<PAGE> 1
As filed with the Securities and Exchange Commission on April 28, 2000
1933 Act Registration No. 333-30551
1940 Act Registration No. 811-7787
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.___
Post-Effective Amendment No. 11 [X]
----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 12 [X]
----
(Check appropriate box or boxes.)
AIM SERIES TRUST
-----------------------------
(Exact name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 100, Houston, TX 77046
-----------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (713) 626-1919
----------------
Copy to:
Lisa A. Moss, Esq. Arthur J. Brown, Esq.
A I M Advisors, Inc. R. Darrell Mounts, Esq.
11 Greenway Plaza, Suite 100 Kirkpatrick & Lockhart LLP
Houston, Texas 77046 1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20036
<TABLE>
<S> <C>
Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of
this Amendment
</TABLE>
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2)
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
<PAGE> 2
AIM GLOBAL TRENDS FUND
--------------------------------------------------------------------------
AIM Global Trends Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MAY 1, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 3
----------------------
AIM GLOBAL TRENDS FUND
----------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 3
Performance Table 3
FEE TABLE AND EXPENSE EXAMPLE 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 4
Expense Example 4
FUND MANAGEMENT 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 5
Advisor Compensation 5
Portfolio Managers 5
OTHER INFORMATION 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 5
Dividends and Distributions 5
FINANCIAL HIGHLIGHTS 6
- - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con Disciplina and Invest with
Discipline are registered service marks and AIM Bank Connection and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 4
----------------------
AIM GLOBAL TRENDS FUND
----------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital.
The fund seeks to meet this objective by investing, normally, at least 65% of
its total assets in equity securities of issuers in the following global
industry sectors:
- consumer products and services
- financial services
- health care
- infrastructure
- natural resources and
- telecommunications and technology.
The fund considers a company to be in one of these industry sectors if it (1)
derives at least 50% of either its revenues or earnings from activities related
to that industry; or (2) devotes at least 50% of its assets to such activities,
based on the company's most recent fiscal year.
The fund may also invest up to 35% of its assets in equity securities of
issuers in other global industry sectors and in debt securities of U.S. and
foreign issuers. The fund will normally invest in the securities of companies
located in at least three different countries, including the United States, and
may invest a significant portion of its assets in the securities of U.S.
issuers. However, the fund will invest no more than 50% of its total assets in
the securities of issuers in any one country, other than the U.S. The fund may
invest substantially in securities denominated in one or more currencies.
The fund may invest in companies located in developing countries, i.e., those
that are in the initial stages of their industrial cycle. The fund may also
invest up to 20% of its total assets in lower-quality debt securities, i.e.,
"junk bonds."
The portfolio managers invest fund assets by initially determining the
industry sectors that they believe provide the most advantageous investment
opportunities for meeting the fund's investment objective. If the portfolio
managers determine that certain sectors are facing slow or negative growth, they
will not invest fund assets in those sectors at that time. The portfolio
managers then analyze specific companies within these sectors for possible
investment. In analyzing specific companies for possible investment, the
portfolio managers ordinarily look for several of the following characteristics:
above-average per share earnings growth; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; development of new technologies; efficient
service; pricing flexibility; strong management; and general operating
characteristics that will enable the companies to compete successfully in their
respective markets. The portfolio managers consider whether to sell a particular
security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash (U.S. dollars, foreign currency, or
multinational currency units), money market instruments, shares of affiliated
money market funds, or high-quality debt securities. As a result, the fund may
not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to
achieve its investment objective. If the fund does trade in this way, it may
incur increased transaction costs, which can lower the actual return on your
investment. Active trading may also increase short-term gains and losses, which
may affect the taxes you have to pay.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions, and market liquidity.
Because the fund focuses its investments in particular industries, an
investment in the fund may be more volatile than that of other investment
companies that do not concentrate their investments in such a manner. The value
of the shares of the fund will be especially susceptible to factors affecting
the industries in which it focuses. In particular, each of the industries is
subject to governmental regulation that may have a material effect on the
products and services offered by companies in that industry.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
1
<PAGE> 5
----------------------
AIM GLOBAL TRENDS FUND
----------------------
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devalued their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures.
The fund may participate in the initial public offering (IPO) market. Because
of the fund's small asset base, any investment the fund may make in IPOs may
significantly increase the fund's total returns. As the fund's assets grow, the
impact of IPO investments will decline, which may reduce the fund's total
returns.
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.
2
<PAGE> 6
----------------------
AIM GLOBAL TRENDS FUND
----------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance. Total return information in the bar chart
and table below may be affected by special market factors, including the fund's
investments in initial public offerings, which may have a magnified impact on
the fund due to its small asset base. There is no guarantee that, as the fund's
assets grow, it will continue to experience substantially similar performance.
Prior to August 27, 1999, the fund was not actively managed and invested its
assets in other AIM funds (that were actively managed) based on the industry
weighting of the companies comprising the Morgan Stanley Capital International
("MSCI") All Country World Index. Those AIM funds invested in the same global
industry sectors the fund does: consumer products and services, financial
services, health care, infrastructure, natural resources, and telecommunications
and technology. Prior to that date, the fund, as a shareholder in other AIM
funds, was indirectly bearing its pro rata share of the fees and expenses
incurred by those funds.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows the performance of the fund's Class A shares for
the year ended December 31, 1999. The bar chart does not reflect sales loads. If
it did, the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1998 ....................................... 9.37%
1999 ....................................... 51.93%
</TABLE>
During the period shown in the bar chart, the highest quarterly return was
34.24% (quarter ended December 31, 1999) and the lowest quarterly return was
- -17.89% (quarter ended September 30, 1999).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 1999 1 YEAR INCEPTION DATE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A 44.73% 20.73% 09/15/97
Class B 46.18 21.69 09/15/97
Class C 50.33 28.48 01/02/98
MSCI All Country World Index(1) 27.31 21.38(2) 08/31/97(2)
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) The MSCI All Country World Index measures the performance of securities
listed on the major world stock exchanges of 47 markets, including both
developed and emerging markets.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
3
<PAGE> 7
----------------------
AIM GLOBAL TRENDS FUND
----------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge
Imposed on Purchases
(as a percentage of
offering price) 4.75% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is less) None(1) 5.00% 1.00%
- -------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets)(2) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.98% 0.98% 0.98%
Distribution and/or
Service (12b-1) Fees 0.50 1.00 1.00
Other Expenses 0.56 0.56 0.56
Total Annual Fund
Operating Expenses 2.04 2.54 2.54
Expense
Reimbursement(3) 0.04 0.04 0.04
Net Expenses 2.00 2.50 2.50
- -------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
(2) Expenses have been restated to reflect current fees.
(3) The investment advisor has contractually agreed to limit the fund's total
operating expenses (excluding interest, taxes, brokerage commissions and
extraordinary items) for Class A, Class B and Class C shares to 2.00%, 2.50%
and 2.50%, respectively.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. To the extent fees are waived or
expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $672 $1,084 $1,521 $2,731
Class B 757 1,091 1,550 2,753
Class C 357 791 1,350 2,875
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $672 $1,084 $1,521 $2,731
Class B 257 791 1,350 2,753
Class C 257 791 1,350 2,875
- ----------------------------------------------
</TABLE>
4
<PAGE> 8
----------------------
AIM GLOBAL TRENDS FUND
----------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
Prior to August 27, 1999, the advisor received no direct compensation for its
services because the fund was not actively managed. The fund's advisory fees
were paid indirectly, by the other AIM funds in which the fund invested. The
advisor currently receives compensation of 0.975% of the first $500 million of
average daily net assets of the fund; 0.95% on the next $500 million of such
assets; 0.925% on the next $500 million of such assets; and 0.90% on amounts
thereafter.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio are
- - Derek S. Izuel, Portfolio Manager, who has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1997. From 1995 to 1997 he was a full time student at the University of
Michigan.
- - Roger Mortimer, Portfolio Manager, who has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1995.
- - Derek H. Webb, Portfolio Manager, who has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1992.
- - Michael Yellen, Portfolio Manager, who has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1994.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Global Trends Fund are subject to the maximum
4.75% initial sales charge as listed under the heading "CATEGORY II Initial
Sales Charges" in the "Shareholder Information--Choosing a Share Class" section
of this prospectus. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
5
<PAGE> 9
----------------------
AIM GLOBAL TRENDS FUND
----------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the fund's financial
statements, is included in the fund's annual report, which is available upon
request.
Total return information in this table may be affected by special market
factors, including the fund's investments in initial public offerings, which may
have a magnified impact on the fund due to its small asset base. There is no
guarantee that, as the fund's assets grow, it will continue to experience
substantially similar performance.
Prior to August 27, 1999, the fund was not actively managed and invested in
other AIM funds.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
1999(a) 1998(a) 1997(a)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.46 $ 10.63 $ 11.43
Income from investment operations:
Net investment income (loss) (0.06) (0.02) (0.01)
Net realized and unrealized gain (loss) on
investments 5.86 1.01 (0.31)
Net increase (decrease) from investment
operations 5.80 0.99 (0.32)
Distributions to shareholders:
From net investment income -- (0.02) --
From net realized gains (1.48) (0.14) --
In excess of net investment income -- -- (0.48)
Total distributions (1.48) (0.16) (0.48)
Net asset value, end of period $ 15.78 $ 11.46 $ 10.63
Total return(b) 51.93% 9.37% (2.68)%
- ------------------------------------------------------------------------------------------------------------
Ratios and supplemental data:
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $20,595 $17,822 $15,145
Ratio of expenses to average net assets:
With fee waivers 1.03%(c) 0.50% 0.50%(d)
Without fee waivers 1.16%(c) 0.50% 0.50%(d)
Ratio of net investment income (loss) to average
net assets:
With fee waivers (0.50)%(c) (0.21)% (0.35)%(d)
Without fee waivers (0.63)%(c) (0.21)% (0.35)%(d)
Portfolio turnover rate 147% 28% 1%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average net assets of $16,635,251.
(d) Annualized.
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
1999(a) 1998(a) 1997(a)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.41 $ 10.62 $ 11.43
Income from investment operations:
Net investment income (loss) (0.13) (0.07) (0.02)
Net realized and unrealized gain (loss) on
investments 5.82 1.00 (0.32)
Net increase (decrease) from investment
operations 5.69 0.93 (0.34)
Distributions to shareholders:
From net investment income -- -- --
From net realized gains (1.48) (0.14) --
In excess of net investment income -- -- (0.47)
Total distributions (1.48) (0.14) (0.47)
Net asset value, end of period $ 15.62 $ 11.41 $ 10.62
Total return(b) 51.18% 8.83% (2.83)%
- ------------------------------------------------------------------------------------------------------------
Ratios and supplemental data:
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $29,118 $25,555 $19,184
Ratio of expenses to average net assets:
With fee waivers 1.53%(c) 1.00% 1.00%(d)
Without fee waivers 1.66%(c) 1.00% 1.00%(d)
Ratio of net investment income (loss) to average
net assets:
With fee waivers (1.00)%(c) (0.71)% (0.85)%(d)
Without fee waivers (1.13)%(c) (0.71)% (0.85)%(d)
Portfolio turnover rate 147% 28% 1%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average net assets of $23,804,842.
(d) Annualized.
6
<PAGE> 10
----------------------
AIM GLOBAL TRENDS FUND
----------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1999(a) DECEMBER 31, 1998(a)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 11.40 $ 10.62
Income from investment operations:
Net investment income (loss) (0.13) (0.08)
Net realized and unrealized gain (loss) on
investments 5.83 1.00
Net increase (decrease) from investment
operations 5.70 0.92
Distribution to shareholders:
From net investment income -- --
From net realized gain on investments (1.48) (0.14)
In excess of net investment income -- --
Total distributions (1.48) (0.14)
Net asset value, end of period $ 15.62 $ 11.40
Total return(b) 51.33% 8.94%
- ------------------------------------------------------------------------------------------------------------
Ratios and supplemental data:
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $ 500 $ 249
Ratio of expenses to average net assets
With fee waivers 1.53%(c) 1.00%(d)
Without fee waivers 1.66%(c) 1.00%(d)
Ratio of net investment income (loss) to average
net assets
With fee waivers (1.00)%(c) (0.71)%(d)
Without fee waivers (1.13)%(c) (0.71)%
Portfolio turnover rate 147% 28%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) These selected per share data were calculated based upon average shares
outstanding during the period.
(b) Total investment return does not include sales charges.
(c) Ratios are based on average net assets of $296,927.
(d) Annualized.
7
<PAGE> 11
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
eight years after the end of shares
the month in which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of
that fund seven years after the end of the month in which shares were
purchased. If you exchange those shares for Class B shares of another
AIM Fund, the shares into which you exchanged will not convert to
Class A shares until eight years after the end of the month in which
you purchased your original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 12
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 13
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 14
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 15
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 16
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 17
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 18
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 19
----------------------
AIM GLOBAL TRENDS FUND
----------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- -----------------------------------
AIM Global Trends Fund
SEC 1940 Act file number: 811-7787
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com GTR-PRO-1 INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 20
STATEMENT OF
ADDITIONAL INFORMATION
CLASS A, CLASS B, AND CLASS C SHARES OF
AIM GLOBAL TRENDS FUND
(A SERIES PORTFOLIO OF
AIM SERIES TRUST)
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
---------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS
AND IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF
THE ABOVE-NAMED FUND, A COPY OF WHICH MAY BE OBTAINED
FREE OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS,INC.,
P.O. BOX 4739, HOUSTON, TEXAS 77210-4739
OR BY CALLING (800) 347-4246
---------------
STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1,
2000 RELATING TO THE AIM GLOBAL TRENDS FUND PROSPECTUS DATED MAY 1, 2000
<PAGE> 21
TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C>
INTRODUCTION......................................................................................................1
GENERAL INFORMATION ABOUT THE TRUST...............................................................................1
INVESTMENT STRATEGIES AND RISKS...................................................................................2
Primary Investment Practices of the Fund.................................................................2
Financial Services Industry.....................................................................2
Infrastructure Industry.........................................................................3
Natural Resources Industry......................................................................3
Consumer Products and Services Industry.........................................................4
Health Care Industry............................................................................4
Telecommunications and Technology Industry......................................................5
Other Investment Practices of the Fund...................................................................6
OPTIONS, FUTURES AND CURRENCY STRATEGIES.........................................................................10
Introduction............................................................................................10
Special Risks of Options, Futures and Currency Strategies...............................................10
Writing Call Options....................................................................................11
Writing Put Options.....................................................................................12
Purchasing Put Options..................................................................................13
Purchasing Call Options.................................................................................13
Index Options...........................................................................................14
Interest Rate, Currency and Stock Index Futures Contracts...............................................15
Options on Futures Contracts............................................................................18
Limitations on Use of Futures, Options on Futures and Certain Options on Currencies.....................18
Forward Contracts.......................................................................................18
Foreign Currency Strategies-- Special Considerations....................................................19
Cover...................................................................................................20
ADDITIONAL RISK FACTORS..........................................................................................20
General.................................................................................................20
Financial Services Industry.............................................................................21
Infrastructure Industry.................................................................................21
Natural Resources Industry..............................................................................22
Consumer Products and Services Industry.................................................................22
Health Care Industry....................................................................................22
Telecommunications and Technology Industry..............................................................22
Debt Securities.........................................................................................23
Investing in Smaller Companies..........................................................................24
Illiquid Securities.....................................................................................24
Foreign Securities......................................................................................25
INVESTMENT LIMITATIONS...........................................................................................26
Investment Limitations of the Fund......................................................................26
PORTFOLIO TRANSACTIONS AND BROKERAGE.............................................................................28
General Brokerage Policy................................................................................28
Allocation of Portfolio Transactions....................................................................29
Allocation of IPO Transactions..........................................................................30
Section 28(e) Standards.................................................................................30
Portfolio Turnover......................................................................................31
</TABLE>
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<TABLE>
<S> <C>
MANAGEMENT.......................................................................................................32
Trustees and Executive Officers.........................................................................32
Management Services Relating to the Fund................................................................34
Expenses of the Fund....................................................................................35
THE DISTRIBUTION PLANS...........................................................................................35
The Class A and C Plan..................................................................................35
The Class B Plan........................................................................................36
Both Plans..............................................................................................36
THE DISTRIBUTOR..................................................................................................39
Sales Charges and Dealer Concessions....................................................................41
REDUCTIONS IN INITIAL SALES CHARGES..............................................................................44
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS......................................................................47
HOW TO PURCHASE AND REDEEM SHARES................................................................................49
Backup Withholding......................................................................................50
NET ASSET VALUE DETERMINATION....................................................................................51
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................52
Reinvestment of Dividends and Distributions.............................................................52
Tax Matters.............................................................................................52
Taxation of the Fund....................................................................................52
Reinstatement Privileges and Wash Sales.................................................................53
Taxation of Certain Investment Activities...............................................................53
Taxation of the Fund's Shareholders.....................................................................55
SHAREHOLDER INFORMATION..........................................................................................56
MISCELLANEOUS INFORMATION........................................................................................58
Charges for Certain Account Information.................................................................58
Custodian...............................................................................................59
Transfer Agency and Fund Accounting Services............................................................59
Independent Accountants.................................................................................59
Legal Matters...........................................................................................59
Shareholder Liability...................................................................................59
Control Persons and Principal Holders of Securities.....................................................60
INVESTMENT RESULTS...............................................................................................60
Total Return Quotations.................................................................................60
Performance Information.................................................................................61
APPENDIX A.......................................................................................................65
Description of Commercial Paper Ratings.................................................................65
Description of Bond Ratings.............................................................................65
Absence of Rating.......................................................................................66
FINANCIAL STATEMENTS.............................................................................................68
</TABLE>
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<PAGE> 23
INTRODUCTION
This Statement of Additional Information relates to the Class A, Class
B and Class C shares of AIM Global Trends Fund, formerly known as GT Global New
Dimension Fund, (the "Fund"). The Fund is a diversified series of AIM Series
Trust (the "Trust"), an open-end management investment company organized as a
Delaware business trust. The Fund seeks its investment objective by investing
substantially all of its assets in the following global industry sectors:
consumer products and services, financial services, health care infrastructure,
natural resources, and telecommunications and technology. A I M Advisors, Inc.
