 10% 21% 0.99%
_________________________________________________________________________________________________________
=========================================================================================================
</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 $9,786,820.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
20
AIM Income Allocation Fund
NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS C
-------------------------------------------
OCTOBER 31, 2005
YEAR ENDED (COMMENCEMENT
DECEMBER 31, DATE) TO
-------------------- DECEMBER 31,
2007 2006 2005
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.86 $10.12 $10.03
- ---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.46(a) 0.31 0.10(a)
- ---------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.17) 0.76 0.12
=========================================================================================================
Total from investment operations 0.29 1.07 0.22
=========================================================================================================
Less distributions:
Dividends from net investment income (0.39) (0.31) (0.13)
- ---------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.15) (0.02) --
=========================================================================================================
Total distributions (0.54) (0.33) (0.13)
=========================================================================================================
Net asset value, end of period $ 10.61 $10.86 $10.12
_________________________________________________________________________________________________________
=========================================================================================================
Total return(b) 2.62% 10.74% 2.17%
_________________________________________________________________________________________________________
=========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $25,286 $9,905 $ 521
_________________________________________________________________________________________________________
=========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.03%(c) 1.04% 1.04%(d)
- ---------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.45%(c) 2.71% 21.60%(d)
=========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.69% 0.64% 0.69%
=========================================================================================================
Ratio of net investment income to average net assets 4.17%(c) 4.11% 5.70%(d)
_________________________________________________________________________________________________________
=========================================================================================================
Portfolio turnover rate(f) 10% 21% 0.99%
_________________________________________________________________________________________________________
=========================================================================================================
</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 $20,372,370.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
21
AIM Income Allocation Fund
NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS R
----------------------------------------
OCTOBER 31, 2005
YEAR ENDED (COMMENCEMENT
DECEMBER 31, DATE) TO
-------------------- DECEMBER 31,
2007 2006 2005
- ------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.86 $10.11 $10.03
- ------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.51(a) 0.43 0.11(a)
- ------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.17) 0.70 0.11
======================================================================================================
Total from investment operations 0.34 1.13 0.22
======================================================================================================
Less distributions:
Dividends from net investment income (0.44) (0.36) (0.14)
- ------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.15) (0.02) --
======================================================================================================
Total distributions (0.59) (0.38) (0.14)
======================================================================================================
Net asset value, end of period $ 10.61 $10.86 $10.11
______________________________________________________________________________________________________
======================================================================================================
Total return(b) 3.14% 11.41% 2.20%
______________________________________________________________________________________________________
======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 394 $ 107 $ 51
______________________________________________________________________________________________________
======================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.53%(c) 0.54% 0.54%(d)
- ------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.95%(c) 2.21% 21.10%(d)
======================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.69% 0.64% 0.69%
======================================================================================================
Ratio of net investment income to average net assets 4.67%(c) 4.61% 6.20%(d)
______________________________________________________________________________________________________
======================================================================================================
Portfolio turnover rate(f) 10% 21% 0.99%
______________________________________________________________________________________________________
======================================================================================================
</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 $227,160.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
22
AIM Income Allocation Fund
NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
------------------------------------
OCTOBER 31, 2005
YEAR ENDED (COMMENCEMENT
DECEMBER 31, DATE) TO
---------------- DECEMBER 31,
2007 2006 2005
- ----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.85 $10.11 $10.03
- ----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.57(a) 0.53 0.12(a)
- ----------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.17) 0.65 0.11
====================================================================================================
Total from investment operations 0.40 1.18 0.23
====================================================================================================
Less distributions:
Dividends from net investment income (0.50) (0.42) (0.15)
- ----------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.15) (0.02) --
====================================================================================================
Total distributions (0.65) (0.44) (0.15)
====================================================================================================
Net asset value, end of period $10.60 $10.85 $10.11
____________________________________________________________________________________________________
====================================================================================================
Total return(b) 3.66% 11.87% 2.29%
____________________________________________________________________________________________________
====================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 10 $ 57 $ 51
____________________________________________________________________________________________________
====================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.03%(c) 0.03% 0.04%(d)
- ----------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.33%(c) 1.58% 20.58%(d)
====================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.69% 0.64% 0.69%
====================================================================================================
Ratio of net investment income to average net assets 5.17%(c) 5.11% 6.70%(d)
____________________________________________________________________________________________________
====================================================================================================
Portfolio turnover rate(f) 10% 21% 0.99%
____________________________________________________________________________________________________
====================================================================================================
</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 $31,331.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 12--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
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.
23
AIM Income Allocation Fund
NOTE 12--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 Ltd. ("Invesco") 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.
24
AIM Income Allocation Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Growth Series
and Shareholders of AIM Income Allocation 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 Income Allocation Fund (one of
the funds constituting AIM Growth Series, hereafter referred to as the "Fund")
at December 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 two years then ended and for the period
October 31 2005 (date operations commenced) through December 31, 2005, 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
audit, which included confirmation of securities at December 31, 2007 by
correspondence with the custodians, provides a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
February 15, 2008
Houston, Texas
25
AIM Income Allocation Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments or
contingent deferred sales charges on redemptions, and redemption fees, if any;
and (2) ongoing costs, including distribution and/or service (12b-1) fees; and
other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period July 1, 2007, through December 31, 2007.
In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the underlying
funds in which your Fund invests. The amount of fees and expenses incurred
indirectly by your Fund will vary because the underlying funds have varied
expenses and fee levels and the Fund may own different proportions of the
underlying funds at different times. Estimated underlying fund expenses are not
expenses that are incurred directly by your Fund. They are expenses that are
incurred directly by the underlying funds and are deducted from the value of the
funds your Fund invests in. The effect of the estimated underlying fund expenses
that you bear indirectly are included in your Fund's total return.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the hypothetical
information is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition,
expenses shown in the table do not include the expenses of the underlying funds,
which are borne indirectly by the Fund. If transaction costs and indirect
expenses were included, your costs would have been higher.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $1,001.60 $1.41 $1,023.79 $1.43 0.28%
B 1,000.00 998.80 5.19 1,020.01 5.24 1.03
C 1,000.00 997.80 5.19 1,020.01 5.24 1.03
R 1,000.00 1,001.30 2.67 1,022.53 2.70 0.53
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period July 1, 2007, through December 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 12/31/07
AIM Income Allocation Fund
==========================================
Institutional Class Shares AVERAGE ANNUAL TOTAL RETURNS PLEASE NOTE THAT PAST PERFORMANCE IS
For periods ended 12/31/07 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 (10/31/05) 8.20% THOSE SHOWN. ALL RETURNS ASSUME
shareholders with a performance overview 1 Year 3.66 REINVESTMENT OF DISTRIBUTIONS AT NAV.
specific to their holdings. Institutional ========================================== INVESTMENT RETURN AND PRINCIPAL VALUE WILL
Class shares are offered exclusively to FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
institutional investors, including defined INSTITUTIONAL CLASS SHARES HAVE NO SALES MAY BE WORTH MORE OR LESS THAN THEIR
contribution plans that meet certain CHARGE; THEREFORE, PERFORMANCE IS AT NET ORIGINAL COST. SEE FULL REPORT FOR
criteria. ASSET VALUE (NAV). PERFORMANCE OF INFORMATION ON COMPARATIVE BENCHMARKS.
INSTITUTIONAL CLASS SHARES WILL DIFFER PLEASE CONSULT YOUR FUND PROSPECTUS FOR
FROM PERFORMANCE OF OTHER SHARE CLASSES MORE INFORMATION. FOR THE MOST CURRENT
PRIMARILY DUE TO DIFFERING SALES CHARGES MONTH-END PERFORMANCE, PLEASE CALL
AND CLASS EXPENSES. 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
HAD THE ADVISOR NOT WAIVED FEES AND/OR
REIMBURSED EXPENSES, PERFORMANCE WOULD
HAVE BEEN LOWER.
==========================================
NASDAQ SYMBOL ILAAX
==========================================
Over for information on your Fund's expenses.
=======================================================================================
THIS SUPPLEMENT 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 INCAL-INS-1 A I M Distributors, Inc. -- REGISTERED TRADEMARK --
Information about your Fund's expenses
Your Fund's long-term performance
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 10/31/05
LIPPER MIXED-ASSET
AIM INCOME ALLOCATION TARGET ALLOCATION
FUND-INSTITUTIONAL CLASS CUSTOM INCOME CONSERVATIVE FUNDS
DATE SHARES S&P 500 INDEX(1) ALLOCATION INDEX(2) INDEX(1)
10/31/05 $10000 $10000 $10000 $10000
11/05 10130 10378 10163 10157
12/05 10229 10382 10251 10229
01/06 10401 10656 10423 10409
02/06 10461 10685 10466 10404
3/06 10504 10818 10502 10469
4/06 10545 10963 10517 10528
5/06 10484 10648 10389 10415
6/06 10543 10662 10441 10421
7/06 10707 10728 10562 10487
8/06 10893 10983 10771 10645
9/06 10981 11266 10905 10773
10/06 11199 11633 11117 10937
11/06 11386 11854 11311 11100
12/06 11443 12020 11316 11129
1/07 11581 12202 11438 11196
2/07 11676 11964 11496 11241
3/07 11733 12097 11522 11311
4/07 11935 12633 11697 11497
5/07 12009 13073 11756 11587
6/07 11826 12856 11599 11500
7/07 11599 12458 11474 11431
8/07 11717 12644 11645 11487
9/07 11963 13117 11877 11725
10/07 12138 13325 12030 11875
11/07 11920 12768 11923 11779
12/07 11862 12680 11873 11759
====================================================================================================================================
SOURCES: (1)LIPPER INC., (2)A I M MANAGEMENT GROUP INC., LIPPER INC.
Past performance cannot guarantee The performance data shown in the chart
comparable future results. above is that of the Fund's institutional
share class. The performance data shown in
The data shown in the chart above the chart in the annual report is that of
includes reinvested distributions, Fund the Fund's Class A, B, C and R shares. The
expenses and management fees. Index performance of the Fund's other share
results include reinvested dividends. classes will differ primarily due to
Performance of an index of funds reflects different sales charge structures and
fund expenses and management fees; class expenses, and may be greater than or
performance of a market index does not. less than the performance of the Fund's
Performance shown in the chart and Institutional Class shares shown in the
table(s) does not reflect deduction of chart above.
taxes a shareholder would pay on Fund
distributions or sale of Fund shares.
Performance of the indexes does not
reflect the effects of taxes.
AIM Income Allocation Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs. This example is intended
to help you understand your ongoing costs (in dollars) of investing in the Fund
and to compare these costs with ongoing costs of investing in other mutual
funds. The example is based on an investment of $1,000 invested at the beginning
of the period and held for the entire period July 1, 2007, through December 31,
2007.
In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the underlying
funds in which your Fund invests. The amount of fees and expenses incurred
indirectly by your Fund will vary because the underlying funds have varied
expenses and fee levels and the Fund may own different proportions of the
underlying funds at different times. Estimated underlying fund expenses are not
expenses that are incurred directly by your Fund. They are expenses that are
incurred directly by the underlying funds and are deducted from the value of the
funds your Fund invests in. The effect of the estimated underlying fund expenses
that you bear indirectly are included in your Fund's total return.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. Therefore, the hypothetical information is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, expenses shown in the table do not
include the expenses of the underlying funds, which are borne indirectly by the
Fund. If indirect expenses were included, your costs would have been higher.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
Institutional $1,000.00 $1,002.90 $ 0.15 $1,025.05 $0.15 0.03%
</Table>
(1) The actual ending account value is based on the actual total return of
the Fund for the period July 1, 2007, through December 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.
AIM Income Allocation 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 December 31,
2007:
FEDERAL AND STATE INCOME TAX
<Table>
Long-Term Capital Gain Dividends $1,243,112
Qualified Dividend Income* 12.50%
Corporate Dividends Received Deduction* 10.00%
U.S. Treasury Obligations* 0.22%
</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 March 31, 2007, June 30, 2007, September 30, 2007 and
December 31, 2007 were 63.93%, 64.49%, 64.04%, and 65.17%, respectively.
27
AIM Income Allocation Fund
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Growth Series (the "Trust"), is
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees
104 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 Ltd. (ultimate parent
of AIM and a global investment
management firm) and, Invesco Holding
Company (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); and INVESCO
North American Holdings, Inc. (holding
company); Chairman and President,
INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of
Funds(R); Vice Chairman, Investment
Company Institute; and Member of
Executive Board, SMU Cox School of
Business
Formerly: Chairman, Investment Company
Institute; 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, AIM Mutual Fund Dealer Inc.
Principal (registered broker dealer), A I M
Executive Officer Advisors, Inc., AIM Funds Management
Inc. d/b/a INVESCO Enterprise Services
(registered investment advisor and
registered transfer agent), 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), and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Management Group Inc. (financial
services holding company) and 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) 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); 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: Director and Chairman, Fund
Management Company (registered broker
dealer); 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 2001 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 1985 Retired None
Trustee Formerly: Partner, law firm of Baker &
McKenzie and Director, Badgley Funds,
Inc. (registered investment company) (2
portfolios)
- -------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm)
Formerly: Director, Policy Studies, Inc.
and Van Gilder Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2001 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 2001 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 2001 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) (15
Trustee Naftalis and Frankel LLP portfolios)
- -------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 2003 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 Ltd., ultimate 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.
28
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Income Allocation 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,
AIM Investment Services, Inc. and
INVESCO Distributors, Inc.; Director,
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: Director, Vice President and
Secretary, Fund Management Company; 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 N/A
Vice President Ltd.; 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 General Counsel, Secretary and Senior
Vice President Managing Director, Invesco Ltd.;
Director and Secretary, Invesco Holding
Company Limited, IVZ, Inc. and INVESCO
Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO
North American Holdings, Inc.; and Vice
President of The AIM Family of
Funds--Registered Trademark--
Formerly: Senior Managing Director, N/A
Invesco Holding Company Limited;
Director, Senior Vice 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 2004 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; Executive
Vice President, A I M Distributors,
Inc.; Senior Vice President, A I M
Management Group Inc.; 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: Director and President, Fund
Management Company; 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. and The AIM Family of
Funds--Registered Trademark--
Formerly: Anti-Money Laundering
Compliance Officer, Fund Management
Company; and 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.
and AIM Investment Services, Inc.
Formerly: Vice President, A I M Capital
Management, Inc. and Fund Management
Company; 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>
29
Fund holdings and proxy voting information
[EDELIVERY
GO PAPERLESS The Fund provides a complete list of its
AIMINVESTMENTS.COM/EDELIVERY holdings four times in each fiscal year,
GRAPHIC] at the quarter-ends. For the second and
fourth quarters, the lists appear in the
REGISTER FOR EDELIVERY Fund's semiannual and annual reports to
shareholders. For the first and third
eDelivery is the process of receiving your quarters, the Fund files the lists with
fund and account information via e-mail. the Securities and Exchange Commission
Once your quarterly statements, tax forms, (SEC) on Form N-Q. The most recent list of
fund reports, and prospectuses are portfolio holdings is available at
available, we will send you an e-mail AIMinvestments.com. From our home page,
notification containing links to these click on Products & Performance, then
documents. For security purposes, you will Mutual Funds, then Fund Overview. Select
need to log in to your account to view your Fund from the drop-down menu and
your statements and tax forms. click on Complete Quarterly Holdings.
Shareholders can also look up the Fund's
WHY SIGN UP? Forms N-Q on the SEC Web site at sec.gov.
Copies of the Fund's Forms N-Q may be
Register for eDelivery to: reviewed and copied at the SEC Public
Reference Room in Washington, D.C. You can
o save your Fund the cost of printing and obtain information on the operation of the
postage. Public Reference Room, including
information about duplicating fee charges,
o reduce the amount of paper you receive. by calling 202-942-8090 or 800-732-0330,
or by electronic request at the following
o gain access to your documents faster by e-mail address: publicinfo@sec.gov. The
not waiting for the mail. SEC file numbers for the Fund are
811-02699 and 002-57526.
o view your documents online anytime at
your convenience. A description of the policies and
procedures that the Fund uses to determine
o save the documents to your personal how to vote proxies relating to portfolio
computer or print them out for your securities is available without charge,
records. upon request, from our Client Services
department at 800-959-4246 or on the AIM
HOW DO I SIGN UP? Web site, AIMinvestments.com. On the home
page, scroll down and click on Proxy
It's easy. Just follow these simple steps: Policy. The information is also available
on the SEC Web site, sec.gov.
1. Log in to your account.
Information regarding how the Fund voted
2. Click on the "Service Center" tab. proxies related to its portfolio
securities during the 12 months ended June
3. Select "Register for eDelivery" and 30, 2007, is available at our Web site. Go
complete the consent process. to AIMinvestments.com, access the About Us
tab, click on Required Notices and then
This AIM service is provided by AIM click on Proxy Voting Activity. Next,
Investment Services, Inc. select the Fund from the drop-down menu.
The information is also available on the
SEC Web site, sec.gov.
If used after April 20, 2008, this report
must be accompanied by a Fund fact sheet
or by an AIM Quarterly Performance Review
for the most recent quarter-end. Mutual
funds and exchange-traded funds
distributed by A I M Distributors, Inc.
INCAL-AR-1 A I M Distributors, Inc.
[AIM INVESTMENTS LOGO]
- REGISTERED TRADEMARK -
TARGET MATURITY
AIM Independence Funds
Annual Report to Shareholders - December 31, 2007
Table of Contents
Letters to Shareholders ........ 2
Performance Summary ............ 4
Management Discussion .......... 4
Long-term Fund Performance ..... 16
Supplemental Information ....... 22
Schedule of Investments ........ 26
Financial Statements ........... 32
Notes to Financial Statements .. 36
Financial Highlights ........... 44
Auditor's Report ............... 51
Fund Expenses .................. 52
Tax Information ................ 54
Trustees and Officers .......... 55
[COVER GLOBE IMAGE]
AIM Independence Now Fund
AIM Independence 2010 Fund
AIM Independence 2020 Fund
[AIM INVESTMENT SOLUTIONS] AIM Independence 2030 Fund
[GRAPHIC] [GRAPHIC] AIM Independence 2040 Fund
[DOMESTIC [FIXED AIM Independence 2050 Fund
EQUITY] INCOME]
[GRAPHIC] [GRAPHIC] [GRAPHIC]
[TARGET [TARGET [DIVERSIFIED
RISK] MATURITY] PORTFOLIOS]
[GRAPHIC] [GRAPHIC]
[SECTOR [INTERNATIONAL/
EQUITY] GLOBAL EQUITY]
[AIM INVESTMENTS LOGO]
--REGISTERED TRADEMARK--
AIM Independence Funds
Dear Shareholders:
I'm pleased to provide you with this report, which includes
[TAYLOR a discussion of how your Fund was managed during the period
PHOTO] under review, and factors that affected its performance. The
following pages contain important information that answers
Philip Taylor questions you may have about your investment.
Despite notable volatility at points throughout the year
ended December 31, 2007, major stock market indexes in the
U.S. and abroad generally performed well. Reasons for their
favorable performance included positive economic growth,
particularly overseas; strong corporate profits; and action
by the U.S. Federal Reserve Board (the Fed) to lower
short-term interest rates, among other factors.
At its mid-September 2007 meeting, the Fed cut its
federal funds target rate for the first time since June
2003.(1) That cut followed 17 rate increases from June 2004
to June 2006(1) and was intended to address concerns about a
weak housing market and problems in the subprime mortgage
market, which some feared could adversely affect the U.S.
economy. The Fed cut the federal funds target rate again in
late October and mid-December in response to continued
economic uncertainty.
This kind of uncertainty can affect equity, fixed-income
and other markets--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.
I encourage you to talk with your financial advisor if
you have concerns about your portfolio. We believe in the
value of working with a trusted financial advisor who can
recommend AIM funds that are appropriate for your portfolio
and that address your long-term investment goals and risk
tolerance regardless of prevailing short-term market
conditions.
In conclusion
In May, AIM Investments' parent company changed its name
from AMVESCAP PLC to Invesco Ltd., uniting our worldwide
operations and global expertise under a new name. While the
name of our parent company may be new to you, I can assure
you that AIM's 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.
We 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
February 11, 2008
Source: (1) U.S. Federal Reserve Board
AIM Investments--REGISTERED TRADEMARK-- is a registered
service mark of A I M Management Group Inc. A I M Advisors,
Inc., A I M Capital Management, Inc., AIM Private Asset
Management, Inc. and PowerShares Capital Management LLC are
the investment advisors for the products and services
represented by AIM Investments; they each provide investment
advisory services to individual and institutional clients
and do not sell securities. A I M Distributors, Inc. is the
distributor for the retail mutual funds and U.S.
institutional money market funds represented by AIM
Investments and the exchange-traded funds managed by
PowerShares Capital Management LLC. All entities are
indirect wholly owned subsidiaries of Invesco Ltd.
2
AIM Independence Funds
Dear Fellow AIM Fund Shareholders:
The lines of communication are open: More than 250 of you
[CROCKETT have responded to the invitation I extended in my previous
PHOTO] letter to complete an online survey, and more than 50
shareholders have contacted me directly by e-mail. When I
Bruce L. Crockett could respond quickly and easily to a shareholder's specific
concern I did, but the messages for the most part raised
consistent issues that I respond to here.
I have received many suggestions, a few complaints, and
one offer to buy a gold mine! In general, your letters
expressed an appreciation for transparency, frankness and
the opportunity to comment. Nevertheless, several
shareholders found room for improvement in communications.
Some would like more concise letters while others would
prefer reports to be more customized for their particular
information needs. With these reports going to tens of
thousands of people, shareholder communications necessarily
have to cover those issues common to a diverse population as
well as the information required by law. The ability to
change or further customize letters and reports is also
affected by technology, timeliness and cost.
Online survey responders preferred electronic
communications to paper at a ratio of 63% to 37%. Direct
responders expressed more of a preference for paper,
especially for long reports. Electronic communications are
more cost-effective than paper communications that have to
be printed and mailed, so I encourage those who have
resisted electronic communications to give them a try.
The correspondence shows that improving fund performance
and reducing shareholder costs remain the key shareholder
concerns. Several letters noted individual funds where
performance had changed for the better, while others
remained dissatisfied with the returns from funds they hold.
Although 75% of the online survey responders wanted to see
more overall fund performance data in these letters, and 58%
wanted more information on individual funds, Securities and
Exchange Commission (SEC) and Financial Industry Regulatory
Authority (FINRA) rules are very specific about the way fund
performance can be discussed in print. Respect for those
rules prevents me from commenting on individual funds or
very recent results here, but I can assure you that your
Board and all of its Investments subcommittees continue to
work with AIM Investments to make improved performance a top
priority for all fund managers.
Expense levels came up as another dominant issue, and no
respondent felt these were too low. Several shareholders
questioned the need for 12b-1 fees, which cover the cost of
distributing fund shares and thereby help the fund to
attract new assets. Your Board reviews the funds' 12b-1 fees
annually with the shareholders' best interests in mind.
While your Board keeps its eye on containing or lowering
these fees wherever possible, we also are mindful that 12b-1
fees may be necessary in order to maintain an effective
distribution system for fund shares.
The value of communication between the Board and
shareholders has been noted within and beyond the AIM
community. In the online survey, 87% of the respondents felt
it was either somewhat or very important to hear directly
from the Board, with 55% saying it was very important.
Morningstar--TRADEMARK--, the mutual fund tracking company,
also commented favorably on this channel of communication in
its fall 2007 update of fund stewardship grades, where AIM
was one of fewer than 10 fund boards to get an A for board
quality, according to BoardIQ (11/13/07).
In other news, Ruth Quigley retired from your Board at
the end of 2007, and we thank her for her many years of
dedicated service. Larry Soll has assumed Ruth's place as a
vice chair of the Investments Committee. The Valuation
Committee, which Ruth used to chair, has been reorganized as
the Valuation, Distribution and Proxy Oversight Committee
under the chairmanship of Carl Frischling. The elevation of
proxy oversight to standing committee status responds to
suggestions from shareholders. In addition, Prema
Mathi-Davis assumed my seat on the Governance Committee, and
I moved to the Audit Committee.
Your Board looks forward to another year of diligent
effort on your behalf, and we are even more strongly
motivated by your feedback. The invitation remains open to
e-mail me at bruce@brucecrockett.com. I look forward to
hearing from you.
Sincerely,
/S/ BRUCE L. CROCKETT
-------------------------
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
February 11, 2008
3
AIM Independence Funds
AIM Independence Now Fund
management's discussion of Fund performance
=======================================================================================
PERFORMANCE SUMMARY class allocations and will periodically
rebalance the Fund's investments in
Since inception on 1/31/07, Class A shares of AIM Independence Now Fund returned 3.47% underlying funds to keep them within their
at net asset value (NAV) and underperformed both the broad market, represented by the target weightings.
S&P 500 Index, and its style-specific index, the Custom Independence Now Index. The
Custom Independence Now Index approximates the performance of the types of holdings Market conditions and your Fund
owned by the Fund's underlying investments. Performance of select underlying funds
within the large-cap domestic equity and fixed income allocations were the primary Market volatility increased during 2007 as
contributors to underperformance versus the style-specific index. subprime mortgage issues and record high
oil prices fueled concerns that slower
Your Fund's long-term performance appears on page 16 of this report. economic growth and rising inflation would
reduce corporate profits.(1) Despite these
FUND VS. INDEXES concerns most major market indexes
finished the year with respectable
Cumulative total returns, 1/31/07-12/31/07 at NAV. Performance shown does not include gains.(2)
applicable CDSC or front-end sales charges, which would have reduced performance.
Across asset classes, international
equities continued their trend of
Class A Shares 3.47% outperforming domestic equities.(1) A weak
Class B Shares 2.79 U.S. dollar helped boost international
Class C Shares 2.79 equity returns.(2) As the dollar declined,
Class R Shares 3.21 large caps generally outperformed small
S&P 500 Index(triangle) (Broad Market Index) 3.92 caps as investors sought more exposure to
Custom Independence Now Index(square) (Style-Specific Index) 5.80 global corporations with the ability to
Lipper Mixed-Asset Target Allocation Conservative Funds Index(triangle) leverage currency weakness through their
(Peer Group Index) 5.03 presence in foreign markets.2 For the most
part, growth outperformed value as
SOURCES: (TRIANGLE)LIPPER INC.; (SQUARE)A I M MANAGEMENT GROUP INC., LIPPER INC. subprime issues weighed on financial
======================================================================================= stocks and real estate, both of which are
mostly found in value indexes.(2)
How we invest The Fund's investment strategy follows
a three-step process. The first step is to Largely in response to subprime
AIM Independence Now Fund is structured determine AIM Independence Now Fund's mortgage issues, the U.S. Federal Reserve
for investors who are currently in, or asset allocation strategy from among broad Board lowered its Federal Funds target
very near retirement. The Fund invests in asset classes based on the Fund's target rate by 1% during the year with a .50% cut
21 underlying products, including seven retirement date. The second step is to in September and .25% cuts in October and
PowerShares--REGISTERED TRADEMARK-- select the underlying funds to be held by December.(3) These cuts served to help
exchange-traded funds and 14 AIM mutual the Fund and to determine the target bonds generally outperform equities for
funds. These investments include 13 equity weightings of such underlying funds. The the fiscal year. For the most part, high
products and eight fixed-income products. third step is the ongoing monitoring of quality bonds outperformed lower quality
The Fund operates under a target maturity the Fund's asset class allocations, bonds as investors sought the safety of
structure, which automatically underlying funds and target weightings. U.S.
redistributes holdings among the
underlying products to become more The portfolio management team monitors
conservative as the Fund approaches the the selection of underlying funds to
target date. ensure that they continue to conform to
the Fund's asset
====================================================================================================================================
PORTFOLIO COMPOSITION TOTAL NET ASSETS
TARGET % OF TOTAL NET ASSETS Total Net Assets $1.30 million
ASSET CLASS ALLOCATION AS OF 12/31/07
- ----------- ---------- ---------------------
Domestic Equity 28.73% 28.18%
Foreign Equity 6.24 6.09 The Fund purchases Institutional Class
High Yield Fixed Income 8.33 8.40 shares of the underlying mutual funds.
Investment Grade Fixed Income 53.35 53.71 Institutional Class shares have no sales
Money Market Funds 3.35 4.91 charge. The Fund's portfolio is subject to
Other Assets Less Liabilities 0.00 -1.29 change, and there is no assurance that the
Fund will continue to hold any particular
fund.
====================================================================================================================================
4
AIM Independence Funds
Treasury securities.(2) Longer maturity 1000 Portfolio was a primary detractor as Gary Wendler
issues outperformed short maturity ones in it returned -1.09% over the fiscal year. [WENDLER Director of Product
response to interest rate reductions.(2) AIM Diversified Dividend was another PHOTO] Strategy and Investment
As with equities, foreign bonds generally relative detractor. Both strategies Services, is manager of AIM
outperformed domestic bonds due to the underperformed as they avoided high growth Independence Now Fund. He began his career
declining dollar.(2) stocks with high valuations that on in the investment industry in 1986 and
balance were rewarded more during 2007. joined AIM in 1995. Mr. Wendler earned a
Fourteen of the Fund's 21 underlying B.B.A in finance from Texas A&M
investments provided positive returns AIM Total Return Bond also detracted University.
during the fiscal year with the largest relative to the style-specific index due
contribution coming from domestic large in part to having a lower portfolio
cap growth equity, foreign equity and duration structure as the Fed cut interest
fixed income asset classes. Fixed income rates. Additionally, AIM Total Return
investments provided the largest positive Bond's dedicated exposure to short term
return contribution. AIM Total Return bonds detracted as the stylespecific index
Bond, AIM Intermediate Government and AIM has a higher allocation to intermediate
Short Term Bond were key fund specific bonds. We maintain a higher allocation to
contributors. AIM International Total short term bonds in our effort to best
Return was another key fixed income meet the fund's risk and return objective
contributor as the declining dollar aided given its target maturity structure.
foreign bonds. AIM International Growth,
AIM International Core Equity and Positive contributors to relative
PowerShares International Dividend style-specific index performance came
Achievers Portfolio were amongst the primarily from AIM International Growth,
largest absolute portfolio contributors, which benefited from performance trends in
and all represented foreign equities. AIM foreign equities and the growth style. AIM
Structured Growth and PowerShares Dynamic Structured Growth and PowerShares Dynamic
Large Cap Growth Portfolio were the Large Cap Growth Portfolio were the
primary domestic equity contributors as primary domestic equity relative
both were aided by the resurgence in the performance contributors benefiting from
growth style during 2007. exposure to growth equities.
Primary absolute detractors came from In the fourth quarter of 2007, the Fund
small cap equity and value styled rebalanced its underlying holdings to the
equities. All of the portfolio's small cap predetermined position along its asset
strategies provided negative returns allocation glidepath, consistent with the
consistent with the market environment. target maturity objective.
PowerShares Dynamic Small Cap Value
Portfolio was the single largest absolute We thank you for your continued
detractor as the fund was hindered by investment in AIM Independence Now Fund.
struggles for both small caps and value
securities. The PowerShares FTSE RAFI US Sources: (1) Bloomberg L.P.; (2) Lipper
1500 Small-Mid Portfolio also detracted as Inc.; (3) Federal Reserve
it provides broad exposure to small and
mid cap stocks. AIM Structured Value Fund, The views and opinions expressed in
which invests in large cap domestic value management's discussion of Fund
stocks, was a detractor from performance, performance are those of A I M Advisors,
as value stocks in the financials sector Inc. These views and opinions are subject
were adversely affected by subprime to change at any time based on factors
mortgage issues. such as market and economic conditions.
These views and opinions may not be relied
The Fund's Class A shares upon as investment advice or
underperformed its style-specific index, recommendations, or as an offer for a
the Custom Independence Now Index, by particular security. The information is
2.33% over the fiscal year. The primary not a complete analysis of every aspect of
detractors from this relative return came any market, country, industry, security or
from select large cap domestic equity and the Fund. Statements of fact are from
fixed income investments. The PowerShares sources considered reliable, but A I M
FTSE RAFI US Advisors, Inc. makes no representation or
warranty as to their completeness or
accuracy. Although historical performance
is no guarantee of future results, these
insights may help you understand our ==========================================
investment management philosophy. FOR A DISCUSSION OF THE RISKS OF INVESTING
IN YOUR FUND AND INDEXES USED IN THIS
See important Fund and index REPORT, PLEASE TURN TO PAGE 22.
disclosures later in this report. ==========================================
5
AIM Independence Funds
AIM Independence 2010 Fund management's discussion of Fund performance that they continue to conform to the
Fund's asset class allocations and will
======================================================================================= periodically rebalance the Fund's
PERFORMANCE SUMMARY investments in underlying funds to keep
them within their target weightings.
Since inception on 1/31/07, Class A shares of AIM Independence 2010 Fund returned 3.65%
Market conditions and your Fund
at net asset value (NAV) and underperformed both the broad market, represented by the
S&P 500 Index, and its style-specific index, the Custom Independence 2010 Index. The Market volatility increased during 2007 as
Custom Independence 2010 Index approximates the performance of the types of holdings subprime mortgage issues and record high
owned by the Fund's underlying investments. Performance of select underlying funds oil prices fueled concerns that slower
within the large-cap domestic equity and fixed income allocations was the primary economic growth and rising inflation would
contributors to underperformance versus the style-specific index. reduce corporate profits.(1) Despite these
concerns most major market indexes
Your Fund's long-term performance appears on page 17 of this report. finished the year with respectable
gains.(2)
FUND VS. INDEXES
Across asset classes, international
Cumulative total returns, 1/31/07-12/31/07 at NAV. Performance shown does not include equities continued their trend of
applicable CDSC or front-end sales charges, which would have reduced performance. outperforming domestic equities.(1) A weak
U.S. dollar helped boost international
Class A Shares 3.65% equity returns.(2) As the dollar declined,
Class B Shares 2.92 large caps generally outperformed small
Class C Shares 3.02 caps as investors sought more exposure to
Class R Shares 3.41 global corporations with the ability to
S&P 500 Index(triangle) (Broad Market Index) 3.92 leverage currency weakness through their
Custom Independence 2010 Index(square) (Style-Specific Index) 5.85 presence in foreign markets.(2) For the
Lipper Mixed-Asset Target 2010 Funds Index(triangle) (Peer Group Index) 5.12 most part, growth outperformed value as
subprime issues weighed on financial
SOURCES: (TRIANGLE)LIPPER INC.; (SQUARE)A I M MANAGEMENT GROUP INC., LIPPER INC. stocks and real estate, both of which are
======================================================================================= mostly found in value indexes.(2)
How we invest The Fund's investment strategy follows Largely in response to subprime mortgage
a three-step process. The first step is to issues, the U.S. Federal Reserve Board
AIM Independence 2010 Fund is structured determine AIM Independence 2010 Fund's (the Fed) lowered its Federal Funds target
for investors whose target retirement date asset allocation strategy from among broad rate by 1% during the year with a .50% cut
is around the year 2010. The Fund invests asset classes based on the Fund's target in September and .25% cuts in October and
in 19 underlying products, including seven retirement date. The second step is to December.(3) These cuts served to help
PowerShares--REGISTERED TRADEMARK-- select the underlying funds to be held by bonds generally outperform equities for
exchange-traded funds and 12 AIM mutual the Fund and to determine the target the fiscal
funds. These investments include 13 equity weightings of such underlying funds. The
products and six fixed-income products. third step is the ongoing monitoring of
The Fund operates under a target maturity the Fund's asset class allocations,
structure, which automatically underlying funds and target weightings.
redistributes holdings among the
underlying products to become more The portfolio management team monitors
conservative as the Fund approaches the the selection of underlying funds to
target date. ensure
====================================================================================================================================
PORTFOLIO COMPOSITION TOTAL NET ASSETS
TARGET % OF TOTAL NET ASSETS
ASSET CLASS ALLOCATION AS OF 12/31/07 Total Net Assets $2.59 million
- ----------- ---------- ---------------------
Domestic Equity 32.00% 31.44
Foreign Equity 8.00 7.83 The Fund purchases Institutional Class
High Yield Fixed Income 9.00 9.11 shares of the underlying mutual funds.
Investment Grade Fixed Income 51.00 51.51 Institutional Class shares have no sales
Money Market Funds 0.00 0.56 charge. The Fund's portfolio is subject to
Other Assets Less Liabilities 0.00 -0.45 change, and there is no assurance that the
Fund will continue to hold any particular
fund.
====================================================================================================================================
6
AIM Independence Funds
year.(2) For the most part, high quality investments. The PowerShares FTSE RAFI US Gary Wendler
bonds outperformed lower quality bonds as 1000 Portfolio was a primary detractor as [WENDLER Director of Product
investors sought the safety of U.S. it returned -1.09% over the fiscal year. PHOTO] Strategy and Investment
Treasury securities.(2) Longer maturity AIM Diversified Dividend was another Services, is manager of AIM
issues outperformed short maturity ones in relative detractor. Both strategies Independence 2010 Fund. He began his
response to interest rate reductions.(2) underperformed as they avoided high growth career in the investment industry in 1986
As with equities, foreign bonds generally stocks with high valuations that on and joined AIM in 1995. Mr. Wendler earned
outperformed domestic bonds due to the balance were rewarded more during 2007. a B.B.A in finance from Texas A&M
declining dollar.(2) University.
AIM Total Return Bond also detracted
Twelve of the Fund's 19 underlying relative to the style-specific index due
investments provided positive returns in part to having a lower portfolio
during the fiscal year with the largest duration structure as the Fed cut interest
contribution coming from domestic large rates. Additionally, AIM Total Return
cap growth equity, foreign equity and Bond's dedicated exposure to short term
fixed income asset classes. Fixed income bonds detracted as the stylespecific index
investments provided the largest positive has a higher allocation to intermediate
return contribution. AIM Total Return bonds. We maintain a higher allocation to
Bond, AIM Intermediate Government and AIM short term bonds in our effort to best
Short Term Bond were key fund specific meet the fund's risk and return objective
contributors. AIM International Total given its target maturity structure.
Return was another key fixed income
contributor as the declining dollar aided Positive contributors to relative
foreign bonds. AIM International Growth, stylespecific index performance came
AIM International Core Equity and primarily from AIM International Growth,
PowerShares International Dividend which benefited from performance trends in
Achievers Portfolio were amongst the foreign equities and the growth style. AIM
largest absolute portfolio contributors, Structured Growth and PowerShares Dynamic
and all represented foreign equities. AIM Large Cap Growth Portfolio were the
Structured Growth and PowerShares Dynamic primary domestic equity relative
Large Cap Growth Portfolio were the performance contributors benefiting from
primary domestic equity contributors as exposure to growth equities.
both were aided by the resurgence in the
growth style during 2007. In the fourth quarter of 2007, the Fund
rebalanced its underlying holdings to the
Primary absolute detractors came from predetermined position along its asset
small cap equity and value styled allocation glidepath, consistent with the
equities. All of the portfolio's small cap target maturity objective.
strategies provided negative returns
consistent with the market environment. We thank you for your continued
PowerShares Dynamic Small Cap Value investment in AIM Independence 2010 Fund.
Portfolio was the single largest absolute
detractor as the fund was hindered by Sources: (1) Bloomberg L.P.; (2) Lipper
struggles involving both small caps and Inc.; (3) Federal Reserve
value securities. The PowerShares FTSE
RAFI US 1500 Small-Mid Portfolio also The views and opinions expressed in
detracted as it provides broad exposure to management's discussion of Fund
small and mid cap stocks. AIM Structured performance are those of A I M Advisors,
Value Fund, which invests in large cap Inc. These views and opinions are subject
domestic value stocks, was a detractor to change at any time based on factors
from performance, as value stocks in the such as market and economic conditions.
financials sector were adversely affected These views and opinions may not be relied
by subprime mortgage issues. upon as investment advice or
recommendations, or as an offer for a
The Fund's Class A shares at NAV particular security. The information is
underperformed its style-specific index, not a complete analysis of every aspect of
the Custom Independence 2010 Index by any market, country, industry, security or
2.20%, over the fiscal year. The primary the Fund. Statements of fact are from
detractors from this relative return came sources considered reliable, but A I M
from select large cap domestic equity and Advisors, Inc. makes no representation or
fixed income warranty as to their completeness or
accuracy. Although historical performance
is no guarantee of future results, these
insights may help you understand our ==========================================
investment management philosophy. FOR A DISCUSSION OF THE RISKS OF INVESTING
IN YOUR FUND AND INDEXES USED IN
See important Fund and index THIS REPORT, PLEASE TURN TO PAGE 22.
disclosures later in this report. ==========================================
7
AIM Independence Funds
AIM Independence 2020 Fund management's discussion of Fund performance
=======================================================================================
PERFORMANCE SUMMARY that they continue to conform to the
Fund's asset class allocations and will
Since inception on 1/31/07, Class A shares of AIM Independence 2020 Fund returned 2.38% periodically rebalance the Fund's
at net asset value (NAV) and underperformed both the broad market, represented by the investments in underlying funds to keep
S&P 500 Index, and its style-specific index, the Custom Independence 2020 Index. The them within their target weightings.
Custom Independence 2020 Index approximates the performance of the types of holdings
owned by the Fund's underlying investments. Performance of select underlying funds Market conditions and your Fund
within the large-cap domestic equity and fixed income allocations was the primary
contributor to underperformance versus the style-specific index. Market volatility increased during 2007 as
subprime mortgage issues and record high
Your Fund's long-term performance appears on page 18 of this report. oil prices fueled concerns that slower
economic growth and rising inflation would
FUND VS. INDEXES reduce corporate profits.(1) Despite these
concerns most major market indexes
Cumulative total returns, 1/31/07-12/31/07 at NAV. Performance shown does not include finished the year with respectable
applicable CDSC or front-end sales charges, which would have reduced performance. gains.(2)
Class A Shares 2.38% Across asset classes, international
Class B Shares 1.68 equities continued their trend of
Class C Shares 1.68 outperforming domestic equities.(1) A weak
Class R Shares 2.19 U.S. dollar helped boost international
S&P 500 Index(triangle) (Broad Market Index) 3.92 equity returns.(2) As the dollar declined,
Custom Independence 2020 Index(square) (Style-Specific Index) 5.27 large caps generally outperformed small
Lipper Mixed-Asset Target 2020 Funds Index(triangle) (Peer Group Index) 5.02 caps as investors sought more exposure to
global corporations with the ability to
SOURCES: (TRIANGLE)LIPPER INC.; (SQUARE)A I M MANAGEMENT GROUP INC., LIPPER INC. leverage currency weakness through their
======================================================================================= presence in foreign markets.(2) For the
most part, growth outperformed value as
How we invest The Fund's investment strategy follows subprime issues weighed on financial
a three-step process. The first step is to stocks and real estate, both of which are
AIM Independence 2020 Fund is structured determine AIM Independence 2020 Fund's mostly found in value indexes.(2)
for investors whose target retirement date asset allocation strategy from among broad
is around the year 2020. The Fund invests asset classes based on the Fund's target Largely in response to subprime
in 19 underlying products, including seven retirement date. The second step is to mortgage issues, the U.S. Federal Reserve
PowerShares--REGISTERED TRADEMARK-- select the underlying funds to be held by Board lowered its Federal Funds target
exchange-traded funds and 12 AIM mutual the Fund and to determine the target rate by 1% during the year with a .50% cut
funds. These investments include 14 equity weightings of such underlying funds. The in September and .25% cuts in October and
products and five fixed-income products. third step is the ongoing monitoring of December.(3) These cuts served to help
The Fund operates under a target maturity the Fund's asset class allocations, bonds generally outperform
structure, which automatically underlying funds and target weightings.
redistributes holdings among the
underlying products to become more The portfolio management team monitors
conservative as the Fund approaches the the selection of underlying funds to
target date. ensure
====================================================================================================================================
PORTFOLIO COMPOSITION TOTAL NET ASSETS
TARGET % OF TOTAL NET ASSETS
ASSET CLASS ALLOCATION AS OF 12/31/07 Total Net Assets $4.94 million
- ----------- ---------- ---------------------
Domestic Equity 41.50% 40.46%
Foreign Equity 15.50 15.15 The Fund purchases Institutional Class
High Yield Fixed Income 12.00 12.22 shares of the underlying mutual funds.
Investment Grade Fixed Income 28.00 28.36 Institutional Class shares have no sales
Real Estate 3.00 2.89 charge. The Fund's portfolio is subject to
Money Market Funds 0.00 2.62 change, and there is no assurance that the
Other Assets Less Liabilities 0.00 -1.70 Fund will continue to hold any particular
fund.
====================================================================================================================================
8
AIM Independence Funds
equities for the fiscal year. For the most returned -1.09% over the fiscal year. AIM Gary Wendler
part, high quality bonds outperformed Diversified Dividend was another relative [WENDLER Director of Product
lower quality bonds as investors sought detractor. Both strategies underperformed PHOTO] Strategy and Investment
the safety of U.S. Treasury securities.(2) as they avoided high growth stocks with Services, is manager of AIM
Longer maturity issues outperformed short high valuations that on balance were more Independence 2020 Fund. He began his
maturity ones in response to interest rate rewarded during 2007. career in the investment industry in 1986
reductions.(2) As with equities, foreign and joined AIM in 1995. Mr. Wendler earned
bonds generally outperformed domestic AIM Total Return Bond also detracted a B.B.A in finance from Texas A&M
bonds due to the declining dollar.(2) relative to the style-specific index due University.
in part to having a lower portfolio
Eleven of the Fund's 19 underlying duration structure as the Fed cut interest
investments provided positive returns rates. Additionally, AIM Independence 2020
during the fiscal year with the largest Fund's dedicated exposure to short term
contribution coming from domestic large bonds detracted as the style-specific
cap growth equity, foreign equity and index has a higher allocation to
fixed income asset classes. AIM intermediate bonds. We maintain a higher
International Growth, AIM International allocation to short term bonds in our
Core Equity and PowerShares International effort to best meet the fund's risk and
Dividend Achievers Portfolio were amongst return objective given its target maturity
the largest absolute portfolio structure.
contributors, and all represented foreign
equities. AIM Structured Growth and Positive contributors to relative
PowerShares Dynamic Large Cap Growth stylespecific index performance came
Portfolio were the primary domestic equity primarily from AIM International Growth,
contributors as both were aided by the which benefited from performance trends in
resurgence in the growth style during foreign equities and the growth style. AIM
2007. Structured Growth and PowerShares Dynamic
Large Cap Growth Portfolio were the
Fixed income was also a source of primary domestic equity relative
positive returns. AIM Total Return Bond performance contributors benefiting from
benefited performance as bonds generally exposure to growth equities.
outperformed equities.(2) AIM
International Total Return was among the In the fourth quarter of 2007, the Fund
top fixed income contributors as the rebalanced its underlying holdings to the
declining dollar aided foreign bonds. predetermined position along its asset
allocation glidepath, consistent with the
Primary absolute detractors came from target maturity objective.
real estate, small cap equity and value
styled equities. All of the portfolio's We thank you for your continued
small cap strategies provided negative investment in AIM Independence 2020 Fund.
returns consistent with the market
environment. PowerShares Dynamic Small Cap Sources: (1) Bloomberg L.P.; (2) Lipper
Value Portfolio was the single largest Inc.; (3) Federal Reserve
absolute detractor as the fund was
hindered by struggles involving both small The views and opinions expressed in
caps and value securities. AIM Global Real management's discussion of Fund
Estate was the second largest detractor as performance are those of A I M Advisors,
real estate was one of the worst Inc. These views and opinions are subject
performing asset classes during 2007. to change at any time based on factors
such as market and economic conditions.
The Fund's Class A shares at NAV These views and opinions may not be relied
underperformed its style-specific index, upon as investment advice or
the Custom Independence 2020 Index, by recommendations, or as an offer for a
2.89% over the fiscal year. The primary particular security. The information is
detractors from this relative return came not a complete analysis of every aspect of
from select large cap domestic equity and any market, country, industry, security or
fixed income investments. The PowerShares the Fund. Statements of fact are from
FTSE RAFI US 1000 Portfolio was a primary sources considered reliable, but A I M
detractor as it Advisors, Inc. makes no representation or
warranty as to their completeness or
accuracy. Although historical performance
is no guarantee of future results, these
insights may help you understand our ==========================================
investment management philosophy. For a discussion of the risks of investing
in your Fund and indexes used in this
See important Fund and index report, please turn to page 22.
disclosures later in this report. ==========================================
9
AIM Independence Funds
AIM Independence 2030 Fund management's discussion of Fund performance
=======================================================================================
PERFORMANCE SUMMARY rebalance the Fund's investments in
underlying funds to keep them within their
Since inception on 1/31/07, Class A shares of AIM Independence 2030 Fund returned 2.00% target weightings.
at net asset value (NAV) and underperformed both the broad market, represented by the
S&P 500 Index, and its style-specific index, the Custom Independence 2030 Index. The Market conditions and your Fund
Custom Independence 2030 Index approximates the performance of the types of holdings
owned by the Fund's underlying investments. Performance of select underlying funds Market volatility increased during 2007 as
within the large-cap domestic equity allocation was the primary contributor to subprime mortgage issues and record high
underperformance versus the style-specific index. oil prices fueled concerns that slower
economic growth and rising inflation would
Your Fund's long-term performance appears on page 19 of this report. reduce corporate profits.(1) Despite these
concerns most major market indexes
FUND VS. INDEXES finished the year with respectable
gains.(2)
Cumulative total returns, 1/31/07-12/31/07 at NAV. Performance shown does not include Across asset classes, international
applicable CDSC or front-end sales charges, which would have reduced performance. equities continued their trend of
outperforming domestic equities.(1) A weak
Class A Shares 2.00% U.S. dollar helped boost international
Class B Shares 1.42 equity returns.(2) As the dollar declined,
Class C Shares 1.42 large caps generally outperformed small
Class R Shares 1.78 caps as investors sought more exposure to
S&P 500 Index(triangle) (Broad Market Index) 3.92 global corporations with the ability to
Custom Independence 2030 Index(square) (Style-Specific Index) 4.82 leverage currency weakness through their
Lipper Mixed-Asset Target 2030 Funds Index(triangle) (Peer Group Index) 5.62 presence in foreign markets.(2) For the
most part, growth outperformed value as
SOURCES: (TRIANGLE)LIPPER INC.; (SQUARE)A I M MANAGEMENT GROUP INC., LIPPER INC. subprime issues weighed on financial
======================================================================================= stocks and real estate, both of which are
mostly found in value indexes.(2)
How we invest The Fund's investment strategy follows
a three-step process. The first step is to Largely in response to subprime
AIM Independence 2030 Fund is structured determine AIM Independence 2030 Fund's mortgage issues, the U.S. Federal Reserve
for investors whose target retirement date asset allocation strategy from among broad Board (the Fed) lowered its Federal Funds
is around the year 2030. The Fund invests asset classes based on the Fund's target target rate by 1% during the year with a
in 16 underlying products, including seven retirement date. The second step is to .50% cut in September and .25% cuts in
PowerShares--REGISTERED TRADEMARK-- select the underlying funds to be held by October and December.(3) These cuts served
exchange-traded funds and nine AIM mutual the Fund and to determine the target to help bonds generally outperform
funds. These investments include 14 equity weightings of such underlying funds. The equities for the fiscal year. For the most
products and two fixed-income products. third step is the ongoing monitoring of part, high quality bonds outperformed
The Fund operates under a target maturity the Fund's asset class allocations, lower quality bonds as investors
structure, which automatically underlying funds and target weightings.
redistributes holdings among the
underlying products to become more The portfolio management team monitors
conservative as the fund approaches the the selection of underlying funds to
target date. ensure that they continue to conform to
the Fund's asset class allocations and
will periodically
====================================================================================================================================
PORTFOLIO COMPOSITION TOTAL NET ASSETS
TARGET % OF TOTAL NET ASSETS
ASSET CLASS ALLOCATION AS OF 12/31/07 Total Net Assets $3.47 million
- ----------- ---------- ---------------------
Domestic Equity 55.00% 54.25%
Foreign Equity 21.00 20.70 The Fund purchases Institutional Class
High Yield Fixed Income 10.00 10.25 shares of the underlying mutual funds.
Investment Grade Fixed Income 10.00 10.19 Institutional Class shares have no sales
Real Estate 4.00 3.86 charge. The Fund's portfolio is subject to
Money Market Funds 0.00 4.56 change, and there is no assurance that the
Other Assets Less Liabilities 0.00 -3.81 Fund will continue to hold any particular
fund.
====================================================================================================================================
10
AIM Independence Funds
sought the safety of U.S. Treasury AIM Total Return Bond also detracted Gary Wendler
securities.(2) Longer maturity issues relative to the style-specific index due [WENDLER Director of Product
outperformed short maturity ones in in part to having a lower portfolio PHOTO] Strategy and Investment
response to interest rate reductions.(2) duration structure as the Fed cut interest Services, is manager of AIM
As with equities, foreign bonds generally rates. Independence 2030 Fund. He began his
outperformed domestic bonds due to the career in the investment industry in 1986
declining dollar.(2) Positive contributors to relative and joined AIM in 1995. Mr. Wendler earned
stylespecific index performance came a B.B.A in finance from Texas A&M
Eight of the Fund's 16 underlying primarily from AIM International Growth, University.
investments provided positive returns which benefited from performance trends in
during the fiscal year with the largest foreign equities and the growth style. AIM
contribution coming from domestic large Structured Growth and PowerShares Dynamic
cap growth equity, foreign equity and Large Cap Growth Portfolio were the
fixed income asset classes. AIM primary domestic equity relative
International Growth, AIM International performance contributors benefiting from
Core Equity and PowerShares International exposure to growth equities.
Dividend Achievers Portfolio were amongst
the largest absolute portfolio In the fourth quarter of 2007, the Fund
contributors and all represented foreign rebalanced its underlying holdings to the
equities. AIM Structured Growth and predetermined position along its asset
PowerShares Dynamic Large Cap Growth allocation glidepath, consistent with the
Portfolio were the primary domestic equity target maturity objective.
contributors as both were aided by the
resurgence in the growth style during We thank you for your continued
2007. AIM Total Return Bond benefited investment in AIM Independence 2030 Fund.
performance as bonds generally
outperformed equities.(2) Sources: (1) Bloomberg L.P.; (2) Lipper
Inc.; (3) Federal Reserve
Primary absolute detractors came from
real estate, small cap equity and value The views and opinions expressed in
styled equities. All of the portfolio's management's discussion of Fund
small cap strategies provided negative performance are those of A I M Advisors,
returns consistent with the market Inc. These views and opinions are subject
environment. PowerShares Dynamic Small Cap to change at any time based on factors
Value Portfolio was the single largest such as market and economic conditions.
absolute detractor as the fund was These views and opinions may not be relied
hindered by struggles involving both small upon as investment advice or
caps and value securities. AIM Global Real recommendations, or as an offer for a
Estate was the second largest detractor as particular security. The information is
real estate was one of the worst not a complete analysis of every aspect of
performing asset classes during 2007. any market, country, industry, security or
the Fund. Statements of fact are from
The Fund's Class A shares at NAV sources considered reliable, but A I M
underperformed its style-specific index, Advisors, Inc. makes no representation or
the Custom Independence 2030 Index, by warranty as to their completeness or
2.82% over the fiscal year. The primary accuracy. Although historical performance
detractors from this relative return came is no guarantee of future results, these
from select large cap domestic equity and insights may help you understand our
fixed income investments. The PowerShares investment management philosophy.
FTSE RAFI US 1000 Portfolio was a primary
detractor as it returned -1.09% over the See important Fund and index
fiscal year. AIM Diversified Dividend was disclosures later in this report.
another relative detractor. Both ==========================================
strategies underperformed as they avoided FOR A DISCUSSION OF THE RISKS OF INVESTING
high growth stocks with high valuations IN YOUR FUND AND INDEXES USED IN THIS
that on balance were more rewarded during REPORT, PLEASE TURN TO PAGE 22.
2007. ==========================================
11
AIM Independence Funds
AIM Independence 2040 Fund management's discussion of Fund performance
=======================================================================================
PERFORMANCE SUMMARY The portfolio management team monitors
the selection of underlying funds to
Since inception on 1/31/07, Class A shares of AIM Independence 2040 Fund returned 1.81% ensure that they continue to conform to
at net asset value (NAV) and underperformed both the broad market, represented by the the Fund's asset class allocations and
S&P 500 Index, and its style-specific index, the Custom Independence 2040 Index. The will periodically rebalance the Fund's
Custom Independence 2040 Index approximates the performance of the types of holdings investments in underlying funds to keep
owned by the Fund's underlying investments. Performance of select underlying funds them within their target weightings.
within the large-cap domestic equity allocation were the primary contributors to
underperformance versus the style-specific index. Market conditions and your Fund
Your Fund's long-term performance appears on page 20 of this report. Market volatility increased during 2007
as subprime mortgage issues and record
FUND VS. INDEXES high oil prices fueled concerns that
slower economic growth and rising
Cumulative total returns, 1/31/07-12/31/07 at NAV. Performance shown does not include inflation would reduce corporate
applicable CDSC or front-end sales charges, which would have reduced performance. profits.(1) Despite these concerns most
major market indexes finished the year
Class A Shares 1.81% with respectable gains.(2)
Class B Shares 1.15
Class C Shares 1.15 Across asset classes, international
Class R Shares 1.59 equities continued their trend of
S&P 500 Index(triangle) (Broad Market Index) 3.92 outperforming domestic equities.(1) A weak
Custom Independence 2040 Index(square) (Style-Specific Index) 4.58 U.S. dollar helped boost international
Lipper Mixed-Asset Target 2030+ Funds Index(triangle) (Peer Group Index) 5.22 equity returns.(2) As the dollar declined,
large caps generally outperformed small
SOURCES: (triangle)LIPPER INC.; (square)A I M MANAGEMENT GROUP INC., LIPPER INC. caps as investors sought more exposure to
======================================================================================= global corporations with the ability to
leverage currency weakness through their
How we invest conservative as the Fund approaches the presence in foreign markets.(2) For the
target date. most part, growth outperformed value as
AIM Independence 2040 Fund is structured subprime issues weighed on financial
for investors whose target retirement date The Fund's investment strategy follows stocks and real estate, both of which are
is around the year 2040. The Fund invests a three-step process. The first step is to mostly found in value indexes.(2)
in 16 underlying products, including seven determine AIM Independence 2040 Fund's
PowerShares--REGISTERED TRADEMARK-- asset allocation strategy from among broad Largely in response to subprime mortgage
exchange-traded funds and nine AIM mutual asset classes based on the Fund's target issues, the U.S. Federal Reserve Board
funds. These investments include 14 equity retirement date. The second step is to lowered its Federal Funds target rate by
products and two fixed-income products. select the underlying funds to be held by 1% during the
The Fund operates under a target maturity the Fund and to determine the target
structure, which automatically weightings of such underlying funds. The
redistributes holdings among the third step is the ongoing monitoring of
underlying products to become more the Fund's asset class allocations,
underlying funds and target weightings.
