-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IT5U0QSsWTVhr6j2e6T6yXAAdsrGH+WND+8VgiMzY8omISZXJnFA4wzyVS99TUva YOesihskP7aVoY5lg8x7Bw== 0000950129-04-001040.txt : 20040305 0000950129-04-001040.hdr.sgml : 20040305 20040305133955 ACCESSION NUMBER: 0000950129-04-001040 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040305 EFFECTIVENESS DATE: 20040305 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIM FLOATING RATE FUND CENTRAL INDEX KEY: 0001027826 IRS NUMBER: 943259182 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-07957 FILM NUMBER: 04651314 BUSINESS ADDRESS: STREET 1: 11 GREENWAY PLAZA, SUITE 100 STREET 2: 21ST FL CITY: HOUSTON STATE: TX ZIP: 77046 BUSINESS PHONE: 7136261919 MAIL ADDRESS: STREET 1: 11 GREENWAY PLAZA STREET 2: SUITE 100 CITY: HOUSTON STATE: TX ZIP: 77046 FORMER COMPANY: FORMER CONFORMED NAME: GT GLOBAL FLOATING RATE FUND INC DATE OF NAME CHANGE: 19961203 N-CSR 1 h11741nvcsr.txt AIM FLOATING RATE FUND - DECEMBER 31, 2003 ------------------------- OMB APPROVAL ------------------------- OMB Number: 3235-0570 Expires: Nov. 30, 2005 Estimated average burden hours per response: 5.0 ------------------------- 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 811-09797 -------------------------------------------------------------------------- AIM Floating Rate Fund - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 11 Greenway Plaza, Suite 100 Houston, Texas 77046 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Robert H. Graham 11 Greenway Plaza, Suite 100 Houston, Texas 77046 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (713) 626-1919 ---------------------------- Date of fiscal year end: 12/31 ----------------- Date of reporting period: 12/31/03 ----------------- AIM FLOATING RATE FUND Annual Report to Shareholders o December 31, 2003 [COVER IMAGE] YOUR GOALS. OUR SOLUTIONS. [AIM INVESTMENTS LOGO APPEARS HERE] --Servicemark-- --Servicemark-- ================================================================================ AIM FLOATING RATE FUND SEEKS TO PROVIDE AS HIGH A LEVEL OF CURRENT INCOME AND PRESERVATION OF CAPITAL AS IS CONSISTENT WITH INVESTING IN SENIOR SECURED FLOATING RATE CORPORATE LOANS AND SENIOR SECURED DEBT SECURITIES. ================================================================================ o Unless otherwise stated, information presented is as of 12/31/03 and is based on total net assets. PRINCIPAL RISKS OF INVESTING IN THE FUND o The fund is nondiversified, which (including government and corporate CHANGE IN INVESTMENT OBJECTIVE AND increases risks as well as potential securities, mortgage pass-through STRATEGIES rewards. securities and asset-backed securities), is compiled by Lehman Brothers, a global The Board of Trustees of AIM Floating o The fund is a continuously offered, investment bank. Rate Fund has approved modifying and closed-end fund. No market currently simplifying the investment objective of exists for either share class and none o The unmanaged Lipper Closed End (CE) the Fund, and certain changes to the is expected to develop. To provide Loan Participation Fund Index represents Fund's investment strategies. liquidity, the fund makes quarterly an average of the 10 largest CE loan tender offers. Consider your liquidity participation funds tracked by Lipper, Effective June 1, 2004, the investment needs when investing in the fund. Inc., an independent mutual fund objective of the Fund will be to provide Floating rate investments should not be performance monitor. a high level of current income and, confused with money market funds, and secondarily, preservation of capital. the fund will not maintain a stable net o A direct investment cannot be made in The Fund will continue to seek to asset value. The fund can invest all or an index. Unless otherwise indicated, achieve its investment objective by substantially all of its assets in index results include reinvested investing, normally, at least 80% of its senior secured floating rate loans and dividends, and they do not reflect sales assets in senior secured floating rate senior secured debt securities rated charges. Performance of an index of loans and senior secured floating rate below investment grade. These securities funds reflects fund expenses; debt securities that meet credit are generally considered to have performance of a market index does not. standards established by the investment speculative characteristics and are advisor, A I M Advisors, Inc., and its subject to greater risk of loss of Industry classifications used in this sub-advisor, INVESCO Senior Secured principal and interest than higher-rated report are generally according to the Management, Inc. securities. Global Industry Classification Standard, which was developed by and is the The Fund has the ability to borrow for ABOUT INDEXES USED IN THIS REPORT exclusive property and a service mark of investment purposes (use leverage), but Morgan Stanley Capital International previously has not done so. The Board of o The unmanaged CSFB Leveraged Loan Inc. and Standard & Poor's. Trustees has authorized the investment Index is an index of advisor to pursue obtaining a leverage below-investment-grade loans designed to A description of the policies and credit facility. Use of leverage results mirror the investable universe of the procedures that the Fund uses to in certain risks to shareholders, U.S. dollar-denominated leveraged loan determine how to vote proxies relating including the risk of higher volatility market. The index is compiled by Credit to portfolio securities is available of the net asset value of shares. Suisse First Boston Corporation, a without charge, upon request, by calling Amounts that may be borrowed for well-known global investment bank. 800-959-4246, or on the AIM Web site, leverage will not exceed 33 1/3% of total AIMinvestments.com. assets (including the amount borrowed) o The unmanaged Lehman High Yield Index, less liabilities (other than which represents the performance of borrowings). high-yield debt securities, is compiled by Lehman Brothers, a global investment The Board of Trustees has also bank. authorized the investment advisor and sub-advisor to invest up to 20% of the o The unmanaged Lehman U.S. Fund's assets in investment-grade and Aggregate Bond Index, which represents non-investment-grade fixed rate the U.S. investment-grade fixed-rate securities; distressed securities of a bond market company in bankruptcy or of a company that is restructuring; and subordinated ON FEBRUARY 1, 2004, AFTER THE CLOSE OF THIS REPORT MAY BE DISTRIBUTED ONLY TO loans. Distressed securities will not THE YEAR COVERED BY THIS ANNUAL REPORT, SHAREHOLDERS OR TO PERSONS WHO HAVE exceed 5% of the Fund's net assets at THOMAS EWALD WAS NAMED A PORTFOLIO RECEIVED A CURRENT PROSPECTUS OF THE the time of purchase. MANAGER OF AIM FLOATING RATE FUND. FUND. PLEASE READ THE PROSPECTUS CAREFULLY AND CONSIDER THE INVESTMENT The foregoing changes to the Fund's ANTHONY CLEMENTE WILL CONTINUE TO BE A OBJECTIVES, RISKS, AND CHARGES AND investment strategies will become SENIOR PORTFOLIO MANAGER OF THE FUND. EXPENSES OF THE INVESTMENT CAREFULLY effective June 1, 2004. BEFORE INVESTING.
=================================================== NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE =================================================== AIMinvestments.com TO OUR SHAREHOLDERS DEAR FELLOW SHAREHOLDER IN THE AIM FAMILY OF FUNDS--Registered Trademark--: [PHOTO OF The fiscal year ended December 31, 2003, was a welcome ROBERT H. change from the bear market of the previous three years. GRAHAM] Major stock market indexes here and abroad delivered positive performance, with double-digit returns more the ROBERT H. GRAHAM rule than the exception. As is historically the case, bond market returns were more modest, but nonetheless positive as well. The U.S. economy appears to have turned a corner, with solid growth in gross domestic product. Overseas, particularly in Europe, economic performance was not so robust but appeared to pick up during the second half of the year. U.S. investors seem to have regained their confidence, putting $152.77 billion in new money into stock mutual funds during 2003 and $31.40 billion into bond funds. By contrast, money market funds, considered a safe haven because of their emphasis on stability of net asset value, suffered large net outflows during 2003. The durability of these trends is, of course, unpredictable, but the economy does appear to have the wind at its back in terms of fiscal, monetary and tax stimulus, and corporate earnings have been strong. Nevertheless, we caution all our shareholders against thinking that 2004 will be a repeat of 2003. We simply do not know. What should investors do? They should do what we have always urged: Keep their eyes on their long-term goals, keep their portfolios diversified, and work with their financial advisors to tailor their investments to their risk tolerance and investment objectives. We cannot overemphasize the importance of professional guidance when it comes to selecting investments. For information on your fund's performance and management during the fiscal year, please see the management discussion that begins on the following page. VISIT OUR WEB SITE As you are aware, the mutual fund industry, including AIM Investments, has been the subject of allegations and investigations of late surrounding the issues of market timing and late trading in funds. We understand how unsettling this may be for many of our shareholders. We encourage you to visit AIMinvestments.com often to monitor developments. We will continue to post updates on these issues as information becomes available. The Securities and Exchange Commission, which regulates our industry, has already proposed new rules and regulations, and is planning to propose several more, that address the issues of market timing and late trading, among others. We welcome these efforts, as does the industry trade group, the Investment Company Institute. We believe comprehensive rule making is necessary and is the best way to establish new industry responsibilities designed to protect shareholders. We support practical rule changes and structural modifications that are fair, enforceable and, most importantly, beneficial for investors. Should you visit our Web site, we invite you to explore the other material available there, including general investing information, performance updates on our funds, and market and economic commentary from our financial experts. As always, AIM is committed to building solutions for your investment goals, and we thank you for your continued participation in AIM Investments. If you have any questions, you can contact one of our Client Service representatives at 800-959-4246. Sincerely, /s/ ROBERT H. GRAHAM Chairman and President February 9, 2004 MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE STRONG DEMAND DRIVES second quarter, 8.2% in the third LOAN MARKET quarter, and 4.0% in the fourth quarter of 2003. Despite this growth in GDP, the As of the close of the year on December Strong demand, combined with a Federal Reserve (the Fed) remained 31, 2003, the 30-day distribution rate relatively slow new-issue market, drove accommodative. For the first half of the at offering price for AIM Floating Rate up loan prices across the board. This year, the Fed kept the short-term Fund's Class B shares and Class C shares demand, together with historically low federal funds rate at 1.25%. In June, it was 3.22% and 2.98%, respectively. For interest rates, prompted many issuers to reduced that rate to 1.00%, its lowest the year, the fund's Class B shares and refinance their outstanding loans. level since 1958. At the time, the Fed Class C shares returned 7.06% and 6.80%, Demand was particularly strong for said it favored a more expansive respectively, at net asset value. lower-quality, below-investment-grade monetary policy because the economy had loans, and distressed securities saw not yet exhibited sustainable growth. In For the same period, the fund's broad above-average percentage price its final Beige Book report of 2003, the market index, the Lehman U.S. Aggregate increases. Fed said that reports suggested that the Bond Index, returned 4.10%; its economy continued to expand in October style-specific index, the CSFB Leveraged In the U.S. fixed-income securities and early November, and that while the Loan Index, returned 11.02%; and its market, high yield pace of growth varied somewhat, it peer group index, the Lipper Closed End (below-investment-grade) issues appeared to be reasonably broadly based. Loan Participation Fund Index, returned outperformed investment-grade issues. 12.64%. The fund outperformed the Lehman The Lehman High Yield Index rose 28.97% YOUR FUND U.S. Aggregate Bond Index because while the investment-grade Lehman U.S. lower-rated fixed-income instruments, in Aggregate Bond Index rose 4.10% for the Throughout the year, we continued to which the fund invests, generally year ended December 31, 2003. Among the concentrate on higher credit quality and outperformed the investment-grade investment-grade segments of the Lehman more-liquid issues in the fixed-income instruments that comprise U.S. Aggregate Bond Index, corporate below-investment-grade loan market, the Lehman U.S. Aggregate Bond Index. issues returned 8.24%; fixed-rate focusing on individual loans and the mortgage-backed securities returned borrowers' credit quality. We emphasized MARKET CONDITIONS 3.07%; U.S. agency investments returned diversification in an effort to insulate 2.59%; and U.S. Treasuries of various the fund from potential market turmoil Stable and relatively attractive returns maturities returned 2.24%. and maintain a relatively stable net caused demand for loan investments to asset value (NAV). We remained true to outpace supply for the year covered by The nation's gross domestic product our discipline of fundamental credit this report. (GDP), generally considered the broadest analysis, favoring higher credit quality measure of economic activity, expanded issues over distressed loans. While some at an annualized rate of 1.4% in the fund managers chose to emphasize riskier first quarter, 3.1% in the loans to increase
==================================================================================================================================== TOP 10 FIXED-INCOME ISSUERS* TOP 10 INDUSTRIES* FUND VS. INDEXES 1. Nextel Communications, Inc. 1.5% 1. Broadcasting & Cable TV 10.8% Total returns, 12/31/02-12/31/03, 2. Mediq/Prn Life Support Service 1.5 2. Publishing 5.7 excluding early withdrawal charges** 3. Allied Waste Industries, Inc. 1.3 3. Wireless Telecommunication 5.6 4. Charter Communications, Inc. 1.3 Services CLASS B SHARES 7.06% 5. Dex Media West LLC 1.2 4. Food Distributors 3.8 CLASS C SHARES 6.80 6. Leiner Health Products Group, Inc. 1.2 5. Industrial Conglomerates 3.7 LEHMAN U.S. AGGREGATE BOND INDEX 4.10 7. Time Warner Telecom Inc. 1.2 6. Auto Parts & Equipment 3.5 (Broad Market Index) 8. Adelphia (Olympus Cable Holding) 1.2 7. Health Care Distributors 3.2 CSFB LEVERAGED LOAN INDEX 11.02 Communications Corp. 8. Integrated 3.2 (Style-specific Index) 9. Identity Group 1.1 Telecommunication Services LIPPER CLOSED END LOAN PARTICIPATION 12.64 10. SPX Corp. 1.1 9. Household Products 3.1 FUND INDEX (Peer Group Index) 10. Health Care Facilities 2.8 Source: Lipper, Inc. TOTAL NUMBER OF HOLDINGS* 234 TOTAL NET ASSETS $242.8 MILLION * Excludes money market fund holdings and is based on total net assets. The fund's holdings are subject to change, and there is no assurance that the fund will continue to hold any particular security. ====================================================================================================================================
2 returns, we were content to adhere to interest rate the borrower pays ANTHONY R. CLEMENTE our investment discipline, taking only increases as well. This feature [PHOTO OF Anthony R. Clemente is a selective advantage of undervalued increases interest rate risk for the ANTHONY R. senior portfolio manager loans. borrower, but eliminates it for the CLEMENTE] of AIM Floating Rate Fund. lender and for the purchaser of the He began his investment Keep in mind that the loan market is loans. industry career in 1982 a private market, meaning that each loan and joined INVESCO (NY), is privately negotiated between buyer IN CLOSING Inc. in 1998. Mr. Clemente and seller. As a result, we are limited earned a B.A. in economics from St. to which loans are available, or offered For the year ended December 31, 2003, we Lawrence University. for sale, at any given time in either were pleased to provide shareholders the primary or secondary markets. with positive total return. We continued REPURCHASE REMINDER Generally, we selectively favored to work to provide as high a level of aerospace and defense, broadcasting, current income and preservation of AIM Floating Rate Fund's remaining chemicals, and health care loans. We capital as was consistent with investing quarterly repurchase offer dates for limited the fund's exposure to auto, in senior secured floating rate 2004 are: retail, and industrial textile loans. corporate loans and senior secured debt securities. SECOND QUARTER: During the year, the fund's Class B APRIL 30-MAY 21 share NAV rose from $8.51 to $8.77 See important fund and index primarily on the strength of increased disclosures inside front cover. THIRD QUARTER: demand for loan assets. The fund's yield JULY 30-AUGUST 20 declined slightly over the year, a result of narrowing spreads in the loan FOURTH QUARTER: market over the 12 months covered by OCTOBER 29-NOVEMBER 19 this report. Demand for loan assets during the year drove up prices and During these periods, shareholders may compressed yields. tender (redeem) their shares in AIM Floating Rate Fund if they wish, but are The floating rate feature of the under no obligation to do so. loans in the fund's portfolio suggest that if interest rates were to rise, the fund's yield would likely increase, since the interest rates on floating rate loans adjust periodically (typically every 30 days, but not to exceed one year). Simply put, the [ARROW interest rates paid on the loans in the BUTTON For More Information Visit portfolio are akin to an adjustable rate IMAGE] AIMinvestments.com mortgage; when market interest rates rise, the AVERAGE ANNUAL TOTAL RETURNS Current performance may be lower or investor's shares, when redeemed, may be higher than the performance data quoted. worth more or less than their original As of 12/31/03, including early Past performance cannot guarantee cost. withdrawal charges** comparable future results. Due to significant market volatility, results Class B share performance reflects CLASS B SHARES of an investment made today may differ the maximum applicable early withdrawal Inception (5/1/97) 4.38% substantially from the historical charge, which declines from 3% beginning 5 Years 3.73 performance shown. Please visit at the time of purchase to 0% at the 1 Year 4.06 AIMinvestments.com for the most current beginning of the fifth year. month-end performance. CLASS C SHARES Class C share performance includes Inception (3/31/00) 2.82% The fund's performance figures are reinvestment of all distributions, 1 Year 5.80 historical, and they reflect fund changes in net asset value, and a 1% expenses, the reinvestment of early withdrawal charge, if applicable. ** If early withdrawal charges were distributions, and changes in net asset included, returns would be lower. value. Performance data quoted represent The fund's 30-day distribution rate past performance and the investment is calculated by dividing the annualized return and principal value of an sum of the previous 30 days' dividends investment will fluctuate, so that an declared by the offering price per share on the last day of the period. For Class C shares, had the advisor not waived fees and/or reimbursed expenses, returns would have been lower.