("AIM") serves as the investment manager of and administrator for the Fund.
The rules and regulations of the Securities and Exchange Commission
(the "SEC") require all mutual funds to furnish prospective investors certain
information concerning the activities of the Fund being considered for
investment. This information is included in a Prospectus (the "Prospectus"),
dated May 1, 2000, which relates to the Class A, Class B and Class C shares of
the Fund. Copies of the Prospectus and additional copies of this Statement of
Additional Information may be obtained without charge by writing the principal
distributor of the Fund's shares, A I M Distributors, Inc. ("AIM Distributors"),
P.O. Box 4739, Houston, TX 77210-4739, or by calling (800) 347-4246.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Fund. Some of
the information required to be in this Statement of Additional Information is
also included in the Fund's current Prospectus, and in order to avoid
repetition, reference will be made herein to sections of the Prospectus.
Additionally, the Prospectus and this Statement of Additional Information omit
certain information contained in the Trust's Registration Statement filed with
the SEC. Copies of the Registration Statement, including items omitted from the
Prospectus and this Statement of Additional Information, may be obtained from
the SEC by paying the charges prescribed under its rules and regulations.
GENERAL INFORMATION ABOUT THE TRUST
The Trust was previously organized as a Massachusetts business trust
named "GT Global Series Trust," which was established on August 26, 1996 and
which had one series named "GT Global New Dimension Fund." On May 29, 1998, the
Trust was reorganized into a Delaware business trust, which was initially
established on May 7, 1998. The Trust currently consists of one series, the
Fund. The Fund currently offers three different classes of shares: Class A
shares, Class B shares and Class C shares. From time to time the Board of
Trustees of the Trust may create new series of shares without the necessity of a
vote of the shareholders of the Trust. All historical financial and other
information contained in this Statement of Additional Information for periods
prior to May 29, 1998 relating to the Fund is that of GT Global New Dimension
Fund.
The term "majority of the outstanding shares" of the Trust, of the Fund
or of a particular class of the Fund means, respectively, the vote of the lesser
of (a) 67% or more of the shares of the Trust, Fund or such class present at a
meeting of the Trust's shareholders, if the holders of more than 50% of the
outstanding shares of the Trust, the Fund or such class are present or
represented by proxy, or (b) more than 50% of the outstanding shares of the
Trust, the Fund or such class.
Class A, Class B and Class C shares of the Fund have equal rights and
privileges. Each share of a particular class is entitled to one vote, to
participate equally in dividends and distributions declared by the Trust's Board
of Trustees with respect to the class of the Fund and, upon liquidation of the
Fund, to participate proportionately in the net assets of the Fund allocable to
such class remaining after satisfaction of outstanding liabilities of the Fund
allocable to such class. Fund shares are fully paid, non-assessable and fully
transferable when issued and have no preemptive rights and have such conversion
and exchange rights as set forth in the Prospectus and this Statement of
Additional Information. Fractional shares have proportionately the same rights,
including voting rights, as are provided for a full
1
<PAGE> 24
share. Other than the automatic conversion of Class B Shares to Class A Shares,
there are no conversion rights.
If any additional series of the Trust are established, on any matter
submitted to a vote of shareholders, shares of each series will be voted by its
shareholders individually when the matter affects the specific interest of that
series only, such as approval of its investment management arrangements. The
shares of the Trust's series would be voted in the aggregate on other matters,
such as the election of Trustees and ratification of the selection by the Board
of Trustees of the Trust's independent accountants.
Normally there will be no annual meeting of shareholders in any year,
except as required under the Investment Company Act of 1940, as amended ("1940
Act"). Fund shares do not have cumulative voting rights, which means that the
holders of a majority of the shares voting for the election of Trustees can
elect all the Trustees. A Trustee may be removed at any meeting of the
shareholders of the Trust by a vote of the shareholders owning at least
two-thirds of the outstanding shares. Any Trustee may call a special meeting of
shareholders for any purpose. Furthermore, Trustees shall promptly call a
meeting of shareholders solely for the purpose of removing one or more Trustees
when requested in writing to do so by shareholders holding 10% of the Trust's
outstanding shares.
Pursuant to the Trust's Declaration of Trust, the Trust may issue an
unlimited number of shares of the Fund. Each share of the Fund represents an
interest in the Fund only, has a par value of $0.01 per share, represents an
equal proportionate interest in the Fund with other Fund shares and is entitled
to such dividends and other distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared at the
discretion of the Board of Trustees. Each share of the Fund is equal in
earnings, assets and voting privileges, except that each class normally has
exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Fund shares, when
issued, are fully paid and nonassessable.
INVESTMENT STRATEGIES AND RISKS
PRIMARY INVESTMENT PRACTICES OF THE FUND
The following discussion of investment strategies and risks supplements
the discussion of investment objective and risks set forth in the Prospectus
under the headings "Investment Objective and Strategies" and "Principal Risks of
Investing in the Fund."
The Fund's investment objective is long-term growth of capital. The
Fund's investment objective may not be changed without the approval of the
holders of a majority of the Fund's outstanding shares. Unless specifically
noted, the Fund's investment policies described in the Prospectus and this
Statement of Additional Information, are not fundamental policies and may be
changed by the Trust's Board of Trustees without shareholder approval.
In addition to the investment practices described in the Prospectus,
the Fund may engage in certain other investment practices, including lending
their portfolio securities; purchasing securities on a when-issued or delayed
delivery basis; entering into repurchase or reverse repurchase agreements; and
borrowing money. There is no assurance that the Fund will achieve its investment
objective.
The Fund invests primarily in six global industry sectors; consumer
products and services, financial services, health care, infrastructure, natural
resources and telecommunications and technology, so the Fund's investment
performance is directly related to the investment performance of the companies
in those sectors. In particular, each of the sectors is subject to governmental
regulation that may have a material effect on the products and services offered
by companies in these industries.
Financial Services Industry
Examples of financial services companies include commercial banks and
savings institutions and loan associations and their holding companies; consumer
and industrial finance companies; diversified
2
<PAGE> 25
financial services companies; investment banks; insurance brokerages; securities
brokerage and investment advisory companies; real estate-related companies;
leasing companies; and a variety of firms in all segments of the insurance field
such as multi-line, property and casualty and life insurance and insurance
holding companies.
AIM believes an accelerating rate of global economic interdependence
will lead to significant growth in the demand for financial services. In
addition, in AIM's view, as the industries evolve, opportunities will emerge for
those companies positioned for the future. Thus, AIM expects that banking and
related financial institution consolidation in the developed countries,
increased demand for retail borrowing in developing countries, a growing need
for international trade-based financing, a rising demand for sophisticated risk
management, the proliferating number of liquid securities markets around the
world, and larger concentrations of investable assets should lead to growth in
financial service companies that are positioned for the future.
Infrastructure Industry
Examples of infrastructure companies include those engaged in
designing, developing or providing the following products and services:
electricity production; oil, gas, and coal exploration, development, production
and distribution; water supply, including water treatment facilities; nuclear
power and other alternative energy sources; transportation, including the
construction or operation of transportation systems; steel, concrete, or similar
types of products; communications equipment and services (including equipment
and services for both data and voice transmission); mobile communications and
cellular radio/paging; emerging technologies combining telephone, television
and/or computer systems; and other products and services, which, in AIM's
judgment, constitute services significant to the development of a country's
infrastructure.
AIM believes that a country's infrastructure is one key to the
long-term success of that country's economy. AIM believes that adequate energy,
transportation, water, and communications systems are essential elements for
long-term economic growth. AIM believes that many developing nations, especially
in Asia and Latin America, plan to make significant expenditures to the
development of their infrastructure in the coming years, which is expected to
facilitate increased levels of services and manufactured goods.
In the developed countries of North America, Europe, Japan and the
Pacific Rim, AIM expects that the replacement and upgrade of transportation and
communications systems should stimulate growth in the infrastructure industries
of those countries. In addition, in AIM's view, deregulation of
telecommunications and electric and gas utilities in many countries is promoting
significant changes in these industries.
AIM believes that strong economic growth in developing countries and
infrastructure replacement, upgrade, and deregulation in more developed
countries provide an environment for favorable investment opportunities in
infrastructure companies worldwide. In addition, the long-term growth rates of
certain foreign countries' economies may be substantially higher than the
long-term growth rate of the U.S. economy. An integral aspect of certain foreign
countries' economies may be the development or improvement of their
infrastructure.
Natural Resources Industry
Examples of natural resource companies include those which own, explore
or develop: energy sources (such as oil, gas and coal); ferrous and non-ferrous
metals (such as iron, aluminum, copper, nickel, zinc and lead), strategic metals
(such as uranium and titanium) and precious metals (such as gold, silver and
platinum); chemicals; forest products (such as timber, coated and uncoated tree
sheet, pulp and newsprint); other basic commodities (such as foodstuffs);
refined products (such as chemicals and steel) and service companies that sell
to these producers and refiners; and other products and services, which, in
AIM's opinion are significant to the ownership and development of natural
resources and other basic commodities.
3
<PAGE> 26
AIM believes that the liberalization of formerly socialist economies
will bring about dramatic changes in both the supply and demand for natural
resources. In addition, rapid industrialization in developing countries of Asia
and Latin America is generating new demands for industrial materials that are
affecting world commodities markets. AIM believes these changes are likely to
create investment opportunities that benefit from new sources of supply and/or
from changes in commodities prices.
AIM also believes that investments in natural resource companies offer
an opportunity to protect wealth against the capital-eroding effects of
inflation. During periods of accelerating inflation or currency uncertainty,
worldwide investment demand for natural resources, particularly precious metals,
tends to increase, and during periods of disinflation or currency stability, it
tends to decrease. AIM believes that rising commodity prices and increasing
worldwide industrial production may favorably affect share prices of natural
resource companies, and investments in such companies can offer excellent
opportunities to offset the effects of inflation.
AIM has identified four areas in the natural resources industry that it
expects will create investment opportunities: (i) improving supply/demand
fundamentals, which may result in higher commodity prices; (ii) privatization of
state-owned natural resource businesses; (iii) management which can improve
production efficiencies without correspondingly increasing commodity prices; and
(iv) service companies with emerging technologies that can enhance productivity
or reduce production costs. Of course, there is no certainty that these factors
will produce the anticipated results.
Consumer Products and Services Industry
Examples of consumer products and services companies include those that
manufacture, market, retail, or distribute: durable goods (such as homes,
household goods, automobiles, boats, furniture and appliances, and computers);
non-durable goods (such as food and beverages and apparel); media,
entertainment, broadcasting, publishing and sports-related goods and services
(such as television and radio broadcast, motion pictures, wireless
communications, gaming casinos, theme parks, restaurants and lodging); and goods
and services to companies in the foregoing industries (such as advertisers,
textile companies and distribution and shipping companies).
The Fund expects that a significant portion of its assets may be
invested in the securities of U.S. issuers from time to time, particularly those
that market their products globally. However, consumer products and services
companies of a particular nation or region of the world are often operated and
owned in their local markets, close to their customers. These companies, AIM
believes, may offer superior opportunities for capital growth as compared to
their larger, multinational counterparts. Certain global markets may be more
attractive than others from time to time; companies dependent on U.S. markets,
for example, may be outperformed by companies not dependent on U.S. markets.
AIM also believes that the demand for consumer products and services
worldwide will increase along with rising disposable incomes in both developed
and developing nations. Emerging economies, such as those in China, Southeast
Asia, Eastern Europe and Latin America, offer opportunities for the growth and
expansion of consumer markets. These regions currently comprise a growing source
of inexpensive consumer products for export and a growing source of demand for
consumer products and services as the disposable incomes of their populations
increase. In AIM's view, these changes are likely to create investment
opportunities in companies, both local and multinational, that are able to
employ innovative manufacturing, marketing, retailing and distribution methods
to open new markets and/or expand existing markets.
Health Care Industry
Examples of health care companies include those that are substantially
engaged in the design, manufacture or sale of products or services used for or
in connection with health care or medicine. Such firms may include
pharmaceutical companies; firms that design, manufacture, sell or supply
medical, dental and optical products, hardware or services; companies involved
in biotechnology, medical diagnostic, and biochemical research and development;
and companies involved in the ownership and/or operation of health care
facilities.
4
<PAGE> 27
The Fund expects that, from time to time, a significant portion of its
assets may be invested in the securities of U.S. issuers. Health care
industries, however, are global industries with significant, growing markets
outside of the United States. A sizable portion of the companies which comprise
the health care industries are headquartered outside of the United States, and
many important pharmaceutical and biotechnology discoveries and technological
breakthroughs have occurred outside of the United States, primarily in Japan,
the United Kingdom and Western Europe.
AIM believes that the global health care industries offer attractive
long-term supply/demand dynamics. While the United States, Western Europe, and
Japan presently account for a substantial portion of health care expenditures,
this should change dramatically in the coming decade if the populations of
developing countries devote an increasing percentage of income to health care.
Additionally, AIM believes demographics on aging point to a significant increase
in demand from the industrialized nations, as the elderly account for a growing
proportion of worldwide health care spending. Finally, in AIM's view, technology
will continue to expand the range of products and services offered, with new
drugs, medical devices and surgical procedures addressing medical conditions
previously considered untreatable.
In addition to these underlying trends, the United States is presently
experiencing a period of rapid and profound change in its own health care
system, marked by the rise of managed care, the formation of health care
delivery networks, and widespread consolidation across all segments of the
industry. AIM believes that this transition offers investment opportunities in
those companies acting as consolidators or otherwise gaining market share at the
expense of less efficient competitors.
Telecommunications and Technology Industry
Examples of telecommunications and technology companies include those
engaged in designing, developing or providing the following products and
services: communications equipment and services (including equipment and
services for both data and voice transmission); electronic components and
equipment; broadcasting (including television and radio, satellite, microwave
and cable television and narrowcasting); computer components, equipment, and
software equipment; Internet technology; mobile communications and cellular
radio/paging; electronic mail; local and wide area networking and linkage of
word and data processing systems; publishing and information systems; videotext
and teletext; and emerging technologies combining telephone, television and/or
computer systems.