====================================================================================================================================
PORTFOLIO COMPOSITION TOTAL NET ASSETS
TARGET % OF TOTAL NET ASSETS
ASSET CLASS ALLOCATION AS OF 12/31/07 Total Net Assets $1.88 million
- ----------- ---------- ---------------------
Domestic Equity 60.80% 59.67%
Foreign Equity 23.32 22.94 The Fund purchases Institutional Class
High Yield Fixed Income 7.10 7.29 shares of the underlying mutual funds.
Investment Grade Fixed Income 4.20 4.29 Institutional Class shares have no sales
Real Estate 4.58 4.43 charge. The Fund's portfolio is subject to
Money Market Funds 0.00 1.00 change, and there is no assurance that the
Other Assets Less Liabilities 0.00 0.38 Fund will continue to hold any particular
fund.
====================================================================================================================================
12
AIM Independence Funds
year with a .50% cut in September and .25% underperformed as they avoided high growth Gary Wendler
cuts in October and December.(3) These stocks with high valuations that on [WENDLER Director of Product
cuts served to help bonds generally balance were more rewarded during 2007. PHOTO] Strategy and Investment
outperform equities for the fiscal Services, is manager of AIM
year.(2) For the most part, high quality Positive contributors to relative Independence 2040 Fund. He began his
bonds outperformed lower quality bonds as stylespecific index performance came career in the investment industry in 1986
investors sought the safety of U.S. primarily from AIM International Growth, and joined AIM in 1995. Mr. Wendler earned
Treasury securities.(2) Longer maturity which benefited from performance trends in a B.B.A in finance from Texas A&M
issues outperformed short maturity ones in foreign equities and the growth style. AIM University.
response to interest rate reductions.(2) Structured Growth and PowerShares Dynamic
As with equities, foreign bonds generally Large Cap Growth Portfolio were the
outperformed domestic bonds due to the primary domestic equity relative
declining dollar.(2) performance contributors benefiting from
exposure to growth equities.
Eight of the Fund's 16 underlying
investments provided positive returns In the fourth quarter of 2007, the Fund
during the fiscal year with the largest rebalanced its underlying holdings to the
contribution coming from domestic large predetermined position along its asset
cap growth equity and foreign equity asset allocation glidepath, consistent with the
classes. AIM International Growth, AIM target maturity objective.
International Core Equity and PowerShares
International Dividend Achievers Portfolio We thank you for your continued
were the three largest absolute portfolio investment in AIM Independence 2040 Fund.
contributors, and all represented foreign
equities. AIM Structured Growth and Sources: (1) Bloomberg L.P.; (2) Lipper
PowerShares Dynamic Large Cap Growth Inc.; (3) Federal Reserve
Portfolio were the primary domestic equity
contributors as both were aided by the The views and opinions expressed in
resurgence in the growth style during management's discussion of Fund
2007. performance are those of A I M Advisors,
Inc. These views and opinions are subject
Primary absolute detractors came from to change at any time based on factors
real estate, small cap equity and value such as market and economic conditions.
styled equities. All of the portfolio's These views and opinions may not be relied
small cap strategies provided negative upon as investment advice or
returns consistent with the market recommendations, or as an offer for a
environment. PowerShares Dynamic Small Cap particular security. The information is
Value Portfolio was the single largest not a complete analysis of every aspect of
absolute detractor as the fund was any market, country, industry, security or
hindered by struggles involving both small the Fund. Statements of fact are from
caps and value securities. AIM Global Real sources considered reliable, but A I M
Estate was the second largest detractor as Advisors, Inc. makes no representation or
real estate was one of the worst warranty as to their completeness or
performing asset classes during 2007. accuracy. Although historical performance
is no guarantee of future results, these
The Fund's Class A shares at NAV insights may help you understand our
underperformed its style-specific index, investment management philosophy.
the Custom Independence 2040 Index, by
2.77% over the fiscal year. The primary See important Fund and index
detractors from this relative return came disclosures later in this report.
from select large cap domestic equity
investments. The PowerShares FTSE RAFI US ==========================================
1000 Portfolio was a primary detractor as FOR A DISCUSSION OF THE RISKS OF INVESTING
it returned -1.09% over the fiscal year. IN YOUR FUND AND INDEXES USED IN THIS
AIM Diversified Dividend was another REPORT, PLEASE TURN TO PAGE 22.
relative detractor. Both strategies ==========================================
13
AIM Independence Funds
AIM Independence 2050 Fund
management's discussion of Fund performance
=======================================================================================
PERFORMANCE SUMMARY The portfolio management team monitors
the selection of underlying funds to
Since inception on 1/31/07, Class A shares of AIM Independence 2050 Fund returned 1.55% ensure that they continue to conform to
at net asset value (NAV) and underperformed both the broad market, represented by the the Fund's asset class allocations and
S&P 500 Index, and its style-specific index, the Custom Independence 2050 Index. The will periodically rebalance the Fund's
Custom Independence 2050 Index approximates the performance of the types of holdings investments in underlying funds to keep
owned by the Fund's underlying investments. Performance of select underlying funds them within their target weightings.
within the large-cap domestic equity allocation were the primary contributors to
underperformance versus the style-specific index. Market conditions and your Fund
Your Fund's long-term performance appears on page 21 of this report. Market volatility increased during 2007 as
subprime mortgage issues and record high
FUND VS. INDEXES oil prices fueled concerns that slower
economic growth and rising inflation would
Cumulative total returns, 1/31/07-12/31/07 at NAV. Performance shown does not include reduce corporate profits.(1) Despite these
applicable CDSC or front-end sales charges, which would have reduced performance. concerns most major market indexes
finished the year with respectable
Class A Shares 1.55% gains.(2)
Class B Shares 0.80
Class C Shares 0.90 Across asset classes, international
Class R Shares 1.29 equities continued their trend of
S&P 500 Index(triangle) (Broad Market Index) 3.92 outperforming domestic equities.(1) A weak
Custom Independence 2050 Index(square) (Style-Specific Index) 4.41 U.S. dollar helped boost international
Lipper Mixed-Asset Target 2030+ Funds Index(triangle) (Peer Group Index) 5.22 equity returns.(2) As the dollar declined,
large caps generally outperformed small
SOURCES: (TRIANGLE)LIPPER INC.; (SQUARE)A I M MANAGEMENT GROUP INC., LIPPER INC. caps as investors sought more exposure to
======================================================================================= global corporations with the ability to
leverage currency weakness through their
How we invest conservative as the Fund approaches the presence in foreign markets.(2) For the
target date. most part, growth outperformed value as
AIM Independence 2050 Fund is structured subprime issues weighed on financial
for investors whose target retirement date The Fund's investment strategy follows stocks and real estate, both of which are
is around the year 2050. The Fund invests a three-step process. The first step is to mostly found in value indexes.(2)
in 15 underlying products, including seven determine AIM Independence 2050 Fund's
PowerShares--REGISTERED TRADEMARK-- asset allocation strategy from among broad Largely in response to subprime
exchange-traded funds and eight AIM mutual asset classes based on the Fund's target mortgage issues, the U.S. Federal Reserve
funds. These investments include 14 equity retirement date. The second step is to Board lowered its Federal Funds target
products and one fixed-income product. The select the underlying funds to be held by rate by 1% during the
Fund operates under a target maturity the fund and to determine the target
structure, which automatically weightings of such underlying funds. The
redistributes holdings among the third step is the ongoing monitoring of
underlying products to become more the Fund's asset class allocations,
underlying funds and target weightings.
====================================================================================================================================
PORTFOLIO COMPOSITION TOTAL NET ASSETS
TARGET % OF TOTAL NET ASSETS
ASSET CLASS ALLOCATION AS OF 12/31/07 Total Net Assets $1.71 million
- ----------- ---------- ---------------------
Domestic Equity 65.00 65.22%
Foreign Equity 25.00 25.07 The Fund purchases Institutional Class
High Yield Fixed Income 5.00 5.21 shares of the underlying mutual funds.
Investment Grade Fixed Income 0.00 0.00 Institutional Class shares have no sales
Real Estate 5.00 4.92 charge. The Fund's portfolio is subject to
Money Market Fund 0.00 1.02 change, and there is no assurance that the
Other Assets Less Liabilities 0.00 -1.44 Fund will continue to hold any particular
fund.
====================================================================================================================================
14
AIM Independence Funds
year with a .50% cut in September and .25% underperformed as they avoided high growth Gary Wendler
cuts in October and December.(3) These stocks with high valuations that on [WENDLER Director of Product
cuts served to help bonds generally balance were more rewarded during 2007. PHOTO] Strategy and Investment
outperform equities for the fiscal Services, is manager of AIM
year.(2) For the most part, high quality Positive contributors to relative Independence 2050 Fund. He began his
bonds outperformed lower quality bonds as stylespecific index performance came career in the investment industry in 1986
investors sought the safety of U.S. primarily from AIM International Growth, and joined AIM in 1995. Mr. Wendler earned
Treasury securities.(2) Longer maturity which benefited from performance trends in a B.B.A in finance from Texas A&M
issues generally outperformed short foreign equities and the growth style. AIM University.
maturity ones in response to interest rate Structured Growth and PowerShares Dynamic
reductions.(2) As with equities, foreign Large Cap Growth Portfolio were the
bonds generally outperformed domestic primary domestic equity relative
bonds due to the declining dollar.(2) performance contributors benefiting from
exposure to growth equities.
Seven of the Fund's 15 underlying
investments provided positive returns In the fourth quarter of 2007, the Fund
during the fiscal year with the largest rebalanced its underlying holdings to the
contribution coming from domestic large predetermined position along its asset
cap growth equity and foreign equity asset allocation glidepath, consistent with the
classes. AIM International Growth, AIM target maturity objective.
International Core Equity and PowerShares
International Dividend Achievers Portfolio We thank you for your continued
were the three largest absolute portfolio investment in AIM Independence 2050 Fund.
contributors, and all represented foreign
equities. AIM Structured Growth and Sources: (1) Bloomberg L.P.; (2) Lipper
PowerShares Dynamic Large Cap Growth Inc.; (3) Federal Reserve
Portfolio were the primary domestic equity
contributors as both were aided by the The views and opinions expressed in
resurgence in the growth style during management's discussion of Fund
2007. performance are those of A I M Advisors,
Inc. These views and opinions are subject
Primary absolute detractors came from to change at any time based on factors
real estate, small cap equity and value such as market and economic conditions.
styled equities. All of the portfolio's These views and opinions may not be relied
small cap strategies provided negative upon as investment advice or
returns consistent with the market recommendations, or as an offer for a
environment. PowerShares Dynamic Small Cap particular security. The information is
Value Portfolio was the single largest not a complete analysis of every aspect of
absolute detractor as the fund was any market, country, industry, security or
hindered by struggles involving both small the Fund. Statements of fact are from
caps and value securities. AIM Global Real sources considered reliable, but A I M
Estate was the second largest detractor as Advisors, Inc. makes no representation or
real estate was one of the worst warranty as to their completeness or
performing asset classes during 2007. accuracy. Although historical performance
is no guarantee of future results, these
The Fund's Class A shares at NAV insights may help you understand our
underperformed its style-specific index, investment management philosophy.
the Custom Independence 2050 Index by
2.86% over the fiscal year. The primary See important Fund and index
detractors from this relative return came disclosures later in this report.
from select large cap domestic equity
investments. The PowerShares FTSE RAFI US ==========================================
1000 Portfolio was a primary detractor as FOR A DISCUSSION OF THE RISKS OF INVESTING
it returned -1.09% over the fiscal year. IN YOUR FUND AND INDEXES USED IN
AIM Diversified Dividend was another THIS REPORT, PLEASE TURN TO PAGE 22.
relative detractor. Both strategies ==========================================
15
AIM Independence Funds
AIM Independence Now Fund long-term performance
Past performance cannot guarantee investment in the Fund at the close of the not. Performance shown in the chart and
comparable future results. reporting period and paid the applicable table(s) does not reflect deduction of
contingent deferred sales charges. Index taxes a shareholder would pay on Fund
The data shown in the chart include results include reinvested dividends, but distributions or sale of Fund shares.
reinvested distributions, applicable sales they do not reflect sales charges. Performance of the indexes does not
charges, Fund expenses and management Performance of an index of funds reflects reflect the effects of taxes.
fees. Results for Class B shares are fund expenses and management fees;
calculated as if a hypothetical performance of a market index does
shareholder had liquidated his entire
====================================================================================================================================
CUMULATIVE TOTAL RETURNS WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN 5% BEGINNING AT THE TIME OF PURCHASE TO 0%
OR LOSS WHEN YOU SELL SHARES. AT THE BEGINNING OF THE SEVENTH YEAR. THE
As of 12/31/07, including maximum CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
applicable sales charges THE NET ANNUAL FUND OPERATING EXPENSE YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
RATIO SET FORTH IN THE MOST RECENT FUND HAVE A FRONTEND SALES CHARGE; RETURNS
CLASS A SHARES PROSPECTUS AS OF THE DATE OF THIS REPORT SHOWN ARE AT NET ASSET VALUE AND DO NOT
Inception (1/31/07) -2.19% FOR CLASS A, CLASS B, CLASS C AND CLASS R REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
SHARES WAS 1.10%, 1.85%, 1.85% AND 1.35%, ON A TOTAL REDEMPTION OF RETIREMENT PLAN
CLASS B SHARES RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND ASSETS WITHIN THE FIRST YEAR.
Inception (1/31/07) -2.09% OPERATING EXPENSE RATIO SET FORTH IN THE
MOST RECENT FUND PROSPECTUS AS OF THE DATE THE PERFORMANCE OF THE FUND'S SHARE
CLASS C SHARES OF THIS REPORT FOR CLASS A, CLASS B, CLASS CLASSES WILL DIFFER PRIMARILY DUE TO
Inception (1/31/07) 1.82% C AND CLASS R SHARES WAS 3.50%, 4.25%, DIFFERENT SALES CHARGE STRUCTURES AND
4.25% AND 3.75%, RESPECTIVELY.(2) THE CLASS EXPENSES.
CLASS R SHARES EXPENSE RATIOS PRESENTED ABOVE MAY VARY
Inception (1/31/07) 3.21% FROM THE EXPENSE RATIOS PRESENTED IN OTHER HAD THE ADVISOR NOT WAIVED FEES AND/OR
========================================== SECTIONS OF THIS REPORT THAT ARE BASED ON REIMBURSED EXPENSES, PERFORMANCE WOULD
EXPENSES INCURRED DURING THE PERIOD HAVE BEEN LOWER.
THE PERFORMANCE DATA QUOTED REPRESENT COVERED BY THIS REPORT.
PAST PERFORMANCE AND CANNOT GUARANTEE (1)Total annual operating expenses less
COMPARABLE FUTURE RESULTS; CURRENT CLASS A SHARE PERFORMANCE REFLECTS THE any contractual fee waivers and/or expense
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE MAXIMUM 5.50% SALES CHARGE, AND CLASS B reimbursements by the advisor in effect
VISIT AIMINVESTMENTS.COM FOR THE MOST AND CLASS C SHARE PERFORMANCE REFLECTS THE through at least June 30, 2008. See
RECENT MONTH-END PERFORMANCE. PERFORMANCE APPLICABLE CONTINGENT DEFERRED SALES current prospectus for more information
FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
CHANGES IN NET ASSET VALUE AND THE EFFECT CDSC ON CLASS B SHARES DECLINES FROM (2)The expense ratio includes acquired
OF THE MAXIMUM SALES CHARGE UNLESS fund fees and expenses of the underlying
OTHERWISE STATED. INVESTMENT RETURN AND funds in which the Fund invests of 0.69%
PRINCIPAL VALUE for Class A, B, C and R shares of AIM
Independence Now Fund.
16
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Fund and index data from 1/31/07
AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE CUSTOM LIPPER MIXED-ASSET
NOW FUND-CLASS NOW FUND-CLASS NOW FUND-CLASS NOW FUND-CLASS S&P 500 INDEPENDENCE TARGET CONSERVATIVE
DATE A SHARES B SHARES C SHARES R SHARES INDEX(1) NOW INDEX(2) FUNDS INDEX(1)
1/31/07 $9450 $10000 $10000 $10000 $10000 $10,000 $10000
2/07 9469 10010 10010 10020 9805 10054 10041
3/07 9547 10095 10095 10097 9914 10103 10103
4/07 9690 10246 10246 10258 10353 10285 10269
5/07 9775 10325 10325 10338 10714 10364 10350
6/07 9719 10257 10257 10273 10536 10284 10271
7/07 9595 10126 10126 10151 10210 10207 10210
8/07 9662 10187 10187 10212 10363 10315 10260
9/07 9819 10343 10332 10372 10750 10515 10473
10/07 9943 10464 10464 10503 10921 10657 10607
11/07 9789 10301 10292 10341 10464 10593 10521
12/07 9781 9791 10182 10321 10392 10580 10503
====================================================================================================================================
Sources: (1)Lipper Inc., (2)A I M Management Group Inc., Lipper Inc.
AIM Independence Funds
AIM Independence 2010 Fund long-term performance
Past performance cannot guarantee investment in the Fund at the close of the does not. Performance shown in the chart
comparable future results. reporting period and paid the applicable and table(s) does not reflect deduction of
contingent deferred sales charges. Index taxes a shareholder would pay on Fund
The data shown in the chart include results include reinvested dividends, but distributions or sale of Fund shares.
reinvested distributions, applicable sales they do not reflect sales charges. Performance of the indexes does not
charges, Fund expenses and management Performance of an index of funds reflects reflect the effects of taxes.
fees. Results for Class B shares are fund expenses and management fees;
calculated as if a hypothetical performance of a market index
shareholder had liquidated his entire
====================================================================================================================================
CUMULATIVE TOTAL RETURNS WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN 5% BEGINNING AT THE TIME OF PURCHASE TO 0%
OR LOSS WHEN YOU SELL SHARES. AT THE BEGINNING OF THE SEVENTH YEAR. THE
As of 12/31/07, including maximum CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
applicable sales charges THE NET ANNUAL FUND OPERATING EXPENSE YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
RATIO SET FORTH IN THE MOST RECENT FUND HAVE A FRONTEND SALES CHARGE; RETURNS
CLASS A SHARES PROSPECTUS AS OF THE DATE OF THIS REPORT SHOWN ARE AT NET ASSET VALUE AND DO NOT
Inception (1/31/07) -2.02% FOR CLASS A, CLASS B, CLASS C AND CLASS R REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
SHARES WAS 1.15%, 1.90%, 1.90% AND 1.40%, ON A TOTAL REDEMPTION OF RETIREMENT PLAN
CLASS B SHARES RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND ASSETS WITHIN THE FIRST YEAR.
Inception (1/31/07) -2.06% OPERATING EXPENSE RATIO SET FORTH IN THE
MOST RECENT FUND PROSPECTUS AS OF THE DATE THE PERFORMANCE OF THE FUND'S SHARE
CLASS C SHARES OF THIS REPORT FOR CLASS A, CLASS B, CLASS CLASSES WILL DIFFER PRIMARILY DUE TO
Inception (1/31/07) 2.02% C AND CLASS R SHARES WAS 2.03%, 2.78%, DIFFERENT SALES CHARGE STRUCTURES AND
2.78% AND 2.28%, RESPECTIVELY.(2) THE CLASS EXPENSES.
CLASS R SHARES EXPENSE RATIOS PRESENTED ABOVE MAY VARY
Inception (1/31/07) 3.41% FROM THE EXPENSE RATIOS PRESENTED IN OTHER HAD THE ADVISOR NOT WAIVED FEES AND/OR
========================================== SECTIONS OF THIS REPORT THAT ARE BASED ON REIMBURSED EXPENSES, PERFORMANCE WOULD
EXPENSES INCURRED DURING THE PERIOD HAVE BEEN LOWER.
THE PERFORMANCE DATA QUOTED REPRESENT COVERED BY THIS REPORT.
PAST PERFORMANCE AND CANNOT GUARANTEE (1)Total annual operating expenses less
COMPARABLE FUTURE RESULTS; CURRENT CLASS A SHARE PERFORMANCE REFLECTS THE any contractual fee waivers and/or expense
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE MAXIMUM 5.50% SALES CHARGE, AND CLASS B reimbursements by the advisor in effect
VISIT AIMINVESTMENTS.COM FOR THE MOST AND CLASS C SHARE PERFORMANCE REFLECTS THE through at least June 30, 2008. See
RECENT MONTH-END PERFORMANCE. PERFORMANCE APPLICABLE CONTINGENT DEFERRED SALES current prospectus for more information
FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
CHANGES IN NET ASSET VALUE AND THE EFFECT CDSC ON CLASS B SHARES DECLINES FROM (2)The expense ratio includes acquired
OF THE MAXIMUM SALES CHARGE UNLESS fund fees and expenses of the underlying
OTHERWISE STATED. INVESTMENT RETURN AND funds in which the Fund invests of 0.73%
PRINCIPAL VALUE for Class A, B, C and R shares of AIM
Independence 2010 Fund.
17
AIM Independence Funds
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Fund and index data from 1/31/07
AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE CUSTOM LIPPER MIXED-ASSET
2010 FUND-CLASS 2010 FUND-CLASS 2010 FUND-CLASS 2010 FUND-CLASS S&P 500 INDEPENDENCE TARGET 2010
DATE A SHARES B SHARES C SHARES R SHARES INDEX(1) 2010 INDEX(2) FUNDS INDEX(1)
1/31/07 $9450 $10000 $10000 $10000 $10000 $10000 $10000
2/07 9459 10010 10010 10010 9805 10046 10001
3/07 9564 10110 10110 10110 9914 10102 10067
4/07 9715 10270 10270 10280 10353 10303 10297
5/07 9819 10369 10369 10380 10714 10397 10440
6/07 9753 10290 10290 10310 10536 10309 10354
7/07 9611 10130 10139 10161 10210 10216 10251
8/07 9668 10190 10189 10221 10363 10323 10302
9/07 9838 10359 10358 10400 10750 10543 10564
10/07 9980 10508 10507 10550 10921 10695 10741
11/07 9810 10319 10318 10360 10464 10606 10550
12/07 9798 9794 10202 10341 10392 10585 10512
====================================================================================================================================
Sources: (1)Lipper Inc., (2)A I M Management Group Inc., Lipper Inc.
AIM Independence Funds
AIM Independence 2020 Fund long-term performance
Past performance cannot guarantee investment in the Fund at the close of the does not. Performance shown in the chart
comparable future results. reporting period and paid the applicable and table(s) does not reflect deduction of
contingent deferred sales charges. Index taxes a shareholder would pay on Fund
The data shown in the chart include results include reinvested dividends, but distributions or sale of Fund shares.
reinvested distributions, applicable sales they do not reflect sales charges. Performance of the indexes does not
charges, Fund expenses and management Performance of an index of funds reflects reflect the effects of taxes.
fees. Results for Class B shares are fund expenses and management fees;
calculated as if a hypothetical performance of a market index
shareholder had liquidated his entire
====================================================================================================================================
CUMULATIVE TOTAL RETURNS WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN 5% BEGINNING AT THE TIME OF PURCHASE TO 0%
OR LOSS WHEN YOU SELL SHARES. AT THE BEGINNING OF THE SEVENTH YEAR. THE
As of 12/31/07, including maximum CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
applicable sales charges THE NET ANNUAL FUND OPERATING EXPENSE YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
RATIO SET FORTH IN THE MOST RECENT FUND HAVE A FRONTEND SALES CHARGE; RETURNS
CLASS A SHARES PROSPECTUS AS OF THE DATE OF THIS REPORT SHOWN ARE AT NET ASSET VALUE AND DO NOT
Inception (1/31/07) -3.22% FOR CLASS A, CLASS B, CLASS C AND CLASS R REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
SHARES WAS 1.25%, 2.00%, 2.00% AND 1.50%, ON A TOTAL REDEMPTION OF RETIREMENT PLAN
CLASS B SHARES RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND ASSETS WITHIN THE FIRST YEAR.
Inception (1/31/07) -3.27% OPERATING EXPENSE RATIO SET FORTH IN THE
MOST RECENT FUND PROSPECTUS AS OF THE DATE THE PERFORMANCE OF THE FUND'S SHARE
CLASS C SHARES OF THIS REPORT FOR CLASS A, CLASS B, CLASS CLASSES WILL DIFFER PRIMARILY DUE TO
Inception (1/31/07) 0.69% C AND CLASS R SHARES WAS 1.42%, 2.17%, DIFFERENT SALES CHARGE STRUCTURES AND
2.17% AND 1.67%, RESPECTIVELY.(2) THE CLASS EXPENSES.
CLASS R SHARES EXPENSE RATIOS PRESENTED ABOVE MAY VARY
Inception (1/31/07) 2.19% FROM THE EXPENSE RATIOS PRESENTED IN OTHER HAD THE ADVISOR NOT WAIVED FEES AND/OR
========================================== SECTIONS OF THIS REPORT THAT ARE BASED ON REIMBURSED EXPENSES, PERFORMANCE WOULD
EXPENSES INCURRED DURING THE PERIOD HAVE BEEN LOWER.
THE PERFORMANCE DATA QUOTED REPRESENT COVERED BY THIS REPORT.
PAST PERFORMANCE AND CANNOT GUARANTEE (1)Total annual operating expenses less
COMPARABLE FUTURE RESULTS; CURRENT CLASS A SHARE PERFORMANCE REFLECTS THE any contractual fee waivers and/or expense
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE MAXIMUM 5.50% SALES CHARGE, AND CLASS B reimbursements by the advisor in effect
VISIT AIMINVESTMENTS.COM FOR THE MOST AND CLASS C SHARE PERFORMANCE REFLECTS THE through at least June 30, 2008. See
RECENT MONTH-END PERFORMANCE. PERFORMANCE APPLICABLE CONTINGENT DEFERRED SALES current prospectus for more information
FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
CHANGES IN NET ASSET VALUE AND THE EFFECT CDSC ON CLASS B SHARES DECLINES FROM (2)The expense ratio includes acquired
OF THE MAXIMUM SALES CHARGE UNLESS fund fees and expenses of the underlying
OTHERWISE STATED. INVESTMENT RETURN AND funds in which the Fund invests of 0.76%
PRINCIPAL VALUE for Class A, B, C and R shares of AIM
Independence 2020 Fund.
18
AIM Independence Funds
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Fund and index data from 1/31/07
AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE CUSTOM LIPPER MIXED-ASSET
2020 FUND-CLASS 2020 FUND-CLASS 2020 FUND-CLASS 2020 FUND-CLASS S&P 500 INDEPENDENCE TARGET 2020
DATE A SHARES B SHARES C SHARES R SHARES INDEX(1) 2020 INDEX(2) FUNDS INDEX(1)
1/31/07 $9450 $10000 $10000 $10000 $10000 $10000 $10000
2/07 9431 9980 9980 9980 9805 10008 9974
3/07 9554 10090 10100 10110 9914 10094 10046
4/07 9761 10310 10309 10319 10353 10357 10293
5/07 9921 10470 10469 10488 10714 10517 10481
6/07 9808 10340 10339 10369 10536 10397 10363
7/07 9573 10091 10090 10119 10210 10231 10219
8/07 9648 10160 10159 10199 10363 10325 10310
9/07 9875 10390 10399 10428 10750 10622 10591
10/07 10064 10589 10588 10627 10921 10815 10803
11/07 9743 10240 10239 10288 10464 10595 10569
12/07 9678 9673 10069 10219 10392 10527 10502
====================================================================================================================================
Sources: (1)Lipper Inc., (2)A I M Management Group Inc., Lipper Inc.
AIM Independence Funds
AIM Independence 2030 Fund long-term performance
Past performance cannot guarantee investment in the Fund at the close of the does not. Performance shown in the chart
comparable future results. reporting period and paid the applicable and table(s) does not reflect deduction of
contingent deferred sales charges. Index taxes a shareholder would pay on Fund
The data shown in the chart include results include reinvested dividends, but distributions or sale of Fund shares.
reinvested distributions, applicable sales they do not reflect sales charges. Performance of the indexes does not
charges, Fund expenses and management Performance of an index of funds reflects reflect the effects of taxes.
fees. Results for Class B shares are fund expenses and management fees;
calculated as if a hypothetical performance of a market index
shareholder had liquidated his entire
====================================================================================================================================
CUMULATIVE TOTAL RETURNS WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN 5% BEGINNING AT THE TIME OF PURCHASE TO 0%
OR LOSS WHEN YOU SELL SHARES. AT THE BEGINNING OF THE SEVENTH YEAR. THE
As of 12/31/07, including maximum CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
applicable sales charges THE NET ANNUAL FUND OPERATING EXPENSE YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
RATIO SET FORTH IN THE MOST RECENT FUND HAVE A FRONTEND SALES CHARGE; RETURNS
CLASS A SHARES PROSPECTUS AS OF THE DATE OF THIS REPORT SHOWN ARE AT NET ASSET VALUE AND DO NOT
Inception (1/31/07) -3.58% FOR CLASS A, CLASS B, CLASS C AND CLASS R REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
SHARES WAS 1.25%, 2.00%, 2.00% AND 1.50%, ON A TOTAL REDEMPTION OF RETIREMENT PLAN
CLASS B SHARES RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND ASSETS WITHIN THE FIRST YEAR.
Inception (1/31/07) -3.51% OPERATING EXPENSE RATIO SET FORTH IN THE
MOST RECENT FUND PROSPECTUS AS OF THE DATE THE PERFORMANCE OF THE FUND'S SHARE
CLASS C SHARES OF THIS REPORT FOR CLASS A, CLASS B, CLASS CLASSES WILL DIFFER PRIMARILY DUE TO
Inception (1/31/07) 0.43% C AND CLASS R SHARES WAS 1.62%, 2.37%, DIFFERENT SALES CHARGE STRUCTURES AND
2.37% AND 1.87%, RESPECTIVELY.(2) THE CLASS EXPENSES.
CLASS R SHARES EXPENSE RATIOS PRESENTED ABOVE MAY VARY
Inception (1/31/07) 1.78% FROM THE EXPENSE RATIOS PRESENTED IN OTHER HAD THE ADVISOR NOT WAIVED FEES AND/OR
========================================== SECTIONS OF THIS REPORT THAT ARE BASED ON REIMBURSED EXPENSES, PERFORMANCE WOULD
EXPENSES INCURRED DURING THE PERIOD HAVE BEEN LOWER.
THE PERFORMANCE DATA QUOTED REPRESENT COVERED BY THIS REPORT.
PAST PERFORMANCE AND CANNOT GUARANTEE (1)Total annual operating expenses less
COMPARABLE FUTURE RESULTS; CURRENT CLASS A SHARE PERFORMANCE REFLECTS THE any contractual fee waivers and/or expense
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE MAXIMUM 5.50% SALES CHARGE, AND CLASS B reimbursements by the advisor in effect
VISIT AIMINVESTMENTS.COM FOR THE MOST AND CLASS C SHARE PERFORMANCE REFLECTS THE through at least June 30, 2008. See
RECENT MONTH-END PERFORMANCE. PERFORMANCE APPLICABLE CONTINGENT DEFERRED SALES current prospectus for more information
FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
CHANGES IN NET ASSET VALUE AND THE EFFECT CDSC ON CLASS B SHARES DECLINES FROM (2)The expense ratio includes acquired
OF THE MAXIMUM SALES CHARGE UNLESS fund fees and expenses of the underlying
OTHERWISE STATED. INVESTMENT RETURN AND funds in which the Fund invests of 0.76%
PRINCIPAL VALUE for Class A, B, C and R shares of AIM
Independence 2030 Fund.
19
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Fund and index data from 1/31/07
AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE CUSTOM LIPPER MIXED-ASSET
2030 FUND-CLASS 2030 FUND-CLASS 2030 FUND-CLASS 2030 FUND-CLASS S&P 500 INDEPENDENCE TARGET 2030
DATE A SHARES B SHARES C SHARES R SHARES INDEX(1) 2030 INDEX(2) FUNDS INDEX(1)
1/31/07 $ 9450 $10000 $10000 $10000 $10000 $10000 $10000
2/07 9384 9930 9930 9930 9805 9960 9943
3/07 9554 10100 10090 10100 9914 10074 10048
4/07 9809 10369 10359 10380 10353 10404 10405
5/07 10054 10609 10609 10629 10714 10641 10691
6/07 9912 10459 10459 10479 10536 10494 10567
7/07 9610 10130 10130 10150 10210 10254 10380
8/07 9694 10210 10210 10239 10363 10338 10408
9/07 9949 10490 10490 10519 10750 10704 10792
10/07 10176 10719 10719 10748 10921 10931 11067
11/07 9733 10240 10240 10269 10464 10583 10654
12/07 9642 9649 10043 10178 10392 10482 10562
====================================================================================================================================
Sources: (1)Lipper Inc., (2)A I M Management Group Inc., Lipper Inc.
AIM Independence Funds
AIM Independence 2040 Fund long-term performance
Past performance cannot guarantee investment in the Fund at the close of the does not. Performance shown in the chart
comparable future results. reporting period and paid the applicable and table(s) does not reflect deduction of
contingent deferred sales charges. Index taxes a shareholder would pay on Fund
The data shown in the chart include results include reinvested dividends, but distributions or sale of Fund shares.
reinvested distributions, applicable sales they do not reflect sales charges. Performance of the indexes does not
charges, Fund expenses and management Performance of an index of funds reflects reflect the effects of taxes.
fees. Results for Class B shares are fund expenses and management fees;
calculated as if a hypothetical performance of a market index
shareholder had liquidated his entire
====================================================================================================================================
CUMULATIVE TOTAL RETURNS WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN 5% BEGINNING AT THE TIME OF PURCHASE TO 0%
OR LOSS WHEN YOU SELL SHARES. AT THE BEGINNING OF THE SEVENTH YEAR. THE
As of 12/31/07, including maximum CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
applicable sales charges THE NET ANNUAL FUND OPERATING EXPENSE YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
RATIO SET FORTH IN THE MOST RECENT FUND HAVE A FRONTEND SALES CHARGE; RETURNS
CLASS A SHARES PROSPECTUS AS OF THE DATE OF THIS REPORT SHOWN ARE AT NET ASSET VALUE AND DO NOT
Inception (1/31/07) -3.76% FOR CLASS A, CLASS B, CLASS C AND CLASS R REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
SHARES WAS 1.30%, 2.05%, 2.05% AND 1.55%, ON A TOTAL REDEMPTION OF RETIREMENT PLAN
CLASS B SHARES RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND ASSETS WITHIN THE FIRST YEAR.
Inception (1/31/07) -3.74% OPERATING EXPENSE RATIO SET FORTH IN THE
MOST RECENT FUND PROSPECTUS AS OF THE DATE THE PERFORMANCE OF THE FUND'S SHARE
CLASS C SHARES OF THIS REPORT FOR CLASS A, CLASS B, CLASS CLASSES WILL DIFFER PRIMARILY DUE TO
Inception (1/31/07) 0.17% C AND CLASS R SHARES WAS 2.07%, 2.82%, DIFFERENT SALES CHARGE STRUCTURES AND
2.82% AND 2.32%, RESPECTIVELY.(2) THE CLASS EXPENSES.
CLASS R SHARES EXPENSE RATIOS PRESENTED ABOVE MAY VARY
Inception (1/31/07) 1.59% FROM THE EXPENSE RATIOS PRESENTED IN OTHER HAD THE ADVISOR NOT WAIVED FEES AND/OR
========================================== SECTIONS OF THIS REPORT THAT ARE BASED ON REIMBURSED EXPENSES, PERFORMANCE WOULD
EXPENSES INCURRED DURING THE PERIOD HAVE BEEN LOWER.
THE PERFORMANCE DATA QUOTED REPRESENT COVERED BY THIS REPORT.
PAST PERFORMANCE AND CANNOT GUARANTEE (1)Total annual operating expenses less
COMPARABLE FUTURE RESULTS; CURRENT CLASS A SHARE PERFORMANCE REFLECTS THE any contractual fee waivers and/or expense
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE MAXIMUM 5.50% SALES CHARGE, AND CLASS B reimbursements by the advisor in effect
VISIT AIMINVESTMENTS.COM FOR THE MOST AND CLASS C SHARE PERFORMANCE REFLECTS THE through at least June 30, 2008. See
RECENT MONTH-END PERFORMANCE. PERFORMANCE APPLICABLE CONTINGENT DEFERRED SALES current prospectus for more information
FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
CHANGES IN NET ASSET VALUE AND THE EFFECT CDSC ON CLASS B SHARES DECLINES FROM (2)The expense ratio includes acquired
OF THE MAXIMUM SALES CHARGE UNLESS fund fees and expenses of the underlying
OTHERWISE STATED. INVESTMENT RETURN AND funds in which the Fund invests of 0.77%
PRINCIPAL VALUE for Class A, B, C and R shares of AIM
Independence 2040 Fund.
20
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Fund and index data from 1/31/07
AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE CUSTOM LIPPER MIXED-ASSET
2040 FUND-CLASS 2040 FUND-CLASS 2040 FUND-CLASS 2040 FUND-CLASS S&P 500 INDEPENDENCE TARGET 2040
DATE A SHARES B SHARES C SHARES R SHARES INDEX(1) 2040 INDEX(2) FUNDS INDEX(1)
1/31/07 $9450 $10000 $10000 $10000 $10000 $10000 $10000
2/07 9365 9900 9900 9910 9805 9940 9926
3/07 9525 10069 10069 10070 9914 10065 10053
4/07 9808 10368 10358 10379 10353 10424 10409
5/07 10072 10638 10638 10658 10714 10694 10745
6/07 9931 10478 10478 10498 10536 10534 10612
7/07 9591 10119 10119 10139 10210 10261 10334
8/07 9685 10209 10199 10229 10363 10341 10382
9/07 9958 10489 10489 10519 10750 10738 10806
10/07 10203 10748 10738 10779 10921 10980 11099
11/07 9723 10229 10229 10270 10464 10574 10615
12/07 9624 9626 10017 10159 10392 10458 10522
====================================================================================================================================
Sources: (1)Lipper Inc., (2)A I M Management Group Inc., Lipper Inc.
AIM Independence Funds
AIM Independence 2050 Fund long-term performance
Past performance cannot guarantee investment in the Fund at the close of the does not. Performance shown in the chart
comparable future results. reporting period and paid the applicable and table(s) does not reflect deduction of
contingent deferred sales charges. Index taxes a shareholder would pay on Fund
The data shown in the chart include results include reinvested dividends, but distributions or sale of Fund shares.
reinvested distributions, applicable sales they do not reflect sales charges. Performance of the indexes does not
charges, Fund expenses and management Performance of an index of funds reflects reflect the effects of taxes
fees. Results for Class B shares are fund expenses and management fees;
calculated as if a hypothetical performance of a market index
shareholder had liquidated his entire
====================================================================================================================================
CUMULATIVE TOTAL RETURNS WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN 5% BEGINNING AT THE TIME OF PURCHASE TO 0%
OR LOSS WHEN YOU SELL SHARES. AT THE BEGINNING OF THE SEVENTH YEAR. THE
As of 12/31/07, including maximum CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
applicable sales charges THE NET ANNUAL FUND OPERATING EXPENSE YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
RATIO SET FORTH IN THE MOST RECENT FUND HAVE A FRONTEND SALES CHARGE; RETURNS
CLASS A SHARES PROSPECTUS AS OF THE DATE OF THIS REPORT SHOWN ARE AT NET ASSET VALUE AND DO NOT
Inception (1/31/07) -4.00% FOR CLASS A, CLASS B, CLASS C AND CLASS R REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
SHARES WAS 1.30%, 2.05%, 2.05% AND 1.55%, ON A TOTAL REDEMPTION OF RETIREMENT PLAN
CLASS B SHARES RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND ASSETS WITHIN THE FIRST YEAR.
Inception (1/31/07) -4.07% OPERATING EXPENSE RATIO SET FORTH IN THE
MOST RECENT FUND PROSPECTUS AS OF THE DATE THE PERFORMANCE OF THE FUND'S SHARE
CLASS C SHARES OF THIS REPORT FOR CLASS A, CLASS B, CLASS CLASSES WILL DIFFER PRIMARILY DUE TO
Inception (1/31/07) -0.07% C AND CLASS R SHARES WAS 2.38%, 3.13%, DIFFERENT SALES CHARGE STRUCTURES AND
3.13% AND 2.63%, RESPECTIVELY.(2) THE CLASS EXPENSES.
CLASS R SHARES EXPENSE RATIOS PRESENTED ABOVE MAY VARY
Inception (1/31/07) 1.29% FROM THE EXPENSE RATIOS PRESENTED IN OTHER HAD THE ADVISOR NOT WAIVED FEES AND/OR
========================================== SECTIONS OF THIS REPORT THAT ARE BASED ON REIMBURSED EXPENSES, PERFORMANCE WOULD
EXPENSES INCURRED DURING THE PERIOD HAVE BEEN LOWER.
THE PERFORMANCE DATA QUOTED REPRESENT COVERED BY THIS REPORT.
PAST PERFORMANCE AND CANNOT GUARANTEE (1)Total annual operating expenses less
COMPARABLE FUTURE RESULTS; CURRENT CLASS A SHARE PERFORMANCE REFLECTS THE any contractual fee waivers and/or expense
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE MAXIMUM 5.50% SALES CHARGE, AND CLASS B reimbursements by the advisor in effect
VISIT AIMINVESTMENTS.COM FOR THE MOST AND CLASS C SHARE PERFORMANCE REFLECTS THE through at least June 30, 2008. See
RECENT MONTH-END PERFORMANCE. PERFORMANCE APPLICABLE CONTINGENT DEFERRED SALES current prospectus for more information
FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
CHANGES IN NET ASSET VALUE AND THE EFFECT CDSC ON CLASS B SHARES DECLINES FROM (2)The expense ratio includes acquired
OF THE MAXIMUM SALES CHARGE UNLESS fund fees and expenses of the underlying
OTHERWISE STATED. INVESTMENT RETURN AND funds in which the Fund invests of 0.77%
PRINCIPAL VALUE for Class A, B, C and R shares of AIM
Independence 2050 Fund.
21
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Fund and index data from 1/31/07
AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE CUSTOM LIPPER MIXED-ASSET
2050 FUND-CLASS 2050 FUND-CLASS 2050 FUND-CLASS 2050 FUND-CLASS S&P 500 INDEPENDENCE TARGET 2050
DATE A SHARES B SHARES C SHARES R SHARES INDEX(1) 2050 INDEX(2) FUNDS INDEX(1)
1/31/07 $9450 $10000 $10000 $10000 $10000 $10000 $10000
2/07 9346 9880 9880 9890 9805 9925 9926
3/07 9516 10050 10060 10060 9914 10058 10053
4/07 9808 10359 10370 10370 10353 10438 10409
5/07 10101 10659 10659 10670 10714 10732 10745
6/07 9940 10489 10489 10510 10536 10563 10612
7/07 9591 10110 10120 10141 10210 10267 10334
8/07 9695 10210 10220 10240 10363 10343 10382
9/07 9987 10509 10520 10549 10750 10762 10806
10/07 10242 10778 10780 10818 10921 11015 11099
11/07 9714 10220 10231 10259 10464 10568 10615
12/07 9600 9593 9993 10129 10392 10441 10522
====================================================================================================================================
Sources: (1)Lipper Inc., (2)A I M Management Group Inc., Lipper Inc.
AIM Independence Funds
AIM INDEPENDENCE NOW FUND'S INVESTMENT OBJECTIVE IS CURRENT INCOME, AND AS A
SECONDARY OBJECTIVE, CAPITAL APPRECIATION.
AIM INDEPENDENCE 2010 FUND, AIM INDEPENDENCE 2020 FUND, AIM INDEPENDENCE 2030
FUND,
AIM INDEPENDENCE 2040 FUND AND AIM INDEPENDENCE 2050 FUND'S INVESTMENT OBJECTIVE
IS TO PROVIDE CAPITAL APPRECIATION AND CURRENT INCOME, CONSISTENT WITH THEIR
CURRENT ASSET ALLOCATION STRATEGIES.
o Unless otherwise stated, information presented in this report is as of
December 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 the credit rating of the issuer's o Foreign securities have additional
securities and may lead to the issuer's risks, including exchange rate changes,
o Class B shares are not available as an inability to honor its contractual political and economic upheaval, the
investment for retirement plans maintained obligations, including making timely relative lack of information, relatively
pursuant to Section 401 of the Internal payment of interest and principal. low market liquidity, and the potential
Revenue Code, including 401(k) plans, lack of strict financial and accounting
money purchase pension plans and profit o Investing in developing countries can controls and standards.
sharing plans, except for plans that have add additional risk, such as high rates of
existing accounts invested in Class B inflation or sharply devalued currencies o Each Fund pursues its investment
shares. against the U.S. dollar. Transaction costs objectives by investing its assets in
are often higher, and there may be delays other underlying funds rather than
o Class R shares are available only to in settlement procedures. investing directly in stocks, bonds, cash
certain retirement plans. Please see the or other investments. Each Fund's
prospectus for more information. o Prices of equity securities change in investment performance depends on the
response to many factors including the investment performance of the underlying
Principal risks of investing in all AIM historical and prospective earnings of the funds. Each Fund will indirectly pay a
Independence funds: issuer, the value of its assets, general proportional share of the asset-based fees
economic conditions, interest rates, of the underlying funds in which it
THE RISKS DETAILED BELOW ARE THE RISKS OF investor perceptions and market liquidity. invests. There is a risk that the
THE UNDERLYING FUNDS, WHICH THE FUND MAY advisor's evaluations and assumptions
EXPERIENCE AS A RESULT OF ITS INVESTMENTS o ETF (exchange-traded fund) shares may regarding the Fund's broad asset classes
IN THE UNDERLYING FUNDS. trade above or below their net asset or the underlying funds may be incorrect
value. An active trading market for a based on actual market conditions, or that
o Certain of the underlying funds may PowerShares ETF's shares may not develop the Fund will vary from the target
engage in active and frequent trading of or be maintained. Trading of a PowerShares weightings in the underlying funds due to
securities to achieve their investment ETF's shares may be halted if the listing factors such as market fluctuations. There
objectives. This may cause them to incur exchange's officials deem such action can be no assurance that the underlying
increased costs, which may lower the appropriate. PowerShares ETFs are not funds will achieve their investment
actual return of the underlying funds. actively managed and may not fulfill their objectives, and the performance of the
Active trading may also increase short objective of tracking the performance of underlying funds may be lower than the
term gains and losses, which may affect the index they seek to track. PowerShares asset class. The underlying funds may
the taxes that must be paid. ETFs would not necessarily sell a security change their investment objectives or
because the issuer of the security was in policies without the approval of the
o The value of convertible securities in financial trouble unless the security is Independence Funds. If that were to occur,
which the Fund invests may be affected by removed from the index that the ETF seeks the Independence Funds might be forced to
market interest rates--the risk that the to track. The value of an investment in withdraw their investments from the
issuer may default on interest or PowerShares ETFs will decline, more or underlying funds at an unfavorable time.
principal payments and the value of the less, in correlation with any decline in The advisor has the ability to select and
underlying common stock into which these the value of the index they seek to track. substitute the underlying funds in which
securities may be converted may decline as In addition, certain PowerShares ETFs may the Fund invests and may be subject to
a result. be composed of a significant percentage of potential conflicts of interest in
issuers in a single industry or sector of selecting underlying funds because the
o Credit risk is the risk of loss on an the economy and may present more risk than advisor for PowerShares ETFs, an affiliate
investment due to the deterioration of an if they were broadly diversified. of the advisor, may receive higher fees
issuer's financial health. Such a from certain
deterioration of financial health may
result in a reduction of
=======================================================================================
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.
=======================================================================================
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
AIMINVESTMENTS.COM
22
AIM Independence Funds
underlying funds than others. However, as o The prices of securities held by the Additional principal risks of investing in
a fiduciary of the Fund, the advisor is Fund may decline in response to market AIM Independence 2010 Fund, AIM
required to act in the Fund's best risks. Independence 2020 Fund and AIM
interest when selecting the underlying Independence Now Fund:
funds. Because the Fund is a fund of o Reinvestment risk is the risk that a
funds, the Fund is subject to the risks bond's cash flows will be reinvested at an THE RISKS DETAILED BELOW ARE THE RISKS OF
associated with the underlying funds in interest rate below that on the original THE UNDERLYING FUNDS, WHICH THE FUND MAY
which it invests. There are additional bond. EXPERIENCE AS A RESULT OF ITS INVESTMENTS
risks of investing in the underlying IN THE UNDERLYING FUNDS.
funds. o If the seller of a repurchase agreement
in which the Fund invests defaults on its o The Fund is subject to currency/exchange
o The Fund invests in "growth" stocks, obligation or declares bankruptcy, the rate risk because it may buy or sell
which may be more volatile than other Fund may experience delays in selling the currencies other than the U.S. dollar.
investment styles because growth stocks securities underlying the repurchase
are more sensitive to investor perceptions agreement.o The Fund invests in "value" o Nondiversification increases the risk
of an issuing company's growth potential. stocks, which can continue to be that the value of the Fund's shares may
Growth stocks tend to be more expensive inexpensive for long periods of time and vary more widely, and the Fund may be
relative to their earnings or assets may never realize their full value. subject to greater investment and credit
compared with other types of stocks. risk than if the Fund invested more
Additional principal risks related to all broadly.o The ability of an issuer of a
o Lower rated securities may be more AIM Independence funds except AIM floating rate loan or debt security to
susceptible to real or perceived adverse Independence 2050 Fund: repay principal prior to maturity can
economic and competitive industry limit the potential for gains by the Fund.
conditions, and may be less liquid than THE RISKS DETAILED BELOW ARE THE RISKS OF
higher grade securities. The loans in THE UNDERLYING FUNDS, WHICH THE FUND MAY Additional principal risks related to all
which the Fund may invest are typically EXPERIENCE AS A RESULT OF ITS INVESTMENTS AIM Independence funds except AIM
noninvestment-grade and involve a greater IN THE UNDERLYING FUNDS. Independence 2040 Fund and AIM
risk of default on interest and principal Independence 2050 Fund:
payments and of price changes due to the o High-coupon, U.S. government agency
changes in the credit quality of the mortgage-backed securities provide a THE RISKS DETAILED BELOW ARE THE RISKS OF
issuer. higher coupon than current prevailing THE UNDERLYING FUNDS, WHICH THE FUND MAY
market interest rates, and the Fund may EXPERIENCE AS A RESULT OF ITS INVESTMENTS
o Interest rate risk refers to the risk purchase such securities at a premium. If IN THE UNDERLYING FUNDS.
that bond prices generally fall as these securities experience a faster
interest rates rise; conversely, bond principal prepayment rate than expected, o Dollar-roll transactions involve the
prices generally rise as interest rates both the market value and income from such risk that the market value of securities
fall. securities will decrease. to be purchased by the Fund may decline
below the price at which the Fund is
o The Fund may use enhanced investment o The Fund may invest in obligations obligated to repurchase the securities or
techniques such as leveraging and issued by agencies and instrumentalities that the other party may default on its
derivatives. Leveraging entails risks such of the U.S. government that may vary in obligation, such that the Fund is delayed
as magnifying changes in the value of the the level of support they receive from the or prevented from completing the
portfolio's securities. Derivatives are U.S. government. The U.S. government may transaction.
subject to counterparty risk--the risk choose not to provide financial support to
that the other party will not complete the U.S. governmentsponsored agencies or
transaction with the Fund. instrumentalities if it is not legally
obligated to do so. In this case, if the
o Small- and mid-capitalization companies issuer defaulted, the fund holding
tend to be more vulnerable to adverse securities of such issuer might not be
developments and more volatile than larger able to recover its investment from the
companies. Investments in these sized U.S. government.
companies may involve special risks,
including those associated with dependence
on a small management group, little or no
operating history, little or no track
record of success, limited product lines,
less publicly available information,
illiquidity, restricted resale or less
frequent trading.
Continued on page 24
23
AIM Independence Funds
About indexes used in this report o The CUSTOM INDEPENDENCE 2020 INDEX is an o The LIPPER MIXED-ASSET TARGET ALLOCATION
index created by A I M Advisors, Inc. to CONSERVATIVE FUNDS INDEX is an equally
o The S&P 500--REGISTERED TRADEMARK-- benchmark the AIM Independence 2020 Fund. weighted representation of the largest
Index is a market capitalization-weighted This index may change from time to time funds in the Lipper Mixed-Asset Target
index covering all major areas of the U.S. based upon the target asset allocation of Allocation Conservative Funds category.
economy. It is not the 500 largest the Fund. The index currently consists of These funds, by portfolio practice,
companies, but rather the most widely held the following indexes: 41.5% Russell maintain a mix of between 20%-40% equity
500 companies chosen with respect to 3000--REGISTERED TRADEMARK-- Index, 15.5% securities, with the remainder invested in
market size, liquidity, and their MSCI EAFE-- REGISTERED TRADEMARK-- Index, bonds, cash, and cash equivalents.
industry. 3% FTSE EPRA/NAREIT Global Real Estate
Index, and 40% Lehman Brothers U.S. o The LIPPER MIXED-ASSET TARGET 2010 FUNDS
o The CUSTOM INDEPENDENCE NOW INDEX is an Universal Index. The FTSE EPRA/NAREIT INDEX is an equally weighted
index created by A I M Advisors, Inc. to Global Real Estate Index is designed to representation of the largest funds in the
benchmark the AIM Independence Now Fund. track the performance of listed real Lipper Mixed-Asset Target Allocation 2010
This index may change from time to time estate companies and REITs worldwide. It Funds category. These funds seek to
based upon the target asset allocation of is compiled by the FTSE Group, National maximize assets for retirement or other
the Fund. The index currently consists of Association of Real Estate Investment purposes with an extended time horizon not
the following indexes: 28.734% Russell Trusts, and European Public Real Estate to exceed the year 2010.
3000--registered trademark-- Index, 6.241% Association.
MSCI EAFE--REGISTERED TRADEMARK-- Index, o The LIPPER MIXED-ASSET TARGET 2020 FUNDS
61.675% Lehman Brothers U.S. Universal o The CUSTOM INDEPENDENCE 2030 INDEX is an INDEX is an equally weighted
Index, and 3.35% 3-Month Treasury Bill index created by A I M Advisors, Inc. to representation of the largest funds in the
Index. The Russell 3000--REGISTERED benchmark the AIM Independence 2030 Fund. Lipper Mixed-Asset Target Allocation 2020
TRADEMARK-- Index measures the performance This index may change from time to time Funds category. These funds seek to
of the 3,000 largest U.S. companies based based upon the target asset allocation of maximize assets for retirement or other
on total market capitalization, which the Fund. The index currently consists of purposes with an extended time horizon not
represents approximately 98% of the the following indexes: 55% Russell to exceed the year 2020.
investable U.S. equity market. The Russell 3000--REGISTERED TRADEMARK-- Index, 21%
3000--REGISTERED TRADEMARK-- Index is a MSCI EAFE--registered trademark-- Index, o The LIPPER MIXED-ASSET TARGET 2030 FUNDS
trademark/service mark of the Frank 4% FTSE EPRA/NAREIT Global Real Estate INDEX is an equally weighted
Russell Company. Russell--registered Index, and 20% Lehman Brothers U.S. representation of the largest funds in the
trademark-- is a trademark of the Frank Universal Index. Lipper Mixed-Asset Target Allocation 2030
Russell Company. The MSCI EAFE--REGISTERED Funds category. These funds seek to
TRADEMARK-- Index is a free float-adjusted o The CUSTOM INDEPENDENCE 2040 INDEX is an maximize assets for retirement or other
market capitalization index that is index created by A I M Advisors, Inc. to purposes with an extended time horizon not
designed to measure developed market benchmark the AIM Independence 2040 Fund. to exceed the year 2030.
equity performance, excluding the U.S. and This index may change from time to time
Canada. The Lehman Brothers U.S. Universal based upon the target asset allocation of o The LIPPER MIXED-ASSET TARGET 2030+
Index represents the union of the U.S. the Fund. The index currently consists of FUNDS INDEX is an equally weighted
Aggregate Index, the U.S. High-Yield the following indexes: 60.8% Russell representation of the largest funds in the
Corporate Index, the 144A Index, the 3000--REGISTERED TRADEMARK-- Index, 23.32% Lipper Mixed- Asset Target Allocation
Eurodollar Index, the Emerging Markets MSCI EAFE-- REGISTERED TRADEMARK-- Index, 2030+ Funds category. These funds seek to
Index, and the non-ERISA (Employee 4.58% FTSE EPRA/NAREIT Global Real Estate maximize assets for retirement or other
Retirement Income Security Act) portion of Index, and 11.3% Lehman Brothers U.S. purposes with an extended time horizon
the CMBS (Commercial Mortgage- Backed Universal Index. exceeding the year 2030.