3 FINANCIALS SCHEDULE OF INVESTMENTS December 31, 2003
MOODY'S RATING(a) PRINCIPAL (UNAUDITED) AMOUNT VALUE - -------------------------------------------------------------------------------------- TOTAL SENIOR SECURED FLOATING RATE INTERESTS-94.77%(B)(C) ADVERTISING -- 0.62% Lamar Advertising Co. Term Loan B due 06/30/10 Ba2 $1,500,000 $ 1,514,374 ====================================================================================== AEROSPACE & DEFENSE-2.06% Alliant Techsystems Inc. Term Loan C due 03/31/09 Ba2 674,579 680,481 - -------------------------------------------------------------------------------------- DRS Technologies, Inc. Term Loan due 09/30/10 Ba3 648,375 655,669 - -------------------------------------------------------------------------------------- Titan Corp. (The) Term Loan B due 06/30/09 Ba3 1,673,759 1,673,759 - -------------------------------------------------------------------------------------- TransDigm, Inc. Term Loan B due 07/22/10 B1 329,175 332,467 - -------------------------------------------------------------------------------------- United Defense Industries, Inc. Term Loan B due 08/13/09 Ba2 1,654,654 1,658,791 ====================================================================================== 5,001,167 ====================================================================================== AIR FREIGHT & LOGISTICS-0.10% Gemini Air Cargo, Inc. Term Loan A due 12/31/11 -- 419,171 251,503 ====================================================================================== APPAREL, ACCESSORIES & LUXURY GOODS-0.89% Glenoit Corp. Term Loan due 10/31/06(d) Caa1 2,189,296 1,477,775 - -------------------------------------------------------------------------------------- Jostens, Inc. Term Loan due 07/29/10 Ba3 666,667 673,889 ====================================================================================== 2,151,664 ====================================================================================== APPAREL RETAIL-0.39% William Carter Co. (The) Term Loan due 09/30/08 Ba3 936,391 936,391 ====================================================================================== AUTO PARTS & EQUIPMENT-3.46% Collins & Aikman Corp. Term Loan B due 12/31/05 B1 896,777 896,767 - -------------------------------------------------------------------------------------- EaglePicher Inc. Term Loan B due 08/07/09 B2 615,055 620,436 - -------------------------------------------------------------------------------------- GenCorp. Inc. Term Loan B due 03/28/07 Ba2 1,481,250 1,486,805 - -------------------------------------------------------------------------------------- Hayes Lemmerz International, Inc. Term Loan B due 06/30/09 Ba3 1,296,750 1,310,258 - -------------------------------------------------------------------------------------- Keystone Automotive Term Loan due 10/30/09 B1 300,000 303,750 - -------------------------------------------------------------------------------------- Mark IV Industries (Dayco Products, Inc.) Term Loan B due 05/31/07 B1 1,000,000 993,750 - -------------------------------------------------------------------------------------- Metaldyne Co. LLC (MascoTech) Term Loan D due 12/31/09 B2 879,900 868,901 - --------------------------------------------------------------------------------------
MOODY'S RATING(a) PRINCIPAL (UNAUDITED) AMOUNT VALUE - --------------------------------------------------------------------------------------
AUTO PARTS & EQUIPMENT-(CONTINUED) Tenneco Automotive Inc. Term Loan B due 12/12/10 B1 $ 710,352 $ 719,231 - -------------------------------------------------------------------------------------- Term Loan B1 due 12/12/10 B1 319,658 323,254 - -------------------------------------------------------------------------------------- United Components Inc. Term Loan B due 06/30/10 B1 871,200 879,912 ====================================================================================== 8,403,064 ====================================================================================== AUTOMOBILE MANUFACTURERS-0.46% TRW Automotive, Inc. Term Loan C-1 due 02/28/11 Ba2 1,100,000 1,113,750 ====================================================================================== BROADCASTING & CABLE TV-10.81% Adelphia (Olympus Cable Holding) Communications Corp. Term Loan B due 09/30/10 B2 3,000,000 2,840,001 - -------------------------------------------------------------------------------------- Adelphia Communications Corp. DIP Term Loan B due 06/25/04 Ba2 339,142 340,520 - -------------------------------------------------------------------------------------- Term Loan B due 06/25/04 Ba2 1,160,858 1,165,574 - -------------------------------------------------------------------------------------- Charter Communications, Inc. Term Loan A due 09/18/07 B2 1,777,777 1,693,333 - -------------------------------------------------------------------------------------- Term Loan B due 03/18/08 B2 1,448,989 1,402,984 - -------------------------------------------------------------------------------------- ComCorp Broadcasting, Inc. Term Loan due 06/30/07 -- 1,550,314 1,534,810 - -------------------------------------------------------------------------------------- DirecTV Holdings LLC Term Loan B1 due 03/06/10 Ba2 1,750,000 1,767,500 - -------------------------------------------------------------------------------------- Echostar Term Loan C due 09/01/08 -- 2,000,000 2,070,000 - -------------------------------------------------------------------------------------- Emmis Communications Corp. Term Loan B due 08/31/09 Ba2 1,538,822 1,558,057 - -------------------------------------------------------------------------------------- Gray Television, Inc. Term Loan due 12/31/10 Ba2 661,017 667,627 - -------------------------------------------------------------------------------------- Insight Communications Co., Inc. Term Loan B due 12/31/09 Ba3 2,000,000 2,005,000 - -------------------------------------------------------------------------------------- MCC Iowa LLC Term Loan B due 09/30/10 Ba3 1,500,000 1,504,500 - -------------------------------------------------------------------------------------- PanAmSat Corp. Term Loan B-1 due 09/30/10 Ba2 686,538 692,832 - -------------------------------------------------------------------------------------- Paxson Communications Corp. Term Loan B due 06/30/06 B1 952,154 954,932 - -------------------------------------------------------------------------------------- Satelite Mexicanos, S.A. de C.V. (Mexico) Floating Rate Note due 06/30/04 Caa1 2,611,000 1,984,360 - -------------------------------------------------------------------------------------- Sinclair Broadcast Group, Inc. Term Loan B due 12/31/09 Ba2 530,073 535,373 - -------------------------------------------------------------------------------------- Spanish Broadcasting System, Inc. Term Loan B due 12/31/09 B1 325,000 328,656 - -------------------------------------------------------------------------------------- White Knight Broadcasting, Inc. Term Loan A2 due 06/30/07 -- 1,711,242 1,694,130 - --------------------------------------------------------------------------------------
F-1
MOODY'S RATING(a) PRINCIPAL (UNAUDITED) AMOUNT VALUE - -------------------------------------------------------------------------------------- BROADCASTING & CABLE TV-(CONTINUED) WideOpenWest Illinois Inc. Term Loan B due 06/03/11 B2 $1,500,000 $ 1,492,500 ====================================================================================== 26,232,689 ====================================================================================== BUILDING PRODUCTS-1.43% Atrium Co. Inc. Term Loan due 12/10/08 B1 657,270 665,486 - -------------------------------------------------------------------------------------- Premdor Inc. Term Loan C due 08/31/08 Ba2 1,476,763 1,480,455 - -------------------------------------------------------------------------------------- Trussway Holdings, Inc. Term Loan B due 12/31/06 -- 1,575,914 1,150,417 - -------------------------------------------------------------------------------------- Werner Holding Co. (DE), Inc. Term Loan due 06/11/09 Ba3 191,667 169,625 ====================================================================================== 3,465,983 ====================================================================================== CASINOS & GAMING-2.50% Alliance Gaming Corp. Term Loan due 09/04/09 B1 1,100,000 1,111,687 - -------------------------------------------------------------------------------------- Boyd Gaming Corp. Term Loan due 06/24/08 Ba1 1,134,242 1,140,623 - -------------------------------------------------------------------------------------- Isle of Capri Black Hawk, LLC Term Loan B due 11/16/06 B1 558,214 560,308 - -------------------------------------------------------------------------------------- Marina District Development Co. LLC Term Loan A due 12/31/07 B2 1,575,836 1,585,685 - -------------------------------------------------------------------------------------- Term Loan B due 12/31/07 B2 914,375 928,091 - -------------------------------------------------------------------------------------- Penn National Gaming Inc. Term Loan B due 09/01/07 B1 732,953 736,618 ====================================================================================== 6,063,012 ====================================================================================== COMMODITY CHEMICALS-1.71% Georgia Gulf Corp. Term Loan D due 12/02/10 Ba3 2,300,000 2,323,000 - -------------------------------------------------------------------------------------- Huntsman Corp. Term Loan A due 03/31/07 B2 928,549 874,229 - -------------------------------------------------------------------------------------- Term Loan B due 03/01/07 B2 703,012 661,314 - -------------------------------------------------------------------------------------- Westlake Chemical Corp. Term Loan B due 07/31/10 Ba2 298,500 301,858 ====================================================================================== 4,160,401 ====================================================================================== COMMUNICATIONS EQUIPMENT-2.72% American Tower Corp. Term Loan B due 12/31/07 B1 801,653 806,663 - -------------------------------------------------------------------------------------- Crown Castle Operating Co. Term Loan B due 09/30/10 B1 2,486,269 2,519,938 - -------------------------------------------------------------------------------------- GCI Holdings, Inc. Term Loan due 10/15/04 Ba3 568,487 572,751 - -------------------------------------------------------------------------------------- Qwest Corp. Term Loan A due 06/30/07 -- 1,055,556 1,109,917 - -------------------------------------------------------------------------------------- SpectraSite Communications, Inc. Term Loan C due 12/31/07 B1 1,567,840 1,588,908 ====================================================================================== 6,598,177 ======================================================================================
MOODY'S RATING(a) PRINCIPAL (UNAUDITED) AMOUNT VALUE
- -------------------------------------------------------------------------------------- COMPUTER HARDWARE-0.87% DecisionOne Corp. Term Loan due 12/30/05 -- $ 334,737 $ 123,853 - -------------------------------------------------------------------------------------- Seagate Technology Inc. Term Loan B due 05/13/07 Ba1 1,970,000 1,983,544 ====================================================================================== 2,107,397 ====================================================================================== CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS-0.08% Manitowoc Co., Inc. (The) Term Loan B due 05/09/07 Ba2 202,397 203,662 ====================================================================================== CONSTRUCTION MATERIALS-0.56% Tapco International Corp. Term Loan B due 06/23/07 B1 903,242 903,242 - -------------------------------------------------------------------------------------- Term Loan C due 06/23/08 B1 456,482 456,482 ====================================================================================== 1,359,724 ====================================================================================== CONSUMER FINANCE-0.20% Infinity Property & Casualty Corp. Term Loan due 06/30/10 Baa3 488,750 492,416 ====================================================================================== DEPARTMENT STORES-0.42% JC Penney, Co. Credit Linked Note due 04/29/04 Ba1 1,000,000 1,011,078 ====================================================================================== DIVERSIFIED CHEMICALS-0.33% Rockwood Specialties Inc. Term Loan C due 12/08/10 B1 800,000 808,000 ====================================================================================== DIVERSIFIED COMMERCIAL SERVICES-1.56% Coinmach Corp. Term Loan B due 07/25/09 B1 1,210,000 1,222,100 - -------------------------------------------------------------------------------------- Iron Mountain, Inc. Term Loan B due 02/15/08 Ba3 1,144,250 1,154,262 - -------------------------------------------------------------------------------------- JohnsonDiversey, Inc. Term Loan A due 05/03/08 Ba3 568,560 569,745 - -------------------------------------------------------------------------------------- US Investigations Services, Inc. Term Loan due 12/31/08 B1 511,445 514,002 - -------------------------------------------------------------------------------------- Walter Industries, Inc. Term Loan B due 04/15/10 Ba2 319,983 321,583 ====================================================================================== 3,781,692 ====================================================================================== DIVERSIFIED METALS & MINING-0.50% Peabody Energy Corp. Revolving Loan due 03/21/08(e) Ba1 1,250,000 1,225,000 ====================================================================================== DRUG RETAIL-1.02% Alimentation Couche-Tard Term Loan due 12/17/10 Ba2 400,000 402,500 - -------------------------------------------------------------------------------------- General Nutrition Cos., Inc. Term Loan B due 12/15/09 B1 500,000 503,125 - -------------------------------------------------------------------------------------- NBTY Inc. Term Loan C due 03/15/07 Ba2 268,154 269,663 - --------------------------------------------------------------------------------------
F-2
MOODY'S RATING(a) PRINCIPAL (UNAUDITED) AMOUNT VALUE - -------------------------------------------------------------------------------------- DRUG RETAIL-(CONTINUED) Rite Aid Corp. Term Loan due 04/30/08 B1 $1,280,000 $ 1,300,400 ====================================================================================== 2,475,688 ====================================================================================== ELECTRIC UTILITIES-1.18% AES NY Funding Term Loan due 04/30/08 B2 1,102,500 1,110,217 - -------------------------------------------------------------------------------------- CenterPoint Energy, Inc. Term Loan B due 10/07/06 Ba1 997,297 1,008,517 - -------------------------------------------------------------------------------------- Tucson Electric Power Co. Term Loan B due 11/14/06 Ba2 750,000 751,875 ====================================================================================== 2,870,609 ====================================================================================== ELECTRICAL COMPONENTS & EQUIPMENT-0.10% Dynatech Corp. (Acterna) Term Loan due 10/14/08(f)(g)(h) -- -- 248,710 ====================================================================================== ELECTRONIC EQUIPMENT & INSTRUMENTS-0.84% Amkor Technology, Inc. Term Loan B due 01/31/06 Ba3 794,000 804,917 - -------------------------------------------------------------------------------------- Amphenol Corp. Term Loan B1 due 05/06/10 Ba2 1,227,000 1,235,436 ====================================================================================== 2,040,353 ====================================================================================== EMPLOYMENT SERVICES-0.40% AMN Healthcare Services, Inc. Term Loan B due 10/02/08 Ba2 750,000 755,156 - -------------------------------------------------------------------------------------- Cross Country Healthcare, Inc. Term Loan B due 06/05/09 Ba1 208,759 210,325 ====================================================================================== 965,481 ====================================================================================== ENVIRONMENTAL SERVICES-1.92% Allied Waste Industries, Inc. Revolving Loan due 05/07/05(e) Ba3 1,000,000 964,583 - -------------------------------------------------------------------------------------- Term Loan B due 01/15/10 Ba3 1,234,375 1,249,548 - -------------------------------------------------------------------------------------- Term Loan C due 01/15/10 Ba3 1,000,000 1,012,292 - -------------------------------------------------------------------------------------- Safety-Kleen Corp.(d)(i) Term Loan B due 04/30/05 -- -- 512,903 - -------------------------------------------------------------------------------------- Term Loan C due 04/30/06 -- -- 512,903 - -------------------------------------------------------------------------------------- Waste Connections, Inc. Term Loan due 10/22/10 Ba2 408,333 412,076 ====================================================================================== 4,664,305 ====================================================================================== FOOD DISTRIBUTORS-3.75% B&G Foods, Inc. Term Loan due 08/31/09 B1 179,550 180,897 - -------------------------------------------------------------------------------------- Dean Foods Co. Term Loan A-1 due 07/15/07 Ba1 786,250 790,181 - -------------------------------------------------------------------------------------- Enodis Holdings Ltd. Term Loan B due 02/20/08 Ba3 1,600,000 1,598,000 - -------------------------------------------------------------------------------------- Land O' Lakes, Inc. Term Loan B due 07/11/08 B1 306,870 306,870 - --------------------------------------------------------------------------------------
MOODY'S RATING(a) PRINCIPAL (UNAUDITED) AMOUNT VALUE
- -------------------------------------------------------------------------------------- FOOD DISTRIBUTORS-(CONTINUED) Leiner Health Products Group, Inc. Term Loan A due 03/31/04 -- $3,028,689 $ 3,028,689 - -------------------------------------------------------------------------------------- National Dairy Holdings, L.P. Term Loan B due 03/31/09 Ba2 491,250 491,557 - -------------------------------------------------------------------------------------- Merisant Co. Term Loan B due 01/11/10 B1 683,826 690,236 - -------------------------------------------------------------------------------------- Vitality Foodservice, Inc. Revolving Loan due 09/25/08(e) B1 154,795 78,946 - -------------------------------------------------------------------------------------- Term Loan A due 09/25/08 B1 2,634,118 1,343,400 - -------------------------------------------------------------------------------------- Term Loan B due 09/24/10 B1 1,136,446 579,587 ====================================================================================== 9,088,363 ====================================================================================== FOOD RETAIL-0.19% DS Waters Enterprises L.P. Term Loan B due 11/07/09 B1 430,000 435,196 ====================================================================================== FOREST PRODUCTS-1.01% Graphic Packaging International Corp. Term Loan B due 08/08/10 B1 2,388,000 2,415,612 ====================================================================================== HEALTH CARE DISTRIBUTORS-3.18% Accredo Health, Inc. Term Loan B due 03/31/09 Ba2 1,228,125 1,237,336 - -------------------------------------------------------------------------------------- Caremark RX, Inc. Term Credit due 03/31/06 Ba2 1,945,350 1,955,077 - -------------------------------------------------------------------------------------- Kindred Healthcare, Inc. Term Loan due 04/02/08 -- 701,901 700,146 - -------------------------------------------------------------------------------------- Mediq/Prn Life Support Service(d)(f)(j) Term Loan B due 06/13/04 -- 3,665,624 3,546,169 - -------------------------------------------------------------------------------------- National MENTOR, Inc. Term Loan B due 04/30/09 Ba3 294,028 291,088 ====================================================================================== 7,729,816 ====================================================================================== HEALTH CARE EQUIPMENT-1.37% Alaris Medical Inc. Term Loan B due 06/30/09 B1 150,020 151,521 - -------------------------------------------------------------------------------------- CONMED Corp. Term Loan C due 12/15/09 Ba3 655,491 662,046 - -------------------------------------------------------------------------------------- Dade Behring Inc. Term Loan B due 10/03/08 B1 1,703,867 1,719,486 - -------------------------------------------------------------------------------------- DJ Orthopedics Inc. Term Loan B due 05/15/09 B1 190,000 191,425 - -------------------------------------------------------------------------------------- Empi, Inc. Term Loan B due 11/24/09 B1 225,000 227,250 - -------------------------------------------------------------------------------------- Hanger Orthopedic Group, Inc. Term Loan B due 09/30/09 B1 269,325 272,018 - -------------------------------------------------------------------------------------- Rotech Healthcare Inc. Term Loan due 03/31/08 Ba2 108,549 109,634 ====================================================================================== 3,333,380 ====================================================================================== HEALTH CARE FACILITIES-2.76% Beverly Enterprises, Inc. Term Loan due 10/22/08 Ba3 95,760 96,718 - --------------------------------------------------------------------------------------
F-3