AIM believes that there are opportunities for continued growth in
demand for components, products, media and systems to collect, store, retrieve,
transmit, process, distribute, record, reproduce and use information. The
pervasive societal impact of communications and information technologies has
been accelerated by the lower costs and higher efficiencies that result from the
blending of computers with telecommunications systems. Accordingly, companies
engaged in the production of methods for using electronic and, potentially,
video technology to communicate information are expected to be important in the
Fund's portfolio. Older technologies, such as photography and print also may be
represented, however.
AIM has identified four areas in the telecommunications and technology
industry that it expects will create investment opportunities: (i) deregulation
of companies in the industry, which will allow competition to promote greater
efficiencies; (ii) privatization of state-owned telecommunications businesses;
(iii) development of infrastructure in underdeveloped countries and upgrading of
services in other countries; and (iv) emerging technologies that will enhance
productivity and reduce costs in the telecommunications industry. Of course,
there is no certainty that these factors will produce the anticipated results.
SELECTION OF EQUITY INVESTMENTS AND ASSET ALLOCATION. The Fund expects
that, from time to time, a significant portion of its assets may be invested in
the securities of domestic issuers. The industries represented in the Fund,
however, are global industries with significant, growing markets outside of the
United States. A sizable proportion of the companies that comprise the
industries in which the Fund invests are headquartered outside of the United
States.
5
<PAGE> 28
For these reasons, AIM believes that a portfolio composed only of
securities of U.S. issuers does not provide the greatest potential return from
an investment by the Fund. AIM uses its financial expertise in markets located
throughout the world and the substantial global resources of AMVESCAP PLC in
attempting to identify those countries and companies then providing the greatest
potential for long-term capital appreciation. In this fashion, AIM seeks to
enable shareholders to capitalize on the substantial investment opportunities
and the potential for long-term capital presented by the industries represented
in the Fund.
OTHER INVESTMENT PRACTICES OF THE FUND
U.S. GOVERNMENT SECURITIES. The Fund may invest in various direct
obligations of the U.S. Treasury and obligations issued or guaranteed by the
U.S. government or one of its agencies or instrumentalities (collectively, "U.S.
government securities"). Among the U.S. government securities that may be held
by the Fund are securities that are supported by the full faith and credit of
the United States; securities that are supported by the right of the issuer to
borrow from the U.S. Treasury; and securities that are supported solely by the
credit of the instrumentality.
There may be times when, in AIM's opinion, prevailing market, economic
or political conditions warrant reducing the proportion of the Fund's assets
invested in equity securities and increasing the proportion held in cash (U.S.
dollars, foreign currencies or multinational currency units) or invested in debt
securities or high quality money market instruments issued by corporations, or
the United States, or a foreign government. A portion of the Fund's assets
normally will be held in cash (U.S. dollars, foreign currencies or multinational
currency units) or invested in foreign or domestic high quality money market
instruments pending investment of proceeds from new sales of Fund shares to
provide for ongoing expenses and to satisfy redemptions.
In certain countries, governmental restrictions and other limitations
on investment may affect the Fund's ability to invest in such countries. In
addition, in some instances only special classes of securities may be purchased
by foreigners and the market prices, liquidity and rights with respect to those
securities may vary from shares owned by nationals. AIM is not aware at this
time of the existence of any investment or exchange control regulations which
might substantially impair the operations of the Fund as described in the Fund's
Prospectus and Statement of Additional Information. Restrictions may in the
future, however, make it undesirable to invest in certain countries. The Fund
does not have a present intention of making any significant investment in any
country or stock market in which AIM considers the political or economic
situation to threaten the Fund with substantial or total loss of its investment
in such country or market.
EQUITY-LINKED DERIVATIVES. The Fund may invest in equity-linked
derivative products designed to replicate the composition and performance of
particular indices. Examples of such products include S&P Depositary Receipts
("SPDRs"), World Equity Benchmark Series ("WEBs"), NASDAQ 100 tracking shares
("QQQs"), Dow Jones Industrial Average Instruments ("DIAMONDS") and Optomised
Portfolios as Listed Securities ("OPALS"). Investments in equity-linked
derivatives involve the same risks associated with a direct investment in the
types of securities included in the indices such products are designed to track.
There can be no assurance that the trading price of the equity-linked
derivatives will equal the underlying value of the basket of securities
purchased to replicate a particular index or that such basket will replicate the
index. Investments in equity-linked derivatives may constitute investment in
other investment companies. See "Investments in Other Investment Companies."
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain
countries, investments by the Fund presently may be made only by acquiring
shares of other investment companies (including investment vehicles or companies
advised by AIM or its affiliates) with local governmental approval to invest in
those countries. At such time as direct investment in these countries is
allowed, the Fund anticipates investing directly in these markets.
The Fund may invest in other investment companies to the extent
permitted by the 1940 Act, and the rules and regulations thereunder, and if
applicable, exemptive orders granted by the SEC. The
6
<PAGE> 29
following restrictions apply to investments in other investment companies other
than Affiliated Money Market Funds (defined below): (i) the Fund may not
purchase more than 3% of the total outstanding voting stock of another
investment company; (ii) the Fund may not invest more than 5% of its total
assets in securities issued by another investment company; and (iii) the Fund
may not invest more than 10% of its total assets in securities issued by other
investment companies other than Affiliated Money Market Funds. With respect to
the Fund's purchase of shares of another investment company, including
Affiliated Money Market Funds, the Fund will indirectly bear its proportionate
share of the advisory fees and other operating expenses of such investment
company. The Fund has obtained an exemptive order from the SEC allowing them to
invest in money market funds that have AIM or an affiliate of AIM as an
investment adviser (the "Affiliated Money Market Funds"), provided that
investments in Affiliated Money Market Funds do not exceed 25% of the total
assets of the Fund.
WARRANTS OR RIGHTS. Warrants or rights may be acquired by the Fund in
connection with other securities or separately and provide the Fund with the
right to purchase at a later date other securities of the issuer. Warrants are
securities permitting, but not obligating, their holder to subscribe for other
securities or commodities. Warrants do not carry with them the right to
dividends or voting rights with respect to the securities that they entitle
their holder to purchase, and they do not represent any rights in the assets of
the issuer. As a result, warrants may be considered more speculative than
certain other types of investments. In addition, the value of a warrant does not
necessarily change with the value of the underlying securities and a warrant
ceases to have value if it is not exercised prior to its expiration date.
LENDING OF FUND SECURITIES. For the purpose of realizing additional
income, the Fund may make secured loans of its securities holdings amounting to
not more than 33 1/3% of its total assets. Securities loans are made to
broker/dealers or institutional investors pursuant to agreements requiring that
the loans be continuously secured by collateral consisting of cash, U.S.
government securities, or certain irrevocable letters of credit at least equal
at all times to the value of the securities lent plus any accrued interest,
"marked to market" on a daily basis. The Fund may pay reasonable administrative
and custodial fees in connection with the loan of their securities. While the
securities loan is outstanding, the Fund will continue to receive the equivalent
of the interest or dividends paid by the issuer on the securities, as well as
interest on the investment of the collateral or a fee from the borrower. The
Fund will have a right to call each loan and obtain the securities within the
stated settlement period. The Fund will not have the right to vote equity
securities while they are being lent, but it may call in a loan in anticipation
of any important vote. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral should the borrower fail financially. Loans will only be made to
firms deemed by AIM to be of good standing and will not be made unless, in AIM's
judgment, the consideration to be earned from such loans would justify the risk.
COMMERCIAL BANK OBLIGATIONS. For the purposes of the Fund's investment
policies with respect to bank obligations, obligations of foreign branches of
U.S. banks and of foreign banks are obligations of the issuing bank and may be
general obligations of the parent bank. Such obligations may, however, be
limited by the terms of a specific obligation and by government regulation. As
with investments in non-U.S. securities in general, investments in the
obligations of foreign branches of U.S. banks and of foreign banks may subject
the Fund to investment risks that are different in some respects from those of
investments in obligations of U.S. issuers. Although the Fund will typically
acquire obligations issued and supported by the credit of U.S. or foreign banks
having total assets at the time of purchase of $1 billion or more, this $1
billion figure is not an investment policy or restriction of the Fund. For the
purposes of calculation with respect to the $1 billion figure, the assets of a
bank will be deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS. A repurchase agreement is a transaction in which
the Fund purchases securities from a bank or recognized securities dealer and
simultaneously commits to resell the securities to the bank or dealer on an
agreed-upon date or upon demand and at a price reflecting a market rate of
interest unrelated to the coupon rate or maturity of the purchased securities.
Although repurchase agreements carry certain risks not associated with direct
investments in securities, including
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possible decline in the market value of the underlying securities and delays and
costs to the Fund if the other party to the repurchase agreement becomes
bankrupt, the Fund intends to enter into repurchase agreements only with banks
and dealers believed by AIM to present minimal credit risks in accordance with
guidelines established by the Board of Trustees. AIM will review and monitor the
creditworthiness of such institutions under the Board's general supervision.
The Fund will invest only in repurchase agreements collateralized at
all times in an amount at least equal to the repurchase price plus accrued
interest. To the extent that the proceeds from any sale of such collateral upon
a default in the obligation to repurchase were less than the repurchase price,
the Fund would suffer a loss. If the financial institution that is party to the
repurchase agreement petitions for bankruptcy or otherwise becomes subject to
bankruptcy or other liquidation proceedings, there may be restrictions on the
Fund's ability to sell the collateral and it could suffer a loss. However, with
respect to financial institutions whose bankruptcy or liquidation proceedings
are subject to the U.S. Bankruptcy Code, the Fund intends to comply with
provisions under such code that would allow the immediate resale of such
collateral. The Fund will not enter into a repurchase agreement with a maturity
of more than seven days if, as a result, more than 15% of the value of its net
assets would be invested in such repurchase agreements and other illiquid
investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS. The
Fund may borrow from banks or may borrow through reverse repurchase agreements
and "roll" transactions in connection with meeting requests for the redemptions
of the Fund's shares. The Fund's borrowings will not exceed 33 1/3% of its total
assets, i.e., the Fund's total assets at all times will equal at least 300% of
the amount of outstanding borrowings. If market fluctuations in the value of the
Fund's securities holdings or other factors cause the ratio of its total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. The Fund may also borrow up to
5% of its total assets for temporary or emergency purposes other than to meet
redemptions. However, no additional investments will be made if the Fund's
borrowings exceed 5% of its total assets. Any borrowing by the Fund may cause
greater fluctuation in the value of its shares than would be the case if it did
not borrow.
The Fund's fundamental investment limitations permit it to borrow money
for leveraging purposes. However, the Fund is currently prohibited, pursuant to
a non-fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by the Board.
If the Fund employs leverage in the future, it would be subject to certain
additional risks. Use of leverage creates an opportunity for greater growth of
capital but would exaggerate any increases or decreases in the net asset value
of the Fund. When the income and gains on securities purchased with the proceeds
of borrowings exceed the costs of such borrowings, the Fund's earnings or net
asset value will increase faster than otherwise would be the case; conversely,
if such income and gains fail to exceed such costs, the Fund's earnings or net
asset value would decline faster than would otherwise be the case.
The Fund may enter into reverse repurchase agreements. A reverse
repurchase agreement is a borrowing transaction in which the Fund transfers
possession of securities to another party, such as a bank or broker/dealer, in
return for cash, and agrees to repurchase the securities in the future at an
agreed upon price, which includes an interest component. The Fund may also
engage in "roll" borrowing transactions, which involve the sale of Government
National Mortgage Association certificates or other securities together with a
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date. The Fund will segregate cash or liquid
securities in an amount sufficient to cover its obligations under "roll"
transactions and reverse repurchase agreements with broker/dealers. No
segregation is required for reverse repurchase agreements with banks.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase
debt securities on a "when-issued" basis and may purchase or sell such
securities on a "forward commitment" basis in order to hedge against anticipated
changes in interest rates and prices. The price, which is generally expressed in
yield terms, is fixed at the time that the commitment is made, but delivery and
payment for
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<PAGE> 31
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time that the Fund enters into a
transaction on a when-issued or forward commitment basis, the Fund will
segregate cash or liquid securities equal to the value of the when-issued or
forward commitment securities with its custodian and will mark to market daily
such assets. There is a risk that the securities may not be delivered and that
the Fund may incur a loss.
SHORT SALES. The Fund may make short sales of securities. A short sale
is a transaction in which the Fund sells a security in anticipation that the
market price of that security will decline. The Fund may make short sales (i) as
a form of hedging to offset potential declines in long positions in securities
it owns, or anticipates acquiring, or in similar securities, and (ii) in order
to maintain flexibility in its securities holdings.
When the Fund makes a short sale of a security it does not own, it must
borrow the security sold short and deliver it to the broker/dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the
borrowing is called or expires will be secured by collateral deposited with the
intermediary. The Fund will also be required to deposit collateral with its
custodian to the extent, if any, necessary so that the value of both collateral
deposits in the aggregate is at all times equal to at least 100% of the current
market value of the security sold short. Depending on arrangements made with the
intermediary from which it borrowed the security regarding payment of any
amounts received by it on such security, the Fund may not receive any payments
(including interest) on its collateral deposited with such intermediary.
If the price of the security sold short increases between the time of
the short sale and the time the Fund replaces the borrowed security, it will
incur a loss; conversely, if the price declines, the Fund will realize a gain.
Any gain will be decreased, and any loss increased, by the transaction costs
associated with the transaction. Although the Fund's gain is limited by the
price at which it sold the security short, its potential loss theoretically is
unlimited.
The Fund will not make a short sale if, after giving effect to the
sale, the market value of the securities sold short exceeds 25% of the value of
its total assets or its aggregate short sales of the securities of any one
issuer exceed the lesser of 2% of its net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange.
TEMPORARY DEFENSIVE STRATEGIES. In anticipation of or in response to
adverse market conditions, for cash management purposes, or for defensive
purposes, the Fund may temporarily hold all or a portion of its assets in cash,
(U.S. dollars, foreign currencies or multinational currency units) money market
instruments, or high-quality debt securities. The Fund may also invest up to 25%
of its total assets in Affiliated Money Market Funds for these purposes. To the
extent the Fund employs a temporary defensive strategy, it will not be invested
so as to achieve directly its investment objectives.
Money market instruments in which the Fund may invest include, but are
not limited to, United States government securities; high-grade commercial
paper; bank certificates of deposit; bankers' acceptances and repurchase
agreements related to any of the foregoing. "High-grade commercial paper" refers
to commercial paper rated A-1 by Standard & Poor's, a division of The
McGraw-Hill Companies, Inc. ("S&P"), or P-1 by Moody's Investors Service, Inc.
("Moody's") or, if not rated, determined by AIM to be of comparable quality.
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<PAGE> 32
PRIVATIZATIONS. The governments of some foreign countries have been
engaged in programs of selling part or all of their stakes in government owned
or controlled enterprises ("privatizations"). AIM believes that privatizations
may offer opportunities for significant capital appreciation and intends to
invest assets of the Fund in privatizations in appropriate circumstances. In
certain foreign countries, the ability of foreign entities such as the Fund to
participate in privatizations may be limited by local law, or the terms on which
the Fund may be permitted to participate may be less advantageous than those for
local investors. There can be no assurance that foreign governments will
continue to sell companies currently owned or controlled by them or that
privatization programs will be successful.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
INTRODUCTION
The Fund may use forward currency contracts, futures contracts, options
on securities, options on indices, options on currencies, and options on futures
contracts to attempt to hedge against the overall level of investment and
currency risk normally associated with the Fund's investments. These instruments
are often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency or an index of securities). The
Fund may invest in such instruments up to the full value of its portfolio
assets.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on such future contracts
to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on
equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by the Fund or that AIM intends to include in the
Fund's holders. The Fund also may purchase and sell put and call options on
stock indexes to hedge against overall fluctuations in the securities markets
generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may
purchase put options or write call options on such futures contracts to protect
against a general stock market decline or a decline in a specific market sector
that could affect adversely the Fund's holders. The Fund also may purchase stock
index futures contracts and purchase call options or write put options on such
contracts to hedge against a general stock market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. The Fund
may use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use by the Fund of options, futures contracts and forward currency
contracts ("Forward Contracts") involves special considerations and risks, as
described below. Risks pertaining to particular instruments are described in the
sections that follow.