Securities) Index. The 3-Month Treasury
Bill Index is tracked by Lipper Inc. to o The CUSTOM INDEPENDENCE 2050 INDEX is an o The Fund is not managed to track the
provide performance for the 3-month U.S. index created by A I M Advisors, Inc. to performance of any particular index,
Treasury Bill. benchmark the AIM Independence 2050 Fund. including the indexes defined here, and
This index may change from time to time consequently, the performance of the Fund
o The CUSTOM INDEPENDENCE 2010 INDEX is an based upon the target asset allocation of may deviate significantly from the
index created by A I M Advisors, Inc. to the fund. The index currently consists of performance of the indexes.
benchmark the AIM Independence 2010 Fund. the following indices: 65% Russell
This index may change from time to time 3000--REGISTERED TRADEMARK-- Index, 25% o A direct investment cannot be made in an
based upon the target asset allocation of MSCI EAFE--REGISTERED TRADEMARK-- Index, index. Unless otherwise indicated, index
the Fund. The index currently consists of 5% FTSE EPRA/NAREIT Global Real Estate results include reinvested dividends, and
the following indexes: 32% Russell Index, and 5% Lehman Brothers U.S. they do not reflect sales charges.
3000--REGISTERED TRADEMARK-- Index, 8% Universal Index. Performance of an index of funds reflects
MSCI EAFE--REGISTERED TRADEMARK-- Index, fund expenses; performance of a market
and 60% Lehman Brothers U.S. Universal index does not.
Index.
24
AIM Independence Funds
Other information
o The returns shown in management's
discussion of Fund performance are based
on net asset values calculated for
shareholder transactions. Generally
accepted accounting principles require
adjustments to be made to the net assets
of the Fund at period end for financial
reporting purposes, and as such, the net
asset values for shareholder transactions
and the returns based on those net asset
values may differ from the net asset
values and returns reported in the
Financial Highlights.
==========================================
FUND NASDAQ SYMBOLS
AIM INDEPENDENCE NOW FUND
Class A Shares IANAX
Class B Shares IANBX
Class C Shares IANCX
Class R Shares IANRX
AIM INDEPENDENCE 2010 FUND
Class A Shares INJAX
Class B Shares INJBX
Class C Shares INJCX
Class R Shares INJRX
AIM INDEPENDENCE 2020 FUND
Class A Shares AFTAX
Class B Shares AFTBX
Class C Shares AFTCX
Class R Shares ATFRX
AIM INDEPENDENCE 2030 FUND
Class A Shares TNAAX
Class B Shares TNABX
Class C Shares TNACX
Class R Shares TNARX
AIM INDEPENDENCE 2040 FUND
Class A Shares TNDAX
Class B Shares TNDBX
Class C Shares TNDCX
Class R Shares TNDRX
AIM INDEPENDENCE 2050 FUND
Class A Shares TNEAX
Class B Shares TNEBX
Class C Shares TNECX
Class R Shares TNERX
==========================================
25
AIM Independence Funds
SCHEDULE OF INVESTMENTS
December 31, 2007
AIM INDEPENDENCE NOW FUND
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-101.29%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE
ASSETS AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/07 12/31/07
- ---------------------------------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY FUNDS-28.18%
AIM Diversified Dividend Fund 4.28% $ 67,543 $ (7,037) $ (5,285) $ 3,753 $ 702 4,419 $ 55,462
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Structured Growth Fund 2.77% 39,001 (4,969) 1,539 319 995 2,989 35,842
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Structured Value Fund 2.73% 41,804 (4,597) (1,925) 202 946 3,245 35,402
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Trimark Small Companies
Fund 1.33% 21,075 (2,165) (1,778) 745 266 1,164 17,258
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Large Cap
Growth Portfolio-ETF 2.68% 38,837 (6,547) 2,376 (17) 62 1,846 34,649
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Large Cap
Value Portfolio-ETF 2.64% 39,274 (5,432) 542 (129) 529 1,680 34,255
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Small Cap
Growth Portfolio-ETF(b) 1.72% 26,456 (3,506) (551) (87) -- 1,272 22,312
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Small Cap
Value Portfolio-ETF 1.60% 26,641 (3,467) (2,324) (147) 654 1,298 20,703
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI US 1000
Portfolio-ETF 6.34% 98,646 (14,557) (1,624) (314) 893 1,413 82,151
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI US 1500
Small-Mid Portfolio-ETF 2.09% 32,509 (4,296) (1,029) (95) 161 507 27,089
=================================================================================================================================
Subtotal Domestic Equity
Funds 431,786 (56,573) (10,059) 4,230 5,208 365,123
=================================================================================================================================
FIXED-INCOME FUNDS-62.11%
AIM Floating Rate Fund 5.69% 85,923 (9,212) (2,695) (203) 2,980 8,613 73,813
- ---------------------------------------------------------------------------------------------------------------------------------
AIM High Yield Fund 2.70% 40,872 (4,322) (1,491) (83) 1,512 8,230 34,976
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Intermediate Government
Fund 8.72% 125,991 (14,045) 1,082 (13) 3,542 13,141 113,015
- ---------------------------------------------------------------------------------------------------------------------------------
AIM International Total
Return Fund 3.61% 53,159 (7,621) 844 400 2,061 4,312 46,782
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Limited Maturity Fund 2.69% 38,662 (4,354) 528 29 825 3,411 34,865
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Short Term Bond Fund 16.18% 240,121 (28,059) (2,304) (130) 6,931 21,701 209,628
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Total Return Bond Fund 22.52% 329,825 (36,283) (1,814) 50 9,344 28,606 291,778
=================================================================================================================================
Subtotal Fixed-Income Funds 914,553 (103,896) (5,850) 50 27,195 804,857
=================================================================================================================================
FOREIGN EQUITY FUNDS-6.09%
AIM International Core Equity
Fund 3.03% 46,596 (5,354) (2,333) 2,928 918 2,731 39,332
- ---------------------------------------------------------------------------------------------------------------------------------
AIM International Growth Fund 1.55% 23,325 (3,523) (107) 1,407 160 620 20,112
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares International
Dividend Achievers
Portfolio-ETF 1.51% 22,752 (4,075) 881 (31) 295 947 19,527
=================================================================================================================================
Subtotal Foreign Equity
Funds 92,673 (12,952) (1,559) 4,304 1,373 78,971
=================================================================================================================================
MONEY MARKET FUNDS-4.91%
Liquid Assets Portfolio 4.02% 192,172 (140,104) -- -- 1,305 52,068 52,068
- ---------------------------------------------------------------------------------------------------------------------------------
Premier Portfolio 0.89% 140,413 (128,950) -- -- 194 11,463 11,463
=================================================================================================================================
Subtotal Money Market Funds 332,585 (269,054) -- -- 1,499 63,531
=================================================================================================================================
TOTAL INVESTMENTS IN
AFFILIATED ISSUERS (Cost
$1,329,950) 101.29% 1,771,597 (442,475) (17,468) 8,584(c) 35,275 1,312,482
=================================================================================================================================
OTHER ASSETS LESS LIABILITIES (1.29)% (16,677)
=================================================================================================================================
NET ASSETS 100.00% $1,295,805
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
Abbreviation:
ETF-Exchange Traded Fund
Notes to Schedule of Investments:
(a) Each underlying fund and the Fund are affiliated by either having the same
investment advisor or an investment advisor under common control with the
Fund's investment advisor. The Fund invests in Institutional Class shares of
the mutual funds listed.
(b) Non-income producing security. A security is determined to be non-income
producing if the security has not declared a distribution within one year
from the report date.
(c) Includes $7,756 of capital gains distributed from affiliated underlying
funds.
See accompanying Notes to Financial Statements which are an integral part of
these financial statements.
26
AIM Independence Funds
SCHEDULE OF INVESTMENTS--(CONTINUED)
December 31, 2007
AIM INDEPENDENCE 2010 FUND
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.45%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE
ASSETS AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/07 12/31/07
- ---------------------------------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY FUNDS-31.44%
AIM Diversified Dividend Fund 4.71% $ 143,454 $ (9,386) $(12,393) $ 8,205 $ 1,465 9,705 $ 121,795
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Structured Growth Fund 3.08% 83,508 (6,811) 2,620 504 2,316 6,648 79,709
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Structured Value Fund 3.04% 88,702 (5,122) (4,983) 218 2,199 7,207 78,624
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Trimark Small Companies
Fund 1.51% 45,494 (2,561) (4,110) 1,597 629 2,629 38,956
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Large Cap
Growth Portfolio-ETF 2.97% 79,737 (7,249) 4,519 (183) 144 4,093 76,824
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Large Cap
Value Portfolio-ETF 2.93% 81,377 (5,465) 175 (216) 1,113 3,721 75,871
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Small Cap
Growth Portfolio-ETF(b) 1.97% 56,395 (3,643) (1,494) (199) -- 2,911 51,059
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Small Cap
Value Portfolio-ETF 1.83% 57,518 (3,628) (6,175) (422) 1,536 2,965 47,293
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI US 1000
Portfolio-ETF 6.98% 202,694 (15,683) (5,609) (761) 1,939 3,107 180,641
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI US 1500
Small-Mid Portfolio-ETF 2.42% 75,061 (9,338) (2,334) (769) 374 1,172 62,620
=================================================================================================================================
Subtotal Domestic Equity
Funds 913,940 (68,886) (29,784) 7,974 11,715 813,392
=================================================================================================================================
FIXED-INCOME FUNDS-60.62%
AIM Floating Rate Fund 5.04% 144,184 (8,537) (4,974) (301) 4,755 15,213 130,372
- ---------------------------------------------------------------------------------------------------------------------------------
AIM High Yield Fund 4.07% 117,111 (6,829) (4,692) (245) 4,094 24,787 105,345
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Intermediate Government
Fund 13.15% 358,904 (22,196) 3,647 (22) 9,460 39,513 340,333
- ---------------------------------------------------------------------------------------------------------------------------------
AIM International Total
Return Fund 3.45% 96,327 (8,781) 1,221 575 3,989 8,234 89,342
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Short Term Bond Fund 12.16% 345,606 (27,740) (3,100) (237) 9,470 32,560 314,529
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Total Return Bond Fund 22.75% 630,229 (38,416) (3,210) (35) 17,207 57,703 588,568
=================================================================================================================================
Subtotal Fixed-Income Funds 1,692,361 (112,499) (11,108) (265) 48,975 1,568,489
=================================================================================================================================
FOREIGN EQUITY FUNDS-7.83%
AIM International Core Equity
Fund 3.95% 117,247 (8,240) (7,383) 7,473 2,504 7,101 102,261
- ---------------------------------------------------------------------------------------------------------------------------------
AIM International Growth Fund 1.97% 56,359 (5,205) (905) 3,281 426 1,568 50,901
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares International
Dividend Achievers
Portfolio-ETF 1.91% 53,111 (5,009) 1,426 (163) 705 2,394 49,365
=================================================================================================================================
Subtotal International
Equity Funds 226,717 (18,454) (6,862) 10,591 3,635 202,527
=================================================================================================================================
MONEY MARKET FUNDS-0.56%
Liquid Assets Portfolio 0.28% 280,602 (273,199) -- -- 253 7,403 7,403
- ---------------------------------------------------------------------------------------------------------------------------------
Premier Portfolio 0.28% 280,602 (273,199) -- -- 253 7,403 7,403
=================================================================================================================================
Subtotal Money Market Funds 561,204 (546,398) -- -- 506 14,806
=================================================================================================================================
TOTAL INVESTMENTS IN
AFFILIATED ISSUERS (Cost
$2,646,968) 100.45% 3,394,222 (746,237) (47,754) 18,300(c) 64,831 2,599,214
=================================================================================================================================
OTHER ASSETS LESS LIABILITIES (0.45)% (11,749)
=================================================================================================================================
NET ASSETS 100.00% $2,587,465
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
Abbreviation:
ETF-Exchange Traded Fund
Notes to Schedule of Investments:
(a) Each underlying fund and the Fund are affiliated by either having the same
investment advisor or an investment advisor under common control with the
Fund's investment advisor. The Fund invests in Institutional Class shares of
the mutual funds listed.
(b) Non-income producing security. A security is determined to be non-income
producing if the security has not declared a distribution within one year
from the report date.
(c) Includes $19,317 of capital gains distributed from affiliated underlying
funds.
See accompanying Notes to Financial Statements which are an integral part of
these financial statements.
27
AIM Independence Funds
SCHEDULE OF INVESTMENTS--(CONTINUED)
December 31, 2007
AIM INDEPENDENCE 2020 FUND
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-101.70%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE
ASSETS AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/07 12/31/07
- ---------------------------------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY FUNDS-40.46%
AIM Diversified Dividend
Fund 5.47% $ 340,897 $ (43,208) $ (28,388) $17,788 $ 2,824 21,535 $ 270,265
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Structured Growth Fund 3.54% 202,154 (30,934) 1,766 1,824 4,768 14,561 174,581
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Structured Value Fund 3.49% 210,968 (27,005) (11,705) 550 4,528 15,803 172,414
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Trimark Small Companies
Fund 2.77% 172,082 (21,604) (14,497) 5,561 2,071 9,225 136,718
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Large
Cap Growth Portfolio-ETF 3.36% 188,158 (29,245) 7,300 (474) 297 8,830 165,739
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Large
Cap Value Portfolio-ETF 3.32% 189,315 (23,397) (951) (1,011) 2,147 8,041 163,956
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Small
Cap Growth
Portfolio-ETF(b) 3.41% 203,706 (27,955) (5,914) (1,559) -- 9,594 168,278
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Small
Cap Value Portfolio-ETF 3.17% 202,015 (23,764) (19,703) (2,254) 4,805 9,799 156,294
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI US
1000 Portfolio-ETF 7.86% 460,595 (56,184) (14,576) (2,041) 3,809 6,670 387,794
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI US
1500 Small-Mid
Portfolio-ETF 4.07% 245,313 (32,843) (9,830) (1,957) 1,125 3,756 200,683
=================================================================================================================================
Subtotal Domestic Equity
Funds 2,415,203 (316,139) (96,498) 16,427 26,374 1,996,722
=================================================================================================================================
FIXED-INCOME FUNDS-40.58%
AIM Floating Rate Fund 3.03% 179,090 (23,568) (4,724) (1,017) 4,691 17,477 149,781
- ---------------------------------------------------------------------------------------------------------------------------------
AIM High Yield Fund 9.19% 544,591 (70,705) (17,112) (3,136) 15,234 106,738 453,638
- ---------------------------------------------------------------------------------------------------------------------------------
AIM International Total
Return Bond Fund 2.48% 143,930 (23,069) 582 975 5,005 11,283 122,418
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Short Term Bond Fund 2.54% 170,261 (43,598) (564) (657) 3,274 12,986 125,442
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Total Return Bond Fund 23.34% 1,340,105 (181,169) (4,389) (2,208) 29,099 112,974 1,152,339
=================================================================================================================================
Subtotal Fixed-Income
Funds 2,377,977 (342,109) (26,207) (6,043) 57,303 2,003,618
=================================================================================================================================
FOREIGN EQUITY FUNDS-15.15%
AIM International Core
Equity Fund 6.21% 380,299 (50,340) (26,976) 22,652 7,029 21,281 306,444
- ---------------------------------------------------------------------------------------------------------------------------------
AIM International Growth
Fund 4.57% 271,017 (39,403) (10,235) 15,370 1,771 6,957 225,826
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares International
Dividend Achievers
Portfolio-ETF 4.37% 247,404 (32,682) 1,369 (551) 2,674 10,453 215,540
=================================================================================================================================
Subtotal Foreign Equity
Funds 898,720 (122,425) (35,842) 37,471 11,474 747,810
=================================================================================================================================
REAL ESTATE FUNDS-2.89%
AIM Global Real Estate Fund 2.89% 190,194 (24,336) (21,909) 1,847 8,105 10,535 142,647
=================================================================================================================================
MONEY MARKET FUNDS-2.62%
Liquid Assets Portfolio 1.31% 796,808 (732,248) -- -- 707 64,560 64,560
- ---------------------------------------------------------------------------------------------------------------------------------
Premier Portfolio 1.31% 796,808 (732,248) -- -- 710 64,560 64,560
=================================================================================================================================
Subtotal Money Market
Funds 1,593,616 (1,464,496) -- -- 1,417 129,120
=================================================================================================================================
TOTAL INVESTMENTS IN
AFFILIATED ISSUERS (Cost
$5,200,373) 101.70% 7,475,710 (2,269,505) (180,456) 49,702(c) 104,673 5,019,917
=================================================================================================================================
OTHER ASSETS LESS
LIABILITIES (1.70)% (84,169)
=================================================================================================================================
NET ASSETS 100.00% $4,935,748
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
Abbreviation:
ETF-Exchange Traded Fund
Notes to Schedule of Investments:
(a) Each underlying fund and the Fund are affiliated by either having the same
investment advisor or an investment advisor under common control with the
Fund's investment advisor. The Fund invests in Institutional Class shares of
the mutual funds listed.
(b) Non-income producing security. A security is determined to be non-income
producing if the security has not declared a distribution within one year
from the report date.
(c) Includes $55,534 of capital gains distributed from affiliated underlying
funds.
See accompanying Notes to Financial Statements which are an integral part of
these financial statements.
28
AIM Independence Funds
SCHEDULE OF INVESTMENTS--(CONTINUED)
December 31, 2007
AIM INDEPENDENCE 2030 FUND
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-103.81%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE
ASSETS AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/07 12/31/07
- ---------------------------------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY FUNDS-54.25%
AIM Diversified Dividend
Fund 6.74% $ 288,283 $ (32,380) $ (22,337) $ 14,440 $ 2,506 18,635 $ 233,868
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Structured Growth Fund 4.38% 171,430 (23,926) 2,655 1,956 4,036 12,671 151,921
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Structured Value Fund 4.33% 179,524 (20,387) (9,223) 578 3,833 13,763 150,158
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Trimark Small Companies
Fund 4.29% 183,731 (20,387) (14,901) 5,468 2,192 10,041 148,806
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Large
Cap Growth Portfolio-ETF 4.23% 161,126 (21,152) 7,080 (272) 243 7,820 146,782
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Large
Cap Value Portfolio-ETF 4.19% 164,688 (18,600) (206) (623) 1,880 7,124 145,259
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Small
Cap Growth
Portfolio-ETF(b) 5.20% 210,342 (22,986) (5,587) (1,264) -- 10,291 180,505
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Small
Cap Value Portfolio-ETF 4.85% 213,494 (22,972) (19,647) (2,491) 4,813 10,557 168,384
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI US
1000 Portfolio-ETF 9.95% 402,981 (44,876) (11,111) (1,642) 3,239 5,940 345,352
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI US
1500 Small-Mid
Portfolio-ETF 6.09% 249,794 (27,369) (9,402) (1,708) 1,107 3,955 211,315
=================================================================================================================================
Subtotal Domestic Equity
Funds 2,225,393 (255,035) (82,679) 14,442 23,849 1,882,350
=================================================================================================================================
FIXED-INCOME FUNDS-20.44%
AIM High Yield Fund 10.25% 429,472 (59,476) (11,648) (2,759) 12,367 83,668 355,589
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Total Return Bond Fund 10.19% 406,484 (51,161) (1,189) (542) 9,208 34,666 353,592
=================================================================================================================================
Subtotal Fixed-Income
Funds 835,956 (110,637) (12,837) (3,301) 21,575 709,181
=================================================================================================================================
FOREIGN EQUITY FUNDS-20.70%
AIM International Core
Equity Fund 8.47% 358,818 (45,853) (21,984) 20,915 6,546 20,418 294,023
- ---------------------------------------------------------------------------------------------------------------------------------
AIM International Growth
Fund 6.21% 257,629 (40,063) (7,055) 14,911 1,639 6,633 215,315
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares International
Dividend Achievers
Portfolio-ETF 6.02% 236,994 (30,753) 3,599 (877) 2,559 10,134 208,963
=================================================================================================================================
Subtotal Foreign Equity
Funds 853,441 (116,669) (25,440) 34,949 10,744 718,301
=================================================================================================================================
REAL ESTATE FUNDS-3.86%
AIM Global Real Estate Fund 3.86% 173,850 (19,188) (19,241) 1,570 7,546 9,905 134,118
=================================================================================================================================
MONEY MARKET FUNDS-4.56%
Liquid Assets Portfolio 2.28% 691,192 (611,943) -- -- 687 79,249 79,249
- ---------------------------------------------------------------------------------------------------------------------------------
Premier Portfolio 2.28% 691,192 (611,943) -- -- 687 79,249 79,249
=================================================================================================================================
Subtotal Money Market
Funds 1,382,384 (1,223,886) -- -- 1,374 158,498
=================================================================================================================================
TOTAL INVESTMENTS IN
AFFILIATED UNDERLYING
FUNDS (Cost $3,742,645) 103.81% 5,471,024 (1,725,415) (140,197) 47,660(c) 65,088 3,602,448
=================================================================================================================================
OTHER ASSETS LESS
LIABILITIES (3.81)% (132,155)
=================================================================================================================================
NET ASSETS 100.00% $3,470,293
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
Abbreviation:
ETF-Exchange Traded Fund
Notes to Schedule of Investments:
(a) Each underlying fund and the Fund are affiliated by either having the same
investment advisor or an investment advisor under common control with the
Fund's investment advisor. The Fund invests in Institutional Class shares of
the mutual funds listed.
(b) Non-income producing security. A security is determined to be non-income
producing if the security has not declared a distribution within one year
from the report date.
(c) Includes $50,624 of capital gains distributed from affiliated underlying
funds.
See accompanying Notes to Financial Statements which are an integral part of
these financial statements.
29
AIM Independence Funds
SCHEDULE OF INVESTMENTS--(CONTINUED)
December 31, 2007
AIM INDEPENDENCE 2040 FUND
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-99.62%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE
ASSETS AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/07 12/31/07
- ---------------------------------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY FUNDS-59.67%
AIM Diversified Dividend
Fund 7.49% $ 166,901 $ (11,755) $(14,446) $ 9,233 $ 1,612 11,228 $ 140,916
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Structured Growth Fund 4.86% 97,250 (8,729) 2,123 893 2,563 7,624 91,414
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Structured Value Fund 4.79% 103,294 (7,367) (5,827) 322 2,434 8,269 90,210
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Trimark Small Companies
Fund 4.75% 105,633 (7,367) (9,096) 3,428 1,391 6,030 89,359
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Large
Cap Growth Portfolio-ETF 4.62% 90,388 (7,779) 4,321 (26) 161 4,630 86,904
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Large
Cap Value Portfolio-ETF 4.57% 94,180 (7,757) (228) (232) 1,226 4,216 85,963
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Small
Cap Growth
Portfolio-ETF(b) 5.73% 121,362 (9,660) (3,319) (494) -- 6,151 107,889
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Small
Cap Value Portfolio-ETF 5.31% 127,687 (13,458) (12,669) (1,649) 3,210 6,264 99,911
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI US
1000 Portfolio-ETF 10.81% 230,587 (18,667) (7,712) (660) 2,123 3,501 203,548
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI US
1500 Small-Mid
Portfolio-ETF 6.74% 145,304 (11,546) (6,250) (718) 736 2,373 126,790
=================================================================================================================================
Subtotal Domestic Equity
Funds 1,282,586 (104,085) (53,103) 10,097 15,456 1,122,904
=================================================================================================================================
FIXED-INCOME FUNDS-11.58%
AIM High Yield Fund 7.29% 154,575 (11,165) (5,679) (441) 5,240 32,304 137,290
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Total Return Bond Fund 4.29% 88,649 (7,676) (264) (43) 2,307 7,908 80,666
=================================================================================================================================
Subtotal Fixed-Income
Funds 243,224 (18,841) (5,943) (484) 7,547 217,956
=================================================================================================================================
FOREIGN EQUITY FUNDS-22.94%
AIM International Core
Equity Fund 9.36% 218,140 (29,936) (14,528) 13,838 4,155 12,234 176,170
- ---------------------------------------------------------------------------------------------------------------------------------
AIM International Growth
Fund 6.94% 146,557 (14,629) (3,223) 8,391 1,053 4,023 130,601
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares International
Dividend Achievers
Portfolio-ETF 6.64% 134,315 (11,551) 2,554 (340) 1,716 6,061 124,978
=================================================================================================================================
Subtotal Foreign Equity
Funds 499,012 (56,116) (15,197) 21,889 6,924 431,749
=================================================================================================================================
REAL ESTATE FUNDS-4.43%
AIM Global Real Estate Fund 4.43% 103,933 (7,202) (12,855) 1,441 4,985 6,161 83,422
=================================================================================================================================
MONEY MARKET FUNDS-1.00%
Liquid Assets Portfolio 0.50% 430,795 (421,332) -- -- 425 9,463 9,463
- ---------------------------------------------------------------------------------------------------------------------------------
Premier Portfolio 0.50% 430,795 (421,332) -- -- 425 9,463 9,463
=================================================================================================================================
Subtotal Money Market
Funds 861,590 (842,664) -- -- 850 18,926
=================================================================================================================================
TOTAL INVESTMENTS IN
AFFILIATED ISSUERS (Cost
$1,962,055) 99.62% 2,990,345 (1,028,908) (87,098) 32,943(c) 35,762 1,874,957
=================================================================================================================================
OTHER ASSETS LESS
LIABILITIES 0.38% 7,095
=================================================================================================================================
NET ASSETS 100.00% $1,882,052
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
Abbreviation:
ETF-Exchange Traded Fund
Notes to Schedule of Investments:
(a) Each underlying fund and the Fund are affiliated by either having the same
investment advisor or an investment advisor under common control with the
Fund's investment advisor. The Fund invests in Institutional Class shares of
the mutual funds listed.
(b) Non-income producing security. A security is determined to be non-income
producing if the security has not declared a distribution within one year
from the report date.
(c) Includes $32,325 of capital gains distributed from affiliated underlying
funds.
See accompanying Notes to Financial Statements which are an integral part of
these financial statements.
30
AIM Independence Funds
SCHEDULE OF INVESTMENTS--(CONTINUED)
December 31, 2007
AIM INDEPENDENCE 2050 FUND
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-101.44%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE
ASSETS AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/07 12/31/07
- ---------------------------------------------------------------------------------------------------------------------------------
DOMESTIC EQUITY FUNDS-65.22%
AIM Diversified Dividend
Fund 8.13% $ 163,010 $ (11,926) $(12,119) $ 9,015 $ 1,650 11,101 $ 139,321
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Structured Growth Fund 5.26% 94,422 (9,406) 4,280 937 2,456 7,516 90,115
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Structured Value Fund 5.19% 100,341 (7,454) (4,052) 348 2,332 8,156 88,980
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Trimark Small Companies
Fund 5.14% 103,481 (7,454) (8,233) 3,393 1,332 5,944 88,085
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Large
Cap Growth Portfolio-ETF 5.06% 89,017 (8,298) 5,935 45 155 4,619 86,699
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Large
Cap Value Portfolio-ETF 5.01% 91,927 (7,325) 1,275 (158) 1,245 4,204 85,719
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Small
Cap Growth
Portfolio-ETF(b) 6.31% 119,917 (9,173) (2,403) (365) -- 6,156 107,976
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares Dynamic Small
Cap Value Portfolio-ETF 5.85% 123,357 (10,862) (11,242) (1,119) 3,122 6,278 100,134
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI US
1000 Portfolio-ETF 11.84% 224,478 (17,671) (3,591) (482) 2,094 3,487 202,734
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares FTSE RAFI US
1500 Small-Mid
Portfolio-ETF 7.43% 142,955 (11,076) (4,186) (530) 715 2,380 127,163
=================================================================================================================================
Subtotal Domestic Equity
Funds 1,252,905 (100,645) (34,336) 11,084 15,101 1,116,926
=================================================================================================================================
FIXED-INCOME FUNDS-5.21%
AIM High Yield Fund 5.21% 99,778 (7,453) (2,737) (300) 3,431 21,009 89,288
=================================================================================================================================
FOREIGN EQUITY FUNDS-25.07%
AIM International Core
Equity Fund 10.15% 210,923 (30,318) (9,628) 13,699 3,977 12,071 173,816
- ---------------------------------------------------------------------------------------------------------------------------------
AIM International Growth
Fund 7.58% 140,732 (13,871) 952 8,250 1,016 3,999 129,801
- ---------------------------------------------------------------------------------------------------------------------------------
PowerShares International
Dividend Achievers
Portfolio-ETF 7.34% 133,344 (13,166) 5,788 (287) 1,769 6,095 125,679
=================================================================================================================================
Subtotal International
Equity Funds 484,999 (57,355) (2,888) 21,662 6,762 429,296
=================================================================================================================================
REAL ESTATE FUNDS-4.92%
AIM Global Real Estate Fund 4.92% 102,659 (7,454) (10,630) 1,557 5,010 6,224 84,276
=================================================================================================================================
MONEY MARKET FUNDS-1.02%
Liquid Assets Portfolio 0.51% 443,022 (434,334) -- -- 396 8,688 8,688
- ---------------------------------------------------------------------------------------------------------------------------------
Premier Portfolio 0.51% 443,022 (434,334) -- -- 396 8,688 8,688
=================================================================================================================================
Subtotal Money Market
Funds 886,044 (868,668) -- -- 792 17,376
=================================================================================================================================
TOTAL INVESTMENTS IN
AFFILIATED ISSUERS (Cost
$1,787,753) 101.44% 2,826,385 (1,041,575) (50,591) 34,003(c) 31,096 1,737,162
=================================================================================================================================
OTHER ASSETS LESS
LIABILITIES (1.44)% (24,696)
=================================================================================================================================
NET ASSETS 100.00% $1,712,466
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
Abbreviation:
ETF-Exchange Traded Fund
Notes to Schedule of Investments:
(a) Each underlying fund and the Fund are affiliated by either having the same
investment advisor or an investment advisor under common control with the
Fund's investment advisor. The Fund invests in Institutional Class shares of
the mutual funds listed.
(b) Non-income producing security. A security is determined to be non-income
producing if the security has not declared a distribution within one year
from the report date.
(c) Includes $31,060 of capital gains distributed from affiliated underlying
funds.
See accompanying Notes to Financial Statements which are an integral part of
these financial statements.
31
AIM Independence Funds
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2007
<Table>
<Caption>
AIM AIM AIM AIM AIM AIM
INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE
NOW FUND 2010 FUND 2020 FUND 2030 FUND 2040 FUND 2050 FUND
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in affiliated underlying
funds, at value $1,312,482 $2,599,214 $5,019,917 $3,602,448 $1,874,957 $1,737,162
- ---------------------------------------------------------------------------------------------------------------------------------
Receivables for:
Fund shares sold 142 3,981 13,445 27,288 37,291 6,148
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends from affiliated underlying
funds 4,034 52 222 261 120 111
- ---------------------------------------------------------------------------------------------------------------------------------
Fund expenses absorbed 17,631 24,644 17,846 18,937 19,380 25,999
- ---------------------------------------------------------------------------------------------------------------------------------
Investment for trustee deferred
compensation and retirement plans 3,168 3,244 3,171 3,170 3,168 3,168
- ---------------------------------------------------------------------------------------------------------------------------------
Other assets 34,183 33,208 33,443 33,304 33,117 33,118
=================================================================================================================================
Total assets 1,371,640 2,664,343 5,088,044 3,685,408 1,968,033 1,805,706
_________________________________________________________________________________________________________________________________
=================================================================================================================================
LIABILITIES:
Payables for:
Investments purchased from affiliated
underlying funds 19,168 11,174 90,587 154,163 27,134 8,162
- ---------------------------------------------------------------------------------------------------------------------------------
Fund shares reacquired -- 1,030 -- 88 -- 20,316
- ---------------------------------------------------------------------------------------------------------------------------------
Trustee deferred compensation and
retirement plans 3,168 3,244 3,171 3,170 3,168 3,168
- ---------------------------------------------------------------------------------------------------------------------------------
Accrued distribution fees 1,396 2,818 5,100 3,940 2,218 1,565
- ---------------------------------------------------------------------------------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 388 543 655 281 256 543
- ---------------------------------------------------------------------------------------------------------------------------------
Accrued transfer agent fees 225 353 905 963 677 557
- ---------------------------------------------------------------------------------------------------------------------------------
Accrued operating expenses 51,490 57,716 51,878 52,510 52,528 58,929
=================================================================================================================================
Total liabilities 75,835 76,878 152,296 215,115 85,981 93,240
=================================================================================================================================
Net assets applicable to shares
outstanding $1,295,805 $2,587,465 $4,935,748 $3,470,293 $1,882,052 $1,712,466
_________________________________________________________________________________________________________________________________
=================================================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,292,304 $2,606,004 $5,062,881 $3,562,047 $1,929,068 $1,723,142
- ---------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 17,296 16,465 23,718 15,889 22,240 21,079
- ---------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain 3,673 12,750 29,605 32,554 17,842 18,836
- ---------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) (17,468) (47,754) (180,456) (140,197) (87,098) (50,591)
=================================================================================================================================
$1,295,805 $2,587,465 $4,935,748 $3,470,293 $1,882,052 $1,712,466
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of
these financial statements.
32
AIM Independence Funds
STATEMENT OF ASSETS AND LIABILITIES--(CONTINUED)
December 31, 2007
<Table>
<Caption>
AIM AIM AIM AIM AIM AIM
INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE
NOW FUND 2010 FUND 2020 FUND 2030 FUND 2040 FUND 2050 FUND
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Class A $ 807,469 $1,645,422 $2,711,407 $1,576,569 $ 900,770 $1,177,239
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class B $ 309,216 $ 340,027 $ 939,993 $ 756,390 $ 500,437 $ 183,800
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class C $ 74,634 $ 431,398 $ 593,340 $ 728,977 $ 276,530 $ 149,820
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class R $ 52,513 $ 118,560 $ 678,928 $ 396,001 $ 153,190 $ 150,613
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Institutional Class $ 51,973 $ 52,058 $ 12,080 $ 12,356 $ 51,125 $ 50,994
_________________________________________________________________________________________________________________________________
=================================================================================================================================
SHARES OUTSTANDING, $0.01 par value per
share, unlimited number of shares
authorized:
Class A 82,566 164,270 272,222 159,361 91,666 120,366
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class B 31,582 34,026 94,766 76,663 51,077 18,842
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class C 7,625 43,155 59,821 73,870 28,224 15,348
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class R 5,368 11,843 68,244 40,085 15,602 15,416
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Institutional Class 5,315 5,189 1,209 1,248 5,196 5,210
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class A:
Net asset value per share $ 9.78 $ 10.02 $ 9.96 $ 9.89 $ 9.83 $ 9.78
- ---------------------------------------------------------------------------------------------------------------------------------
Maximum offering price per share
(Net asset value of divided by 94.50%) $ 10.35 $ 10.60 $ 10.54 $ 10.47 $ 10.40 $ 10.35
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class B:
Net asset value and offering price per
share $ 9.79 $ 9.99 $ 9.92 $ 9.87 $ 9.80 $ 9.75
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class C:
Net asset value and offering price per
share $ 9.79 $ 10.00 $ 9.92 $ 9.87 $ 9.80 $ 9.76
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Class R:
Net asset value and offering price per
share $ 9.78 $ 10.01 $ 9.95 $ 9.88 $ 9.82 $ 9.77
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Institutional Class:
Net asset value and offering price per
share $ 9.78 $ 10.03 $ 9.99 $ 9.90 $ 9.84 $ 9.79
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Cost of Investments in affiliated
underlying funds $1,329,950 $2,646,968 $5,200,373 $3,742,645 $1,962,055 $1,787,753
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of
these financial statements.
33
AIM Independence Funds
STATEMENT OF OPERATIONS
For the period January 31, 2007 (commencement date) through December 31, 2007
<Table>
<Caption>
AIM AIM AIM AIM AIM AIM
INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE
NOW FUND 2010 FUND 2020 FUND 2030 FUND 2040 FUND 2050 FUND
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends from affiliated underlying
funds $ 35,275 $ 64,831 $ 104,673 $ 65,088 $ 35,762 $ 31,096
- ---------------------------------------------------------------------------------------------------------------------------------
Other Income 169 232 169 169 167 169
=================================================================================================================================
Total investment income 35,444 65,063 104,842 65,257 35,929 31,265
=================================================================================================================================
EXPENSES:
Administrative services fees 45,890 45,890 45,890 45,890 45,890 45,890
- ---------------------------------------------------------------------------------------------------------------------------------
Custodian fees 6,511 8,826 10,203 10,187 9,852 9,291
- ---------------------------------------------------------------------------------------------------------------------------------
Distribution fees:
Class A 1,051 1,927 3,398 2,070 1,169 1,470
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 1,639 1,853 4,957 4,171 2,795 1,029
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 508 2,601 1,680 2,059 856 924
- ---------------------------------------------------------------------------------------------------------------------------------
Class R 236 296 555 524 319 253
- ---------------------------------------------------------------------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 1,312 2,327 4,590 4,459 3,224 2,547
- ---------------------------------------------------------------------------------------------------------------------------------
Transfer agent fees -- Institutional 25 15 33 25 18 19
- ---------------------------------------------------------------------------------------------------------------------------------
Trustees' and officer's fees and
benefits 15,532 15,693 15,814 15,433 15,402 15,688
- ---------------------------------------------------------------------------------------------------------------------------------
Registration and filing fees 71,372 65,771 65,922 65,927 65,760 65,760
- ---------------------------------------------------------------------------------------------------------------------------------
Professional services fees 53,135 59,288 53,379 53,491 53,486 59,465
- ---------------------------------------------------------------------------------------------------------------------------------
Other 15,871 16,012 16,676 16,125 15,609 16,168
=================================================================================================================================
Total expenses 213,082 220,499 223,097 220,361 214,380 218,504
=================================================================================================================================
Less: Expenses reimbursed and expense
offset arrangement(s) (208,474) (211,574) (207,299) (207,720) (206,599) (212,362)
=================================================================================================================================
Net expenses 4,608 8,925 15,798 12,641 7,781 6,142
=================================================================================================================================
Net investment income 30,836 56,138 89,044 52,616 28,148 25,123
=================================================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
FROM:
Net realized gain (loss) on sales of
affiliated underlying fund shares 828 (1,017) (5,832) (2,964) 618 2,943
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized gain from distributions of
affiliated underlying fund shares 7,756 19,317 55,534 50,624 32,325 31,060
=================================================================================================================================
Net realized gain from affiliated
underlying fund shares 8,584 18,300 49,702 47,660 32,943 34,003
=================================================================================================================================
Change in net unrealized appreciation
(depreciation) of affiliated
underlying fund shares (17,468) (47,754) (180,456) (140,197) (87,098) (50,591)
=================================================================================================================================
Net increase (decrease) in net assets
resulting from operations $ 21,952 $ 26,684 $ (41,710) $ (39,921) $ (26,007) $ 8,535
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of
these financial statements.
34
AIM Independence Funds
STATEMENT OF CHANGES IN NET ASSETS
For the period January 31, 2007 (commencement date) through December 31, 2007
<Table>
<Caption>
AIM AIM AIM AIM AIM AIM
INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE
NOW FUND 2010 FUND 2020 FUND 2030 FUND 2040 FUND 2050 FUND
------------ ------------ ------------ ------------ ------------ ------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2007 2007 2007 2007 2007 2007
- --------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 30,836 $ 56,138 $ 89,044 $ 52,616 $ 28,148 $ 25,123
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain 8,584 18,300 49,702 47,660 32,943 34,003
- --------------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) (17,468) (47,754) (180,456) (140,197) (87,098) (50,591)
================================================================================================================================
Net increase (decrease) in net
assets resulting from operations 21,952 26,684 (41,710) (39,921) (26,007) 8,535
================================================================================================================================
Distributions to shareholders from net
investment income:
Class A (33,781) (52,594) (61,402) (42,432) (23,717) (33,184)
- --------------------------------------------------------------------------------------------------------------------------------
Class B (11,689) (9,793) (20,030) (16,422) (11,405) (4,512)
- --------------------------------------------------------------------------------------------------------------------------------
Class C (2,632) (12,420) (10,670) (10,435) (5,758) (3,528)
- --------------------------------------------------------------------------------------------------------------------------------
Class R (2,633) (3,660) (13,844) (7,604) (3,843) (1,407)
- --------------------------------------------------------------------------------------------------------------------------------
Institutional Class (3,130) (1,762) (307) (347) (1,458) (1,526)
================================================================================================================================
Total distributions from net
investment income (53,865) (80,229) (106,253) (77,240) (46,181) (44,157)
================================================================================================================================
Distributions to shareholders from net
realized gains:
Class A (3,061) (3,496) (11,117) (7,830) (7,337) (11,035)
- --------------------------------------------------------------------------------------------------------------------------------
Class B (1,184) (744) (4,130) (3,515) (4,047) (1,769)
- --------------------------------------------------------------------------------------------------------------------------------
Class C (241) (943) (2,200) (2,234) (2,044) (1,383)
- --------------------------------------------------------------------------------------------------------------------------------
Class R (213) (254) (2,597) (1,466) (1,241) (494)
- --------------------------------------------------------------------------------------------------------------------------------
Institutional Class (212) (113) (53) (61) (432) (486)
================================================================================================================================
Total distributions from net
realized gains (4,911) (5,550) (20,097) (15,106) (15,101) (15,167)
================================================================================================================================
Decrease in net assets resulting
from distributions (58,776) (85,779) (126,350) (92,346) (61,282) (59,324)
================================================================================================================================
Share transactions-net:
Class A 831,360 1,685,472 2,804,919 1,648,097 946,845 1,212,088
- --------------------------------------------------------------------------------------------------------------------------------
Class B 319,205 349,541 971,424 782,082 525,655 193,543
- --------------------------------------------------------------------------------------------------------------------------------
Class C 76,014 438,505 615,357 752,285 286,342 154,721
- --------------------------------------------------------------------------------------------------------------------------------
Class R 53,633 121,157 701,808 409,679 158,599 150,881
- --------------------------------------------------------------------------------------------------------------------------------
Institutional Class 52,417 51,885 10,300 10,417 51,900 52,022
================================================================================================================================
Net increase in net assets
resulting from share transactions 1,332,629 2,646,560 5,103,808 3,602,560 1,969,341 1,763,255
================================================================================================================================
Net increase in net assets 1,295,805 2,587,465 4,935,748 3,470,293 1,882,052 1,712,466
================================================================================================================================
NET ASSETS:
Beginning of year -- -- -- -- -- --
================================================================================================================================
End of year* $1,295,805 $2,587,465 $4,935,748 $3,470,293 $1,882,052 $1,712,466
================================================================================================================================
* Includes accumulated undistributed
net investment income $ 17,296 $ 16,465 $ 23,718 $ 15,889 $ 22,240 $ 21,079
________________________________________________________________________________________________________________________________
================================================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
35
AIM Independence Funds
NOTES TO FINANCIAL STATEMENTS
December 31, 2007
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Growth Series (the "Trust") is organized as a Delaware statutory trust and
is registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate series portfolios (each constituting a "Fund"), each
authorized to issue an unlimited number of shares of beneficial interest. The
Funds covered in this report are AIM Independence Now Fund, AIM Independence
2010 Fund, AIM Independence 2020 Fund, AIM Independence 2030 Fund, AIM
Independence 2040 Fund and AIM Independence 2050 Fund (collectively, the
"Funds"). Each Fund currently offers multiple classes of shares. Matters
affecting each Fund or class will be voted on exclusively by the shareholders of
such Fund or class. The assets, liabilities and operations of each Fund are
accounted for separately. Information presented in these financial statements
pertains only to the Funds.
The investment objectives of the Funds are: to provide current income and,
as a secondary objective, capital appreciation for AIM Independence Now Fund;
and to provide capital appreciation and current income, consistent with their
current asset allocation strategies for AIM Independence 2010 Fund, AIM
Independence 2020 Fund, AIM Independence 2030 Fund, AIM Independence 2040 Fund
and AIM Independence 2050 Fund.
Each Fund is a "fund of funds", in that it invests in other mutual funds and
exchange-traded funds ("underlying funds") advised by A I M Advisors, Inc.
("AIM") and PowerShares Capital Management LLC ("PowerShares Capital"),
respectively. AIM and PowerShares Capital are affiliates of each other as they
are indirect wholly owned subsidiaries of Invesco Ltd. ("Invesco"). AIM may
change each Fund's asset class allocations, the underlying funds or the target
weightings in the underlying funds without shareholder approval. The underlying
funds may engage in a number of investment techniques and practices, which
involve certain risks. Each underlying fund's accounting policies are outlined
in the underlying fund's financial statements and are available upon request.
The following is a summary of the significant accounting policies followed
by the Funds in the preparation of their financial statements.
A. SECURITY VALUATIONS -- Investments in underlying funds not traded on an
exchange are valued at the end of the day net asset value per share.
Investments in underlying funds which are traded on an exchange are valued
in accordance with valuation policy of the underlying funds detailed below.
Securities in the underlying funds, 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").
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.
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.
Swap agreements are fair valued using an evaluated quote provided by an
independent pricing service. Evaluated quotes provided by the pricing
service are valued based on a model which may include end of day net
present values, spreads, ratings, industry, and company performance.
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.
36
AIM Independence Funds
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. Distributions from ordinary income from underlying funds, if any, are
recorded as dividend income on ex-dividend date. Distributions from net
realized capital gains from underlying funds, if any, are recorded as
realized gains on the ex-dividend date. Interest income is recorded on the
accrual basis from settlement date.
Each Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- AIM Independence Now Fund generally declares and pays
dividends, if any, quarterly. AIM Independence 2010 Fund, AIM Independence
2020 Fund, AIM Independence 2030 Fund, AIM Independence 2040 Fund and AIM
Independence 2050 Fund generally declare and pay dividends, if any,
annually. Distributions from net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date. The Funds may
elect to treat a portion of the proceeds from redemptions as distributions
for federal income tax purposes.
D. FEDERAL INCOME TAXES -- The Funds intend 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
Funds' taxable earnings to shareholders. As such, the Funds 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.
Each Fund files tax returns in the U.S. federal jurisdiction and certain
other jurisdictions. Generally each Fund is subject to examinations by such
taxing authorities for up to three years after the tax period.
E. EXPENSES -- Expenses included in the accompanying financial statements
reflect the expenses of the Funds and do not include any expenses of the
underlying funds. The effects of the underlying funds expenses are included
in the realized and unrealized gain/loss on the investments in the
underlying funds.
Fees provided for under the Rule 12b-1 plan of a particular class of each
fund and which are directly attributable to that class are charged to the
operations of such class. Transfer agency fees and expenses and other
shareholder recordkeeping fees and expenses 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 of each respective fund are allocated among the
classes of such fund based on relative net assets.
F. 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.
G. 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 Funds. Additionally, in
the normal course of business, the Funds enter into contracts that contain
a variety of indemnification clauses. Each Fund's maximum exposure under
these arrangements is unknown as this would involve future claims that may
be made against such Fund that have not yet occurred. The risk of material
loss as a result of such indemnification claims is considered remote.
37
AIM Independence Funds
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with AIM.
Under the terms of the investment advisory agreement, the Funds do not pay an
advisory fee. However, each Fund pays advisory fees to AIM indirectly as a
shareholder of the underlying funds.
Through at least June 30, 2008, AIM has contractually agreed to reimburse
expenses to the extent necessary to limit total annual operating expenses as a
percentage of average daily net assets (excluding certain items discussed below
which includes 12b-1 plan payments) of Class A, Class B, Class C, Class R, and
Institutional Class shares for each Fund as follows:
<Table>
AIM Independence Now Fund 0.16%
- -------------------------------------------------------------------
AIM Independence 2010 Fund 0.17%
- -------------------------------------------------------------------
AIM Independence 2020 Fund 0.24%
- -------------------------------------------------------------------
AIM Independence 2030 Fund 0.24%
- -------------------------------------------------------------------
AIM Independence 2040 Fund 0.28%
- -------------------------------------------------------------------
AIM Independence 2050 Fund 0.28%
__________________________________________________________________
===================================================================
</Table>
In determining the advisor's obligation to reimburse expenses, the following
expenses are not taken into account, and will cause other expenses to exceed the
numbers reflected above: (i) 12b-1 plan payments (ii) interest; (iii) taxes;
(iv) dividend expense on short sales; (v) extraordinary items; (vi) expenses
related to a merger or reorganization, as approved by the Fund's Board of
Trustees; and (vii) expenses that the Funds have incurred but did not actually
pay because of an expense offset arrangement. Currently, in addition to the
expense reimbursement with Invesco described more fully below, the expense
offset arrangements from which the Funds may benefit are in the form of credits
that the Funds receive from banks where the Funds or its transfer agent have
deposit accounts in which it holds uninvested cash. Those credits are used to
pay certain expenses incurred by the Funds.
For the period January 31, 2007 (commencement date) to December 31, 2007,
AIM reimbursed the following expenses:
<Table>
<Caption>
FUND INSTITUTIONAL
LEVEL CLASS A CLASS B CLASS C CLASS R CLASS
- --------------------------------------------------------------------------------------------------------------------------------
AIM Independence Now Fund $207,137 $ 808 $ 315 $ 98 $ 91 $25
- --------------------------------------------------------------------------------------------------------------------------------
AIM Independence 2010 Fund 209,232 1,406 338 475 108 15
- --------------------------------------------------------------------------------------------------------------------------------
AIM Independence 2020 Fund 202,676 2,832 1,033 350 231 31
- --------------------------------------------------------------------------------------------------------------------------------
AIM Independence 2030 Fund 203,237 2,286 1,151 569 289 22
- --------------------------------------------------------------------------------------------------------------------------------
AIM Independence 2040 Fund 203,357 1,623 970 297 221 18
- --------------------------------------------------------------------------------------------------------------------------------
AIM Independence 2050 Fund 209,796 1,730 303 272 149 18
________________________________________________________________________________________________________________________________
================================================================================================================================
</Table>
The Trust has entered into a master administrative services agreement with
AIM pursuant to which each Fund has agreed to pay AIM for certain administrative
costs incurred in providing accounting services to such Fund. For the period
January 31, 2007 (commencement date) to December 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 each Fund has agreed to pay
AIS a fee for providing transfer agency and shareholder services to such Fund.
For the period January 31, 2007 (commencement date) to December 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 each Fund. The Trust has
adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to each
Fund's Class A, Class B, Class C and Class R shares (collectively the "Plans").
Each 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. Rules of the Financial Industry
Regulatory Authority ("FINRA"), formerly known as National Association of
Securities Dealers, impose a cap on the total sales charges, including
asset-based sales charges that may be paid by any class of shares of each Fund.
For the period January 31, 2007 (commencement date) to December 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")
are not recorded as expenses of the Funds. Front-end sales commissions are
deducted from proceeds from the sales of Fund shares prior to investment in
Class A shares of the Funds. CDSC are deducted from redemption
38
AIM Independence Funds
proceeds prior to remittance to the shareholder. During the period January 31,
2007 (commencement date) to December 31, 2007, ADI advised the Funds that ADI
retained the following in front-end sales commissions from the sale of Class A
shares:
<Table>
AIM Independence Now Fund $1,122
- --------------------------------------------------------------------
AIM Independence 2010 Fund 3,000
- --------------------------------------------------------------------
AIM Independence 2020 Fund 5,940
- --------------------------------------------------------------------
AIM Independence 2030 Fund 7,318
- --------------------------------------------------------------------
AIM Independence 2040 Fund 2,549
- --------------------------------------------------------------------
AIM Independence 2050 Fund 3,877
____________________________________________________________________
====================================================================
</Table>
ADI advised the Funds that ADI retained the following in CDSC imposed on
redemptions by shareholders:
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS R
- ------------------------------------------------------------------------------------------------------
AIM Independence Now Fund $ 77 $ 54 $ -- $ --
- ------------------------------------------------------------------------------------------------------
AIM Independence 2010 Fund 238 -- -- --
- ------------------------------------------------------------------------------------------------------
AIM Independence 2020 Fund 416 -- 408 --
- ------------------------------------------------------------------------------------------------------
AIM Independence 2030 Fund 130 738 26 --
- ------------------------------------------------------------------------------------------------------
AIM Independence 2040 Fund -- 36 -- --
- ------------------------------------------------------------------------------------------------------
AIM Independence 2050 Fund -- 57 67 --
______________________________________________________________________________________________________
======================================================================================================
</Table>
The underlying AIM Funds Institutional Class pay no distribution fees and
the Funds pay no sales loads or other similar compensation to ADI for acquiring
underlying fund shares.
Certain officers and trustees of the Trust are officers and directors of
AIM, AIS and/or ADI.
NOTE 3--EXPENSE OFFSET ARRANGEMENT
The expense offset arrangement is comprised of transfer agency credits which
result from balances in Demand Deposit Accounts (DDA) used by the transfer agent
for clearing shareholder transactions. For the period January 31, 2007
(commencement date) to December 31, 2007, the Funds received credits from this
arrangement, which resulted in the reduction of the Funds' total expenses of:
<Table>
<Caption>
TRANSFER AGENT
CREDITS
- ----------------------------------------------------------------------------
AIM Independence Now Fund $ --
- ----------------------------------------------------------------------------
AIM Independence 2010 Fund --
- ----------------------------------------------------------------------------
AIM Independence 2020 Fund 146
- ----------------------------------------------------------------------------
AIM Independence 2030 Fund 166
- ----------------------------------------------------------------------------
AIM Independence 2040 Fund 113
- ----------------------------------------------------------------------------
AIM Independence 2050 Fund 94
____________________________________________________________________________
============================================================================
</Table>
NOTE 4--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by each Fund
to pay remuneration to certain Trustees and Officers of such Fund. Trustees have
the option to defer compensation payable by the Funds, and "Trustees' and
Officer's Fees and Benefits" also include amounts accrued by each 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 each Fund to fund such retirement
benefits. Obligations under the deferred compensation and retirement plans
represent unsecured claims against the general assets of the Funds.
During the period January 31, 2007 (commencement date) to December 31, 2007,
the Funds paid legal fees for services rendered by Kramer, Levin, Naftalis &
Frankel LLP as counsel to the Independent Trustees as shown below. A member of
that firm is a Trustee of the Trust.
<Table>
<Caption>
LEGAL FEES
- ------------------------------------------------------------------------
AIM Independence Now Fund $2,551
- ------------------------------------------------------------------------
AIM Independence 2010 Fund 2,552
- ------------------------------------------------------------------------
AIM Independence 2020 Fund 2,553
- ------------------------------------------------------------------------
AIM Independence 2030 Fund 2,552
- ------------------------------------------------------------------------
AIM Independence 2040 Fund 2,551
- ------------------------------------------------------------------------
AIM Independence 2050 Fund 2,551
________________________________________________________________________
========================================================================
</Table>
39
AIM Independence Funds
NOTE 5--BORROWINGS
The Funds are a party to an uncommitted unsecured revolving credit facility with
State Street Bank and Trust Company ("SSB"). The Funds may borrow up to the
lesser of (i) $125,000,000, or (ii) the limits set by its prospectus for
borrowings. The Funds 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 January 31, 2007 (commencement date) to December 31, 2007,
the Funds did not borrow under the uncommitted unsecured revolving credit
facility.
Additionally, the Funds are permitted to temporarily carry a negative or
overdrawn balance in their 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 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the period January 31, 2007
(commencement date) to December 31, 2007 was as follows:
<Table>
<Caption>
2007
-----------------------------------------
ORDINARY LONG-TERM TOTAL
INCOME CAPITAL GAIN DISTRIBUTIONS
- -------------------------------------------------------------------------------------------------------
AIM Independence Now Fund $55,758 $ 3,018 $ 58,776
- -------------------------------------------------------------------------------------------------------
AIM Independence 2010 Fund 81,752 4,027 85,779
- -------------------------------------------------------------------------------------------------------
AIM Independence 2020 Fund 115,303 11,047 126,350
- -------------------------------------------------------------------------------------------------------
AIM Independence 2030 Fund 82,295 10,051 92,346
- -------------------------------------------------------------------------------------------------------
AIM Independence 2040 Fund 50,236 11,046 61,282
- -------------------------------------------------------------------------------------------------------
AIM Independence 2050 Fund 49,307 10,017 59,324
_______________________________________________________________________________________________________
=======================================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of December 31, 2007, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
NET
UNREALIZED
UNDISTRIBUTED UNDISTRIBUTED APPRECIATION TEMPORARY SHARES OF
ORDINARY LONG-TERM (DEPRECIATION) - BOOK/TAX BENEFICIAL TOTAL NET
INCOME GAIN INVESTMENTS DIFFERENCES INTEREST ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Independence Now Fund $20,424 $ 4,738 $ (18,985) $(2,676) $1,292,304 $1,295,805
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Independence 2010 Fund 20,571 15,290 (51,658) (2,742) 2,606,004 2,587,465
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Independence 2020 Fund 30,649 44,488 (199,590) (2,680) 5,062,881 4,935,748
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Independence 2030 Fund 26,073 40,573 (155,722) (2,678) 3,562,047 3,470,293
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Independence 2040 Fund 27,034 21,279 (92,652) (2,677) 1,929,068 1,882,052
- ---------------------------------------------------------------------------------------------------------------------------------
AIM Independence 2050 Fund 25,540 21,042 (54,581) (2,677) 1,723,142 1,712,466
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</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 Funds net unrealized
appreciation (depreciation) differences are 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 Funds temporary
book/tax differences are the result of the trustee deferral of compensation.
The Funds do not have a capital loss carryforward as of December 31, 2007.
