<PAGE> 1
ANNUAL REPORT / DECEMBER 31 1999
AIM FLOATING RATE FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[COVER IMAGE]
-------------------------------------
SAILBOATS AROUND THE PENINSULA BY PETER SICKLES
SAILBOATS GLIDE MAJESTICALLY ON A PLACID OCEAN ON THEIR
WAY TO A FRIENDLY PORT. WHETHER THE ECONOMIC WATERS ARE
CALM OR TURBULENT, AIM FLOATING RATE FUND ENDEAVORS TO
BE A STABLE INVESTMENT VEHICLE FOR SHAREHOLDERS WHILE
TRANSPORTING THEM TO THEIR FINANCIAL DESTINATION.
-------------------------------------
AIM Floating Rate Fund is for shareholders who seek a high 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.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Floating Rate Fund's performance figures are historical, and they
reflect changes in net asset value and the reinvestment of distributions.
o When sales charges are included in performance figures, performance reflects
the maximum applicable early withdrawal charge. The early withdrawal charge
declines from 3% beginning at the time of purchase to 0% at the beginning of
the fifth year.
o The 30-day distribution rate is calculated by dividing the annualized sum of
the previous 30 days' dividends declared by the offering price per share on
the last day of the period.
o The fund invests primarily in higher-yielding, lower-rated senior secured
floating rate corporate loans and other debt obligations that are subject to
the risk of nonpayment of scheduled interest or principal payments, which
may cause the fund's net asset value per share to decline. Prepayment of
principal by borrowers may require the fund to replace its investment with a
lower-yielding security that may adversely affect the fund's net asset
value.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The London Interbank Offered Rate (LIBOR) is the interest rate the world's
most creditworthy banks charge one another for large loans. It is used
worldwide as a base interest rate for loans made to major commercial and
industrial corporations.
o An investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends and do not reflect sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM FLOATING RATE FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
The fiscal year discussed in this report has reconfirmed our
[PHOTO OF faith in two long-established principles of investing:
Charles T. portfolio diversification and long-term thinking. We could
Bauer, title this report "What a Difference a Year Makes."
Chairman of An investor surveying conditions when the fiscal year
the Board of opened on January 1, 1999, would have seen a market
THE FUND dominated by large-capitalization stocks and high-quality
APPEARS HERE] bonds, especially U.S. Treasuries. During 1998, two
well-known indexes of large-capitalization U.S. companies,
the S&P 500 and the Dow Jones Industrial Average, were up
28.60% and 18.15%, respectively. By contrast,
smaller-company stocks in the Russell 2000 had lost 2.55%.
Overseas, many markets were languishing, especially in Asia,
where so many financial difficulties had originated in 1997.
In bond markets as well, name-brand quality was the
place to be. The Lehman Government/Corporate Bond Index,
which follows sovereign issues and investment-grade debt, was up 9.47%, while
the Lehman High Yield Index, which tracks riskier "junk bonds," had risen only
1.60%.
It would be easy for an investor to conclude that blue-chip issues, whether
equity or fixed-income, were the place to be, that it was time to divest himself
of everything else and put all his eggs in the blue-chip basket. The investor,
of course, would be wrong.
MARKETS TURN
While large-capitalization stocks continued to do very well, during 1999 markets
broadened dramatically with many investment sectors performing a complete
turnaround. For example, the small-cap stocks in the Russell 2000 were up 21.26%
for calendar year 1999, and many Asian markets, particularly Japan, had staged a
comeback.
The same holds true of bonds. The higher-quality Lehman index was down 2.15%
during 1999 while the Lehman High Yield index was up 2.39%.
The point, at the risk of sounding repetitive to those of you who have
invested with us for a long time, is that this is why diversification is a
fundamental investing principle. Market sectors and asset classes go in and out
of favor, but over the long run--and the long run is several years--the markets'
overall trend has been upward. Selecting an asset class or a market sector on
the basis of a short-term snapshot of conditions is usually unwise, as is
concentrating your portfolio in one asset class. Staying fully invested in a
diversified portfolio remains a compelling strategy and one of your best
prospects for long-term gain. We also continue to remind you that the past few
years have seen extraordinary gains in some markets, and there is no assurance
that this trend will continue.
LOOKING AHEAD
As we look about at the close of this fiscal year, we are encouraged by multiple
signs of economic health in Europe and Asia, not to mention the prolonged U.S.
economic expansion. However, we are aware of how easily an investor could have
been misled by conditions just 12 months ago. For our shareholders, we therefore
reiterate our commitment to investing through a financial advisor. In addition
to helping you select investments appropriate to your time horizon and risk
tolerance, a financial advisor can keep you informed about how changing market
conditions affect you and your portfolio--and help ensure that when you do alter
your investments, there's a logical reason for doing so. AIM believes every
investor should be guided by a financial professional.
FUND MANAGERS COMMENT
In the pages that follow, your fund's portfolio managers discuss how they
managed your fund during the year ended December 31, how the markets behaved and
what they foresee for the near future. We trust you will find their discussion
informative. If you have any questions or comments, we invite you to contact us,
either at our Web site, aimfunds.com, or through our Client Services department
at 800-959-4246. Information about your account is also available through our
automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
-------------------------------------
STAYING FULLY
INVESTED IN A DIVERSIFIED
PORTFOLIO REMAINS
A COMPELLING STRATEGY
AND ONE OF YOUR
BEST PROSPECTS FOR
LONG-TERM GAIN.
-------------------------------------
AIM FLOATING RATE FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
FUND PROVIDES SOLID INCOME,
POSTS POSITIVE GAINS
FINANCIAL MARKETS WERE VOLATILE IN 1999. HOW DID AIM FLOATING RATE FUND PERFORM?
Despite a volatile market environment, the fund, which invests primarily in
senior secured floating-rate loans, provided solid income and posted positive
gains for the fiscal year. As of December 31, 1999, the fund's 30-day
distribution rate was 8.04%. By comparison, the six-month London InterBank
Offered Rate (LIBOR) was 6.13%. Excluding sales charges, the fund's total return
was 5.49% for the 12-month period ended December 31--a year in which many
fixed-income investments endured losses.
During the fiscal year, net asset value per share remained within a
relatively narrow range of $9.68 to $9.85, extending the fund's record of
share-price stability as shown on the accompanying chart. While the fund
attempts to maintain a relatively stable net asset value, floating-rate
investments should not be confused with money market funds, and the fund's net
asset value will most likely not be as stable as that of a money market fund.
During the fiscal year, the fund's net assets increased from $288 million to
$440 million.
WHAT WERE SOME OF THE MAJOR TRENDS IN FINANCIAL MARKETS?
The bond market endured its worst year since 1994. The weakness in the market
stemmed from investor concerns that strong economic growth would prompt the
Federal Reserve Board (the Fed) to raise interest rates to keep inflation at
bay. Ultimately, in three separate moves, the central bank raised the key
federal funds rate from 4.75% to 5.50%. The bond market was also rattled by Y2K
concerns, which largely proved to be unfounded, and the decline in value of the
U.S. dollar against the Japanese yen. Only a few bond classes, such as
high-yield bonds and emerging-markets debt, posted gains for the fiscal year.
Lower-rated bonds outpaced higher-rated bonds, and shorter-term securities
outperformed longer-term securities.