MOODY'S RATING(a) PRINCIPAL (UNAUDITED) AMOUNT VALUE - -------------------------------------------------------------------------------------- HEALTH CARE FACILITIES-(CONTINUED) Community Health Systems, Inc. Term Loan B due 07/16/10 Ba3 $1,631,685 $ 1,647,493 - -------------------------------------------------------------------------------------- DaVita Inc. Term Loan B due 03/31/09 Ba3 988,447 993,699 - -------------------------------------------------------------------------------------- Genesis Health Ventures, Inc. Term Loan B due 12/01/10 Ba3 474,850 477,224 - -------------------------------------------------------------------------------------- IASIS Healthcare Corp. Term Loan due 02/07/09 B1 1,748,000 1,765,480 - -------------------------------------------------------------------------------------- Mariner Health Care, Inc. Term Loan due 01/02/10 Ba3 349,378 352,217 - -------------------------------------------------------------------------------------- Triad Hospitals, Inc. Term Loan B due 09/30/08 Ba3 1,353,175 1,370,090 ====================================================================================== 6,702,921 ====================================================================================== HEALTH CARE SUPPLIES-1.14% Express Scripts, Inc. Term Loan B due 03/31/08 Ba1 1,769,231 1,791,346 - -------------------------------------------------------------------------------------- Fisher Scientific International Term Loan C due 03/31/10 Ba3 969,520 976,791 ====================================================================================== 2,768,137 ====================================================================================== HOME FURNISHINGS-0.00% Imperial Home Decor Group, Inc. (The) Term Loan due 03/30/06(j)(k) -- 416,862 8,337 ====================================================================================== HOTELS, RESORTS & CRUISE LINES-0.36% Wyndham International, Inc. Term Loan II due 04/01/06 -- 848,078 810,763 - -------------------------------------------------------------------------------------- Term Loan 1 due 06/30/06 -- 59,382 56,116 ====================================================================================== 866,879 ====================================================================================== HOUSEHOLD APPLIANCES-0.35% Goodman Global Holdings, Inc. Term Loan B due 11/21/09 Ba2 850,000 856,375 ====================================================================================== HOUSEHOLD PRODUCTS-3.07% Central Garden & Pet Co. Term Loan due 05/14/09 Ba2 480,585 485,391 - -------------------------------------------------------------------------------------- Paint Sundry Brands Corp. Term Loan B due 08/11/05 B1 700,743 693,735 - -------------------------------------------------------------------------------------- Term Loan C due 08/11/06 B1 756,448 748,884 - -------------------------------------------------------------------------------------- Rayovac Corp. Term Loan B due 09/30/09 B1 721,546 726,957 - -------------------------------------------------------------------------------------- Rent-A-Center Term Loan due 05/28/09 Ba2 1,751,200 1,768,712 - -------------------------------------------------------------------------------------- Scotts Co. (The) Term Loan due 09/30/10 Ba1 1,391,481 1,406,266 - -------------------------------------------------------------------------------------- United Industries Co. Loan B due 01/20/06 B1 1,607,785 1,615,824 ====================================================================================== 7,445,769 ======================================================================================
MOODY'S RATING(a) PRINCIPAL (UNAUDITED) AMOUNT VALUE
- -------------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES-3.67% AMSTED Industries Inc. Term Loan B due 04/10/09 B1 $ 497,500 $ 501,853 - -------------------------------------------------------------------------------------- Dresser Inc. Term Loan B due 04/10/09 Ba3 754,743 764,177 - -------------------------------------------------------------------------------------- Flowserve Corp. Term Loan C due 06/01/09 Ba3 1,163,682 1,172,895 - -------------------------------------------------------------------------------------- Messer Grieshem Term Loan B due 04/30/09 Ba2 752,902 759,490 - -------------------------------------------------------------------------------------- Term Loan C due 04/20/08 Ba2 1,358,854 1,370,744 - -------------------------------------------------------------------------------------- Mueller Group, Inc. Term Loan due 05/31/08 B1 1,770,531 1,774,958 - -------------------------------------------------------------------------------------- Norcross Safety Products LLC Term Loan due 03/20/09 B1 533,212 537,877 - -------------------------------------------------------------------------------------- TriMas Corp. Term Loan B due 12/31/09 B1 1,398,417 1,398,417 - -------------------------------------------------------------------------------------- Unifrax Corp. Term Loan due 09/04/09 B1 621,875 628,482 ====================================================================================== 8,908,893 ====================================================================================== INDUSTRIAL GASES-0.93% Ferrellgas, L.P. Term Loan C due 06/17/06 B1 2,273,836 2,262,467 ====================================================================================== INDUSTRIAL MACHINERY -- 2.25% CLFX Corp. Term Loan B due 05/30/09 Ba3 481,250 481,551 - -------------------------------------------------------------------------------------- Term Loan C due 05/30/10 Ba3 200,000 200,000 - -------------------------------------------------------------------------------------- Demag Investment Term Loan B due 09/30/10 -- 500,000 495,000 - -------------------------------------------------------------------------------------- Term Loan C due 09/30/11 -- 500,000 496,250 - -------------------------------------------------------------------------------------- Rexnord Corp. Term Loan due 11/25/09 B1 1,187,616 1,199,492 - -------------------------------------------------------------------------------------- SPX Corp. Term Loan B due 09/30/09 Ba2 2,575,037 2,600,787 ====================================================================================== 5,473,080 ====================================================================================== INTEGRATED TELECOMMUNICATION SERVICES-3.15% Cincinnati Bell Inc. Term Loan D due 03/31/08 B1 2,493,750 2,524,922 - -------------------------------------------------------------------------------------- CSG Systems, Inc. Term Loan B due 02/28/08 Ba3 1,000,000 997,500 - -------------------------------------------------------------------------------------- Time Warner Telecom Inc. Term Loan B due 12/31/07 B1 2,970,000 2,988,562 - -------------------------------------------------------------------------------------- TSI Telecommunication Services Inc. Term Loan B due 12/31/06 Ba3 1,128,453 1,131,274 ====================================================================================== 7,642,258 ======================================================================================
F-4
MOODY'S RATING(a) PRINCIPAL (UNAUDITED) AMOUNT VALUE - -------------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES-0.21% Data Transmission Network, LLC Term Loan due 03/31/04 B3 $ 6,572 $ 5,586 - -------------------------------------------------------------------------------------- Term Loan JR due 03/31/09 B3 88,119 74,901 - -------------------------------------------------------------------------------------- Term Loan SR due 09/30/08 B3 514,756 437,543 ====================================================================================== 518,030 ====================================================================================== LEISURE FACILITIES-1.48% 24 Hour Fitness Worldwide Inc. Term Loan due 07/01/09 B1 750,000 755,625 - -------------------------------------------------------------------------------------- AMF Bowling Worldwide, Inc. Term Loan due 02/28/08 B1 1,174,615 1,179,754 - -------------------------------------------------------------------------------------- Regal Cinemas, Inc. Term Loan D due 06/30/09 Ba2 1,650,138 1,667,156 ====================================================================================== 3,602,535 ====================================================================================== LEISURE PRODUCTS-0.90% Cinemark USA, Inc. Term Loan C due 03/31/08 Ba3 373,125 376,390 - -------------------------------------------------------------------------------------- Hollywood Entertainment Corp. Term Loan B due 03/31/08 Ba3 543,750 547,828 - -------------------------------------------------------------------------------------- Vivendi Universal Term Loan B due 06/30/08 Ba2 1,250,000 1,258,594 ====================================================================================== 2,182,812 ====================================================================================== METAL & GLASS CONTAINERS-2.73% Ball Corp. Term Loan B due 12/19/09 Ba2 534,009 536,679 - -------------------------------------------------------------------------------------- Berry Plastics Corp. Term Loan C due 06/30/10 B1 1,477,547 1,484,935 - -------------------------------------------------------------------------------------- Graham Packaging Co., L.P. Tranch 1 due 02/14/10 B2 1,743,860 1,764,568 - -------------------------------------------------------------------------------------- Greif Brothers Corp. Term Loan due 08/23/09 Ba3 678,750 683,558 - -------------------------------------------------------------------------------------- Kerr Group, Inc. Term Loan due 08/13/10 B1 158,372 159,230 - -------------------------------------------------------------------------------------- Silgan Containers Corp. Term Loan B due 11/30/08 Ba3 1,975,000 1,991,047 ====================================================================================== 6,620,017 ====================================================================================== MOVIES & ENTERTAINMENT-0.59% LodgeNet Entertainment Corp. Term Loan due 06/30/06 B1 433,569 434,292 - -------------------------------------------------------------------------------------- Rainbow Media Holdings, Inc. Term Loan C due 03/31/09 Ba2 997,498 1,003,733 ====================================================================================== 1,438,025 ====================================================================================== OFFICE SERVICES & SUPPLIES-2.37% EMED Co., Inc. Term Loan B due 04/30/06 -- 1,825,674 1,811,982 - -------------------------------------------------------------------------------------- Global Imaging Systems, Inc. Term Loan due 06/25/09 Ba3 470,967 474,499 - --------------------------------------------------------------------------------------
MOODY'S RATING(a) PRINCIPAL (UNAUDITED) AMOUNT VALUE - --------------------------------------------------------------------------------------
OFFICE SERVICES & SUPPLIES-(CONTINUED) Identity Group Revolving Loan due 05/07/05(e) B3 $2,062,500 $ 1,216,875 - -------------------------------------------------------------------------------------- Term Loan B due 05/11/07 -- 2,525,000 1,489,750 - -------------------------------------------------------------------------------------- Per-Se Technologies, Inc. Term Loan B due 09/10/08 B2 760,500 763,827 ====================================================================================== 5,756,933 ====================================================================================== OIL & GAS REFINING, MARKETING & TRANSPORTATION-1.20% Magellan Midstream Holding Co. Term Loan A due 06/20/08 Ba3 298,512 301,497 - -------------------------------------------------------------------------------------- Magellan Midstream Partners, L.P. Term Loan C due 08/06/08 Ba3 250,000 251,562 - -------------------------------------------------------------------------------------- Premcor Refining Group, Inc. Term Loan due 02/11/06 Ba2 1,500,000 1,515,000 - -------------------------------------------------------------------------------------- Williams RMT Co. Term Loan B due 05/30/07 B1 845,750 851,036 ====================================================================================== 2,919,095 ====================================================================================== PACKAGED FOODS & MEATS-1.11% Birds Eye Foods Inc. Term Loan B due 08/12/08 Ba3 469,507 473,616 - -------------------------------------------------------------------------------------- Del Monte Foods Co. Term Loan B due 12/20/10 Ba3 1,062,712 1,073,870 - -------------------------------------------------------------------------------------- Dole Food Co., Inc. Term Loan C due 09/28/08 Ba3 436,426 441,882 - -------------------------------------------------------------------------------------- Michael Foods Inc. Term Loan B due 11/21/10 B1 700,000 710,500 ====================================================================================== 2,699,868 ====================================================================================== PAPER PACKAGING-1.51% Jefferson Smurfit Group PLC Term Loan B due 03/31/07 -- 1,134,724 1,143,234 - -------------------------------------------------------------------------------------- Printpack Inc. Term Loan C due 03/31/09 Ba3 985,000 989,925 - -------------------------------------------------------------------------------------- Smurfit-Stone Container Corp. Term Loan C due 06/30/09 -- 1,523,269 1,534,693 ====================================================================================== 3,667,852 ====================================================================================== PERSONAL PRODUCTS-0.72% Tempur World, Inc. Term Loan B due 06/30/09 B1 756,200 759,036 - -------------------------------------------------------------------------------------- Weight Watchers International Term Loan B due 12/31/09 Ba1 870,776 879,484 - -------------------------------------------------------------------------------------- Term Loan C due 12/31/09 Ba1 111,787 112,904 ====================================================================================== 1,751,424 ====================================================================================== PHARMACEUTICALS-1.08% aaiPharma Inc. Term Loan due 12/01/09 B2 616,122 622,283 - -------------------------------------------------------------------------------------- Alpharma Inc. Term Loan A due 10/05/07 B2 1,152,495 1,143,851 - --------------------------------------------------------------------------------------
F-5
MOODY'S RATING(a) PRINCIPAL (UNAUDITED) AMOUNT VALUE - -------------------------------------------------------------------------------------- PHARMACEUTICALS-(CONTINUED) Term Loan B due 10/05/08 B2 $ 843,950 $ 843,950 ====================================================================================== 2,610,084 ====================================================================================== PRECIOUS METALS & MINERALS-0.46% IMC Global Inc. Term Loan B due 11/17/06 Ba3 1,113,701 1,123,911 ====================================================================================== PUBLISHING-5.72% American Media, Inc. Term Loan due 04/01/07 Ba3 2,440,904 2,465,313 - -------------------------------------------------------------------------------------- CanWest Media, Inc. Term Loan D due 05/15/09 -- 1,989,744 2,009,641 - -------------------------------------------------------------------------------------- Dex Media East LLC Term Loan B due 05/08/09 Ba3 739,500 756,139 - -------------------------------------------------------------------------------------- Dex Media West LLC Revolving Loan due 09/10/09(e) Ba3 235,849 229,560 - -------------------------------------------------------------------------------------- Term Loan B due 03/09/10 Ba3 2,765,485 2,800,919 - -------------------------------------------------------------------------------------- Primedia Inc. Term Loan B due 06/30/09 B3 664,717 644,360 - -------------------------------------------------------------------------------------- RH Donnelley Corp. Term Loan B-2 due 06/30/10 Ba3 2,472,722 2,499,769 - -------------------------------------------------------------------------------------- Sun Media Corp. Term Loan B due 02/07/09 Ba2 718,288 721,879 - -------------------------------------------------------------------------------------- TransWestern Publishing Co. Term Loan B due 06/30/08 Ba3 231,756 233,494 - -------------------------------------------------------------------------------------- Ziff Davis Media Inc. Term Loan B due 03/31/07 -- 1,589,124 1,517,613 ====================================================================================== 13,878,687 ====================================================================================== RAILROADS-0.08% Pacer International, Inc. Term Loan due 06/09/10 B1 195,817 197,163 ====================================================================================== SEMICONDUCTORS-1.30% AMI Semiconductors, Inc. Term Loan due 09/26/08 B1 997,500 1,007,475 - -------------------------------------------------------------------------------------- Fairchild Semiconductor International, Inc. Term Loan due 09/26/08 Ba3 1,233,800 1,247,680 - -------------------------------------------------------------------------------------- On Semiconductor Corp. Term Loan C due 08/04/07 B3 903,420 907,372 ====================================================================================== 3,162,527 ====================================================================================== SPECIALTY CHEMICALS-2.60% Cognis Deutschland GmbH & Co. KG Term Loan B due 01/31/10 Ba2 500,000 500,750 - -------------------------------------------------------------------------------------- Term Loan C due 01/31/11 Ba2 500,000 502,000 - -------------------------------------------------------------------------------------- Huntsman ICI Chemicals LLC Term Loan B due 06/30/07 B1 1,322,435 1,329,047 - -------------------------------------------------------------------------------------- Term Loan C due 06/30/08 B1 599,973 602,973 - -------------------------------------------------------------------------------------- Nalco Co. Term Loan B due 11/04/10 B1 1,700,000 1,706,729 - --------------------------------------------------------------------------------------
MOODY'S RATING(a) PRINCIPAL (UNAUDITED) AMOUNT VALUE
- -------------------------------------------------------------------------------------- SPECIALTY CHEMICALS-(CONTINUED) Noveon, Inc. Term Loan B due 12/31/09 B1 $1,650,000 $ 1,666,500 ====================================================================================== 6,307,999 ====================================================================================== STEEL-0.06% UCAR Finance Co. Term Loan B2 due 12/31/07 Ba3 155,755 155,949 ====================================================================================== TEXTILES-0.17% Joan Fabrics Corp. Term Loan B due 06/30/05 -- 249,420 239,443 - -------------------------------------------------------------------------------------- Term Loan C due 06/30/06 -- 170,492 163,672 ====================================================================================== 403,115 ====================================================================================== TOBACCO-0.38% Commonwealth Brands, Inc. Term Loan due 08/28/07 B1 913,792 916,647 ====================================================================================== TRUCKING-0.24% Quality Distribution Term Loan due 11/13/09 B1 249,375 251,245 - -------------------------------------------------------------------------------------- Sirva, Inc. Term Loan due 12/01/10 B1 341,765 341,195 ====================================================================================== 592,440 ====================================================================================== WIRELESS TELECOMMUNICATION SERVICES-5.55% AAT Communications Term Loan A due 08/13/09 B3 1,501,371 1,501,371 - -------------------------------------------------------------------------------------- Centennial de Puerto Rico Term Loan B due 05/31/07 B3 1,260,494 1,263,330 - -------------------------------------------------------------------------------------- Dobson Operating Co. Term Loan due 03/31/10 Ba3 1,895,250 1,918,941 - -------------------------------------------------------------------------------------- Leap Wireless International, Inc. Loan due 09/30/08(k) -- 2,000,000 1,285,000 - -------------------------------------------------------------------------------------- Nextel Communications, Inc. Term Loan E due 12/15/10 Ba2 3,713,029 3,732,059 - -------------------------------------------------------------------------------------- Rural Cellular Corp. Term Loan B due 09/30/08 B2 969,849 971,870 - -------------------------------------------------------------------------------------- Term Loan C due 03/31/09 B2 969,849 971,870 - -------------------------------------------------------------------------------------- Western Wireless Corp. Term Loan B due 09/30/08 B2 1,826,776 1,831,343 ====================================================================================== 13,475,784 ====================================================================================== Total Senior Secured Floating Rate Interests (Cost $245,302,372) 230,064,670 ======================================================================================
SHARES DOMESTIC STOCKS & OTHER EQUITY INTERESTS-0.00% AIR FREIGHT & LOGISTICS-0.00% Gemini Air Cargo, Inc.-Pfd.(d)(l) 29,793 0 ======================================================================
F-6
MARKET SHARES VALUE - ---------------------------------------------------------------------- APPAREL, ACCESSORIES & LUXURY GOODS-0.00% Glenoit Inc.(d)(l) 24,421 $ 0 ====================================================================== COMPUTER HARDWARE-0.00% DecisionOne Corp.(d)(l) 37,286 0 ====================================================================== FOOD DISTRIBUTORS-0.00% Leiner Health Products Group, Inc.-Pfd.(d)(l) 138 0 - ---------------------------------------------------------------------- Vitality Foodservice Inc.-Pfd.(d)(l) 26 0 ====================================================================== 0 ====================================================================== HOME FURNISHINGS-0.00% IHDG Realty Inc.(d)(l) 150,070 0 - ----------------------------------------------------------------------
- ----------------------------------------------------------------------
MARKET SHARES VALUE HOME FURNISHINGS-(CONTINUED) Imperial Home Decor Group, Inc. (The)(d)(f)(l) 150,070 $ 0 ====================================================================== 0 ====================================================================== Total Domestic Stocks & Other Equity Interests (Cost $2,149,379) 0 ====================================================================== MONEY MARKET FUNDS-6.38% Liquid Assets Portfolio(m) 7,747,259 7,747,259 - ---------------------------------------------------------------------- STIC Prime Portfolio(m) 7,747,259 7,747,259 ====================================================================== Total Money Market Funds (Cost $15,494,518) 15,494,518 ====================================================================== TOTAL INVESTMENTS-101.15% (Cost $262,946,269) 245,559,188 ====================================================================== OTHER ASSETS LESS LIABILITIES-(1.15)% (2,802,066) ====================================================================== NET ASSETS-100.00% $242,757,122 ______________________________________________________________________ ======================================================================
Abbreviations: DIP - Debtor in Possession Pfd. - Preferred