40
AIM Independence Funds
NOTE 7--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
each Fund during the period January 31, 2007 (commencement date) to December 31,
2007 were as follows:
<Table>
<Caption>
PURCHASES SALES
- --------------------------------------------------------------------------------------------------------------------
AIM Independence Now Fund $1,439,012 $173,421
- --------------------------------------------------------------------------------------------------------------------
AIM Independence 2010 Fund 2,833,018 199,839
- --------------------------------------------------------------------------------------------------------------------
AIM Independence 2020 Fund 5,882,094 805,009
- --------------------------------------------------------------------------------------------------------------------
AIM Independence 2030 Fund 4,088,640 501,529
- --------------------------------------------------------------------------------------------------------------------
AIM Independence 2040 Fund 2,128,755 186,244
- --------------------------------------------------------------------------------------------------------------------
AIM Independence 2050 Fund 1,940,341 172,907
____________________________________________________________________________________________________________________
====================================================================================================================
</Table>
At December 31, 2007, the aggregate cost and the net unrealized appreciation
(depreciation) of investments for tax purposes are as follows:
<Table>
<Caption>
NET UNREALIZED
FEDERAL TAX UNREALIZED UNREALIZED APPRECIATION
COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
- -----------------------------------------------------------------------------------------------------------------------------
AIM Independence Now Fund $1,331,467 $ 7,492 $ (26,477) $ (18,985)
- -----------------------------------------------------------------------------------------------------------------------------
AIM Independence 2010 Fund 2,650,872 11,424 (63,082) (51,658)
- -----------------------------------------------------------------------------------------------------------------------------
AIM Independence 2020 Fund 5,219,507 9,557 (209,147) (199,590)
- -----------------------------------------------------------------------------------------------------------------------------
AIM Independence 2030 Fund 3,758,170 12,115 (167,837) (155,722)
- -----------------------------------------------------------------------------------------------------------------------------
AIM Independence 2040 Fund 1,967,609 8,590 (101,242) (92,652)
- -----------------------------------------------------------------------------------------------------------------------------
AIM Independence 2050 Fund 1,791,743 17,570 (72,151) (54,581)
_____________________________________________________________________________________________________________________________
=============================================================================================================================
</Table>
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of costs incurred during
the startup period of the Funds and excise tax expenses, on December 31, 2007,
the following reclassifications were made:
<Table>
<Caption>
UNDISTRIBUTED
NET INVESTMENT SHARES OF
INCOME BENEFICIAL INTEREST
- ---------------------------------------------------------------------------------------------------
AIM Independence Now Fund $40,325 $(40,325)
- ---------------------------------------------------------------------------------------------------
AIM Independence 2010 Fund 40,556 (40,556)
- ---------------------------------------------------------------------------------------------------
AIM Independence 2020 Fund 40,927 (40,927)
- ---------------------------------------------------------------------------------------------------
AIM Independence 2030 Fund 40,513 (40,513)
- ---------------------------------------------------------------------------------------------------
AIM Independence 2040 Fund 40,273 (40,273)
- ---------------------------------------------------------------------------------------------------
AIM Independence 2050 Fund 40,113 (40,113)
___________________________________________________________________________________________________
===================================================================================================
</Table>
These reclassifications had no effect on the net assets of the Funds.
41
AIM Independence Funds
NOTE 9--SHARE INFORMATION
The Fund currently offers five different classes of shares: Class A, Class B,
Class C, Class R and Institutional Class. Class A shares are sold with a
front-end sales charge 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
- ---------------------------------------------------------------------------------------------------------------------------------
AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE
NOW FUND 2010 FUND 2020 FUND
--------------------- --------------------- ---------------------
JANUARY 31, 2007 (COMMENCEMENT DATE) TO DECEMBER 31, 2007(a)
-----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 85,453 $ 862,785 171,813 $1,766,089 322,922 $3,331,014
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 34,525 349,508 41,774 429,020 109,022 1,120,921
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 7,350 73,311 41,894 425,993 66,394 683,482
- ---------------------------------------------------------------------------------------------------------------------------------
Class R 5,081 50,807 14,971 154,400 70,547 726,797
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class 9,924 100,030 5,001 50,010 5,989 60,030
=================================================================================================================================
Issued as reinvestment of dividends:
Class A 3,726 36,551 5,649 56,090 7,312 72,021
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 1,242 12,175 973 9,643 2,453 24,064
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 281 2,759 1,264 12,543 1,312 12,870
- ---------------------------------------------------------------------------------------------------------------------------------
Class R 289 2,846 394 3,914 1,671 16,441
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class 363 3,588 188 1,875 36 359
=================================================================================================================================
Automatic conversion of Class B shares to Class A
shares:
Class A 2,695 27,219 36 370 4,873 50,323
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (2,695) (27,219) (36) (370) (4,896) (50,323)
=================================================================================================================================
Reacquired:
Class A (9,308) (95,195) (13,228) (137,077) (62,885) (648,439)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (1,490) (15,259) (8,685) (88,752) (11,813) (123,238)
- ---------------------------------------------------------------------------------------------------------------------------------
Class C (6) (56) (3) (31) (7,885) (80,995)
- ---------------------------------------------------------------------------------------------------------------------------------
Class R (2) (20) (3,522) (37,157) (3,974) (41,430)
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class (4,972) (51,201) -- -- (4,816) (50,089)
=================================================================================================================================
132,456 $1,332,629 258,483 $2,646,560 496,262 $5,103,808
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
42
AIM Independence Funds
NOTE 9--SHARE INFORMATION--(CONTINUED)
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ---------------------------------------------------------------------------------------------------------------------------------
AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE
2030 FUND 2040 FUND 2050 FUND
--------------------- --------------------- ---------------------
JANUARY 31, 2007 (COMMENCEMENT DATE) TO DECEMBER 31, 2007(a)
-----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 182,962 $1,895,799 104,656 $1,083,818 130,666 $1,324,675
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 87,208 893,971 49,991 515,565 19,866 204,069
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 78,331 799,652 27,424 278,631 15,525 156,791
- ---------------------------------------------------------------------------------------------------------------------------------
Class R 43,006 441,059 15,078 153,537 15,221 149,001
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class 5,003 50,029 5,003 50,030 5,003 50,030
=================================================================================================================================
Issued as reinvestment of dividends:
Class A 4,997 48,768 3,208 31,053 4,563 43,941
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 2,049 19,937 1,601 15,452 654 6,281
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 1,266 12,313 809 7,802 486 4,668
- ---------------------------------------------------------------------------------------------------------------------------------
Class R 931 9,070 526 5,083 197 1,901
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class 42 408 195 1,890 209 2,012
=================================================================================================================================
Automatic conversion of Class B shares to Class A
shares:
Class A 367 3,750 168 1,695 1,146 11,361
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (368) (3,750) (168) (1,695) (1,146) (11,361)
=================================================================================================================================
Reacquired:
Class A (28,965) (300,220) (16,366) (169,721) (16,009) (167,889)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (12,226) (128,076) (347) (3,667) (532) (5,446)
- ---------------------------------------------------------------------------------------------------------------------------------
Class C (5,727) (59,680) (9) (91) (663) (6,738)
- ---------------------------------------------------------------------------------------------------------------------------------
Class R (3,852) (40,450) (2) (21) (2) (21)
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Class (3,797) (40,020) (2) (20) (2) (20)
=================================================================================================================================
351,227 $3,602,560 191,765 $1,969,341 175,182 $1,763,255
_________________________________________________________________________________________________________________________________
=================================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Funds. 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, some of the outstanding shares of the Funds are owned by AIM
or an investment advisor under common control with AIM. The aggregate
percentage of ownership for the Funds is as follows:
<Table>
<Caption>
RECORD OWNERS AIM AND/OR AFFILIATE
- ---------------------------------------------------------------------------------------------------
AIM Independence Now Fund 39% 20%
- ---------------------------------------------------------------------------------------------------
AIM Independence 2010 Fund 11 19
- ---------------------------------------------------------------------------------------------------
AIM Independence 2020 Fund 15 12
- ---------------------------------------------------------------------------------------------------
AIM Independence 2030 Fund 9 5
- ---------------------------------------------------------------------------------------------------
AIM Independence 2040 Fund 6 28
- ---------------------------------------------------------------------------------------------------
AIM Independence 2050 Fund -- 37
___________________________________________________________________________________________________
===================================================================================================
</Table>
43
AIM Independence Funds
NOTE 10--SIGNIFICANT EVENT
At a meeting held on December 13, 2007, the Board of Trustees of Trust approved
certain proposals to be presented for shareholder approval at a special meeting
of the shareholders of the Trust intended to be held on February 29, 2008 (the
"Special Meeting"). At the Special Meeting, shareholders of record as of the
close of business on November 30, 2007, are entitled to vote their respective
shares on several proposals that including, among others the following
proposal(s).
New proposed sub-advisory agreements between A I M Advisors, Inc. ("AIM")
and each of AIM Funds Management Inc., Invesco Asset Management Deutschland,
GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan)
Limited, Invesco Australia Limited, Invesco Global Asset Management (N.A.),
Inc., Invesco Hong Kong Limited, Invesco Institutional (N.A.), Inc. and Invesco
Senior Secured Management, Inc. (collectively, the "Affiliated Sub-Advisers")
(the "New Sub-advisory Arrangements"). This proposal is intended to benefit the
Fund and its shareholders by permitting AIM to utilize the additional resources
and talent of these affiliated sub-advisers in managing the Fund. Because AIM
would pay all of the sub-advisory fees of the sub-advisers, the new sub-advisory
arrangements would not affect the fees the Fund pays pursuant to the advisory
agreement. If approved by shareholders, the New Sub-advisory Arrangements are
expected to become effective on or about May 1, 2008.
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
AIM INDEPENDENCE NOW FUND
<Table>
<Caption>
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
------- ------- ------- ------- -------------
JANUARY 31, 2007 (COMMENCEMENT DATE) TO DECEMBER 31, 2007
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.02 $10.02 $10.02 $10.02 $10.02
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.41 0.34 0.34 0.39 0.43
- --------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) (0.07) (0.06) (0.06) (0.07) (0.07)
==========================================================================================================================
Total from investment operations 0.34 0.28 0.28 0.32 0.36
==========================================================================================================================
Less distributions:
Dividends from net investment income (0.54) (0.47) (0.47) (0.52) (0.56)
- --------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.04) (0.04) (0.04) (0.04) (0.04)
==========================================================================================================================
Total distributions (0.58) (0.51) (0.51) (0.56) (0.60)
==========================================================================================================================
Net asset value, end of period $ 9.78 $ 9.79 $ 9.79 $ 9.78 $ 9.78
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) 3.47% 2.79% 2.79% 3.21% 3.74%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 807 $ 309 $ 75 $ 53 $ 52
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements(c) 0.41% 1.16% 1.16% 0.66% 0.16%
- --------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements(c) 28.75% 29.50% 29.50% 29.00% 28.35%
==========================================================================================================================
Estimated acquired fund fees from underlying funds(d) 0.68% 0.68% 0.68% 0.68% 0.68%
==========================================================================================================================
Ratio of net investment income to average net assets(c) 4.41% 3.66% 3.66% 4.16% 4.66%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate(e) 27% 27% 27% 27% 27%
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $457,891,
$178,632, $55,375, $51,389 and $58,624 for Class A, Class B, Class C,
Class R and Institutional Class shares, respectively.
(d) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
44
AIM Independence Funds
NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM INDEPENDENCE 2010 FUND
<Table>
<Caption>
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
------- ------- ------- ------- -------------
JANUARY 31, 2007 (COMMENCEMENT DATE) TO DECEMBER 31, 2007
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.02 $10.02 $10.02 $10.02 $10.02
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.43 0.35 0.35 0.40 0.45
- --------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) (0.07) (0.06) (0.05) (0.06) (0.07)
==========================================================================================================================
Total from investment operations 0.36 0.29 0.30 0.34 0.38
==========================================================================================================================
Less distributions:
Dividends from net investment income (0.34) (0.30) (0.30) (0.33) (0.35)
- --------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.02) (0.02) (0.02) (0.02) (0.02)
==========================================================================================================================
Total distributions (0.36) (0.32) (0.32) (0.35) (0.37)
==========================================================================================================================
Net asset value, end of period $10.02 $ 9.99 $10.00 $10.01 $10.03
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) 3.65% 2.92% 3.02% 3.41% 3.87%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,645 $ 340 $ 431 $ 119 $ 52
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements(c) 0.42% 1.17% 1.17% 0.67% 0.17%
- --------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements(c) 16.42% 17.17% 17.17% 16.67% 16.02%
==========================================================================================================================
Estimated acquired fund fees from underlying funds(d) 0.70% 0.70% 0.70% 0.70% 0.70%
==========================================================================================================================
Ratio of net investment income to average net assets(c) 4.50% 3.75% 3.75% 4.25% 4.75%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate(e) 15% 15% 15% 15% 15%
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $839,688,
$201,947, $283,419, $64,445 and $51,554 for Class A, Class B, Class C,
Class R and Institutional Class shares, respectively.
(d) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
45
AIM Independence Funds
NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM INDEPENDENCE 2020 FUND
<Table>
<Caption>
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
------- ------- ------- ------- -------------
JANUARY 31, 2007 (COMMENCEMENT DATE) TO DECEMBER 31, 2007
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.02 $10.02 $10.02 $10.02 $10.02
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.41 0.34 0.34 0.38 0.43
- --------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) (0.17) (0.17) (0.17) (0.16) (0.15)
==========================================================================================================================
Total from investment operations 0.24 0.17 0.17 0.22 0.28
==========================================================================================================================
Less distributions:
Dividends from net investment income (0.25) (0.22) (0.22) (0.24) (0.26)
- --------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.05) (0.05) (0.05) (0.05) (0.05)
==========================================================================================================================
Total distributions (0.30) (0.27) (0.27) (0.29) (0.31)
==========================================================================================================================
Net asset value, end of period $ 9.96 $ 9.92 $ 9.92 $ 9.95 $ 9.99
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) 2.38% 1.68% 1.68% 2.19% 2.80%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,711 $ 940 $ 593 $ 679 $ 12
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements(c) 0.50% 1.25% 1.25% 0.75% 0.25%
- --------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements(c) 10.04% 10.79% 10.79% 10.29% 9.67%
==========================================================================================================================
Estimated acquired fund fees from underlying funds(d) 0.78% 0.78% 0.78% 0.78% 0.78%
==========================================================================================================================
Ratio of net investment income to average net assets(c) 4.33% 3.58% 3.58% 4.08% 4.58%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate(e) 37% 37% 37% 37% 37%
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges and is not
annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of
$1,481,116, $540,062, $183,052, $121,013 and $40,377 for Class A, Class
B, Class C, Class R and Institutional Class shares, respectively.
(d) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
46
AIM Independence Funds
NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM INDEPENDENCE 2030 FUND
<Table>
<Caption>
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
------- ------- ------- ------- -------------
JANUARY 31, 2007 (COMMENCEMENT DATE) TO DECEMBER 31, 2007
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.02 $10.02 $10.02 $10.02 $10.02
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.34 0.27 0.27 0.32 0.37
- --------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.14) (0.13) (0.13) (0.15) (0.15)
==========================================================================================================================
Total from investment operations 0.20 0.14 0.14 0.17 0.22
==========================================================================================================================
Less distributions:
Dividends from net investment income (0.28) (0.24) (0.24) (0.26) (0.29)
- --------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.05) (0.05) (0.05) (0.05) (0.05)
==========================================================================================================================
Total distributions (0.33) (0.29) (0.29) (0.31) (0.34)
==========================================================================================================================
Net asset value, end of period $ 9.89 $ 9.87 $ 9.87 $ 9.88 $ 9.90
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) 2.00% 1.42% 1.425% 1.78% 2.23%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,577 $ 756 $ 729 $ 396 $ 12
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements(c) 0.50% 1.25% 1.25% 0.75% 0.25%
- --------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements(c) 13.53% 14.28% 14.28% 13.78% 13.07%
==========================================================================================================================
Estimated acquired fund fees from underlying funds(d) 0.80% 0.80% 0.80% 0.80% 0.80%
==========================================================================================================================
Ratio of net investment income to average net assets(c) 3.60% 2.85% 2.85% 3.35% 3.85%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate(e) 31% 31% 31% 31% 31%
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges, if any, and is
not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $902,202,
$454,393, $224,363, $114,187 and $40,467, for Class A, Class B, Class C,
Class R and Institutional Class, respectively.
(d) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
47
AIM Independence Funds
NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM INDEPENDENCE 2040 FUND
<Table>
<Caption>
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
------- ------- ------- ------- -------------
JANUARY 31, 2007 (COMMENCEMENT DATE) TO DECEMBER 31, 2007
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.02 $10.02 $10.02 $10.02 $10.02
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.31 0.24 0.24 0.28 0.34
- --------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.13) (0.13) (0.13) (0.13) (0.14)
==========================================================================================================================
Total from investment operations 0.18 0.11 0.11 0.15 0.20
==========================================================================================================================
Less distributions:
Dividends from net investment income (0.28) (0.24) (0.24) (0.26) (0.29)
- --------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.09) (0.09) (0.09) (0.09) (0.09)
==========================================================================================================================
Total distributions (0.37) (0.33) (0.33) (0.35) (0.38)
==========================================================================================================================
Net asset value, end of period $ 9.83 $ 9.80 $ 9.80 $ 9.82 $ 9.84
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) 1.81% 1.15% 1.15% 1.59% 2.03%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 901 $ 500 $ 277 $ 153 $ 51
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements(c) 0.54% 1.29% 1.29% 0.79% 0.28%
- --------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements(c) 22.43% 23.18% 23.18% 22.68% 21.86%
==========================================================================================================================
Estimated acquired fund fees from underlying funds(d) 0.81% 0.81% 0.81% 0.81% 0.81%
==========================================================================================================================
Ratio of net investment income to average net assets(c) 3.26% 2.51% 2.51% 3.01% 3.53%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate(e) 20% 20% 20% 20% 20%
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges, if any, and is
not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $509,497,
$304,499, $93,289, $69,535 and $51,819, for Class A, Class B, Class C,
Class R and Institutional Class, respectively.
(d) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
48
AIM Independence Funds
NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
AIM INDEPENDENCE 2050 FUND
<Table>
<Caption>
INSTITUTIONAL
CLASS A CLASS B CLASS C CLASS R CLASS
------- ------- ------- ------- -------------
JANUARY 31, 2007 (COMMENCEMENT DATE) TO DECEMBER 31, 2007
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.02 $10.02 $10.02 $10.02 $10.02
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.29 0.21 0.21 0.26 0.31
- --------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.14) (0.13) (0.12) (0.14) (0.14)
==========================================================================================================================
Total from investment operations 0.15 0.08 0.09 0.12 0.17
==========================================================================================================================
Less distributions:
Dividends from net investment income (0.29) (0.25) (0.25) (0.27) (0.30)
- --------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.10) (0.10) (0.10) (0.10) (0.10)
==========================================================================================================================
Total distributions (0.39) (0.35) (0.35) (0.37) (0.40)
==========================================================================================================================
Net asset value, end of period $ 9.78 $ 9.75 $ 9.76 $ 9.77 $ 9.79
__________________________________________________________________________________________________________________________
==========================================================================================================================
Total return(b) 1.55% 0.80% 0.90% 1.29% 1.78%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,177 $ 184 $ 150 $ 151 $ 51
__________________________________________________________________________________________________________________________
==========================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements(c) 0.54% 1.29% 1.29% 0.79% 0.28%
- --------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements(c) 24.63% 25.38% 25.38% 24.88% 24.12%
==========================================================================================================================
Estimated acquired fund fees from underlying funds(d) 0.82% 0.82% 0.82% 0.82% 0.82%
==========================================================================================================================
Ratio of net investment income to average net assets(c) 3.01% 2.26% 2.26% 2.76% 3.27%
__________________________________________________________________________________________________________________________
==========================================================================================================================
Portfolio turnover rate(e) 20% 20% 20% 20% 20%
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges, if any, and is
not annualized for periods less than one year.
(c) Ratios are annualized and based on average daily net assets of $640,741,
$112,067, $100,676, $55,112 and $51,828, for Class A, Class B, Class C,
Class R and Institutional Class, respectively.
(d) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 12--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
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.
49
AIM Independence Funds
NOTE 12--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 Ltd. ("Invesco") 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.
50
AIM Independence Funds
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Growth Series
and Shareholders of:
AIM Independence Now Fund,
AIM Independence 2010 Fund,
AIM Independence 2020 Fund,
AIM Independence 2030 Fund,
AIM Independence 2040 Fund
and AIM Independence 2050 Fund:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules 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 Independence Now Fund, AIM
Independence 2010 Fund, AIM Independence 2020 Fund, AIM Independence 2030 Fund,
AIM Independence 2040 Fund and AIM Independence 2050 Fund (six of the funds
constituting AIM Growth Series, hereafter referred to as the "Funds") at
December 31, 2007, and the results of each of their operations, the changes in
each of their net assets and the financial highlights for the period January 31,
2007 (commencement date) through December 31, 2007, 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 Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at December 31, 2007 by
correspondence with the custodian, provides a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
February 15, 2008
Houston, Texas
51
AIM Independence Funds
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments or
contingent deferred sales charges on redemptions, and redemption fees, if any;
and (2) ongoing costs, including distribution and/or service (12b-1) fees; and
other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period July 1, 2007, through December 31, 2007.
In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the underlying
funds in which your Fund invests. The amount of fees and expenses incurred
indirectly by your Fund will vary because the underlying funds have varied
expenses and fee levels and the Fund may own different proportions of the
underlying funds at different times. Estimated underlying fund expenses are not
expenses that are incurred directly by your Fund. They are expenses that are
incurred directly by the underlying funds and are deducted from the value of the
funds your Fund invests in. The effect of the estimated underlying fund expenses
that you bear indirectly are included in your Fund's total return.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the hypothetical
information is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition,
expenses shown in the table do not include the expenses of the underlying funds,
which are borne indirectly by the Fund. If transaction costs and indirect
expenses were included, your costs would have been higher.
AIM INDEPENDENCE NOW FUND
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $1,006.00 $2.07 $1,023.14 $2.09 0.41%
B 1,000.00 1,002.20 5.85 1,019.36 5.90 1.16
C 1,000.00 1,002.20 5.85 1,019.36 5.90 1.16
R 1,000.00 1,004.80 3.34 1,021.88 3.36 0.66
</Table>
AIM INDEPENDENCE 2010 FUND
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $1,004.40 $2.12 $1,023.09 $2.14 0.42%
B 1,000.00 1,000.30 5.90 1,019.31 5.96 1.17
C 1,000.00 1,001.20 5.90 1,019.31 5.96 1.17
R 1,000.00 1,003.00 3.38 1,021.83 3.41 0.67
</Table>
52
AIM Independence Funds
AIM INDEPENDENCE 2020 FUND
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $986.40 $2.45 $1,022.74 $2.50 0.49%
B 1,000.00 983.40 6.20 1,018.95 6.31 1.24
C 1,000.00 983.40 6.20 1,018.95 6.31 1.24
R 1,000.00 985.60 3.70 1,021.48 3.77 0.74
</Table>
AIM INDEPENDENCE 2030 FUND
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $972.40 $2.49 $1,022.68 $2.55 0.50%
B 1,000.00 969.70 6.21 1,018.90 6.36 1.25
C 1,000.00 969.70 6.21 1,018.90 6.36 1.25
R 1,000.00 971.30 3.73 1,021.42 3.82 0.75
</Table>
AIM INDEPENDENCE 2040 FUND
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $968.80 $2.73 $1,022.43 $2.80 0.55%
B 1,000.00 965.20 6.44 1,018.65 6.61 1.30
C 1,000.00 965.20 6.44 1,018.65 6.61 1.30
R 1,000.00 967.60 3.97 1,021.17 4.08 0.80
</Table>
AIM INDEPENDENCE 2050 FUND
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $965.40 $2.68 $1,022.48 $2.75 0.54%
B 1,000.00 961.00 6.38 1,018.70 6.56 1.29
C 1,000.00 962.00 6.38 1,018.70 6.56 1.29
R 1,000.00 963.90 3.91 1,021.22 4.02 0.79
</Table>
(1) The actual ending account value is based on the actual total return of
the Fund for the period July 1, 2007, through December 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.
53
Supplement to Annual Report dated 12/31/07
AIM Independence Funds
o AIM Independence Now Fund
o AIM Independence 2010 Fund
o AIM Independence 2020 Fund
o AIM Independence 2030 Fund
o AIM Independence 2040 Fund
o AIM Independence 2050 Fund
Institutional Class Shares
The following information has been prepared to provide Institutional Class shareholders with a performance overview specific to
their holdings. Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans
that meet certain criteria.
==========================================
NASDAQ SYMBOLS
AIM INDEPENDENCE NOW FUND IANIX
AIM INDEPENDENCE 2010 FUND INJIX
AIM INDEPENDENCE 2020 FUND AFTSX
AIM INDEPENDENCE 2030 FUND TNAIX
AIM INDEPENDENCE 2040 FUND TNDIX
AIM INDEPENDENCE 2050 FUND TNEIX
==========================================
=================================================================================
THIS SUPPLEMENT 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 IND-INS-1 A I M Distributors, Inc. -- REGISTERED TRADEMARK --
Information about your Fund's expenses
AIM Independence Now Fund long-term performance
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 1/31/07
LIPPER MIXED-ASSET
AIM INDEPENDENCE NOW TARGET ALLOCATION
FUND-INSTITUTIONAL CLASS CUSTOM INDEPENDENCE CONSERVATIVE
DATE SHARES S&P 500 INDEX(1) NOW INDEX(2) FUNDS INDEX(1)
1/31/07 $10000 $10000 $10000 $10000
2/07 10020 9805 10054 10041
3/07 10110 9914 10103 10103
4/07 10271 10353 10285 10269
5/07 10361 10714 10364 10350
6/07 10299 10536 10284 10271
7/07 10178 10210 10207 10210
8/07 10239 10363 10315 10260
9/07 10400 10750 10515 10473
10/07 10543 10921 10657 10607
11/07 10380 10464 10593 10521
12/07 10374 10392 10580 10503
====================================================================================================================================
SOURCES: (1)LIPPER INC., (2)A I M MANAGEMENT GROUP INC., LIPPER INC.
Past performance cannot guarantee Performance shown in the chart and in the annual report is that of the Fund's
comparable future results. table(s) does not reflect deduction of Class A, B, C and R shares. The
taxes a shareholder would pay on Fund performance of the Fund's other share
The data shown in the chart above distributions or sale of Fund shares. classes will differ primarily due to
includes reinvested distributions, Fund Performance of the indexes does not different sales charge structures and
expenses and management fees. Index reflect the effects of taxes. class expenses, and may be greater than or
results include reinvested dividends. less than the performance of the Fund's
Performance of an index of funds reflects The performance data shown in the chart Institutional Class shares shown in the
fund expenses and management fees; above is that of the Fund's institutional chart above.
performance of a market index does not. share class. The performance data shown in
the chart
AIM Independence Now Fund INSTITUTIONAL CLASS SHARES HAVE NO SALES HAD THE ADVISOR NOT WAIVED FEES AND/OR
========================================== CHARGE; THEREFORE, PERFORMANCE IS AT NET REIMBURSED EXPENSES, PERFORMANCE WOULD
CUMULATIVE TOTAL RETURNS ASSET VALUE (NAV). PERFORMANCE OF HAVE BEEN LOWER.
For periods ended 12/31/07 INSTITUTIONAL CLASS SHARES WILL DIFFER
FROM PERFORMANCE OF OTHER SHARE CLASSES INVESTMENT RETURN AND PRINCIPAL VALUE
Inception (1/31/07) 3.74% PRIMARILY DUE TO DIFFERING SALES CHARGES WILL FLUCTUATE SO YOUR SHARES, WHEN
========================================== AND CLASS EXPENSES. REDEEMED, MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. SEE FULL REPORT FOR
PLEASE NOTE THAT PAST PERFORMANCE IS INFORMATION ON COMPARATIVE BENCHMARKS.
NOT INDICATIVE OF FUTURE RESULTS. MORE PLEASE CONSULT YOUR FUND PROSPECTUS FOR
RECENT RETURNS MAY BE MORE OR LESS THAN MORE INFORMATION. FOR THE MOST CURRENT
THOSE SHOWN. ALL RETURNS ASSUME MONTH-END PERFORMANCE, PLEASE CALL
REINVESTMENT OF DISTRIBUTIONS AT NAV. 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
Information about your Fund's expenses
AIM Independence 2010 Fund long-term performance
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 1/31/07
AIM INDEPENDENCE LIPPER MIXED-ASSET
2010 FUND-INSTITUTIONAL CUSTOM INDEPENDENCE TARGET 2010 FUNDS
DATE CLASS SHARES S&P 500 INDEX(1) 2010 INDEX(2) INDEX(1)
1/31/07 $10000 $10000 $10000 $10000
2/07 10020 9805 10046 10001
3/07 10120 9914 10102 10067
4/07 10290 10353 10303 10297
5/07 10400 10714 10397 10440
6/07 10331 10536 10309 10354
7/07 10181 10210 10216 10251
8/07 10251 10363 10323 10302
9/07 10430 10750 10543 10564
10/07 10590 10921 10695 10741
11/07 10401 10464 10606 10550
12/07 10387 10392 10585 10512
====================================================================================================================================
SOURCES: (1)LIPPER INC., (2)A I M MANAGEMENT GROUP INC., LIPPER INC.
Past performance cannot guarantee Performance shown in the chart and in the annual report is that of the Fund's
comparable future results. table(s) does not reflect deduction of Class A, B, C and R shares. The
taxes a shareholder would pay on Fund performance of the Fund's other share
The data shown in the chart above distributions or sale of Fund shares. classes will differ primarily due to
includes reinvested distributions, Fund Performance of the indexes does not different sales charge structures and
expenses and management fees. Index reflect the effects of taxes. class expenses, and may be greater than or
results include reinvested dividends. less than the performance of the Fund's
Performance of an index of funds reflects The performance data shown in the chart Institutional Class shares shown in the
fund expenses and management fees; above is that of the Fund's institutional chart above.
performance of a market index does not. share class. The performance data shown in
the chart
AIM Independence 2010 Fund INSTITUTIONAL CLASS SHARES HAVE NO SALES HAD THE ADVISOR NOT WAIVED FEES AND/OR
========================================== CHARGE; THEREFORE, PERFORMANCE IS AT NET REIMBURSED EXPENSES, PERFORMANCE WOULD
CUMULATIVE TOTAL RETURNS ASSET VALUE (NAV). PERFORMANCE OF HAVE BEEN LOWER.
For periods ended 12/31/07 INSTITUTIONAL CLASS SHARES WILL DIFFER
FROM PERFORMANCE OF OTHER SHARE CLASSES INVESTMENT RETURN AND PRINCIPAL VALUE
Inception (1/31/07) 3.87% PRIMARILY DUE TO DIFFERING SALES CHARGES WILL FLUCTUATE SO YOUR SHARES, WHEN
========================================== AND CLASS EXPENSES. REDEEMED, MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. SEE FULL REPORT FOR
PLEASE NOTE THAT PAST PERFORMANCE IS INFORMATION ON COMPARATIVE BENCHMARKS.
NOT INDICATIVE OF FUTURE RESULTS. MORE PLEASE CONSULT YOUR FUND PROSPECTUS FOR
RECENT RETURNS MAY BE MORE OR LESS THAN MORE INFORMATION. FOR THE MOST CURRENT
THOSE SHOWN. ALL RETURNS ASSUME MONTH-END PERFORMANCE, PLEASE CALL
REINVESTMENT OF DISTRIBUTIONS AT NAV. 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
Information about your Fund's expenses
AIM Independence 2020 Fund long-term performance
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 1/31/07
AIM INDEPENDENCE LIPPER MIXED-ASSET
2020 FUND-INSTITUTIONAL CUSTOM INDEPENDENCE TARGET 2020 FUNDS
DATE CLASS SHARES S&P 500 INDEX(1) 2020 INDEX(2) INDEX(1)
1/31/07 $10000 $10000 $10000 $10000
2/07 9980 9805 10008 9974
3/07 10110 9914 10094 10046
4/07 10339 10353 10357 10293
5/07 10509 10714 10517 10481
6/07 10389 10536 10397 10363
7/07 10140 10210 10231 10219
8/07 10230 10363 10325 10310
9/07 10480 10750 10622 10591
10/07 10679 10921 10815 10803
11/07 10339 10464 10595 10569
12/07 10280 10392 10527 10502
====================================================================================================================================
SOURCES: (1)LIPPER INC., (2)A I M MANAGEMENT GROUP INC., LIPPER INC.
Past performance cannot guarantee Performance shown in the chart and in the annual report is that of the Fund's
comparable future results. table(s) does not reflect deduction of Class A, B, C and R shares. The
taxes a shareholder would pay on Fund performance of the Fund's other share
The data shown in the chart above distributions or sale of Fund shares. classes will differ primarily due to
includes reinvested distributions, Fund Performance of the indexes does not different sales charge structures and
expenses and management fees. Index reflect the effects of taxes. class expenses, and may be greater than or
results include reinvested dividends. less than the performance of the Fund's
Performance of an index of funds reflects The performance data shown in the chart Institutional Class shares shown in the
fund expenses and management fees; above is that of the Fund's institutional chart above.
performance of a market index does not. share class. The performance data shown in
the chart
AIM Independence 2020 Fund INSTITUTIONAL CLASS SHARES HAVE NO SALES HAD THE ADVISOR NOT WAIVED FEES AND/OR
========================================== CHARGE; THEREFORE, PERFORMANCE IS AT NET REIMBURSED EXPENSES, PERFORMANCE WOULD
CUMULATIVE TOTAL RETURNS ASSET VALUE (NAV). PERFORMANCE OF HAVE BEEN LOWER.
For periods ended 12/31/07 INSTITUTIONAL CLASS SHARES WILL DIFFER
FROM PERFORMANCE OF OTHER SHARE CLASSES INVESTMENT RETURN AND PRINCIPAL VALUE
Inception (1/31/07) 2.80% PRIMARILY DUE TO DIFFERING SALES CHARGES WILL FLUCTUATE SO YOUR SHARES, WHEN
========================================== AND CLASS EXPENSES. REDEEMED, MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. SEE FULL REPORT FOR
PLEASE NOTE THAT PAST PERFORMANCE IS INFORMATION ON COMPARATIVE BENCHMARKS.
NOT INDICATIVE OF FUTURE RESULTS. MORE PLEASE CONSULT YOUR FUND PROSPECTUS FOR
RECENT RETURNS MAY BE MORE OR LESS THAN MORE INFORMATION. FOR THE MOST CURRENT
THOSE SHOWN. ALL RETURNS ASSUME MONTH-END PERFORMANCE, PLEASE CALL
REINVESTMENT OF DISTRIBUTIONS AT NAV. 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
Information about your Fund's expenses
AIM Independence 2030 Fund long-term performance
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 1/31/07
AIM INDEPENDENCE LIPPER MIXED-ASSET
2030 FUND-INSTITUTIONAL CUSTOM INDEPENDENCE TARGET 2030 FUNDS
DATE CLASS SHARES S&P 500 INDEX(1) 2030 INDEX(2) INDEX(1)
1/31/07 $10000 $10000 $10000 $10000
2/07 9930 9805 9960 9943
3/07 10110 9914 10074 10048
4/07 10389 10353 10404 10405
5/07 10638 10714 10641 10691
6/07 10499 10536 10494 10567
7/07 10180 10210 10254 10380
8/07 10269 10363 10338 10408
9/07 10548 10750 10704 10792
10/07 10788 10921 10931 11067
11/07 10319 10464 10583 10654
12/07 10223 10392 10482 10562
====================================================================================================================================
SOURCES: (1)LIPPER INC., (2)A I M MANAGEMENT GROUP INC., LIPPER INC.
Past performance cannot guarantee Performance shown in the chart and in the annual report is that of the Fund's
comparable future results. table(s) does not reflect deduction of Class A, B, C and R shares. The
taxes a shareholder would pay on Fund performance of the Fund's other share
The data shown in the chart above distributions or sale of Fund shares. classes will differ primarily due to
includes reinvested distributions, Fund Performance of the indexes does not different sales charge structures and
expenses and management fees. Index reflect the effects of taxes. class expenses, and may be greater than or
results include reinvested dividends. less than the performance of the Fund's
Performance of an index of funds reflects The performance data shown in the chart Institutional Class shares shown in the
fund expenses and management fees; above is that of the Fund's institutional chart above.
performance of a market index does not. share class. The performance data shown in
the chart
AIM Independence 2030 Fund INSTITUTIONAL CLASS SHARES HAVE NO SALES HAD THE ADVISOR NOT WAIVED FEES AND/OR
========================================== CHARGE; THEREFORE, PERFORMANCE IS AT NET REIMBURSED EXPENSES, PERFORMANCE WOULD
CUMULATIVE TOTAL RETURNS ASSET VALUE (NAV). PERFORMANCE OF HAVE BEEN LOWER.
For periods ended 12/31/07 INSTITUTIONAL CLASS SHARES WILL DIFFER
FROM PERFORMANCE OF OTHER SHARE CLASSES INVESTMENT RETURN AND PRINCIPAL VALUE
Inception (1/31/07) 2.23% PRIMARILY DUE TO DIFFERING SALES CHARGES WILL FLUCTUATE SO YOUR SHARES, WHEN
========================================== AND CLASS EXPENSES. REDEEMED, MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. SEE FULL REPORT FOR
PLEASE NOTE THAT PAST PERFORMANCE IS INFORMATION ON COMPARATIVE BENCHMARKS.
NOT INDICATIVE OF FUTURE RESULTS. MORE PLEASE CONSULT YOUR FUND PROSPECTUS FOR
RECENT RETURNS MAY BE MORE OR LESS THAN MORE INFORMATION. FOR THE MOST CURRENT
THOSE SHOWN. ALL RETURNS ASSUME MONTH-END PERFORMANCE, PLEASE CALL
REINVESTMENT OF DISTRIBUTIONS AT NAV. 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
Information about your Fund's expenses
AIM Independence 2040 Fund long-term performance
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 1/31/07
AIM INDEPENDENCE LIPPER MIXED-ASSET
2040 FUND-INSTITUTIONAL CUSTOM INDEPENDENCE TARGET 2030+ FUNDS
DATE CLASS SHARES S&P 500 INDEX(1) 2040 INDEX(2) INDEX(1)
1/31/07 $10000 $10000 $10000 $10000
2/07 9910 9805 9940 9926
3/07 10079 9914 10065 10053
4/07 10389 10353 10424 10409
5/07 10668 10714 10694 10745
6/07 10519 10536 10534 10612
7/07 10170 10210 10261 10334
8/07 10259 10363 10341 10382
9/07 10559 10750 10738 10806
10/07 10819 10921 10980 11099
11/07 10310 10464 10574 10615
12/07 10203 10392 10458 10522
====================================================================================================================================
SOURCES: (1)LIPPER INC., (2)A I M MANAGEMENT GROUP INC., LIPPER INC.
Past performance cannot guarantee Performance shown in the chart and in the annual report is that of the Fund's
comparable future results. table(s) does not reflect deduction of Class A, B, C and R shares. The
taxes a shareholder would pay on Fund performance of the Fund's other share
The data shown in the chart above distributions or sale of Fund shares. classes will differ primarily due to
includes reinvested distributions, Fund Performance of the indexes does not different sales charge structures and
expenses and management fees. Index reflect the effects of taxes. class expenses, and may be greater than or
results include reinvested dividends. less than the performance of the Fund's
Performance of an index of funds reflects The performance data shown in the chart Institutional Class shares shown in the
fund expenses and management fees; above is that of the Fund's institutional chart above.
performance of a market index does not. share class. The performance data shown in
the chart
AIM Independence 2040 Fund INSTITUTIONAL CLASS SHARES HAVE NO SALES HAD THE ADVISOR NOT WAIVED FEES AND/OR
========================================== CHARGE; THEREFORE, PERFORMANCE IS AT NET REIMBURSED EXPENSES, PERFORMANCE WOULD
CUMULATIVE TOTAL RETURNS ASSET VALUE (NAV). PERFORMANCE OF HAVE BEEN LOWER.
For periods ended 12/31/07 INSTITUTIONAL CLASS SHARES WILL DIFFER
FROM PERFORMANCE OF OTHER SHARE CLASSES INVESTMENT RETURN AND PRINCIPAL VALUE
Inception (1/31/07) 2.03% PRIMARILY DUE TO DIFFERING SALES CHARGES WILL FLUCTUATE SO YOUR SHARES, WHEN
========================================== AND CLASS EXPENSES. REDEEMED, MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. SEE FULL REPORT FOR
PLEASE NOTE THAT PAST PERFORMANCE IS INFORMATION ON COMPARATIVE BENCHMARKS.
NOT INDICATIVE OF FUTURE RESULTS. MORE PLEASE CONSULT YOUR FUND PROSPECTUS FOR
RECENT RETURNS MAY BE MORE OR LESS THAN MORE INFORMATION. FOR THE MOST CURRENT
THOSE SHOWN. ALL RETURNS ASSUME MONTH-END PERFORMANCE, PLEASE CALL
REINVESTMENT OF DISTRIBUTIONS AT NAV. 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
Information about your Fund's expenses
AIM Independence 2050 Fund long-term performance
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 1/31/07
AIM INDEPENDENCE LIPPER MIXED-ASSET
2050 FUND-INSTITUTIONAL CUSTOM INDEPENDENCE TARGET 2030+ FUNDS
DATE CLASS SHARES S&P 500 INDEX(1) 2050 INDEX(2) INDEX(1)
1/31/07 $10000 $10000 $10000 $10000
2/07 9890 9805 9925 9926
3/07 10070 9914 10058 10053
4/07 10389 10353 10438 10409
5/07 10688 10714 10732 10745
6/07 10529 10536 10563 10612
7/07 10160 10210 10267 10334
8/07 10269 10363 10343 10382
9/07 10578 10750 10762 10806
10/07 10858 10921 11015 11099
11/07 10299 10464 10568 10615
12/07 10178 10392 10441 10522
====================================================================================================================================
SOURCES: (1)LIPPER INC., (2)A I M MANAGEMENT GROUP INC., LIPPER INC.
Past performance cannot guarantee Performance shown in the chart and in the annual report is that of the Fund's
comparable future results. table(s) does not reflect deduction of Class A, B, C and R shares. The
taxes a shareholder would pay on Fund performance of the Fund's other share
The data shown in the chart above distributions or sale of Fund shares. classes will differ primarily due to
includes reinvested distributions, Fund Performance of the indexes does not different sales charge structures and
expenses and management fees. Index reflect the effects of taxes. class expenses, and may be greater than or
results include reinvested dividends. less than the performance of the Fund's
Performance of an index of funds reflects The performance data shown in the chart Institutional Class shares shown in the
fund expenses and management fees; above is that of the Fund's institutional chart above.
performance of a market index does not. share class. The performance data shown in
the chart
AIM Independence 2050 Fund INSTITUTIONAL CLASS SHARES HAVE NO SALES HAD THE ADVISOR NOT WAIVED FEES AND/OR
========================================== CHARGE; THEREFORE, PERFORMANCE IS AT NET REIMBURSED EXPENSES, PERFORMANCE WOULD
CUMULATIVE TOTAL RETURNS ASSET VALUE (NAV). PERFORMANCE OF HAVE BEEN LOWER.
For periods ended 12/31/07 INSTITUTIONAL CLASS SHARES WILL DIFFER
FROM PERFORMANCE OF OTHER SHARE CLASSES INVESTMENT RETURN AND PRINCIPAL VALUE
Inception (1/31/07) 1.78% PRIMARILY DUE TO DIFFERING SALES CHARGES WILL FLUCTUATE SO YOUR SHARES, WHEN
========================================== AND CLASS EXPENSES. REDEEMED, MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. SEE FULL REPORT FOR
PLEASE NOTE THAT PAST PERFORMANCE IS INFORMATION ON COMPARATIVE BENCHMARKS.
NOT INDICATIVE OF FUTURE RESULTS. MORE PLEASE CONSULT YOUR FUND PROSPECTUS FOR
RECENT RETURNS MAY BE MORE OR LESS THAN MORE INFORMATION. FOR THE MOST CURRENT
THOSE SHOWN. ALL RETURNS ASSUME MONTH-END PERFORMANCE, PLEASE CALL
REINVESTMENT OF DISTRIBUTIONS AT NAV. 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
AIM Independence Funds
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs. This example is intended
to help you understand your ongoing costs (in dollars) of investing in the Fund
and to compare these costs with ongoing costs of investing in other mutual
funds. The example is based on an investment of $1,000 invested at the beginning
of the period and held for the entire period July 1, 2007, through December 31,
2007.
In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the underlying
funds in which your Fund invests. The amount of fees and expenses incurred
indirectly by your Fund will vary because the underlying funds have varied
expenses and fee levels and the Fund may own different proportions of the
underlying funds at different times. Estimated underlying fund expenses are not
expenses that are incurred directly by your Fund. They are expenses that are
incurred directly by the underlying funds and are deducted from the value of the
funds your Fund invests in. The effect of the estimated underlying fund expenses
that you bear indirectly are included in your Fund's total return.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. Therefore, the hypothetical information is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, expenses shown in the table do not
include the expenses of the underlying funds, which are borne indirectly by the
Fund. If indirect expenses were included, your costs would have been higher.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
INSTITUTIONAL CLASS (7/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
AIM Independence Now Fund $1,000.00 $1,007.30 $0.81 $1,024.40 $0.82 0.16%
AIM Independence 2010
Fund 1,000.00 1,005.60 0.86 1,024.35 0.87 0.17
AIM Independence 2020
Fund 1,000.00 989.50 1.20 1,024.00 1.22 0.24
AIM Independence 2030
Fund 1,000.00 973.70 1.24 1,023.95 1.28 0.25
AIM Independence 2040
Fund 1,000.00 970.00 1.39 1,023.79 1.43 0.28
AIM Independence 2050
Fund 1,000.00 966.70 1.39 1,023.79 1.43 0.28
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period July 1, 2007, through December 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.
AIM Independence Funds
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.
Each Fund designates the following amounts or, if subsequently determined to
be different, the maximum amount allowable for its fiscal year ended December
31, 2007:
FEDERAL AND STATE INCOME TAX
<Table>
<Caption>
CORPORATE
LONG TERM QUALIFIED DIVIDENDS
CAPITAL GAIN DIVIDEND RECEIVED U.S. TREASURY
DISTRIBUTIONS INCOME* DEDUCTION* OBLIGATIONS*
- ------------------------------------------------------------------------------------------------------------------------
AIM Independence Now Fund $ 3,018 7.50% 4.50% 2.64%
- ------------------------------------------------------------------------------------------------------------------------
AIM Independence 2010 Fund 4,027 7.50% 6.50% 0.39%
- ------------------------------------------------------------------------------------------------------------------------
AIM Independence 2020 Fund 11,047 19.00% 11.00% 0.34%
- ------------------------------------------------------------------------------------------------------------------------
AIM Independence 2030 Fund 10,051 19.00% 13.86% 0.43%
- ------------------------------------------------------------------------------------------------------------------------
AIM Independence 2040 Fund 11,046 19.00% 12.50% 0.50%
- ------------------------------------------------------------------------------------------------------------------------
AIM Independence 2050 Fund 10,017 20.00% 13.00% 0.55%
________________________________________________________________________________________________________________________
========================================================================================================================
</Table>
* The above percentage is 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
Funds are as follows:
<Table>
<Caption>
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
2007 2007 2007 2007
- --------------------------------------------------------------------------------------------------------------------
AIM Independence Now Fund 58.89% 60.72% 60.56% 59.90%
- --------------------------------------------------------------------------------------------------------------------
AIM Independence 2010 Fund 61.84% 61.12% 61.05% 60.96%
- --------------------------------------------------------------------------------------------------------------------
AIM Independence 2020 Fund 50.94% 50.73% 50.05% 49.56%
- --------------------------------------------------------------------------------------------------------------------
AIM Independence 2030 Fund 36.89% 38.64% 38.30% 37.44%
- --------------------------------------------------------------------------------------------------------------------
AIM Independence 2040 Fund 32.38% 32.79% 33.12% 32.54%
- --------------------------------------------------------------------------------------------------------------------
AIM Independence 2050 Fund 26.88% 28.14% 29.01% 28.12%
____________________________________________________________________________________________________________________
====================================================================================================================
</Table>
54
AIM Independence Funds
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Growth Series (the "Trust"), is
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees
104 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 Ltd. (ultimate parent
of AIM and a global investment
management firm) and, Invesco Holding
Company (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); and INVESCO
North American Holdings, Inc. (holding
company); Chairman and President,
INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of
Funds(R); Vice Chairman, Investment
Company Institute; and Member of
Executive Board, SMU Cox School of
Business
Formerly: Chairman, Investment Company
Institute; 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, AIM Mutual Fund Dealer Inc.
Principal (registered broker dealer), A I M
Executive Officer Advisors, Inc., AIM Funds Management
Inc. d/b/a INVESCO Enterprise Services
(registered investment advisor and
registered transfer agent), 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), and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Management Group Inc. (financial
services holding company) and 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) 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); 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: Director and Chairman, Fund
Management Company (registered broker
dealer); 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 2001 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 1985 Retired None
Trustee
Formerly: Partner, law firm of Baker &
McKenzie and Director, Badgley Funds,
Inc. (registered investment company) (2
portfolios)
- -------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm)
Formerly: Director, Policy Studies, Inc.
and Van Gilder Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2001 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 2001 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)
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company), and Discovery Global Education
Fund (non-profit)
- -------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) (15
Trustee Naftalis and Frankel LLP portfolios)
- -------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 2003 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 Ltd., ultimate 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.
55
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Independence Funds
<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,
AIM Investment Services, Inc. and
INVESCO Distributors, Inc.; Director,
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: Director, Vice President and
Secretary, Fund Management Company; 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 N/A
Vice President Ltd.; 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 General Counsel, Secretary and Senior N/A
Vice President Managing Director, Invesco Ltd.;
Director and Secretary, Invesco Holding
Company Limited, IVZ, Inc. and INVESCO
Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO
North American Holdings, Inc.; and Vice
President of The AIM Family of
Funds--Registered Trademark--
Formerly: Senior Managing Director,
Invesco Holding Company Limited;
Director, Senior Vice 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 2004 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; Executive
Vice President, A I M Distributors,
Inc.; Senior Vice President, A I M
Management Group Inc.; 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: Director and President, Fund
Management Company; 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. and The AIM Family of
Funds--Registered Trademark--
Formerly: Anti-Money Laundering
Compliance Officer, Fund Management
Company; and 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.
and AIM Investment Services, Inc.
Formerly: Vice President, A I M Capital
Management, Inc. and Fund Management
Company; 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>
56
[EDELIVERY Fund holdings and proxy voting information
GO PAPERLESS
AIMINVESTMENTS.COM/EDELIVERY The Fund provides a complete list of its
GRAPHIC] holdings four times in each fiscal year,
at the quarter-ends. For the second and
REGISTER FOR EDELIVERY fourth quarters, the lists appear in the
Fund's semiannual and annual reports to
eDelivery is the process of receiving your shareholders. For the first and third
fund and account information via e-mail. quarters, the Fund files the lists with
Once your quarterly statements, tax forms, the Securities and Exchange Commission
fund reports, and prospectuses are (SEC) on Form N-Q. The most recent list of
available, we will send you an e-mail portfolio holdings is available at
notification containing links to these AIMinvestments.com. From our home page,
documents. For security purposes, you will click on Products & Performance, then
need to log in to your account to view Mutual Funds, then Fund Overview. Select
your statements and tax forms. your Fund from the drop-down menu and
click on Complete Quarterly Holdings.
WHY SIGN UP? Shareholders can also look up the Fund's
Forms N-Q on the SEC Web site at sec.gov.
Register for eDelivery to: Copies of the Fund's Forms N-Q may be
reviewed and copied at the SEC Public
o save your Fund the cost of printing and Reference Room in Washington, D.C. You can
postage. obtain information on the operation of the
Public Reference Room, including
o reduce the amount of paper you receive. information about duplicating fee charges,
by calling 202-942-8090 or 800-732-0330,
o gain access to your documents faster by or by electronic request at the following
not waiting for the mail. e-mail address: publicinfo@sec.gov. The
SEC file numbers for the Fund are
o view your documents online anytime at 811-02699 and 002-57526.
your convenience.
A description of the policies and
o save the documents to your personal procedures that the Fund uses to determine
computer or print them out for your how to vote proxies relating to portfolio
records. securities is available without charge,
upon request, from our Client Services
HOW DO I SIGN UP? department at 800-959-4246 or on the AIM
Web site, AIMinvestments.com. On the home
It's easy. Just follow these simple steps: page, scroll down and click on Proxy
Policy. The information is also available
1. Log in to your account. on the SEC Web site, sec.gov.
2. Click on the "Service Center" tab. Information regarding how the Fund voted
proxies related to its portfolio
3. Select "Register for eDelivery" and securities during the 12 months ended June
complete the consent process. 30, 2007, is available at our Web site. Go
to AIMinvestments.com, access the About Us
This AIM service is provided by AIM tab, click on Required Notices and then
Investment Services, Inc. click on Proxy Voting Activity. Next,
select the Fund from the drop-down menu.
The information is also available on the
SEC Web site, sec.gov.
If used after April 20, 2008, this report
must be accompanied by a Fund fact sheet
or by an AIM Quarterly Performance Review
for the most recent quarter-end. Mutual
funds and exchange-traded funds
distributed by A I M Distributors, Inc.
IND-AR-1 A I M Distributors, Inc.
[AIM INVESTMENTS LOGO]
-- REGISTERED TRADEMARK --
DIVERSIFIED PORTFOLIOS
AIM International Allocation Fund
Annual Report to Shareholders - December 31, 2007
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 ........... 10
Notes to Financial Statements .. 13
Financial Highlights ........... 18
Auditor's Report ............... 24
Fund Expenses .................. 25
Tax Information ................ 26
Trustees and Officers .......... 27
[COVER GLOBE IMAGE]
[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 International Allocation Fund
Dear Shareholders:
I'm pleased to provide you with this report, which includes
[TAYLOR a discussion of how your Fund was managed during the period
PHOTO] under review, and factors that affected its performance. The
following pages contain important information that answers
Philip Taylor questions you may have about your investment.
Despite notable volatility at points throughout the year
ended December 31, 2007, major stock market indexes in the
U.S. and abroad generally performed well. Reasons for their
favorable performance included positive economic growth,
particularly overseas; strong corporate profits; and action
by the U.S. Federal Reserve Board (the Fed) to lower
short-term interest rates, among other factors.
At its mid-September 2007 meeting, the Fed cut its
federal funds target rate for the first time since June
2003.(1) That cut followed 17 rate increases from June 2004
to June 2006(1) and was intended to address concerns about a
weak housing market and problems in the subprime mortgage
market, which some feared could adversely affect the U.S.
economy. The Fed cut the federal funds target rate again in
late October and mid-December in response to continued
economic uncertainty.
This kind of uncertainty can affect equity, fixed-income
and other markets--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.
I encourage you to talk with your financial advisor if
you have concerns about your portfolio. We believe in the
value of working with a trusted financial advisor who can
recommend AIM funds that are appropriate for your portfolio
and that address your long-term investment goals and risk
tolerance regardless of prevailing short-term market
conditions.
In conclusion
In May, AIM Investments' parent company changed its name
from AMVESCAP PLC to Invesco Ltd., uniting our worldwide
operations and global expertise under a new name. While the
name of our parent company may be new to you, I can assure
you that AIM's 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.
We 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
February 11, 2008
Source: (1)U.S. Federal Reserve Board
AIM Investments--REGISTERED TRADEMARK-- is a registered
service mark of A I M Management Group Inc. A I M Advisors,
Inc., A I M Capital Management, Inc., AIM Private Asset
Management, Inc. and PowerShares Capital Management LLC are
the investment advisors for the products and services
represented by AIM Investments; they each provide investment
advisory services to individual and institutional clients
and do not sell securities. A I M Distributors, Inc. is the
distributor for the retail mutual funds and U.S.
institutional money market funds represented by AIM
Investments and the exchange-traded funds managed by
PowerShares Capital Management LLC. All entities are
indirect wholly owned subsidiaries of Invesco Ltd.
2
AIM International Allocation Fund
Dear Fellow AIM Fund Shareholders:
The lines of communication are open: More than 250 of you
[CROCKETT have responded to the invitation I extended in my previous
PHOTO] letter to complete an online survey, and more than 50
shareholders have contacted me directly by e-mail. When I
Bruce L. Crockett could respond quickly and easily to a shareholder's specific
concern I did, but the messages for the most part raised
consistent issues that I respond to here.
I have received many suggestions, a few complaints, and
one offer to buy a gold mine! In general, your letters
expressed an appreciation for transparency, frankness and
the opportunity to comment. Nevertheless, several
shareholders found room for improvement in communications.
Some would like more concise letters while others would
prefer reports to be more customized for their particular
information needs. With these reports going to tens of
thousands of people, shareholder communications necessarily
have to cover those issues common to a diverse population as
well as the information required by law. The ability to
change or further customize letters and reports is also
affected by technology, timeliness and cost.
Online survey responders preferred electronic
communications to paper at a ratio of 63% to 37%. Direct
responders expressed more of a preference for paper,
especially for long reports. Electronic communications are
more cost-effective than paper communications that have to
be printed and mailed, so I encourage those who have
resisted electronic communications to give them a try.
The correspondence shows that improving fund performance
and reducing shareholder costs remain the key shareholder
concerns. Several letters noted individual funds where
performance had changed for the better, while others
remained dissatisfied with the returns from funds they hold.
Although 75% of the online survey responders wanted to see
more overall fund performance data in these letters, and 58%
wanted more information on individual funds, Securities and
Exchange Commission (SEC) and Financial Industry Regulatory
Authority (FINRA) rules are very specific about the way fund
performance can be discussed in print. Respect for those
rules prevents me from commenting on individual funds or
very recent results here, but I can assure you that your
Board and all of its Investments subcommittees continue to
work with AIM Investments to make improved performance a top
priority for all fund managers.
Expense levels came up as another dominant issue, and no
respondent felt these were too low. Several shareholders
questioned the need for 12b-1 fees, which cover the cost of
distributing fund shares and thereby help the fund to
attract new assets. Your Board reviews the funds' 12b-1 fees
annually with the shareholders' best interests in mind.
While your Board keeps its eye on containing or lowering
these fees wherever possible, we also are mindful that 12b-1
fees may be necessary in order to maintain an effective
distribution system for fund shares.
The value of communication between the Board and
shareholders has been noted within and beyond the AIM
community. In the online survey, 87% of the respondents felt
it was either somewhat or very important to hear directly
from the Board, with 55% saying it was very important.
Morningstar--TRADEMARK--, the mutual fund tracking company,
also commented favorably on this channel of communication in
its fall 2007 update of fund stewardship grades, where AIM
was one of fewer than 10 fund boards to get an A for board
quality, according to BoardIQ (11/13/07).