Several key stock-market indexes soared to new heights in 1999. However,
stock markets were volatile primarily because of interest-rate concerns.
Moreover, the market's impressive gains were largely confined to growth stocks,
particularly technology issues.
HOW DID SENIOR SECURED FLOATING-RATE LOANS FARE IN THE RISING INTEREST-RATE
ENVIRONMENT?
Senior secured floating-rate loans tended to be more stable in value than other
types of investments. That's because the interest rates on these loans, made by
banks and financial institutions to corporations, are periodically adjusted
(usually every 30 to 60 days) to correspond with the underlying LIBOR contract.
The senior status of these loans also helps them retain their value.
WHAT IS THE MAIN RISK ASSOCIATED WITH SENIOR SECURED FLOATING-RATE LOANS?
That would be credit risk. Most of these loans are below investment-grade
quality as measured by Standard & Poor's Corporation (S&P) and Moody's Investors
Service (Moody's), two widely known credit-rating agencies.
FUND VS. LIBOR
As of 12/31/99
================================================================================
30-Day
Distribution
Rate LIBOR
- --------------------------------------------------------------------------------
8.04% 6.13%
================================================================================
RELATIVE PRICE STABILITY
5/1/97-12/31/99
================================================================================
5/1/97 10 12/97 10.02 7/98 10
6/97 10 1/98 10.02 8/98 10
7/97 10 2/98 10.02 9/98 9.89
8/97 10.01 3/98 10.01 10/98 9.85
9/97 10.01 4/98 10.01 11/98 9.82
10/97 10.02 5/98 10 12/98 9.84
11/97 10.02 6/98 10 12/99 9.68
Source: Lipper, Inc. There is no guarantee that the fund will maintain a
constant net asset value. Investment return will vary so you may have a gain or
a loss when you sell shares. Past performance cannot guarantee comparable future
results.
================================================================================
GROWTH IN NET ASSETS
12/31/98-12/31/99
in millions
================================================================================
1998 1999
- --------------------------------------------------------------------------------
$288 $439
================================================================================
-------------------------------------
SENIOR SECURED FLOATING-RATE LOANS
TENDED TO BE MORE STABLE IN VALUE THAN
OTHER TYPES OF INVESTMENTS.
-------------------------------------
See important fund and index disclosures inside front cover.
AIM FLOATING RATE FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
HOW DO YOU ATTEMPT TO REDUCE THIS RISK?
We are very careful in selecting loans for the portfolio. Each company
represented in the portfolio has undergone an extensive analysis that includes
an assessment of:
o the company's management and firm's position within its particular industry;
o the corporation's prospects and its dependence on various markets worldwide;
o the firm's financial sponsor and its overall financial flexibility.
After this evaluation is completed, we analyze the loan to ascertain its value
compared to similar types of investments and to determine how well it might
trade in the market. If our overall assessment is favorable, we will then decide
to buy the loan.
WHAT OTHER PRECAUTIONS DO YOU TAKE?
We closely monitor each of the fund's holdings. Because senior secured
floating-rate loans are typically placed privately with institutional investors,
we sign confidentiality agreements for each financing. We get information such
as financial reports directly from the companies represented in the portfolio,
usually monthly.
Additionally, the borrower is generally bound by a stringent agreement.
Consequently, if a company develops a problem in meeting its debt obligation, we
can react swiftly to resolve the problem, usually well before it reaches the
default stage.
While past performance cannot guarantee comparable future results, the
default rate on these loans has historically been relatively low. In most
instances, these loans (which carry the highest claim on the company's assets
and earnings) are backed by collateral such as stock, property or equipment,
which can be sold to meet debt obligations.
HOW WAS THE FUND POSITIONED AT THE END OF THE FISCAL YEAR?
A total of 100 companies, representing a broad range of industries, were
represented in the portfolio. Wyndham International, the fund's top holding,
owns and operates more than 300 hotels. Lyondell Petrochemical is a major
manufacturer of petrochemicals and polymers, while Allied Waste Industries
provides trash collection service for nearly 10 million residential, commercial
and industrial customers in 46 states.
Huntsman makes a wide variety of specialty and industrial chemicals used in
detergents and by the rubber, plastics and packaging industries. Ferrellgas
sells propane to more than 800,000 customers in 45 states and the District of
Columbia.
WHAT IS YOUR OUTLOOK?
We expect the stock and bond markets to remain volatile because of interest-rate
concerns. On February 2, after the close of the fiscal year, the Fed raised the
federal funds rate to 5.75%. Although by no means a certainty, it appears that
the Fed is poised to raise interest rates again in the months ahead to slow
economic growth and forestall inflation. Uncertainty about the Fed's direction
could have an unsettling effect on the stock and bond markets.
In such an environment, we would expect senior secured floating-rate loans
to be more stable in price than other types of investments because of their
adjustable interest rates. Such a development could make these loans even more
attractive to investors seeking a steady source of income and relative
share-price stability.
PORTFOLIO COMPOSITION
As of 12/31/99, based on total net assets
<TABLE>
<CAPTION>
============================================================================================
TOP 10 ISSUERS TOP 10 INDUSTRIES
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Wyndham International, Inc. 2.27% 1. Lodging 5.47%
2. Lyondell Petrochemical Co. 2.26 2. Media (Broadcasting) 5.20
3. Allied Waste Industries 2.22 3. Containers & Packaging 5.06
4. Graham Packaging 1.77 4. Telephone Systems 4.80
5. Huntsman ICI Chemicals 1.71 5. Media (Publishing) 4.40
6. Ferrellgas, L.P. 1.59 6. Industrial & Commercial Services 4.26
7. Coinmach Corp. 1.56 7. Chemicals (Commodity) 3.81
8. Stone Container Corp. 1.53 8. Office Equipment 3.71
9. Formax, Inc. 1.45 9. Pollution Control (Waste Management) 2.83
10. Sovereign Bancorp 1.42 10. Consumer Services 2.69
The fund's portfolio is subject to change, and there is no assurance that the
fund will continue to hold any particular security.
============================================================================================
</TABLE>
See important fund and index disclosures inside front cover.
AIM FLOATING RATE FUND
3
<PAGE> 6
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL MARKET
RATING AMOUNT VALUE
(Unaudited)
<S> <C> <C> <C>
SENIOR SECURED FLOATING
RATE INTERESTS-92.15%(a)(b)
ADVERTISING-1.14%
Big Flower Press Holdings Co.
Term Loan B due 11/30/08 B1 $5,000,000 $ 5,000,000
- --------------------------------------------------------------------
AEROSPACE & DEFENSE-2.10%
Fairchild Corp.
Term Loan due 04/30/06 Ba3 4,345,404 4,346,490
- --------------------------------------------------------------------
Transtar Metals
Term Loan B due 01/20/06 NR 4,982,143 4,894,955
- --------------------------------------------------------------------
9,241,445
- --------------------------------------------------------------------
AIR FREIGHT-COURIERS-0.54%
Atlas Freighter Leasing, Inc.
Term Loan due 05/29/04 Ba3 2,368,378 2,362,457
- --------------------------------------------------------------------
APPAREL & TEXTILE
MANUFACTURING-1.12%
Glenoit Corp.
Term Loan B due 06/30/04 B1 4,942,229 4,923,695
- --------------------------------------------------------------------
AUTOMOBILE PARTS &
EQUIPMENT-2.32%
Avis Rent A Car, Inc.