Notes to Schedule of Investments: (a) Ratings are assigned by Moody's Investors Service, Inc. ("Moody's"). (b) Senior secured corporate loans and senior secured debt securities are, at present, not readily marketable and may be subject to contractual and legal restrictions on sale. Senior secured corporate loans and senior secured debt securities in the Fund's portfolio generally have variable rates which adjust to a base, such as the London Inter-Bank Offered Rate ("LIBOR"), on set dates, typically every 30 days but not greater than one year; and/or have interest rates that float at a margin above a widely recognized base lending rate such as the Prime Rate of a designated U.S. bank. (c) Senior secured floating rate interests often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, it is anticipated that the senior secured floating rate interests will have an expected average life of three to five years. (d) Security is fair valued in accordance with the procedures established by the Board of Trustees. (e) A portion of this holding is subject to unfunded loan commitments. See Note 8. (f) Consists of more than one class of securities traded together as a unit. (g) The $102,798 principal amount loan is a unit consisting of the following components: $102,798 Term Loan market value $144,469 value of Acterna Inc. stock with 13,414 shares $1,443 value of Eningen Realty Inc. stock with 134 shares (h) Security not registered under the Securities Act of 1933, as amended (e.g. the security was purchased in a Rule 144A transaction or a Regulation D transaction). The security may be resold only pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The Fund has no rights to demand registration of these securities. The market value of this security at 12/31/03 represented 0.10% of the Fund's net assets. (i) Borrower has emerged from bankruptcy and has restructured the loan. The $7,174,469 par value loan will be restructured as a unit consisting of the following components: $547,252 Term Note 1.751 shares of Series A Preferred Stock in SK Holding Co., Inc. at $25.00 per share nominal 102,803 shares of Common Stock in Safety-Kleen Hold Co., Inc., at $12.00 per share nominal (j) A portion of this holding is subject to a letter of credit. (k) Defaulted security. Currently, the issuer is partially or fully in default with respect to interest payments. (l) Non-income producing security. (m) The money market fund and the Fund are affiliated by having the same investment advisor. See Note 3. See accompanying notes which are an integral part of the financial statements. F-7 STATEMENT OF ASSETS AND LIABILITIES December 31, 2003 ASSETS: Investments, at market value (cost $247,451,751) $230,064,670 - ----------------------------------------------------------- Investments in affiliated money market funds (cost $15,494,518) 15,494,518 - ----------------------------------------------------------- Cash 274,055 - ----------------------------------------------------------- Receivables for: Investments sold 17,863 - ----------------------------------------------------------- Fund shares sold 141,845 - ----------------------------------------------------------- Dividends and interest 992,409 - ----------------------------------------------------------- Investment for deferred compensation and retirement plans 13,027 - ----------------------------------------------------------- Other assets 28,308 =========================================================== Total assets 247,026,695 ___________________________________________________________ =========================================================== LIABILITIES: Payables for: Investments purchased 3,740,966 - ----------------------------------------------------------- Fund shares reacquired 10,419 - ----------------------------------------------------------- Dividends 259,055 - ----------------------------------------------------------- Deferred compensation and retirement plans 17,480 - ----------------------------------------------------------- Accrued distribution fees 97,857 - ----------------------------------------------------------- Accrued transfer agent fees 31,387 - ----------------------------------------------------------- Accrued operating expenses 112,409 =========================================================== Total liabilities 4,269,573 =========================================================== Net assets applicable to shares outstanding $242,757,122 ___________________________________________________________ =========================================================== NET ASSETS CONSIST OF: Shares of beneficial interest $303,194,102 - ----------------------------------------------------------- Undistributed net investment income 175,968 - ----------------------------------------------------------- Undistributed net realized gain (loss) from investment securities (43,225,867) - ----------------------------------------------------------- Unrealized appreciation (depreciation) of investment securities (17,387,081) =========================================================== $242,757,122 ___________________________________________________________ =========================================================== NET ASSETS: Class B $221,963,942 ___________________________________________________________ =========================================================== Class C $ 20,793,180 ___________________________________________________________ =========================================================== SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE: Class B 25,300,248 ___________________________________________________________ =========================================================== Class C 2,376,678 ___________________________________________________________ =========================================================== Class B: Net asset value and offering price per share $ 8.77 ___________________________________________________________ =========================================================== Class C: Net asset value and offering price per share $ 8.75 ___________________________________________________________ ===========================================================
See accompanying notes which are an integral part of the financial statements. F-8 STATEMENT OF OPERATIONS For the year ended December 31, 2003 INVESTMENT INCOME: Interest $12,811,259 - ------------------------------------------------------------------------- Dividends from affiliated money market funds 135,177 - ------------------------------------------------------------------------- Facility fees earned 852,131 ========================================================================= Total investment income 13,798,567 ========================================================================= EXPENSES: Advisory fees 2,483,860 - ------------------------------------------------------------------------- Administrative services fees 70,136 - ------------------------------------------------------------------------- Custodian fees 21,661 - ------------------------------------------------------------------------- Distribution fees: Class B 605,182 - ------------------------------------------------------------------------- Class C 145,397 - ------------------------------------------------------------------------- Transfer agent fees 263,869 - ------------------------------------------------------------------------- Trustees' fees 12,832 - ------------------------------------------------------------------------- Other 367,545 ========================================================================= Total expenses 3,970,482 ========================================================================= Less: Fees waived and expense offset arrangements (56,105) ========================================================================= Net expenses 3,914,377 ========================================================================= Net investment income 9,884,190 ========================================================================= REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES: Net realized gain (loss) from investment securities (6,496,705) - ------------------------------------------------------------------------- Change in net unrealized appreciation of investment securities 14,410,573 ========================================================================= Net gain from investment securities 7,913,868 ========================================================================= Net increase in net assets resulting from operations $17,798,058 _________________________________________________________________________ =========================================================================
See accompanying notes which are an integral part of the financial statements. F-9 STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2003 and 2002
2003 2002 - --------------------------------------------------------------------------------------------- OPERATIONS: Net investment income $ 9,884,190 $ 15,007,245 - --------------------------------------------------------------------------------------------- Net realized gain (loss) from investment securities (6,496,705) (16,353,786) - --------------------------------------------------------------------------------------------- Change in net unrealized appreciation of investment securities 14,410,573 11,349,432 ============================================================================================= Net increase in net assets resulting from operations 17,798,058 10,002,891 ============================================================================================= Distributions to shareholders from net investment income: Class B (9,006,161) (13,778,659) - --------------------------------------------------------------------------------------------- Class C (668,536) (1,059,967) ============================================================================================= Decrease in net assets resulting from distributions (9,674,697) (14,838,626) ============================================================================================= Share transactions-net: Class B (51,825,825) (87,082,277) - --------------------------------------------------------------------------------------------- Class C (220,648) (10,516,173) ============================================================================================= Net increase (decrease) in net assets resulting from share transactions (52,046,473) (97,598,450) ============================================================================================= Net increase (decrease) in net assets (43,923,112) (102,434,185) ============================================================================================= NET ASSETS: Beginning of year 286,680,234 389,114,419 ============================================================================================= End of year (including undistributed net investment income of $175,968 and $203,780 for 2003 and 2002, respectively) $242,757,122 $ 286,680,234 _____________________________________________________________________________________________ =============================================================================================
See accompanying notes which are an integral part of the financial statements. F-10 STATEMENT OF CASH FLOWS For the year ended December 31, 2003 CASH PROVIDED BY OPERATING ACTIVITIES: Net increase in net assets resulting from operations $ 17,798,058 =========================================================================== ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS TO NET CASH PROVIDED BY OPERATIONS: Increase in receivables 66,419 - --------------------------------------------------------------------------- Decrease in payables (102,236) - --------------------------------------------------------------------------- Net realized and unrealized gain on investments (7,914,854) - --------------------------------------------------------------------------- Amortization (1,191,126) - --------------------------------------------------------------------------- Proceeds from principal payments and sales of senior floating rate interests 236,885,670 - --------------------------------------------------------------------------- Purchases of senior secured floating rate interests (175,745,007) - --------------------------------------------------------------------------- Purchases of short-term investments (670,172,821) - --------------------------------------------------------------------------- Proceeds from sales and maturities of short-term investments 670,313,000 =========================================================================== Net cash provided by operating activities 69,937,103 ___________________________________________________________________________ =========================================================================== CASH USED IN FINANCING ACTIVITIES: Proceeds from capital shares sold 13,412,998 - --------------------------------------------------------------------------- Disbursements from capital shares repurchased (71,227,631) - --------------------------------------------------------------------------- Dividends paid to shareholders (4,124,431) =========================================================================== Net cash provided by (used in) financing activities (61,939,064) =========================================================================== Net increase in cash 7,998,039 - --------------------------------------------------------------------------- Cash and cash equivalents at beginning of period 7,770,534 =========================================================================== Cash and cash equivalents at end of period $ 15,768,573 ___________________________________________________________________________ =========================================================================== NON-CASH FINANCING ACTIVITIES: Value of capital shares issued in reinvestment of dividends paid to shareholders $ 5,723,908 ___________________________________________________________________________ ===========================================================================
See accompany notes which are an integral part of the financial statements. F-11 NOTES TO FINANCIAL STATEMENTS December 31, 2003 NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM Floating Rate Fund (the "Fund") is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a continuously offered non-diversified, closed-end management investment company. The Fund currently offers multiple classes of shares. Matters affecting each class will be voted on exclusively by the shareholders of such class. The Fund's investment objective is to provide as high a level of current income and preservation of capital as is consistent with investment in senior secured corporate loans and senior secured debt securities. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. SECURITY VALUATIONS -- The Fund invests primarily in senior secured corporate loans ("Corporate Loans") and senior secured debt securities ("Corporate Debt Securities") that meet credit standards established by its investment advisor, A I M Advisors, Inc. (the "Advisor") and its sub- advisor, INVESCO Senior Secured Management, Inc., (the "Sub-Advisor"). The Sub-Advisor, under the supervision of the Advisor, values the Corporate Loans and Corporate Debt Securities in accordance with guidelines adopted and periodically reviewed by the Fund's Board of Trustees. Under the Fund's current guidelines, Corporate Loans and Corporate Debt Securities for which an active secondary market exists to a reliable degree in the opinion of the Sub-Advisor and for which the Sub-Advisor can obtain one or more quotations from banks or dealers in Corporate Loans and Corporate Debt Securities will be valued by the Sub-Advisor utilizing daily bid quotes. With respect to illiquid securities, i.e., Corporate Loans and Corporate Debt Securities for which an active secondary market does not exist to a reliable degree in the opinion of the Sub-Advisor, and with respect to securities whose bid quotes the Sub-Advisor believes do not accurately reflect fair value, such Corporate Loans and Corporate Debt Securities will be valued by the Sub-Advisor at fair value, as determined in good faith by or under the supervision of the Board of Trustees pursuant to procedures specifically authorized by the Board of Trustees, and which is intended to approximate market value. The Sub-Advisor believes that Intermediate Participants selling Corporate Loans or otherwise involved in a Corporate Loan transaction may tend, in valuing Corporate Loans for their own accounts, to be less sensitive to interest rate and credit quality changes and, accordingly, the Sub-Advisor may not rely solely on such valuations in valuing the Corporate Loans for the Fund's account. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a settlement 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. Facility Fees received may be amortized over the life of the loan. Other income, including amendment fees, commitment fees, letter of credit fees, etc., included in the Statement of Operations, are recorded as income when received by the Fund. Dividend income is recorded on the ex-dividend date. The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class. Cash and cash equivalents in the Statement of Cash Flows are comprised of cash and investments in affiliated money market funds for the purpose of investing daily available cash balances. C. DISTRIBUTIONS -- Distributions from income are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to use a portion of the proceeds from redemptions as distributions for federal income tax purposes. D. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. Any capital loss carryforwards listed are reduced for limitations, if any, to the extent required by the Internal Revenue Code. E. INTERMEDIATE PARTICIPANTS -- The Fund invests in Corporate Loans from U.S. or non-U.S. companies (the "Borrowers"). The investment of the Fund in a Corporate Loan may take the form of participation interests or assignments. If the Fund purchases a participation interest from a syndicate of lenders ("Lenders") or one of the participants in the syndicate ("Participant"), one or more of which administers the loan on behalf of all the Lenders (the "Agent Bank"), the Fund would be required to rely on the Lender that sold the participation interest not only for the enforcement of the Fund's rights against the Borrower but also for the receipt and processing of payments due to the Fund under the Corporate Loans. As such, the Fund is subject to the credit risk of the Borrower and the Participant. Lenders and Participants interposed between the Fund and a Borrower, together with Agent Banks, are referred to as "Intermediate Participants". F. SECURITIES PURCHASED ON A WHEN-ISSUED AND DELAYED DELIVERY BASIS -- The Fund may purchase and sell interests in Corporate Loans and Corporate Debt Securities and other portfolio securities on a when-issued and delayed delivery basis, with payment and delivery scheduled for a future date. No income accrues to the Fund on such interests or securities in connection with such transactions prior to the date the Fund F-12 actually takes delivery of such interests or securities. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of acquiring such securities, they may sell such securities before the settlement date. G. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES The Fund has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the Fund's average daily net assets. Under the terms of a master sub-advisory agreement between AIM and INVESCO Senior Secured Management, Inc. ("ISSM"), AIM pays ISSM at the annual rate of 0.40% of AIM's compensation on the sub-advised assets. AIM has voluntarily agreed to waive fees and/or reimburse expenses (excluding interest, taxes, fund merger and reorganization expenses, extraordinary items, including other items designated as such by the Board of Trustees and increases in expenses due to expense offset arrangements, if any) for Class B and Class C shares to the extent necessary to limit the total fund operating expenses of Class B and Class C shares to 1.50% and 1.75%, respectively. Voluntary fee waivers or reimbursements may be modified or discontinued at any time without further notice to investors. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market funds on investments by the Fund in such affiliated money market funds. For the year ended December 31, 2003, AIM waived fees of $2,809. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. For the year ended December 31, 2003, AIM was paid $70,136 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay AIM Investment Services, Inc. ("AISI"), formerly known as A I M Fund Services, Inc., a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2003, AISI retained $144,526 for such services. The Trust entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class B and Class C shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class B and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Class B shares and 0.75% of the average daily net assets of Class C shares. AIM Distributors has voluntarily agreed to limit the Class C shares plan payments to 0.50%. Of these amounts, AIM Distributors may pay a service fee up to 0.25% of the average daily net assets of the Class B or Class C shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their 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. NASD Rules also impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. AIM Distributors has agreed to waive 0.25% of the annual Distribution and Service Fee for Class C shares. Pursuant to the Plans, for the year ended December 31, 2003, the Class B and Class C shares paid $605,182 and $96,931, respectively, after AIM Distributors waived plan fees of $48,466 for Class C shares. AIM Distributors did not receive any commissions from sales of shares of the Fund during the year ended December 31, 2003. For the year ended December 31, 2003, AIM Distributors received $325,060 and $9,068 from Class B and Class C shares, respectively in early withdrawal charges imposed on redemptions of Fund shares. Certain officers and trustees of the Trust are officers and directors of AIM, AISI and/or AIM Distributors. NOTE 3--INVESTMENTS IN AFFILIATES The Fund is permitted pursuant to an exemptive order from the Securities and Exchange Commission ("SEC") and approved procedures by the Board of Trustees to invest daily available cash balances in affiliated money market funds. Each day the prior day's balance invested in the affiliated money market fund is redeemed in full and a new purchase amount is submitted to invest the current day's available cash. The table below shows the transactions in and earnings from investments in affiliated money market funds for the period ended December 31, 2003.