In other news, Ruth Quigley retired from your Board at
the end of 2007, and we thank her for her many years of
dedicated service. Larry Soll has assumed Ruth's place as a
vice chair of the Investments Committee. The Valuation
Committee, which Ruth used to chair, has been reorganized as
the Valuation, Distribution and Proxy Oversight Committee
under the chairmanship of Carl Frischling. The elevation of
proxy oversight to standing committee status responds to
suggestions from shareholders. In addition, Prema
Mathi-Davis assumed my seat on the Governance Committee, and
I moved to the Audit Committee.
Your Board looks forward to another year of diligent
effort on your behalf, and we are even more strongly
motivated by your feedback. The invitation remains open to
e-mail me at bruce@brucecrockett.com. I look forward to
hearing from you.
Sincerely,
/S/ BRUCE L. CROCKETT
------------------------------
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
February 11, 2008
3
AIM International Allocation Fund
Management's discussion of Fund performance are actively managed by their respective
management teams based on individual fund
======================================================================================= objectives, investment strategies and
PERFORMANCE SUMMARY management techniques. While the
weightings of various underlying funds in
During 2007 steady market gains in the first half of the year--aided by improving the portfolio may vary from their targets
corporate earnings and record levels of merger and acquisition activity--were followed during the year due to market movements,
by more erratic market increases in the second half of the year. we rebalance the portfolio annually to
maintain the target asset class
Within this environment, we are pleased to have provided shareholders with allocations. The Fund was rebalanced back
double-digit Fund performance at net asset value (NAV). We attribute this favorable to target allocations of its underlying
performance to the Fund's broad diversification that permitted it to have exposure to holdings in June of 2007.
multiple asset classes, helping the overall portfolio weather market volatility during
the year. Although results were positive for the year, the Fund slightly underperformed Market conditions and your Fund
its style-specific index. This relative result can be attributed to the Fund's exposure
to U.S. equity markets through investments in AIM Global Value Fund. International markets continued their
ongoing five-year rally with particular
Your Fund's long-term performance appears later in this report. strength in Europe, as positive economic
data and a strong currency drove returns
FUND VS. INDEXES higher in the region.(1) While most major
international markets finished in positive
Total returns, 12/31/06-12/31/07 at NAV. Performance shown does not include applicable territory, Japan stood out as a
CDSC or front-end sales charges, which would have reduced performance. significant laggard. Recent economic data
pointed to a lack of consumer and investor
Class A Shares 10.37% confidence, and leading indicators
Class B Shares 9.61 suggested a recession in Japan is not out
Class C Shares 9.53 of the question. Emerging markets enjoyed
Class R Shares 10.16 strong investor optimism with China and
MSCI EAFE Index(triangle) (Broad Market Index/Style-Specific Index) 11.17 India leading performance in this market
Lipper International Multi-Cap Core Funds Index(triangle) (Peer Group Index) 12.61 segment.
SOURCE: (TRIANGLE)LIPPER INC. The performance of smaller companies,
======================================================================================= though generally positive, lagged large
caps stocks during 2007.(1) The strong
How we Invest outperformance of smaller companies over
the past couple of years has brought
The Fund offers investors convenient entry International Core Equity Fund, AIM valuations to a level where they are on
into international markets through a International Growth Fund, AIM Global par (or in some cases at a premium) with
single, broadly diversified portfolio that Value Fund, AIM International Small large cap stocks. Inefficiencies in
has the flexibility to invest across Company Fund and AIM Developing Markets smaller cap equities, due to the reduced
investment styles (growth, value and Fund--to create a versatile core holding research dedicated to them (versus large
core), market capitalizations (small and that provides broad international caps), however, continued to provide
large), sectors and countries, both diversification. attractive investment opportunities for
emerging and developed. The resulting keen
portfolio blends five unique, We determine target asset class
complementary and established funds--AIM weightings and underlying fund selections
for the Fund and also monitor the Fund on
an ongoing basis. The underlying funds in
the portfolio
====================================================================================================================================
PORTFOLIO COMPOSITION
% OF TOTAL NET ASSETS
ASSET CLASS FUND TARGET ALLOCATION AS OF 12/31/07
- ----------- ---- ----------------- ----------------------
International/Global Equity AIM Developing Markets Fund 5.00% 5.42%
International/Global Equity AIM Global Value Fund 27.50 26.90
International/Global Equity AIM International Core Equity Fund 35.00 35.01
International/Global Equity AIM International Growth Fund 22.50 22.94
International/Global Equity AIM International Small Company Fund 10.00 9.79
Other Assets Less Liabilities -0.06
Total Net Assets $414.72 million
The Fund purchases Institutional Class shares of the underlying mutual funds.
Institutional Class shares have no sales charges. The Fund's holdings are subject to
change, and there is no assurance that the Fund will continue to hold any particular
fund.
====================================================================================================================================
4
AIM International Allocation Fund
investors. In terms of investment styles, market equities during 2007 enabled the Gary Wendler
international growth stocks finally broke fund to outperform the MSCI EAFE Index, [RODRIGUEZ Director of Product Strategy
a cycle of underperformance by generally which is composed of stocks from developed PHOTO] and Investment Services is
outperforming international value stocks nations. In contrast, the fund's nearly manager of AIM International
during 2007.(1) 50% underweight in China, a market that Allocation Fund. He began his career in
was up significantly in 2007, detracted the investment industry in 1986 and joined
Against this macro-economic backdrop, from fund performance. Extremely stretched AIM in 1995. Mr. Wendler earned a B.B.A.
your Fund's five underlying fund holdings valuations kept the fund managers cautious in finance from Texas A&M University.
each registered positive, and in some on the Chinese market.
cases double digit, returns--contributing
positively to the Fund's overall return. o AIM GLOBAL VALUE FUND, which represents
27.5% of AIM International Allocation
o AIM INTERNATIONAL GROWTH FUND, which Fund's total target allocation,
represents 22.5% of AIM International represented the smallest contribution to
Allocation Fund's total target allocation, the Fund's return. Although the fund
provided the largest contribution to the delivered positive results, exposure to
Fund's return. Holdings in emerging the weaker U.S. market detracted from
markets such as Brazil, India and performance. In addition, fund managers
Korea--countries not represented in the attempted to partially limit the fund's
EAFE benchmark--contributed positively to exposure to currency fluctuations by using
both absolute and relative results. currency hedges. During the period, these
Despite very strong emerging markets currency hedges detracted from the fund's
returns, however, the fund's exposure to performance as well.
these markets remained low. This reflects
the fund's valuation discipline, which led It is important to note that over the
to the sale of several emerging-markets past 12 months, AIM International
stocks as we perceived their valuations Allocation Fund, buoyed by strong
had become stretched. international markets, has experienced
strong double-digit returns. It would be
o AIM INTERNATIONAL CORE EQUITY FUND, imprudent for us to suggest that such a
which represents 35% of AIM International level of performance is sustainable over
Allocation Fund's total target allocation, the long term. Regardless of
provided the second-largest contribution macro-economic trends, however, the Fund
to the Fund's return. Improved relative maintained its allocations and continued
performance in larger, well-established to offer investors convenient entry into
companies was the leading contributor to international markets through a single,
results for the year. On a relative basis, broadly diversified portfolio.
however, the fund's underweight position
in utilities hurt relative results as We welcome new investors and thank all
utilities stocks within the MSCI EAFE of our shareholders for investing in AIM
Index performed well during the period. International Allocation Fund
o AIM INTERNATIONAL SMALL COMPANY FUND, Source: (1)Lipper Inc.
which represents 10% of AIM International
Allocation Fund's total target allocation, THE VIEWS AND OPINIONS EXPRESSED IN
provided the third-largest contribution to MANAGEMENT'S DISCUSSION OF FUND
the Fund's return. Performance was driven PERFORMANCE ARE THOSE OF A I M ADVISORS,
by the fund's ability to go "beyond the INC. THESE VIEWS AND OPINIONS ARE SUBJECT
beaten path," which enabled fund managers TO CHANGE AT ANY TIME BASED ON FACTORS
to identify many overlooked but rewarding SUCH AS MARKET AND ECONOMIC CONDITIONS.
discounted quality growth opportunities THESE VIEWS AND OPINIONS MAY NOT BE RELIED
not represented in the benchmark indexes UPON AS INVESTMENT ADVICE OR
across both developed and emerging RECOMMENDATIONS, OR AS AN OFFER FOR A
markets. PARTICULAR SECURITY. THE INFORMATION IS
NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF
o AIM DEVELOPING MARKETS FUND, which ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR
represents 5% of AIM International THE FUND. STATEMENTS OF FACT ARE FROM
Allocation Fund's total target allocation, SOURCES CONSIDERED RELIABLE, BUT A I M
represented the fourth-largest ADVISORS, INC. MAKES NO REPRESENTATION OR
contribution to the Fund's return. The WARRANTY AS TO THEIR COMPLETENESS OR
stellar performance of emerging 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
AIM International Allocation Fund
Your Fund's long-term performance
Past performance cannot guarantee include reinvested dividends, but they do
comparable future results. not reflect sales charges. Performance of
an index of funds reflects fund expenses
The data shown in the chart include and management fees; performance of a
reinvested distributions, applicable sales market index does not. Performance shown
charges, Fund expenses and management in the chart and table(s) does not reflect
fees. Results for Class B shares are deduction of taxes a shareholder would pay
calculated as if a hypothetical on Fund distributions or sale of Fund
shareholder had liquidated his entire shares. Performance of the indexes does
investment in the Fund at the close of the not reflect the effects of taxes.
reporting period and paid the applicable
contingent deferred sales charges. Index
results
====================================================================================================================================
Continued from page 8
About indexes used in this report o The Fund is not managed to track the Other information
performance of any particular index,
o The MSCI EAFE--REGISTERED TRADEMARK-- including the indexes defined here, and o The returns shown in the management's
INDEX is a free float-adjusted market consequently, the performance of the Fund discussion of Fund performance are based
capitalization index that is designed to may deviate significantly from the on net asset values calculated for
measure developed market equity performance of the indexes. shareholder transactions. Generally
performance, excluding the U.S. and accepted accounting principles require
Canada. o A direct investment cannot be made in an adjustments to be made to the net assets
index. Unless otherwise indicated, index of the Fund at period end for financial
o The LIPPER INTERNATIONAL MULTI-CAP CORE results include reinvested dividends, and reporting purposes, and as such, the net
FUNDS INDEX is an equally weighted they do not reflect sales charges. asset values for shareholder transactions
representation of the largest funds in the Performance of an index of funds reflects and the returns based on those net asset
Lipper International Multi-Cap Core Funds fund expenses; performance of a market values may differ from the net asset
category. These funds typically have an index does not. values and returns reported in the
average price-tocash flow ratio, Financial Highlights.
price-to-book ratio, and threeyear
sales-per-share growth value, compared to
the S&P/Citigroup World ex-U.S. BMI.
6
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Fund and index data from 10/31/05
AIM INTERNATIONAL AIM INTERNATIONAL AIM INTERNATIONAL AIM INTERNATIONAL LIPPER INTERNATIONAL
ALLOCATION FUND- ALLOCATION FUND- ALLOCATION FUND- ALLOCATION FUND- MSCI EAFE MULTI-CAP CORE
DATE CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES INDEX(1) FUNDS INDEX(1)
10/31/05 $9,450 $10,000 $10,000 $10,000 $10,000 $10,000
11/05 9768 10336 10336 10336 10245 10199
12/05 10186 10765 10765 10777 10721 10670
1/06 10870 11480 11480 11492 11380 11291
2/06 10860 11469 11469 11482 11354 11266
3/06 11232 11851 11851 11874 11729 11637
4/06 11717 12354 12354 12378 12289 12188
5/06 11280 11881 11881 11915 11812 11692
6/06 11204 11790 11790 11834 11811 11637
7/06 11357 11951 11951 11995 11928 11758
8/06 11670 12272 12272 12327 12256 12074
9/06 11727 12323 12323 12377 12275 12114
10/06 12137 12745 12745 12811 12752 12543
11/06 12498 13117 13117 13194 13133 12931
12/06 12878 13508 13508 13588 13545 13326
1/07 13024 13651 13651 13742 13637 13446
2/07 12985 13610 13601 13701 13747 13432
3/07 13334 13968 13959 14059 14097 13803
4/07 13857 14499 14500 14612 14724 14354
5/07 14254 14908 14909 15021 14982 14774
6/07 14264 14908 14899 15021 15000 14817
7/07 14022 14643 14644 14775 14779 14543
8/07 13935 14540 14531 14673 14548 14435
9/07 14496 15122 15124 15267 15327 15224
10/07 15204 15846 15848 16005 15929 15926
11/07 14362 14957 14959 15113 15405 15270
12/07 14211 14508 14798 14968 15058 15006
====================================================================================================================================
Source: (1)Lipper Inc.
AIM International Allocation Fund
==========================================
AVERAGE ANNUAL TOTAL RETURNS CLASS A SHARE PERFORMANCE REFLECTS THE
MAXIMUM 5.50% SALES CHARGE, AND CLASS B
As of 12/31/07, including maximum AND CLASS C SHARE PERFORMANCE REFLECTS THE
applicable sales charges APPLICABLE CONTINGENT DEFERRED SALES
CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
CLASS A SHARES CDSC ON CLASS B SHARES DECLINES FROM 5%
Inception (10/31/05) 17.60% BEGINNING AT THE TIME OF PURCHASE TO 0% AT
1 Year 4.33 THE BEGINNING OF THE SEVENTH YEAR. THE
CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
CLASS B SHARES YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
Inception (10/31/05) 18.73% HAVE A FRONT-END SALES CHARGE; RETURNS
1 Year 4.61 SHOWN ARE AT NET ASSET VALUE AND DO NOT
REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
CLASS C SHARES ON A TOTAL REDEMPTION OF RETIREMENT PLAN
Inception (10/31/05) 19.82% ASSETS WITHIN THE FIRST YEAR.
1 Year 8.53
THE PERFORMANCE OF THE FUND'S SHARE
CLASS R SHARES CLASSES WILL DIFFER PRIMARILY DUE TO
Inception (10/31/05) 20.45% DIFFERENT SALES CHARGE STRUCTURES AND
1 Year 10.16 CLASS EXPENSES.
==========================================
HAD THE ADVISOR NOT WAIVED FEES AND/OR
THE PERFORMANCE DATA QUOTED REPRESENT PAST REIMBURSED EXPENSES, PERFORMANCE WOULD
PERFORMANCE AND CANNOT GUARANTEE HAVE BEEN LOWER.
COMPARABLE FUTURE RESULTS; CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE A REDEMPTION FEE OF 2% WILL BE IMPOSED
VISIT AIMINVESTMENTS.COM FOR THE MOST ON CERTAIN REDEMPTIONS OR EXCHANGES OUT OF
RECENT MONTH-END PERFORMANCE. PERFORMANCE THE FUND WITHIN 30 DAYS OF PURCHASE.
FIGURES REFLECT REINVESTED DISTRIBUTIONS, EXCEPTIONS TO THE REDEMPTION FEE ARE
CHANGES IN NET ASSET VALUE AND THE EFFECT LISTED IN THE FUND'S PROSPECTUS.
OF THE MAXIMUM SALES CHARGE UNLESS
OTHERWISE STATED. INVESTMENT RETURN AND (1) Total annual operating expenses less
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU any contractual fee waivers and/or expense
MAY HAVE A GAIN OR LOSS WHEN YOU SELL reimbursements by the advisor in effect
SHARES. through at least June 30, 2008. See
current prospectus for more information.
THE NET ANNUAL FUND OPERATING EXPENSE
RATIO SET FORTH IN THE MOST RECENT FUND (2) The expense ratio includes acquired
PROSPECTUS AS OF THE DATE OF THIS REPORT fund fees and expenses of the underlying
FOR CLASS A, CLASS B, CLASS C AND CLASS R funds in which the Fund invests 1.01% for
SHARES WAS 1.45%, 2.20%, 2.20% AND 1.70%, Class A, B, C and R shares of AIM
RESPECTIVELY.(1, 2) THE TOTAL ANNUAL FUND International Allocation Fund.
OPERATING EXPENSE RATIO SET FORTH IN THE
MOST RECENT FUND PROSPECTUS AS OF THE DATE
OF THIS REPORT FOR CLASS A, CLASS B, CLASS
C AND CLASS R SHARES WAS 1.85%, 2.60%,
2.60% AND 2.10%, RESPECTIVELY.(2) 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.
==========================================
FOR A DISCUSSION OF THE RISKS OF INVESTING
IN YOUR FUND AND INDEXES USED IN THIS
REPORT, PLEASE TURN THE PAGE.
==========================================
7
AIM International Allocation Fund
AIM INTERNATIONAL ALLOCATION FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE LONG-TERM GROWTH OF CAPITAL.
o Unless otherwise stated, information presented in this report is as of December 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 receive higher fees from certain accounting controls and standards.
underlying funds than others. However, as
o Class B shares are not available as an a fiduciary of the Fund, the advisor is o Lower rated securities may be more
investment for retirement plans maintained required to act in the Fund's best susceptible to real or perceived adverse
pursuant to Section 401 of the Internal interest when selecting the underlying economic and competitive industry
Revenue Code, including 401(k) plans, funds. Because the Fund is a fund of conditions, and may be less liquid than
money purchase pension plans and profit funds, the Fund is subject to the risks higher grade securities. The loans in
sharing plans, except for plans that have associated with the underlying funds in which the Fund may invest are typically
existing accounts invested in Class B which it invests. There are additional noninvestment-grade and involve a greater
shares. risks of investing in the underlying risk of default on interest and principal
funds. payments and of price changes due to the
o Class R shares are available only to changes in the credit quality of the
certain retirement plans. Please see the Principal risks of investing in the issuer.
prospectus for more information. underlying Funds
o Interest rate risk refers to the risk
Principal risks of investing in the Fund o To the extent the Fund holds cash or that bond prices generally fall as
cash equivalents rather than equity interest rates rise; conversely, bond
o The Fund pursues its investment securities for risk management purposes, prices generally rise as interest rates
objectives by investing its assets in the Fund may not achieve its investment fall.
other underlying funds that are a part of objective.
The AIM Family of Funds rather than o The prices of initial public offering
investing directly in stocks, bonds, cash o The value of convertible securities in (IPO) securities may go up and down more
or other investments. The Fund's which the Fund invests may be affected by than prices of equity securities of
investment performance depends on the market interest rates-the risk that the companies with longer trading histories.
investment performance of the underlying issuer may default on interest or In addition, companies offering securities
funds. There is risk that the advisor's principal payments and the value of the in IPOs may have less experienced
evaluations and assumptions regarding the underlying common stock into which these management or limited operating histories.
Fund's broad asset classes or the securities may be converted may decline as There can be no assurance that the fund
underlying funds may be incorrect based on a result. will have favorable IPO investment
actual market conditions, or that the Fund opportunities.
will vary from the target weightings in o Credit risk is the risk of loss on an
the underlying funds due to factors such investment due to the deterioration of an o The Fund may use enhanced investment
as market fluctuations. There can be no issuer's financial health. Such a techniques such as leveraging, derivatives
assurance that the underlying funds will deterioration of financial health may and short sales. Leveraging entails risks
achieve their investment objectives, and result in a reduction of the credit rating such as magnifying changes in the value of
the performance of the underlying funds of the issuer's securities and may lead to the portfolio's securities. Derivatives
may be lower than the asset class. The the issuer's inability to honor its are subject to counterparty risk-the risk
underlying funds may change their contractual obligations, including making that the other party will not complete the
investment objectives or policies without timely payment of interest and principal. transaction with the Fund. Short sales
the approval of the Allocation Funds. If carry the risk of buying a security back
that were to occur, the Allocation Funds o Prices of equity securities change in at a higher price at which the Fund's
might be forced to withdraw their response to many factors including the exposure is unlimited.
investments from the underlying funds at historical and prospective earnings of the
an unfavorable time. The advisor has the issuer, the value of its assets, general o The prices of securities held by the
ability to select and substitute the economic conditions, interest rates, Fund may decline in response to market
underlying funds in which the Fund invests investor perceptions and market liquidity. risks.
and may be subject to potential conflicts
of interest in selecting underlying funds o Foreign securities have additional o Nondiversification increases the risk
because it may risks, including exchange rate changes, that the value of the Fund's shares may
political and economic upheaval, the vary more widely, and the Fund may be
relative lack of information, relatively subject to greater investment and credit
low market liquidity, and the potential risk than if the Fund invested more
lack of strict financial and broadly.
======================================================================================= 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. FUND NASDAQ SYMBOLS
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING.
======================================================================================= Class A Shares AINAX
Class B Shares INABX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class C Shares INACX
Class R Shares RINAX
AIMINVESTMENTS.COM ==========================================
8
AIM International Allocation Fund
SCHEDULE OF INVESTMENTS
December 31,2007
SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.06%(a)
<Table>
<Caption>
CHANGE IN
% OF UNREALIZED
NET VALUE PURCHASES PROCEEDS APPRECIATION
ASSETS 12/31/06 AT COST FROM SALES (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------
AIM Developing Markets Fund 5.42% $ 10,502,640 $ 10,412,100 $(2,206,808) $ 2,957,622
- ------------------------------------------------------------------------------------------------------------
AIM Global Value Fund 26.90% 51,003,944 66,331,888 (1,030,524) (4,794,028)
- ------------------------------------------------------------------------------------------------------------
AIM International Core Equity Fund 35.01% 66,173,490 85,750,467 (1,327,316) (5,594,106)
- ------------------------------------------------------------------------------------------------------------
AIM International Growth Fund 22.94% 43,983,393 48,610,441 (853,013) 3,141,480
- ------------------------------------------------------------------------------------------------------------
AIM International Small Co. Fund 9.79% 19,379,317 27,005,961 (1,793,363) (4,443,296)
============================================================================================================
TOTAL INVESTMENTS IN AFFILIATED
MUTUAL FUNDS (Cost $411,432,103) 100.06% $191,042,784 $238,110,857 $(7,211,024) $(8,732,328)
============================================================================================================
OTHER ASSETS LESS LIABILITIES (0.06)%
============================================================================================================
NET ASSETS 100.00%
____________________________________________________________________________________________________________
============================================================================================================
<Caption>
REALIZED DIVIDEND SHARES VALUE
GAIN (LOSS) INCOME 12/31/07 12/31/07
- ------------------------------------------------------------------------------------------------
AIM Developing Markets Fund $ 1,681,686 $ 218,793 666,883 $ 22,480,628
- ------------------------------------------------------------------------------------------------
AIM Global Value Fund 3,384,143 2,403,580 7,075,371 111,578,603
- ------------------------------------------------------------------------------------------------
AIM International Core Equity Fund 10,118,419 3,631,881 10,083,620 145,204,135
- ------------------------------------------------------------------------------------------------
AIM International Growth Fund 5,255,270 814,103 2,930,290 95,117,220
- ------------------------------------------------------------------------------------------------
AIM International Small Co. Fund 7,042,002 1,756,962 1,807,436 40,595,010
================================================================================================
TOTAL INVESTMENTS IN AFFILIATED
MUTUAL FUNDS (Cost $411,432,103) $27,481,520(b) $8,825,319 $414,975,596
================================================================================================
OTHER ASSETS LESS LIABILITIES (254,326)
================================================================================================
NET ASSETS $414,721,270
________________________________________________________________________________________________
================================================================================================
</Table>
Notes to Schedule of Investments:
(a) Each underlying fund and the Fund are affiliated by either having the same
investment advisor or an investment advisor under common control with the
Fund's investment advisor. The Fund invests in Institutional Class shares of
the mutual funds listed.
(b) Includes $25,716,213 of capital gains from affiliated underlying funds.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
9
AIM International Allocation Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2007
<Table>
ASSETS:
Investments in affiliated underlying funds,
at value (Cost $411,432,103) $414,975,596
===========================================================
Receivables for:
Fund shares sold 1,222,826
- -----------------------------------------------------------
Fund expenses absorbed 17,728
- -----------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 7,576
- -----------------------------------------------------------
Other assets 39,085
===========================================================
Total assets 416,262,811
___________________________________________________________
===========================================================
LIABILITIES:
Payables for:
Investments purchased -- affiliated
underlying funds 527,212
- -----------------------------------------------------------
Fund shares reacquired 620,249
- -----------------------------------------------------------
Trustee deferred compensation and
retirement plans 12,278
- -----------------------------------------------------------
Accrued distribution fees 171,026
- -----------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 520
- -----------------------------------------------------------
Accrued transfer agent fees 140,805
- -----------------------------------------------------------
Accrued operating expenses 69,451
===========================================================
Total liabilities 1,541,541
===========================================================
Net assets applicable to shares outstanding $414,721,270
___________________________________________________________
===========================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $385,576,150
- -----------------------------------------------------------
Undistributed net investment income 121,739
- -----------------------------------------------------------
Undistributed net realized gain 25,479,888
- -----------------------------------------------------------
Unrealized appreciation 3,543,493
===========================================================
$414,721,270
___________________________________________________________
===========================================================
NET ASSETS:
Class A $280,139,984
___________________________________________________________
===========================================================
Class B $ 40,465,657
___________________________________________________________
===========================================================
Class C $ 89,840,516
___________________________________________________________
===========================================================
Class R $ 4,210,747
___________________________________________________________
===========================================================
Institutional Class $ 64,366
___________________________________________________________
===========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 19,805,709
___________________________________________________________
===========================================================
Class B 2,878,545
___________________________________________________________
===========================================================
Class C 6,393,067
___________________________________________________________
===========================================================
Class R 298,299
___________________________________________________________
===========================================================
Institutional Class 4,541
___________________________________________________________
===========================================================
Class A:
Net asset value per share $ 14.14
- -----------------------------------------------------------
Maximum offering price per share:
(Net asset value of $14.14 divided by
94.50%) $ 14.96
___________________________________________________________
===========================================================
Class B:
Net asset value and offering price per
share $ 14.06
___________________________________________________________
===========================================================
Class C:
Net asset value and offering price per
share $ 14.05
___________________________________________________________
===========================================================
Class R:
Net asset value and offering price per
share $ 14.12
___________________________________________________________
===========================================================
Institutional Class:
Net asset value and offering price per
share $ 14.17
___________________________________________________________
===========================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
10
AIM International Allocation Fund
STATEMENT OF OPERATIONS
For the year ended December 31, 2007
<Table>
INVESTMENT INCOME:
Dividends from affiliated funds $ 8,825,319
- -------------------------------------------------------------------------
Other Income 423
=========================================================================
Total investment income 8,825,742
=========================================================================
EXPENSES:
Administrative services fees 115,677
- -------------------------------------------------------------------------
Custodian fees 8,229
- -------------------------------------------------------------------------
Distribution fees:
Class A 556,352
- -------------------------------------------------------------------------
Class B 338,868
- -------------------------------------------------------------------------
Class C 697,941
- -------------------------------------------------------------------------
Class R 13,687
- -------------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 738,791
- -------------------------------------------------------------------------
Transfer agent fees -- Institutional 32
- -------------------------------------------------------------------------
Trustees' and officer's fees and benefits 24,692
- -------------------------------------------------------------------------
Other 251,530
=========================================================================
Total expenses 2,745,799
=========================================================================
Less: Expenses reimbursed and expense offset arrangement(s) (547,704)
=========================================================================
Net expenses 2,198,095
=========================================================================
Net investment income 6,627,647
=========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS IN
AFFILIATED UNDERLYING FUND SHARES:
Net realized gain on sales of affiliated underlying fund
shares 1,765,308
- -------------------------------------------------------------------------
Net realized gain from distributions of affiliated
underlying fund shares 25,716,213
- -------------------------------------------------------------------------
Net realized gain from affiliated underlying fund shares 27,481,521
- -------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
affiliated underlying fund shares (8,732,328)
- -------------------------------------------------------------------------
Net gain from affiliated underlying funds 18,749,193
=========================================================================
Net increase in net assets resulting from operations $25,376,840
_________________________________________________________________________
=========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
11
AIM International Allocation Fund
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2007 and 2006
<Table>
<Caption>
2007 2006
- ------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 6,627,647 $ 2,865,477
- ------------------------------------------------------------------------------------------
Net realized gain 27,481,521 5,489,776
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (8,732,328) 12,278,882
==========================================================================================
Net increase in net assets resulting from operations 25,376,840 20,634,135
==========================================================================================
Distributions to shareholders from net investment income:
Class A (4,912,958) (2,075,075)
- ------------------------------------------------------------------------------------------
Class B (482,883) (276,170)
- ------------------------------------------------------------------------------------------
Class C (1,057,738) (497,063)
- ------------------------------------------------------------------------------------------
Class R (64,616) (16,255)
- ------------------------------------------------------------------------------------------
Institutional Class (1,257) (1,231)
==========================================================================================
Total distributions from net investment income (6,519,452) (2,865,794)
==========================================================================================
Distributions to shareholders from net realized gains:
Class A (4,929,576) (204,559)
- ------------------------------------------------------------------------------------------
Class B (724,382) (34,974)
- ------------------------------------------------------------------------------------------
Class C (1,586,910) (62,948)
- ------------------------------------------------------------------------------------------
Class R (73,236) (1,731)
- ------------------------------------------------------------------------------------------
Institutional Class (1,132) (113)
==========================================================================================
Total distributions from net realized gains (7,315,236) (304,325)
==========================================================================================
Decrease in net assets resulting from distributions (13,834,688) (3,170,119)
==========================================================================================
Share transactions-net:
Class A 142,842,274 111,990,864
- ------------------------------------------------------------------------------------------
Class B 17,259,257 18,276,188
- ------------------------------------------------------------------------------------------
Class C 47,695,599 34,312,685
- ------------------------------------------------------------------------------------------
Class R 3,114,835 889,618
- ------------------------------------------------------------------------------------------
Institutional Class (11,107) 1,359
==========================================================================================
Net increase in net assets resulting from share
transactions 210,900,858 165,470,714
==========================================================================================
Net increase in net assets 222,443,010 182,934,730
==========================================================================================
NET ASSETS:
Beginning of year 192,278,260 9,343,530
==========================================================================================
End of year (including undistributed net investment income
of $121,739 and $13,544, respectively) $414,721,270 $192,278,260
__________________________________________________________________________________________
==========================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12
AIM International Allocation Fund
NOTES TO FINANCIAL STATEMENTS
December 31, 2007
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM International Allocation Fund (the "Fund") is a series portfolio of AIM
Growth Series (the "Trust"). The Trust is organized as a Delaware statutory
trust and is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end series management investment company consisting
of seventeen separate series portfolios, each authorized to issue an unlimited
number of shares of beneficial interest. The Fund currently offers multiple
classes of shares. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is to provide long-term growth of capital.
The Fund is a "fund of funds", in that it invests in the Institutional Class of
other mutual funds ("underlying funds") advised by A I M Advisors, Inc. ("AIM").
AIM may change the Fund's asset class allocations, the underlying funds or the
target weightings in the underlying funds without shareholder approval. The
underlying funds may engage in a number of investment techniques and practices,
which involve certain risks. Each underlying fund's accounting policies are
outlined in the underlying fund's financial statements and are available upon
request.
A. SECURITY VALUATIONS -- Investments in underlying funds are valued at the
end of the day net asset value per share.
Securities in the underlying funds, 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.
13
AIM International Allocation Fund
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. Distributions from ordinary income and short term gains from
underlying funds, if any, are recorded as dividend income on ex-dividend
date. Distributions from net realized capital gains from underlying funds,
if any, are recorded as realized gains on the ex-dividend date. Interest
income is recorded on the accrual basis from settlement date.
The Fund allocates income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to treat a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
D. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of
Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and 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.
The Fund files tax returns in the U.S. federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the tax period.
E. EXPENSES -- Expenses included in the accompanying financial statements
reflect the expenses of the Fund and do not include any expenses of the
underlying funds. The effects of underlying funds expenses are included in
earnings from the investments in the underlying funds.
Fees provided for under the Rule 12b-1 plan of a particular class of the
Fund are charged to the operations of such class. Transfer agency fees and
expenses and other shareholder recordkeeping fees and expenses attributable
to the Institutional Class are charged to such class. Transfer agency fees
and expenses and other shareholder recordkeeping fees and expenses relating
to all other classes are allocated among those classes based on relative
net assets. All other expenses are allocated among the classes based on
relative net assets.
F. 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.
G. 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.
H. 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.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with AIM.
Under the terms of the investment advisory agreement, the Fund does not pay an
advisory fee. However, the Fund pays advisory fees to AIM indirectly as a
shareholder of the underlying funds
AIM has contractually agreed to reimburse expenses to the extent necessary
to limit other expenses (excluding certain items discussed below including Rule
12b-1 plan fund) of Class A, Class B, Class C, Class R and Institutional Class
shares to 0.18% of average daily net assets, respectively, through at least June
30, 2008. In determining the advisor's obligation to reimburse expenses, the
following expenses are not taken into account, and will cause other expenses to
exceed the numbers reflected above: (i) Rule 12b-1 plan fees, if any; (ii)
interest; (iii) taxes; (iv) dividend expense on short sales; (v) extraordinary
items; (vi) expenses related to a merger or reorganization, as approved by the
Fund's Board of Trustees; (vii) expenses of the underlying funds that are paid
indirectly as a result of share ownership of the underlying funds; and (viii)
expenses that the Fund has incurred but did not actually pay because of an
expense offset arrangement. Currently, in addition to the expense reimbursement
with Invesco Ltd. ("Invesco") 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. These credits are used to pay
certain expenses incurred by the Fund.
For the year ended December 31, 2007, AIM reimbursed $526,649 of class level
expenses of Class A, Class B, Class C and R Class shares in proportion to the
net assets of each class.
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
December 31, 2007, Invesco reimbursed expenses of the Fund in the amount of
$1,543.
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
December 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
14
AIM International Allocation Fund
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 December 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. Rules of the Financial Industry
Regulatory Authority ("FINRA"), formerly known as National Association of
Securities Dealers, 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 December 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")
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 December 31, 2007, ADI
advised the Fund that ADI retained $270,466 in front-end sales commissions from
the sale of Class A shares and $6,515, $41,579, $15,529 and $0 from Class A,
Class B, Class C and Class R shares, respectively, for CDSC imposed on
redemptions by shareholders.
The underlying funds pay no distribution fees and the Fund pays no sales
loads or other similar compensation to ADI for acquiring underlying fund shares.
Certain officers and trustees of the Trust are officers and directors of
AIM, AIS and/or ADI.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the year
ended December 31, 2007, the Fund received credits from these arrangements,
which resulted in the reduction of the Fund's total expenses of $19,512.
NOTE 4--TRUSTEES' AND OFFICER'S FEES AND BENEFITS
"Trustees' and Officer's Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to 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 December 31, 2007, the Fund paid legal fees of $4,304
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 5--BORROWINGS
The Fund 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 December 31, 2007, the Fund did not 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.
15
AIM International Allocation Fund
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended December 31, 2007
and 2006 was as follows:
<Table>
<Caption>
2007 2006
- ---------------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 6,519,452 $3,042,670
- ---------------------------------------------------------------------------------------
Long-term capital gain 7,315,236 127,449
=======================================================================================
Total distributions $13,834,688 $3,170,119
_______________________________________________________________________________________
=======================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of December 31, 2007, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2007
- --------------------------------------------------------------------------
Undistributed ordinary income $ 132,842
- --------------------------------------------------------------------------
Undistributed long-term gain 25,480,655
- --------------------------------------------------------------------------
Net unrealized appreciation -- investments 3,542,726
- --------------------------------------------------------------------------
Temporary book/tax differences (11,103)
- --------------------------------------------------------------------------
Shares of beneficial interest 385,576,150
==========================================================================
Total net assets $414,721,270
__________________________________________________________________________
==========================================================================
</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 December 31, 2007.
NOTE 7--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 December 31, 2007 was $238,110,857 and
$7,211,024, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- -------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $12,690,001
- -------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (9,147,275)
===============================================================================
Net unrealized appreciation of investment securities $ 3,542,726
_______________________________________________________________________________
===============================================================================
Cost of investments for tax purposes is $411,432,870.
</Table>
16
AIM International Allocation Fund
NOTE 8--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
- -----------------------------------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
---------------------------------------------------------
2007(a) 2006
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 11,880,798 $169,089,634 9,993,221 $121,413,453
- -----------------------------------------------------------------------------------------------------------------------
Class B 1,674,498 23,632,252 1,656,660 19,924,547
- -----------------------------------------------------------------------------------------------------------------------
Class C 3,826,633 54,094,130 3,182,037 38,416,639
- -----------------------------------------------------------------------------------------------------------------------
Class R 237,750 3,410,218 80,803 977,141
- -----------------------------------------------------------------------------------------------------------------------
Institutional Class 3,740 53,500 -- --
=======================================================================================================================
Issued as reinvestment of dividends:
Class A 670,710 9,282,552 159,634 2,107,164
- -----------------------------------------------------------------------------------------------------------------------
Class B 82,234 1,130,716 21,893 287,898
- -----------------------------------------------------------------------------------------------------------------------
Class C 183,014 2,516,072 40,169 527,823
- -----------------------------------------------------------------------------------------------------------------------
Class R 9,911 136,869 1,336 17,604
- -----------------------------------------------------------------------------------------------------------------------
Institutional Class 172 2,389 102 1,344
=======================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 220,322 3,154,290 46,811 572,375
- -----------------------------------------------------------------------------------------------------------------------
Class B (222,068) (3,154,290) (47,032) (572,375)
=======================================================================================================================
Reacquired:(b)
Class A (2,707,228) (38,684,202) (1,004,557) (12,102,128)
- -----------------------------------------------------------------------------------------------------------------------
Class B (306,637) (4,349,421) (114,606) (1,363,882)
- -----------------------------------------------------------------------------------------------------------------------
Class C (627,331) (8,914,603) (392,394) (4,631,777)
- -----------------------------------------------------------------------------------------------------------------------
Class R (30,039) (432,252) (8,344) (105,127)
- -----------------------------------------------------------------------------------------------------------------------
Institutional Class (4,567) (66,996) -- 15
=======================================================================================================================
14,891,912 $210,900,858 13,615,733 $165,470,714
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
(a) There are entities that are 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.
(b) Net of redemption fees of $15,005 and $19,325 which were allocated among the
classes based on relative net assets of each class for the year ended
December 31, 2007 and 2006, respectively.
NOTE 9--SIGNIFICANT EVENT
At a meeting held on December 13, 2007, the Board of Trustees of Trust
approved certain proposals to be presented for shareholder approval at a special
meeting of the shareholders of the Trust intended to be held on February 29,
2008 (the "Special Meeting"). At the Special Meeting, shareholders of record as
of the close of business on November 30, 2007, are entitled to vote their
respective shares on several proposals that including, among others the
following proposal(s).
New proposed sub-advisory agreement between A I M Advisors, Inc. ("AIM") and
each of AIM Funds Management Inc., Invesco Asset Management Deutschland, GmbH,
Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited,
Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco
Hong Kong Limited, Invesco Institutional (N.A.), Inc. and Invesco Senior Secured
Management, Inc. (collectively, the "Affiliated Sub-Advisers") (the "New
Sub-advisory Arrangements"). This proposal is intended to benefit the Fund and
its shareholders by permitting AIM to utilize the additional resources and
talent of these affiliated sub-advisers in managing the Fund. Because AIM would
pay all of the sub-advisory fees of the sub-advisers, the new sub-advisory
arrangements would not affect the fees the Fund pays pursuant to the advisory
agreement. If approved by shareholders, the New Sub-advisory Arrangements are
expected to become effective on or about May 1, 2008.
17
AIM International Allocation Fund
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
----------------------------------------------
YEAR ENDED OCTOBER 31, 2005
DECEMBER 31, (COMMENCEMENT DATE)
----------------------- TO DECEMBER 31,
2007 2006 2005
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.29 $ 10.71 $ 10.12
- ------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.32 0.42 0.32
- ------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.05 2.41 0.47
============================================================================================================
Total from investment operations 1.37 2.83 0.79
============================================================================================================
Less distributions:
Dividends from net investment income (0.26) (0.23) (0.20)
- ------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.26) (0.02) --
============================================================================================================
Total distributions (0.52) (0.25) (0.20)
============================================================================================================
Redemption fees added to shares of beneficial interest 0.00 0.00 --
============================================================================================================
Net asset value, end of period $ 14.14 $ 13.29 $ 10.71
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) 10.37% 26.42% 7.78%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $280,140 $129,474 $ 5,848
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.44%(c) 0.44% 0.43%(d)
- ------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.60%(c) 0.84% 7.30%(d)
============================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.96% 1.01% 1.15%
============================================================================================================
Ratio of net investment income to average net assets 2.25%(c) 3.36% 17.87%(d)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate(f) 2% 2% 0.3%
____________________________________________________________________________________________________________
============================================================================================================
</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 $222,540,726.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
18
AIM International Allocation Fund
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS B
--------------------------------------------
YEAR ENDED OCTOBER 31, 2005
DECEMBER 31, (COMMENCEMENT DATE)
--------------------- DECEMBER 31,
2007 2006 2005
- ----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.23 $ 10.70 $10.12
- ----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.21 0.32 0.31
- ----------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.05 2.41 0.46
==========================================================================================================
Total from investment operations 1.26 2.73 0.77
==========================================================================================================
Less distributions:
Dividends from net investment income (0.17) (0.18) (0.19)
- ----------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.26) (0.02) --
==========================================================================================================
Total distributions (0.43) (0.20) (0.19)
==========================================================================================================
Redemption fees added to shares of beneficial interest 0.00 0.00 --
==========================================================================================================
Net asset value, end of period $ 14.06 $ 13.23 $10.70
__________________________________________________________________________________________________________
==========================================================================================================
Total return(b) 9.61% 25.50% 7.65%
__________________________________________________________________________________________________________
==========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $40,466 $21,839 $1,430
__________________________________________________________________________________________________________
==========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.19%(c) 1.19% 1.18%(d)
- ----------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.34%(c) 1.59% 8.05%(d)
==========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.96% 1.01% 1.15%
==========================================================================================================
Ratio of net investment income to average net assets 1.50%(c) 2.61% 17.12%(d)
__________________________________________________________________________________________________________
==========================================================================================================
Portfolio turnover rate(f) 2% 2% 0.3%
__________________________________________________________________________________________________________
==========================================================================================================
</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 $33,886,778.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
19
AIM International Allocation Fund
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS C
--------------------------------------------
YEAR ENDED OCTOBER 31, 2005
DECEMBER 31, (COMMENCEMENT DATE)
--------------------- TO DECEMBER 31,
2007 2006 2005
- ----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.23 $ 10.70 $10.12
- ----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.21 0.32 0.31
- ----------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.04 2.41 0.46
==========================================================================================================
Total from investment operations 1.25 2.73 0.77
==========================================================================================================
Less distributions:
Dividends from net investment income (0.17) (0.18) (0.19)
- ----------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.26) (0.02) --
==========================================================================================================
Total distributions (0.43) (0.20) (0.19)
==========================================================================================================
Redemption fees added to shares of beneficial interest 0.00 0.00 --
==========================================================================================================
Net asset value, end of period $ 14.05 $ 13.23 $10.70
__________________________________________________________________________________________________________
==========================================================================================================
Total return(b) 9.53% 25.50% 7.65%
__________________________________________________________________________________________________________
==========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $89,841 $39,826 $1,937
__________________________________________________________________________________________________________
==========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.19%(c) 1.19% 1.18%(d)
- ----------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.35%(c) 1.59% 8.05%(d)
==========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.96% 1.01% 1.15%
==========================================================================================================
Ratio of net investment income to average net assets 1.50%(c) 2.61% 17.12%(d)
__________________________________________________________________________________________________________
==========================================================================================================
Portfolio turnover rate(f) 2% 2% 0.3%
__________________________________________________________________________________________________________
==========================================================================================================
</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 $69,794,119.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
20
AIM International Allocation Fund
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS R
------------------------------------------
YEAR ENDED OCTOBER 31, 2005
DECEMBER 31, (COMMENCEMENT DATE)
------------------- TO DECEMBER 31,
2007 2006 2005
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $13.27 $10.71 $10.12
- --------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.29 0.39 0.32
- --------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.05 2.40 0.46
========================================================================================================
Total from investment operations 1.34 2.79 0.78
========================================================================================================
Less distributions:
Dividends from net investment income (0.23) (0.21) (0.19)
- --------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.26) (0.02) --
========================================================================================================
Total distributions (0.49) (0.23) (0.19)
========================================================================================================
Redemption fees added to shares of beneficial interest 0.00 0.00 --
========================================================================================================
Net asset value, end of period $14.12 $13.27 $10.71
________________________________________________________________________________________________________
========================================================================================================
Total return(b) 10.16% 26.07% 7.77%
________________________________________________________________________________________________________
========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $4,211 $1,071 $ 74
________________________________________________________________________________________________________
========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.69%(c) 0.69% 0.68%(d)
- --------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.85%(c) 1.09% 7.55%(d)
========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.96% 1.01% 1.15%
========================================================================================================
Ratio of net investment income to average net assets 2.00%(c) 3.11% 17.62%(d)
________________________________________________________________________________________________________
========================================================================================================
Portfolio turnover rate(f) 2% 2% 0.3%
________________________________________________________________________________________________________
========================================================================================================
</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 $2,737,413.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
21
AIM International Allocation Fund
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
------------------------------------------
YEAR ENDED OCTOBER 31, 2005
DECEMBER 31, (COMMENCEMENT DATE)
------------------- TO DECEMBER 31,
2007 2006 2005
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $13.31 $10.72 $10.12
- --------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income(a) 0.36 0.44 0.32
- --------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.05 2.41 0.48
========================================================================================================
Total from investment operations 1.41 2.85 0.80
========================================================================================================
Less distributions:
Dividends from net investment income (0.29) (0.24) (0.20)
- --------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.26) (0.02) --
========================================================================================================
Total distributions (0.55) (0.26) (0.20)
========================================================================================================
Redemption fees added to shares of beneficial interest 0.00 0.00 --
========================================================================================================
Net asset value, end of period $14.17 $13.31 $10.72
________________________________________________________________________________________________________
========================================================================================================
Total return(b) 10.66% 26.64% 7.90%
________________________________________________________________________________________________________
========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 64 $ 69 $ 55
________________________________________________________________________________________________________
========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 0.17%(c) 0.18% 0.18%(d)
- --------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 0.17%(c) 0.34% 6.92%(d)
========================================================================================================
Estimated acquired fund fees from underlying funds(e) 0.96% 1.01% 1.15%
========================================================================================================
Ratio of net investment income to average net assets 2.52%(c) 3.62% 18.12%(d)
________________________________________________________________________________________________________
========================================================================================================
Portfolio turnover rate(f) 2% 2% 0.3%
________________________________________________________________________________________________________
========================================================================================================
</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 $71,165.
(d) Annualized.
(e) In addition to the fees and expenses which the Fund bears directly; the
Fund indirectly bears a pro rata share of the fees and expenses of the
underlying funds in which the Fund invests. Because the underlying funds
have varied expenses and fee levels and the Fund may own different
proportions at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary. Estimated underlying fund expenses are
not expenses that are incurred directly by your Fund. They are expenses
that are incurred directly by the underlying funds and are deducted from
the value of the funds your Fund invests in. The effect of the estimated
underlying fund expenses that you bear indirectly is included in your
Fund's total return.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 11--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.
22
AIM International Allocation Fund
NOTE 11--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 Ltd. ("Invesco") 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.
23
AIM International Allocation Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Growth Series
and Shareholders of AIM International Allocation 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 International Allocation Fund
(one of the funds constituting AIM Growth Series, hereafter referred to as the
"Fund") at December 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 two years then ended and
for the period October 31, 2005 (date operations commenced) through December 31,
2005, 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 audit, which included confirmation of securities at December
31, 2007 by correspondence with the custodians, provides a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
February 15, 2008
Houston, Texas
24
AIM International Allocation Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments or
contingent deferred sales charges on redemptions, and redemption fees, if any;
and (2) ongoing costs, including distribution and/or service (12b-1) fees; and
other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period July 1, 2007, through December 31, 2007.
In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the underlying
funds in which your Fund invests. The amount of fees and expenses incurred
indirectly by your Fund will vary because the underlying funds have varied
expenses and fee levels and the Fund may own different proportions of the
underlying funds at different times. Estimated underlying fund expenses are not
expenses that are incurred directly by your Fund. They are expenses that are
incurred directly by the underlying funds and are deducted from the value of the
funds your Fund invests in. The effect of the estimated underlying fund expenses
that you bear indirectly are included in your Fund's total return.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the hypothetical
information is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition,
expenses shown in the table do not include the expenses of the underlying funds,
which are borne indirectly by the Fund. If transaction costs and indirect
expenses were included, your costs would have been higher.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (7/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $996.50 $2.21 $1,022.99 $2.24 0.44%
B 1,000.00 993.30 5.98 1,019.21 6.06 1.19
C 1,000.00 993.20 5.98 1,019.21 6.06 1.19
R 1,000.00 996.50 3.47 1,021.73 3.52 0.69
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period July 1, 2007, through December 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.
25
Supplement to Annual Report dated 12/31/07
AIM International Allocation Fund
==========================================
Institutional Class Shares AVERAGE ANNUAL TOTAL RETURNS PLEASE NOTE THAT PAST PERFORMANCE IS
For periods ended 12/31/07 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 (10/31/05) 21.02% THOSE SHOWN. ALL RETURNS ASSUME
shareholders with a performance overview 1 Year 10.66 REINVESTMENT OF DISTRIBUTIONS AT NAV.
specific to their holdings. Institutional ========================================== INVESTMENT RETURN AND PRINCIPAL VALUE WILL
Class shares are offered exclusively to FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
institutional investors, including defined INSTITUTIONAL CLASS SHARES HAVE NO SALES MAY BE WORTH MORE OR LESS THAN THEIR
contribution plans that meet certain CHARGE; THEREFORE, PERFORMANCE IS AT NET ORIGINAL COST. SEE FULL REPORT FOR
criteria. ASSET VALUE (NAV). PERFORMANCE OF INFORMATION ON COMPARATIVE BENCHMARKS.
INSTITUTIONAL CLASS SHARES WILL DIFFER PLEASE CONSULT YOUR FUND PROSPECTUS FOR
FROM PERFORMANCE OF OTHER SHARE CLASSES MORE INFORMATION. FOR THE MOST CURRENT
PRIMARILY DUE TO DIFFERING SALES CHARGES MONTH-END PERFORMANCE, PLEASE CALL
AND CLASS EXPENSES. 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
A REDEMPTION FEE OF 2% WILL BE IMPOSED ON
CERTAIN REDEMPTIONS OR EXCHANGES OUT OF
THE FUND WITHIN 30 DAYS OF PURCHASE.
EXCEPTIONS TO THE REDEMPTION FEE ARE
LISTED IN THE FUNDS PROSPECTUS.
==========================================
NASDAQ SYMBOL INAIX
==========================================
Over for information on your Fund's expenses.
=======================================================================================
THIS SUPPLEMENT 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 INTAL-INS-1 A I M Distributors, Inc. -- REGISTERED TRADEMARK --
Information about your Fund's expenses
Your Fund's long-term performance
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND AND INDEX DATA FROM 10/31/05
AIM INTERNATIONAL
ALLOCATION FUND- LIPPER INTERNATIONAL
INSTITUTIONAL CLASS MULTI-CAP CORE FUNDS
DATE SHARES MSCI EAFE INDEX(1) INDEX(1)
10/31/05 $10000 $10000 $10000
11/05 10336 10245 10199
12/05 10790 10721 10670
1/06 11504 11380 11291
2/06 11504 11354 11266
3/06 11896 11729 11637
4/06 12409 12289 12188
5/06 11946 11812 11692
6/06 11876 11811 11637
7/06 12047 11928 11758
8/06 12379 12256 12074
9/06 12440 12275 12114
10/06 12873 12752 12543
11/06 13265 13133 12931
12/06 13663 13545 13326
1/07 13827 13637 13446
2/07 13786 13747 13432
3/07 14165 14097 13803
4/07 14719 14724 14354
5/07 15140 14982 14774
6/07 15150 15000 14817
7/07 14903 14779 14543
8/07 14801 14548 14435
9/07 15416 15327 15224
10/07 16166 15929 15926
11/07 15273 15405 15270
12/07 15121 15058 15006
====================================================================================================================================
SOURCE: (1)LIPPER INC.
Past performance cannot guarantee The performance data shown in the chart
comparable future results. above is that of the Fund's institutional
share class. The performance data shown in
The data shown in the chart above the chart in the annual report is that of
includes reinvested distributions, Fund the Fund's Class A, B, C and R shares. The
expenses and management fees. Index performance of the Fund's other share
results include reinvested dividends. classes will differ primarily due to
Performance of an index of funds reflects different sales charge structures and
fund expenses and management fees; class expenses, and may be greater than or
performance of a market index does not. less than the performance of the Fund's
Performance shown in the chart and Institutional Class shares shown in the
table(s) does not reflect deduction of chart above.
taxes a shareholder would pay on Fund
distributions or sale of Fund shares.
Performance of the indexes does not
reflect the effects of taxes.
AIM International Allocation Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs. This example is intended
to help you understand your ongoing costs (in dollars) of investing in the Fund
and to compare these costs with ongoing costs of investing in other mutual
funds. The example is based on an investment of $1,000 invested at the beginning
of the period and held for the entire period July 1, 2007, through December 31,
2007.
In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the underlying
funds in which your Fund invests. The amount of fees and expenses incurred
indirectly by your Fund will vary because the underlying funds have varied
expenses and fee levels and the Fund may own different proportions of the
underlying funds at different times. Estimated underlying fund expenses are not
expenses that are incurred directly by your Fund. They are expenses that are
incurred directly by the underlying funds and are deducted from the value of the
funds your Fund invests in. The effect of the estimated underlying fund expenses
that you bear indirectly are included in your Fund's total return.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. Therefore, the hypothetical information is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, expenses shown in the table do not
include the expenses of the underlying funds, which are borne indirectly by the
Fund. If indirect expenses were included, your costs would have been higher.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
Institutional $1,000.00 $997.90 $0.96 $1,024.25 $0.97 0.19%
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period July 1, 2007, through December 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.
AIM International Allocation 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 December 31,
2007:
FEDERAL AND STATE INCOME TAX
<Table>
Long-Term Capital Gain Dividends $7,315,236
Qualified Dividend Income* 98.00%
Corporate Dividends Received Deduction* 15.00%
</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 March 31, 2007, June 30, 2007, September 30, 2007 and
December 31, 2007 were 90.58%, 90.30%, 90.09%, and 89.77%, respectively.
26
AIM International Allocation Fund
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Growth Series (the "Trust"), is
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees
104 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 Ltd. (ultimate parent
of AIM and a global investment
management firm) and, Invesco Holding
Company (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); and INVESCO
North American Holdings, Inc. (holding
company); Chairman and President,
INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of
Funds(R); Vice Chairman, Investment
Company Institute; and Member of
Executive Board, SMU Cox School of
Business
Formerly: Chairman, Investment Company
Institute; 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, AIM Mutual Fund Dealer Inc.
Principal (registered broker dealer), A I M
Executive Officer Advisors, Inc., AIM Funds Management
Inc. d/b/a INVESCO Enterprise Services
(registered investment advisor and
registered transfer agent), 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), and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Management Group Inc. (financial
services holding company) and 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) 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); 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: Director and Chairman, Fund
Management Company (registered broker
dealer); 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 2001 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 1985 Retired None
Trustee
Formerly: Partner, law firm of Baker &
McKenzie and Director, Badgley Funds,
Inc. (registered investment company) (2
portfolios)
- -------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm)
Formerly: Director, Policy Studies, Inc.
and Van Gilder Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2001 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 2001 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)
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company), and Discovery Global Education
Fund (non-profit)
- -------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) (15
Trustee Naftalis and Frankel LLP portfolios)
- -------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 2003 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 Ltd., ultimate 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.
27
TRUSTEES AND OFFICERS--(CONTINUED)
AIM International Allocation 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,
AIM Investment Services, Inc. and
INVESCO Distributors, Inc.; Director,
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: Director, Vice President and
Secretary, Fund Management Company; 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 N/A
Vice President Ltd.; 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 General Counsel, Secretary and Senior
Vice President Managing Director, Invesco Ltd.;
Director and Secretary, Invesco Holding
Company Limited, IVZ, Inc. and INVESCO
Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO
North American Holdings, Inc.; and Vice
President of The AIM Family of
Funds--Registered Trademark--
Formerly: Senior Managing Director, N/A
Invesco Holding Company Limited;
Director, Senior Vice 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 2004 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; Executive
Vice President, A I M Distributors,
Inc.; Senior Vice President, A I M
Management Group Inc.; 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: Director and President, Fund
Management Company; 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. and The AIM Family of
Funds--Registered Trademark--
Formerly: Anti-Money Laundering
Compliance Officer, Fund Management
Company; and 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.
and AIM Investment Services, Inc.
Formerly: Vice President, A I M Capital
Management, Inc. and Fund Management
Company; 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>
28
Fund holdings and proxy voting information
[EDELIVERY
GO PAPERLESS The Fund provides a complete list of its
AIMINVESTMENTS.COM/EDELIVERY holdings four times in each fiscal year,
GRAPHIC] at the quarter-ends. For the second and
fourth quarters, the lists appear in the
REGISTER FOR EDELIVERY Fund's semiannual and annual reports to
shareholders. For the first and third
eDelivery is the process of receiving your quarters, the Fund files the lists with
fund and account information via e-mail. the Securities and Exchange Commission
Once your quarterly statements, tax forms, (SEC) on Form N-Q. The most recent list of
fund reports, and prospectuses are portfolio holdings is available at
available, we will send you an e-mail AIMinvestments.com. From our home page,
notification containing links to these click on Products & Performance, then
documents. For security purposes, you will Mutual Funds, then Fund Overview. Select
need to log in to your account to view your Fund from the drop-down menu and
your statements and tax forms. click on Complete Quarterly Holdings.
Shareholders can also look up the Fund's
WHY SIGN UP? Forms N-Q on the SEC Web site at sec.gov.