(1) Successful use of most of these instruments depends upon AIM's
ability to predict movements of the overall securities and currency
markets, which requires different skills than predicting changes in the
prices of individual securities. While AIM is experienced in the use of
these instruments, there can be no assurance that any particular
strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the
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<PAGE> 33
value of an instrument used in a short hedge increased by less than the
decline in value of the hedged investment, the hedge would not be fully
successful. Such a lack of correlation might occur due to factors
unrelated to the value of the investments being hedged, such as
speculative or other pressures on the markets in which the hedging
instrument is traded. The effectiveness of hedges using hedging
instruments on indices will depend on the degree of correlation between
price movements in the index and price movements in the investments
being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by
wholly or partially offsetting the negative effect of unfavorable price
movements in the investments being hedged. However, hedging strategies
can also reduce opportunity for gain by offsetting the positive effect
of favorable price movements in the hedged investments. For example, if
the Fund entered into a short hedge because AIM projected a decline in
the price of a security in the Fund's portfolio, and the price of that
security increased instead, the gain from that increase might be wholly
or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined
by more than the increase in the price of the security, the Fund could
suffer a loss. In either such case, the Fund would have been in a
better position had it not hedged at all.
(4) There is no assurance that a liquid secondary market will exist for
any particular option, futures contract or option thereon at any
particular time.
(5) As described below, the Fund might be required to maintain assets
as "cover," maintain segregated accounts or make margin payments when
it takes positions in instruments involving obligations to third
parties (i.e., instruments other than purchased options). If the Fund
were unable to close out its positions in such instruments, it might be
required to continue to maintain such assets or accounts or make such
payments until the position expired or matured. The requirements might
impair the Fund's ability to sell a portfolio security or make an
investment at a time when it would otherwise be favorable to do so, or
require that the Fund sell a portfolio security at a disadvantageous
time. The Fund's ability to close out a position in an instrument prior
to expiration or maturity depends on the existence of a liquid
secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to
enter into a transaction closing out the position. Therefore, there is
no assurance that any position can be closed out at a time and price
that is favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and
currencies. Call options generally will be written on securities and currencies
that, in the opinion of AIM, are not expected to make any major price moves in
the near future but that, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security
or currency at a specified price (the exercise price) at any time until
(American style) or on (European style) a certain date (the expiration date). So
long as the obligation of the writer of a call option continues, he or she may
be assigned an exercise notice, requiring him or her to deliver the underlying
security or currency against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by purchasing an option
identical to that previously sold.
Portfolio securities or currencies on which call options may be written
will be purchased solely on the basis of investment considerations consistent
with the Fund's investment objective. When writing a call option, the Fund, in
return for the premium, gives up the opportunity for profit from a price
increase in the underlying security or currency above the exercise price, and
retains the risk of loss should the price of the security or currency decline.
Unlike one who owns securities or currencies not subject to an option, the Fund
has no control over when it may be required to sell the underlying securities or
currencies, since most options may be exercised at any time prior to the
option's expiration. If a call option that the Fund has written expires, it will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call
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<PAGE> 34
option is exercised, the Fund will realize a gain or loss from the sale of the
underlying security or currency, which will be increased or offset by the
premium received. The Fund does not consider a security or currency covered by a
call option to be "pledged" as that term is used in their policies that limit
the pledging or mortgaging of their assets.
Writing call options can serve as a limited short hedge because
declines in the value of the hedged investment would be offset to the extent of
the premium received for writing the option. However, if the security or
currency appreciates to a price higher than the exercise price of the call
option, it can be expected that the option will be exercised and the Fund will
be obligated to sell the security or currency at less than its market value.
The premium that the Fund receives for writing a call option is deemed
to constitute the market value of an option. The premium the Fund will receive
from writing a call option will reflect, among other things, the current market
price of the underlying investment, the relationship of the exercise price to
such market price, the historical price volatility of the underlying investment,
and the length of the option period. In determining whether a particular call
option should be written, AIM will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security or currency from
being called or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price or expiration date, or both.
The Fund will pay transaction costs in connection with the writing of
options and in entering into closing purchase contracts. Transaction costs
relating to options activity are normally higher than those applicable to
purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the
current market values of the underlying securities, indices or currencies at the
time the options are written. From time to time, the Fund may purchase an
underlying security or currency for delivery in accordance with the exercise of
an option, rather than delivering such security or currency from its portfolio.
In such cases, additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more, respectively, than
the premium received from writing the option. Because increases in the market
price of a call option generally will reflect increases in the market price of
the underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A
put option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
The Fund generally would write put options in circumstances where AIM
wishes to purchase the underlying security or currency for the Fund's holdings
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund would also receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premium received.
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<PAGE> 35
Writing put options can serve as a limited long hedge because increases
in the value of the hedged investment would be offset to the extent of the
premium received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at greater than its market value.
PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and
currencies. As the holder of a put option, the Fund would have the right to sell
the underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise such
option or permit such option to expire.
The Fund may purchase a put option on an underlying security or
currency ("protective put") owned by the Fund in order to protect against an
anticipated decline in the value of the security or currency. Such hedge
protection is provided only during the life of the put option when the Fund, as
the holder of the put option, is able to sell the underlying security or
currency at the put exercise price regardless of any decline in the underlying
security's market price or currency's exchange value. The premium paid for the
put option and any transaction costs would reduce any profit otherwise available
for distribution when the security or currency is eventually sold.
The Fund may also purchase put options at a time when it does not own
the underlying security or currency. By purchasing put options on a security or
currency it does not own, that the Fund seeks to benefit from a decline in the
market price of the underlying security or currency. If the put option is not
sold when it has remaining value, and if the market price of the underlying
security or currency remains equal to or greater than the exercise price during
the life of the put option, the Fund will lose its entire investment in the put
option. In order for the purchase of a put option to be profitable, the market
price of the underlying security or currency must decline sufficiently below the
exercise price to cover the premium and transaction costs, unless the put option
is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and
currencies. As the holder of a call option, the Fund would have the right to
purchase the underlying security or currency at the exercise price at any time
until (American style) or on (European style) the expiration date. The Fund may
enter into closing sale transactions with respect to such options, exercise such
options or permit such options to expire.
Call options may be purchased by the Fund for the purpose of acquiring
the underlying security or currency for its portfolio. Utilized in this fashion,
the purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique may also be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund may also purchase call options on underlying securities or
currencies it owns to avoid realizing losses that would result in a reduction of
its current return. For example, where the Fund has written a call option on an
underlying security or currency having a current market value below the price at
which it purchased the security or currency, an increase in the market price
could result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill its delivery obligations under its written
call (if it is exercised). This strategy
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<PAGE> 36
could allow the Fund to avoid selling the portfolio security or currency at a
time when it has an unrealized loss; however, the Fund would have to pay a
premium to purchase the call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of
the Fund's total assets at the time of each purchase.
The Fund may attempt to accomplish objectives similar to those involved
in using Forward Contracts by purchasing put or call options on currencies. A
put option gives the Fund as purchaser the right (but not the obligation) to
sell a specified amount of currency at the exercise price at any time until
(American style) or on (European style) the expiration date of the option. A
call option gives the Fund as purchaser the right (but not the obligation) to
purchase a specified amount of currency at the exercise price at any time until
(American style) or on (European style) the expiration date of the option. The
Fund might purchase a currency put option, for example, to protect itself
against a decline in the dollar value of a currency in which it holds or
anticipates holding securities. If the currency's value should decline against
the dollar, the loss in currency value should be offset, in whole or in part, by
an increase in the value of the put. If the value of the currency instead should
rise against the dollar, any gain to the Fund would be reduced by the premium it
had paid for the put option. A currency call option might be purchased, for
example, in anticipation of, or to protect against, a rise in the value against
the dollar of a currency in which the Fund anticipates purchasing securities.
Options may be either listed on an exchange or traded in
over-the-counter ("OTC") markets. Listed options are third-party contracts
(i.e., performance of the obligations of the purchaser and seller is guaranteed
by the exchange or clearing corporation) and have standardized strike prices and
expiration dates. OTC options are two-party contracts with negotiated strike
prices and expiration dates. The Fund will not purchase an OTC option unless it
believes that daily valuations for such options are readily obtainable. OTC
options differ from exchange-traded options in that OTC options are transacted
with dealers directly and not through a clearing corporation (which guarantees
performance). Consequently, there is a risk of non-performance by the dealer.
Since no exchange is involved, OTC options are valued on the basis of an average
of the last bid prices obtained from dealers, unless a quotation from only one
dealer is available, in which case only that dealer's price will be used. In the
case of OTC options, there can be no assurance that a liquid secondary market
will exist for any particular option at any specific time.
The staff of the SEC considers purchased OTC options to be illiquid
securities. The Fund may also sell OTC options and, in connection therewith,
segregate assets or cover its obligations with respect to OTC options written by
it. The assets used as cover for OTC options written by the Fund will be
considered illiquid unless the OTC options are sold to qualified dealers who
agree that the Fund may repurchase any OTC option it writes at a maximum price
to be calculated by a formula set forth in the option agreement. The cover for
an OTC option written subject to this procedure would be considered illiquid
only to the extent that the maximum repurchase price under the formula exceeds
the intrinsic value of the option.
The Fund's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. The Fund
intends to purchase or write only those exchange-traded options for which there
appear to be liquid secondary markets. However, there can be no assurance that
such a market will exist at any particular time. Closing transactions can be
made for OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with it, there is no assurance
that the Fund will in fact be able to close out an OTC option position at a
favorable price prior to expiration. In the event of insolvency of the contra
party, the Fund might be unable to close out an OTC option position at any time
prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities
or futures contracts except that all settlements are in cash and gain or loss
depends on changes in the index in question (and thus on price movements in the
securities market or a particular market sector generally) rather than on price
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movements in individual securities or futures contracts. When the Fund writes a
call on an index, it receives a premium and agrees that, prior to the expiration
date, the purchaser of the call, upon exercise of the call, will receive from
the Fund an amount of cash if the closing level of the index upon which the call
is based is greater than the exercise price of the call. The amount of cash is
equal to the difference between the closing price of the index and the exercise
price of the call times a specified multiple (the "multiplier"), which
determines the total dollar value for each point of such difference. When the
Fund buys a call on an index, it pays a premium and has the same rights as to
such call as are indicated above. When the Fund buys a put on an index, it pays
a premium and has the right, prior to the expiration date, to require the seller
of the put, upon the Fund's exercise of the put, to deliver to the Fund an
amount of cash if the closing level of the index upon which the put is based is
less than the exercise price of the put, which amount of cash is determined by
the multiplier, as described above for calls. When the Fund writes a put on an
index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the Fund to deliver to it an amount of cash equal to
the difference between the closing level of the index and the exercise price
times the multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Fund, as the call writer, will
not know that it has been assigned until the next business day at the earliest.
The time lag between exercise and notice of assignment poses no risk for the
writer of a covered call on a specific underlying security, such as common
stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If the Fund purchases an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the Fund will be required to pay the
difference between the closing index value and the exercise price of the option
(times the applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
The Fund may enter into interest rate, currency or stock index futures
contracts (collectively, "Futures" or "Futures Contracts") as a hedge against
changes in prevailing levels of interest rates, currency exchange rates or stock
price levels, respectively, in order to establish more definitely the effective
return on securities or currencies held or intended to be acquired by it. The
Fund's hedging may include sales of Futures as an offset against the effect of
expected increases in interest rates, and decreases in currency exchange rates
and stock prices, and purchases of Futures as an offset against the effect of
expected declines in interest rates, and increases in currency exchange rates or
stock prices.
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The Fund only will enter into Futures Contracts that are traded on
futures exchanges and are standardized as to maturity date and underlying
financial instrument. Futures exchanges and trading thereon in the United States
are regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts
could be used to reduce the Fund's exposure to interest rate, currency exchange
rate and stock market fluctuations, the Fund may be able to hedge its exposure
more effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and
purchase by another party of a specified amount of a specific financial
instrument (security or currency) for a specified price at a designated date,
time and place. A stock index Futures Contract provides for the delivery, at a
designated date, time and place, of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading on the contract and the price at which the Futures Contract is
originally struck; no physical delivery of stocks comprising the index is made.
Brokerage fees are incurred when a Futures Contract is bought or sold, and
margin deposits must be maintained at all times the Futures Contract is
outstanding.
Although Futures Contracts typically require future delivery of and
payment for financial instruments or currencies, Futures Contracts usually are
closed out before the delivery date. Closing out an open Futures Contract sale
or purchase is effected by entering into an offsetting Futures Contract purchase
or sale, respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, it will continue to be required to maintain the margin
deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations
arising from the sale of one Futures Contract of September deutschmarks on an
exchange may be fulfilled at any time before delivery under the Futures Contract
is required (i.e., on a specified date in September, the "delivery month") by
the purchase of another Futures Contract of September deutschmarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging
purposes only; that is, Futures Contracts will be sold to protect against a
decline in the price of securities or currencies that the Fund owns, or Futures
Contracts will be purchased to protect the Fund against an increase in the price
of securities or currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that
must be deposited by the Fund in order to initiate Futures trading and maintain
its open positions in Futures Contracts. A margin deposit made when the Futures
Contract is entered into ("initial margin") is intended to ensure the Fund's
performance under the Futures Contract. The margin required for a particular
Futures Contract is set by the exchange on which the Futures Contract is traded
and may be significantly modified from time to time by the exchange during the
term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
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Risks of Using Futures Contracts. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of
Futures Contracts and prices of the securities or currencies in the Fund's
portfolio being hedged. The degree of imperfection of correlation depends upon
circumstances such as variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves
an extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted
in Futures Contract and options on Futures Contracts prices during a single
trading day. The daily limit establishes the maximum amount that the price of a
Futures Contract or option may vary either up or down from the previous day's
settlement price at the end of a trading session. Once the daily limit has been
reached in a particular type of Futures Contract or option, no trades may be
made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and therefore does not limit
potential losses, because the limit may prevent the liquidation of unfavorable
positions. Futures Contracts and option prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of positions and subjecting some traders
to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Fund would continue to be
subject to market risk with respect to the position. In addition, except in the
case of purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk
that movements in the prices of Futures Contracts or options on Futures might
not correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
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OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or
currencies except that options on Futures Contracts give the purchaser the
right, in return for the premium paid, to assume a position in a Futures
Contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. Upon exercise of the option, the delivery of the Futures position by
the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's Futures margin account,
which represents the amount by which the market price of the Futures Contract,
at exercise, exceeds (in the case of a call) or is less than (in the case of a
put) the exercise price of the option on the Futures Contract. If an option is
exercised on the last trading day prior to the expiration date of the option,
the settlement will be made entirely in cash equal to the difference between the
exercise price of the option and the closing level of the securities, currencies
or index upon which the Futures Contract is based on the expiration date.
Purchasers of options who fail to exercise their options prior to the exercise
date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and
the purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required
to deposit initial and variation margin pursuant to requirements similar to
those applicable to Futures Contracts. Premiums received from the writing of an
option on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option
covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on
Futures Contracts and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for bona fide hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund, after taking into account
unrealized profits and unrealized losses on any contracts it has entered into.
In general, a call option on a Futures Contract is "in-the-money" if the value
of the underlying Futures Contract exceeds the strike, i.e., exercise, price of
the call; a put option on a Futures Contract is "in-the-money" if the value of
the underlying Futures Contract is exceeded by the strike price of the put. This
guideline may be modified by the Board, without a shareholder vote. This
limitation does not limit the percentage of the Fund's assets at risk to 5%.
FORWARD CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial
bank or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. The Fund
either may accept or make delivery of the currency at the maturity of the
Forward Contract. The Fund may also, if its contra party agrees prior to
maturity, enter into a closing transaction involving the purchase or sale of an
offsetting contract.