Term Loan B due 06/30/06 Ba3 2,500,000 2,509,375
- --------------------------------------------------------------------
Term Loan C due 06/30/07 Ba3 2,500,000 2,509,375
- --------------------------------------------------------------------
Joan Fabrics Corp.
Term Loan B due 06/30/05 NR 1,430,901 1,426,429
- --------------------------------------------------------------------
Term Loan C due 06/30/06 NR 742,183 741,255
- --------------------------------------------------------------------
Tenneco Inc.
Term Loan B due 09/30/07 Ba3 1,500,000 1,508,750
- --------------------------------------------------------------------
Term Loan C due 03/30/08 Ba3 1,500,000 1,508,750
- --------------------------------------------------------------------
10,203,934
- --------------------------------------------------------------------
BEVERAGES-1.13%
Vitality Foodservice, Inc.
Term Loan B due 10/26/06 B1 5,000,000 4,975,000
- --------------------------------------------------------------------
BUILDING MATERIALS-1.87%
Atrium Co.
Term Loan B due 06/30/05 Ba3 1,354,815 1,354,815
- --------------------------------------------------------------------
Term Loan C due 06/30/06 Ba3 1,942,500 1,942,500
- --------------------------------------------------------------------
Trussway Holdings, Inc.
Term Loan B due 12/31/06 B1 5,000,000 4,925,000
- --------------------------------------------------------------------
8,222,315
- --------------------------------------------------------------------
CASINOS-2.07%
Aladdin Gaming, L.L.C.
Term Loan B due 08/26/06 B2 277,778 243,054
- --------------------------------------------------------------------
Term Loan C due 02/26/08 B2 2,222,222 1,944,445
- --------------------------------------------------------------------
Horseshoe Gaming Holding Corp.
Term Loan B due 03/17/06 Ba2 2,992,500 2,990,630
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
(Unaudited)
MOODY'S PRINCIPAL MARKET
RATING AMOUNT VALUE
<S> <C> <C> <C>
CASINOS-(CONTINUED)
Resort at Summerlin, Inc. (The)
Term Loan due 03/31/04 B3 $4,000,000 $ 3,920,000
- --------------------------------------------------------------------
9,098,129
- --------------------------------------------------------------------
CHEMICALS-COMMODITY-3.81%
Huntsman Corp.
Term Loan B due 12/22/05 Ba2 3,442,437 3,433,831
- --------------------------------------------------------------------
Lyondell Petrochemical Co.
Term Loan A due 06/30/03 Ba3 2,958,187 2,960,961
- --------------------------------------------------------------------
Term Loan B due 06/30/05 Ba3 4,926,615 4,974,857
- --------------------------------------------------------------------
Term Loan E due 06/30/06 Ba3 1,975,000 2,015,118
- --------------------------------------------------------------------
Sterling Pulp Chemicals
(SASK) Ltd.
Term Loan B due 06/27/05 B1 3,445,572 3,342,205
- --------------------------------------------------------------------
16,726,972
- --------------------------------------------------------------------
CHEMICALS-SPECIALTY-1.71%
Huntsman ICI Chemicals LLC
Term Loan B due 06/30/07 Ba3 3,750,000 3,763,125
- --------------------------------------------------------------------
Term Loan C due 06/30/08 Ba3 3,750,000 3,764,062
- --------------------------------------------------------------------
7,527,187
- --------------------------------------------------------------------
COAL-0.63%
Centennial Resources(c)
Term Loan A due 03/31/02 Caa1 850,000 --
- --------------------------------------------------------------------
Term Loan B due 03/31/04 Caa1 1,966,666 --
- --------------------------------------------------------------------
P&L Coal Holdings Corp./Peabody
Term Loan B due 06/30/06 Ba2 2,769,231 2,762,307
- --------------------------------------------------------------------
2,762,307
- --------------------------------------------------------------------
COMPUTERS-1.01%
GENICOM Corp.
Term Loan due 09/30/00 NR 360,124 356,522
- --------------------------------------------------------------------
Term Loan B due 09/05/04 NR 4,781,250 4,064,063
- --------------------------------------------------------------------
4,420,585
- --------------------------------------------------------------------
CONSUMER SERVICES-2.69%
Bally Total Fitness Corp.
Term Loan B due 11/04/04 B1 5,000,000 4,968,750
- --------------------------------------------------------------------
Coinmach Corp.
Term Loan B due 06/30/05 NR 6,862,688 6,854,110
- --------------------------------------------------------------------
11,822,860
- --------------------------------------------------------------------
CONTAINERS & PACKAGING-5.06%
Graham Packaging Co. L.P.
Term Loan B due 01/30/06 B1 2,430,811 2,430,203
- --------------------------------------------------------------------
Term Loan C due 01/30/07 B1 2,014,100 2,007,757
- --------------------------------------------------------------------
Term Loan D due 01/30/07 B1 3,341,250 3,339,162
- --------------------------------------------------------------------
Kerr Group, Inc.
Term Loan B due 03/09/06 NR 2,000,000 2,000,000
- --------------------------------------------------------------------
Packaging Corp. America
Term Loan B due 04/12/07 Ba3 1,609,504 1,617,954
- --------------------------------------------------------------------
Term Loan C due 04/12/08 Ba3 1,609,504 1,617,954
- --------------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL MARKET
RATING AMOUNT VALUE
(Unaudited)
<S> <C> <C> <C>
CONTAINERS & PACKAGING-(CONTINUED)
Packaging Dynamics, LLC
Term Loan B due 11/20/05 NR $2,479,792 $ 2,479,792
- --------------------------------------------------------------------
Stone Container Corp.
Term Loan C due 11/15/03 Ba3 6,713,090 6,727,073
- --------------------------------------------------------------------
22,219,895
- --------------------------------------------------------------------
COSMETICS-PERSONAL CARE-0.54%
American Safety Razor Co.
Term Loan B due 02/05/05 B1 2,375,000 2,376,484
- --------------------------------------------------------------------
ELECTRICAL COMPONENTS &
EQUIPMENT-1.22%
Electro Mechanical
Solutions, Inc.
Term Loan B due 02/28/04 NR 2,868,163 2,581,347
- --------------------------------------------------------------------
Term Loan C due 11/30/04 NR 3,083,286 2,774,958
- --------------------------------------------------------------------
5,356,305
- --------------------------------------------------------------------
FACTORY EQUIPMENT-1.44%
Formax, Inc.
Term Loan B due 09/30/05 NR 6,359,309 6,351,360
- --------------------------------------------------------------------
FINANCIAL INSTITUTION-0.35%
Amresco Inc.
Term Loan B due 08/12/03 Caa1 1,640,903 1,558,858
- --------------------------------------------------------------------
FINANCIAL SERVICES/DIVERSIFIED-2.55%
Bridge Information Systems, Inc.
Term Loan B due 05/29/05 NR 4,975,000 4,931,220
- --------------------------------------------------------------------
Sovereign Bancorp, Inc.
Term Loan due 06/30/03 Ba3 6,250,000 6,257,813
- --------------------------------------------------------------------
11,189,033
- --------------------------------------------------------------------
FOOD-0.63%
Aurora Foods Inc.