UNREALIZED MARKET VALUE PURCHASES PROCEEDS APPRECIATION MARKET VALUE DIVIDEND REALIZED FUND 12/31/2002 AT COST FROM SALES (DEPRECIATION) 12/31/2003 INCOME GAIN (LOSS) - ------------------------------------------------------------------------------------------------------------------------------- Liquid Assets Portfolio $3,885,267 $144,255,746 $(140,393,754) $ -- $ 7,747,259 $ 68,416 $ -- - ------------------------------------------------------------------------------------------------------------------------------- STIC Prime Portfolio 3,885,267 144,255,746 (140,393,754) -- 7,747,259 66,761 -- =============================================================================================================================== $7,770,534 $288,511,492 $(280,787,508) $ -- $15,494,518 $135,177 $ -- _______________________________________________________________________________________________________________________________ ===============================================================================================================================
NOTE 4--EXPENSE OFFSET ARRANGEMENTS Indirect expenses under expense offset arrangements are comprised of transfer agency credits resulting from Demand Deposit Account (DDA) balances in transfer agency clearing accounts and custodian credits resulting from periodic overnight cash balances at the custodian. For the year ended December 31, 2003, the Fund received reductions in transfer agency fees from AISI (an affiliate of AIM) of $3,310 and F-13 reductions in custodian fees of $1,520 under expense offset arrangements which resulted in a reduction of the Fund's total expenses of $4,830. NOTE 5--TRUSTEES FEES Trustees' fees represent remuneration paid to each Trustee of the Trust who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM and INVESCO Funds in which their deferral accounts shall be deemed to be invested. 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 that also participate in a retirement plan and receive benefits under such plan. During the year ended December 31, 2003, the Fund paid legal fees of $4,225 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. NOTE 6--BORROWINGS Effective June 26, 2003, the Fund became a participant in an uncommitted unsecured revolving credit facility with State Street Bank and Trust Company ("SSB"). The Fund may borrow up to the lesser of (i) $125,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the credit facility can borrow on a first come, first served basis. Principal on each loan outstanding shall bear interest at the bid rate quoted by SSB at the time of the request for the loan. During the reporting period, the Fund was a participant in a committed credit facility with a syndicate administered by Citibank, N.A. The Fund could borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which were parties to the credit facility could borrow on a first come, first served basis. The funds which were party to the credit facility were charged a commitment fee of 0.09% on the unused balance of the committed line. The commitment fee was allocated among the funds based on their respective average net assets for the period. The committed credit facility expired May 20, 2003. During the year ended December 31, 2003, the Fund did not borrow under either the uncommitted unsecured revolving credit facility or the committed credit facility. Additionally the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds in the account so the custodian can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank. In either case, the custodian bank will be compensated an amount equal to the Federal Funds rate plus 100 basis points. NOTE 7--REPURCHASE OFFERS The Fund is committed to conducting quarterly Repurchase Offers which are offers by the Fund to repurchase at least 5% and up to 25% of its shares. In each Repurchase Offer, the repurchase price will be the net asset value determined not more than 14 days following the repurchase request deadline and payment for all shares repurchased pursuant to these offers will be made not later than 7 days after the repurchase pricing date. Class B shares held less than four years and Class C shares held for less than one year which are repurchased by the Fund pursuant to Repurchase Offers will be subject to an early withdrawal charge of up to 3% for Class B shares and up to 1% for Class C shares. The early withdrawal charge is calculated on the lesser of the then current net asset value or the original purchase price of the shares being tendered. NOTE 8--UNFUNDED LOAN COMMITMENTS As of December 31, 2003, the Fund had unfunded loan commitments of $3,143,402, which could be extended at the option of the borrower, pursuant to the following loan agreements:
UNFUNDED BORROWER COMMITMENTS - -------------------------------------------------------------------------------- Allied Waste Industries, Inc. $ 964,583 - -------------------------------------------------------------------------------- Dex Media West LLC 229,560 - -------------------------------------------------------------------------------- Identity Group 645,313 - -------------------------------------------------------------------------------- Peabody Energy Corp. 1,225,000 - -------------------------------------------------------------------------------- Vitality Foodservice, Inc. 78,946 ================================================================================ $3,143,402 ________________________________________________________________________________ ================================================================================
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, 2003 and 2002 was as follows:
2003 2002 - -------------------------------------------------------------------------------- Distributions paid from ordinary income $9,674,697 $14,838,626 ________________________________________________________________________________ ================================================================================
Tax Components of Net Assets: As of December 31, 2003, the components of net assets on a tax basis were as follows: Undistributed ordinary income $ 28,909 - ------------------------------------------------------------------------------- Unrealized appreciation (depreciation) -- investments (17,236,440) - ------------------------------------------------------------------------------- Temporary book/tax differences (13,990) - ------------------------------------------------------------------------------- Capital loss carryforward (42,213,498) - ------------------------------------------------------------------------------- Post-October capital loss deferral (1,001,961) - ------------------------------------------------------------------------------- Shares of beneficial interest 303,194,102 =============================================================================== Total net assets $242,757,122 _______________________________________________________________________________ ===============================================================================
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales, premium amortization and the treatment of defaulted loans. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The F-14 Fund's temporary book/tax differences are the result of deferral of trustee compensation and trustee retirement plan expenses. The Fund has a capital loss carryforward for tax purposes which expires as follows:
CAPITAL LOSS EXPIRATION CARRYFORWARD - ---------------------------------------------------------- December 31, 2007 $ 453,428 - ---------------------------------------------------------- December 31, 2009 10,188,057 - ---------------------------------------------------------- December 31, 2010 21,273,718 - ---------------------------------------------------------- December 31, 2011 10,298,295 ========================================================== Total capital loss carryforward $42,213,498 __________________________________________________________ ==========================================================
NOTE 10--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities and money market funds) purchased and sold by the Portfolio during the year ended December 31, 2003 was $174,799,393 and $229,199,777, respectively.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS - ----------------------------------------------------------- Aggregate unrealized appreciation of investment securities $ 2,074,876 - ----------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (19,311,316) =========================================================== Net unrealized appreciation (depreciation) of investment securities $(17,236,440) ___________________________________________________________ =========================================================== Cost of investments for tax purposes is $262,795,628.
NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of premium amortization on restructured bonds sold, on December 31, 2003, undistributed net investment income was decreased by $237,305 and undistributed net realized gains increased by $237,305. This reclassification had no effect on the net assets of the Fund. NOTE 12--SHARE INFORMATION The Fund currently offers two different classes of shares: Class B shares and Class C shares. Both classes are sold at net asset value with no front-end sales charge. Each class imposes an early withdrawal charge on redemptions.
CHANGES IN SHARES OUTSTANDING - ----------------------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, --------------------------------------------------------- 2003 2002 -------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------------------------------- Sold: Class B 718,381 $ 6,228,263 559,733 $ 4,862,238 - ----------------------------------------------------------------------------------------------------------------------- Class C 833,690 7,239,407 430,544 3,737,815 ======================================================================================================================= Issued as reinvestment of dividends: Class B 607,360 5,256,934 878,220 7,600,841 - ----------------------------------------------------------------------------------------------------------------------- Class C 54,064 466,974 85,580 738,849 ======================================================================================================================= Reacquired: Class B (7,319,172) (63,311,022) (11,549,154) (99,545,356) - ----------------------------------------------------------------------------------------------------------------------- Class C (917,327) (7,927,029) (1,738,269) (14,992,837) ======================================================================================================================= (6,023,004) $(52,046,473) (11,333,346) $(97,598,450) _______________________________________________________________________________________________________________________ =======================================================================================================================
F-15 NOTE 13--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS B ----------------------------------------------------------- YEAR ENDED DECEMBER 31, ----------------------------------------------------------- 2003 2002 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 8.51 $ 8.64 $ 9.37 $ 9.68 $ 9.84 - ------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.33 0.38 0.60(a) 0.78 0.69(a) - ------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 0.25 (0.13) (0.73) (0.31) (0.16) ========================================================================================================================= Total from investment operations 0.58 0.25 (0.13) 0.47 0.53 ========================================================================================================================= Less dividends from net investment income (0.32) (0.38) (0.60) (0.78) (0.69) ========================================================================================================================= Net asset value, end of period $ 8.77 $ 8.51 $ 8.64 $ 9.37 $ 9.68 _________________________________________________________________________________________________________________________ ========================================================================================================================= Total return(b) 6.94% 2.88% (1.49)% 5.03% 5.49% _________________________________________________________________________________________________________________________ ========================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $221,964 $266,260 $357,841 $458,359 $439,523 _________________________________________________________________________________________________________________________ ========================================================================================================================= Ratio of expenses to average net assets 1.48%(c) 1.49% 1.38% 1.50% 1.47%(d) ========================================================================================================================= Ratio of net investment income to average net assets 3.80%(c) 4.40% 6.66% 8.18% 7.02% _________________________________________________________________________________________________________________________ ========================================================================================================================= Portfolio turnover rate 72% 56% 38% 39% 81% _________________________________________________________________________________________________________________________ =========================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and does not include withdrawal charges. (c) Ratios are based on average daily net assets of $242,072,727. (d) After fee waivers and reimbursements. Ratio of expenses to average net assets prior to the fee waivers for 1999 was 1.52%.
CLASS C ------------------------------------------------- APRIL 3, 2000 (DATE SALES YEAR ENDED DECEMBER 31, COMMENCED) TO -------------------------------- DECEMBER 31, 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 8.49 $ 8.62 $ 9.35 $ 9.63 - --------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.31 0.36 0.58(a) 0.58 - --------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 0.25 (0.14) (0.73) (0.28) =============================================================================================================== Total from investment operations 0.56 0.22 (0.15) 0.30 =============================================================================================================== Less dividends from net investment income (0.30) (0.35) (0.58) (0.58) =============================================================================================================== Net asset value, end of period $ 8.75 $ 8.49 $ 8.62 $ 9.35 _______________________________________________________________________________________________________________ =============================================================================================================== Total return(b) 6.68% 2.62% (1.75)% 3.22% _______________________________________________________________________________________________________________ =============================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $20,793 $20,421 $31,274 $28,354 _______________________________________________________________________________________________________________ =============================================================================================================== Ratio of expenses to average net assets: With fee waivers 1.73%(c) 1.74% 1.63% 1.73%(d) - --------------------------------------------------------------------------------------------------------------- Without fee waivers 1.98%(c) 1.99% 1.88% 1.98%(d) =============================================================================================================== Ratio of net investment income to average net assets 3.55%(c) 4.15% 6.40% 8.14%(d) _______________________________________________________________________________________________________________ =============================================================================================================== Portfolio turnover rate(e) 72% 56% 38% 39% _______________________________________________________________________________________________________________ ===============================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America, does not include withdrawal charges and is not annualized for periods less than one year. (c) Ratios are based on average daily net assets of $19,386,262. (d) Annualized. (e) Not annualized for periods less than one year. F-16 NOTE 14--LEGAL PROCEEDINGS ENRON CORP. V. J.P. MORGAN SECURITIES, AIM FLOATING RATE FUND, ET AL.; AIM Floating Rate Fund, along with other parties, was named as a defendant in a case filed in the United States Bankruptcy Court for the Southern District of New York on November 6, 2003. Plaintiff is seeking to declare that certain repurchases by Enron Corp. of commercial paper issued by the company from the defendants were preferential transfers that may be avoided in the bankruptcy proceeding so that they may be avoided. The aggregate amount of the repurchases from the Fund during the 90 days prior to the bankruptcy petition by Enron Corp. was $9,986,667. At this time Fund management is unable to make an assessment as to the likelihood of loss, and therefore have not recorded a liability in the financial statements for any potential loss. Your Fund's investment advisor, A I M Advisors, Inc. ("AIM"), is an indirect wholly owned subsidiary of AMVESCAP PLC ("AMVESCAP"). Another indirect wholly owned subsidiary of AMVESCAP, INVESCO Funds Group, Inc. ("IFG"), was formerly the investment advisor to the INVESCO Funds. IFG continues to serve as the investment advisor to INVESCO Variable Investment Funds, Inc. ("IVIF"). On November 25, 2003, AIM succeeded IFG as the investment advisor to the INVESCO Funds other than IVIF. The mutual fund industry as a whole is currently subject to a wide range of inquiries and litigation related to issues of "market timing" and "late trading." Both AIM and IFG are the subject of a number of such inquiries, as described below. A. Regulatory Inquiries and Actions 1. IFG On December 2, 2003 each of the Securities and Exchange Commission ("SEC") and the Office of the Attorney General of the State of New York ("NYAG") filed civil proceedings against IFG and Raymond R. Cunningham, in his capacity as the Chief Executive Officer of IFG. Mr. Cunningham currently holds the positions of Chief Operating Officer and Senior Vice President of A I M Management Group Inc., the parent of AIM, and the position of Senior Vice President of AIM. In addition, on December 2, 2003, the State of Colorado filed civil proceedings against IFG. Neither the Fund nor any of the other AIM or INVESCO Funds has been named as a defendant in any of these proceedings. The SEC complaint alleges that IFG failed to disclose in the INVESCO Funds' prospectuses and to the INVESCO Funds' independent directors that IFG had entered into certain arrangements permitting market timing of the INVESCO Funds. The SEC is seeking injunctions, including permanent injunctions from serving as an investment advisor, officer or director of an investment company; an accounting of all market timing as well as certain fees and compensation received; disgorgement; civil monetary penalties; and other relief. The NYAG and Colorado complaints make substantially similar allegations. The NYAG is seeking injunctions, including permanent injunctions from directly or indirectly selling or distributing shares of mutual funds; disgorgement of all profits obtained, including fees collected, and payment of all restitution and damages caused, directly or indirectly from the alleged illegal activities; civil monetary penalties; and other relief. The State of Colorado is seeking injunctions; restitution, disgorgement and other equitable relief, civil monetary penalties; and other relief. In addition, IFG has received inquiries in the form of subpoenas or other oral or written requests for information from various regulators concerning market timing activity, late trading, fair value pricing and related issues concerning the INVESCO Funds. These regulators include the Florida Department of Financial Services, the Commissioner of Securities for the State of Georgia, the Office of the State Auditor for the State of West Virginia, and the Office of the Secretary of State for West Virginia. IFG has also received more limited inquiries concerning related matters from the United States Department of Labor, NASD, Inc., and the SEC. IFG is providing full cooperation with respect to these inquiries. 2. AIM AIM has also received inquiries in the form of subpoenas or other oral or written requests for information from various regulators concerning market timing activity, late trading, fair value pricing, and related issues concerning the AIM Funds. AIM has received requests for information and documents concerning these and related matters from the SEC and the Massachusetts Secretary of the Commonwealth. In addition, AIM has received subpoenas concerning these and related matters from the NYAG, the United States Attorney's Office for the District of Massachusetts, the Commissioner of Securities for the State of Georgia, the Office of the State Auditor for the State of West Virginia, and the Office of the Secretary of State for West Virginia. AIM has also received more limited inquiries from the SEC and NASD, Inc. concerning specific funds, entities and/or individuals, none of which directly bears upon the Fund. AIM is providing full cooperation with respect to these inquiries. 3. AMVESCAP Response AMVESCAP is seeking to resolve both the pending regulatory complaints against IFG alleging market timing and the ongoing market timing investigations with respect to IFG and AIM. AMVESCAP recently found, in its ongoing review of these matters, that shareholders were not always effectively protected from the potential adverse impact of market timing and illegal late trading through intermediaries. These findings were based, in part, on an extensive economic analysis by outside experts who have been retained by AMVESCAP to examine the impact of these activities. In light of these findings, AMVESCAP has publicly stated that any AIM or INVESCO Fund, or any shareholders thereof, harmed by these activities will receive full restitution. AMVESCAP has informed regulators of these findings. In addition, AMVESCAP has retained outside counsel to undertake a comprehensive review of AIM's and IFG's policies, procedures and practices, with the objective that they rank among the most effective in the fund industry. There can be no assurance that AMVESCAP will be able to reach a satisfactory settlement with the regulators, or that any such settlement will not include terms which would have the effect of barring either or both of IFG and AIM, or any other investment advisor directly or indirectly owned by AMVESCAP, from serving as an investment advisor to any registered investment company including the Fund. The Fund has been informed by AIM that, if either of these results occurs, AIM will seek exemptive relief from the SEC to permit it to continue to serve as the Fund's investment advisor. There can be no assurance that such exemptive relief will be granted. Any settlement with the regulators could also include terms which would bar Mr. Cunningham from serving as an officer or director of any registered investment company. F-17 NOTE 14--LEGAL PROCEEDINGS (CONTINUED) B. Private Actions In addition to the complaints described above, multiple lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, certain INVESCO Funds, certain AIM Funds, IFG, AIM, A I M Management Group Inc., the parent of AIM, AMVESCAP, certain related entities and certain of their officers, including Mr. Cunningham). The allegations in the majority of the lawsuits are substantially similar to the allegations in the regulatory complaints against IFG described above. Certain other lawsuits allege that certain AIM and INVESCO Funds inadequately employed fair value pricing. Such lawsuits allege a variety of theories of recovery, including but not limited to: (i) violation of various provisions of the Federal and state securities laws; (ii) violation of various provisions of the Employee Retirement Income Security Act ("ERISA"); (iii) breach of fiduciary duty; and (iv) breach of contract. The lawsuits have been filed in both Federal and state courts and seek such remedies as compensatory damages; restitution; rescission; accounting for wrongfully gotten gains, profits and compensation; injunctive relief; disgorgement; equitable relief; various corrective measures under ERISA; rescission of certain Funds' advisory agreements with AIM; declaration that the advisory agreement is unenforceable or void; refund of advisory fees; interest; and attorneys' and experts' fees. IFG has removed certain of the state court proceedings to Federal District Court. At a hearing before the Judicial Panel on Multidistrict Litigation concerning the most efficient way to manage the numerous lawsuits alleging market timing in mutual funds throughout the industry, IFG and AIM supported transfer of all cases pending against them to one district for consolidated proceedings. The Panel has not issued a ruling. Additional lawsuits or regulatory actions arising out of these circumstances and presenting similar allegations and requests for relief may be filed against the Fund, IFG, AIM, AMVESCAP and related entities and individuals in the future. As a result of these developments, investors in the AIM and INVESCO Funds might react by redeeming their investments. This might require the Funds to sell investments to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the Funds. At the present time, management of AIM and the Fund is unable to estimate the impact, if any, that the outcome of the matters described above may have on the Fund or AIM. F-18 REPORT OF INDEPENDENT AUDITORS To the Board of Trustees and Shareholders of AIM Floating Rate Fund In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations, of changes in net assets and of cash flows and the financial highlights present fairly, in all material respects, the financial position of the AIM Floating Rate Fund (the "Fund") at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets and its cash flows 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 auditing standards generally accepted in the United States of America, which 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, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP February 20, 2004 Houston, Texas F-19 PROXY RESULTS (UNAUDITED) A Special Meeting of Shareholders of AIM Floating Rate Fund, a Delaware statutory trust, was held on October 21, 2003. The meeting was held for the following purpose: (1) To elect sixteen individuals to the Board, each of whom will serve until his or her successor is elected and qualified: Bob R. Baker, Frank S. Bayley, James T. Bunch, Bruce L. Crockett, Albert R. Dowden, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling, Robert H. Graham, Gerald J. Lewis, Prema Mathai-Davis, Lewis F. Pennock, Ruth H. Quigley, Louis S. Sklar, Larry Soll, Ph D. and Mark H. Williamson. The results of the voting on the above matter were as follows:
WITHHOLDING TRUSTEES/MATTER VOTES FOR AUTHORITY - -------------------------------------------------------------------------------- (1) Bob R. Baker................................. 24,874,399 139,539 Frank S. Bayley.............................. 24,876,782 137,156 James T. Bunch............................... 24,877,146 136,792 Bruce L. Crockett............................ 24,876,782 137,156 Albert R. Dowden............................. 24,876,782 137,156 Edward K. Dunn, Jr........................... 24,875,432 138,506 Jack M. Fields............................... 24,876,782 137,156 Carl Frischling.............................. 24,875,069 138,869 Robert H. Graham............................. 24,859,068 154,870 Gerald J. Lewis.............................. 24,876,143 137,795 Prema Mathai-Davis........................... 24,877,146 136,792 Lewis F. Pennock............................. 24,877,146 136,792 Ruth H. Quigley.............................. 24,858,317 155,621 Louis S. Sklar............................... 24,873,287 140,651 Larry Soll, Ph.D............................. 24,874,290 139,648 Mark H. Williamson........................... 24,859,747 154,191
F-20 OTHER INFORMATION TRUSTEES AND OFFICERS As of January 1, 2004 The address of each trustee and officer of AIM Floating Rate Fund (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 104 portfolios in the AIM and INVESCO Funds complex, except for Messrs. Baker, Bunch, Lewis and Soll who oversee 96 portfolios and Mr. Williamson who oversees 117 portfolios in the AIM and INVESCO Funds complex. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust's organizational documents. Column two below includes length of time served with predecessor entities, if any.