The Fund engages in forward currency transactions in anticipation of,
or to protect itself against, fluctuations in exchange rates. The Fund might
sell a particular foreign currency forward, for example, when it holds bonds
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
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currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers. A
Forward Contract generally has no deposit requirement, and no commissions are
charged at any stage for trades. The Fund will enter into such Forward Contracts
with major U.S. or foreign banks and securities or currency dealers in
accordance with guidelines approved by the Board.
The Fund may enter into Forward Contracts either with respect to
specific transactions or with respect to its overall investments. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (i.e., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to
sell a currency, it either may sell a security and use the sale proceeds to make
delivery of the currency or retain the security and offset its contractual
obligation to deliver the currency by purchasing a second contract pursuant to
which it will obtain, on the same maturity date, the same amount of the currency
that it is obligated to deliver. Similarly, the Fund may close out a Forward
Contract requiring it to purchase a specified currency by entering into a second
contract, if its contra party agrees, entitling it to sell the same amount of
the same currency on the maturity date of the first contract. The Fund would
realize a gain or loss as a result of entering into such an offsetting Forward
Contract under either circumstance to the extent the exchange rate or rates
between the currencies involved moved between the execution dates of the first
contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because Forward Contracts are usually
entered into on a principal basis, no fees or commissions are involved. The use
of Forward Contracts does not eliminate fluctuations in the prices of the
underlying securities the Fund owns or intends to acquire, but it does establish
a rate of exchange in advance. In addition, while Forward Contract sales limit
the risk of loss due to a decline in the value of the hedged currencies, they
also limit any potential gain that might result should the value of the
currencies increase.
FOREIGN CURRENCY STRATEGIES - SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign
currencies, options on Futures on foreign currencies and Forward Contracts to
hedge against movements in the values of the foreign currencies in which the
Fund's securities are denominated. Such currency hedges can protect against
price movements in a security that the Fund owns or intends to acquire that are
attributable to changes in the value of the currency in which it is denominated.
Such hedges do not, however, protect against price movements in the securities
that are attributable to other causes.
The Fund might seek to hedge against changes in the value of a
particular currency when no Futures Contract, Forward Contract or option
involving that currency is available or one of such contracts is more expensive
than certain other contracts. In such cases, the Fund may hedge against price
movements in that currency by entering into a contract on another currency or
basket of currencies, the values of which the portfolio manager believes will
have a positive correlation to the value of the currency
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<PAGE> 42
being hedged. The risk that movements in the price of the contract will not
correlate perfectly with movements in the price of the currency being hedged is
magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward
Contracts and options on foreign currencies depends on the value of the
underlying currency relative to the U.S. dollar. Because foreign currency
transactions occurring in the interbank market might involve substantially
larger amounts than those involved in the use of Futures Contracts, Forward
Contracts or options, the Fund could be disadvantaged by dealing in the odd lot
market (generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirements that quotations available through
dealers or other market sources be firm or revised on a timely basis. Quotation
information generally is representative of very large transactions in the
interbank market and thus might not reflect odd-lot transactions where rates
might be less favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options
involving foreign currencies might be required to take place within the country
issuing the underlying currency. Thus, the Fund might be required to accept or
make delivery of the underlying foreign currency in accordance with any U.S. or
foreign regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options
(other than options purchased by the Fund) expose the Fund to an obligation to
another party. The Fund will not enter into any such transactions unless it owns
either (1) an offsetting ("covered") position in securities, currencies, or
other options, Forward Contracts or Futures Contracts or (2) cash, receivables
and short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account cannot be sold
while the position in the corresponding Forward Contract, Futures Contract or
option is open, unless they are replaced with other appropriate assets. If a
large portion of the Fund's assets is used for cover or otherwise set aside, it
could affect portfolio management or the Fund's ability to meet redemption
requests or other current obligations.
ADDITIONAL RISK FACTORS
GENERAL
Equity securities, particularly common stocks, generally represent the
most junior position in an issuer's capital structure, and entitle holders to an
interest in the assets of the issuer, if any, remaining after all more senior
claims have been satisfied. The value of equity securities held by the Fund will
fluctuate in response to general market and economic developments, as well as
developments affecting the particular issuers of such securities. The value of
debt securities held by the Fund generally will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and interest rates.
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FINANCIAL SERVICES INDUSTRY
Companies in the financial services sector are subject to rapid
business changes, significant competition, value fluctuations due to the
concentration of loans in particular industries significantly affected by
economic conditions (such as real estate or energy), and volatile performance
dependent upon the availability and cost of capital and prevailing interest
rates. In addition, general economic conditions significantly affect these
companies. Credit and other losses resulting from the financial difficulty of
borrowers or other third parties potentially may have an adverse effect on
companies in these industries. Foreign banks, particularly those of Japan, have
reported financial difficulties attributed to increased competition, regulatory
changes, and general economic difficulties.
The financial services area in the United States currently is changing
relatively rapidly as existing distinctions between various financial service
segments become less clear. For instance, recent business combinations have
included insurance, finance, and securities brokerage under single ownership.
Some primarily retail corporations have expanded into securities and insurance
fields. Investment banking, securities brokerage, and investment advisory
companies are subject to government regulation and risk due to securities
trading and underwriting activities.
Many of the investment considerations discussed in connection with
banks, savings institutions and loan associations, and finance companies also
apply to insurance companies. The performance of insurance company investments
will be subject to risk from several factors. The earnings of insurance
companies will be affected by interest rates, pricing (including severe pricing
competition from time to time), claims activity, marketing competition and
general economic conditions. Particular insurance lines also will be influenced
by specific matters. Property and casualty insurance profits may be affected by
certain weather catastrophes and other disasters. Life and health insurers'
profits may be affected by mortality and morbidity rates. Individual companies
may be exposed to material risks, including reserve inadequacy, problems in
investment portfolios (due to real estate or "junk" bond holdings, for example),
and the inability to collect from reinsurance carriers. Insurance companies are
subject to extensive governmental regulation, including the imposition of
maximum rate levels, which may not be adequate for some lines of business.
Proposed or potential anti-trust or tax law changes also may affect adversely
insurance companies' policy sales, tax obligations, and profitability.
INFRASTRUCTURE INDUSTRY
The nature of regulation of infrastructure industries continues to
evolve in both the United States and foreign countries, and changes in
governmental policy and the need for regulatory approvals may have a material
effect on the products and services offered by companies in the infrastructure
industries. Electric, gas, water, and most telecommunications companies in the
United States, for example, are subject to both federal and state regulation
affecting permitted rates of return and the kinds of services that may be
offered. Government regulation may also hamper the development of new
technologies. Adverse regulatory developments could therefore potentially affect
the performance of the Fund.
In addition, many infrastructure companies have historically been
subject to the risks attendant to increases in fuel and other operating costs,
high interest costs on borrowed funds, costs associated with compliance with
environmental, and other safety regulations and changes in the regulatory
climate. Changes in prevailing interest rates may also affect the Infrastructure
Fund's share values because prices of equity and debt securities of
infrastructure companies tend to increase when interest rates decline and
decrease when interest rates rise. Further, competition is intense for many
infrastructure companies. As a result, many of these companies may be adversely
affected in the future and such companies may be subject to increased share
price volatility. In addition, many companies have diversified into oil and gas
exploration and development, and therefore returns may be more sensitive to
energy prices.
Some infrastructure companies, such as water supply companies, operate
in highly fragmented market sectors due to local ownership. In addition, some of
these companies are mature and experience little or no growth. Either of these
factors could have a material effect on infrastructure companies and could
therefore affect the performance of the Fund.
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NATURAL RESOURCES INDUSTRY
The Fund invests in companies that engage in the exploration,
development, and distribution of coal, oil and gas in the United States. These
companies are subject to significant federal and state regulation, which may
affect rates of return on such investments and the kinds of services that may be
offered. In addition, many natural resource companies historically have been
subject to significant costs associated with compliance with environmental and
other safety regulations. Governmental regulation may also hamper the
development of new technologies.
Further, competition is intense for many natural resource companies. As
a result, many of these companies may be adversely affected in the future and
the value of the securities issued by such companies may be subject to increased
price volatility. Such companies may also be subject to irregular fluctuations
in earnings due to changes in the availability of money, the level of interest
rates, and other factors.
The value of securities of natural resource companies will fluctuate in
response to market conditions for the particular natural resources with which
the issuers are involved. The price of natural resources will fluctuate due to
changes in worldwide levels of inventory, and changes, perceived or actual, in
production and consumption. With respect to precious metals, such price
fluctuations may be substantial over short periods of time. In addition, the
value of natural resources may fluctuate directly with respect to various stages
of the inflationary cycle and perceived inflationary trends and are subject to
numerous factors, including national and international politics.
CONSUMER PRODUCTS AND SERVICES INDUSTRY
The performance of consumer products and services companies relates
closely to the actual and perceived performance of the overall economy, interest
rates, and consumer confidence. In addition, many consumer products and services
companies have unpredictable earnings, due in part to changes in consumer tastes
and intense competition. As a result of either of these factors, consumer
products and services companies may be subject to increased share price
volatility.
The consumer products and services industry may also be subject to
greater government regulation than many other industries. Changes in
governmental policy and the need for regulatory approvals may have a material
effect on the products and services offered by companies in the consumer
products and services industries. Such governmental regulations may also hamper
the development of new business opportunities.
HEALTH CARE INDUSTRY
Health care industries generally are subject to substantial
governmental regulation. Changes in governmental policy or regulation could have
a material effect on the demand for products and services offered by companies
in the health care industries and therefore could affect the performance of the
Fund. Regulatory approvals are generally required before new drugs and medical
devices or procedures may be introduced and before the acquisition of additional
facilities by health care providers. In addition, the products and services
offered by such companies may be subject to rapid obsolescence caused by
technological and scientific advances.
TELECOMMUNICATIONS AND TECHNOLOGY INDUSTRY
Telecommunications and technology industries may be subject to greater
governmental regulation than many other industries and changes in governmental
policy and the need for regulatory approvals may have a material effect on the
products and services offered by companies in those industries. Telephone
operating companies in the United States, for example, are subject to both
federal and state regulation affecting permitted rates of return and the kinds
of services that may be offered. In addition, certain types of companies in the
telecommunications and technology industries are engaged in fierce competition
for market share that could result in increased share price volatility
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DEBT SECURITIES
The value of the debt securities held by the Fund generally will vary
conversely with market interest rates. If interest rates in a market fall, the
value of the debt securities held by the Fund ordinarily will rise. If market
interest rates increase, however, the debt securities owned by the Fund in that
market will be likely to decrease in value.
Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC or C by S&P, and debt rated Ba, B,
Caa, Ca or C by Moody's is regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. For S&P, BB indicates the lowest
degree of speculation for such lower quality debt and C the highest degree of
speculation. For Moody's, Baa indicates the lowest degree of speculation for
such lower quality debt and C the highest degree of speculation. While such
lower quality debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. Debt rated C by Moody's or S&P is the lowest rated debt that is not
in default as to principal or interest, and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Lower quality debt securities also are generally considered to be subject to
greater risk than securities with higher ratings with regard to a deterioration
of general economic conditions. These lower quality debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds." See
Appendix A for a description of the various debt ratings.
Ratings of debt securities represent the rating agency's opinion
regarding their quality and are not a guarantee of quality. Rating agencies
attempt to evaluate the safety of principal and interest payments and do not
evaluate the risks of fluctuations in market value. Also, rating agencies may
fail to make timely changes in credit ratings in response to subsequent events,
so that an issuer's current financial condition may be better or worse than a
rating indicates.
The market values of lower quality debt securities tend to reflect
individual developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.
Lower quality debt securities of corporate issuers frequently have call
or buy-back features that permit the issuer to call or repurchase the security
from the Fund. If an issuer exercises these provisions in a declining interest
rate market, the Fund may have to replace the security with a lower yielding
security, resulting in a decreased return for investors. In addition, the Fund
may have difficulty disposing of lower quality securities because they may have
a thin trading market. There may be no established retail secondary market for
many of these securities, and the Fund anticipates that such securities could be
sold only to a limited number of dealers or institutional investors. The lack of
a liquid secondary market also may have an adverse impact on market prices of
such instruments and may make it more difficult for the Fund to obtain accurate
market quotations for purposes of valuing their portfolio investments. The Fund
may also acquire lower quality debt securities during an initial underwriting or
which are sold without registration under applicable securities laws. Such
securities involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect
on the market value of lower quality debt securities in which the Fund may
invest include: (i) potential adverse publicity;
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<PAGE> 46
(ii) heightened sensitivity to general economic or political conditions; and
(iii) the likely adverse impact of a major economic recession. The Fund may also
incur additional expenses to the extent it is required to seek recovery upon a
default in the payment of principal or interest on portfolio holdings, and the
Fund may have limited legal recourse in the event of a default.
AIM attempts to minimize the speculative risks associated with
investments in lower quality securities through credit analysis and by carefully
monitoring current trends in interest rates, political developments and other
factors.
INVESTING IN SMALLER COMPANIES
While the Fund's holdings normally will include securities of
established suppliers of traditional products and services, the Fund may invest
in smaller companies which can benefit from the development of new products and
services. These smaller companies may present greater opportunities for capital
appreciation, but may also involve greater risks than large, established
issuers. Such smaller companies may have limited resources, and their securities
may trade less frequently and in more limited volume than the securities of
larger, more established companies. As a result, the prices of the securities of
such smaller companies may fluctuate to a greater degree than the prices of the
securities of other issuers.
ILLIQUID SECURITIES
The Fund may invest up to 15% of its net assets in illiquid securities.
Securities may be considered illiquid if the Fund cannot reasonably expect
within seven days to sell the securities for approximately the amount at which
it values such securities. See "Investment Limitations." The sale of illiquid
securities, if they can be sold at all, generally will require more time and
result in higher brokerage charges or dealer discounts and other selling
expenses than will the sale of liquid securities such as securities eligible for
trading on U.S. securities exchanges or in OTC markets. Moreover, restricted
securities, which may be illiquid for purposes of this limitation, often sell,
if at all, at a price lower than similar securities that are liquid.
Illiquid securities include those that are subject to restrictions
contained in the securities laws of other countries. However, securities that
are freely marketable in the country where they are principally traded, but
would not be freely marketable in the United States, will not be considered
illiquid. Where registration is required, the Fund may be obligated to pay all
or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time the Fund may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended (the "1933 Act"),
including private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
have developed as a result of Rule 144A, providing both readily ascertainable
values for restricted securities and the ability to liquidate an investment to
satisfy share redemption orders. Such markets include automated systems for the
trading, clearance and settlement of unregistered securities of domestic and
foreign issuers, such as the PORTAL System sponsored by the National Association
of Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing
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<PAGE> 47
Rule 144A-eligible restricted securities held by the Fund, however, could affect
adversely the marketability of such portfolio securities, and the Fund might be
unable to dispose of such securities promptly or at favorable prices.
With respect to liquidity determinations generally, the Board has the
ultimate responsibility for determining whether specific securities, including
restricted securities pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. The Board has delegated the function of making day-to-day
determinations of liquidity to AIM, in accordance with procedures approved by
the Board. AIM takes into account a number of factors in reaching liquidity
decisions, including (i) the frequency of trading in the security, (ii) the
number of dealers that make quotes for the security, (iii) the number of dealers
that have undertaken to make a market in the security, (iv) the number of other
potential purchasers and (v) the nature of the security and how trading is
effected (e.g., the time needed to sell the security, how offers are solicited
and the mechanics of transfer). AIM monitors the liquidity of securities held by
the Fund and periodically reports such determinations to the Board. If the
liquidity percentage restriction of the Fund is satisfied at the time of
investment, a later increase in the percentage of illiquid securities held by
the Fund resulting from a change in market value or assets will not constitute a
violation of that restriction. If as a result of a change in market value or
assets, the percentage of illiquid securities held by the Fund increases above
the applicable limit, AIM will take appropriate steps to bring the aggregate
amount of illiquid assets back within the prescribed limitations as soon as
reasonably practicable, taking into account the effect of any disposition on the
Fund. AIM believes that carefully selected investments in joint ventures,
cooperatives, partnerships and state enterprises that are illiquid
(collectively, "Special Situations") could enable the Fund to achieve capital
appreciation substantially exceeding the appreciation it would realize if it did
not make such investments. However, in order to attempt to limit investment
risk, the Fund will invest no more than 5% of its total assets in Special
Situations.