Term Loan B due 09/30/06 Ba2 997,500 999,994
- --------------------------------------------------------------------
New World Pasta Co.
Term Loan B due 01/31/06 Ba2 1,773,267 1,777,700
- --------------------------------------------------------------------
2,777,694
- --------------------------------------------------------------------
HEALTH CARE PROVIDERS-2.52%
Caremark RX, Inc.
Term Loan B due 06/08/01 B1 968,640 917,787
- --------------------------------------------------------------------
Community Health Systems, Inc.
Term Loan D due 12/31/05 NR 4,922,678 4,907,294
- --------------------------------------------------------------------
Genesis Health Ventures, Inc.
Term Loan B due 09/30/04 B2 1,191,410 857,816
- --------------------------------------------------------------------
Term Loan C due 06/30/05 B2 1,188,615 855,803
- --------------------------------------------------------------------
Mariner Post-Acute Network, Inc.(d)
Term Loan B due 03/31/05 Caa2 2,357,920 1,178,960
- --------------------------------------------------------------------
Term Loan C due 03/31/06 Caa2 2,357,920 1,178,960
- --------------------------------------------------------------------
Multicare Companies, Inc.
Term Loan B due 09/30/04 B3 1,221,875 879,750
- --------------------------------------------------------------------
Term Loan C due 06/01/05 B3 406,250 292,499
- --------------------------------------------------------------------
11,068,869
- --------------------------------------------------------------------
</TABLE>
<TABLE>
(Unaudited)
<CAPTION>
MOODY'S PRINCIPAL MARKET
RATING AMOUNT VALUE
<S> <C> <C> <C>
HEAVY CONSTRUCTION-1.19%
Terex Corp.
Term Loan B due 03/06/06 Ba3 $1,722,972 $ 1,724,588
- --------------------------------------------------------------------
Term Loan C due 03/06/06 Ba3 3,500,000 3,503,283
- --------------------------------------------------------------------
5,227,871
- --------------------------------------------------------------------
HEAVY MACHINERY-1.36%
United Rentals
Term Loan C due 06/30/06 Ba2 6,000,000 5,989,998
- --------------------------------------------------------------------
HOME FURNISHINGS/APPLIANCES-0.94%
Rent-A-Center
Term Loan B due 02/05/06 Ba3 1,857,648 1,849,136
- --------------------------------------------------------------------
Term Loan C due 02/05/07 Ba3 2,271,994 2,261,581
- --------------------------------------------------------------------
4,110,717
- --------------------------------------------------------------------
HOUSEHOLD FURNISHINGS-
APPLIANCES-0.96%
Imperial Home Decor Group,
Inc. (The)
Term Loan B due 03/13/05 B1 3,285,652 2,792,804
- --------------------------------------------------------------------
Term Loan C due 03/13/06 B1 1,690,556 1,436,972
- --------------------------------------------------------------------
4,229,776
- --------------------------------------------------------------------
HOUSEHOLD PRODUCTS-2.40%
Boyds Collection, Ltd. (The)
Term Loan B due 04/01/06 Ba3 1,416,667 1,410,763
- --------------------------------------------------------------------
Paint Sundry Brands Corp.
Term Loan B due 08/11/05 NR 1,698,153 1,664,189
- --------------------------------------------------------------------
Term Loan C due 08/11/06 NR 1,570,750 1,539,336
- --------------------------------------------------------------------
United Industries Co. A252
Loan B due 03/24/06 B1 5,940,000 5,943,712
- --------------------------------------------------------------------
10,558,000
- --------------------------------------------------------------------
INDUSTRIAL & COMMERCIAL
SERVICES-4.20%
Century Maintenance Supply, Inc.
Term Loan B due 06/30/05 NR 4,925,000 4,851,125
- --------------------------------------------------------------------
Decision One Corp.
Term Loan B due 08/30/04 Caa3 2,947,500 1,621,125
- --------------------------------------------------------------------
Ferrellgas, L.P.
Term Loan C due 06/17/06 NR 7,000,000 6,973,750
- --------------------------------------------------------------------
Synthetic Industries, Inc.
Term Loan B due 12/13/07 B1 5,000,000 5,025,000
- --------------------------------------------------------------------
18,471,000
- --------------------------------------------------------------------
INDUSTRIAL-DIVERSIFIED-1.86%
Goss Graphic Systems, Inc.
Term Loan due 01/29/03 B3 3,000,000 2,430,000
- --------------------------------------------------------------------
Mueller Group, Inc.
Term Loan B due 08/12/06 B1 995,000 997,073
- --------------------------------------------------------------------
Term Loan C due 08/12/07 B1 995,000 997,073
- --------------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL MARKET
RATING AMOUNT VALUE
(Unaudited)
<S> <C> <C> <C>
INDUSTRIAL-DIVERSIFIED-(CONTINUED)
Thermadyne Holdings Corp.
Term Loan B due 05/22/05 B1 $1,975,000 $ 1,861,438
- --------------------------------------------------------------------
Term Loan C due 05/22/06 B1 1,975,000 1,861,437
- --------------------------------------------------------------------
8,147,021
- --------------------------------------------------------------------
INSURANCE COMPANY-0.44%
Willis Corroon Corp.
Term Loan C due 02/05/08 Ba2 970,000 973,031
- --------------------------------------------------------------------
Term Loan D due 08/05/08 Ba2 970,000 973,031
- --------------------------------------------------------------------
1,946,062
- --------------------------------------------------------------------
LODGING-5.47%
Extended Stay America, Inc.
Term Loan B due 12/31/03 Ba3 4,950,000 4,919,063
- --------------------------------------------------------------------
Interval International Corp.
Term Loan B due 12/16/05 NR 2,087,812 2,077,373
- --------------------------------------------------------------------
Term Loan C due 12/15/06 NR 2,087,812 2,077,373
- --------------------------------------------------------------------
Strategic Hotel Capital
Funding, LLC
Term Loan B due 11/22/04 Ba3 5,000,000 5,000,000
- --------------------------------------------------------------------
Wyndam International, Inc.
Term Loan B due 06/30/06 B1 10,000,000 9,975,000
- --------------------------------------------------------------------
24,048,809
- --------------------------------------------------------------------
MEDIA-BROADCASTING-5.25%
AMFM Operating Inc.
Term Loan A due 11/30/01 Ba1 5,000,000 4,981,250
- --------------------------------------------------------------------
CC Michigan, LLC & CC New
England, LLC
Term Note B due 11/15/08 Ba3 3,200,000 3,200,000
- --------------------------------------------------------------------
Charter Communications Operating
Term Loan B due 03/18/08 Ba3 5,000,000 5,009,528
- --------------------------------------------------------------------
ComCorp Broadcasting, Inc.
Term Loan B due 06/30/07 NR 2,500,000 2,487,500
- --------------------------------------------------------------------
Mediacom LLC
Term Loan B due 09/30/08 Ba3 2,500,000 2,500,000
- --------------------------------------------------------------------
RCN Corp.
Term Loan due 05/19/07 B1 2,400,000 2,415,000
- --------------------------------------------------------------------
White Knight Broadcasting, Inc.
Term Loan B due 06/30/07 NR 2,500,000 2,487,500
- --------------------------------------------------------------------
23,080,778
- --------------------------------------------------------------------
MEDIA-PUBLISHING-4.49%
American Media, Inc.