Copies of the Fund's Forms N-Q may be
Register for eDelivery to: reviewed and copied at the SEC Public
Reference Room in Washington, D.C. You can
o save your Fund the cost of printing and obtain information on the operation of the
postage. Public Reference Room, including
information about duplicating fee charges,
o reduce the amount of paper you receive. by calling 202-942-8090 or 800-732-0330,
or by electronic request at the following
o gain access to your documents faster by e-mail address: publicinfo@sec.gov. The
not waiting for the mail. SEC file numbers for the Fund are
811-02699 and 002-57526.
o view your documents online anytime at
your convenience. A description of the policies and
procedures that the Fund uses to determine
o save the documents to your personal how to vote proxies relating to portfolio
computer or print them out for your securities is available without charge,
records. upon request, from our Client Services
department at 800-959-4246 or on the AIM
HOW DO I SIGN UP? Web site, AIMinvestments.com. On the home
page, scroll down and click on Proxy
It's easy. Just follow these simple steps: Policy. The information is also available
on the SEC Web site, sec.gov.
1. Log in to your account.
Information regarding how the Fund voted
2. Click on the "Service Center" tab. proxies related to its portfolio
securities during the 12 months ended June
3. Select "Register for eDelivery" and 30, 2007, is available at our Web site. Go
complete the consent process. to AIMinvestments.com, access the About Us
tab, click on Required Notices and then
This AIM service is provided by AIM click on Proxy Voting Activity. Next,
Investment Services, Inc. select the Fund from the drop-down menu.
The information is also available on the
SEC Web site, sec.gov.
If used after April 20, 2008, this report
must be accompanied by a Fund fact sheet
or by an AIM Quarterly Performance Review
for the most recent quarter-end. Mutual
funds and exchange-traded funds
distributed by A I M Distributors, Inc.
INTAL-AR-1 A I M Distributors, Inc.
[AIM INVESTMENTS LOGO]
--REGISTERED TRADEMARK--
DOMESTIC EQUITY
Mid-Cap Blend
AIM Mid Cap Core Equity Fund
Annual Report to Shareholders - December 31, 2007
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 ................ 26
Fund Expenses ................... 27
Tax Information ................. 28 [COVER GLOBE IMAGE]
Trustees and Officers ........... 29
[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 Mid Cap Core Equity Fund
Dear Shareholders:
I'm pleased to provide you with this report, which includes
[TAYLOR a discussion of how your Fund was managed during the period
PHOTO] under review, and factors that affected its performance. The
following pages contain important information that answers
Philip Taylor questions you may have about your investment.
Despite notable volatility at points throughout the year
ended December 31, 2007, major stock market indexes in the
U.S. and abroad generally performed well. Reasons for their
favorable performance included positive economic growth,
particularly overseas; strong corporate profits; and action
by the U.S. Federal Reserve Board (the Fed) to lower
short-term interest rates, among other factors.
At its mid-September 2007 meeting, the Fed cut its
federal funds target rate for the first time since June
2003.(1) That cut followed 17 rate increases from June 2004
to June 2006(1) and was intended to address concerns about a
weak housing market and problems in the subprime mortgage
market, which some feared could adversely affect the U.S.
economy. The Fed cut the federal funds target rate again in
late October and mid-December in response to continued
economic uncertainty.
This kind of uncertainty can affect equity, fixed-income
and other markets--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.
I encourage you to talk with your financial advisor if
you have concerns about your portfolio. We believe in the
value of working with a trusted financial advisor who can
recommend AIM funds that are appropriate for your portfolio
and that address your long-term investment goals and risk
tolerance regardless of prevailing short-term market
conditions.
In conclusion
In May, AIM Investments' parent company changed its name
from AMVESCAP PLC to Invesco Ltd., uniting our worldwide
operations and global expertise under a new name. While the
name of our parent company may be new to you, I can assure
you that AIM's 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.
We 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
February 11, 2008
Source: (1)U.S. Federal Reserve Board
AIM Investments--REGISTERED TRADEMARK-- is a registered
service mark of A I M Management Group Inc. A I M Advisors,
Inc., A I M Capital Management, Inc., AIM Private Asset
Management, Inc. and PowerShares Capital Management LLC are
the investment advisors for the products and services
represented by AIM Investments; they each provide investment
advisory services to individual and institutional clients
and do not sell securities. A I M Distributors, Inc. is the
distributor for the retail mutual funds and U.S.
institutional money market funds represented by AIM
Investments and the exchange-traded funds managed by
PowerShares Capital Management LLC. All entities are
indirect wholly owned subsidiaries of Invesco Ltd.
2
AIM Mid Cap Core Equity Fund
Dear Fellow AIM Fund Shareholders:
The lines of communication are open: More than 250 of you
[CROCKETT have responded to the invitation I extended in my previous
PHOTO] letter to complete an online survey, and more than 50
shareholders have contacted me directly by e-mail. When I
Bruce L. Crockett could respond quickly and easily to a shareholder's specific
concern I did, but the messages for the most part raised
consistent issues that I respond to here.
I have received many suggestions, a few complaints, and
one offer to buy a gold mine! In general, your letters
expressed an appreciation for transparency, frankness and
the opportunity to comment. Nevertheless, several
shareholders found room for improvement in communications.
Some would like more concise letters while others would
prefer reports to be more customized for their particular
information needs. With these reports going to tens of
thousands of people, shareholder communications necessarily
have to cover those issues common to a diverse population as
well as the information required by law. The ability to
change or further customize letters and reports is also
affected by technology, timeliness and cost.
Online survey responders preferred electronic
communications to paper at a ratio of 63% to 37%. Direct
responders expressed more of a preference for paper,
especially for long reports. Electronic communications are
more cost-effective than paper communications that have to
be printed and mailed, so I encourage those who have
resisted electronic communications to give them a try.
The correspondence shows that improving fund performance
and reducing shareholder costs remain the key shareholder
concerns. Several letters noted individual funds where
performance had changed for the better, while others
remained dissatisfied with the returns from funds they hold.
Although 75% of the online survey responders wanted to see
more overall fund performance data in these letters, and 58%
wanted more information on individual funds, Securities and
Exchange Commission (SEC) and Financial Industry Regulatory
Authority (FINRA) rules are very specific about the way fund
performance can be discussed in print. Respect for those
rules prevents me from commenting on individual funds or
very recent results here, but I can assure you that your
Board and all of its Investments subcommittees continue to
work with AIM Investments to make improved performance a top
priority for all fund managers.
Expense levels came up as another dominant issue, and no
respondent felt these were too low. Several shareholders
questioned the need for 12b-1 fees, which cover the cost of
distributing fund shares and thereby help the fund to
attract new assets. Your Board reviews the funds' 12b-1 fees
annually with the shareholders' best interests in mind.
While your Board keeps its eye on containing or lowering
these fees wherever possible, we also are mindful that 12b-1
fees may be necessary in order to maintain an effective
distribution system for fund shares.
The value of communication between the Board and
shareholders has been noted within and beyond the AIM
community. In the online survey, 87% of the respondents felt
it was either somewhat or very important to hear directly
from the Board, with 55% saying it was very important.
Morningstar--TRADEMARK--, the mutual fund tracking company,
also commented favorably on this channel of communication in
its fall 2007 update of fund stewardship grades, where AIM
was one of fewer than 10 fund boards to get an A for board
quality, according to BoardIQ (11/13/07).
In other news, Ruth Quigley retired from your Board at
the end of 2007, and we thank her for her many years of
dedicated service. Larry Soll has assumed Ruth's place as a
vice chair of the Investments Committee. The Valuation
Committee, which Ruth used to chair, has been reorganized as
the Valuation, Distribution and Proxy Oversight Committee
under the chairmanship of Carl Frischling. The elevation of
proxy oversight to standing committee status responds to
suggestions from shareholders. In addition, Prema
Mathi-Davis assumed my seat on the Governance Committee, and
I moved to the Audit Committee.
Your Board looks forward to another year of diligent
effort on your behalf, and we are even more strongly
motivated by your feedback. The invitation remains open to
e-mail me at bruce@brucecrockett.com. I look forward to
hearing from you.
Sincerely,
/s/ BRUCE L. CROCKETT
------------------------------
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
February 11, 2008
3
AIM Mid Cap Core Equity Fund
Management's discussion of Fund performance management. Business analysis allows us to
identify key drivers of the company,
======================================================================================= understand industry challenges and
PERFORMANCE SUMMARY evaluate the sustainability of competitive
advantages. Both the financial and
For the fiscal year ended December 31, 2007, AIM Mid Cap Core Equity Fund delivered business analyses serve as a basis to
positive returns at net asset value (NAV) and outperformed the broad market S&P 500 construct valuation models that help us
Index, as well as the Fund's stylespecific benchmark, the Russell Midcap Index. Overall estimate a company's value. We use three
results were driven in part by strength in our energy and health care holdings. primary valuation techniques, including
Additionally, the Fund's relative results benefited from avoiding both turbulence in discounted cash flow, traditional
the financials sector and weakness in consumer discretionary. valuation multiples and net asset value.
Your Fund's long-term performance appears later in this report. We consider selling a stock when:
FUND VS. INDEXES o It exceeds our target price.
Total returns, 12/31/06-12/31/07, at NAV. Performance shown does not include applicable o We have not seen a demonstrable
CDSC or front-end sales charges, which would have reduced performance. improvement in fundamentals.
Class A Shares 9.90% o A more compelling investment opportunity
Class B Shares 9.03 exists.
Class C Shares 9.05
Class R Shares 9.59 Market conditions and your Fund
S&P 500 Index(triangle) (Broad Market Index) 5.49
Russell Midcap Index(triangle) (Style-Specific Index) 5.60 For the fiscal year ended December 31,
Lipper Mid-Cap Core Funds Index(triangle) (Peer Group Index) 6.34 2007, we delivered attractive returns for
shareholders and worked diligently to
SOURCE: (TRIANGLE)LIPPER INC. provide shareholders with a wealth
======================================================================================= creation strategy that takes a
full-market-cycle perspective--over bull
How we invest The process we use to identify potential and bear markets--and can serve as a
investments for the Fund includes three source of stability within overall asset
We manage your Fund as a core fund, phases: allocation. This objective has become
seeking to provide upside potential as increasingly important as we mark the
well as a measure of protection in o Financial analysis to evaluate ROIC and five-year anniversary of the bull market
difficult markets. As part of an overall capital allocation and witness increased volatility in the
well-diversified asset allocation financial markets.
strategy, the Fund may complement more o Business analysis to determine
aggressive value and growth investments. competitive positioning Economic growth, as measured by the
change in gross domestic product,
We conduct fundamental research of o Valuation analysis to identify increased 4.9% in the third quarter of
companies to gain a thorough understanding attractively valued companies 2007(1)--above the second-quarter growth
of their business prospects, appreciation rate and the highest rate over the past 12
potential and return on invested capital Financial analysis provides vital months. This represented strong growth
(ROIC). insight into historical and potential despite expectations that the economy was
ROIC, a key indicator of business quality in the later stages of the current
and caliber of
========================================== ========================================== ==========================================
PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS*
By sector 1. Specialty Chemicals 6.4% 1. Barr Pharmaceuticals Inc. 3.2%
Health Care 13.8% 2. Oil & Gas Exploration & 2. Sigma-Aldrich Corp. 3.1
Information Technology 11.9 Production 6.3 3. Henkel KGaA-Pfd. 2.9
Materials 10.4 3. Life Sciences Tools & 4. Cadbury Schweppes PLC 2.6
Energy 10.0 Services 5.3 5. People's United Financial Inc. 2.5
Consumer Staples 9.7 4. Property & Casualty 6. International Flavors &
Financials 9.6 Insurance 3.9 Fragrances Inc. 2.3
Industrials 9.3 5. Industrial Machinery 3.9 7. Chesapeake Energy Corp. 2.1
Consumer Discretionary 5.4 8. Axis Capital Holdings Ltd. 2.1
Utilities 1.3 Total Net Assets $2 billion 9. Techne Corp. 1.8
Telecommunication Services 0.5 Total Number of Holdings* 67 10. Progressive Corp. (The) 1.8
Money Market Funds Plus
Other Liabilities Less Assets 18.1
The Fund's holdings are subject to change, and there is no assurance that the
Fund will continue to hold any particular security.
* Excluding money market fund holdings.
========================================== ========================================== ==========================================
4
AIM Mid Cap Core Equity Fund
economic cycle and would be affected by results versus the style-specific index, The views and opinions expressed in
the housing decline. The weakness in as financials was the worst performing management's discussion of Fund
housing affected consumer spending but did sector of the market over the fiscal year. performance are those of A I M Advisors,
not influence job growth in a meaningful Inc. These views and opinions are subject
way during the reporting period. Over the Although the Fund has delivered better to change at any time based on factors
past year, we observed a tangible increase results than the Russell Midcap Index, such as market and economic conditions.
in yield spreads between the BBB corporate some aspects of the portfolio's These views and opinions may not be relied
bond yields and the 10-year U.S. Treasury, positioning detracted from relative upon as investment advice or
indicating a shift in investors' risk performance. Notably, the Fund's largest recommendations, or as an offer for a
appetite and increasing difficulty in detractors from performance came from particular security. The information is
obtaining financing. The period of easy information technology holding Sega SAMMY not a complete analysis of every aspect of
credit appears to be over. Inflation, as HOLDINGS INC. The stock was under pressure any market, country, industry, security or
measured by the consumer price index, as a result of regulatory changes in Japan the Fund. Statements of fact are from
increased 4.1% in 2007, largely due to pertaining to its Pachinko gaming devices. sources considered reliable, but A I M
energy costs, which were up 17.4%.(2) This It is no longer a Fund holding. Advisors, Inc. makes no representation or
represents the fastest increase in almost warranty as to their completeness or
two decades(3) and a sharp increase versus The Fund's holding of 19.93% in cash at accuracy. Although historical performance
2.5% in 2006.(2) the end of the period detracted from is no guarantee of future results, these
overall returns. While cash may reduce insights may help you understand our
Fund returns were largely driven by our returns in up markets, it serves to reduce investment management philosophy.
overweight position in the energy sector volatility during more turbulent or
versus the style-specific benchmark. negative market environments. Overall, the See important Fund and index
Strength in the global economy and Fund's cash position resulted from our disclosures later in this report.
emerging markets has taken oil prices from fundamental research, as we invested only
$61.05 per barrel in December 2006 to when compelling investment opportunities Ronald S. Sloan
$95.98 in December 2007.(4) The Fund's arose, consistent with our intended wealth [SLOAN Chartered Financial
exposure to this sector has been a creation strategy. PHOTO] Analyst, senior portfolio
consistent theme in the portfolio; however manager, is lead manager of
the nature of our exposure has changed as The Fund's positioning at year end was AIM Mid Cap Core Equity Fund.
the capital spending cycle has matured. somewhat more defensive than that of its Mr. Sloan has been in the investment
Early in the cycle, the primary stylespecific index, as fundamental data industry since 1971. He joined AIM in
beneficiaries were oil producers. Our suggested growth catalysts and sustainable 1998. Mr. Sloan attended the University of
research indicated that as the capital profits tied to the credit cycle had shown Missouri, where he earned both a B.S. in
spending cycle matured, energy service signs of diminishing. Among our largest business administration and an M.B.A.
providers would do well, as oil producers overweight sectors were health care and
invested to maintain and update their consumer staples, while our underweight Douglas Asiello
infrastructure. This benefited companies sectors included consumer discretionary [ASIELLO Chartered Financial Analyst,
such as SMITH INTERNATIONAL INC., an oil and financials. PHOTO] portfolio manager, is manager
services and equipment firm that has been of AIM Mid Cap Core Equity
a long-term Fund holding. We believed that We believe our competitive advantage is Fund. Mr. Asiello joined AIM
the firm's growth prospects were a strict focus on identifying growth-value in 2001. He earned a B.A. in international
attractive because the company benefited anomalies-- companies that have strong relations, an M.B.A. from The Wharton
from the capital spending cycle, a prospects to grow shareholder value, are School at the University of Pennsylvania
supportive commodity pricing cycle and managed by good stewards of capital and and an M.A. in international management
expanding exposure to opportunities in the are trading at attractive valuations. In from The Joseph H. Lauder Institute of
Eastern Hemisphere--during 2007, other our opinion, this allowed the Fund to Management and International Studies.
investors began to agree. serve as a source of stability within our
shareholders' overall asset allocation and Brian Nelson
We have previously discussed our facilitated our objective of striving to [NELSON Chartered Financial Analyst,
rationale for decreasing the Fund's deliver above average risk-adjusted PHOTO] portfolio manager, is manager
exposure to the financials sector. Our returns over a full market cycle. of AIM Mid Cap Core Equity
fundamental research raised concerns that Fund. Mr. Nelson has been in
the increasingly lenient lending standards Thank you for your continued investment the investment industry since 1988. He
of some regional banks and consumer in AIM Mid Cap Core Equity Fund. earned a B.A. from the University of
financial companies would lead to higher California-Santa Barbara.
default rates. These concerns materialized Sources:
in 2007 with the controversy surrounding (1) Bureau of Economic Analysis; Assisted by the Mid/Large Cap Core Team
the subprime mortgage industry and weighed (2) Bureau of Labor Statistics;
heavily on returns of financials stocks. (3) The Wall Street Journal;
Avoidance of these stocks helped the (4) Bloomberg L.P.
Fund's
5
AIM Mid Cap Core Equity Fund
Your Fund's long-term performance
Past performance cannot guarantee does not reflect deduction of taxes a chart. The vertical axis, the one that
comparable future results. shareholder would pay on Fund indicates the dollar value of an
distributions or sale of Fund shares. investment, is constructed with each
The data shown in the chart include Performance of the indexes does not segment representing a percent change in
reinvested distributions, applicable sales reflect the effects of taxes. the value of the investment. In this
charges. Index results include reinvested chart, each segment represents a doubling,
dividends, but they do not reflect sales This chart, which is a logarithmic or 100% change, in the value of the
charges. Performance of an index of funds chart, presents the fluctuations in the investment. In other words, the space
reflects fund expenses and management value of the Fund and its indexes. We between $5,000 and $10,000 is the same
fees; performance of a market index does believe that a logarithmic chart is more size as the space between $10,000 and
not. Performance shown in the chart and effective than other types of charts in $20,000, and so on.
table(s) illustrating changes in value during the
early years shown in the
- ------------------------------------------------------------------------------------------------------------------------------------
Continued from page 8
Other information net asset values for shareholder and a service mark of Morgan Stanley
transactions and the returns based on Capital International Inc. and Standard &
o The returns shown in the management's those net asset values may differ from the Poor's.
discussion of Fund performance are based net asset values and returns reported in
on net asset values calculated for the Financial Highlights. o The Chartered Financial Analyst
shareholder transactions. Generally --REGISTERED TRADEMARK-- (CFA --REGISTERED
accepted accounting principles require o Industry classifications used in this TRADEMARK--) designation is a globally
adjustments to be made to the net assets report are generally according to the recognized standard for measuring the
of the Fund at period end for financial Global Industry Classification Standard, competence and integrity of investment
reporting purposes, and as such, the which was developed by and is the professionals.
exclusive property
6
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
Index data from 5/31/87, Fund data from 6/9/87
AIM MID CAP CORE
EQUITY FUND-CLASS A
DATE SHARES S&P 500 INDEX(1) RUSSELL MIDCAP INDEX(1)
5/31/87 $10000 $ 10000
6/87 $ 9837 10505 10407
7/87 10149 11037 10852
8/87 10612 11449 11236
9/87 10357 11198 11021
10/87 7409 8787 8307
11/87 7172 8062 7845
12/87 8089 8676 8526
1/88 8250 9040 8922
2/88 8940 9460 9554
3/88 8817 9168 9567
4/88 9016 9269 9626
5/88 8741 9349 9603
6/88 9554 9777 10261
7/88 9318 9740 10055
8/88 8949 9410 9831
9/88 9204 9810 10166
10/88 8959 10083 10209
11/88 8685 9939 9964
12/88 8990 10113 10214
1/89 9647 10852 10825
2/89 9760 10583 10800
3/89 10263 10829 10977
4/89 11217 11391 11507
5/89 12120 11850 12025
6/89 11689 11783 11981
7/89 12664 12846 12816
8/89 13023 13097 13244
9/89 13311 13043 13123
10/89 13187 12741 12504
11/89 13331 13000 12675
12/89 13914 13311 12898
1/90 12538 12418 11863
2/90 13318 12578 12104
3/90 14282 12911 12398
4/90 14022 12589 11866
5/90 16016 13814 12941
6/90 16081 13721 12857
7/90 15453 13677 12475
8/90 13405 12443 11133
9/90 12158 11838 10308
10/90 11876 11788 9982
11/90 12581 12548 10944
12/90 12884 12898 11415
1/91 13513 13458 12188
2/91 14368 14419 13204
3/91 15094 14768 13752
4/91 14876 14803 13835
5/91 15397 15439 14491
6/91 14248 14733 13824
7/91 15126 15419 14501
8/91 15852 15783 14935
9/91 15332 15519 14848
10/91 15028 15727 15152
11/91 14064 15095 14526
12/91 15367 16818 16153
1/92 17184 16505 16457
2/92 17347 16719 16835
3/92 16336 16394 16405
4/92 15836 16875 16533
5/92 15977 16958 16640
6/92 15052 16705 16370
7/92 16182 17387 17054
8/92 15627 17032 16662
9/92 16116 17232 17007
10/92 17422 17292 17423
11/92 19706 17879 18301
12/92 20243 18098 18793
====================================================================================================================================
Source: (1)Lipper Inc.
====================================================================================================================================
[MOUNTAIN CHART]
1/93 20409 18249 19168
2/93 19109 18498 19190
3/93 18909 18888 19814
4/93 17680 18431 19289
5/93 18921 18923 19902
6/93 18470 18978 20127
7/93 18707 18902 20224
8/93 19736 19618 21123
9/93 19665 19467 21204
10/93 20646 19870 21222
11/93 20729 19680 20730
12/93 21933 19918 21480
1/94 22214 20595 22073
2/94 22840 20036 21773
3/94 23057 19164 20845
4/94 23594 19410 20988
5/94 23811 19727 21017
6/94 23735 19244 20394
7/94 23569 19876 21094
8/94 25037 20689 22094
9/94 25243 20183 21555
10/94 25306 20636 21719
11/94 24974 19885 20761
12/94 25376 20180 21031
1/95 25549 20703 21463
2/95 26826 21509 22574
3/95 27830 22142 23220
4/95 28876 22794 23570
5/95 29563 23704 24344
6/95 31455 24253 25163
7/95 33176 25057 26384
8/95 33405 25120 26789
9/95 33605 26179 27394
10/95 32271 26086 26781
11/95 32975 27229 28113
12/95 31267 27754 28277
1/96 31364 28697 28873
2/96 32003 28964 29551
3/96 32333 29243 29979
4/96 34645 29674 30828
5/96 34742 30438 31294
6/96 33366 30554 30824
7/96 31201 29205 28916
8/96 32842 29822 30293
9/96 35137 31499 31789
10/96 35155 32367 32044
11/96 36631 34812 33996
12/96 36163 34122 33649
1/97 36756 36253 34908
2/97 33797 36537 34855
3/97 30748 35039 33373
4/97 31409 37129 34204
5/97 34265 39399 36699
6/97 35467 41150 37900
7/97 38549 44424 41062
8/97 37801 41937 40616
9/97 41442 44232 42934
10/97 39424 42757 41264
11/97 39861 44734 42246
12/97 41252 45502 43410
1/98 39978 46005 42592
2/98 43807 49321 45922
3/98 46672 51845 48100
4/98 44750 52376 48221
5/98 42100 51477 46728
6/98 46184 53566 47375
7/98 43219 53000 45116
8/98 33694 45343 37899
9/98 34637 48250 40352
10/98 35991 52169 43104
11/98 37013 55329 45145
12/98 39312 58515 47792
1/99 39497 60961 47710
2/99 36886 59067 46123
3/99 39269 61430 47568
4/99 40824 63808 51082
5/99 41342 62303 50936
6/99 44699 65751 52732
7/99 43394 63707 51285
8/99 41962 63392 49956
====================================================================================================================================
====================================================================================================================================
[MOUNTAIN CHART]
9/99 41983 61656 48200
10/99 43184 65556 50484
11/99 48448 66889 51936
12/99 53908 70823 56506
1/00 52528 67265 54636
2/00 57718 65993 58835
3/00 61389 72445 62204
4/00 61161 70266 59261
5/00 60843 68826 57691
6/00 60290 70521 59397
7/00 59301 69419 58731
8/00 65130 73729 64360
9/00 64303 69837 63442
10/00 63268 69541 62463
11/00 59548 64062 56841
12/00 64038 64377 61167
1/01 65952 66659 62152
2/01 63637 60585 58369
3/01 60576 56749 54748
4/01 66380 61156 59430
5/01 67521 61566 60537
6/01 66698 60068 59967
7/01 66884 59477 58251
8/01 64356 55757 56011
9/01 56872 51255 49257
10/01 59078 52233 51207
11/01 61849 56238 55498
12/01 64360 56731 57727
1/02 64360 55904 57382
2/02 65062 54826 56773
3/02 67866 56888 60178
4/02 66977 53440 59011
5/02 67352 53048 58344
6/02 63115 49271 54433
7/02 57365 45431 49120
8/02 58742 45728 49389
9/02 53996 40764 44832
10/02 56129 44347 47098
11/02 59715 46955 50368
12/02 57219 44198 48384
1/03 55840 43042 47405
2/03 54869 42396 46777
3/03 54627 42806 47239
4/03 58003 46330 50670
5/03 62945 48769 55308
6/03 63675 49392 55867
7/03 65515 50263 57708
8/03 67920 51242 60214
9/03 66297 50699 59460
10/03 69134 53566 63998
11/03 70295 54036 65794
12/03 72728 56868 67766
1/04 74131 57912 69735
2/04 75429 58717 71236
3/04 75210 57831 71251
4/04 75699 56924 68635
5/04 76615 57704 70338
6/04 78722 58826 72284
7/04 75455 56879 69123
8/04 75108 57107 69423
9/04 76512 57726 71676
10/04 77698 58607 73653
11/04 80915 60978 78141
12/04 82776 63052 81467
1/05 81095 61515 79450
2/05 83926 62809 81904
3/05 83229 61698 81260
4/05 80483 60529 78671
5/05 82792 62453 82440
6/05 84150 62542 84657
7/05 88055 64867 89120
8/05 88169 64276 88496
9/05 87384 64796 89670
10/05 84728 63715 86976
11/05 88024 66123 90835
12/05 88913 66146 91773
1/06 92994 67898 96489
2/06 92213 68081 96373
3/06 93338 68929 98761
4/06 94085 69854 99454
====================================================================================================================================
====================================================================================================================================
[MOUNTAIN CHART]
5/06 91253 67846 96107
6/06 90349 67936 96218
7/06 89139 68355 94112
8/06 90476 69978 96502
9/06 93027 71781 98249
10/06 95669 74118 102118
11/06 97688 75526 105792
12/06 98782 76585 105780
1/07 101133 77742 109355
2/07 101547 76226 109531
3/07 103182 77077 110410
4/07 107650 80490 114615
5/07 111020 83296 118938
6/07 108977 81913 116256
7/07 106361 79377 111928
8/07 104777 80564 112119
9/07 107574 83574 115807
10/07 111135 84904 117676
11/07 108334 81353 112056
12/07 108640 80789 111702
====================================================================================================================================
AIM Mid Cap Core Equity Fund
========================================== EXPENSE RATIO SET FORTH IN THE MOST RECENT
AVERAGE ANNUAL TOTAL RETURNS FUND PROSPECTUS AS OF THE DATE OF THIS
REPORT FOR CLASS A, CLASS B, CLASS C AND
As of 12/31/07, including maximum CLASS R SHARES WAS 1.30%, 2.05%, 2.05% AND
applicable sales charges 1.55%, RESPECTIVELY. THE EXPENSE RATIOS
PRESENTED ABOVE MAY VARY FROM THE EXPENSE
CLASS A SHARES RATIOS PRESENTED IN OTHER SECTIONS OF THIS
Inception (6/9/87) 12.30% REPORT THAT ARE BASED ON EXPENSES INCURRED
10 Years 9.55 DURING THE PERIOD COVERED BY THIS REPORT.
5 Years 12.39 CLASS A SHARE PERFORMANCE REFLECTS THE
1 Year 3.85 MAXIMUM 5.50% SALES CHARGE, AND CLASS B
AND CLASS C SHARE PERFORMANCE REFLECTS THE
CLASS B SHARES APPLICABLE CONTINGENT DEFERRED SALES
Inception (4/1/93) 12.22% CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
10 Years 9.56 CDSC ON CLASS B SHARES DECLINES FROM 5%
5 Years 12.60 BEGINNING AT THE TIME OF PURCHASE TO 0% AT
1 Year 4.66 THE BEGINNING OF THE SEVENTH YEAR. THE
CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
CLASS C SHARES YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
Inception (5/3/99) 11.03% HAVE A FRONT-END SALES CHARGE; RETURNS
5 Years 12.84 SHOWN ARE AT NET ASSET VALUE AND DO NOT
1 Year 8.17 REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
ON A TOTAL REDEMPTION OF RETIREMENT PLAN
CLASS R SHARES ASSETS WITHIN THE FIRST YEAR. THE
10 Years 9.97% PERFORMANCE OF THE FUND'S SHARE CLASSES
5 Years 13.41 WILL DIFFER PRIMARILY DUE TO DIFFERENT
1 Year 9.59 SALES CHARGE STRUCTURES AND CLASS
========================================== EXPENSES.
CLASS R SHARES' INCEPTION DATE IS JUNE 3,
2002. RETURNS SINCE THAT DATE ARE
HISTORICAL RETURNS. ALL OTHER RETURNS ARE
BLENDED RETURNS OF HISTORICAL CLASS R
SHARE PERFORMANCE AND RESTATED CLASS A
SHARE PERFORMANCE (FOR PERIODS PRIOR TO
THE INCEPTION DATE OF CLASS R SHARES) AT
NET ASSET VALUE, ADJUSTED TO REFLECT THE
HIGHER RULE 12B-1 FEES APPLICABLE TO CLASS
R SHARES. CLASS A SHARES' INCEPTION DATE
IS JUNE 9, 1987.
THE PERFORMANCE DATA QUOTED REPRESENT
PAST PERFORMANCE AND CANNOT GUARANTEE
COMPARABLE FUTURE RESULTS; CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE
VISIT AIMINVESTMENTS.COM FOR THE MOST
RECENT MONTH-END PERFORMANCE. PERFORMANCE
FIGURES REFLECT REINVESTED DISTRIBUTIONS,
CHANGES IN NET ASSET VALUE AND THE EFFECT
OF THE MAXIMUM SALES CHARGE UNLESS
OTHERWISE STATED. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU ==========================================
MAY HAVE A GAIN OR LOSS WHEN YOU SELL FOR A DISCUSSION OF THE RISKS OF INVESTING
SHARES. IN YOUR FUND AND INDEXES USED IN THIS
REPORT, PLEASE TURN THE PAGE.
THE TOTAL ANNUAL FUND OPERATING ==========================================
7
AIM Mid Cap Core Equity Fund
AIM MID CAP CORE EQUITY FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF
CAPITAL.
o Unless otherwise stated, information presented in this report is as of
December 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 and the potential lack of strict financial sponsored agencies or instrumentalities if
and accounting controls and standards. it is not legally obligated to do so. In
o Class B shares are not available as an this case, if the issuer defaulted, the
investment for retirement plans maintained o Interest rate risk refers to the risk fund holding securities of such issuer
pursuant to Section 401 of the Internal that bond prices generally fall as might not be able to recover its
Revenue Code, including 401(k) plans, interest rates rise; conversely, bond investment from the U.S. government.
money purchase pension plans and profit prices generally rise as interest rates
sharing plans. Plans that had existing fall. About indexes used in this report
accounts invested in Class B shares prior
to September 30, 2003, will continue to be o The Fund may use enhanced investment o The S&P 500 --REGISTERED TRADEMARK--
allowed to make additional purchases. techniques such as leveraging, derivatives INDEX is a market capitalization-weighted
and short sales. Leveraging entails risks index covering all major areas of the U.S.
o Class R shares are available only to such as magnifying changes in the value of economy. It is not the 500 largest
certain retirement plans. Please see the the portfolio's securities. Derivatives companies, but rather the most widely held
prospectus for more information. are subject to counterparty risk--the risk 500 companies chosen with respect to
that the other party will not complete the market size, liquidity, and their
Principal risks of investing in the Fund transaction with the Fund. Short sales industry.
carry the risk of buying a security back
o To the extent the Fund holds cash or at a higher price at which the Fund's o The unmanaged RUSSELL MIDCAP
cash equivalents rather than equity exposure is unlimited. --REGISTERED TRADEMARK-- INDEX measures
securities for risk management purposes, the performance of the 800 smallest
the Fund may not achieve its investment o There is no guarantee that the companies in the Russell 1000 --REGISTERED
objective. investment techniques and risk analyses TRADEMARK-- Index, which represent
used by the Fund's portfolio managers will approximately 30% of the total market
o The value of convertible securities in produce the desired results. capitalization of the Russell 1000 Index.
which the Fund invests may be affected by
market interest rates--the risk that the o Mid-capitalization companies tend to be o The LIPPER MID-CAP CORE FUNDS INDEX is
issuer may default on interest or more vulnerable to adverse developments an equally weighted representation of the
principal payments and the value of the and more volatile than larger companies. largest funds in the Lipper Mid-Cap Core
underlying common stock into which these Investments in mid-capitalization sized Funds category. These funds have an
securities may be converted may decline as companies may involve special risks average price-to-earnings ratio,
a result. including those associated with dependence price-to-book ratio, and three-year
on a small management group, little or no sales-per-share growth value, compared to
o The Fund may invest in debt securities, operating history, little or no track the S&P MidCap 400 Index.
such as notes and bonds, which carry record of success, limited product lines,
interest rate and credit risk. less publicly available information, o The Fund is not managed to track the
illiquidity, restricted resale or less performance of any particular index,
o Prices of equity securities change in frequent trading. including the indexes defined here, and
response to many factors including the consequently, the performance of the Fund
historical and prospective earnings of the o The prices of securities held by the may deviate significantly from the
issuer, the value of its assets, general Fund may decline in response to market performance of the indexes.
economic conditions, interest rates, risks.
investor perceptions and market liquidity. o A direct investment cannot be made in an
o The Fund may invest in obligations index. Unless otherwise indicated, index
o Foreign securities have additional issued by agencies and instrumentalities results include reinvested dividends, and
risks, including exchange rate changes, of the U.S. government that may vary in they do not reflect sales charges.
political and economic upheaval, the the level of support they receive from the Performance of an index of funds reflects
relative lack of information, relatively U.S. government. The U.S. government may fund expenses; performance of a market
low market liquidity, choose not to provide financial support to index does not.
U.S. government-
======================================================================================= 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. FUND NASDAQ SYMBOLS
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING.
======================================================================================= Class A Shares GTAGX
Class B Shares GTABX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class C Shares GTACX
AIMINVESTMENTS.COM Class R Shares GTARX
==========================================
8
AIM Mid Cap Core Equity Fund
SCHEDULE OF INVESTMENTS(a)
December 31, 2007
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------
DOMESTIC COMMON STOCKS-71.95%
ADVERTISING-1.06%
Omnicom Group Inc. 446,574 $ 21,225,662
===========================================================================
AEROSPACE & DEFENSE-0.87%
Goodrich Corp. 246,802 17,426,689
===========================================================================
APPLICATION SOFTWARE-2.29%
Amdocs Ltd.(b) 457,477 15,769,232
- ---------------------------------------------------------------------------
Cadence Design Systems, Inc.(b) 1,754,651 29,846,614
===========================================================================
45,615,846
===========================================================================
ASSET MANAGEMENT & CUSTODY BANKS-0.16%
Legg Mason, Inc. 42,321 3,095,781
===========================================================================
COMMUNICATIONS EQUIPMENT-0.36%
Polycom, Inc.(b) 258,423 7,178,991
===========================================================================
COMPUTER STORAGE & PERIPHERALS-1.64%
QLogic Corp.(b) 2,308,729 32,783,952
===========================================================================
CONSTRUCTION & FARM MACHINERY & HEAVY
TRUCKS-1.21%
Joy Global Inc. 366,235 24,105,588
===========================================================================
DEPARTMENT STORES-0.51%
Kohl's Corp.(b) 223,794 10,249,765
===========================================================================
DISTRIBUTORS-1.32%
Genuine Parts Co. 567,829 26,290,483
===========================================================================
ELECTRONIC EQUIPMENT MANUFACTURERS-0.45%
Agilent Technologies, Inc.(b) 245,089 9,004,570
===========================================================================
ELECTRONIC MANUFACTURING SERVICES-1.55%
Molex Inc. 782,476 21,361,595
- ---------------------------------------------------------------------------
Tyco Electronics Ltd. 255,221 9,476,356
===========================================================================
30,837,951
===========================================================================
ENVIRONMENTAL & FACILITIES SERVICES-1.31%
Republic Services, Inc. 837,106 26,243,273
===========================================================================
FOOD RETAIL-0.71%
SUPERVALU Inc. 379,175 14,226,646
===========================================================================
GAS UTILITIES-1.35%
UGI Corp. 989,297 26,958,343
===========================================================================
</Table>
<Table>
SHARES VALUE
- ---------------------------------------------------------------------------
<Caption>
HEALTH CARE EQUIPMENT-3.68%
Hospira, Inc.(b) 576,581 $ 24,585,414
- ---------------------------------------------------------------------------
Varian Medical Systems, Inc.(b) 445,050 23,213,808
- ---------------------------------------------------------------------------
Zimmer Holdings, Inc.(b) 389,422 25,760,265
===========================================================================
73,559,487
===========================================================================
HEALTH CARE SERVICES-0.77%
Quest Diagnostics Inc. 291,728 15,432,411
===========================================================================
HEALTH CARE TECHNOLOGY-0.81%
IMS Health Inc. 699,458 16,115,512
===========================================================================
HUMAN RESOURCE & EMPLOYMENT SERVICES-1.35%
Administaff, Inc.(c) 951,316 26,903,216
===========================================================================
INDUSTRIAL MACHINERY-3.07%
Dover Corp. 485,877 22,394,071
- ---------------------------------------------------------------------------
ITT Corp. 277,788 18,345,119
- ---------------------------------------------------------------------------
Parker Hannifin Corp. 274,018 20,636,296
===========================================================================
61,375,486
===========================================================================
INSURANCE BROKERS-1.04%
Marsh & McLennan Cos., Inc. 780,434 20,658,088
===========================================================================
LIFE SCIENCES TOOLS & SERVICES-5.35%
Invitrogen Corp.(b) 245,898 22,969,332
- ---------------------------------------------------------------------------
PerkinElmer, Inc. 579,679 15,083,248
- ---------------------------------------------------------------------------
Pharmaceutical Product Development, Inc. 800,370 32,310,937
- ---------------------------------------------------------------------------
Techne Corp.(b) 550,578 36,365,677
===========================================================================
106,729,194
===========================================================================
METAL & GLASS CONTAINERS-1.22%
Pactiv Corp.(b) 914,028 24,340,566
===========================================================================
OFFICE ELECTRONICS-1.46%
Xerox Corp. 1,802,114 29,176,226
===========================================================================
OFFICE SERVICES & SUPPLIES-0.74%
Pitney Bowes Inc. 389,673 14,823,161
===========================================================================
OIL & GAS DRILLING-0.87%
Noble Corp. 308,471 17,431,696
===========================================================================
OIL & GAS EQUIPMENT & SERVICES-2.83%
BJ Services Co. 873,367 21,187,883
- ---------------------------------------------------------------------------
FMC Technologies, Inc.(b) 273,772 15,522,872
- ---------------------------------------------------------------------------
Smith International, Inc. 267,510 19,755,614
===========================================================================
56,466,369
===========================================================================
</Table>
9
AIM Mid Cap Core Equity Fund
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------
OIL & GAS EXPLORATION & PRODUCTION-5.05%
Chesapeake Energy Corp. 1,081,440 $ 42,392,448
- ---------------------------------------------------------------------------
Newfield Exploration Co.(b) 302,891 15,962,356
- ---------------------------------------------------------------------------
Pioneer Natural Resources Co. 328,703 16,053,854
- ---------------------------------------------------------------------------
Whiting Petroleum Corp.(b) 458,533 26,439,013
===========================================================================
100,847,671
===========================================================================
PACKAGED FOODS & MEATS-0.44%
Del Monte Foods Co. 936,367 8,858,032
===========================================================================
PAPER PRODUCTS-1.61%
MeadWestvaco Corp. 1,027,926 32,174,084
===========================================================================
PERSONAL PRODUCTS-3.06%
Avon Products, Inc. 704,936 27,866,120
- ---------------------------------------------------------------------------
Estee Lauder Cos. Inc. (The)-Class A 761,602 33,213,463
===========================================================================
61,079,583
===========================================================================
PHARMACEUTICALS-3.18%
Barr Pharmaceuticals Inc.(b) 1,195,000 63,454,500
===========================================================================
PRECIOUS METALS & MINERALS-1.21%
Coeur d'Alene Mines Corp.(b)(c) 4,895,174 24,182,160
===========================================================================
PROPERTY & CASUALTY INSURANCE-3.86%
Axis Capital Holdings Ltd. 1,051,396 40,972,902
- ---------------------------------------------------------------------------
Progressive Corp. (The) 1,884,362 36,104,376
===========================================================================
77,077,278
===========================================================================
PUBLISHING-1.21%
Washington Post Co. (The)-Class B 30,533 24,164,732
===========================================================================
REGIONAL BANKS-0.84%
SVB Financial Group(b)(c) 332,232 16,744,493
===========================================================================
SEMICONDUCTORS-1.96%
Analog Devices, Inc. 605,396 19,191,053
- ---------------------------------------------------------------------------
Linear Technology Corp.(c) 624,810 19,887,703
===========================================================================
39,078,756
===========================================================================
SPECIALIZED FINANCE-1.22%
Moody's Corp. 683,131 24,387,777
===========================================================================
SPECIALTY CHEMICALS-6.35%
International Flavors & Fragrances Inc. 960,772 46,241,956
- ---------------------------------------------------------------------------
Rohm and Haas Co. 365,533 19,398,836
- ---------------------------------------------------------------------------
Sigma-Aldrich Corp. 1,118,896 61,091,722
===========================================================================
126,732,514
===========================================================================
SYSTEMS SOFTWARE-1.48%
McAfee Inc.(b) 431,771 16,191,412
- ---------------------------------------------------------------------------
Symantec Corp.(b) 821,714 13,262,464
===========================================================================
29,453,876
===========================================================================
</Table>
<Table>
SHARES VALUE
- ---------------------------------------------------------------------------
<Caption>
THRIFTS & MORTGAGE FINANCE-2.50%
People's United Financial Inc.(c) 2,800,929 $ 49,856,536
===========================================================================
Total Domestic Common Stocks (Cost
$1,202,384,898) 1,436,346,944
===========================================================================
FOREIGN COMMON STOCKS & OTHER EQUITY
INTERESTS-7.06%
CANADA-1.20%
Penn West Energy Trust (Oil & Gas Exploration
& Production)(b)(c) 925,033 24,050,858
===========================================================================
JAPAN-1.94%
Fujitsu Ltd. (Computer Hardware)(d) 2,026,000 13,590,710
- ---------------------------------------------------------------------------
Namco Bandai Holdings Inc. (Leisure
Products)(c)(d) 1,580,700 25,094,247
===========================================================================
38,684,957
===========================================================================
SOUTH KOREA-0.49%
SK Telecom Co., Ltd.-ADR (Wireless
Telecommunication Services) 325,227 9,704,774
===========================================================================
SWEDEN-0.78%
Atlas Copco A.B.-Class A (Industrial
Machinery)(b)(d) 1,058,000 15,615,056
===========================================================================
UNITED KINGDOM-2.65%
Cadbury Schweppes PLC (Packaged Foods &
Meats)(d) 4,253,483 52,922,979
===========================================================================
Total Foreign Common Stocks & Other
Equity Interests (Cost $127,901,872) 140,978,624
===========================================================================
FOREIGN PREFERRED STOCKS-2.89%
GERMANY-2.89%
Henkel KgaA-Pfd. (Household Products)(c)(d)
(Cost $40,572,048) 1,029,867 57,622,866
===========================================================================
MONEY MARKET FUNDS-19.87%
Liquid Assets Portfolio-Institutional
Class(e) 198,372,190 198,372,190
- ---------------------------------------------------------------------------
Premier Portfolio-Institutional Class(e) 198,372,190 198,372,190
===========================================================================
Total Money Market Funds (Cost
$396,744,380) 396,744,380
===========================================================================
TOTAL INVESTMENTS (excluding investments
purchased with cash collateral from
securities on loan)-101.77% (Cost
$1,767,603,198) 2,031,692,814
===========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES ON LOAN
MONEY MARKET FUNDS-3.92%
Liquid Assets Portfolio-Institutional Class
(Cost $78,282,236)(e)(f) 78,282,236 78,282,236
===========================================================================
TOTAL INVESTMENTS-105.69% (Cost
$1,845,885,434) 2,109,975,050
===========================================================================
OTHER ASSETS LESS LIABILITIES-(5.69)% (113,576,427)
===========================================================================
NET ASSETS-100.00% $1,996,398,623
___________________________________________________________________________
===========================================================================
</Table>
10
AIM Mid Cap Core Equity Fund
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
Pfd. - Preferred
</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 December 31, 2007.
(d) In accordance with the procedures established by the Board of Trustees, the
foreign security is fair valued using adjusted closing market prices. The
aggregate value of these securities at December 31, 2007 was $164,845,858,
which represented 8.26% of the Fund's Net Assets. See Note 1A.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
(f) The security has been segregated to satisfy the commitment to return the
cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 8.
11
AIM Mid Cap Core Equity Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2007
<Table>
ASSETS:
Investments, at value (Cost $1,370,858,818)* $1,634,948,434
- ------------------------------------------------------------
Investments in affiliated money market funds
(Cost $475,026,616) 475,026,616
============================================================
Total investments (Cost $1,845,885,434) 2,109,975,050
============================================================
Foreign currencies, at value (Cost
$3,355,296) 3,438,536
- ------------------------------------------------------------
Receivables for:
Fund shares sold 1,848,865
- ------------------------------------------------------------
Dividends 3,637,786
- ------------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 58,773
- ------------------------------------------------------------
Other assets 24,323
============================================================
Total assets 2,118,983,333
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 26,442,073
- ------------------------------------------------------------
Fund shares reacquired 15,153,746
- ------------------------------------------------------------
Trustee deferred compensation and
retirement plans 252,306
- ------------------------------------------------------------
Collateral upon return of securities
loaned 78,282,236
- ------------------------------------------------------------
Accrued distribution fees 812,208
- ------------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 1,063
- ------------------------------------------------------------
Accrued transfer agent fees 1,309,687
- ------------------------------------------------------------
Accrued operating expenses 331,391
============================================================
Total liabilities 122,584,710
============================================================
Net assets applicable to shares outstanding $1,996,398,623
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,705,999,481
- ------------------------------------------------------------
Undistributed net investment income 2,665,234
- ------------------------------------------------------------
Undistributed net realized gain 23,628,376
- ------------------------------------------------------------
Unrealized appreciation 264,105,532
============================================================
$1,996,398,623
____________________________________________________________
============================================================
NET ASSETS:
Class A $1,280,918,189
____________________________________________________________
============================================================
Class B $ 394,916,133
____________________________________________________________
============================================================
Class C $ 182,444,313
____________________________________________________________
============================================================
Class R $ 70,939,863
____________________________________________________________
============================================================
Institutional Class $ 67,180,125
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 54,214,582
____________________________________________________________
============================================================
Class B 20,154,343
____________________________________________________________
============================================================
Class C 9,330,243
____________________________________________________________
============================================================
Class R 3,031,124
____________________________________________________________
============================================================
Institutional Class 2,749,151
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 23.63
- ------------------------------------------------------------
Maximum offering price per share
(Net asset value of $23.63 divided by
94.50%) $ 25.01
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 19.59
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 19.55
____________________________________________________________
============================================================
Class R:
Net asset value and offering price per
share $ 23.40
____________________________________________________________
============================================================
Institutional Class:
Net asset value and offering price per
share $ 24.44
____________________________________________________________
============================================================
</Table>
* At December 31, 2007, securities with an aggregate value of $75,658,414 were
on loan to brokers.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12
AIM Mid Cap Core Equity Fund
STATEMENT OF OPERATIONS
For the year ended December 31, 2007
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $1,512,213) $ 30,760,896
- ---------------------------------------------------------------------------
Dividends from affiliated money market funds (includes
securities lending income of $581,986) 18,206,643
===========================================================================
Total investment income 48,967,539
===========================================================================
EXPENSES:
Advisory fees 15,418,103
- ---------------------------------------------------------------------------
Administrative services fees 483,362
- ---------------------------------------------------------------------------
Custodian fees 156,228
- ---------------------------------------------------------------------------
Distribution fees:
Class A 3,623,977
- ---------------------------------------------------------------------------
Class B 4,566,571
- ---------------------------------------------------------------------------
Class C 2,057,291
- ---------------------------------------------------------------------------
Class R 366,227
- ---------------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 4,987,900
- ---------------------------------------------------------------------------
Transfer agent fees -- Institutional 64,671
- ---------------------------------------------------------------------------
Trustees' and officer's fees and benefits 83,352
- ---------------------------------------------------------------------------
Other 562,845
===========================================================================
Total expenses 32,370,527
===========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangement(s) (434,745)
===========================================================================
Net expenses 31,935,782
===========================================================================
Net investment income 17,031,757
===========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (includes net gains from securities
sold to affiliates of $1,040,983) 327,587,011
- ---------------------------------------------------------------------------
Foreign currencies (301,522)
===========================================================================
327,285,489
===========================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (128,764,943)
- ---------------------------------------------------------------------------
Foreign currencies 15,920
===========================================================================
(128,749,023)
===========================================================================
Net realized and unrealized gain 198,536,466
===========================================================================
Net increase in net assets resulting from operations $ 215,568,223
___________________________________________________________________________
===========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13
AIM Mid Cap Core Equity Fund
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2007 and 2006
<Table>
<Caption>
2007 2006
- ----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 17,031,757 $ 12,944,778
- ----------------------------------------------------------------------------------------------
Net realized gain 327,285,489 369,587,634
- ----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (128,749,023) (97,677,270)
==============================================================================================
Net increase in net assets resulting from operations 215,568,223 284,855,142
==============================================================================================
Distributions to shareholders from net investment income:
Class A (16,275,716) (11,105,072)
- ----------------------------------------------------------------------------------------------
Class B (2,444,969) --
- ----------------------------------------------------------------------------------------------
Class C (1,130,405) --
- ----------------------------------------------------------------------------------------------
Class R (718,689) (308,087)
- ----------------------------------------------------------------------------------------------
Institutional Class (1,068,419) (914,852)
==============================================================================================
Total distributions from net investment income (21,638,198) (12,328,011)
==============================================================================================
Distributions to shareholders from net realized gains:
Class A (213,526,286) (278,131,973)
- ----------------------------------------------------------------------------------------------
Class B (77,277,032) (99,069,710)
- ----------------------------------------------------------------------------------------------
Class C (35,725,927) (44,295,529)
- ----------------------------------------------------------------------------------------------
Class R (11,722,473) (12,929,052)
- ----------------------------------------------------------------------------------------------
Institutional Class (10,571,933) (12,684,204)
==============================================================================================
Total distributions from net realized gains (348,823,651) (447,110,468)
==============================================================================================
Decrease in net assets resulting from distributions (370,461,849) (459,438,479)
==============================================================================================
Share transactions-net:
Class A (187,700,557) (532,970,872)
- ----------------------------------------------------------------------------------------------
Class B (59,508,754) (69,891,922)
- ----------------------------------------------------------------------------------------------
Class C (18,808,145) (46,161,994)
- ----------------------------------------------------------------------------------------------
Class R 4,315,028 (8,467,077)
- ----------------------------------------------------------------------------------------------
Institutional Class (2,718,185) (7,841,265)
==============================================================================================
Net increase (decrease) in net assets resulting from
share transactions (264,420,613) (665,333,130)
==============================================================================================
Net increase (decrease) in net assets (419,314,239) (839,916,467)
==============================================================================================
NET ASSETS:
Beginning of year 2,415,712,862 3,255,629,329
==============================================================================================
End of year (including undistributed net investment income
of $2,665,234 and $1,590,129, respectively) $1,996,398,623 $2,415,712,862
______________________________________________________________________________________________
==============================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
14
AIM Mid Cap Core Equity Fund
NOTES TO FINANCIAL STATEMENTS
December 31, 2007
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Mid Cap Core Equity Fund (the "Fund") is a series portfolio of AIM Growth
Series (the "Trust"). The Trust is organized as a Delaware statutory trust and
is registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate series 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.
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 Mid Cap Core Equity Fund
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds as 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.
The Fund files tax returns in the U.S. federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for tax periods after 2003.
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.
16
AIM Mid Cap Core Equity Fund
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
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.
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 0.725%
- --------------------------------------------------------------------
Next $500 million 0.70%
- --------------------------------------------------------------------
Next $500 million 0.675%
- --------------------------------------------------------------------
Over $1.5 billion 0.65%
___________________________________________________________________
====================================================================
</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 December 31, 2007, AIM waived advisory fees of $301,153.
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
December 31, 2007, Invesco reimbursed expenses of the Fund in the amount of
$12,841.
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
December 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 December 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. Rules of the Financial Industry
Regulatory Authority ("FINRA"), formerly known as National Association of
Securities Dealers, 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 December 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 December 31, 2007, ADI advised the Fund that it retained $98,162 in
front-end sales commissions from the sale of Class A shares and $4,796,
$180,168, $6,040 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.
17
AIM Mid Cap Core Equity Fund
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 affiliated money market funds for the year ended December 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 12/31/07 INCOME
- ---------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio -- Institutional
Class $143,663,821 $ 574,897,585 $ (520,189,216) $198,372,190 $ 8,817,401
- ---------------------------------------------------------------------------------------------------
Premier
Portfolio -- Institutional
Class 143,663,821 574,897,585 (520,189,216) 198,372,190 8,807,256
===================================================================================================
Subtotal $287,327,642 $1,149,795,170 $(1,040,378,432) $396,744,380 $17,624,657
===================================================================================================
</Table>
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 12/31/06 AT COST FROM SALES 12/31/07 INCOME*
- ---------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio -- Institutional
Class $ 32,044,433 $ 699,203,542 $ (652,965,739) $ 78,282,236 $ 291,051
- ---------------------------------------------------------------------------------------------------
STIC Prime
Portfolio -- Institutional
Class 32,044,434 141,211,855 (173,256,289) -- 290,935
===================================================================================================
Subtotal $ 64,088,867 $ 840,415,397 $ (826,222,028) $ 78,282,236 $ 581,986
___________________________________________________________________________________________________
===================================================================================================
</Table>
* Net of compensation to counterparties.
INVESTMENTS IN OTHER AFFILIATES:
The Investment Company Act of 1940 defines affiliates as those issuances in
which a fund holds 5% or more of the outstanding voting securities. The Fund has
not owned enough of the outstanding voting securities of the issuer to have
control (as defined in the Investment Company Act of 1940) of that issuer. The
following is a summary of the transactions with affiliates for the year ended
December 31, 2007.
<Table>
<Caption>
CHANGE IN
UNREALIZED
VALUE PURCHASES PROCEEDS APPRECIATION VALUE DIVIDEND
12/31/06 AT COST FROM SALES (DEPRECIATION) 12/31/07 INCOME*
- ---------------------------------------------------------------------------------------------------------------------
IDT Corp. $ -- $ 32,123,849 $ (21,641,745) $(10,482,104) $ -- $ --
=====================================================================================================================
Total
Investments
in
Affiliates $351,416,509 $2,022,334,416 $(1,888,242,205) $(10,482,104) $475,026,616 $18,206,643
_____________________________________________________________________________________________________________________
=====================================================================================================================
<Caption>
REALIZED
GAIN (LOSS)
- ---------------
IDT Corp. $(10,482,104)
===============
Total
Investments
in
Affiliates $(10,482,104)
_______________
===============
</Table>
NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Fund is permitted to purchase or sell securities from or to certain other
AIM Funds under specified conditions outlined in procedures adopted by the Board
of Trustees of the Trust. The procedures have been designed to ensure that any
purchase or sale of securities by the Fund from or to another fund or portfolio
that is or could be considered an affiliate by virtue of having a common
investment advisor (or affiliated investment advisors), common Trustees and/or
common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined
under the procedures, each transaction is effected at the current market price.
Pursuant to these procedures, for the year ended December 31, 2007, the Fund
engaged in securities sales of $2,643,363, which resulted in net realized gains
of $1,040,983, and securities purchases of $14,359,643.
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 December
31, 2007, the Fund received credits from these arrangements, which resulted in
the reduction of the Fund's total expenses of $120,751.
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
18
AIM Mid Cap Core Equity Fund
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 December 31, 2007, the Fund paid legal fees of $10,814
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 December 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 by the
securities lending provider. 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 December 31, 2007, securities with an aggregate value of $75,658,414 were
on loan to brokers. The loans were secured by cash collateral of $78,282,236
received by the Fund and subsequently invested in affiliated money market funds.
For the year ended December 31, 2007, the Fund received dividends on cash
collateral investments of $581,986 for securities lending transactions, which
are net of compensation to counterparties.
19
AIM Mid Cap Core Equity Fund
NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years December 31, 2007 and
2006 was as follows:
<Table>
<Caption>
2007 2006
- ------------------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 28,130,779 $ 60,774,347
- ------------------------------------------------------------------------------------------
Long-term capital gain 342,331,070 398,664,132
==========================================================================================
Total distributions $370,461,849 $459,438,479
__________________________________________________________________________________________
==========================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of December 31, 2007, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2007
- ------------------------------------------------------------------------------
Undistributed ordinary income $ 16,003,976
- ------------------------------------------------------------------------------
Undistributed long-term gain 10,752,102
- ------------------------------------------------------------------------------
Net unrealized appreciation -- investments 264,105,532
- ------------------------------------------------------------------------------
Temporary book/tax differences (243,194)
- ------------------------------------------------------------------------------
Post-October currency loss deferral (219,274)
- ------------------------------------------------------------------------------
Shares of beneficial interest 1,705,999,481
==============================================================================
Total net assets $1,996,398,623
______________________________________________________________________________
==============================================================================
</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 tax-basis net unrealized
appreciation on investments amount includes appreciation on foreign currencies
of $15,916.