FOREIGN SECURITIES
Each of the Funds may hold foreign securities. Such investments may
include American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs") and other securities representing underlying securities of foreign
issuers. These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs are receipts
typically issued by a United States bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. EDRs are
receipts issued in Europe which evidence a similar ownership arrangement.
Generally, ADRs, in registered form, are designed for use in the United States
securities markets, and EDRs, in bearer form, are designed for use in European
securities markets. ADRs and EDRs may be listed on stock exchanges, or traded in
OTC markets in the United States or Europe, as the case may be. ADRs, like other
securities traded in the United States, will be subject to negotiated commission
rates.
To the extent a Fund invests in securities denominated in foreign
currencies, each Fund bears the risk of changes in the exchange rates between
U.S. currency and the foreign currency, as well as the availability and status
of foreign securities markets. These securities will be marketable equity
securities (including common and preferred stock, depositary receipts for stock
and fixed income or equity securities exchangeable for or convertible into
stock) of foreign companies which generally are listed on a recognized foreign
securities exchange or traded in a foreign over-the-counter market. Each of the
Funds may also invest in foreign securities listed on recognized U.S. securities
exchanges or traded in the U.S. over-the-counter market. Such foreign securities
may be issued by foreign companies located in developing countries in various
regions of the world. A "developing country" is a country in the initial stages
of its industrial cycle. As compared to investment in the securities markets of
developed countries, investment in the securities markets of developing
countries involves exposure to markets that may have substantially less trading
volume and greater price volatility, economic structures that are less diverse
and mature, and political systems that may be less stable.
Investments by a Fund in foreign securities, whether denominated in
U.S. currencies or foreign currencies, may entail all of the risks set forth
below. Investments by a Fund in ADRs, EDRs or similar securities also may entail
some or all of the risks as set forth below.
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<PAGE> 48
Currency Risk. The value of each Fund's foreign investments will be
affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security decreases when the value of the U.S. dollar rises against the
foreign currency in which the security is denominated and increases when the
value of the U.S. dollar falls against such currency.
On January 1, 1999, certain members of the European Economic and
Monetary Union ("EMU"), namely Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain established a
common European currency known as the "euro" and each member's local currency
became a denomination of the euro. It is anticipated that each participating
country will replace its local currency with the euro on July 1, 2002. Any other
European country that is a member of the European Union and satisfies the
criteria for participation in the EMU may elect to participate in the EMU and
may supplement its existing currency with euro. The anticipated replacement of
existing currencies with the euro on July 1, 2002 could cause market disruptions
before or after July 1, 2002 and could adversely affect the value of securities
held by a Fund.
Political and Economic Risk. The economies of many of the countries in
which the Funds may invest are not as developed as the United States economy and
may be subject to significantly different forces. Political or social
instability, expropriation or confiscatory taxation, and limitations on the
removal of funds or other assets could also adversely affect the value of each
Fund's investments.
Regulatory Risk. Foreign companies are not registered with the SEC and
are generally not subject to the regulatory controls imposed on United States
issuers and, as a consequence, there is generally less publicly available
information about foreign securities than is available about domestic
securities. Foreign companies are not subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to domestic companies. Income from foreign securities owned by
the Funds may be reduced by a withholding tax at the source, which tax would
reduce dividend income payable to the Funds' shareholders.
Market Risk. The securities markets in many of the countries in which
the Funds invest will have substantially less trading volume than the major
United States markets. As a result, the securities of some foreign companies may
be less liquid and experience more price volatility than comparable domestic
securities. Increased custodian costs as well as administrative costs (such as
the need to use foreign custodians) may be associated with the maintenance of
assets in foreign jurisdictions. There is generally less government regulation
and supervision of foreign stock exchanges, brokers and issuers which may make
it difficult to enforce contractual obligations. In addition, transaction costs
in foreign securities markets are likely to be higher, since brokerage
commission rates in foreign countries are likely to be higher than in the United
States.
INVESTMENT LIMITATIONS
INVESTMENT LIMITATIONS OF THE FUND
The following fundamental limitations of the Fund cannot be changed
without the affirmative vote of a majority of the outstanding shares of the
Fund.
1. The Fund is a "diversified company" as defined in the 1940 Act. The
Fund will not purchase the securities of any issuer if, as a result,
the Fund would fail to be a diversified company within the meaning of
the 1940 Act, and the rules and regulations promulgated thereunder, as
such statute, rules, and regulations are amended from time to time or
are interpreted from time to time by the SEC staff (collectively, the
"1940 Act Laws and Interpretations") or to the extent that the Fund
may be permitted to do so by exemptive order or similar relief
(collectively, with the 1940 Act Laws and Interpretations, the "1940
Act Laws, Interpretations and Exemptions"). In complying with this
restriction, however, the Fund may purchase securities of other
investment companies to the extent permitted by the 1940 Act Laws,
Interpretations and Exemptions.
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2. The Fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940
Act Laws, Interpretations and Exemptions of its investments in the
securities of issuers primarily engaged in the same industry. This
restriction does not limit the Fund's investment in (i) obligations
issued or guaranteed by the U.S. government, its agencies or
instrumentalities, (ii) tax-exempt obligations issued by government or
political subdivisions of governments, or (iii) bank instruments. In
complying with this restriction, the Fund will not consider a
bank-issued guaranty or financial guaranty insurance as a separate
security.
3. The Fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objectives, policies and limitations as
the Fund.
4. The Fund may not borrow money or issue senior securities, except as
permitted by the 1940 Act Laws, Interpretations and Exemptions.
5. The Fund may not underwrite the securities of other issuers. This
restriction does not prevent the Fund from engaging in transactions
involving the acquisition, disposition or resale of its portfolio
securities, regardless of whether the Fund may be considered to be an
underwriter under the Securities Act of 1933.
6. The Fund may not purchase real estate or sell real estate unless
acquired as a result of ownership of securities or other instruments.
This restriction does not prevent the Fund from investing in issuers
that invest, deal, or otherwise engage in transactions in real estate
or interests therein, or investing in securities that are secured by
real estate or interests therein.
7. The Fund may not make personal loans or loans to persons who
control or are under the common control with the Fund, except to the
extent permitted by 1940 Act Laws, Interpretations and Exemptions.
This restriction does not prevent the Fund from purchasing debt
obligations, entering into repurchase agreements, loaning its assets
to broker-dealers or institutional investors, or investing in loans,
including assignments and participation interests.
8. The Fund will not purchase or sell physical commodities unless
acquired as a result of owning securities or other instruments, but
the Fund may purchase, sell or enter into financial options and
futures, forward and spot currency contracts, swap transactions and
other financial contracts or derivative instruments.
The investment restrictions set forth above provide the Fund with the
ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
the change. Even though the Fund has this flexibility, the Fund follows internal
guidelines relating to certain of these restrictions which the adviser must
follow in managing the Fund. Any changes to these guidelines, which are set
forth below, require the approval of the Board of Trustees.
1. In complying with the diversification restriction set forth in (1)
above, the Fund will not, with respect to 75% of its total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities), if, as a result, (i) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(ii) the fund would hold more than 10% of the outstanding voting
securities of that issuer. The fund may (i) purchase securities of
other investment companies as permitted by Section 12(d)(1) of the
1940 Act and (ii) invest its assets in securities of other money
market funds and lend money to other investment companies and their
series portfolios that have AIM as an investment adviser, subject to
the terms and conditions of any exemptive orders issued by the SEC.
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<PAGE> 50
2. In complying with the concentration restriction set forth in (2)
above, the Fund may invest up to 25% of its total assets in the
securities of issuers whose principal business activities are in the
same industry.
3. Notwithstanding the restriction set forth in (3) above, the Fund may
not invest all of its assets in the securities of a single open-end
management investment company with the same fundamental investment
objectives, policies and limitations as the Fund.
4. In complying with the borrowing restriction set forth in (4) above,
the Fund may borrow money in an amount not exceeding 33 1/3% of its
total assets (including the amount borrowed) less liabilities (other
than borrowings). The Fund may borrow from banks, broker/dealers or
other investment companies or their series portfolios that have AIM or
an affiliate of AIM as an investment adviser (an "AIM Fund"). The Fund
may not borrow for leveraging, but may borrow for temporary or
emergency purposes, in anticipation of or in response to adverse market
conditions, or for cash management purposes. The Fund may not purchase
additional securities when any borrowing from banks exceed 5% of the
Fund's total assets.
5. In complying with the lending restrictions set forth in (7) above,
the Fund may lend up to 33 1/3% of its total assets and may lend money
to another AIM Fund, on such terms and conditions as the SEC may
require in an exemptive order.
6. The Fund will not invest more than 15% of its net assets in illiquid
securities, a term which means securities that cannot be disposed of
within seven days in the ordinary course of business at approximately
the amount at which the Fund has valued the securities and includes,
among other things, repurchase agreements maturing in more than seven
days;
7. The Fund will not purchase portfolio securities while borrowings in
excess of 5% of its total assets are outstanding;
8. The Fund will not purchase securities on margin, except for
short-term credit necessary for clearance of portfolio transactions and
except that the Fund may make margin deposits in connection with its
use of financial options and futures, forward and spot currency
contracts, swap transactions and other financial contract or derivative
instruments;
9. The Fund will not purchase securities of other investment companies,
except to the extent permitted by the 1940 Act Laws, Interpretations
and Exemptions and except that this limitation does not apply to
securities received or acquired as dividends, through offers of
exchange, or as a result of reorganization, consolidation, or merger.
If a percentage restriction on investment or utilization of assets in
an investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions. The
Fund may exchange securities, exercise conversion or subscription rights,
warrants or other rights to purchase common stock or other equity securities and
may hold, except to the extent limited by the 1940 Act, any such securities so
acquired without regard to the Fund's investment policies and restrictions. The
original cost of the securities so acquired will be included in any subsequent
determination of the Fund's compliance with the investment percentage
limitations referred to above and in the Prospectus.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
AIM makes decisions to buy and sell securities for each Fund, selects
broker-dealers, effects the Funds' investment portfolio transactions, allocates
brokerage fees in such transactions, and where applicable, negotiates
commissions and spreads on transactions. AIM's primary consideration in
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effecting a security transaction is to obtain the most favorable execution of
the order, which includes the best price on the security and a low commission
rate. While AIM seeks reasonably competitive commission rates, the Funds may not
pay the lowest commission or spread available. See "Section 28(e) Standards"
below.
Some of the securities in which the Funds invest are traded in
over-the-counter markets. In such transactions, a Fund deals directly with
dealers who make markets in the securities involved, except when better prices
are available elsewhere. Portfolio transactions placed through dealers who are
primary market makers are effected at net prices without commissions, but which
include compensation in the form of a mark up or mark down.
Traditionally, commission rates have not been negotiated on stock
markets outside the United States. Although in recent years many overseas stock
markets have adopted a system of negotiated rates, a number of markets maintain
an established schedule of minimum commission rates.
AIM may determine target levels of commission business with various
brokers on behalf of its clients (including the Funds) over a certain time
period. The target levels will be based upon the following factors, among
others: (1) the execution services provided by the broker; (2) the research
services provided by the broker; and (3) the broker's interest in mutual funds
in general and in the Funds and other mutual funds advised by AIM or A I M
Capital Management, Inc. (collectively, the "AIM Funds") in particular,
including sales of the Funds and of the other AIM Funds. In connection with (3)
above, the Funds' trades may be executed directly by dealers that sell shares of
the AIM Funds or by other broker-dealers with which such dealers have clearing
arrangements. AIM will not use a specific formula in connection with any of
these considerations to determine the target levels.
The Funds may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of a Fund, provided the conditions of an exemptive order received by
the Funds from the SEC are met. In addition, a Fund may purchase or sell a
security from or to another AIM Fund or account (and may invest in affiliated
money market funds) provided the Funds follow procedures adopted by the Boards
of Directors/Trustees of the various AIM Funds, including the Trust. These
inter-fund transactions do not generate brokerage commissions but may result in
custodial fees or taxes or other related expenses.
Under the 1940 Act, certain persons affiliated with the Trust are
prohibited from dealing with the Funds as principal in any purchase or sale of
securities unless an exemptive order allowing such transactions is obtained from
the SEC. The 1940 Act also prohibits the Funds from purchasing a security being
publicly underwritten by a syndicate of which certain persons affiliated with
the Trust are members except in accordance with certain conditions. These
conditions may restrict the ability of a Fund to purchase municipal securities
being publicly underwritten by such syndicate, and the Fund may be required to
wait until the syndicate has been terminated before buying such securities. At
such time, the market price of the securities may be higher or lower than the
original offering price. A person affiliated with the Trust may, from time to
time, serve as placement agent or financial advisor to an issuer of municipal
securities and be paid a fee by such issuer. Each Fund may purchase such
municipal securities directly from the issuer, provided that the purchase is
reviewed by the Board of Trustees and a determination is made that the placement
fee or other remuneration paid by the issuer to a person affiliated with the
Trust is fair and reasonable in relation to the fees charged by others
performing similar services.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous other investment accounts. Some
of these accounts may have investment objectives similar to the Funds.
Occasionally, identical securities will be appropriate for investment by one of
the Funds and by another Fund or one or more of these investment accounts.
However, the position of each account in the same securities and the length of
time that each account may hold its investment in the same securities may vary.
The timing and amount of purchase by each account will also be determined by its
cash position. If the purchase or sale of securities is consistent with the
investment policies of the Fund(s) and one or more of these accounts, and is
considered at or
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about the same time, AIM will fairly allocate transactions in such securities
among the Fund(s) and these accounts. AIM may combine such transactions, in
accordance with applicable laws and regulations, to obtain the most favorable
execution. Simultaneous transactions could, however, adversely affect a Fund's
ability to obtain or dispose of the full amount of a security which it seeks to
purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to a Fund. In making such allocations,
AIM considers the investment objectives and policies of its advisory clients,
the relative size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, the size of investment commitments
generally held, and the judgments of the persons responsible for recommending
the investment.
ALLOCATION OF IPO TRANSACTIONS
From time to time, certain of the AIM Funds or other accounts managed
by AIM may become interested in participating in security distributions that are
available in an IPO, and occasions may arise when purchases of such securities
by one AIM Fund or account may also be considered for purchase by one or more
other AIM Funds or accounts. In such cases, it shall be AIM's practice to
specifically combine or otherwise bunch indications of interest for IPO
securities for all AIM Funds and accounts participating in purchase transactions
for that security, and to allocate such transactions in accordance with the
following procedures:
AIM will determine the eligibility of each AIM Fund and account that
seeks to participate in a particular IPO by reviewing a number of factors,
including suitability of the investment with the AIM Fund's or account's
investment objective, policies and strategies, the liquidity of the AIM Fund or
account if such investment is purchased, and whether the portfolio manager
intends to hold the security as a long-term investment. The allocation of
limited supply securities issued in IPOs will be made to eligible AIM Funds and
accounts in a manner designed to be fair and equitable for the eligible AIM
Funds and accounts, and so that there is equal allocation of IPOs over the
longer term. Where multiple funds or accounts are eligible, rotational
participation may occur, based on the extent to which an AIM Fund or account has
participated in previous IPOs as well as the size of the AIM Fund or account.
Each eligible AIM Fund and account with an asset level of less than $500 million
will be placed in one of three tiers, depending upon its asset level. The AIM
Funds and accounts in the tier containing funds and accounts with the smallest
asset levels will participate first, each receiving a 40 basis point allocation
(rounded to the nearest share round lot that approximates 40 basis points) (the
"Allocation"), based on that AIM Fund's or account's net assets. This process
continues until all of the AIM Funds and accounts in the three tiers receive
their Allocations, or until the shares are all allocated. Should securities
remain after this process, eligible AIM Funds and accounts will receive their
Allocations on a straight pro rata basis. For the tier of AIM Funds and accounts
not receiving a full Allocation, the Allocation may be made only to certain AIM
Funds or accounts so that each may receive close to or exactly 40 basis points.