Term Loan B due 05/07/05 Ba3 1,000,000 1,000,000
- --------------------------------------------------------------------
Term Loan B due 05/07/07 Ba3 4,000,000 4,000,000
- --------------------------------------------------------------------
Enterprise Publishing Co.
Term Loan due 06/30/05 NR 4,808,184 4,808,184
- --------------------------------------------------------------------
Hollinger International Inc.
Term Loan due 12/31/04 Ba1 5,000,000 5,018,750
- --------------------------------------------------------------------
21st Century Newspapers, Inc.
Term Loan B due 09/15/05 NR 4,912,500 4,900,219
- --------------------------------------------------------------------
19,727,153
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL MARKET
RATING AMOUNT VALUE
(Unaudited)
<S> <C> <C> <C>
MEDICAL & BIOTECHNOLOGY-1.14%
Quest Diagnostics Inc.
Term Loan B due 08/16/06 Ba3 $2,600,000 $ 2,606,500
- --------------------------------------------------------------------
Term Loan C due 08/16/07 Ba3 2,400,000 2,406,000
- --------------------------------------------------------------------
5,012,500
- --------------------------------------------------------------------
MEDICAL SUPPLIES-2.08%
Dade Behring, Inc.
Term Loan B due 06/30/06 Ba3 2,487,500 2,491,853
- --------------------------------------------------------------------
Term Loan C due 06/30/07 Ba3 2,487,500 2,491,853
- --------------------------------------------------------------------
Stryker Corp.
Term Loan C due 12/31/06 Ba2 4,146,415 4,158,854
- --------------------------------------------------------------------
9,142,560
- --------------------------------------------------------------------
OFFICE EQUIPMENT-3.71%
Buhrmann N.V.
Term Loan B due 12/28/07 Ba3 5,000,000 5,016,665
- --------------------------------------------------------------------
EMED Co., Inc.
Term Loan B due 03/31/06 NR 3,970,000 3,950,150
- --------------------------------------------------------------------
Identity Group
Term Loan B due 05/07/07 NR 4,987,500 4,981,266
- --------------------------------------------------------------------
20th Century Plastics
Term Loan B due 09/30/05 NR 1,297,401 1,268,209
- --------------------------------------------------------------------
Term Loan C due 09/30/06 NR 1,136,487 1,110,916
- --------------------------------------------------------------------
16,327,206
- --------------------------------------------------------------------
PAPER PRODUCTS-0.57%
Pacifica Papers Inc.
Term Loan B due 03/11/06 Ba2 2,487,500 2,490,609
- --------------------------------------------------------------------
PHARMACEUTICALS-1.53%
Endo Pharmaceuticals, Inc.
Term Loan B due 06/30/04 B1 2,452,381 2,415,595
- --------------------------------------------------------------------
Leiner Health Products
Group, Inc.
Term Loan C due 12/30/05 Ba3 4,406,149 4,318,026
- --------------------------------------------------------------------
6,733,621
- --------------------------------------------------------------------
POLLUTION CONTROL-WASTE
MANAGEMENT-2.83%
Allied Waste Industries, Inc.
Term Loan B due 09/30/05 Ba3 4,545,454 4,432,765
- --------------------------------------------------------------------
Term Loan C due 09/30/06 Ba3 5,454,546 5,319,316
- --------------------------------------------------------------------
Safety-Kleen Corp
Term Loan B due 04/03/05 Ba3 1,343,182 1,345,700
- --------------------------------------------------------------------
Term Loan C due 04/03/06 Ba3 1,343,182 1,345,700
- --------------------------------------------------------------------
12,443,481
- --------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST-2.56%
Pebble Beach Co.
Term Loan B due 07/30/06 B1 1,996,364 2,001,355
- --------------------------------------------------------------------
RCPI Trust
Term Loan due 05/16/00 Ba3 4,255,319 4,255,319
- --------------------------------------------------------------------
Starwood Hotels & Resorts
Worldwide, Inc.
Term Loan due 02/23/03 Ba1 5,000,000 5,000,000
- --------------------------------------------------------------------
11,256,674
- --------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL MARKET
RATING AMOUNT VALUE
(Unaudited)
<S> <C> <C> <C>
RECREATION-ENTERTAINMENT-0.45%
ClubCorp., Inc.
Term Loan B due 03/25/07 Ba3 $2,000,000 $ 2,000,000
- --------------------------------------------------------------------
RECREATION-OTHER-0.49%
KSL Recreation Group Inc.
Revolving Credit due
04/30/04 B2 778,776 767,094
- --------------------------------------------------------------------
Term Loan A due 04/30/05 B2 700,000 693,000
- --------------------------------------------------------------------
Term Loan B due 04/30/06 B2 700,000 693,000
- --------------------------------------------------------------------
2,153,094
- --------------------------------------------------------------------
RESTAURANTS-1.09%
AFC Enterprises, Inc.
Term Loan B due 06/30/04 Ba3 4,808,391 4,811,397
- --------------------------------------------------------------------
RETAILERS-DRUG BASED-1.13%
Duane Reade Inc.
Term Loan B due 02/15/03 B1 4,421,250 4,412,960
- --------------------------------------------------------------------
Term Loan C due 02/15/06 B1 555,474 555,474
- --------------------------------------------------------------------
4,968,434
- --------------------------------------------------------------------
RETAILERS-BROADLINE-1.12%
Petco Animal Supplies, Inc.
Term Loan B due 06/18/06 B2 4,987,500 4,943,859
- --------------------------------------------------------------------
SEMICONDUCTOR & RELATED-2.27%
International Rectifier Corp.
Term Loan B due 06/30/05 NR 4,977,273 4,964,830
- --------------------------------------------------------------------
Semiconductor Components Group
Term Loan B due 08/04/06 Ba3 2,407,407 2,407,407
- --------------------------------------------------------------------
Term Loan C due 08/04/07 Ba3 2,592,593 2,592,593
- --------------------------------------------------------------------
9,964,830
- --------------------------------------------------------------------
SOFTWARE & PROCESSING-0.46%
Merrill Corp.
Term Loan B due 11/15/07 B1 2,000,000 2,002,500
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MOODY'S PRINCIPAL MARKET
RATING AMOUNT VALUE
(Unaudited)
<S> <C> <C> <C>
STEEL-0.68%
Neenah Foundry Co.
Term Loan B due 09/30/05 Ba1 $3,000,000 $ 2,992,500
- --------------------------------------------------------------------
TELEPHONE SYSTEMS-4.80%
CommNet Cellular Inc.
Term Loan B due 12/31/06 B1 586,380 586,380
- --------------------------------------------------------------------
Term Loan C due 03/31/07 B1 1,161,150 1,161,150
- --------------------------------------------------------------------
Term Loan D due 09/30/07 B1 3,251,743 3,251,743
- --------------------------------------------------------------------
Nextel Communications Inc.
Term Loan B due 06/30/08 Ba2 3,000,000 3,031,608
- --------------------------------------------------------------------
Term Loan C due 12/31/08 Ba2 3,000,000 3,031,608
- --------------------------------------------------------------------
Tritel Holding Corp.
