Jason Holzer and Barrett Sides of AIM Global Aggressive Growth Fund

Companies in emerging markets appeal to the managers for the same reason, and because they tend to grow rapidly, Holzer says. These stocks currently account for nearly 20% of the fund’s assets.

Holzer acknowledges that owning these stocks can be risky. “But we think there are also significant rewards,” he says. Holzer maintains that these investments have “added a lot of value” to the portfolio over the last few years.

Generally the fund limits its holdings in developing countries to what Holzer describes as “blue chips.”

An example, he says, is OTP Bank, a Hungarian savings and commercial bank that is the biggest in the country. The bank, one of the fund’s top holdings, grew by about 38% last year and is expected to grow by 25% in 2004, yet its shares trade for around 10 times earnings, according to Holzer. The stock is up 55% so far this year, making it one of the fund’s best performers, Holzer says.

A recent addition to the fund is Computershare, an Australian company that provides share registry, investor relations and related services, and technology to securities companies on five continents. The company has been expanding its operations through acquisitions and has been garnering new customers in the U.K., in particular, Sides says. The fund has owned Computershare on and off over the last few years, and took a stake in it again in February.

Around the same time, the managers invested in William Hill, one of the largest operators of gambling shops in the U.K. New legislation has enabled the company to increase the number of slot machines at each location, Holzer says. The gaming devices are highly profitable, and their added numbers have improved what was already “a pretty good business with very stable” cash flow, he says. Hill also looks good because it has been growing by about 20%, but its stock trades at about 14 times earnings, Holzer says.

A company that’s typical of the fund’s European holdings, Holzer says, is Open-Joint/Vimpel Commun ADS (VIP). Known as Vimpelcom, it is the second largest provider of wireless telecommunications services in Russia, where, Holzer notes, the market for cell phones is relatively untapped. Vimplecom has grown by 100% in each of the last two years, yet it stock sells for only about 13 times projected 2004 earnings, Holzer says. Also, in a country where corporate governance can be a concern for investors, Vimpelcom’s is “probably the best,” he says. With a year-to-date gain of 32%, Vimpelcom has also made a strong contribution to the fund’s results, the managers say.

The fund’s No. 1 stock, Anglo Irish Bank, has held that position for several years, says Holzer. He characterizes the bank as the fastest growing and most efficiently run one in Europe. The managers say they also like Anglo Irish because it consistently meets or beats analysts’ estimates.

Just as positive financial characteristics can gain a stock entry to the fund, weakening fundamentals can result in it being ushered out. For example, Affiliated Computer Svcs`A` (ACS), which provides information technology services, was sold earlier this year in part because its sales growth had begun slowing, says co-manager James Birdsall.

The managers tend to sell stocks at a slower pace than than their rivals. AIM Global Aggressive Growth’s turnover rate last year was 64%, compared to 83.8% for similar funds.

Contact Robert F. Keane with questions and comments at:

[email protected].