When any AIM Fund and/or account with substantially identical
investment objectives and policies participates in syndicates, they will do so
in amounts that are substantially proportionate to each other. In these cases,
the net assets of the largest AIM Fund will be used to determine in which tier,
as described in the paragraph above, such group of AIM Funds or accounts will be
placed. If no AIM Fund is participating, then the net assets of the largest
account will be used to determine tier placement. The price per share of
securities purchased in such syndicate transactions will be the same for each
AIM Fund and account.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM,
under certain circumstances, lawfully may cause an account to pay a higher
commission than the lowest available. Under Section 28(e), AIM must make a good
faith determination that the commissions paid are "reasonable in relation to the
value of the brokerage and research services provided ... viewed in terms of
either that particular transaction or [AIM's] overall responsibilities with
respect to the accounts as to which
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it exercises investment discretion." The services provided by the broker also
must lawfully and appropriately assist AIM in the performance of its investment
decision-making responsibilities. Accordingly, in recognition of research
services provided to it, a Fund may pay a broker higher commissions than those
available from another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Trust's trustees with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally, in
written form or on computer software. Research services may also include the
providing of custody services, as well as the providing of equipment used to
communicate research information, the providing of specialized consultations
with AIM personnel with respect to computerized systems and data furnished to
AIM as a component of other research services, the arranging of meetings with
management of companies, and the providing of access to consultants who supply
research information.
The outside research assistance is useful to AIM since the
broker-dealers used by AIM tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, the research provides
AIM with a diverse perspective on financial markets. Research services provided
to AIM by broker-dealers are available for the benefit of all accounts managed
or advised by AIM or by its affiliates. Some broker-dealers may indicate that
the provision of research services is dependent upon the generation of certain
specified levels of commissions and underwriting concessions by AIM's clients,
including the Funds. However, the Funds are not under any obligation to deal
with any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the
broker-dealer providing them. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM believes
that the research services are beneficial in supplementing AIM's research and
analysis and that they improve the quality of AIM's investment advice. The
advisory fee paid by the Funds is not reduced because AIM receives such
services. However, to the extent that AIM would have purchased research services
had they not been provided by broker-dealers, the expenses to AIM could be
considered to have been reduced accordingly.
PORTFOLIO TURNOVER
Although the Fund does not intend generally to trade for short-term
profits, the securities held by the Fund will be sold whenever management
believes it is appropriate to do so, without regard to the length of time a
particular security may have been held. Portfolio turnover rate is calculated by
dividing the lesser of sales or purchases of portfolio securities by the Fund's
average month-end portfolio value, excluding short-term investments. The
portfolio turnover rate will not be a limiting factor when management deems
portfolio changes appropriate. Higher portfolio turnover involves
correspondingly greater brokerage commissions and other transaction costs that
the Fund will bear directly, and may result in the realization of net capital
gains that are taxable when distributed to the Fund's shareholders.
Prior to August 27, 1999, the Fund invested substantially all of its
assets in the AIM Theme Funds and periodically rebalanced its investments among
those funds. For the fiscal years ended December 31, 1999 and 1998, the
portfolio turnover rates were 147% and 28%, respectively.
31
<PAGE> 54
MANAGEMENT
TRUSTEES AND EXECUTIVE OFFICERS
The Trust's Trustees and Executive Officers are listed below. Unless
otherwise indicated, the address of each Executive Officer is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046.
<TABLE>
<CAPTION>
======================================== ======================= ====================================================
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5
NAME, ADDRESS AND AGE REGISTRANT YEARS
- --------------------------------------- ----------------------- ----------------------------------------------------
<S> <C> <C>
*ROBERT H. GRAHAM (53) Trustee, Chairman and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and
President, A I M Advisors, Inc.; Director and
Senior Vice President, A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company; and
Director and Chief Executive Officer, Managed
Products, AMVESCAP PLC.
- ---------------------------------------- ----------------------- ----------------------------------------------------
C. DEREK ANDERSON (58) Trustee Senior Managing Partner, Plantagenet Capital
456 Montgomery St. Management, LLC (an investment partnership); Chief
Suite 200 Executive Officer, Plantagenet Holdings, Ltd. (an
San Francisco, CA 94104 investment banking firm); Director, Premium Wear,
Inc. (formerly Munsingwear, Inc.) (a casual
apparel company), 'R' Homes, Inc., Big Online,
Inc., Champagne Le Brun and various other
privately owned companies.
- ---------------------------------------- ----------------------- ----------------------------------------------------
FRANK S. BAYLEY (60) Trustee Partner, law firm of Baker & McKenzie; Trustee,
Two Embarcadero Center The Badgley Funds (public, no load mutual funds);
Suite 2400 and Director and Chairman, Stenson Marina, Inc. a
San Francisco, CA 94111 subsidiary of C. D. Stimson Company (a private
investment company).
- ---------------------------------------- ----------------------- ----------------------------------------------------
RUTH H. QUIGLEY (65) Trustee Private investor; and President, Quigley
1055 California Street Friedlander & Co., Inc. (a financial advisory
San Francisco, CA 94108 services firm) from 1984 to 1986.
- ---------------------------------------- ----------------------- ----------------------------------------------------
MELVILLE B. COX (56) Vice President Vice President and Chief Compliance Officer, A I M
Advisors, Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services,
Inc. and Fund Management Company.
- ---------------------------------------- ----------------------- ----------------------------------------------------
</TABLE>
- ------
* A trustee who is an "interested person" of the Trust and AIM as defined in the
1940 Act.
32
<PAGE> 55
<TABLE>
<CAPTION>
======================================== ======================= ====================================================
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5
NAME, ADDRESS AND AGE REGISTRANT YEARS
- --------------------------------------- ----------------------- ----------------------------------------------------
<S> <C> <C>
GARY T. CRUM (52) Vice President Director and President, A I M Capital Management,
Inc.; Director and Executive Vice President, A I M
Management Group Inc.; Director and Senior Vice
President, A I M Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC.
- ---------------------------------------- ----------------------- ----------------------------------------------------
CAROL F. RELIHAN (45) Vice President Director, Senior Vice President, General Counsel
and Secretary, A I M Advisors, Inc.; Senior Vice
President, General Counsel and Secretary, A I M
Management Group Inc.; Director, Vice President
and General Counsel, Fund Management Company; Vice
President and General Counsel, A I M Fund Services,
Inc.; and Vice President, A I M Capital Management,
Inc. and A I M Distributors, Inc.
- ---------------------------------------- ----------------------- ----------------------------------------------------
SAMUEL D. SIRKO (40) Vice President and Assistant General Counsel and Assistant Secretary
Secretary of A I M Management Group Inc., A I M Capital
Management, Inc., A I M Distributors, Inc. A I M
Fund Services, Inc., and Fund Management Company;
and Vice President, Assistant General Counsel and
Assistant Secretary of A I M Advisors, Inc.
- ---------------------------------------- ----------------------- ----------------------------------------------------
DANA R. SUTTON (41) Vice President and Vice President and Fund Controller, A I M Advisors,
Treasurer Inc.; and Assistant Vice President and Assistant
Treasurer, Fund Management Company.
======================================== ======================= ====================================================
</TABLE>
The Board of Trustees has a Nominating and Audit Committee, comprised
of Miss Quigley (Chairman) and Messrs. Anderson and Bayley, which is responsible
for nominating persons to serve as Trustees, reviewing audits of the Trust and
its funds and recommending firms to serve as independent auditors of the Trust.
All of the Trust's Trustees also serve as trustees of some or all of the other
investment companies managed, administered or advised by AIM. All of the Trust's
executive officers hold similar offices with some or all of the other investment
companies managed, administered or advised by AIM. Each Trustee who is not a
director, officer or employee of AIM or any other affiliated company is paid an
annual retainer component, plus a per-meeting fee component and reimbursed
travel and other expenses incurred in connection with attendance at such
meetings.
For the fiscal year ended December 31, 1999, Mr. Anderson, Mr. Bayley,
Mr. Arthur Patterson (a Trustee until September 27, 1999, when he retired) and
Ms. Quigley, who are not directors, officers or employees of AIM or any
affiliated company, received total compensation of $2,126, $2,159, $1,375 and
$2,159, respectively, from the Trust for their services as Trustees. For the
fiscal year ended December 31, 1998, Mr. Anderson, Mr. Bayley, Mr. Patterson and
Miss Quigley, who are not directors, officers or
33
<PAGE> 56
employees of AIM or any other affiliated company, received total compensation of
$106,500, $108,500, $80,000 and $108,500, respectively, from the investment
companies managed or administered by AIM for which he or she served as a
Trustee. Fees and expenses disbursed to the Trustees contained no accrued or
payable pension or retirement benefits. Other Trustees and officers receive no
compensation or expense reimbursement from the Trust. As of March 31, 2000, the
Trustees and officers of the Trust, as a group, owned less than 1% of the
outstanding shares of the Fund.
MANAGEMENT SERVICES RELATING TO THE FUND
AIM was organized in 1976, and along with its subsidiaries, manages or
advises approximately 120 investment portfolios encompassing a broad range of
investment objectives.
AIM is a direct, wholly owned subsidiary of A I M Management Group Inc.
("AIM Management"), a holding company that has been engaged in the financial
services business since 1976. AIM is the sole shareholder of the Fund's
principal underwriter, AIM Distributors.
AIM Management is an indirect wholly owned subsidiary of AMVESCAP PLC,
11 Devonshire Square, London, EC2M 4YR, England. AMVESCAP PLC and its
subsidiaries are independent investment management groups that have a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston office, AIM
draws upon the expertise, personnel, data and systems of other offices in
Atlanta, Boston, Dallas, Denver, Louisville, Miami, Portland (Oregon),
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and Toronto. In managing
the Fund, the Advisor employs a team approach, taking advantage of its
investment resources around the world.
AIM and the Trust have adopted a Code of Ethics which requires
investment personnel and certain other employees to (a) pre-clear all personal
securities transactions subject to the Code of Ethics; (b) file reports
regarding such transactions; (c) refrain from personally engaging in (i)
short-term trading of a security, (ii) transactions involving a security within
seven days of an AIM Fund transaction involving the same security (subject to a
de minimis exception), and (iii) transactions involving securities being
considered for investment by an AIM Fund (subject to the de minimis exception);
and (d) abide by certain other provisions of the Code of Ethics. The de minimis
exception under the Code of Ethics covers situations where there is no material
conflict of interest because of the large market capitalization of a security
and the relatively small number of shares involved in a personal transaction.
The Code of Ethics also generally prohibits AIM employees from purchasing
securities in initial public offerings. Personal trading reports are
periodically reviewed by AIM, and the Board of Trustees reviews quarterly and
annual reports (which summarize any significant violations of the Code of
Ethics). Sanctions for violating the Code of Ethics may include censure,
monetary penalties, suspension or termination of employment.
AIM serves as the Fund's investment manager under an investment
management contract between the Trust and AIM ("Master Investment Advisory
Agreement," the "Agreement"). As investment manager, AIM makes all investment
decisions for the Fund, and, as administrator, administers the Fund's affairs.
Among other things, AIM furnishes the services and pays the compensation and
travel expenses of persons who perform the executive, administrative, clerical
and bookkeeping functions of the Fund and provides suitable office space,
necessary small office equipment and utilities.
The Agreement may be renewed with respect to the Fund for additional
one-year terms, provided that any such renewal has been specifically approved at
least annually by (i) the Fund's Board of Trustees or the vote of a majority of
the Fund's outstanding voting securities (as defined in the 1940 Act) and (ii) a
majority of Trustees who are not parties to the Agreement or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Agreement and the Administration Contract provide that with respect to the Fund,
either the Trust or AIM may terminate either the Agreement or the Administration
Contract without penalty upon sixty days' written notice to the other party. The
Agreement terminates in the event of its assignment (as defined in the 1940
Act).
34
<PAGE> 57
For investment advisory services, the Fund pays AIM fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925%
on the next $500 million and 0.90% on the amounts thereafter. The investment
advisory fees paid by the Fund are higher than those paid by most mutual funds.
AIM has undertaken to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual rate of
2.00%, 2.50% and 2.50% of the average daily net assets of the Fund's Class A,
Class B and Class C shares, respectively, until June 30, 2000.
AIM may from time to time further waive or reduce its fee. Voluntary
fee waivers or reductions may be rescinded at any time without further notice to
investors. During periods of voluntary fee waivers or reductions, AIM will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions set forth in the Fee Table in the
Prospectus may not be terminated or amended to the Fund's detriment during the
period stated in the agreement between AIM and the Fund. For the fiscal period
ended December 31, 1999, the Fund paid $142,786 to AIM in investment advisory
fees.
AIM also serves as administrator and pricing and fund accounting agent
to the Fund under a Master Administrative Services Agreement between the Trust
and AIM ("Administration Contract"). For the fiscal period ended December 31,
1999, the Fund paid $17,100 in administrative fees.
EXPENSES OF THE FUND
The Fund pays all expenses not assumed by AIM, AIM Distributors and
other agents. These expenses include, in addition to the investment advisory and
administration fees discussed above, distribution, transfer agency, pricing and
accounting agency and brokerage fees, legal and audit expenses, custodian fees,
trustees' fees, organizational fees, fidelity bond and other insurance premiums,
taxes, extraordinary expenses and expenses of reports and prospectuses sent to
existing investors. Expenditures, including costs incurred in connection with
the purchase or sale of portfolio securities, which are capitalized in
accordance with generally accepted accounting principles applicable to
investment companies, are accounted for as capital items and not as expenses.
The ratio of the Fund's expenses to its relative net assets can be expected to
be higher than the expense ratios of funds investing solely in domestic
securities, since the cost of maintaining the custody of foreign securities and
the rate of investment management fees paid by the Fund generally are higher
than the comparable expenses of such other funds.
THE DISTRIBUTION PLANS
THE CLASS A AND C PLAN
The Trust has adopted a Master Distribution Plan pursuant to Rule 12b-1
under the 1940 Act relating to the Class A and Class C shares of the Fund (the
"Class A and C Plan"). The Class A and C Plan provides that the Class A shares
pay 0.50% per annum of their average daily net assets as compensation to AIM
Distributors for the purpose of financing any activity which is primarily
intended to result in the sale of Class A shares. Under the Class A and C Plan,
Class C shares of the Fund pay compensation to AIM Distributors at an annual
rate of 1.00% of the average daily net assets attributable to Class C shares.
Activities appropriate for financing under the Class A and C Plan include, but
are not limited to, the following: printing of prospectuses and statements of
additional information and reports for other than existing shareholders;
overhead; preparation and distribution of advertising material and sales
literature; expenses of organizing and conducting sales seminars; supplemental
payments to dealers and other institutions such as asset-based sales charges or
as payments of service fees under shareholder service arrangements; and costs of
administering the Class A and C Plan.
The Class A and C Plan is designed to compensate AIM Distributors, on a
quarterly basis, for certain promotional and other sales-related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services
35
<PAGE> 58
to their customers who purchase and own Class A or Class C shares of the Fund.
Payments can also be directed by AIM Distributors to selected institutions who
have entered into service agreements with respect to Class A and Class C shares
of the Fund and who provide continuing personal services to their customers who
own Class A and Class C shares of the Fund. The service fees payable to selected
institutions are calculated at the annual rate of 0.25% of the average daily net
asset value of those Fund shares that are held in such institution's customers'
accounts which were purchased on or after a prescribed date set forth in the
Class A and C Plan.
Of the aggregate amount payable under the Class A and C Plan, payments
to dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 0.25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A and C Plan. The Class A and C
Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Trust with respect to the
Fund. The Class A and C Plan does not obligate the Fund to reimburse AIM
Distributors for the actual expenses AIM Distributors may incur in fulfilling
its obligations under the Class A and C Plan on behalf of the Fund. Thus, under
the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Fund will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
THE CLASS B PLAN
The Trust has also adopted a Master Distribution Plan pursuant to Rule
12b-1 under the 1940 Act relating to Class B shares of the Fund (the "Class B
Plan," and collectively with the Class A and C Plan, the "Plans"). Under the
Class B Plan, the Fund pays compensation to AIM Distributors at an annual rate
of 1.00% of the average daily net assets attributable to Class B shares. Of such
amount, the Fund pays a service fee of 0.25% of the average daily net assets
attributable to Class B shares to selected dealers and other institutions which
furnish continuing personal shareholder services to their customers who purchase
and own Class B shares. Amounts paid in accordance with the Class B Plan may be
used to finance any activity primarily intended to result in the sale of Class B
shares, including but not limited to printing of prospectuses and statements of
additional information and reports for other than existing shareholders;
overhead; preparation and distribution of advertising material and sales
literature; expenses of organizing and conducting sales seminars; supplemental
payments to dealers and other institutions such as asset-based sales charges or
as payments of service fees under shareholder service arrangements; and costs of
administering the Class B Plan.