Term Loan B due 03/31/08 B2 5,000,000 5,018,750
- --------------------------------------------------------------------
VoiceStream PCS
Term Loan B due 06/26/07 B2 5,000,000 4,995,835
- --------------------------------------------------------------------
21,077,074
- --------------------------------------------------------------------
TRANSPORTATION EQUIPMENT-0.23%
Transportation Technologies Ind., Inc.
Term Loan B due 04/21/05 Ba2 997,500 997,500
- --------------------------------------------------------------------
Total Senior Secured
Floating Rate
Interests (Cost
$415,552,838) 405,040,408
- --------------------------------------------------------------------
REPURCHASE AGREEMENT-7.09%(E)
State Street Bank & Trust
Co., 2.50%, 01/03/00
(Cost $31,145,000)(f) 31,145,000 31,145,000
- --------------------------------------------------------------------
TOTAL INVESTMENTS-99.24%
(Cost $446,697,838) 436,185,408
- --------------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.76% 3,337,315
- --------------------------------------------------------------------
NET ASSETS-100% $439,522,723
====================================================================
</TABLE>
Abbreviations
NR - Not rated
Notes to Schedule of Investments:
(a) 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. Senior secured floating rate interests
are, at present, not readily marketable and may be subject to restrictions
on resale.
(b) 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 a expected average life of three to five years.
(c) Non-income producing security: Centennial Resources, Inc. filed for
bankruptcy under Chapter 11 on October 13, 1998.
(d) Non-income producing security: Mariner Post-Acute Network, Inc. filed for
bankruptcy under Chapter 11 on January 24, 2000.
(e) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(f) Repurchase agreement entered into 12/31/99 with a maturing value of
$31,151,489. Collateralized by U.S. Government obligations.
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$446,697,838) $436,185,408
- ---------------------------------------------------------
Receivables for:
Fund shares sold 2,345,076
- ---------------------------------------------------------
Interest 3,368,395
- ---------------------------------------------------------
Unamortized organizational costs 98,903
- ---------------------------------------------------------
Other assets 31,443
- ---------------------------------------------------------
Total assets 442,029,225
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Dividend distributions 1,382,154
- ---------------------------------------------------------
Deferred facility fees 355,739
- ---------------------------------------------------------
Due to bank 364,658
- ---------------------------------------------------------
Accrued advisory and administrative fees 284,060
- ---------------------------------------------------------
Accrued accounting services fees 6,186
- ---------------------------------------------------------
Accrued transfer agent fees 21,875
- ---------------------------------------------------------
Accrued operating expenses 91,830
- ---------------------------------------------------------
Total liabilities 2,506,502
- ---------------------------------------------------------
Net assets applicable to shares outstanding $439,522,723
- ---------------------------------------------------------
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: 45,410,075
- ---------------------------------------------------------
NET ASSET VALUE AND OFFERING PRICE PER
SHARE $ 9.68
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $30,228,136
- ---------------------------------------------------------
Facility fees earned 693,434
- ---------------------------------------------------------
Total investment income 30,921,570
- ---------------------------------------------------------
EXPENSES:
Advisory and administrative fees 4,352,734
- ---------------------------------------------------------
Accounting services fees 79,739
- ---------------------------------------------------------
Custodian fees 36,288
- ---------------------------------------------------------
Directors' fees 21,289
- ---------------------------------------------------------
Transfer agent fees 303,644
- ---------------------------------------------------------
Professional fees 407,904
- ---------------------------------------------------------
Other 316,767
- ---------------------------------------------------------
Total expenses 5,518,365
- ---------------------------------------------------------
Less: Expenses paid indirectly (7,557)
- ---------------------------------------------------------
Expense waivers (164,548)
- ---------------------------------------------------------
Net expenses 5,346,260
- ---------------------------------------------------------
Net investment income 25,575,310
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (515,356)
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (5,999,961)
- ---------------------------------------------------------
Net gain (loss) from investment
securities (6,515,317)
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $19,059,993
=========================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 25,575,310 $ 15,638,616
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (515,356) 10,508
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (5,999,961) (4,634,050)
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 19,059,993 11,015,074
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income (25,583,506) (15,477,327)
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities (22,939) (150,555)
- --------------------------------------------------------------------------------------------
Share transactions-net 157,995,609 130,989,233
- --------------------------------------------------------------------------------------------
Net increase in net assets 151,449,157 126,376,425
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 288,073,566 161,697,141
- --------------------------------------------------------------------------------------------
End of period $439,522,723 $288,073,566
============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $450,409,846 $292,414,237
- --------------------------------------------------------------------------------------------
Undistributed net investment income 153,093 161,289
- --------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (527,786) 10,509
- --------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (10,512,430) (4,512,469)
- --------------------------------------------------------------------------------------------
$439,522,723 $288,073,566
============================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Cash Provided by Operating Activities:
Net increase in net assets resulting from operations...... $ 19,059,993
Increase in receivables................................ (1,101,074)
Increase in payables................................... 68,961
Net realized and unrealized gain on investments........ 6,515,317
Decrease in deferred facility fees..................... (226,563)
Decrease in unamortized organization costs............. 42,473
---------------
Net cash provided by operating activities......... 24,359,107
---------------
Cash Used for Investing Activities:
Proceeds from principal payments and sales of senior
floating rate interests................................ 291,137,103
Purchases of senior secured floating rate interests....... (443,109,767)
Purchases of short-term investments....................... (4,989,462,087)
Proceeds from sales and maturities of short-term
investments............................................ 4,984,600,442
---------------
Net cash used in investing activities............. (156,834,309)
---------------
Cash Provided by Financing Activities:
Proceeds from capital shares sold and reinvested.......... 192,931,473
Disbursements from capital shares repurchased............. (49,481,864)
Dividends paid to shareholders............................ (11,339,821)
Proceeds from bank line of credit......................... --
---------------
Net cash provided by financing activities......... 132,109,788
---------------
Net decrease in cash...................................... (365,414)
Cash at Beginning of Period............................... 756
---------------
Cash at End of Period..................................... $ (364,658)
===============
Non-Cash Financing Activities:
Value of capital shares issued in reinvestment of
dividends paid to shareholders......................... $ 13,669,943
===============
</TABLE>
See notes to financial statements.
10
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Floating Rate Fund, (the "Fund"), is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a continuously offered non-diversified, closed-end management investment
company.
The Fund invests substantially all of its investable assets in Floating Rate
Portfolio (the "Portfolio"). The Portfolio is organized as a Delaware business
trust which is registered under the 1940 Act as non-diversified, closed-end
management investment company.
The Portfolio has investment objectives, policies and limitations
substantially identical to those of the Fund. Therefore, the financial
statements of the Fund and Portfolio have been presented on a consolidated
basis, and represent all activities of both the Fund and Portfolio. Through
December 31, 1999, all of the shares of beneficial interest of the Portfolio
were owned by either the Fund or INVESCO, Inc., which has a nominal ($100)
investment in the Portfolio.
The preparation of financial statements in conformity with generally accepted
accounting principles 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 and the Portfolio in the preparation of their financial statements.