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 December 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 December 31, 2007 was $941,252,006 and
$1,659,440,537, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $307,184,914
- ------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (43,095,298)
==============================================================================
Net unrealized appreciation of investment securities $264,089,616
______________________________________________________________________________
==============================================================================
Cost of investments is the same for tax and financial
reporting purposes.
</Table>
NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of passive foreign
investment companies and foreign currency transactions, on December 31, 2007,
undistributed net investment income was increased by $5,681,546 and
undistributed net realized gain was decreased by $5,681,546. This
reclassification had no effect on the net assets of the Fund.
20
AIM Mid Cap Core Equity Fund
NOTE 12--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
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
--------------------------------------------------------------
2007 2006
---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 6,241,450 $ 173,257,488 7,836,659 $ 231,041,690
- ------------------------------------------------------------------------------------------------------------------------------
Class B 535,435 12,686,772 522,159 13,575,265
- ------------------------------------------------------------------------------------------------------------------------------
Class C 563,606 13,325,886 509,365 13,226,227
- ------------------------------------------------------------------------------------------------------------------------------
Class R 788,477 21,570,907 761,892 22,322,860
- ------------------------------------------------------------------------------------------------------------------------------
Institutional Class 1,288,870 37,175,632 864,292 26,327,833
==============================================================================================================================
Issued as reinvestment of dividends:
Class A 9,450,420 221,707,505 10,662,512 280,104,464
- ------------------------------------------------------------------------------------------------------------------------------
Class B 3,899,443 75,883,852 4,167,438 94,016,864
- ------------------------------------------------------------------------------------------------------------------------------
Class C 1,806,333 35,078,987 1,859,906 41,885,042
- ------------------------------------------------------------------------------------------------------------------------------
Class R 534,950 12,431,951 507,371 13,227,163
- ------------------------------------------------------------------------------------------------------------------------------
Institutional Class 479,817 11,640,352 503,480 13,599,002
==============================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 1,122,892 31,000,501 884,031 25,956,761
- ------------------------------------------------------------------------------------------------------------------------------
Class B (1,316,265) (31,000,501) (1,005,900) (25,956,761)
==============================================================================================================================
Reacquired:
Class A (22,287,869) (613,666,051) (36,249,950) (1,070,073,787)
- ------------------------------------------------------------------------------------------------------------------------------
Class B (4,955,405) (117,078,877) (5,830,538) (151,527,290)
- ------------------------------------------------------------------------------------------------------------------------------
Class C (2,857,879) (67,213,018) (3,901,001) (101,273,263)
- ------------------------------------------------------------------------------------------------------------------------------
Class R (1,086,424) (29,687,830) (1,492,867) (44,017,100)
- ------------------------------------------------------------------------------------------------------------------------------
Institutional Class (1,815,982) (51,534,169) (1,581,493) (47,768,100)
==============================================================================================================================
(7,608,131) $(264,420,613) (20,982,644) $ (665,333,130)
______________________________________________________________________________________________________________________________
==============================================================================================================================
</Table>
NOTE 13--SIGNIFICANT EVENT
At a meeting held on December 13, 2007, the Board of Trustees of Trust approved
certain proposals to be presented for shareholder approval at a special meeting
of the shareholders of the Trust intended to be held on February 29, 2008 (the
"Special Meeting"). At the Special Meeting, shareholders of record as of the
close of business on November 30, 2007, are entitled to vote their respective
shares on several proposals that including, among others the following
proposal(s).
New proposed sub-advisory agreement between A I M Advisors, Inc. ("AIM") and
each of AIM Funds Management Inc., Invesco Asset Management Deutschland, GmbH,
Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited,
Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco
Hong Kong Limited, Invesco Institutional (N.A.), Inc. and Invesco Senior Secured
Management, Inc. (collectively, the "Affiliated Sub-Advisers") (the "New
Sub-advisory Arrangements"). This proposal is intended to benefit the Fund and
its shareholders by permitting AIM to utilize the additional resources and
talent of these affiliated sub-advisers in managing the Fund. Because AIM would
pay all of the sub-advisory fees of the sub-advisers, the new sub-advisory
arrangements would not affect the fees the Fund pays pursuant to the advisory
agreement. If approved by shareholders, the New Sub-advisory Arrangements are
expected to become effective on or about May 1, 2008.
21
AIM Mid Cap Core Equity Fund
NOTE 14--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
---------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
2007 2006 2005 2004 2003
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 26.08 $ 28.57 $ 28.64 $ 26.92 $ 21.17
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.32 0.25 0.06(a) (0.01)(a) (0.08)(a)
- -------------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 2.23 2.97 2.08 3.71 5.83
===============================================================================================================================
Total from investment operations 2.55 3.22 2.14 3.70 5.75
===============================================================================================================================
Less distributions:
Dividends from net investment income (0.36) (0.22) -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (4.64) (5.49) (2.21) (1.98) --
===============================================================================================================================
Total distributions (5.00) (5.71) (2.21) (1.98) --
===============================================================================================================================
Net asset value, end of period $ 23.63 $ 26.08 $ 28.57 $ 28.64 $ 26.92
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(b) 9.90% 11.11% 7.43% 13.82% 27.10%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,280,918 $1,556,658 $2,186,823 $2,552,041 $2,025,407
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.21%(c) 1.28% 1.27% 1.30% 1.41%
- -------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.22%(c) 1.28% 1.32% 1.40% 1.41%
===============================================================================================================================
Ratio of net investment income (loss) to average net
assets 0.97%(c) 0.65% 0.23% (0.02)% (0.33)%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 49% 51% 61% 56% 38%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges.
(c) Ratios are based on average daily net assets of $1,449,590,805.
<Table>
<Caption>
CLASS B
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2007 2006 2005 2004 2003
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 22.39 $ 25.23 $ 25.73 $ 24.54 $ 19.43
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.08 (0.02) (0.14)(a) (0.19)(a) (0.21)(a)
- -------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.91 2.67 1.85 3.36 5.32
=========================================================================================================================
Total from investment operations 1.99 2.65 1.71 3.17 5.11
=========================================================================================================================
Less distributions:
Dividends from net investment income (0.15) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (4.64) (5.49) (2.21) (1.98) --
=========================================================================================================================
Total distributions (4.79) (5.49) (2.21) (1.98) --
=========================================================================================================================
Net asset value, end of period $ 19.59 $ 22.39 $ 25.23 $ 25.73 $ 24.54
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) 9.03% 10.32% 6.59% 13.00% 26.30%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $394,916 $492,311 $609,073 $702,361 $702,267
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets 1.96%(c)(d) 2.03% 2.02% 2.04%(d) 2.06%
=========================================================================================================================
Ratio of net investment income (loss) to average net assets 0.22%(c) (0.10)% (0.52)% (0.76)% (0.98)%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 49% 51% 61% 56% 38%
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges.
(c) Ratios are based on average daily net assets of $456,657,080.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 1.97% and 2.05% for the years ended December 31, 2007 and 2004,
respectively.
22
AIM Mid Cap Core Equity Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS C
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2007 2006 2005 2004 2003
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 22.35 $ 25.20 $ 25.70 $ 24.51 $ 19.41
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.08 (0.02) (0.14)(a) (0.19)(a) (0.21)(a)
- -------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.91 2.66 1.85 3.36 5.31
=========================================================================================================================
Total from investment operations 1.99 2.64 1.71 3.17 5.10
=========================================================================================================================
Less distributions:
Dividends from net investment income (0.15) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (4.64) (5.49) (2.21) (1.98) --
=========================================================================================================================
Total distributions (4.79) (5.49) (2.21) (1.98) --
=========================================================================================================================
Net asset value, end of period $ 19.55 $ 22.35 $ 25.20 $ 25.70 $ 24.51
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) 9.05% 10.29% 6.60% 13.01% 26.28%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $182,444 $219,435 $286,025 $324,873 $303,296
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets 1.96%(c)(d) 2.03% 2.02% 2.04%(d) 2.06%
=========================================================================================================================
Ratio of net investment income (loss) to average net assets 0.22%(c) (0.10)% (0.52)% (0.76)% (0.98)%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 49% 51% 61% 56% 38%
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions. Does not include sales charges.
(c) Ratios are based on average daily net assets of $205,729,050.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 1.97% and 2.05% for the years ended December 31, 2007 and 2004,
respectively.
<Table>
<Caption>
CLASS R
------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------
2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.88 $ 28.38 $ 28.54 $ 26.89 $ 21.18
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.22 0.14 (0.01)(a) (0.07)(a) (0.12)(a)
- --------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 2.23 2.98 2.06 3.70 5.83
====================================================================================================================
Total from investment operations 2.45 3.12 2.05 3.63 5.71
====================================================================================================================
Less distributions:
Dividends from net investment income (0.29) (0.13) -- -- --
- --------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (4.64) (5.49) (2.21) (1.98) --
====================================================================================================================
Total distributions (4.93) (5.62) (2.21) (1.98) --
====================================================================================================================
Net asset value, end of period $ 23.40 $ 25.88 $ 28.38 $ 28.54 $ 26.89
____________________________________________________________________________________________________________________
====================================================================================================================
Total return(b) 9.59% 10.83% 7.14% 13.57% 26.96%
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $70,940 $72,308 $85,631 $61,303 $27,281
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets 1.46%(c)(d) 1.53% 1.52% 1.54%(d) 1.56%
====================================================================================================================
Ratio of net investment income (loss) to average net assets 0.71%(c) 0.40% (0.02)% (0.26)% (0.48)%
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate 49% 51% 61% 56% 38%
____________________________________________________________________________________________________________________
====================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions.
(c) Ratios are based on average daily net assets of $73,245,420.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 1.47% and 1.55% for the years ended December 31, 2007 and 2004,
respectively.
23
AIM Mid Cap Core Equity Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------
2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 26.82 $ 29.26 $ 29.15 $ 27.23 $ 21.27
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.43 0.38 0.20(a) 0.14(a) 0.08(a)
- --------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 2.30 3.06 2.12 3.76 5.88
====================================================================================================================
Total from investment operations 2.73 3.44 2.32 3.90 5.96
====================================================================================================================
Less distributions:
Dividends from net investment income (0.47) (0.40) -- -- --
- --------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (4.64) (5.48) (2.21) (1.98) --
====================================================================================================================
Total distributions (5.11) (5.88) (2.21) (1.98) --
====================================================================================================================
Net asset value, end of period $ 24.44 $ 26.82 $ 29.26 $ 29.15 $ 27.23
____________________________________________________________________________________________________________________
====================================================================================================================
Total return(b) 10.33% 11.62% 7.92% 14.40% 28.02%
____________________________________________________________________________________________________________________
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $67,180 $75,000 $88,077 $51,579 $26,056
____________________________________________________________________________________________________________________
====================================================================================================================
Ratio of expenses to average net assets 0.82%(c)(d) 0.82% 0.82% 0.80%(d) 0.76%
====================================================================================================================
Ratio of net investment income to average net assets 1.35%(c) 1.10% 0.68% 0.48% 0.32%
____________________________________________________________________________________________________________________
====================================================================================================================
Portfolio turnover rate 49% 51% 61% 56% 38%
____________________________________________________________________________________________________________________
====================================================================================================================
</Table>
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset
value for financial reporting purposes and the returns based upon those
net asset values may differ from the net asset value and returns for
shareholder transactions.
(c) Ratios are based on average daily net assets of $71,408,879.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 0.83% and 0.81% for the years ended December 31, 2007 and 2004,
respectively.
NOTE 15--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING
On July 6, 2007, the Securities and Exchange Commission ("SEC") published notice
of two proposed distribution plans ("Distribution Plans") for the distribution
of monies placed into two separate Fair Funds created pursuant to a settlement
reached on October 8, 2004 between Invesco Funds Group, Inc. ("IFG"), A I M
Advisors, Inc. ("AIM") and A I M Distributors, Inc. and the SEC (the "Order").
One of the Fair Funds consists of $325 million, plus interest and any
contributions by other settling parties, for distribution to shareholders of
certain mutual funds formerly advised by IFG who may have been harmed by market
timing and related activity. The second Fair Fund consists of $50 million, plus
interest and any contributions by other settling parties, for distribution to
shareholders of mutual funds advised by AIM who may have been harmed by market
timing and related activity. Comments on the Distribution Plans were due no
later than August 6, 2007 and the Distribution Plans are awaiting final approval
by the SEC. Distributions from the Fair Funds will begin after the SEC finally
approves the Distribution Plans. The proposed Distribution Plans provide for
distribution to all eligible investors, for the periods spanning January 1, 2000
through July 31, 2003 (for the IFG Fair Fund) and January 1, 2001 through
September 30, 2003 (for the AIM Fair Fund), their proportionate share of the
applicable Fair Fund to compensate such investors for injury they may have
suffered as a result of market timing in the affected funds. The Distribution
Plans include a provision for any residual amounts in the Fair Funds to be
distributed in the future to the affected funds. Because the Distribution Plans
have not received final approval from the SEC and distribution of the Fair Funds
has not yet commenced, management of AIM and the Fund are unable to estimate the
amount of distribution to be made to the Fund, if any.
At the request of the trustees of the AIM Funds, Invesco Ltd. ("Invesco"),
the parent company of IFG and AIM, has agreed to reimburse expenses incurred by
the AIM Funds related to market timing matters.
PENDING LITIGATION AND REGULATORY INQUIRIES
On August 30, 2005, the West Virginia Office of the State
Auditor -- Securities Commission ("WVASC") issued a Summary Order to Cease and
Desist and Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The
WVASC makes findings of fact that AIM and ADI entered into certain arrangements
permitting market timing of the AIM Funds and failed to disclose these
arrangements in the prospectuses for such Funds, and conclusions of law to the
effect that AIM and ADI violated the West Virginia securities laws. The WVASC
orders AIM and ADI to cease any further violations and seeks to impose monetary
sanctions, including restitution to affected investors, disgorgement of fees,
reimbursement of investigatory, administrative and legal costs and an
"administrative assessment," to be determined by the Commissioner. Initial
research indicates that these damages could be limited or capped by statute. By
agreement with the Commissioner of Securities, AIM's time to respond to that
Order has been indefinitely suspended.
24
AIM Mid Cap Core Equity Fund
NOTE 15--LEGAL PROCEEDINGS--(CONTINUED)
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, IFG, AIM, ADI and/or
related entities and individuals, depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity in
the AIM Funds; 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 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 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 Mid Cap Core Equity Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Growth Series
and Shareholders of AIM Mid Cap Core Equity 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 Mid Cap Core Equity Fund (one
of the funds constituting AIM Growth Series, hereafter referred to as the
"Fund") at December 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 five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 2007 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
February 15, 2008
Houston, Texas
26
AIM Mid Cap Core Equity Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments or
contingent deferred sales charges on redemptions, and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and/or service
(12b-1) fees; and other Fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with ongoing costs of investing in other mutual funds. The
example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period July 1, 2007, through December 31, 2007.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the hypothetical
information is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $996.30 $6.04 $1,019.16 $6.11 1.20%
B 1,000.00 991.90 9.79 1,015.38 9.91 1.95
C 1,000.00 991.90 9.79 1,015.38 9.91 1.95
R 1,000.00 994.40 7.29 1,017.90 7.38 1.45
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period July 1, 2007, through December 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.
27
Supplement to Annual Report dated 12/31/07
AIM Mid Cap Core Equity Fund
==========================================
Institutional Class Shares AVERAGE ANNUAL TOTAL RETURNS PLEASE NOTE THAT PAST PERFORMANCE IS
For periods ended 12/31/07 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 (3/15/02) 9.09% THOSE SHOWN. ALL RETURNS ASSUME
shareholders with a performance overview 5 Years 14.25 REINVESTMENT OF DISTRIBUTIONS AT NAV.
specific to their holdings. Institutional 1 Year 10.33 INVESTMENT RETURN AND PRINCIPAL VALUE WILL
Class shares are offered exclusively to ========================================== FLUCTUATE SO YOUR SHARES, WHEN REDEEMED,
institutional investors, including defined MAY BE WORTH MORE OR LESS THAN THEIR
contribution plans that meet certain INSTITUTIONAL CLASS SHARES HAVE NO SALES ORIGINAL COST. SEE FULL REPORT FOR
criteria. CHARGE; THEREFORE, PERFORMANCE IS AT NET INFORMATION ON COMPARATIVE BENCHMARKS.
ASSET VALUE (NAV). PERFORMANCE OF PLEASE CONSULT YOUR FUND PROSPECTUS FOR
INSTITUTIONAL CLASS SHARES WILL DIFFER MORE INFORMATION. FOR THE MOST CURRENT
FROM PERFORMANCE OF OTHER SHARE CLASSES MONTH-END PERFORMANCE, PLEASE CALL
PRIMARILY DUE TO DIFFERING SALES CHARGES 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
AND CLASS EXPENSES.
==========================================
NASDAQ SYMBOL GTAVX
==========================================
Over for information on your Fund's expenses.
=======================================================================================
THIS SUPPLEMENT 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 GEQ-INS-1 A I M Distributors, Inc. -- REGISTERED TRADEMARK --
AIM Mid Cap Core Equity Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management fees
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period July 1, 2007, through December 31, 2007.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. Therefore, the hypothetical information is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (7/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
Institutional $1,000.00 $998.00 $4.03 $1,021.17 $4.08 0.80%
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period July 1, 2007, through December 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.
AIM Mid Cap Core Equity 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 December 31,
2007:
FEDERAL AND STATE INCOME TAX
<Table>
Long-Term Capital Gain Dividends $342,331,070
Qualified Dividend Income* 68%
Corporate Dividends Received Deduction* 50%
</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 $6,492,581
</Table>
ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION
The percentages of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended March 31, 2007, June 30, 2007, September 30, 2007 and
December 31, 2007 were 24.42%, 31.01%, 32.21%, and 29.39%, respectively.
28
AIM Mid Cap Core Equity Fund
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Growth Series (the "Trust"), is
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees
104 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 Ltd. (ultimate parent
of AIM and a global investment
management firm) and, Invesco Holding
Company (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); and INVESCO
North American Holdings, Inc. (holding
company); Chairman and President,
INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of
Funds(R); Vice Chairman, Investment
Company Institute; and Member of
Executive Board, SMU Cox School of
Business
Formerly: Chairman, Investment Company
Institute; 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, AIM Mutual Fund Dealer Inc.
Principal (registered broker dealer), A I M
Executive Officer Advisors, Inc., AIM Funds Management
Inc. d/b/a INVESCO Enterprise Services
(registered investment advisor and
registered transfer agent), 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), and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Management Group Inc. (financial
services holding company) and 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) 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); 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: Director and Chairman, Fund
Management Company (registered broker
dealer); 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 2001 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 1985 Retired None
Trustee
Formerly: Partner, law firm of Baker &
McKenzie and Director, Badgley Funds,
Inc. (registered investment company) (2
portfolios)
- -------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm)
Formerly: Director, Policy Studies, Inc.
and Van Gilder Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2001 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 2001 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)
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company), and Discovery Global Education
Fund (non-profit)
- -------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) (15
Trustee Naftalis and Frankel LLP portfolios)
- -------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 2003 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 Ltd., ultimate 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.
29
TRUSTEES AND OFFICERS--(CONTINUED)
AIM Mid Cap Core Equity 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,
AIM Investment Services, Inc. and
INVESCO Distributors, Inc.; Director,
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: Director, Vice President and
Secretary, Fund Management Company; 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 N/A
Vice President Ltd.; 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 General Counsel, Secretary and Senior
Vice President Managing Director, Invesco Ltd.;
Director and Secretary, Invesco Holding
Company Limited, IVZ, Inc. and INVESCO
Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO
North American Holdings, Inc.; and Vice
President of The AIM Family of
Funds--Registered Trademark--
Formerly: Senior Managing Director, N/A
Invesco Holding Company Limited;
Director, Senior Vice 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 2004 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; Executive
Vice President, A I M Distributors,
Inc.; Senior Vice President, A I M
Management Group Inc.; 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: Director and President, Fund
Management Company; 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. and The AIM Family of
Funds--Registered Trademark--
Formerly: Anti-Money Laundering
Compliance Officer, Fund Management
Company; and 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.
and AIM Investment Services, Inc.
Formerly: Vice President, A I M Capital
Management, Inc. and Fund Management
Company; 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>
30
[EDELIVERY Fund holdings and proxy voting information
GO PAPERLESS
AIMINVESTMENTS.COM/EDELIVERY The Fund provides a complete list of its
GRAPHIC] holdings four times in each fiscal year,
at the quarter-ends. For the second and
REGISTER FOR EDELIVERY fourth quarters, the lists appear in the
Fund's semiannual and annual reports to
eDelivery is the process of receiving your shareholders. For the first and third
fund and account information via e-mail. quarters, the Fund files the lists with
Once your quarterly statements, tax forms, the Securities and Exchange Commission
fund reports, and prospectuses are (SEC) on Form N-Q. The most recent list of
available, we will send you an e-mail portfolio holdings is available at
notification containing links to these AIMinvestments.com. From our home page,
documents. For security purposes, you will click on Products & Performance, then
need to log in to your account to view Mutual Funds, then Fund Overview. Select
your statements and tax forms. your Fund from the drop-down menu and
click on Complete Quarterly Holdings.
WHY SIGN UP? Shareholders can also look up the Fund's
Forms N-Q on the SEC Web site at sec.gov.
Register for eDelivery to: Copies of the Fund's Forms N-Q may be
reviewed and copied at the SEC Public
o save your Fund the cost of printing and Reference Room in Washington, D.C. You can
postage. obtain information on the operation of the
Public Reference Room, including
o reduce the amount of paper you receive. information about duplicating fee charges,
by calling 202-942-8090 or 800-732-0330,
o gain access to your documents faster by or by electronic request at the following
not waiting for the mail. e-mail address: publicinfo@sec.gov. The
SEC file numbers for the Fund are
o view your documents online anytime at 811-02699 and 002-57526.
your convenience.
A description of the policies and
o save the documents to your personal procedures that the Fund uses to determine
computer or print them out for your how to vote proxies relating to portfolio
records. securities is available without charge,
upon request, from our Client Services
HOW DO I SIGN UP? department at 800-959-4246 or on the AIM
Web site, AIMinvestments.com. On the home
It's easy. Just follow these simple steps: page, scroll down and click on Proxy
Policy. The information is also available
1. Log in to your account. on the SEC Web site, sec.gov.
2. Click on the "Service Center" tab. Information regarding how the Fund voted
proxies related to its portfolio
3. Select "Register for eDelivery" and securities during the 12 months ended June
complete the consent process. 30, 2007, is available at our Web site. Go
to AIMinvestments.com, access the About Us
This AIM service is provided by AIM tab, click on Required Notices and then
Investment Services, Inc. click on Proxy Voting Activity. Next,
select the Fund from the drop-down menu.
The information is also available on the
SEC Web site, sec.gov.
If used after April 20, 2008, this report
must be accompanied by a Fund fact sheet
or by an AIM Quarterly Performance Review
for the most recent quarter-end. Mutual
funds and exchange-traded funds
distributed by A I M Distributors, Inc.
MCCE-AR-1 A I M Distributors, Inc.
[AIM INVESTMENTS LOGO]
--REGISTERED TRADEMARK--
DOMESTIC EQUITY
Small Cap
AIM Small Cap Growth Fund
Annual Report to Shareholders - December 31, 2007
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 ............ 13
Notes to Financial Statements ... 15
Financial Highlights ............ 22
Auditor's Report ................ 27
Fund Expenses ................... 28
Tax Information ................. 29 [COVER GLOBE IMAGE]
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 Small Cap Growth Fund
Dear Shareholders:
I'm pleased to provide you with this report, which includes
[TAYLOR a discussion of how your Fund was managed during the period
PHOTO] under review, and factors that affected its performance. The
following pages contain important information that answers
Philip Taylor questions you may have about your investment.
Despite notable volatility at points throughout the year
ended December 31, 2007, major stock market indexes in the
U.S. and abroad generally performed well. Reasons for their
favorable performance included positive economic growth,
particularly overseas; strong corporate profits; and action
by the U.S. Federal Reserve Board (the Fed) to lower
short-term interest rates, among other factors.
At its mid-September 2007 meeting, the Fed cut its
federal funds target rate for the first time since June
2003.(1) That cut followed 17 rate increases from June 2004
to June 2006(1) and was intended to address concerns about a
weak housing market and problems in the subprime mortgage
market, which some feared could adversely affect the U.S.
economy. The Fed cut the federal funds target rate again in
late October and mid-December in response to continued
economic uncertainty.
This kind of uncertainty can affect equity, fixed-income
and other markets--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.
I encourage you to talk with your financial advisor if
you have concerns about your portfolio. We believe in the
value of working with a trusted financial advisor who can
recommend AIM funds that are appropriate for your portfolio
and that address your long-term investment goals and risk
tolerance regardless of prevailing short-term market
conditions.
In conclusion
In May, AIM Investments' parent company changed its name
from AMVESCAP PLC to Invesco Ltd., uniting our worldwide
operations and global expertise under a new name. While the
name of our parent company may be new to you, I can assure
you that AIM's 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.
We 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
February 11, 2008
Source: (1)U.S. Federal Reserve Board
AIM Investments--REGISTERED TRADEMARK-- is a registered
service mark of A I M Management Group Inc. A I M Advisors,
Inc., A I M Capital Management, Inc., AIM Private Asset
Management, Inc. and PowerShares Capital Management LLC are
the investment advisors for the products and services
represented by AIM Investments; they each provide investment
advisory services to individual and institutional clients
and do not sell securities. A I M Distributors, Inc. is the
distributor for the retail mutual funds and U.S.
institutional money market funds represented by AIM
Investments and the exchange-traded funds managed by
PowerShares Capital Management LLC. All entities are
indirect wholly owned subsidiaries of Invesco Ltd.
2
AIM Small Cap Growth Fund
Dear Fellow AIM Fund Shareholders:
The lines of communication are open: More than 250 of you
[CROCKETT have responded to the invitation I extended in my previous
PHOTO] letter to complete an online survey, and more than 50
shareholders have contacted me directly by e-mail. When I
Bruce L. Crockett could respond quickly and easily to a shareholder's specific
concern I did, but the messages for the most part raised
consistent issues that I respond to here.
I have received many suggestions, a few complaints, and
one offer to buy a gold mine! In general, your letters
expressed an appreciation for transparency, frankness and
the opportunity to comment. Nevertheless, several
shareholders found room for improvement in communications.
Some would like more concise letters while others would
prefer reports to be more customized for their particular
information needs. With these reports going to tens of
thousands of people, shareholder communications necessarily
have to cover those issues common to a diverse population as
well as the information required by law. The ability to
change or further customize letters and reports is also
affected by technology, timeliness and cost.
Online survey responders preferred electronic
communications to paper at a ratio of 63% to 37%. Direct
responders expressed more of a preference for paper,
especially for long reports. Electronic communications are
more cost-effective than paper communications that have to
be printed and mailed, so I encourage those who have
resisted electronic communications to give them a try.
The correspondence shows that improving fund performance
and reducing shareholder costs remain the key shareholder
concerns. Several letters noted individual funds where
performance had changed for the better, while others
remained dissatisfied with the returns from funds they hold.
Although 75% of the online survey responders wanted to see
more overall fund performance data in these letters, and 58%
wanted more information on individual funds, Securities and
Exchange Commission (SEC) and Financial Industry Regulatory
Authority (FINRA) rules are very specific about the way fund
performance can be discussed in print. Respect for those
rules prevents me from commenting on individual funds or
very recent results here, but I can assure you that your
Board and all of its Investments subcommittees continue to
work with AIM Investments to make improved performance a top
priority for all fund managers.
Expense levels came up as another dominant issue, and no
respondent felt these were too low. Several shareholders
questioned the need for 12b-1 fees, which cover the cost of
distributing fund shares and thereby help the fund to
attract new assets. Your Board reviews the funds' 12b-1 fees
annually with the shareholders' best interests in mind.
While your Board keeps its eye on containing or lowering
these fees wherever possible, we also are mindful that 12b-1
fees may be necessary in order to maintain an effective
distribution system for fund shares.
The value of communication between the Board and
shareholders has been noted within and beyond the AIM
community. In the online survey, 87% of the respondents felt
it was either somewhat or very important to hear directly
from the Board, with 55% saying it was very important.
Morningstar--TRADEMARK--, the mutual fund tracking company,
also commented favorably on this channel of communication in
its fall 2007 update of fund stewardship grades, where AIM
was one of fewer than 10 fund boards to get an A for board
quality, according to BoardIQ (11/13/07).
In other news, Ruth Quigley retired from your Board at
the end of 2007, and we thank her for her many years of
dedicated service. Larry Soll has assumed Ruth's place as a
vice chair of the Investments Committee. The Valuation
Committee, which Ruth used to chair, has been reorganized as
the Valuation, Distribution and Proxy Oversight Committee
under the chairmanship of Carl Frischling. The elevation of
proxy oversight to standing committee status responds to
suggestions from shareholders. In addition, Prema
Mathi-Davis assumed my seat on the Governance Committee, and
I moved to the Audit Committee.
Your Board looks forward to another year of diligent
effort on your behalf, and we are even more strongly
motivated by your feedback. The invitation remains open to
e-mail me at bruce@brucecrockett.com. I look forward to
hearing from you.
Sincerely,
/S/ BRUCE L. CROCKETT
------------------------------
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
February 11, 2008
3
AIM Small Cap Growth Fund
Management's discussion of Fund performance with company management.
======================================================================================= 2. Valuation analysis. Identifying
PERFORMANCE SUMMARY attractively valued stocks given their
growth potential over a one- to two-year
For the year ended December 31, 2007, Class A shares of AIM Small Cap Growth Fund horizon.
delivered positive returns and, at net asset value (NAV), outperformed the Russell 2000
Growth Index. Outperformance versus the Russell 2000 Growth Index was driven by solid 3. Timeliness analysis. Identifying the
stock selection across sectors. "time- liness" of a stock purchase. We
review trading volume characteristics and
The Fund also outperformed versus the broad market index, the S&P 500 Index. trend analysis to make sure there are no
Outperformance versus the S&P 500 Index was primarily due to the fact that small-cap signs of stock deterioration. This also
growth stocks generally outperformed large-cap stocks during the year. serves as a risk management measure that
helps us confirm our high conviction
Your Fund's long-term performance appears later in this report. candidates.
FUND VS. INDEXES We consider selling or trimming a stock
when:
Total returns, 12/31/06-12/31/07, at NAV. Performance shown does not include applicable
CDSC or front-end sales charges, which would have reduced performance. o The company's fundamental business
prospects deteriorate.
Class A Shares 11.38%
Class B Shares 10.55 o A stock hits its target price.
Class C Shares 10.52
Class R Shares 11.07 o The company's technical profile
Investor Class Shares 11.39 deteriorates.
S&P 500 Index(triangle) (Broad Market Index) 5.49
Russell 2000 Growth Index(triangle) (Style-Specific Index) 7.05 Market conditions and your Fund
Lipper Small-Cap Growth Funds Index(triangle) (Peer Group Index) 9.68
Despite high market volatility late in the
SOURCE: (triangle)LIPPER INC. year, major U.S. equity markets finished
======================================================================================= the year in positive territory.(1) In the
first part of the year, strong economic
How we invest cap-growth asset class. We seek to control growth, favorable corporate earnings and
risk by keeping the Fund's sector increased merger and acquisition activity
We focus on small-cap growth companies weightings in line with the benchmark by drove equity markets higher. However,
with visible and long-term growth staying fully diversified in all those concerns about the credit markets,
opportunities, as demonstrated by sectors. continued weakness in housing and rising
consistent and accelerating earnings oil prices weighed heavily on investor
growth. Our investment philosophy o STOCK SELECTION: We select stocks based sentiment during much of the second half
involves: on an analysis of individual companies. of the year.
Our three-step selection process includes:
o PORTFOLIO CONSTRUCTION: We align the In this environment, large-cap stocks
Fund with the Russell 2000 Growth Index, 1. Fundamental analysis. Building generally outperformed both mid- and
the benchmark we believe represents the financial models and conducting in-depth small- cap stocks.(1) Additionally, growth
small- interviews stocks out- performed value stocks.(1)
With the exception of the financials and
consumer discretionary sectors, positive
performance was broad
========================================== ========================================== ==========================================
PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS*
By sector 1. Application Software 6.8% 1. Carpenter Technology Corp. 1.4%
Information Technology 28.6% 2. Semiconductors 4.6 2. General Cable Corp. 1.3
Health Care 17.7 3. Oil & Gas Exploration & 3. Bucyrus International, Inc.
Industrials 17.0 Production 4.0 -Class A 1.3
Consumer Discretionary 10.2 4. Biotechnology 3.7 4. MICROS Systems, Inc. 1.3
Energy 8.4 5. Oil & Gas Equipment & 5. Church & Dwight Co., Inc. 1.3
Financials 6.5 Services 3.5 6. Varian Inc. 1.3
Materials 3.8 7. Blackboard Inc. 1.2
Consumer Staples 3.7 Total Net Assets $1.70 billion 8. ANSYS, Inc. 1.2
Telecommunication Services 2.0 Total Number of Holdings* 131 9. DeVry, Inc. 1.2
Utilities 0.8 10. Affiliated Managers Group, Inc. 1.1
Money Market Funds Plus
Other Assets Less Liabilities 1.3
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 Small Cap Growth Fund
among Russell 2000 Growth Index sectors The Fund also outperformed the Russell The views and opinions expressed in
with the best returns found in the 2000 Growth Index in the health care management's discussion of Fund
materials, utilities and energy sectors. sector. Outperformance in this sector was performance are those of A I M Advisors,
driven primarily by stock selection in Inc. These views and opinions are subject
The Fund benefited from positive biotechnology and health care providers to change at any time based on factors
absolute performance in eight out of 10 and services holdings. Examples of such as market and economic conditions.
economic sectors, with the highest biotechnology holdings that performed well These views and opinions may not be relied
positive impact on performance coming from included BIOMARIN PHARMACEUTICAL, MYRIAD upon as investment advice or
holdings in the health care, information GENETICS and UNITED THERAPEUTICS. Examples recommendations, or as an offer for a
technology (IT) and energy sectors. The of health care providers and services particular security. The information is
Fund outperformed the Russell 2000 Growth stocks that made meaningful contributions not a complete analysis of every aspect of
Index by the widest margin in those same included PEDIATRIX MEDICAL GROUP and VCA any market, country, industry, security or
three sectors. ANTECH. the Fund. Statements of fact are from
sources considered reliable, but A I M
Outperformance in the IT sector was Underperformance versus the Russell Advisors, Inc. makes no representation or
driven primarily by solid stock selection 2000 Growth Index was isolated in the warranty as to their completeness or
in a number of industries including materials and consumer discretionary accuracy. Although historical performance
internet software and services, software sectors. In the materials sector, is no guarantee of future results, these
and semiconductors/semiconductor underperformance was primarily driven by insights may help you understand our
equipment. Two IT holdings were among the an underweight position in chemicals investment management philosophy.
Fund's top five contributors to overall holdings and an overweight position in
performance during the year--aQuantive and construction materials holdings. See important Fund and index
Ansys. aQuantive, a company that offers disclosures later in this report.
digital marketing services to help clients Underperformance in the consumer
efficiently allocate their online discretionary sector was driven largely by Juliet Ellis
advertising budgets, was acquired by stock selection in the specialty retail [ELLIS Chartered Financial
Microsoft (not a Fund holding) in August industry. Many retail stocks faced selling PHOTO] Analyst, senior portfolio
of this year. We subsequently sold the pressure during the year, as investors manager, is lead manager of
stock, locking in substantial gains for feared that consumers would finally begin AIM Small Cap Growth Fund.
shareholders. Ansys, a maker of design to slow their discretionary spending. Ms. Ellis joined AIM in 2004. She
software for developers and engineers, Examples of holdings that were significant previously served as senior portfolio
continued to benefit from strong demand detractors from Fund performance included manager of two small-cap funds for another
for its software products during the year. HOT TOPIC and DSW. Both holdings were company and was responsible for the
negatively affected by slower consumer management of more than $2 billion in
Many companies in the energy sector spending during the year. Despite the assets. Ms. Ellis began her investment
continued to benefit from higher oil pull-back, we continued to own both stocks career in 1981 as a financial consultant.
prices and the ongoing modernization and at the close of the reporting period. She is a cum laude and Phi Beta Kappa
expansion of the global energy graduate of Indiana University with a B.A.
infrastructure. The Fund outperformed the During the year, the most significant in economics and political science.
Russell 2000 Growth Index in this sector positioning changes included additions in
due to solid stock selection in both the industrials, materials and consumer Juan Hartsfield
energy equipment and services holdings, as staples sectors. These purchases were Chartered Financial
well as exploration and production funded by reducing exposure to the [HARTSFIELD Analyst, portfolio manager,
holdings. An overweight position in energy consumer discretionary, health care and PHOTO] is manager of AIM Small Cap
equipment and services holdings also financials sectors. All changes to the Growth Fund. Prior to
contributed to outperformance. In this Fund were based on our bottom-up stock joining AIM in 2004, he began his
area, one holding that made a significant selection process of identifying high investment career in 2000 as an equity
contribution to Fund performance was FMC quality growth companies trading at what analyst and most recently served as a
TECHNOLOGIES. FMC Technologies provides we believe are attractive valuations. portfolio manager. Mr. Hartsfield earned
subsea drilling and production systems for an B.S. in petroleum engineering from The
the exploration and production of oil and Although we are pleased to have University of Texas at Austin and an
gas. The company benefited from solid provided positive returns for our M.B.A. from the University of Michigan.
demand for its products, producing growth investors for the year, we are always
in revenue and earnings during the year. striving to improve performance and help Assisted by the Small Cap Core/Growth Team
you meet your financial goals. We thank
you for your commitment to AIM Small Cap On February 4, 2008, after the close of
Growth Fund. the reporting period,Clay Manley was added
to the team.
Source: (1)Lipper Inc.
5
AIM Small Cap Growth Fund
Your Fund's long-term performance
Past performance cannot guarantee not. Performance shown in the chart and percent change in the value of the
comparable future results. table(s) does not reflect deduction of investment. In this chart, each segment
taxes a shareholder would pay on Fund represents a doubling, or 100% change, in
The data shown in the chart include distributions or sale of Fund shares. the value of the investment. In other
reinvested distributions, applicable sales Performance of the indexes does not words, the space between $5,000 and
charges, Fund expenses and management reflect the effects of taxes. $10,000 is the same size as the space
fees. Results for Class B shares are between $10,000 and $20,000, and so on.
calculated as if a hypothetical This chart, which is a logarithmic
shareholder had liquidated his entire chart, presents the fluctuations in the
investment in the Fund at the close of the value of the Fund and its indexes. We
reporting period and paid the applicable believe that a logarithmic chart is more
contingent deferred sales charges. Index effective than other types of charts in
results include reinvested dividends, but illustrating changes in value during the
they do not reflect sales charges. early years shown in the chart. The
Performance of an index of funds reflects vertical axis, the one that indicates the
fund expenses and management fees; dollar value of an investment, is
performance of a market index does constructed with each segment representing
a
- ------------------------------------------------------------------------------------------------------------------------------------
Continued from page 8
o The Fund is not managed to track the Other information o Industry classifications used in this
performance of any particular index, report are generally according to the
including the indexes defined here, and o The returns shown in the management's Global Industry Classification Standard,
consequently, the performance of the Fund discussion of Fund performance are based which was developed by and is the
may deviate significantly from the on net asset values calculated for exclusive property and a service mark of
performance of the indexes. shareholder transactions. Generally Morgan Stanley Capital International Inc.
accepted accounting principles require and Standard & Poor's.
o A direct investment cannot be made in an adjustments to be made to the net assets
index. Unless otherwise indicated, index of the Fund at period end for financial o The Chartered Financial
results include reinvested dividends, and reporting purposes, and as such, the net Analyst--REGISTERED TRADEMARK--
they do not reflect sales charges. asset values for shareholder transactions (CFA--REGISTERED TRADEMARK--) designation
Performance of an index of funds reflects and the returns based on those net asset is a globally recognized standard for
fund expenses; performance of a market values may differ from the net asset measuring the competence and integrity of
index does not. values and returns reported in the investment professionals.
Financial Highlights.
6
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT
FUND DATA FROM 10/18/95, INDEX DATA FROM 10/31/95
AIM SMALL CAP GROWTH AIM SMALL CAP GROWTH S&P 500 RUSSELL 2000 GROWTH LIPPER SMALL-CAP
DATE FUND-CLASS A SHARES FUND-CLASS B SHARES INDEX(1) INDEX(1) GROWTH FUNDS INDEX(1)
10/18/95 $ 9450 $10000
10/95 9483 10035 $10000 $10000 $10000
11/95 9665 10219 10438 10441 10367
12/95 9756 10307 10640 10673 10624
1/96 9822 10367 11001 10584 10579
2/96 10376 10953 11104 11067 11092
3/96 10781 11373 11211 11286 11452
4/96 11790 12439 11376 12152 12615
5/96 12229 12886 11669 12775 13188
6/96 11517 12133 11713 11945 12451
7/96 10632 11198 11196 10487 11083
8/96 10790 11356 11432 11263 11868
9/96 11592 12196 12075 11843 12625
10/96 11211 11785 12408 11333 12089
11/96 11096 11654 13345 11648 12279
12/96 11104 11661 13081 11875 12435
1/97 11352 11914 13898 12171 12724
2/97 10377 10891 14007 11436 11805
3/97 9552 10009 13432 10629 10953
4/97 9446 9896 14233 10506 10790
5/97 10670 11172 15104 12086 12287
6/97 11256 11782 15775 12495 12945
7/97 12232 12797 17030 13136 13724
8/97 12499 13069 16077 13530 13942
9/97 13661 14272 16957 14609 15115
10/97 13057 13634 16391 13732 14342
11/97 12907 13465 17149 13404 14018
12/97 12908 13466 17443 13412 13831
1/98 13044 13590 17636 13233 13626
2/98 14175 14768 18907 14401 14728
3/98 15106 15726 19875 15006 15394
4/98 15423 16043 20078 15098 15506
5/98 14574 15152 19734 14001 14409
6/98 15288 15890 20535 14144 14831
7/98 14347 14894 20318 12963 13715
8/98 11227 11656 17382 9970 10719
9/98 12204 12642 18497 10981 11293
10/98 12439 12891 19999 11554 11738
11/98 13752 14232 21211 12450 12692
12/98 15900 16458 22432 13577 13965
1/99 16534 17101 23370 14188 14303
2/99 15553 16082 22643 12890 12926
3/99 16907 17476 23549 13349 13511
4/99 18166 18762 24461 14528 14038
5/99 18987 19593 23884 14551 14115
6/99 21023 21700 25206 15317 15436
7/99 21405 22075 24422 14844 15381
8/99 21647 22314 24301 14288 15166
9/99 21946 22610 23636 14564 15715
10/99 22890 23569 25131 14937 16632
11/99 25831 26576 25642 16516 18730
12/99 30307 31172 27150 19428 22507
1/00 30707 31564 25786 19247 22272
2/00 40322 41425 25299 23725 28798
3/00 38999 40054 27772 21231 26537
4/00 35263 36193 26937 19087 23257
5/00 31755 32563 26385 17416 21355
6/00 38668 39629 27034 19666 25116
7/00 34646 35487 26612 17980 23482
8/00 39697 40630 28264 19872 26008
9/00 38491 39370 26772 18884 24720
10/00 35373 36153 26659 17352 22865
11/00 28210 28825 24559 14201 18971
12/00 30086 30722 24679 15070 20649
1/01 31316 31954 25554 16290 21279
2/01 26544 27065 23226 14057 18554
3/01 23860 24310 21755 12779 16752
4/01 27160 27655 23444 14343 18561
====================================================================================================================================
SOURCE: (1)LIPPER INC.
====================================================================================================================================
[MOUNTAIN CHART]
5/01 27494 27987 23602 14676 19064
6/01 27788 28266 23027 15076 19545
7/01 26427 26862 22801 13790 18455
8/01 24669 25059 21375 12928 17363
9/01 21006 21318 19649 10842 14653
10/01 22701 23034 20024 11885 15726
11/01 24438 24782 21559 12878 16945
12/01 25943 26294 21748 13679 17972
1/02 25165 25489 21431 13193 17428
2/02 23416 23708 21018 12339 16373
3/02 25184 25479 21808 13411 17712
4/02 24637 24910 20486 13121 17245
5/02 23566 23827 20336 12354 16553
6/02 21756 21980 18888 11306 15323
7/02 18775 18951 17416 9569 13150
8/02 18796 18951 17530 9564 13131
9/02 17715 17856 15627 8873 12334
10/02 18523 18661 17001 9322 12861
11/02 20029 20163 18000 10246 13938
12/02 18675 18778 16943 9540 13007
1/03 18150 18252 16500 9281 12663
2/03 17675 17758 16253 9033 12269
3/03 17917 17994 16410 9170 12522
4/03 19221 19282 17761 10038 13557
5/03 21039 21097 18696 11169 14939
6/03 21656 21698 18935 11384 15445
7/03 22656 22696 19269 12245 16348
8/03 24070 24092 19644 12902 17215
9/03 23293 23287 19436 12576 16793
10/03 25163 25146 20535 13662 18316
11/03 25961 25930 20715 14108 18804
12/03 25981 25930 21801 14171 18831
1/04 26831 26768 22201 14915 19712
2/04 26721 26639 22509 14892 19637
3/04 26590 26487 22170 14962 19502
4/04 25396 25285 21822 14211 18549
5/04 26064 25940 22121 14493 18936
6/04 26903 26744 22551 14975 19476
7/04 24428 24275 21805 13631 17757
8/04 23651 23482 21892 13338 17182
9/04 24522 24341 22129 14075 18164
10/04 25230 25027 22467 14417 18673
11/04 26959 26714 23376 15636 19980
12/04 27757 27497 24171 16198 20862
1/05 26980 26702 23582 15468 20073
2/05 27738 27431 24078 15681 20469
3/05 27030 26713 23652 15092 19782
4/05 25827 25521 23204 14132 18676
5/05 27860 27507 23942 15128 19914
6/05 28275 27895 23976 15617 20610
7/05 29813 29398 24867 16709 21868
8/05 29500 29066 24640 16474 21490
9/05 29542 29086 24840 16604 21607
10/05 28520 28057 24425 15990 20875
11/05 30236 29743 25348 16896 21994
12/05 30070 29553 25357 16871 21976
1/06 32256 31692 26029 18498 23767
2/06 32247 31657 26099 18399 23674
3/06 33669 33038 26424 19294 24660
4/06 34073 33411 26779 19238 24743
5/06 32062 31413 26009 17884 23204
6/06 32008 31344 26043 17895 23011
7/06 30523 29871 26204 16965 21756
8/06 31243 30549 26826 17462 22194
9/06 31387 30677 27517 17580 22484
10/06 33157 32383 28413 18720 23499
11/06 34546 33714 28953 19168 24292
12/06 34377 33518 29359 19122 24317
1/07 35106 34215 29803 19478 24930
2/07 35425 34520 29222 19416 24882
3/07 35907 34951 29548 19596 25143
4/07 37002 36003 30856 20109 25869
5/07 39130 38041 31932 21027 27056
6/07 38719 37623 31402 20906 26986
7/07 37650 36558 30429 19821 26001
8/07 38049 36923 30885 20319 26348
9/07 39438 38253 32038 20909 27374
10/07 41106 39848 32548 21851 28561
11/07 38447 37238 31187 20342 26680
12/07 38230 38235 30971 20470 26670
====================================================================================================================================
AIM Small Cap Growth Fund
========================================== SHARES FOR THE PERIOD USING BLENDED THE PERFORMANCE OF THE FUND'S SHARE
AVERAGE ANNUAL TOTAL RETURNS RETURNS. CLASS A SHARES' INCEPTION DATE IS CLASSES WILL DIFFER PRIMARILY DUE TO
OCTOBER 18, 1995. DIFFERENT SALES CHARGE STRUCTURES AND
As of 12/31/07, including maximum CLASS EXPENSES.
applicable sales charges THE PERFORMANCE DATA QUOTED REPRESENT
PAST PERFORMANCE AND CANNOT GUARANTEE
CLASS A SHARES COMPARABLE FUTURE RESULTS; CURRENT
Inception (10/18/95) 11.62% PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE
10 Years 10.85 VISIT AIMINVESTMENTS.COM FOR THE MOST
5 Years 14.12 RECENT MONTH-END PERFORMANCE. PERFORMANCE
1 Year 5.26 FIGURES REFLECT REINVESTED DISTRIBUTIONS,
CHANGES IN NET ASSET VALUE AND THE EFFECT
CLASS B SHARES OF THE MAXIMUM SALES CHARGE UNLESS
Inception (10/18/95) 11.62% OTHERWISE STATED. INVESTMENT RETURN AND
10 Years 10.82 PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU
5 Years 14.33 MAY HAVE A GAIN OR LOSS WHEN YOU SELL
1 Year 5.70 SHARES.
CLASS C SHARES THE TOTAL ANNUAL FUND OPERATING EXPENSE
Inception (5/3/99) 8.12% RATIO SET FORTH IN THE MOST RECENT FUND
5 Years 14.56 PROSPECTUS AS OF THE DATE OF THIS REPORT
1 Year 9.55 FOR CLASS A, CLASS B, CLASS C, CLASS R AND
INVESTOR CLASS SHARES WAS 1.25%, 2.00%,
CLASS R SHARES 2.00%, 1.50% AND 1.26%, RESPECTIVELY. THE
10 Years 11.24% EXPENSE RATIOS PRESENTED ABOVE MAY VARY
5 Years 15.14 FROM THE EXPENSE RATIOS PRESENTED IN OTHER
1 Year 11.07 SECTIONS OF THIS REPORT THAT ARE BASED ON
EXPENSES INCURRED DURING THE PERIOD
INVESTOR CLASS SHARES COVERED BY THIS REPORT.
10 Years 11.47%
5 Years 15.42 CLASS A SHARE PERFORMANCE REFLECTS THE
1 Year 11.39 MAXIMUM 5.50% SALES CHARGE, AND CLASS B
========================================== AND CLASS C SHARE PERFORMANCE REFLECTS THE
APPLICABLE CONTINGENT DEFERRED SALES
CLASS R SHARES' INCEPTION DATE IS JUNE 3, CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
2002. RETURNS SINCE THAT DATE ARE CDSC ON CLASS B SHARES DECLINES FROM 5%
HISTORICAL RETURNS. ALL OTHER RETURNS ARE BEGINNING AT THE TIME OF PURCHASE TO 0% AT
BLENDED RETURNS OF HISTORICAL CLASS R THE BEGINNING OF THE SEVENTH YEAR. THE
SHARE PERFORMANCE AND RESTATED CLASS A CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
SHARE PERFORMANCE (FOR PERIODS PRIOR TO YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
THE INCEPTION DATE OF CLASS R SHARES) AT HAVE A FRONT-END SALES CHARGE; RETURNS
NET ASSET VALUE, ADJUSTED TO REFLECT THE SHOWN ARE AT NET ASSET VALUE AND DO NOT
HIGHER RULE 12B-1 FEES APPLICABLE TO CLASS REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
R SHARES. CLASS A SHARES' INCEPTION DATE ON A TOTAL REDEMPTION OF RETIREMENT PLAN
IS OCTOBER 18, 1995. ASSETS WITHIN THE FIRST YEAR. INVESTOR
CLASS SHARES DO NOT HAVE A FRONT-END SALES
INVESTOR CLASS SHARES' INCEPTION DATE CHARGE OR A CDSC; THEREFORE, PERFORMANCE
IS APRIL 7, 2006. RETURNS SINCE THAT DATE IS AT NET ASSET VALUE.
ARE HISTORICAL RETURNS. ALL OTHER RETURNS
ARE BLENDED RETURNS OF HISTORICAL INVESTOR
CLASS SHARE PERFORMANCE AND RESTATED CLASS
A SHARE PERFORMANCE (FOR PERIODS PRIOR TO ==========================================
THE INCEPTION DATE OF INVESTOR CLASS FOR A DISCUSSION OF THE RISKS OF INVESTING
SHARES) AT NET ASSET VALUE, WHICH RESTATED IN YOUR FUND AND INDEXES USED IN THIS
PERFORMANCE WILL REFLECT THE RULE 12B-1 REPORT, PLEASE TURN THE PAGE.
FEES APPLICABLE TO CLASS A ==========================================
7
AIM Small Cap Growth Fund
AIM SMALL CAP GROWTH FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL.
o Unless otherwise stated, information presented in this report is as of
December 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 Foreign securities have additional o The prices of securities held by the
risks, including exchange rate changes, Fund may decline in response to market
o Class B shares are not available as an political and economic upheaval, the risks.
investment for retirement plans maintained relative lack of information, relatively
pursuant to Section 401 of the Internal low market liquidity, and the potential o Interest rate risk refers to the risk
Revenue Code, including 401(k) plans, lack of strict financial and accounting that bond prices generally fall as
money purchase pension plans and profit controls and standards. interest rates rise; conversely, bond
sharing plans. Plans that had existing prices generally rise as interest rates
accounts invested in Class B shares prior o The Fund invests in "growth" stocks, fall.
to September 30, 2003, will continue to be which may be more volatile than other
allowed to make additional purchases. investment styles because growth stocks o The Fund may invest in obligations
are more sensitive to investor perceptions issued by agencies and instrumentalities
o Class R shares are available only to of an issuing company's growth potential. of the U.S. government that may vary in
certain retirement plans. Please see the the level of support they receive from the
prospectus for more information. o The prices of initial public offering U.S. government. The U.S. government may
(IPO) securities may go up and down more choose not to provide financial support to
o Investor Class shares are closed to most than prices of equity securities of U.S. government-sponsored agencies or
investors. For more information on who may companies with longer trading histories. instrumentalities if it is not legally
continue to invest in Investor Class In addition, companies offering securities obligated to do so. In this case, if the
shares, please see the prospectus. in IPOs may have less experienced issuer defaulted, the fund holding
management or limited operating histories. securities of such issuer might not be
Principal risks of investing in the Fund There can be no assurance that the fund able to recover its investment from the
will have favorable IPO investment U.S. government.
o The value of convertible securities in opportunities.
which the Fund invests may be affected by About indexes used in this report
market interest rates--the risk that the o The Fund may use enhanced investment
issuer may default on interest or techniques such as leveraging and o The S&P 500 --REGISTERED TRADEMARK--
principal payments and the value of the derivatives. Leveraging entails risks such INDEX is a market capitalization-weighted
underlying common stock into which these as magnifying changes in the value of the index covering all major areas of the U.S.
securities may be converted may decline as portfolio's securities. Derivatives are economy. It is not the 500 largest
a result. subject to counter-party risk--the risk companies, but rather the most widely held
that the other party will not complete the 500 companies chosen with respect to
o Credit risk is the risk of loss on an transaction with the Fund. market size, liquidity, and their
investment due to the deterioration of an industry.
issuer's financial health. Such a o There is no guarantee that the
deterioration of financial health may investment techniques and risk analyses o The Russell 2000 --REGISTERED
result in a reduction of the credit rating used by the Fund's portfolio managers will TRADEMARK-- GROWTH INDEX measures the
of the issuer's securities and may lead to produce the desired results. performance of those Russell 2000
the issuer's inability to honor its companies with higher price-to-book ratios
contractual obligations, including making o Small- and mid-capitalization companies and higher forecasted growth values. The
timely payment of interest and principal. tend to be more vulnerable to adverse Russell 2000 Growth Index is a
developments and more volatile than larger trademark/service mark of the Frank
o Prices of equity securities change in companies. Investments in these sized Russell Company. Russell --REGISTERED
response to many factors including the companies may involve special risks, TRADEMARK-- is a trademark of the Frank
historical and prospective earnings of the including those associated with dependence Russell Company.
issuer, the value of its assets, general on a small management group, little or no
economic conditions, interest rates, operating history, little or no track o The LIPPER SMALL-CAP GROWTH FUNDS INDEX
investor perceptions and market liquidity. record of success, limited product lines, is an equally weighted representation of
less publicly available information, the largest funds in the Lipper Small-Cap
illiquidity, restricted resale or less Growth Funds category. These funds
frequent trading. typically have an above-average
price-to-earnings ratio, price-to-book
ratio, and three-year sales-per-share
growth value, compared to the S&P SmallCap
600 Index.
======================================================================================= 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. FUND NASDAQ SYMBOLS
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING.