NAME, YEAR OF BIRTH AND TRUSTEE AND/ POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - ------------------------------------------------------------------------------------------------------------------------------ INTERESTED PERSONS - ------------------------------------------------------------------------------------------------------------------------------ Robert H. Graham(1) -- 1946 1998 Director and Chairman, A I M Management Group None Trustee, Chairman and Inc. (financial services holding company); and President Director and Vice Chairman, AMVESCAP PLC and Chairman of AMVESCAP PLC -- AIM Division (parent of AIM and a global investment management firm) Formerly: President and Chief Executive Officer, A I M Management Group Inc.; Director, Chairman and President, A I M Advisors, Inc. (registered investment advisor); Director and Chairman, A I M Capital Management, Inc. (registered investment advisor), A I M Distributors, Inc. (registered broker dealer), AIM Investment Services, Inc., (registered transfer agent), and Fund Management Company (registered broker dealer); and Chief Executive Officer, AMVESCAP PLC -- Managed Products - ------------------------------------------------------------------------------------------------------------------------------ Mark H. Williamson(2) -- 1951 2003 Director, President and Chief Executive Officer, None Trustee and Executive Vice A I M Management Group Inc. (financial services President holding company); Director, Chairman and President, A I M Advisors, Inc. (registered investment advisor); Director, A I M Capital Management, Inc. (registered investment advisor) and A I M Distributors, Inc. (registered broker dealer); Director and Chairman, AIM Investment Services, Inc. (registered transfer agent), and Fund Management Company (registered broker dealer); and Chief Executive Officer, AMVESCAP PLC -- AIM Division (parent of AIM and a global investment management firm) Formerly: Director, Chairman, President and Chief Executive Officer, INVESCO Funds Group, Inc. and INVESCO Distributors, Inc.; Chief Executive Officer, AMVESCAP PLC -- Managed Products; Chairman and Chief Executive Officer of NationsBanc Advisors, Inc.; and Chairman of NationsBanc Investments, Inc. - ------------------------------------------------------------------------------------------------------------------------------ INDEPENDENT TRUSTEES - ------------------------------------------------------------------------------------------------------------------------------ Bob R. Baker -- 1936 2003 Consultant None Trustee Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation - ------------------------------------------------------------------------------------------------------------------------------ Frank S. Bayley -- 1939 1998 Of Counsel, law firm of Baker & McKenzie Badgley Funds, Inc. Trustee (registered investment company) - ------------------------------------------------------------------------------------------------------------------------------ James T. Bunch -- 1942 2003 Co-President and Founder, Green, Manning & Bunch None Trustee Ltd., (investment banking firm); and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation Formerly: General Counsel and Director, Boettcher & Co.; and Chairman and Managing Partner, law firm of Davis, Graham & Stubbs - ------------------------------------------------------------------------------------------------------------------------------ Bruce L. Crockett -- 1944 2001 Chairman, Crockett Technology Associates ACE Limited Trustee (technology consulting company) (insurance company); and Captaris, Inc. (unified messaging provider) - ------------------------------------------------------------------------------------------------------------------------------ Albert R. Dowden -- 1941 2001 Director of a number of public and private Cortland Trust, Inc. Trustee business corporations, including the Boss Group (Chairman) Ltd. (private investment and management) and (registered Magellan Insurance Company investment company); Annuity and Life Re Formerly: Director, President and Chief (Holdings), Ltd. Executive Officer, Volvo Group North America, (insurance company) Inc.; Senior Vice President, AB Volvo; and director of various affiliated Volvo companies - ------------------------------------------------------------------------------------------------------------------------------ Edward K. Dunn, Jr. -- 1935 2001 Formerly: Chairman, Mercantile Mortgage Corp.; None Trustee President and Chief Operating Officer, Mercantile-Safe Deposit & Trust Co.; and President, Mercantile Bankshares Corp. - ------------------------------------------------------------------------------------------------------------------------------ Jack M. Fields -- 1952 2001 Chief Executive Officer, Twenty First Century Administaff Trustee Group, Inc. (government affairs company) and Texana Timber LP - ------------------------------------------------------------------------------------------------------------------------------
(1) Mr. Graham is considered an interested person of the Trust because he is a director of AMVESCAP PLC, parent of the advisor to the Trust. (2) Mr. Williamson is considered an interested person of the Trust because he is an officer and a director of the advisor to, and a director of the principal underwriter of, the Trust. Trustees and Officers (continued) As of January 1, 2004 The address of each trustee and officer of AIM Floating Rate Fund (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 104 portfolios in the AIM and INVESCO Funds complex, except for Messrs. Baker, Bunch, Lewis and Soll who oversee 96 portfolios and Mr. Williamson who oversees 117 portfolios in the AIM and INVESCO Funds complex. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust's organizational documents. Column two below includes length of time served with predecessor entities, if any.
NAME, YEAR OF BIRTH AND TRUSTEE AND/ PRINCIPAL OCCUPATION(S) OTHER DIRECTORSHIP(S) POSITION(S) HELD WITH THE TRUST OR OFFICER SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - ----------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Naftalis and Cortland Trust, Inc. Trustee Frankel LLP (registered investment company) - ----------------------------------------------------------------------------------------------------------------------------- Gerald J. Lewis -- 1933 2003 Chairman, Lawsuit Resolution Services (San General Chemical Trustee Diego, California) Group, Inc., Wheelabrator Formerly: Associate Justice of the California Technologies, Inc. Court of Appeals (waste management company), Fisher Scientific, Inc., Henley Manufacturing, Inc. (laboratory supplies), and California Coastal Properties, Inc. - ----------------------------------------------------------------------------------------------------------------------------- Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA of the None Trustee USA - ----------------------------------------------------------------------------------------------------------------------------- Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None Trustee - ----------------------------------------------------------------------------------------------------------------------------- Ruth H. Quigley -- 1935 1998 Retired None Trustee - ----------------------------------------------------------------------------------------------------------------------------- Louis S. Sklar -- 1939 2001 Executive Vice President, Development and None Trustee Operations Hines Interests Limited Partnership (real estate development company) - ----------------------------------------------------------------------------------------------------------------------------- Larry Soll, Ph.D. -- 1942 2003 Retired None Trustee - ----------------------------------------------------------------------------------------------------------------------------- OTHER OFFICERS - ----------------------------------------------------------------------------------------------------------------------------- Kevin M. Carome -- 1956 2003 Director, Senior Vice President, Secretary and N/A Senior Vice President and General Counsel, A I M Management Group Inc. Chief Legal Officer (financial services holding company) and A I M Advisors, Inc.; Vice President, A I M Capital Management, Inc., A I M Distributors, Inc. and AIM Investment Services, Inc.; and Director, Vice President and General Counsel, Fund Management Company Formerly: Senior Vice President and General Counsel, Liberty Financial Companies, Inc.; and Senior Vice President and General Counsel, Liberty Funds Group, LLC - ----------------------------------------------------------------------------------------------------------------------------- Robert G. Alley -- 1948 2001 Managing Director, Chief Fixed Income Officer N/A Vice President and Senior Investment Officer, A I M Capital Management, Inc.; and Vice President, A I M Advisors, Inc. - ----------------------------------------------------------------------------------------------------------------------------- Stuart W. Coco -- 1955 2001 Managing Director and Chief Research N/A Vice President Officer -- Fixed Income, A I M Capital Management, Inc.; and Vice President, A I M Advisors, Inc. - ----------------------------------------------------------------------------------------------------------------------------- Melville B. Cox -- 1943 1998 Vice President and Chief Compliance Officer, N/A Vice President A I M Advisors, Inc. and A I M Capital Management, Inc.; and Vice President, AIM Investment Services, Inc. - ----------------------------------------------------------------------------------------------------------------------------- Sidney M. Dilgren -- 1961 2004 Vice President and Fund Treasurer, A I M Vice President and Treasurer Advisors, Inc.; Senior Vice President, AIM Investment Services, Inc.; and Vice President, A I M Distributors, Inc. - ----------------------------------------------------------------------------------------------------------------------------- Karen Dunn Kelley -- 1960 2001 Managing Director and Chief Management Officer, N/A Vice President A I M Capital Management, Inc; Director and President, Fund Management Company; and Vice President, A I M Advisors, Inc. - ----------------------------------------------------------------------------------------------------------------------------- Edgar M. Larsen -- 1940 2001 Vice President, A I M Advisors, Inc., and N/A Vice President President, Chief Executive Officer and Chief Investment Officer, A I M Capital Management, Inc. - -----------------------------------------------------------------------------------------------------------------------------
The Statement of Additional Information of the Trust includes additional information about the Fund's Trustees and is available upon request, without charge, by calling 1.800.347.4246. OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS SUB-ADVISOR 11 Greenway Plaza A I M Advisors, Inc. A I M Distributors, PricewaterhouseCoopers INVESCO Senior Secured Suite 100 11 Greenway Plaza Inc. LLP Management Houston, TX 77046-1173 Suite 100 11 Greenway Plaza 1201 Louisiana, Suite 1166 Avenue of the Americas Houston, TX Suite 100 2900 New York, NY 10036 77046-1173 Houston, TX Houston, TX 77046-1173 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN SUB-SUB-ADVISOR TRUSTEES Ballard Spahr AIM Investment State Street Bank and INVESCO Institutional (N.A.), Andrews & Ingersoll, LLP Kramer, Levin, Services, Inc. Trust Company Inc. 1735 Market Street Naftalis & Frankel P.O. Box 4739 225 Franklin Street 1166 Avenue of the Americas Philadelphia, PA 19103-7599 LLP Houston, TX Boston, MA 02110 New York, NY 10036 919 Third Avenue 77210-4739 New York, NY 10022-3852
REQUIRED FEDERAL INCOME TAX INFORMATION (UNAUDITED) Of ordinary dividends paid to shareholders during the Fund's tax year ended December 31, 2003, 0% is eligible for the dividends received deduction for corporations. For its tax year ended December 31, 2003, the Fund designated 0%, or the maximum allowable, of its dividend distribution as qualified dividend income. The actual amount for the calendar year will be designated in the Fund's year end tax statement. REQUIRED STATE INCOME TAX INFORMATION (UNAUDITED) Of the ordinary dividends paid, 0% was derived from U.S. Treasury Obligations. DOMESTIC EQUITY INTERNATIONAL/GLOBAL EQUITY FIXED INCOME AIM Aggressive Growth Fund AIM Asia Pacific Growth Fund TAXABLE AIM Balanced Fund* AIM Developing Markets Fund AIM Basic Balanced Fund* AIM European Growth Fund AIM Floating Rate Fund AIM Basic Value Fund AIM European Small Company Fund AIM High Yield Fund AIM Blue Chip Fund AIM Global Aggressive Growth Fund AIM Income Fund AIM Capital Development Fund AIM Global Growth Fund AIM Intermediate Government Fund AIM Charter Fund AIM Global Trends Fund AIM Limited Maturity Treasury Fund AIM Constellation Fund AIM Global Value Fund(5) AIM Money Market Fund AIM Dent Demographic Trends Fund AIM International Emerging Growth Fund AIM Short Term Bond Fund AIM Diversified Dividend Fund1(1) AIM International Growth Fund AIM Total Return Bond Fund AIM Emerging Growth Fund AIM Trimark Fund INVESCO U.S. Government Money Fund AIM Large Cap Basic Value Fund INVESCO International Core Equity Fund(6) AIM Large Cap Growth Fund TAX-FREE AIM Libra Fund SECTOR EQUITY AIM Mid Cap Basic Value Fund AIM High Income Municipal Fund AIM Mid Cap Core Equity Fund(2) AIM Global Health Care Fund AIM Municipal Bond Fund AIM Mid Cap Growth Fund AIM Real Estate Fund AIM Tax-Exempt Cash Fund AIM Opportunities I Fund INVESCO Advantage Health Sciences Fund AIM Tax-Free Intermediate Fund AIM Opportunities II Fund INVESCO Energy Fund AIM Opportunities III Fund INVESCO Financial Services Fund AIM Premier Equity Fund INVESCO Gold & Precious Metals Fund AIM Select Equity Fund INVESCO Health Sciences Fund AIM Small Cap Equity Fund(3) INVESCO Leisure Fund AIM Small Cap Growth Fund(4) INVESCO Multi-Sector Fund AIM Trimark Endeavor Fund INVESCO Technology Fund AM Trimark Small Companies Fund INVESCO Utilities Fund AIM Weingarten Fund INVESCO Core Equity Fund INVESCO Dynamics Fund INVESCO Mid-Cap Growth Fund INVESCO Small Company Growth Fund INVESCO S&P 500 Index Fund INVESCO Total Return Fund*
* Domestic equity and income fund (1) Effective May 2, 2003, AIM Large Cap Core Equity Fund was renamed AIM Diversified Dividend Fund. (2) As of the close of business on February 27, 2004, AIM Mid Cap Core Equity Fund is available to new investors on a limited basis. For information on who may continue to invest in AIM Mid Cap Core Equity Fund, please contact your financial advisor. (3) AIM Small Cap Equity Fund was closed to most investors on December 19, 2003. For information on who may continue to invest in AIM Small Cap Equity Fund, please contact your financial advisor. (4) AIM Small Cap Growth Fund was closed to most investors on March 18, 2002. For information on who may continue to invest in AIM Small Cap Growth Fund, please contact your financial advisor. (5) Effective April 30, 2003, AIM Worldwide Spectrum Fund was renamed AIM Global Value Fund. (6) Effective November 24, 2003, INVESCO International Blue Chip Value Fund was renamed INVESCO International Core Equity Fund. For more complete information about any AIM or INVESCO fund, including sales charges and expenses, ask your financial advisor for a prospectus. Please read the prospectus carefully and consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. If used after April, 2004, this brochure must be accompanied by a fund Performance & Commentary or by an AIM Quarterly Performance Review for the most recent quarter-end. Mutual funds distributed by A I M Distributors, Inc. A I M Management Group Inc. has provided leadership in the investment management industry since 1976 and manages $149 billion in assets for approximately 11 million shareholders, including individual investors, corporate clients and financial institutions. AIM is a subsidiary of AMVESCAP PLC, one of the world's largest independent financial services companies with $371 billion in assets under management. Data as of December 31, 2003. AIMinvestments.com FLR-AR-1 YOUR GOALS. OUR SOLUTIONS.--Servicemark-- - -------------------------------------------------------------------------------------- Mutual Retirement Annuities College Separately Offshore Alternative Cash [AIM INVESTMENTS LOGO APPEARS HERE] Funds Products Savings Managed Products Investments Management Plans Accounts
ITEM 2. CODE OF ETHICS. As of the end of the period covered by this report, Registrant had adopted a code of ethics (the "Code") that applies to the Registrant's principal executive office ("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 Prema Mathai-Davis. Ms. Mathai-Davis is "independent" within the meaning of that term used in Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. 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 Percentage of Fees Billed Applicable Billed Applicable to to Non-Audit Non-Audit Services Fees Billed for Services Provided Fees Billed for Provided in 2002 Services Rendered in 2003 Pursuant to Services Rendered Pursuant to Waiver to the Registrant in Waiver of Pre-Approval to the Registrant in of Pre-Approval 2003 Requirement(1)(2) 2002 Requirement(1)(2) ----------------------- ----------------------- ----------------------- ----------------------- Audit Fees $ 60,729 N/A $ 56,070 N/A Audit-Related Fees $ 0 0% $ 0 N/A Tax Fees(3) $ 8,038 0% $ 7,355 N/A All Other Fees $ 0 0% $ 0 N/A ----------------------- ----------------------- Total Fees $ 68,767 $ 59,300 N/A
PWC billed the Registrant aggregate non-audit fees of $10,038 for the fiscal year ended 2003, and $7,355 for the fiscal year ended 2002, for non-audit services rendered to the Registrant. - ---------- (1) Prior to May 6, 2003, the Registrant's Audit Committee was not required to pre-approve non-audit services. Therefore, the percentage of fees shown in this column only represents fees billed for non-audit services rendered after May 6, 2003, pursuant to a waiver of the pre-approval requirement. (2) 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 billed to the Registrant during a fiscal year; and (iii) such services are promptly approved by the Registrant's Audit Committee prior to the completion of the audit by the Audit Committee. (3) Tax Fees for the fiscal year ended December 31, 2003 includes fees billed for reviewing tax returns. Tax Fees for the fiscal year ended December 31, 2002 includes fees billed for reviewing tax returns. FEES BILLED BY PWC RELATED TO AIM AND AIM AFFILIATES PWC billed AIM and 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 Non- Fees Billed for Non- Audit Services Audit Services Rendered to AIM Percentage of Fees Rendered to AIM Percentage of Fees and AIM Affiliates Billed Applicable to and AIM Affiliates Billed Applicable to in 2003 That Were Non-Audit Services in 2002 That Were Non-Audit Services Required Provided in 2003 Required Provided in 2002 to be Pre-Approved Pursuant to Waiver to be Pre-Approved Pursuant to Waiver by the Registrant's of Pre-Approval by the Registrant's of Pre-Approval Audit Committee(1) Requirement(2)(3) Audit Committee(1) Requirement(2)(3) ---------------------- ---------------------- ---------------------- ---------------------- Audit-Related Fees $ 0 0% N/A N/A Tax Fees $ 0 0% N/A N/A All Other Fees $ 0 0% N/A N/A ---------------------- Total Fees $ 0 N/A N/A