A. Portfolio Valuation -- The Portfolio invests primarily in senior secured
corporate loans ("Corporate Loans") and senior secured debt securities
("Corporate Debt Securities") that meet credit standards established by
INVESCO Senior Secured Management, Inc., (the "Sub-advisor"). When possible,
A I M Advisors, Inc. ("AIM") or the Sub-advisor will rely on quotations
provided by banks, dealers or pricing services with respect to Corporate
Loans and Corporate Debt Securities. Whenever it is not possible to obtain
such quotes, the Sub-advisor, subject to guidelines reviewed by the
Portfolio's Board of Trustees, values the Corporate Loans and Corporate Debt
Securities at fair value, which approximates market value. In valuing a
Corporate Loan or Corporate Debt Security, the Sub-advisor considers, among
other factors, (1) the credit worthiness of the U.S. or non-U.S. Company
borrowing or issuing Corporate Debt Securities and any intermediate loan
participants, (2) the current interest rate, period until next interest rate
reset and maturity of the Corporate Loan or Corporate Debt Security, (3)
recent prices in the market for instruments of similar quality, rate, and
period until next interest rate reset and maturity.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded on
the accrual basis. Facility fees received are recognized as income over the
expected life of the loan.
C. Distributions -- Distributions from income are recorded on ex-dividend date,
and are declared daily and paid monthly. Distributions from net realized
capital gains, if any, are generally paid annually and recorded on
ex-dividend date.
D. Federal Income Taxes -- The Fund intends to comply with the requirements 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 gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund has a capital loss
carryforward of $525,269 as of December 31, 1999 which may be carried forward
to offset future taxable gains, if any, which expires in varying increments,
if not previously utilized, in the year 2007.
E. Intermediate Participants -- The Portfolio invests in Corporate Loans from
U.S. or non-U.S. companies (the "Borrowers"). The investment of the Portfolio
in a Corporate Loan may take the form of participation interests or
assignments. If the Portfolio 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 Portfolio would be required to rely on
the Lender that sold the participation interest not only for the enforcement
of the Portfolio's rights against the Borrower but also for the receipt and
processing of payments due to the Portfolio under the Corporate Loans. As
such, the Portfolio is subject to the credit risk of the Borrower and a
Participant. Lenders and Participants interposed between the Portfolio 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
Portfolio 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 Portfolio on such interests or securities in connection
with such transactions prior to the date the Portfolio 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
Portfolio will generally purchase these securities with the intention of
11
<PAGE> 14
acquiring such securities, they may sell such securities before the
settlement date.
G. Deferred Organizational Expenses -- Expenses incurred by the Fund or
Portfolio in connection with its organization aggregated $212,350. These
expenses are being amortized on a straight-line basis over a five-year
period.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's and the Portfolio's investment
manager and administrator. The Fund pays AIM administration fees at an
annualized rate of 0.25% of the Fund's average daily net assets. The Portfolio
pays AIM investment management and administration fees at an annual rate of
0.95% of the Portfolio's average daily net assets. AIM has contractually agreed
to limit the Fund's expenses (exclusive of brokerage commissions, taxes,
interest and extraordinary expenses) to the maximum annual rate of 1.50% of the
average daily net assets of the Fund. During the year ended December 31, 1999,
AIM waived fees of $164,548.
Effective July 1, 1999, the Trust entered into a master administrative
services agreement with AIM, replacing the prior pricing and accounting
agreement. The Fund, pursuant to the master administrative services agreement
with AIM, has agreed to pay AIM for certain administrative costs incurred in
providing accounting services to the Fund and the Portfolio. Prior to July 1,
1999, AIM was the pricing and accounting agent for the Fund and the Portfolio.
The monthly fee for these services paid to AIM was a percentage, not to exceed
0.03% annually, of a Fund's average daily net assets. The annual fee rate was
derived based on the aggregate net assets of the funds which comprised the
following investment companies: AIM Growth Series, AIM Investment Funds, AIM
Series Trust, G.T. Global Variable Investment Series and G.T. Global Variable
Investment Trust. The fee was calculated at the rate of 0.03% of the first $5
billion of assets and 0.02% to the assets in excess of $5 billion. An amount is
allocated to and paid by each such fund based on its relative average daily net
assets. For the year ended December 31, 1999, AIM was paid $79,739 for such
services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $243,528 for such services.
A I M Distributors, Inc. ("AIM Distributors") serves as the Fund's
distributor. AIM Distributors did not receive any commissions from sales of
shares of the Fund during the year ended December 31, 1999. During the year
ended December 31, 1999, AIM Distributors received $854,327 in early withdrawal
charges imposed on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
custodian fees of $7,557 under an expense offset arrangement. The effect of the
above arrangement resulted in a reduction of the Fund's total expenses of $7,557
during the year ended December 31, 1999.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period. Prior to May 28, 1999, the Fund, along with certain
other funds advised and/or administered by AIM, had a line of credit with
BankBoston and State Street Bank & Trust Company. The arrangements with the
banks allowed the Fund and certain other funds to borrow, on a first come, first
served basis, an aggregate maximum amount of $250,000,000.
NOTE 5-TENDER OFFER
The Fund's Board of Directors considers each quarter the making of Tender offers
which are offers to repurchase all or a portion of its shares of Common Stock
from stockholders at a price per share equal to the net asset value per share of
the Fund's Common Stock determined at the close of business on the day an offer
terminates. Shares of Common Stock held less than four years and which are
repurchased by the Fund pursuant to Tender Offers will be subject to an early
withdrawal charge of up to 3% of the lesser of the then current net asset value
or the original purchase price of the Common Stock being tendered.
NOTE 6-UNFUNDED LOAN COMMITMENTS
As of December 31, 1999, the Fund had unfunded loan commitments of $4,006,720,
which could be extended at the option of the borrower, pursuant to the following
loan agreements:
<TABLE>
<CAPTION>
BORROWER UNFUNDED COMMITMENTS
- ---------------------------------- --------------------
<S> <C>
KSL Recreation Group, Inc. $3,262,040
- --------------------------------------------------------
RCPI Trust 744,680
- --------------------------------------------------------
$4,006,720
========================================================
</TABLE>
12
<PAGE> 15
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Portfolio during the year ended December 31, 1999 was
$443,100,779 and $291,106,955, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 983,098
- -------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (11,495,528)
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities $(10,512,430)
===============================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold: 19,803,989 $193,807,530 16,339,303 $162,694,934
- -------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends: 1,398,875 13,669,943 741,971 7,380,819
- -------------------------------------------------------------------------------------------------------------------
Reacquired: (5,067,050) (49,481,864) (3,940,550) (39,086,520)
- -------------------------------------------------------------------------------------------------------------------
16,135,814 $157,995,609 13,140,724 $130,989,233
===================================================================================================================
</TABLE>
13
<PAGE> 16
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Capital Stock
outstanding during each of the years in the two-year period ended December 31,
1999 and the period May 1, 1997 (date operations commenced) through December 31,
1997.