======================================================================================= Class A Shares GTSAX
Class B Shares GTSBX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class C Shares GTSDX
AIMINVESTMENTS.COM Class R Shares GTSRX
Investor Class Shares GTSIX
==========================================
8
AIM Small Cap Growth Fund
SCHEDULE OF INVESTMENTS(A)
December 31, 2007
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-98.68%
ADVERTISING-0.49%
National CineMedia, Inc.(b) 327,987 $ 8,268,552
===========================================================================
AEROSPACE & DEFENSE-1.67%
Ceradyne, Inc.(c) 233,872 10,975,613
- ---------------------------------------------------------------------------
TransDigm Group, Inc.(c) 382,778 17,290,082
===========================================================================
28,265,695
===========================================================================
AIR FREIGHT & LOGISTICS-1.30%
Forward Air Corp. 365,851 11,403,576
- ---------------------------------------------------------------------------
Hub Group, Inc.-Class A(c) 403,882 10,735,183
===========================================================================
22,138,759
===========================================================================
APPAREL RETAIL-1.24%
DSW Inc.-Class A(c) 350,678 6,578,719
- ---------------------------------------------------------------------------
Hot Topic, Inc.(c) 1,253,973 7,298,123
- ---------------------------------------------------------------------------
Zumiez Inc.(b)(c) 297,810 7,254,652
===========================================================================
21,131,494
===========================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-0.76%
Warnaco Group, Inc. (The)(c) 369,950 12,874,260
===========================================================================
APPLICATION SOFTWARE-6.78%
Ansoft Corp.(c) 413,076 10,678,015
- ---------------------------------------------------------------------------
ANSYS, Inc.(c) 498,399 20,663,622
- ---------------------------------------------------------------------------
Blackboard Inc.(b)(c) 515,421 20,745,695
- ---------------------------------------------------------------------------
Informatica Corp.(c) 1,000,182 18,023,280
- ---------------------------------------------------------------------------
JDA Software Group, Inc.(c) 650,978 13,319,010
- ---------------------------------------------------------------------------
Lawson Software, Inc.(c) 1,822,720 18,664,653
- ---------------------------------------------------------------------------
Manhattan Associates, Inc.(c) 489,646 12,907,068
===========================================================================
115,001,343
===========================================================================
ASSET MANAGEMENT & CUSTODY BANKS-1.12%
Affiliated Managers Group, Inc.(b)(c) 162,108 19,041,206
===========================================================================
AUTO PARTS & EQUIPMENT-0.71%
Tenneco Inc.(c) 464,601 12,112,148
===========================================================================
BIOTECHNOLOGY-3.68%
BioMarin Pharmaceutical Inc.(b)(c) 502,654 17,793,952
- ---------------------------------------------------------------------------
Cepheid, Inc.(c) 355,123 9,357,491
- ---------------------------------------------------------------------------
Human Genome Sciences, Inc.(b)(c) 617,914 6,451,022
- ---------------------------------------------------------------------------
Myriad Genetics, Inc.(b)(c) 356,589 16,552,861
- ---------------------------------------------------------------------------
United Therapeutics Corp.(b)(c) 126,151 12,318,645
===========================================================================
62,473,971
===========================================================================
</Table>
<Table>
SHARES VALUE
- ---------------------------------------------------------------------------
<Caption>
COMMUNICATIONS EQUIPMENT-3.23%
Arris Group Inc.(c) 416,136 $ 4,153,032
- ---------------------------------------------------------------------------
F5 Networks, Inc.(c) 467,982 13,346,847
- ---------------------------------------------------------------------------
Harmonic Inc.(c) 724,262 7,590,266
- ---------------------------------------------------------------------------
NICE Systems Ltd.-ADR (Israel)(c) 446,341 15,318,423
- ---------------------------------------------------------------------------
Polycom, Inc.(c) 519,817 14,440,516
===========================================================================
54,849,084
===========================================================================
COMPUTER STORAGE & PERIPHERALS-0.81%
Emulex Corp.(c) 838,619 13,686,262
===========================================================================
CONSTRUCTION & FARM MACHINERY & HEAVY
TRUCKS-2.05%
Bucyrus International, Inc.-Class A 225,098 22,372,491
- ---------------------------------------------------------------------------
Wabtec Corp. 359,330 12,375,325
===========================================================================
34,747,816
===========================================================================
CONSTRUCTION MATERIALS-1.44%
Eagle Materials Inc.(b) 347,422 12,326,532
- ---------------------------------------------------------------------------
Texas Industries, Inc.(b) 172,587 12,098,349
===========================================================================
24,424,881
===========================================================================
DATA PROCESSING & OUTSOURCED SERVICES-3.18%
Euronet Worldwide, Inc.(b)(c) 620,809 18,624,270
- ---------------------------------------------------------------------------
Global Payments Inc. 218,965 10,186,252
- ---------------------------------------------------------------------------
NeuStar, Inc.-Class A(c) 437,561 12,549,250
- ---------------------------------------------------------------------------
Syntel, Inc.(b) 326,860 12,590,647
===========================================================================
53,950,419
===========================================================================
DIVERSIFIED COMMERCIAL & PROFESSIONAL
SERVICES-3.26%
Advisory Board Co. (The)(c) 164,630 10,567,600
- ---------------------------------------------------------------------------
CoStar Group Inc.(c) 337,462 15,945,079
- ---------------------------------------------------------------------------
Pike Electric Corp.(c) 791,362 13,263,227
- ---------------------------------------------------------------------------
Tetra Tech, Inc.(c) 727,694 15,645,421
===========================================================================
55,421,327
===========================================================================
DRUG RETAIL-0.85%
Longs Drug Stores Corp. 306,092 14,386,324
===========================================================================
EDUCATION SERVICES-2.02%
DeVry, Inc. 393,338 20,437,842
- ---------------------------------------------------------------------------
Strayer Education, Inc. 81,094 13,833,015
===========================================================================
34,270,857
===========================================================================
ELECTRIC UTILITIES-0.76%
ITC Holdings Corp. 229,958 12,974,230
===========================================================================
</Table>
9
AIM Small Cap Growth Fund
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------
ELECTRICAL COMPONENTS & EQUIPMENT-3.12%
Acuity Brands, Inc. 166,600 $ 7,497,000
- ---------------------------------------------------------------------------
General Cable Corp.(c) 307,827 22,557,563
- ---------------------------------------------------------------------------
Regal-Beloit Corp. 253,274 11,384,666
- ---------------------------------------------------------------------------
Thomas & Betts Corp.(c) 236,505 11,598,205
===========================================================================
53,037,434
===========================================================================
ELECTRONIC EQUIPMENT MANUFACTURERS-1.59%
Cogent Inc.(b)(c) 938,986 10,469,694
- ---------------------------------------------------------------------------
Coherent, Inc.(c) 429,484 10,767,164
- ---------------------------------------------------------------------------
Orbotech, Ltd. (Israel)(c) 331,389 5,815,877
===========================================================================
27,052,735
===========================================================================
ELECTRONIC MANUFACTURING SERVICES-0.82%
Trimble Navigation Ltd.(c) 461,754 13,963,441
===========================================================================
ENVIRONMENTAL & FACILITIES SERVICES-0.64%
EnergySolutions Inc.(c) 91,925 2,481,056
- ---------------------------------------------------------------------------
Fuel Tech, Inc.(b)(c) 366,972 8,311,916
===========================================================================
10,792,972
===========================================================================
FOOD DISTRIBUTORS-0.71%
Performance Food Group Co.(c) 445,693 11,975,771
===========================================================================
HEALTH CARE EQUIPMENT-3.40%
Gen-Probe Inc.(c) 216,437 13,620,381
- ---------------------------------------------------------------------------
Mentor Corp.(b) 259,431 10,143,752
- ---------------------------------------------------------------------------
NuVasive, Inc.(b)(c) 456,731 18,050,009
- ---------------------------------------------------------------------------
Wright Medical Group, Inc.(c) 543,848 15,864,046
===========================================================================
57,678,188
===========================================================================
HEALTH CARE FACILITIES-1.72%
LifePoint Hospitals, Inc.(c) 388,304 11,548,161
- ---------------------------------------------------------------------------
VCA Antech, Inc.(c) 398,293 17,616,499
===========================================================================
29,164,660
===========================================================================
HEALTH CARE SERVICES-2.55%
Athenahealth Inc.(b)(c) 42,637 1,534,932
- ---------------------------------------------------------------------------
Chemed Corp. 259,067 14,476,664
- ---------------------------------------------------------------------------
InVentiv Health Inc.(c) 400,627 12,403,412
- ---------------------------------------------------------------------------
Pediatrix Medical Group, Inc.(c) 217,561 14,826,782
===========================================================================
43,241,790
===========================================================================
HEALTH CARE TECHNOLOGY-1.04%
Eclipsys Corp.(c) 700,352 17,725,909
===========================================================================
HOME ENTERTAINMENT SOFTWARE-0.91%
THQ Inc.(c) 545,028 15,364,339
===========================================================================
</Table>
<Table>
SHARES VALUE
- ---------------------------------------------------------------------------
<Caption>
HOME FURNISHINGS-0.49%
Tempur-Pedic International Inc. 321,329 $ 8,344,914
===========================================================================
HOTELS, RESORTS & CRUISE LINES-0.55%
Choice Hotels International, Inc. 281,475 9,344,970
===========================================================================
HOUSEHOLD PRODUCTS-1.27%
Church & Dwight Co., Inc. 398,990 21,573,389
===========================================================================
HUMAN RESOURCE & EMPLOYMENT SERVICES-0.76%
Korn/Ferry International(c) 688,106 12,950,155
===========================================================================
INDUSTRIAL MACHINERY-1.87%
Barnes Group Inc. 426,358 14,236,094
- ---------------------------------------------------------------------------
Dynamic Materials Corp.(b) 297,302 17,511,088
===========================================================================
31,747,182
===========================================================================
INSURANCE BROKERS-0.76%
National Financial Partners Corp.(b) 284,120 12,958,713
===========================================================================
INTERNET RETAIL-0.59%
Shutterfly, Inc.(b)(c) 391,600 10,032,792
===========================================================================
INTERNET SOFTWARE & SERVICES-1.90%
DealerTrack Holdings Inc.(c) 372,249 12,459,174
- ---------------------------------------------------------------------------
Omniture, Inc.(b)(c) 234,686 7,812,697
- ---------------------------------------------------------------------------
ValueClick, Inc.(c) 549,582 12,035,846
===========================================================================
32,307,717
===========================================================================
INVESTMENT BANKING & BROKERAGE-0.83%
Greenhill & Co., Inc.(b) 211,040 14,029,939
===========================================================================
IT CONSULTING & OTHER SERVICES-0.75%
SRA International, Inc.-Class A(c) 432,225 12,729,026
===========================================================================
LIFE SCIENCES TOOLS & SERVICES-2.78%
AMAG Pharmaceuticals, Inc.(b)(c) 146,463 8,806,820
- ---------------------------------------------------------------------------
PAREXEL International Corp.(c) 348,279 16,821,876
- ---------------------------------------------------------------------------
Varian Inc.(c) 329,955 21,546,061
===========================================================================
47,174,757
===========================================================================
MANAGED HEALTH CARE-0.75%
Magellan Health Services, Inc.(c) 272,309 12,697,769
===========================================================================
MARINE-0.41%
American Commercial Lines Inc.(b)(c) 432,387 7,021,965
===========================================================================
METAL & GLASS CONTAINERS-0.96%
Greif Inc.-Class A 249,194 16,289,812
===========================================================================
</Table>
10
AIM Small Cap Growth Fund
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------
MOVIES & ENTERTAINMENT-1.23%
Live Nation Inc.(c) 519,970 $ 7,549,964
- ---------------------------------------------------------------------------
Marvel Entertainment, Inc.(b)(c) 502,194 13,413,602
===========================================================================
20,963,566
===========================================================================
MULTI-LINE INSURANCE-0.65%
HCC Insurance Holdings, Inc. 383,700 11,004,516
===========================================================================
OFFICE REIT'S-0.76%
BioMed Realty Trust, Inc. 554,425 12,846,027
===========================================================================
OFFICE SERVICES & SUPPLIES-0.76%
Interface, Inc.-Class A 788,324 12,865,448
===========================================================================
OIL & GAS DRILLING-0.87%
Unit Corp.(c) 319,115 14,759,069
===========================================================================
OIL & GAS EQUIPMENT & SERVICES-3.55%
Core Laboratories N.V. (Netherlands)(c) 134,883 16,822,608
- ---------------------------------------------------------------------------
Dril-Quip, Inc.(c) 308,076 17,147,510
- ---------------------------------------------------------------------------
FMC Technologies, Inc.(c) 241,054 13,667,762
- ---------------------------------------------------------------------------
ION Geophysical Corp.(b)(c) 801,359 12,645,445
===========================================================================
60,283,325
===========================================================================
OIL & GAS EXPLORATION & PRODUCTION-3.99%
Arena Resources, Inc.(c) 398,832 16,635,283
- ---------------------------------------------------------------------------
Bill Barrett Corp.(b)(c) 400,810 16,781,915
- ---------------------------------------------------------------------------
Carrizo Oil & Gas, Inc.(b)(c) 338,137 18,513,001
- ---------------------------------------------------------------------------
Whiting Petroleum Corp.(c) 273,110 15,747,522
===========================================================================
67,677,721
===========================================================================
PACKAGED FOODS & MEATS-0.85%
Ralcorp Holdings, Inc.(c) 237,164 14,417,200
===========================================================================
PHARMACEUTICALS-1.79%
Medicines Co. (The)(c) 477,376 9,146,524
- ---------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(b) 374,278 9,720,000
- ---------------------------------------------------------------------------
Sciele Pharma, Inc.(b)(c) 564,205 11,537,992
===========================================================================
30,404,516
===========================================================================
PROPERTY & CASUALTY INSURANCE-0.85%
ProAssurance Corp.(b)(c) 224,244 12,315,481
- ---------------------------------------------------------------------------
Security Capital Assurance Ltd. 537,926 2,092,532
===========================================================================
14,408,013
===========================================================================
REGIONAL BANKS-1.54%
East West Bancorp, Inc. 208,541 5,052,948
- ---------------------------------------------------------------------------
SVB Financial Group(c) 290,012 14,616,605
- ---------------------------------------------------------------------------
Texas Capital Bancshares, Inc.(c) 356,364 6,503,643
===========================================================================
26,173,196
===========================================================================
</Table>
<Table>
SHARES VALUE
- ---------------------------------------------------------------------------
<Caption>
RESTAURANTS-1.01%
Jack in the Box Inc.(c) 375,626 $ 9,679,882
- ---------------------------------------------------------------------------
P.F. Chang's China Bistro, Inc.(b)(c) 327,249 7,474,367
===========================================================================
17,154,249
===========================================================================
SEMICONDUCTOR EQUIPMENT-2.70%
FormFactor Inc.(c) 275,225 9,109,948
- ---------------------------------------------------------------------------
Tessera Technologies Inc.(c) 453,622 18,870,675
- ---------------------------------------------------------------------------
Varian Semiconductor Equipment Associates,
Inc.(c) 480,699 17,785,863
===========================================================================
45,766,486
===========================================================================
SEMICONDUCTORS-4.57%
Cirrus Logic, Inc.(c) 1,656,420 8,745,898
- ---------------------------------------------------------------------------
Diodes Inc.(b)(c) 547,093 16,451,086
- ---------------------------------------------------------------------------
Microsemi Corp.(b)(c) 700,082 15,499,815
- ---------------------------------------------------------------------------
Power Integrations, Inc.(c) 392,297 13,506,786
- ---------------------------------------------------------------------------
Silicon Laboratories Inc.(c) 382,743 14,326,070
- ---------------------------------------------------------------------------
SiRF Technology Holdings, Inc.(b)(c) 357,758 8,990,459
===========================================================================
77,520,114
===========================================================================
SPECIALIZED CONSUMER SERVICES-0.64%
Jackson Hewitt Tax Service Inc.(b) 340,996 10,826,623
===========================================================================
SPECIALTY CHEMICALS-0.07%
Zep Inc.(c) 83,300 1,155,371
===========================================================================
SPECIALTY STORES-0.49%
Dick's Sporting Goods, Inc.(c) 302,332 8,392,736
===========================================================================
STEEL-1.37%
Carpenter Technology Corp. 310,296 23,324,950
===========================================================================
SYSTEMS SOFTWARE-1.32%
MICROS Systems, Inc.(c) 318,377 22,337,330
===========================================================================
TECHNOLOGY DISTRIBUTORS-0.81%
Tech Data Corp.(c) 364,561 13,751,241
===========================================================================
TRADING COMPANIES & DISTRIBUTORS-0.49%
WESCO International, Inc.(c) 211,804 8,395,911
===========================================================================
TRUCKING-0.64%
Knight Transportation, Inc.(b) 735,505 10,892,829
===========================================================================
WIRELESS TELECOMMUNICATION SERVICES-1.21%
SBA Communications Corp.-Class A(c) 404,186 13,677,654
- ---------------------------------------------------------------------------
Virgin Mobile USA, Inc.(b)(c) 763,205 6,784,893
===========================================================================
20,462,547
===========================================================================
Total Common Stocks & Other Equity
Interests (Cost $1,301,972,952) 1,675,001,951
===========================================================================
</Table>
11
AIM Small Cap Growth Fund
<Table>
<Caption>
SHARES VALUE
- ---------------------------------------------------------------------------
MONEY MARKET FUNDS-2.25%
Liquid Assets Portfolio-Institutional
Class(d) 19,118,678 $ 19,118,678
- ---------------------------------------------------------------------------
Premier Portfolio- Institutional Class(d) 19,118,678 19,118,678
===========================================================================
Total Money Market Funds (Cost
$38,237,356) 38,237,356
===========================================================================
TOTAL INVESTMENTS (excluding investments
purchased with cash collateral from
securities on loan)-100.93% (Cost
$1,340,210,308) 1,713,239,307
===========================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES ON LOAN
MONEY MARKET FUNDS-15.75%
Liquid Assets Portfolio-Institutional Class
(Cost $267,321,890)(d)(e) 267,321,890 267,321,890
===========================================================================
TOTAL INVESTMENTS-116.68% (Cost
$1,607,532,198) 1,980,561,197
===========================================================================
OTHER ASSETS LESS LIABILITIES-(16.68)% (283,173,186)
===========================================================================
NET ASSETS-100.00% $1,697,388,011
___________________________________________________________________________
===========================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
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) All or a portion of this security was out on loan at December 31, 2007.
(c) Non-income producing security.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor. See Note 3.
(e) 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.
12
AIM Small Cap Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2007
<Table>
ASSETS:
Investments, at value (Cost $1,301,972,952)* $1,675,001,951
- ------------------------------------------------------------
Investments in affiliated money market funds
(Cost $305,559,246) 305,559,246
============================================================
Total investments (Cost $1,607,532,198) 1,980,561,197
============================================================
Receivables for:
Investments sold 6,313,944
- ------------------------------------------------------------
Fund shares sold 2,387,646
- ------------------------------------------------------------
Dividends 1,192,583
- ------------------------------------------------------------
Investment for trustee deferred compensation
and retirement plans 145,368
- ------------------------------------------------------------
Other assets 24,541
============================================================
Total assets 1,990,625,279
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 31,991
- ------------------------------------------------------------
Fund shares reacquired 23,667,128
- ------------------------------------------------------------
Trustee deferred compensation and
retirement plans 282,851
- ------------------------------------------------------------
Collateral upon return of securities
loaned 267,321,890
- ------------------------------------------------------------
Accrued distribution fees 381,468
- ------------------------------------------------------------
Accrued trustees' and officer's fees and
benefits 883
- ------------------------------------------------------------
Accrued transfer agent fees 1,320,416
- ------------------------------------------------------------
Accrued operating expenses 230,641
============================================================
Total liabilities 293,237,268
============================================================
Net assets applicable to shares outstanding $1,697,388,011
____________________________________________________________
============================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,354,491,352
- ------------------------------------------------------------
Undistributed net investment income (loss) (214,159)
- ------------------------------------------------------------
Undistributed net realized gain (loss) (29,918,181)
- ------------------------------------------------------------
Unrealized appreciation 373,028,999
============================================================
$1,697,388,011
____________________________________________________________
============================================================
NET ASSETS:
Class A $1,056,349,200
____________________________________________________________
============================================================
Class B $ 60,226,865
____________________________________________________________
============================================================
Class C $ 28,722,327
____________________________________________________________
============================================================
Class R $ 36,591,248
____________________________________________________________
============================================================
Investor Class $ 273,505,876
____________________________________________________________
============================================================
Institutional Class $ 241,992,495
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 36,431,515
____________________________________________________________
============================================================
Class B 2,342,312
____________________________________________________________
============================================================
Class C 1,117,847
____________________________________________________________
============================================================
Class R 1,284,602
____________________________________________________________
============================================================
Investor Class 9,189,357
____________________________________________________________
============================================================
Institutional Class 8,063,840
____________________________________________________________
============================================================
Class A:
Net asset value per share $ 29.00
- ------------------------------------------------------------
Maximum offering price per share
(Net asset value of $29.00 divided by
94.50%) $ 30.69
____________________________________________________________
============================================================
Class B:
Net asset value and offering price per
share $ 25.71
____________________________________________________________
============================================================
Class C:
Net asset value and offering price per
share $ 25.69
____________________________________________________________
============================================================
Class R:
Net asset value and offering price per
share $ 28.48
____________________________________________________________
============================================================
Investor Class:
Net asset value and offering price per
share $ 29.76
____________________________________________________________
============================================================
Institutional Class:
Net asset value and offering price per
share $ 30.01
____________________________________________________________
============================================================
</Table>
* At December 31, 2007, securities with an aggregate value of $258,956,654 were
on loan to brokers.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13
AIM Small Cap Growth Fund
STATEMENT OF OPERATIONS
For the year ended December 31, 2007
<Table>
INVESTMENT INCOME:
Dividends $ 4,541,643
- --------------------------------------------------------------------------
Dividends from affiliated money market funds (includes
securities lending income of $1,795,831) 3,464,750
==========================================================================
Total investment income 8,006,393
==========================================================================
EXPENSES:
Advisory fees 12,277,780
- --------------------------------------------------------------------------
Administrative services fees 430,556
- --------------------------------------------------------------------------
Custodian fees 72,050
- --------------------------------------------------------------------------
Distribution fees:
Class A 2,780,669
- --------------------------------------------------------------------------
Class B 865,335
- --------------------------------------------------------------------------
Class C 307,536
- --------------------------------------------------------------------------
Class R 156,387
- --------------------------------------------------------------------------
Investor Class 711,765
- --------------------------------------------------------------------------
Transfer agent fees -- A, B, C, R and Investor 3,633,651
- --------------------------------------------------------------------------
Transfer agent fees -- Institutional 141,339
- --------------------------------------------------------------------------
Trustees' and officer's fees and benefits 67,753
- --------------------------------------------------------------------------
Other 461,055
==========================================================================
Total expenses 21,905,876
==========================================================================
Less: Fees waived, expenses reimbursed and expense offset
arrangement(s) (96,226)
==========================================================================
Net expenses 21,809,650
==========================================================================
Net investment income (loss) (13,803,257)
==========================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain from investment securities (includes net
gains from securities sold to affiliates of $1,224,291) 216,189,108
==========================================================================
Change in net unrealized appreciation (depreciation) (11,203,457)
==========================================================================
Net realized and unrealized gain 204,985,651
==========================================================================
Net increase in net assets resulting from operations $191,182,394
__________________________________________________________________________
==========================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
14
AIM Small Cap Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2007 and 2006
<Table>
<Caption>
2007 2006
- ----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (13,803,257) $ (14,478,066)
- ----------------------------------------------------------------------------------------------
Net realized gain 216,189,108 194,618,970
- ----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (11,203,457) 7,687,788
==============================================================================================
Net increase in net assets resulting from operations 191,182,394 187,828,692
==============================================================================================
Distributions to shareholders from net realized gains:
Class A (116,301,535) (77,844,391)
- ----------------------------------------------------------------------------------------------
Class B (7,490,512) (8,062,396)
- ----------------------------------------------------------------------------------------------
Class C (3,483,918) (2,391,127)
- ----------------------------------------------------------------------------------------------
Class R (4,004,380) (1,764,768)
- ----------------------------------------------------------------------------------------------
Investor Class (29,163,541) (19,834,701)
- ----------------------------------------------------------------------------------------------
Institutional Class (25,832,340) (12,454,719)
==============================================================================================
Decrease in net assets resulting from distributions (186,276,226) (122,352,102)
==============================================================================================
Share transactions-net:
Class A (20,896,701) (92,389,959)
- ----------------------------------------------------------------------------------------------
Class B (43,973,533) (21,665,113)
- ----------------------------------------------------------------------------------------------
Class C (1,515,213) (2,017,666)
- ----------------------------------------------------------------------------------------------
Class R 13,958,156 1,550,079
- ----------------------------------------------------------------------------------------------
Investor Class (9,311,730) 294,286,974
- ----------------------------------------------------------------------------------------------
Institutional Class 65,670,923 66,866,147
==============================================================================================
Net increase in net assets resulting from share
transactions 3,931,902 246,630,462
==============================================================================================
Net increase in net assets 8,838,070 312,107,052
==============================================================================================
NET ASSETS:
Beginning of year 1,688,549,941 1,376,442,889
==============================================================================================
End of year (including undistributed net investment income
(loss) of $(214,159) and $(192,002), respectively) $1,697,388,011 $1,688,549,941
______________________________________________________________________________________________
==============================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
December 31, 2007
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Small Cap Growth Fund (the "Fund") is a series portfolio of AIM Growth
Series (the "Trust"). The Trust is organized as a Delaware statutory trust and
is registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate series portfolios, each authorized to issue an unlimited
number of shares of beneficial interest. The Fund currently consists of 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.
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.
15
AIM Small Cap Growth Fund
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.
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds as 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.
16
AIM Small Cap Growth Fund
The Fund files tax returns in the U.S. federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for tax periods after 2003.
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 $500 million 0.725%
- --------------------------------------------------------------------
Next $500 million 0.70%
- --------------------------------------------------------------------
Next $500 million 0.675%
- --------------------------------------------------------------------
Over $1.5 billion 0.65%
___________________________________________________________________
====================================================================
</Table>
Effective July 1, 2007, 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, Investor Class and Institutional Class shares to 1.50%,
2.25%, 2.25%, 1.75%, 1.50% 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 B, Class C, Class R, Investor Class 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; (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 Ltd. ("Invesco") 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 (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 December 31, 2007, AIM waived advisory fees of $27,310.
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
December 31, 2007, Invesco reimbursed expenses of the Fund in the amount of
$6,207.
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
December 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
17
AIM Small Cap Growth Fund
limitations approved by the Trust's Board of Trustees. For the year ended
December 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, Investor Class and Institutional Class shares of the Fund. The
Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect
to the Fund's Class A, Class B, Class C, Class R and Investor Class shares
(collectively the "Plans"). The Fund, pursuant to the Plans, pays ADI
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of Class A shares, 1.00% of the average daily net assets of Class B and Class C
shares, 0.50% of the average daily net assets of Class R shares and 0.25% of the
average daily net assets of Investor Class 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. Rules of the Financial
Industry Regulatory Authority ("FINRA"), formerly known as National Association
of Securities Dealers, 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 December 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 December 31, 2007, ADI advised the Fund that it retained $19,979 in
front-end sales commissions from the sale of Class A shares and $1,821, $29,918,
$1,602 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
December 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 12/31/07 INCOME
- --------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $ 9,628,286 $ 215,493,517 $ (206,003,125) $ 19,118,678 $ 835,344
- --------------------------------------------------------------------------------------------------
Premier
Portfolio-Institutional
Class 9,628,286 215,493,517 (206,003,125) 19,118,678 833,575
==================================================================================================
Subtotal $ 19,256,572 $ 430,987,034 $ (412,006,250) $ 38,237,356 $1,668,919
==================================================================================================
</Table>
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LENDING TRANSACTIONS:
<Table>
<Caption>
VALUE PURCHASES PROCEEDS VALUE DIVIDEND
FUND 12/31/06 AT COST FROM SALES 12/31/07 INCOME*
- --------------------------------------------------------------------------------------------------
Liquid Assets
Portfolio-Institutional
Class $245,766,380 $ 653,561,829 $ (632,006,319) $267,321,890 $1,197,101
- --------------------------------------------------------------------------------------------------
STIC Prime
Portfolio-Institutional
Class 245,766,380 195,747,827 (441,514,207) -- 598,730
==================================================================================================
Subtotal $491,532,760 $ 849,309,656 $(1,073,520,526) $267,321,890 $1,795,831
==================================================================================================
Total
Investments
in
Affiliates $510,789,332 $1,280,296,690 $(1,485,526,776) $305,559,246 $3,464,750
__________________________________________________________________________________________________
==================================================================================================
</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 December 31, 2007, the Fund
engaged in securities sales of $2,319,951, which resulted in net realized gains
of $1,224,291, and securities purchases of $368,035.
18
AIM Small Cap Growth Fund
NOTE 5--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions, (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 December
31, 2007, the Fund received credits from these arrangements, which resulted in
the reduction of the Fund's total expenses of $62,709.
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 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 December 31, 2007, the Fund paid legal fees of $8,891
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 7--BORROWINGS
Pursuant to an exemptive order from the SEC, the Fund may participate in an
interfund lending facility that AIM has established for temporary borrowings by
the AIM Funds. An interfund loan will be made under this facility only if the
loan rate (an average of the rate available on bank loans and the rate available
on investments in overnight repurchase agreements) is favorable to both the
lending fund and the borrowing fund. A loan will be secured by collateral if the
Fund's aggregate borrowings from all sources exceeds 10% of the Fund's total
assets. To the extent that the loan is required to be secured by collateral, the
collateral is marked to market daily to ensure that the market value is at least
102% of the outstanding principal value of the loan.
The Fund is a 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 December 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 by the
securities lending provider. 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 December 31, 2007, securities with an aggregate value of $258,956,654
were on loan to brokers. The loans were secured by cash collateral of
$267,321,890 received by the Fund and subsequently invested in an affiliated
money market fund. For the year ended December 31, 2007, the Fund received
dividends on cash collateral investments of $1,795,831 for securities lending
transactions, which are net of compensation to counterparties.
19
AIM Small Cap Growth Fund
NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended December 31, 2007
and 2006 was as follows:
<Table>
<Caption>
2007 2006
- ------------------------------------------------------------------------------------------
Distributions paid from long-term capital gain $186,276,226 $122,352,102
__________________________________________________________________________________________
==========================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of December 31, 2007, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2007
- ------------------------------------------------------------------------------
Undistributed long-term gain $ 48,522,029
- ------------------------------------------------------------------------------
Net unrealized appreciation -- investments 372,795,361
- ------------------------------------------------------------------------------
Temporary book/tax differences (214,159)
- ------------------------------------------------------------------------------
Capital loss carryforward (78,206,572)
- ------------------------------------------------------------------------------
Shares of beneficial interest 1,354,491,352
==============================================================================
Total net assets $1,697,388,011
______________________________________________________________________________
==============================================================================
</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 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. Under these limitation rules, the Fund is limited as of December
31, 2007 to utilizing $42,675,560 of capital loss carryforward in the fiscal
year ended December 31, 2008.
The Fund utilized $23,630,073 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 December 31, 2007 which expires as
follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------
December 31, 2010 $78,206,572
_____________________________________________________________________________
=============================================================================
</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. To
the extent that unrealized gains as of April 10, 2006, the date of the
reorganization of AIM Small Company Growth Fund, into the Fund are realized on
securities held in each Fund at such date, the capital loss carryforward may
be further limited for up to five years from the date of reorganization.
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 December 31, 2007 was $497,182,462 and
$702,019,453, respectively.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $462,486,565
- ------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (89,691,204)
==============================================================================
Net unrealized appreciation of investment securities $372,795,361
______________________________________________________________________________
==============================================================================
Cost of investments for tax purposes is $1,607,765,836.
</Table>
NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of reorganization expenses
and net operating losses, on December 31, 2007, undistributed net investment
income (loss) was increased by $13,781,100, undistributed net realized gain
(loss) was decreased by $9,028,513 and shares of beneficial interest decreased
by $4,752,587. This reclassification had no effect on the net assets of the
Fund.
20
AIM Small Cap Growth Fund
NOTE 12--SHARE INFORMATION
The Fund currently consists of six different classes of shares: Class A, Class
B, Class C, Class R, Investor Class and Institutional Class. Investor Class
shares of the Fund are offered only to certain grandfathered investors.
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, Investor Class 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.
Effective as of the close of business on March 18, 2002, the Fund's shares
were offered on a limited basis to certain investors.
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- --------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
2007(A) 2006
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 7,628,780 $ 243,008,419 11,245,514 $ 336,758,169
- --------------------------------------------------------------------------------------------------------------------------
Class B 89,915 2,569,076 113,474 3,064,186
- --------------------------------------------------------------------------------------------------------------------------
Class C 171,861 4,910,680 150,457 4,057,897
- --------------------------------------------------------------------------------------------------------------------------
Class R 639,590 20,286,616 346,847 10,148,737
- --------------------------------------------------------------------------------------------------------------------------
Investor Class(b) 920,180 30,104,070 1,024,035 31,424,316
- --------------------------------------------------------------------------------------------------------------------------
Institutional Class 2,986,532 97,694,692 2,180,542 66,178,816
==========================================================================================================================
Issued as reinvestment of dividends:
Class A 3,980,841 114,409,369 2,596,560 76,806,257
- --------------------------------------------------------------------------------------------------------------------------
Class B 279,229 7,120,338 285,727 7,657,484
- --------------------------------------------------------------------------------------------------------------------------
Class C 130,748 3,331,458 84,591 2,266,199
- --------------------------------------------------------------------------------------------------------------------------
Class R 141,798 4,004,380 55,509 1,620,305
- --------------------------------------------------------------------------------------------------------------------------
Investor Class(b) 972,104 28,677,140 644,388 19,512,083
- --------------------------------------------------------------------------------------------------------------------------
Institutional Class 832,135 24,747,697 409,652 12,441,138
==========================================================================================================================
Issued in connection with acquisitions:(c)
Class A -- -- 590,229 18,025,191
- --------------------------------------------------------------------------------------------------------------------------
Class B -- -- 159,036 4,454,101
- --------------------------------------------------------------------------------------------------------------------------
Class C -- -- 115,052 3,219,750
- --------------------------------------------------------------------------------------------------------------------------
Class R -- -- 388 11,711
- --------------------------------------------------------------------------------------------------------------------------
Investor Class(b) -- -- 11,513,233 359,268,241
- --------------------------------------------------------------------------------------------------------------------------
Institutional Class -- -- 1,027,027 32,051,660
==========================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 1,016,530 32,907,168 220,655 6,483,421
- --------------------------------------------------------------------------------------------------------------------------
Class B (1,127,536) (32,907,168) (241,243) (6,483,421)
==========================================================================================================================
Reacquired:
Class A (12,866,163) (411,221,657) (17,962,228) (530,462,997)
- --------------------------------------------------------------------------------------------------------------------------
Class B (729,187) (20,755,779) (1,126,152) (30,357,463)
- --------------------------------------------------------------------------------------------------------------------------
Class C (338,328) (9,757,351) (428,706) (11,561,512)
- --------------------------------------------------------------------------------------------------------------------------
Class R (328,628) (10,332,840) (352,222) (10,230,674)
- --------------------------------------------------------------------------------------------------------------------------
Investor Class(b) (2,112,401) (68,092,940) (3,772,182) (115,917,666)
- --------------------------------------------------------------------------------------------------------------------------
Institutional Class (1,733,377) (56,771,466) (1,450,012) (43,805,467)
==========================================================================================================================
554,623 $ 3,931,902 7,430,171 $ 246,630,462
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) There is an entity that is a record owner of more than 5% of the
outstanding shares of the Fund and it owns 6% 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
owned beneficially.
(b) Investor Class shares commenced sales on April 7, 2006.
21
AIM Small Cap Growth Fund
(c) As of the opening of business on April 10, 2006, the Fund acquired all
the net assets of AIM Small Company Growth Fund pursuant to a plan of
reorganization approved by the Trustees of the Fund November 14, 2005
and by the shareholders of AIM Small Company Growth Fund on February 28,
2006. The acquisition was accomplished by a tax free exchange of
13,404,965 shares of the Fund for 28,265,285 shares of AIM Small Company
Growth Fund shares outstanding as of the close of business on April 7,
2006. Each class of shares of AIM Small Company Growth Fund was
exchanged for the like class of shares of the Fund based on the relative
net asset value of AIM Small Company Growth Fund to the net asset value
of the Fund on the close of business, April 7, 2006. AIM Small Company
Growth Fund's net assets as of the close of business on April 7, 2006 of
$417,030,654 including $68,480,152 of unrealized appreciation were
combined with the net assets of the Fund immediately before the
acquisition of $1,468,437,474. The combined aggregate net assets of the
Fund subsequent to the reorganization were $1,885,468,128.
NOTE 13--SIGNIFICANT EVENT
At a meeting held on December 13, 2007, the Board of Trustees of Trust approved
certain proposals to be presented for shareholder approval at a special meeting
of the shareholders of the Trust intended to be held on February 29, 2008 (the
"Special Meeting"). At the Special Meeting, shareholders of record as of the
close of business on November 30, 2007, are entitled to vote their respective
shares on several proposals that including, among others the following
proposal(s).
New proposed sub-advisory agreement between A I M Advisors, Inc. ("AIM") and
each of AIM Funds Management Inc., Invesco Asset Management Deutschland, GmbH,
Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited,
Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco
Hong Kong Limited, Invesco Institutional (N.A.), Inc. and Invesco Senior Secured
Management, Inc. (collectively, the "Affiliated Sub-Advisers") (the "New
Sub-advisory Arrangements") . This proposal is intended to benefit the Fund and
its shareholders by permitting AIM to utilize the additional resources and
talent of these affiliated sub-advisers in managing the Fund. Because AIM would
pay all of the sub-advisory fees of the sub-advisers, the new sub-advisory
arrangements would not affect the fees the Fund pays pursuant to the advisory
agreement. If approved by shareholders, the New Sub-advisory Arrangements are
expected to become effective on or about May 1, 2008.
NOTE 14--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS A
---------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 29.23 $ 27.51 $ 27.46 $ 25.71 $ 18.47
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.25)(a) (0.25)(a) (0.31) (0.32) (0.21)(a)
- --------------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 3.54 4.21 2.61 2.07 7.45
================================================================================================================================
Total from investment operations 3.29 3.96 2.30 1.75 7.24
================================================================================================================================
Less distributions from net realized gains (3.52) (2.24) (2.25) -- --
================================================================================================================================
Net asset value, end of period $ 29.00 $ 29.23 $ 27.51 $ 27.46 $ 25.71
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(b) 11.38% 14.30% 8.32% 6.81% 39.20%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,056,349 $1,071,753 $1,099,696 $1,491,940 $1,602,724
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.23%(c) 1.25% 1.45% 1.40% 1.27%
- --------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.23%(c) 1.25% 1.50% 1.51% 1.37%
================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.78)%(c) (0.84)% (0.95)% (1.12)% (0.98)%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 29% 49% 41% 69% 32%
________________________________________________________________________________________________________________________________
================================================================================================================================
</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.
(c) Ratios are based on average daily net assets of $1,112,267,497.
22
AIM Small Cap Growth Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS B
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2007 2006 2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 26.47 $ 25.29 $ 25.61 $ 24.15 $ 17.49
- ------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.44)(a) (0.43)(a) (0.47) (0.52) (0.35)(a)
- ------------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 3.20 3.85 2.40 1.98 7.01
==============================================================================================================================
Total from investment operations 2.76 3.42 1.93 1.46 6.66
==============================================================================================================================
Less distributions from net realized gains (3.52) (2.24) (2.25) -- --
==============================================================================================================================
Net asset value, end of period $ 25.71 $ 26.47 $ 25.29 $ 25.61 $ 24.15
______________________________________________________________________________________________________________________________
==============================================================================================================================
Total return(b) 10.55% 13.42% 7.47% 6.05% 38.08%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $60,227 $101,394 $117,307 $149,400 $182,700
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratio of expenses to average net assets 1.98%(c) 2.00% 2.20% 2.15%(d) 2.02%
==============================================================================================================================
Ratio of net investment income (loss) to average net assets (1.53)%(c) (1.59)% (1.70)% (1.87)% (1.73)%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Portfolio turnover rate 29% 49% 41% 69% 32%
______________________________________________________________________________________________________________________________
==============================================================================================================================
</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.
(c) Ratios are based on average daily net assets of $86,533,474.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 2.16% for the year ended December 31, 2004.
<Table>
<Caption>
CLASS C
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
2007 2006 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 26.46 $ 25.27 $ 25.60 $ 24.14 $ 17.48
- -----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.44)(a) (0.43)(a) (0.47) (0.52) (0.35)(a)
- -----------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 3.19 3.86 2.39 1.98 7.01
=============================================================================================================================
Total from investment operations 2.75 3.43 1.92 1.46 6.66
=============================================================================================================================
Less distributions from net realized gains (3.52) (2.24) (2.25) -- --
=============================================================================================================================
Net asset value, end of period $ 25.69 $ 26.46 $ 25.27 $ 25.60 $ 24.14
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Total return(b) 10.52% 13.47% 7.44% 6.05% 38.10%
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $28,722 $30,521 $31,141 $40,904 $50,031
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Ratio of expenses to average net assets 1.98%(c) 2.00% 2.20% 2.15%(d) 2.02%
=============================================================================================================================
Ratio of net investment income (loss) to average net assets (1.53)%(c) (1.59)% (1.70)% (1.87)% (1.73)%
_____________________________________________________________________________________________________________________________
=============================================================================================================================
Portfolio turnover rate 29% 49% 41% 69% 32%
_____________________________________________________________________________________________________________________________
=============================================================================================================================
</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.
(c) Ratios are based on average daily net assets of $30,753,593.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 2.16% for the year ended December 31, 2004.
23
AIM Small Cap Growth Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
CLASS R
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
2007 2006 2005 2004 2003
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 28.84 $ 27.23 $ 27.28 $ 25.61 $18.44
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.33)(a) (0.32)(a) (0.30) (0.27) (0.28)(a)
- -------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 3.49 4.17 2.50 1.94 7.45
=========================================================================================================================
Total from investment operations 3.16 3.85 2.20 1.67 7.17
=========================================================================================================================
Less distributions from net realized gains (3.52) (2.24) (2.25) -- --
=========================================================================================================================
Net asset value, end of period $ 28.48 $ 28.84 $ 27.23 $ 27.28 $25.61
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total return(b) 11.07% 14.04% 8.01% 6.52% 38.88%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $36,591 $23,988 $21,276 $19,506 $9,029
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to average net assets 1.48%(c) 1.50% 1.70% 1.65%(d) 1.52%
=========================================================================================================================
Ratio of net investment income (loss) to average net assets (1.03)%(c) (1.09)% (1.20)% (1.37)% (1.23)%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover rate 29% 49% 41% 69% 32%
_________________________________________________________________________________________________________________________
=========================================================================================================================
</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.
(c) Ratios are based on average daily net assets of $31,277,473.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 1.66% for the year ended December 31, 2004.
<Table>
<Caption>
INVESTOR CLASS
--------------------------------------
APRIL 07,2006
YEAR ENDED (COMMENCEMENT DATE)
DECEMBER 31, TO DECEMBER 31,
2007 2006
- ----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 29.91 $ 31.20
- ----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(a) (0.26) (0.19)
- ----------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 3.63 1.14
====================================================================================================
Total from investment operations 3.37 0.95
====================================================================================================
Less distributions from net realized gains (3.52) (2.24)
====================================================================================================
Net asset value, end of period $ 29.76 $ 29.91
____________________________________________________________________________________________________
====================================================================================================
Total return(b) 11.39% 2.96%
____________________________________________________________________________________________________
====================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $273,506 $281,479
____________________________________________________________________________________________________
====================================================================================================
Ratio of expenses to average net assets 1.23%(c) 1.26%(d)
====================================================================================================
Ratio of net investment income (loss) to average net assets (0.78)%(c) (0.85)%(d)
____________________________________________________________________________________________________
====================================================================================================
Portfolio turnover rate(e) 29% 49%
____________________________________________________________________________________________________
====================================================================================================
</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 $284,706,056.
(d) Annualized.
(e) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
24
AIM Small Cap Growth Fund
NOTE 14--FINANCIAL HIGHLIGHTS--(CONTINUED)
<Table>
<Caption>
INSTITUTIONAL CLASS
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
2007 2006 2005 2004 2003
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 30.01 $ 28.08 $ 27.83 $ 25.91 $ 18.53
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.12)(a) (0.13)(a) (0.11) (0.16) (0.12)(a)
- -------------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 3.64 4.30 2.61 2.08 7.50
===============================================================================================================================
Total from investment operations 3.52 4.17 2.50 1.92 7.38
===============================================================================================================================
Less distributions from net realized gains (3.52) (2.24) (2.25) -- --
===============================================================================================================================
Net asset value, end of period $ 30.01 $ 30.01 $ 28.08 $ 27.83 $ 25.91
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(b) 11.85% 14.76% 8.93% 7.41% 39.83%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $241,992 $179,414 $107,023 $112,547 $108,116
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets 0.81%(c) 0.84% 0.84% 0.85%(d) 0.80%
===============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.36)%(c) (0.43)% (0.35)% (0.57)% (0.51)%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 29% 49% 41% 69% 32%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
</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.
(c) Ratios are based on average daily net assets of $227,966,555.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 0.86% for the year ended December 31, 2004.
NOTE 15--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING
On July 6, 2007, the Securities and Exchange Commission ("SEC") published
notice of two proposed distribution plans ("Distribution Plans") for the
distribution of monies placed into two separate Fair Funds created pursuant to a
settlement reached on October 8, 2004 between Invesco Funds Group, Inc. ("IFG"),
A I M Advisors, Inc. ("AIM") and A I M Distributors, Inc. and the SEC (the
"Order"). One of the Fair Funds consists of $325 million, plus interest and any
contributions by other settling parties, for distribution to shareholders of
certain mutual funds formerly advised by IFG who may have been harmed by market
timing and related activity. The second Fair Fund consists of $50 million, plus
interest and any contributions by other settling parties, for distribution to
shareholders of mutual funds advised by AIM who may have been harmed by market
timing and related activity. Comments on the Distribution Plans were due no
later than August 6, 2007 and the Distribution Plans are awaiting final approval
by the SEC. Distributions from the Fair Funds will begin after the SEC finally
approves the Distribution Plans. The proposed Distribution Plans provide for
distribution to all eligible investors, for the periods spanning January 1, 2000
through July 31, 2003 (for the IFG Fair Fund) and January 1, 2001 through
September 30, 2003 (for the AIM Fair Fund), their proportionate share of the
applicable Fair Fund to compensate such investors for injury they may have
suffered as a result of market timing in the affected funds. The Distribution
Plans include a provision for any residual amounts in the Fair Funds to be
distributed in the future to the affected funds. Because the Distribution Plans
have not received final approval from the SEC and distribution of the Fair Funds
has not yet commenced, management of AIM and the Fund are unable to estimate the
amount of distribution to be made to the Fund, if any.
At the request of the trustees of the AIM Funds, Invesco Ltd. ("Invesco"),
the parent company of IFG and AIM, has agreed to reimburse expenses incurred by
the AIM Funds related to market timing matters.
PENDING LITIGATION AND REGULATORY INQUIRIES
On August 30, 2005, the West Virginia Office of the State
Auditor -- Securities Commission ("WVASC") issued a Summary Order to Cease and
Desist and Notice of Right to Hearing to AIM and ADI (Order No. 05-1318). The
WVASC makes findings of fact that AIM and ADI entered into certain arrangements
permitting market timing of the AIM Funds and failed to disclose these
arrangements in the prospectuses for such Funds, and conclusions of law to the
effect that AIM and ADI violated the West Virginia securities laws. The WVASC
orders AIM and ADI to cease any further violations and seeks to impose monetary
sanctions, including restitution to affected investors, disgorgement of fees,
reimbursement of investigatory, administrative and legal costs and an
"administrative assessment," to be determined by the Commissioner. Initial
research indicates that these damages could be limited or capped by statute. 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, IFG, AIM, ADI and/or
related entities and individuals, depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity
in the AIM Funds; and
- that certain AIM Funds inadequately employed fair value pricing.
25
AIM Small Cap Growth Fund
NOTE 15--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 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 Small Cap Growth Fund
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Growth Series
and Shareholders of AIM Small Cap 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 Small Cap Growth Fund (one of
the funds constituting AIM Growth Series, hereafter referred to as the "Fund")
at December 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 December 31, 2007 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
February 15, 2008
Houston, Texas
27
AIM Small Cap Growth Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments or
contingent deferred sales charges on redemptions, and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and/or service
(12b-1) fees; and other Fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with ongoing costs of investing in other mutual funds. The
example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period July 1, 2007, through December 31, 2007.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the hypothetical
information is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
A $1,000.00 $989.00 $ 6.27 $1,018.90 $ 6.36 1.25%
B 1,000.00 985.00 10.01 1,015.12 10.16 2.00
C 1,000.00 985.00 10.01 1,015.12 10.16 2.00
R 1,000.00 987.50 7.51 1,017.64 7.63 1.50
Investor 1,000.00 988.60 6.27 1,018.90 6.36 1.25
</Table>
(1) The actual ending account value is based on the actual total return of
the Fund for the period July 1, 2007, through December 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 12/31/07
AIM Small Cap Growth Fund
==========================================
Institutional Class Shares AVERAGE ANNUAL TOTAL RETURNS PLEASE NOTE THAT PAST PERFORMANCE IS
For periods ended 12/31/07 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 (3/15/02) 8.22% THOSE SHOWN. ALL RETURNS ASSUME
shareholders with a performance overview 5 Years 16.00 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 MAY BE WORTH MORE OR LESS THAN THEIR
contribution plans that meet certain INSTITUTIONAL CLASS SHARES HAVE NO SALES ORIGINAL COST. SEE FULL REPORT FOR
criteria. CHARGE; THEREFORE, PERFORMANCE IS AT NET INFORMATION ON COMPARATIVE BENCHMARKS.
ASSET VALUE (NAV). PERFORMANCE OF PLEASE CONSULT YOUR FUND PROSPECTUS FOR
========================================== INSTITUTIONAL CLASS SHARES WILL DIFFER MORE INFORMATION. FOR THE MOST CURRENT
NASDAQ SYMBOL GTSVX FROM PERFORMANCE OF OTHER SHARE CLASSES MONTH-END PERFORMANCE, PLEASE CALL
========================================== PRIMARILY DUE TO DIFFERING SALES CHARGES 800-451-4246 OR VISIT AIMINVESTMENTS.COM.
AND CLASS EXPENSES.
Over for information on your Fund's expenses.
=======================================================================================
THIS SUPPLEMENT 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 SCG-INS-1 A I M Distributors, Inc. -- REGISTERED TRADEMARK --
AIM Small Cap Growth Fund
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management fees
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period July 1, 2007, through December 31, 2007.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. Therefore, the hypothetical information is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds.
<Table>
<Caption>
HYPOTHETICAL
(5% ANNUAL RETURN BEFORE
ACTUAL EXPENSES)
BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE
CLASS (07/01/07) (12/31/07)(1) PERIOD(2) (12/31/07) PERIOD(2) RATIO
Institutional $1,000.00 $ 991.10 $ 4.12 $1,021.07 $4.18 0.82%
</Table>
(1) The actual ending account value is based on the actual total return of
the Fund for the period July 1, 2007, through December 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.
AIM Small Cap 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 December
31, 2007:
FEDERAL AND STATE INCOME TAX
<Table>
Long-Term Capital Gain Dividends $186,276,226
</Table>
ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION
The percentages of qualifying assets not subject to the U.S. estate tax for
the fiscal quarters ended March 31, 2007, June 30, 2007, September 30, 2007 and
December 31, 2007 were 3.90%, 4.18%, 4.35%, and 4.43%, respectively.
29
AIM Small Cap Growth Fund
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Growth Series (the "Trust"), is
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees
104 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 Ltd. (ultimate parent
of AIM and a global investment
management firm) and, Invesco Holding
Company (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); and INVESCO
North American Holdings, Inc. (holding
company); Chairman and President,
INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of
Funds(R); Vice Chairman, Investment
Company Institute; and Member of
Executive Board, SMU Cox School of
Business
Formerly: Chairman, Investment Company
Institute; 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, AIM Mutual Fund Dealer Inc.
Principal (registered broker dealer), A I M
Executive Officer Advisors, Inc., AIM Funds Management
Inc. d/b/a INVESCO Enterprise Services
(registered investment advisor and
registered transfer agent), 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), and 1371 Preferred Inc.
(holding company); Director, Chairman,
Chief Executive Officer and President,
A I M Management Group Inc. (financial
services holding company) and 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) 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); 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: Director and Chairman, Fund
Management Company (registered broker
dealer); 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 2001 Chairman, Crockett Technology Associates ACE Limited (insurance company);
Trustee and Chair (technology consulting company) and Captaris, Inc. (unified
messaging provider)
- -------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 2003 Retired None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 1985 Retired None
Trustee
Formerly: Partner, law firm of Baker &
McKenzie and Director, Badgley Funds,
Inc. (registered investment company) (2
portfolios)
- -------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., None
Trustee (investment banking firm)
Formerly: Director, Policy Studies, Inc.
and Van Gilder Insurance Corporation
- -------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2001 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 2001 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)
Formerly: Chief Executive Officer,
Texana Timber LP (sustainable forestry
company), and Discovery Global Education
Fund (non-profit)
- -------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Director, Reich & Tang Funds) (15
Trustee Naftalis and Frankel LLP portfolios)
- -------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA None
Trustee of the USA
- -------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None
Trustee
- -------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 2003 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 Ltd., ultimate 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 Small Cap 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,
AIM Investment Services, Inc. and
INVESCO Distributors, Inc.; Director,
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: Director, Vice President and
Secretary, Fund Management Company; 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 N/A
Vice President Ltd.; 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 General Counsel, Secretary and Senior
Vice President Managing Director, Invesco Ltd.;
Director and Secretary, Invesco Holding
Company Limited, IVZ, Inc. and INVESCO
Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO
North American Holdings, Inc.; and Vice
President of The AIM Family of
Funds--Registered Trademark--
Formerly: Senior Managing Director, N/A
Invesco Holding Company Limited;
Director, Senior Vice 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 2004 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; Executive
Vice President, A I M Distributors,
Inc.; Senior Vice President, A I M
Management Group Inc.; 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: Director and President, Fund
Management Company; 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. and The AIM Family of
Funds--Registered Trademark--
Formerly: Anti-Money Laundering
Compliance Officer, Fund Management
Company; and 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.
and AIM Investment Services, Inc.
Formerly: Vice President, A I M Capital
Management, Inc. and Fund Management
Company; 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>
31
[EDELIVERY Fund holdings and proxy voting information
GO PAPERLESS
AIMINVESTMENTS.COM/EDELIVERY The Fund provides a complete list of its
GRAPHIC] holdings four times in each fiscal year,
at the quarter-ends. For the second and
REGISTER FOR EDELIVERY fourth quarters, the lists appear in the
Fund's semiannual and annual reports to
eDelivery is the process of receiving your shareholders. For the first and third
fund and account information via e-mail. quarters, the Fund files the lists with
Once your quarterly statements, tax forms, the Securities and Exchange Commission
fund reports, and prospectuses are (SEC) on Form N-Q. The most recent list of
available, we will send you an e-mail portfolio holdings is available at
notification containing links to these AIMinvestments.com. From our home page,
documents. For security purposes, you will click on Products & Performance, then
need to log in to your account to view Mutual Funds, then Fund Overview. Select
your statements and tax forms. your Fund from the drop-down menu and
click on Complete Quarterly Holdings.
WHY SIGN UP? Shareholders can also look up the Fund's
Forms N-Q on the SEC Web site at sec.gov.
Register for eDelivery to: Copies of the Fund's Forms N-Q may be
reviewed and copied at the SEC Public
o save your Fund the cost of printing and Reference Room in Washington, D.C. You can
postage. obtain information on the operation of the
Public Reference Room, including
o reduce the amount of paper you receive. information about duplicating fee charges,
by calling 202-942-8090 or 800-732-0330,
o gain access to your documents faster by or by electronic request at the following
not waiting for the mail. e-mail address: publicinfo@sec.gov. The
SEC file numbers for the Fund are
o view your documents online anytime at 811-02699 and 002-57526.
your convenience.
A description of the policies and
o save the documents to your personal procedures that the Fund uses to determine
computer or print them out for your how to vote proxies relating to portfolio
records. securities is available without charge,
upon request, from our Client Services
HOW DO I SIGN UP? department at 800-959-4246 or on the AIM
Web site, AIMinvestments.com. On the home
It's easy. Just follow these simple steps: page, scroll down and click on Proxy
Policy. The information is also available
1. Log in to your account. on the SEC Web site, sec.gov.
2. Click on the "Service Center" tab. Information regarding how the Fund voted
proxies related to its portfolio
3. Select "Register for eDelivery" and securities during the 12 months ended June
complete the consent process. 30, 2007, is available at our Web site. Go
to AIMinvestments.com, access the About Us
This AIM service is provided by AIM tab, click on Required Notices and then
Investment Services, Inc. click on Proxy Voting Activity. Next,
select the Fund from the drop-down menu.
The information is also available on the
SEC Web site, sec.gov.
If used after April 20, 2008, this report
must be accompanied by a Fund fact sheet
or by an AIM Quarterly Performance Review
for the most recent quarter-end. Mutual
funds and exchange-traded funds
distributed by A I M Distributors, Inc.
SCG-AR-1 A I M Distributors, Inc.
[AIM INVESTMENTS LOGO]
-- REGISTERED TRADEMARK --
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 $414,551 N/A $295,465 N/A
Audit-Related Fees(2) $ 5,556 0% $ 0 0%
Tax Fees(3) $130,667 0% $ 89,252 0%
All Other Fees $ 0 0% $ 0 0%
-------- --------
Total Fees $550,774 0% $384,717 0%
PWC billed the Registrant aggregate non-audit fees of $136,223 for the fiscal
year ended 2007, and $89,252 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) Audit-Related Fees for the fiscal year ended December 31, 2007 includes
fees billed for completing agreed-upon procedures related to reorganization
transactions.
(3) Tax fees for the fiscal year end December 31, 2007 includes fees billed for
reviewing tax returns and consultation services. Tax fees for fiscal year
end December 31, 2006 includes fees billed for reviewing tax returns.
FEES BILLED BY PWC RELATED TO AIM AND AIM AFFILIATES
PWC billed AIM Advisors, Inc. ("AIM"), the Registrant's adviser, and any
entity controlling, controlled by or under common control with AIM that 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. To the extent that such
services were provided, the Audit Committee determined that the provision
of such services is compatible with PWC maintaining independence with
respect to the Registrant.
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 December 17, 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 December 17,
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 Growth Series
By: /s/ PHILIP A. TAYLOR
------------------------------------
Philip A. Taylor
Principal Executive Officer
Date: March 7, 2008
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: March 7, 2008
By: /s/ SIDNEY M. DILGREN
------------------------------------
Sidney M. Dilgren
Principal Financial Officer
Date: March 7, 2008
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.