PWC billed AIM and AIM Affiliates aggregate non-audit fees of $0 for the fiscal year ended 2003, and $346,364 for the fiscal year ended 2002, 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 any entity controlling, controlled by or under common control with AIM that provides ongoing services to the Registrant ("AIM Affiliates"), that were not required to be pre-approved pursuant to SEC regulations is compatible with maintaining PWC's independence. The Audit Committee determined that the provision of such services is compatible with PWC maintaining independence with respect the Registrant. - ---------- (1) Prior to May 6, 2003, the Registrant's Audit Committee was not required to pre-approve non-audit services. Therefore, the fees billed for non-audit services shown in this column only represents fees for pre-approved non-audit services rendered after May 6, 2003, to AIM and AIM Affiliates. (2) Prior to May 6, 2003, the Registrant's Audit Committee was not required to pre-approve non-audit services. Therefore, the percentage of fees shown in this column only represents fees billed for non-audit services rendered after May 6, 2003, pursuant to a waiver of the pre-approval requirement. (3) 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 billed to the Registrant during a fiscal year; and (iii) such services are promptly approved by the Registrant's Audit Committee prior to the completion of the audit by the Audit Committee. PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES POLICIES AND PROCEDURES As adopted by the Audit Committees of the AIM Funds and the INVESCO Funds (the "Funds") AMENDED NOVEMBER 6, 2003 I. 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 Directors/Registrantees (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 Committee pre-approves the audit and non-audit services provided to the Funds by the 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 Committee ("general pre-approval") or require the specific pre-approval of the Audit Committee ("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 Committee. Additionally, any proposed services exceeding general pre-approved cost levels or established amounts will also require specific pre-approval by the Audit Committee. The Audit Committee will annually review and pre-approve the services that may be provided by the 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 Committee considers a different period and states otherwise. The Audit Committee 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 Committee in fulfilling its responsibilities. II. DELEGATION The Audit Committee may from time to time delegate pre-approval authority to one or more of its members who are Independent Directors. All decisions to pre-approve a service by a delegated member shall be reported to the Audit Committee at its next-scheduled meeting. III. AUDIT SERVICES The annual audit services engagement terms and fees will be subject to specific pre-approval of the Audit Committee. 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 Committee may grant general pre-approval for 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. IV. GENERAL PRE-APPROVAL OF NON-AUDIT SERVICES The Audit Committee may provide general pre-approval of types of non-audit services described in this Section IV to the Funds and its Service Affiliates if the Committee believes 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. 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. ALL OTHER SERVICES The Audit Committee 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. V. SPECIFIC PRE-APPROVAL OF NON-AUDIT SERVICES The Audit Committee may provide specific pre-approval of any non-audit services to the Funds and its Service Affiliates if the Audit Committee believes that the provision of the service will not impair the independence of the auditor, is consistent with the SEC Rules on auditor independence, and otherwise conforms to the Audit Committees' general principles and policies as set forth herein. VI. PRE-APPROVAL FEE LEVELS OR ESTABLISHED AMOUNTS Pre-approval fee levels or established amounts for services to be provided by the Auditor under general pre-approval policies will be set annually by the Audit Committee. Any proposed services exceeding these levels or amounts will require specific pre-approval by the Audit Committee. 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. VII. PROCEDURES On an annual basis, A I M Advisors, Inc. ("AIM") will submit to the Audit Committee 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 where possible 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 Committee 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 Committee. The Audit Committee will be informed at the next regularly scheduled Audit Committee meeting of any such services rendered by the Auditor. Each request to provide services that require specific approval by the Audit Committee shall be submitted to the Audit Committee 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. Non-audit services pursuant to the de minimis exception provided by the SEC Rules will be promptly brought to the attention of the Audit Committee 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 Committee has 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 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) o Bookkeeping or other services related to the accounting records or financial statements of the audit client o Financial information systems design and implementation o Appraisal or valuation services, fairness opinions, or contribution-in-kind reports o Actuarial services o Internal audit outsourcing services CATEGORICALLY PROHIBITED NON-AUDIT SERVICES o Management functions o Human resources o Broker-dealer, investment adviser, or investment banking services o Legal services o Expert services unrelated to the audit o 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. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. PROXY VOTING POLICIES INVESCO Institutional (NA), Inc. and its wholly-owned subsidiaries, ("INVESCO") each has responsibility for making investment decisions that are in the best interest of its clients. As part of the investment management services it provides to clients, INVESCO may be authorized by clients to vote proxies appurtenant to the shares for which the clients are beneficial owners. As a fiduciary, INVESCO believes that it has a duty to manage clients' assets solely in the best interest of the clients and that the ability to vote proxies is a client asset. Accordingly, INVESCO has a duty to vote proxies in a manner in which it believes will add value to the client's investment. INVESCO is regulated by various state and federal laws, such as the Investment Advisers Act of 1940, the Investment Company Act of 1940, and the Employee Retirement Income Security Act of 1974 ("ERISA"). Because there may be different proxy voting standards for ERISA and non-ERISA clients, INVESCO's policy is to apply the proxy voting policies and procedures described herein to all of its clients. Any discussion herein which refers to an ERISA or non-ERISA situation is used for reference only. INVESCO may amend its proxy policies and procedures from time to time without prior notice to its clients. BACKGROUND ERISA fiduciary standards relating to proxy voting have not been interpreted until more recent times. Due to the large number of mergers and acquisitions in the 1980s and the growing importance of institutional investors in the equity markets, the Department of Labor ("DOL"), which enforces fiduciary standards for ERISA plan sponsors and managers, took the position that the right to vote shares of stock owned by a pension plan is, in itself, an asset of the plan. Thus, the "Wall Street Rule" of "vote with management (or abstain from voting) or sell the stock" was under scrutiny. In 1988, the DOL stated, in the "Avon Letter", that the fiduciary act of managing plan assets that are shares of corporate stock includes the voting of proxies appurtenant to those shares of stock. Accordingly, where the authority to manage plan assets has been delegated to an investment manager pursuant to ERISA, no person other than the investment manager has authority to vote proxies appurtenant to such plan assets, except to the extent the named fiduciary has reserved to itself the right to direct a plan trustee regarding the voting of proxies. In 1990, in the "Monks Letter", the DOL stated that an ERISA violation would occur if the investment manager is explicitly or implicitly assigned the authority to vote proxies appurtenant to certain plan-owned stock and the named fiduciary, trustee or any person other than the investment manager makes the decision on how to vote the same proxies. Thus, according to the DOL, if the investment management contract expressly provides that the investment manager is not required to vote proxies, but does not expressly preclude the investment manager from voting the relevant proxies, the investment manager would have the exclusive fiduciary responsibility for voting the proxies. In contrast, the DOL pointed out that if either the plan document or the investment management contract expressly precludes the investment manager from voting proxies, the responsibility for voting proxies lies exclusively with the trustee. In 1994, in its Interpretive Bulletin 94-2 ("94-2"), the DOL reiterated and supplemented the Avon and Monks Letters. In addition, 94-2 extended the principles put forth in the Avon and Monks Letters to voting of proxies on shares of foreign corporations. However, the DOL recognized that the cost of exercising a vote on a particular proxy proposal could exceed any benefit that the plan could expect to gain in voting on the proposal. Therefore, the plan fiduciary had to weigh the costs and benefits of voting on proxy proposals relating to foreign securities and make an informed decision with respect to whether voting a given proxy proposal is prudent and solely in the interest of the plan's participants and beneficiaries. In January 2003, the Securities and Exchange Commission ("SEC") adopted regulations regarding Proxy Voting by investment advisers (SEC Release No. IA-2106). These regulations required investment advisers to (1) adopt written proxy voting policies and procedures which describe how the adviser addresses material conflicts between its interests and those of its clients with respect to proxy voting and which also addresses how the adviser resolves those conflicts in the bet interest of clients; (2) disclose to clients how they can obtain information from the adviser on how the adviser voted the proxies; and (3) describe to clients its proxy voting policies and procedure to clients and, upon request, furnish a copy of them to clients. PROXY VOTING POLICY Consistent with the fiduciary standards discussed above, INVESCO will vote proxies unless either the named fiduciary (e.g., the plan sponsor) retains in writing the right to direct the plan trustee or a third party to vote proxies or INVESCO determines that any benefit the client might gain from voting a proxy would be outweighed by the costs associated therewith (i.e., foreign proxies). In voting such proxies, INVESCO will act prudently, taking into consideration those factors that may affect the value of the security and will vote such proxies in a manner in which, in its opinion, is in the best interests of clients. PROXY COMMITTEE The INVESCO Proxy Committee will establish guidelines and procedures for voting proxies and will periodically review records on how proxies were voted. The Proxy Committee will consist of certain of INVESCO's equity investment professionals and non-equity investment professionals. PROXY MANAGER The Proxy Committee will appoint a Proxy Manager and/or hire a third-party Proxy Agent to analyze proxies, act as a liaison to the Proxy Committee and manage the proxy voting process, which process includes the voting of proxies and the maintenance of appropriate records. The Proxy Manager will exercise discretion to vote proxies within the guidelines established by the Proxy Committee. The Proxy Manager will consult with the Proxy Committee in determining how to vote proxies for issues not specifically covered by the proxy voting guidelines adopted by the Proxy Committee or in situations where the Proxy Manager or members of the Committee determine that consultation is prudent. CONFLICTS OF INTEREST In effecting our policy of voting proxies in the best interests of our clients, there may be occasions where the voting of such proxies may present an actual or perceived conflict of interest between INVESCO, as the investment manager, and clients. Some of these potential conflicts of interest situations include, but are not limited to, (1) where INVESCO (or an affiliate) manage assets, administer employee benefit plans, or provides other financial services or products to companies whose management is soliciting proxies and failure to vote proxies in favor of the management of such a company may harm our (or an affiliate's) relationship with the company; (2) where INVESCO (or an affiliate) may have a business relationship, not with the company, but with a proponent of a proxy proposal and where INVESCO (or an affiliate) may manage assets for the proponent; or (3) where INVESCO (or an affiliate) or any member of the Proxy Committee may have personal or business relationships with participants in proxy contests, corporate directors or candidates for corporate directorships, or where INVESCO (or an affiliate) or any member of the Proxy Committee may have a personal interest in the outcome of a particular matter before shareholders. In order to avoid even the appearance of impropriety, in the event that INVESCO (or an affiliate) manages assets for a company, its pension plan, or related entity or where any member of the Proxy Committee has a personal conflict of interest, and where we have invested clients' funds in that company's shares, the Proxy Committee will not take into consideration this relationship and will vote proxies in that company solely in the best interest of all of our clients. In addition, members of the Proxy Committee must notify INVESCO's Chief Compliance Officer, with impunity and without fear of retribution or retaliation, of any direct, indirect or perceived improper influence made by anyone within INVESCO or by an affiliated company's representatives with regard to how INVESCO should vote proxies. The Chief Compliance Officer will investigate the allegations and will report his or her findings the INVESCO Management Committee. In the event that it is determined that improper influence was made, the Management Committee will determine the appropriate action to take which may include, but is not limited to, (1) notifying the affiliated company's Chief Executive Officer, its Management Committee or Board of Directors, (2) taking remedial action, if necessary, to correct the result of any improper influence where the clients have been harmed, or (3) notifying the appropriate regulatory agencies of the improper influence and to fully cooperate with these regulatory agencies as required. In all cases, the Proxy Committee shall not take into consideration the improper influence in determining how to vote proxies and will vote proxies solely in the best interest of clients. Furthermore, members of the Proxy Committee must advise INVESCO's Chief Compliance Officer and fellow Committee members of any actual or potential conflicts of interest he or she may have with regard to how proxies are to be voted regarding certain companies (e.g., personal security ownership in a company, or personal or business relationships with participants in proxy contests, corporate directors or candidates for corporate directorships). After reviewing such conflict, upon advice from the Chief Compliance Officer, the Committee may require such Committee member to recuse himself or herself from participating in the discussions regarding the proxy vote item and from casting a vote regarding how INVESCO should vote such proxy. PROXY VOTING PROCEDURES The Proxy Manager will: o Vote proxies; o Take reasonable steps to reconcile proxies received by INVESCO and/or a third-party Proxy Agent who administers the vote with shares held in the accounts; o Document the vote and rationale for each proxy voted (routine matters are considered to be documented if a proxy is voted in accordance with the Proxy Voting Guidelines established by the Proxy Committee); o If requested, provide to clients a report of the proxies voted on their behalf. PROXY VOTING GUIDELINES The Proxy Committee has adopted the following guidelines in voting proxies: I. CORPORATE GOVERNANCE INVESCO will evaluate each proposal separately. However, INVESCO will generally vote FOR a management sponsored proposal unless it believes that adoption of the proposal may have a negative impact on the economic interests of shareholders. INVESCO will generally vote FOR o Annual election of directors o Appointment of auditors o Indemnification of management or directors or both against negligent or unreasonable action o Confidentiality of voting o Equal access to proxy statements o Cumulative voting o Declassification of Boards o Majority of Independent Directors INVESCO will generally vote AGAINST o Removal of directors from office only for cause or by a supermajority vote o "Sweeteners" to attract support for proposals o Unequal voting rights proposals ("superstock") o Staggered or classified election of directors o Limitation of shareholder rights to remove directors, amend by-laws, call special meetings, nominate directors, or other actions to limit or abolish shareholder rights to act independently such as acting by written consent o Proposals to vote unmarked proxies in favor of management o Proposals to eliminate existing pre-emptive rights II. TAKEOVER DEFENSE AND RELATED ACTIONS INVESCO will evaluate each proposal separately. Generally, INVESCO will vote FOR a management sponsored anti-takeover proposal which (1) enhances management's bargaining position and (2) when combined with other anti-takeover provisions, including state takeover laws, does not discourage serious offers. INVESCO believes that generally four or more anti-takeover measures, which can only be repealed by a super-majority vote, are considered sufficient to discourage serious offers and therefore should be voted AGAINST. INVESCO will generally vote FOR o Fair price provisions o Certain increases in authorized shares and/or creation of new classes of common or preferred stock o Proposals to eliminate greenmail provisions o Proposals to eliminate poison pill provisions o Proposals to re-evaluate or eliminate in-place "shark repellents" INVESCO will generally vote AGAINST o Proposals authorizing the company's board of directors to adopt, amend or repeal by-laws without shareholders' approval o Proposals authorizing the company's management or board of directors to buy back shares at premium prices without shareholders' approval III. COMPENSATION PLANS INVESCO will evaluate each proposal separately. INVESCO believes that in order for companies to recruit, promote and retain competent personnel, companies must provide appropriate and competitive compensation plans. INVESCO will generally vote FOR management sponsored compensation plans, which are reasonable, industry competitive and not unduly burdensome to the company in order for the company to recruit, promote and retain competent personnel. INVESCO will generally vote FOR o Stock option plans and/or stock appreciation right plans o Profit incentive plans provided the option is priced at 100% fair market value o Extension of stock option grants to non-employee directors in lieu of their cash compensation provided the option is priced at or about the then fair market value o Profit sharing, thrift or similar savings plans INVESCO will generally vote AGAINST o Stock option plans that permit issuance of loans to management or selected employees with authority to sell stock purchased by the loan without immediate repayment, or that are overly generous (below market price or with appreciation rights paying the difference between option price and the stock, or permit pyramiding or the directors to lower the purchase price of outstanding options without a simultaneous and proportionate reduction in the number of shares available) o Incentive plans which become effective in the event of hostile takeovers or mergers (golden and tin parachutes) o Proposals creating an unusually favorable compensation structure in advance of a sale of the company o Proposals that fail to link executive compensation to management performance o Acceleration of stock options/awards if the majority of the board of directors changes within a two year period o Grant of stock options to non-employee directors in lieu of their cash compensation at a price below 100% fair market value o Adoption of a stock purchase plan at less than 85% of fair market value IV. CAPITAL STRUCTURE, CLASSES OF STOCK AND RECAPITALIZATION INVESCO will evaluate each proposal separately. INVESCO recognizes that from time to time companies must reorganize their capital structure in order to avail themselves of access to the capital markets and in order to restructure their financial position in order to raise capital and to be better capitalized. Generally, INVESCO will vote FOR such management sponsored reorganization proposals if such proposals will help the company gain better access to the capital markets and to attain a better financial position. INVESCO will generally vote AGAINST such proposals that appear to entrench management and do not provide shareholders with economic value. INVESCO will generally vote FOR o Proposals to reincorporate or reorganize into a holding company o Authorization of additional common or preferred shares to accommodate a stock split or other business purposes not related to anti-takeover measures as long as the increase is not excessive and a valid need has been proven INVESCO will generally vote AGAINST o Proposals designed to discourage mergers and acquisitions in advance o Proposals to change state of incorporation to a state less favorable to shareholders' interests o Reincorporating in another state to implement anti-takeover measures V. SOCIAL RESPONSIBILITY INVESCO will evaluate each proposal separately. INVESCO believes that a corporation, if it is in a solid financial position and can afford to do so, has an obligation to return certain largesse to the communities in which it operates. INVESCO believes that the primary mission of a company is to be profitable. However, where a company has proven that it is able to sustain a level of profitability and the market price of the company's shares reflect an appropriate economic value for such shares, INVESCO will generally vote FOR certain social responsibility initiatives. INVESCO will generally vote AGAINST proposed social responsibility initiatives if it believes that the company already has adequate policies and procedures in place and it should focus its efforts on enhancing shareholder value where the assets and resources involved could be put to better use in obtaining profits. INVESCO will generally vote FOR o International Labor Organization Principles o Resolutions seeking Basic Labor Protections and Equal Employment Opportunity o Expanding EEO/Social Responsibility Reporting RECORD KEEPING The Proxy Manager will take necessary steps to retain proxy voting records for the period of time as required by regulations. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES (a) As of December 18, 2003, an evaluation was performed under the supervision and with the participation of the officers of AIM Variable Insurance Funds (the "Registrant"), including the Principal Executive Officer ("PEO") and Principal Financial Officer ("PFO"), to assess the effectiveness of the Registrant's disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act"), as amended. Based on that evaluation, the Registrant's officers, including the PEO and PFO, concluded that, as of December 18, 2003, the Registrant's disclosure controls and procedures were reasonably designed so as to ensure: (1) that information required to be disclosed by the Registrant of 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 go 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 Registrant's last fiscal half-year (the Registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. However, changes in certain other controls have been implemented during such time period, involving such things as trade monitoring, fair value pricing, revising trading guidelines, and establishing redemption fees on trades in certain funds, which could affect the Registrant. ITEM 10. EXHIBITS. CODE OF ETHICS FOR SENIOR OFFICERS. (a)(1) Code of Ethics. (a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2 under the Investment Company Act of 1940. (b) Certification of principal executive officer and principal financial officer as required by Section 906 of the Sarbanes-Oxley Act of 2002. 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 Floating Rate Fund --------------------------- By: /s/ ROBERT H. GRAHAM --------------------------- Robert H. Graham Principal Executive Officer Date: February 23, 2004 --------------------------- Pursuant to the requirements of the Securities 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/ ROBERT H. GRAHAM --------------------------- Robert H. Graham Principal Executive Officer Date: February 23, 2004 --------------------------- By: /s/ SIDNEY M. DILGREN --------------------------- Sidney M. Dilgren Principal Financial Officer Date: February 23, 2004 --------------------------- EXHIBIT INDEX 10a Code of Ethics (b)(1) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2 under the Investment Company Act of 1940. Certification of principal executive officer and principal financial officer as required by Section 906 of the Sarbanes-Oxley Act of 2002. EX-99.CODE ETH 3 h11741exv99wcodeeth.txt CODE OF ETHICS Item 10(a)(1) THE AIM FAMILY OF FUNDS CODE OF ETHICS FOR SENIOR OFFICERS I. INTRODUCTION The Boards of Directors/Trustees ("Board") of The AIM Family of Funds (the "Companies") have adopted this code of ethics (this "Code") applicable to their Principal Executive Officer and Principal Financial and Accounting Officer (the "Covered Officers") to promote: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely and understandable disclosure in documents filed with the Securities and Exchange Commission ("SEC") and in other public communications; o compliance with applicable governmental laws, rules and regulations; o the prompt internal reporting to an appropriate person or persons identified in the Code of violations of the Code; and o accountability for adherence to the Code. II. COVERED OFFICERS SHOULD ACT HONESTLY AND CANDIDLY Each Covered Officer named in Exhibit A to this Code owes a duty to the Companies to act with integrity. Integrity requires, among other things, being honest and candid. Deceit and subordination of principle are inconsistent with integrity. Each Covered Officer must: o act with integrity, including being honest and candid while still maintaining the confidentiality of information where required by law or the Companies' policies; o observe both the form and spirit of laws and governmental rules and regulations, accounting standards and policies of the Companies; o adhere to a high standard of business ethics; and o place the interests of the Companies before the Covered Officer's own personal interests. Business practices Covered Officers should be guided by and adhere to these fiduciary standards. III. COVERED OFFICERS SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT CONFLICTS OF INTEREST GUIDING PRINCIPLES. A "conflict of interest" occurs when an individual's private interest interferes with the interests of the Companies. A conflict of interest can arise when a Covered Officer takes actions or has interests that may make it difficult to perform his or her work for the Companies objectively and effectively. For example, a conflict of interest would arise if a Covered Officer, or a member or his family, receives improper personal benefits as a result of his or her position in any of the Companies. In addition, investment companies should be sensitive to situations that create apparent, but not actual, conflicts of interest. Service to the Companies should never be subordinated to personal gain and advantage. Certain conflicts of interest covered by this Code arise out of the relationships between Covered Officers and the Companies that already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended and the Investment Advisers Act of 1940, as amended. For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Companies because of their status as "affiliated persons" of the Companies. Therefore, as to the existing statutory and regulatory prohibitions on individual behavior, they will be deemed to be incorporated in this Code and therefore any material violation will also be deemed a violation of this Code. Covered Officers must in all cases comply with applicable statutes and regulations. As to conflicts arising from, or as a result of the contractual relationship between, the Companies and the investment adviser of which the Covered Officers are also officers or employees, it is recognized by the Board that, subject to the adviser's fiduciary duties to the Companies, the Covered Officers will in the normal course of their duties (whether formally for the Companies or for the adviser, or for both) be involved in establishing policies and implementing decisions which will have different effects on the adviser and the Companies. The Board recognizes that the participation of the Covered Officers in such activities is inherent in the contractual relationship between the Companies and the adviser and is consistent with the expectation of the Board of the performance by the Covered Officers of their duties as officers of the Companies. In addition, it is recognized by the Board that the Covered Officers may also be officers or employees of other investment companies advised by the same adviser and the codes which apply to senior officers of those investment companies will apply to the Covered Officers acting in those distinct capacities. Each Covered Officer must: o avoid conflicts of interest wherever possible; o handle any actual or apparent conflict of interest ethically; o not use his or her personal influence or personal relationships to influence investment decisions or financial reporting by an investment company whereby the Covered Officer would benefit personally to the detriment of any of the Companies; o not cause an investment company to take action, or fail to take action, for the personal benefit of the Covered Officer rather than the benefit of such company; o not use knowledge of portfolio transactions made or contemplated for an investment company to profit or cause others to profit, by the market effect of such transactions; and o as described in more detail below, discuss any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest with the Chief Legal Officer of the AIM Funds (the "Chief Legal Officer"). Some conflict of interest situations that should always be discussed with the Chief Legal Officer, if material, include the following: o any outside business activity that detracts from an individual's ability to devote appropriate time and attention to his or her responsibilities with the Companies; o being in the position of supervising, reviewing or having any influence on the job evaluation, pay or benefit of any immediate family member; o any direct ownership interest in, or any consulting or employment relationship with, any of the Companies' service providers, other than its investment adviser, distributor or other AMVESCAP affiliated entities and other than a de minimis ownership interest (for purposes of this section of the Code an ownership interest of 1% or less shall constitute a de minimis ownership interest, and an ownership interest of more than 1% creates a rebuttable presumption that there may be a material conflict of interest); and o a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Companies for effecting portfolio transactions or for selling or redeeming shares, other than an interest arising from the Covered Officer's employment with AIM, its subsidiaries, its parent organizations and any affiliates or subsidiaries thereof, such as compensation or equity ownership, and other than an interest arising from a de minimis ownership interest in a company with which the Companies execute portfolios transactions or a company that receives commissions or other fees related to its sales and redemptions of shares of the Companies (for purposes of this section of the Code an ownership interest of 1% or less shall constitute a de minimis ownership interest, and an ownership interest of more than 1% creates a rebuttable presumption that there may be a material conflict of interest). IV. DISCLOSURE Each Covered Officer is required to be familiar, and comply, with the Companies' disclosure controls and procedures so that the Companies' subject reports and documents filed with the SEC comply in all material respects with the applicable federal securities laws and SEC rules. In addition, each Covered Officer having direct or supervisory authority regarding these SEC filings or the Companies' other public communications should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Companies and take other appropriate steps regarding these disclosures with the goal of making full, fair, accurate, timely and understandable disclosure. Each Covered Officer must: o familiarize himself/herself with the disclosure requirements applicable to the Companies as well as the business and financial operations of the Companies; and o not knowingly misrepresent, or cause others to misrepresent, facts about the Companies to others, whether within or outside the Companies, including representations to the Companies' internal auditors, independent Directors/Trustees, independent auditors, and to governmental regulators and self-regulatory organizations. V. COMPLIANCE It is the Companies' policy to comply in all material respects with all applicable governmental laws, rules and regulations. It is the personal responsibility of each Covered Officer to adhere to the standards and restrictions imposed by those laws, rules and regulations, including those relating to affiliated transactions, accounting and auditing matters. VI. REPORTING AND ACCOUNTABILITY Each Covered Officer must: o upon receipt of the Code, sign and submit to the Chief Compliance Officer of the Companies an acknowledgement stating that he or she has received, read, and understands the Code. o annually thereafter submit a form to the Chief Compliance Officer of the Companies confirming that he or she has received, read and understands the Code and has complied with the requirements of the Code. o not retaliate against any employee or other Covered Officer for reports of potential violations that are made in good faith. o notify the Chief Legal Officer promptly if he becomes aware of any existing or potential violation of this Code. Failure to do so is itself a violation of this Code. Except as described otherwise below, the Chief Legal Officer is responsible for applying this Code to specific situations in which questions are presented to him or her and has the authority to interpret this Code in any particular situation. The Chief Legal Officer shall take all action he or she considers appropriate to investigate any actual or potential violations reported to him or her. The Chief Legal Officer is authorized to consult, as appropriate, with the Chairman of the Audit Committees of the Board, counsel to the Companies and counsel to the independent Directors/Trustees, and is encouraged to do so. The Chief Legal Officer is responsible for granting waivers and determining sanctions, as appropriate. In addition, approvals, interpretations, or waivers sought by the Covered Officers may also be considered by the Chairman of the AIM Funds Audit Committees. The Companies will follow these procedures in investigating and enforcing this Code, and in reporting on the Code: o the Chief Legal Officer will take all appropriate action to investigate any violations reported to him or her; o violations and potential violations will be reported to the Chairman of the Audit Committees of the Board after such investigation; o if the Chairman of the Audit Committees determines that a violation has occurred, he or she will inform the Board, which will take all appropriate disciplinary or preventive action; o appropriate disciplinary or preventive action may include a letter of censure, suspension, dismissal or, in the event of criminal or other serious violations of law, notification to the SEC or other appropriate law enforcement authorities; o the Chief Legal Officer will be responsible for granting waivers, as appropriate; and o any changes to or waivers of this Code will, to the extent required, be disclosed on Form N-CSR as provided by SEC rules. VII. OTHER POLICIES AND PROCEDURES The Companies' and the Advisers' and Principal Underwriters' codes of ethics under Rule 17j-1 under the Investment Company Act and the Advisers' more detailed policies and procedures set forth in its Compliance and Supervisory Procedures Manual are separate requirements applying to Covered Officers and others, and are not part of this Code. VIII. AMENDMENTS This Code may not be amended except in written form, which is specifically approved by a majority vote of the Companies' Board, including a majority of independent Directors/Trustees. IX. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code shall be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the members of the Companies' Board, counsel to the Companies, and counsel to the independent Directors/Trustees. Date: September 17, 2003 EXHIBIT A Persons Covered by this Code of Ethics: Robert H. Graham Dana R. Sutton Date: September 27, 2003 THE AIM FAMILY OF FUNDS CODE OF ETHICS--ACKNOWLEDGEMENT I hereby acknowledge that I am a Principal Officer of the Companies and I am aware of and subject to the Companies' Code of Ethics. Accordingly, I have read and understood the requirements of the Code of Ethics and I am committed to fully comply with the Code of Ethics. I recognize my obligation to promote: 1. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; 2. Full, fair, accurate, timely, and understandable disclosure in reports and documents that the Companies file with, or submit to, the Commission and in other public communications made by the Companies; and 3. Compliance with applicable governmental laws, rules, and regulations. - --------------------------- ---------------------------------------------- Date Name: Title: EX-99.CERT 4 h11741exv99wcert.txt CERTIFICATIONS PURSUANT TO SECTION 302 Sarbanes Oxley - 302 Certification I, Robert H. Graham, certify that: 1. I have reviewed this report on Form N-CSR of AIM Floating Rate Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 12, 2004 \S\ Robert H. Graham -------------------- --------------------------------------------- Robert H. Graham, Principal Executive Officer Sarbanes Oxley - 302 Certification I, Sidney M. Dilgren, certify that: 1. I have reviewed this report on Form N-CSR of AIM Floating Rate Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 12, 2004 \S\ Sidney M. Dilgren ------------------- ---------------------------------------------- Sidney M. Dilgren, Principal Financial Officer EX-99.906CERT 5 h11741exv99w906cert.txt CERTIFICATIONS PURSUANT TO SECTION 906 Sarbanes Oxley - 906 Certification CERTIFICATION OF SHAREHOLDER REPORT In connection with the Certified Shareholder Report of AIM Floating Rate Fund (the "Company") on Form N-CSR for the period ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert H. Graham, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: February 12, 2004 \S\ Robert H. Graham ----------------------- ----------------------------------- Robert H. Graham Principal Executive Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. Sarbanes Oxley - 906 Certification CERTIFICATION OF SHAREHOLDER REPORT In connection with the Certified Shareholder Report of AIM Floating Rate Fund (the "Company") on Form N-CSR for the period ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Sidney M. Dilgren, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: February 12, 2004 \S\ Sidney M. Dilgren ----------------------- ----------------------------------- Sidney M. Dilgren Principal Financial Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----