<TABLE>
<CAPTION>
1999(a) 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.84 $ 10.02 $ 10.00
- ------------------------------------------------------------ -------- -------- --------
Income from investment operations:
Net investment income 0.69 0.68 0.46
- ------------------------------------------------------------ -------- -------- --------
Net realized and unrealized gain (loss) on investments (0.16) (0.18) 0.02
- ------------------------------------------------------------ -------- -------- --------
Net increase (decrease) from investment operations 0.53 0.50 0.48
- ------------------------------------------------------------ -------- -------- --------
Distributions to shareholders:
- ------------------------------------------------------------ -------- -------- --------
From net investment income (0.69) (0.67) (0.46)
- ------------------------------------------------------------ -------- -------- --------
From net realized gains -- (0.01) --
- ------------------------------------------------------------ -------- -------- --------
Total distributions (0.69) (0.68) (0.46)
- ------------------------------------------------------------ -------- -------- --------
Net asset value, end of period $ 9.68 $ 9.84 $ 10.02
============================================================ ======== ======== ========
Total return(b) 5.49% 5.25% 5.04%
============================================================ ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $439,523 $288,074 $161,697
============================================================ ======== ======== ========
Ratio of net investment income to average net assets:
With fee waivers 7.02%(c) 6.88% 7.26%(d)
============================================================ ======== ======== ========
Without fee waivers 6.97%(c) 6.75% 6.24%(d)
============================================================ ======== ======== ========
Ratio of expenses to average net assets excluding interest
expense:
With fee waivers 1.47%(c) 1.50% 1.50%(d)
============================================================ ======== ======== ========
Without fee waivers 1.52%(c) 1.63% 2.52%(d)
============================================================ ======== ======== ========
Ratio of interest expense to average net assets (Note 4) NA 0.01% 0.15%(d)
============================================================ ======== ======== ========
Portfolio turnover rate 81% 75% 118%
============================================================ ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not include withdrawal charges and is not annualized for periods less
than one year.
(c) Ratios are based on average net assets of $364,173,935.
(d) Annualized.
NOTE 10-SUBSEQUENT EVENT
On December 9, 1999, the Board of Directors of the Fund approved a restructuring
of the Fund (the "Restructuring") and recommended that it be submitted to the
Fund's shareholders for their approval. The Restructuring would include
reorganizing the Fund as a Delaware business trust and eliminating the current
"master/feeder" investment structure. The Restructuring would also allow the
Fund to offer multiple classes of shares with different distribution plans and
would commit the Fund to making repurchase offers each quarter, thereby assuring
shareholders of at least partial liquidity for their shares. It is anticipated
that the Restructuring proposal will be submitted to Fund shareholders in
February, 2000, and, if approved, that the Restructuring would be completed by
March, 2000.
14
<PAGE> 17
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Shareholders of AIM Floating Rate
Fund, Inc.:
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations, cash flows and of
changes in net assets and the financial highlights
present fairly, in all material respects, the financial
position of AIM Floating Rate Fund Inc. (hereafter
referred to as the "Fund") at December 31, 1999, the
results of its operations, of cash flows, the changes in
its net assets and the financial highlights for each of
the periods indicated therein, in conformity with
accounting principles generally accepted in the United
States. 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 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 investments at December 31, 1999
by correspondence with the custodian and intermediate
participants, provide a reasonable basis for the opinion
expressed above.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
February 18, 2000
15
<PAGE> 18
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
C. Derek Anderson Robert H. Graham 11 Greenway Plaza
Senior Managing Partner, Chairman and President Suite 100
Plantagenet Capital Management, LLC Houston, TX 77046
(an investment partnership); Dana R. Sutton
Chief Executive Officer, Vice President and Treasurer INVESTMENT MANAGER
Plantagenet Holdings, Ltd.
(an investment banking firm) Samuel D. Sirko A I M Advisors, Inc.
Vice President and Secretary 11 Greenway Plaza
Frank S. Bayley Suite 100
Partner, law firm of Melville B. Cox Houston, TX 77046
Baker & McKenzie Vice President
SUB-ADVISOR
Robert H. Graham Gary T. Crum
President and Chief Executive Officer, Vice President INVESCO Senior Secured Management, Inc.
A I M Management Group Inc. 1166 Avenue of the Americas
Carol F. Relihan New York, NY 11036
Ruth H. Quigley Vice President
Private Investor SUB-SUB-ADVISOR
Mary J. Benson
Assistant Vice President and INVESCO (NY), Inc.
Assistant Treasurer 1166 Avenue of the Americas
New York, NY 10036
Sheri Morris
Assistant Vice President and TRANSFER AGENT
Assistant Treasurer
A I M Fund Services, Inc.
Nancy L. Martin P.O. Box 4739
Assistant Secretary Houston, TX 77210-4739
Ofelia M. Mayo CUSTODIAN
Assistant Secretary
State Street Bank and Trust Company
Kathleen J. Pflueger 225 Franklin Street
Assistant Secretary Boston, MA 02110
COUNSEL TO THE FUND
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
COUNSEL TO THE DIRECTORS
Paul, Hastings, Janofsky & Walker LLP
Twenty Third Floor
555 South Flower Street
Los Angeles, CA 90071
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
AUDITORS
PricewaterhouseCoopers
160 Federal Street
Boston, MA 02110
</TABLE>
<PAGE> 19
-------------------------------------
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<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has provided leadership
AIM Aggressive Growth Fund AIM Money Market Fund in the mutual fund industry since 1976 and managed
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund approximately $160 billion in assets for more than
AIM Capital Development Fund 6.6 million shareholders, including individual
AIM Constellation Fund(1) INTERNATIONAL GROWTH FUNDS investors, corporate clients and financial
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund institutions, as of December 31, 1999.
AIM Large Cap Growth Fund AIM Asian Growth Fund The AIM Family of Funds--Registered Trademark--
AIM Mid Cap Equity Fund AIM Developing Markets Fund is distributed nationwide, and AIM today is the
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(4) eighth-largest mutual fund complex in the United
AIM Mid Cap Opportunities Fund AIM European Development Fund States in assets under management, according to
AIM Select Growth Fund AIM International Equity Fund Strategic Insight, an independent mutual fund
AIM Small Cap Growth Fund(2) AIM Japan Growth Fund monitor.
AIM Small Cap Opportunities Fund(3) AIM Latin American Growth Fund
AIM Value Fund AIM New Pacific Growth Fund
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AIM Charter Fund
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TAX-FREE INCOME FUNDS AIM Global Health Care Fund
AIM High Income Municipal Fund AIM Global Infrastructure Fund
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AIM Tax-Exempt Bond Fund of Connecticut AIM Global Telecommunications and Technology Fund(5)
AIM Tax-Free Intermediate Fund AIM Global Trends Fund(6)
</TABLE>
(1) Effective December 1, 1999, AIM Constellation Fund's investment strategy
broadened to allow investments across all market capitalizations. (2) AIM Small
Cap Growth Fund closed to new investors on November 8, 1999. (3) AIM Small Cap
Opportunities Fund closed to new investors on November 4, 1999. (4) On September
1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth Fund. Previously
the fund invested in all size companies in most areas of Europe. The fund now
seeks to invest at least 65% of its assets in large-cap companies within
countries using the euro as their currency (EMU-member countries). (5) On June
1, 1999, AIM Global Telecommunications Fund was renamed AIM Global
Telecommunications and Technology Fund. (6) Effective August 27, 1999, AIM
Global Trends Fund was restructured to operate as a traditional mutual fund.
Before that date, the fund operated as a fund of funds. For more complete
information about any AIM fund(s), including sales charges and expenses, ask
your financial advisor or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money. If used as
sales material after April 20, 2000, this report must be accompanied by a
current Quarterly Review of Performance for AIM Funds.
[DALBAR LOGO APPEARS HERE] [AIM LOGO APPEARS HERE]
INVEST WITH DISCIPLINE
--Registered Trademark--
A I M Distributors, Inc. FLR-AR-1