BOTH PLANS
Pursuant to an incentive program, AIM Distributors may enter into
agreements ("Shareholder Service Agreements") with investment dealers selected
from time to time by AIM Distributors for the provision of distribution
assistance in connection with the sale of the Fund's shares to such dealers'
customers, and for the provision of continuing personal shareholder services to
customers who may from time to time directly or beneficially own shares of the
Funds. The distribution assistance and continuing personal shareholder services
to be rendered by dealers under the Shareholder Service Agreements may include,
but shall not be limited to, the following: distributing sales literature;
answering routine customer inquiries concerning the Fund; assisting customers in
changing dividend options, account designations and addresses, and in enrolling
in any of the several special investment plans offered in connection with the
purchase of the Fund's shares; assisting in the establishment and maintenance of
customer accounts and records and in the processing of purchase and redemption
transactions; investing dividends and any capital gains distributions
automatically in the Fund's shares; and providing such other information and
services as the Fund or the customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plans to be made to banks
which provide services to their customers who have purchased shares.
36
<PAGE> 59
Services provided pursuant to Shareholder Service Agreements with banks may
include some or all of the following: answering shareholder inquiries regarding
the Fund, performing sub-accounting; establishing and maintaining shareholder
accounts and records; processing customer purchase and redemption transactions;
providing periodic statements showing a shareholder's account balance and the
integration of such statements with those of other transactions and balances in
the shareholder's other accounts serviced by the bank; forwarding applicable
prospectuses, proxy statements, reports and notices to bank clients who hold
Fund shares; and such other administrative services as the Fund reasonably may
request, to the extent permitted by applicable statute, rule or regulation.
Similar agreements may be permitted under the Plans for institutions which
provide recordkeeping for and administrative services to 401(k) plans.
Financial intermediaries and any other person entitled to receive
compensation for selling Fund shares may receive different compensation for
selling shares of one particular class over another.
Under a Shareholder Service Agreement, the Fund agrees to pay
periodically fees to selected dealers and other institutions who render the
foregoing services to their customers. The fees payable under a Shareholder
Service Agreement generally will be calculated at the end of each payment period
for each business day of the Fund during such period at the annual rate of 0.25%
of the average daily net asset value of the Fund's shares purchased or acquired
through exchange. Fees calculated in this manner shall be paid only to those
selected dealers or other institutions who are dealers or institutions of record
at the close of business on the last business day of the applicable payment
period for the account in which the Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable
limitations imposed by rules of the National Association of Securities Dealers,
Inc. ("NASD"). The Plans conform to rules of the NASD by limiting payments made
to dealers and other financial institutions who provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund
to no more than 0.25% per annum of the average daily net assets of the funds
attributable to the customers of such dealers or financial institutions, and by
imposing a cap on the total sales charges, including asset based sales charges,
that may be paid by the Fund and its respective classes.
AIM Distributors may from time to time waive or reduce any portion of
its 12b-1 fee for Class A shares and Class C shares. Voluntary fee waivers or
reductions may be rescinded at any time without further notice to investors.
During periods of voluntary fee waivers or reductions, AIM Distributors will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions set forth in the Fee Table in a
Prospectus may not be terminated or amended to the Fund's detriment during the
period stated in the agreement between AIM Distributors and the Fund.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Funds, pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Fund, in
making dealer incentive and shareholder servicing payments under the Plans.
These payments are an obligation of the Fund and not of AIM Distributors.
Financial intermediaries and any other person entitled to receive compensation
for selling Fund shares may receive different compensation for selling shares of
one class over another.
Prior to June 1, 1998, the Fund had a different Rule 12b-1 plan, which
operated as a "reimbursement-type" plan (the "Prior Plan") and provided for
payments to GT Global Inc., the distributor of the Fund at the time the Prior
Plan was in effect.
For the fiscal period ended December 31, 1998, the Fund paid the
following amounts under the Prior Plan and the current plan:
37
<PAGE> 60
<TABLE>
<CAPTION>
% OF CLASS AVERAGE DAILY
NET ASSETS
------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Prior Plan $40,450 $102,970 $ 512 0.50% 1.00% 1.00%
Current Plan $58,122 $155,976 $ 1,568 0.50% 1.00% 1.00%
Period Ended
December 31, 1999 $83,176 $238,049 $ 2,969 0.50% 1.00% 1.00%
</TABLE>
An estimate of fees by category paid by the Fund with regard to Class
A, Class B and Class C shares during the fiscal period ended December 31, 1998
follows:
<TABLE>
<CAPTION>
CLASS A
<S> <C>
Advertising ......................................................................$ 20,386
Printing and Mailing prospectuses, semi-annual reports
and annual reports (other than to current shareholders)........................$ 1,582
Seminars........................................................................... 0
Compensation to Underwriters to partially offset
other marketing expenses....................................................... 0
Compensation to Dealers including Finder's Fees....................................$ 76,604
Compensation to Sales Personnel.................................................... 0
CLASS B
Advertising........................................................................$ 1,756
Printing and Mailing prospectuses, semi-annual reports
and annual reports (other than to current shareholders)........................$ 166
Seminars...........................................................................$ 385
Compensation to Underwriters to partially offset
other marketing expenses............................................... $ 194,210
Compensation to Dealers............................................................$ 62,429
Compensation to Sales Personnel.................................................... 0
CLASS C
Advertising........................................................................$ 481
Printing and Mailing prospectuses, semi-annual reports
and annual reports (other than to current shareholders)........................ 0
Seminars........................................................................... 0
Compensation to Underwriters.......................................................$ 1,560
Compensation to Dealers............................................................$ 39
Compensation to Sales Personnel.................................................... 0
</TABLE>
The Plans require AIM Distributors to provide the Board of Trustees at
least quarterly with a written report of the amounts expended pursuant to the
Plans and the purposes for which such expenditures were made. The Board of
Trustees reviews these reports in connection with their decisions with respect
to the Plans.
As required by Rule 12b-1, the Plans and related forms of Shareholder
Service Agreements were approved by the Board of Trustees, including a majority
of the Trustees who are not "interested persons" (as defined in the 1940 Act) of
the Trust and who have no direct or indirect financial interest in the operation
of the Plans or in any agreements related to the Plans ("Qualified Trustees").
In approving the Plans in accordance with the requirements of Rule 12b-1, the
trustees considered various factors and determined that there is a reasonable
likelihood that the Plans would benefit each class of the Fund and their
respective shareholders.
38
<PAGE> 61
The Plans do not obligate the Fund to reimburse AIM Distributors for
the actual expenses AIM Distributors may incur in fulfilling its obligations
under the Plans. Thus, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Fund will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
Unless terminated earlier in accordance with their terms, the Plans
continue in effect from year to year thereafter, as long as such continuance is
specifically approved at least annually by the Board of Trustees, including a
majority of the Qualified Trustees.
The Plans may be terminated by the vote of a majority of the Qualified
Trustees, or, with respect to a particular class, by the vote a majority of the
outstanding voting securities of that class.
Any change in the Plans that would increase materially the distribution
expenses paid by the applicable class requires shareholder approval; otherwise,
it may be amended by the Trustees, including a majority of the Qualified
Trustees, by votes cast in person at a meeting called for the purpose of voting
upon such amendment. As long as the Plans are in effect, the selection or
nomination of the Qualified Trustees is committed to the discretion of the
Qualified Trustees. In the event the Class A and C Plan is amended in a manner
which the Board of Trustees determines would materially increase the charges
paid under the Class A and C Plan, the Class B shares of the Fund will no longer
convert into Class A shares of the same Fund unless the Class B shares, voting
separately, approve such amendment. If the Class B shareholders do not approve
such amendment, the Board of Trustees will (i) create a new class of shares of
the Fund which is identical in all material respects to the Class A shares as
they existed prior to the implementation of the amendment and (ii) ensure that
the existing Class B shares of the Fund will be exchanged or converted into such
new class of shares no later than the date the Class B shares were scheduled to
convert into Class A shares.
The principal differences between the Class A and C Plan, on the one
hand, and the Class B Plan, on the other hand, are: (i) the Class A and C Plan
allows payment to AIM Distributors or to dealers or financial institutions of up
to 0.50% of average daily net assets of the Class A shares of the Fund, as
compared to 1.00% of such assets of the Fund's Class B shares; (ii) the Class B
Plan obligates the Class B shares to continue to make payments to AIM
Distributors following termination of the Class B shares Distribution Agreement
with respect to Class B shares sold by or attributable to the distribution
efforts of AIM Distributors and its predecessor, GT Global, Inc. unless there
has been a complete termination of the Class B Plan (as defined in such Plan)
and (iii) the Class B Plan expressly authorizes AIM Distributors to assign,
transfer or pledge its rights to payments pursuant to the Class B Plan.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of
the Fund's shares is set forth in the Prospectus under the headings "How to
Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." Master
Distribution Agreements with AIM Distributors relating to the Class A, Class B
and Class C shares of the Funds were approved by the Board of Directors on May
7, 1998. Both such Master Distribution Agreements are hereinafter collectively
referred to as the "Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing the Fund's
prospectuses and statements of additional information relating to public
offerings made by AIM Distributors pursuant to the Distribution Agreements
(other than those prospectuses and statements of additional information
distributed to existing shareholders of the Fund), and any promotional or sales
literature used by AIM Distributors or furnished by AIM Distributors to dealers
in connection with the public offering of the Fund's shares, including expenses
of advertising in connection with such public offerings. AIM Distributors has
not undertaken to sell any specified number of shares of any classes of the
Fund.
39
<PAGE> 62
AIM Distributors expects to pay sales commissions from its own
resources to dealers and institutions who sell Class B and Class C shares of the
Funds at the time of such sales. Payments with respect to Class B shares will
equal 4.0% of the purchase price of the Class B shares sold by the dealer or
institution, and will consist of a sales commission equal to 3.75% of the
purchase price of the Class B shares sold plus an advance of the first year
service fee of 0.25% with respect to such shares. The portion of the payments to
AIM Distributors under the Class B Plan which constitutes an asset-based sales
charge (0.75%) is intended in part to permit AIM Distributors to recoup a
portion of such sales commissions plus financing costs. AIM Distributors
anticipates that it will require a number of years to recoup from Class B Plan
payments the sales commissions paid to dealers and institutions in connection
with sales of Class B shares. In the future, if multiple distributors serve the
Fund, each such distributor (or its assignee or transferee) would receive a
share of the payments under the Class B Plan based on the portion of the Fund's
Class B shares sold by or attributable to the distribution efforts of that
distributor.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the Fund at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record.
The Trust (on behalf of any class of the Fund) or AIM Distributors may
terminate the Distribution Agreements on sixty (60) days' written notice without
penalty. The Distribution Agreements will terminate automatically in the event
of their assignment. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
distribution fees in respect of the outstanding Class B shares attributable to
the distribution efforts of AIM Distributors and its predecessor; provided,
however, that a complete termination of the Class B Plan (as defined in such
Plan) would terminate all payments by the Fund of asset based distribution fees
and service fees to AIM Distributors. Termination of the Class B Plan or
Distribution Agreement does not affect the obligation of the Class B
shareholders to pay contingent deferred sales charges.
From time to time, AIM Distributors may transfer and sell its right to
payments under the Distribution Agreement relating to Class B Shares in order to
finance distribution expenditures in respect of Class B Shares.
The following chart reflects the total sales charges paid in connection
with the sale of Class A shares of the Fund and the amount retained by GT
Global, Inc., the Fund's distributor prior to June 1, 1998, for the fiscal
period ended December 31, 1998:
JANUARY 1, 1998 TO
JUNE 1, 1998
-----------------------
SALES AMOUNT
CHARGES RETAINED
------- --------
AIM Global Trends Fund .................$ 85,590 $ 14,589
The following chart reflects the total sales charges paid in connection
with the sale of Class A shares of the Fund and the amount retained by AIM
Distributors for the fiscal period ended December 31, 1999, and the period
June 1, 1998 to December 31, 1998, respectively:
40
<PAGE> 63
<TABLE>
<CAPTION>
JUNE 1, 1998 TO PERIOD ENDED
DECEMBER 31, 1998 DECEMBER 31, 1999
--------------------- -----------------------
SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED
------- -------- ------- --------
<S> <C> <C> <C> <C>
AIM Global Trends Fund...............$ 5,303 $ 5,203 $ 30,132 $ 5,165
</TABLE>
The following chart reflects the contingent deferred sales charges paid
by Class A and Class B shareholders for the fiscal years ended December 31,
1998 and 1999, respectively:
<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
AIM Global Trends Fund.............$ 77,466 $ 1,175
</TABLE>
SALES CHARGES AND DEALER CONCESSIONS
CATEGORY I. Certain AIM Funds are currently sold with a sales charge
ranging from 5.50% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds include Class A shares of each of AIM Advisor Flex
Fund, AIM Advisor International Value Fund, AIM Advisor Large Cap Value Fund,
AIM Aggressive Growth Fund, AIM Asian Growth Fund, AIM Basic Value Fund, AIM
Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM
Constellation Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund
AIM European Development Fund, AIM Euroland Growth Fund, AIM Global Utilities
Fund, AIM Global Growth & Income Fund, AIM International Equity Fund, AIM Japan
Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund, AIM
Large Cap Opportunities Fund, AIM Mid Cap Equity Fund, AIM Mid Cap Growth Fund,
AIM Mid Cap Opportunities Fund, AIM New Pacific Growth Fund, AIM Select Growth
Fund, AIM Small Cap Growth Fund, AIM Small Cap Opportunities Fund, AIM Value
Fund and AIM Weingarten Fund.
<TABLE>
<CAPTION>
Dealer
Concession
Investor's Sales Charge ----------
------------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction(1) Price Invested Price
----------------------- ------------- -------- ----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
- -------------------
(1) AIM Small Cap Opportunities Fund will not accept any single purchase in
excess of $250,000.
CATEGORY II. Certain AIM Funds are currently sold with a sales charge
ranging from 4.75% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds are: the Class A shares of each of AIM Advisor Real
Estate Fund, AIM Balanced Fund, AIM Developing Markets Fund, AIM Emerging
Markets Debt Fund, AIM Global Aggressive Growth Fund, AIM Global Consumer
Products and Services Fund, AIM Global Financial Services Fund, AIM Global
Government Income Fund, AIM Global Growth Fund, AIM Global Health Care Fund, AIM
Global Income Fund, AIM Global Infrastructure Fund, AIM Global Resources Fund,
AIM Global Telecommunications and Technology Fund, AIM Global Trends Fund, AIM
High Income Municipal Fund, AIM High Yield Fund, AIM High Yield Fund II, AIM
41
<PAGE> 64
Income Fund, AIM Intermediate Government Fund, AIM Latin American Growth Fund,
AIM Municipal Bond Fund, AIM Strategic Income Fund and AIM Tax-Exempt Bond Fund
of Connecticut.
<TABLE>
<CAPTION>
Dealer
Concession
Investor's Sales Charge ----------
---------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
------------------ ------------- -------- -----
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $ 1,000,000 2.00 2.04 1.60
</TABLE>
CATEGORY III. Certain AIM Funds are currently sold with a sales charge
ranging from 1.00% to 0.50% of the offering price on purchases of less than
$1,000,000. These AIM Funds are the Class A shares of each of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund.
<TABLE>
<CAPTION>
Dealer
Concession
Investor's Sales Charge ----------
------------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment In Offering Amount Offering
Single Transaction Price Invested Price
------------------ ------------- ---------- --------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,0000 .50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more of Category
I, II or III funds; however, AIM Distributors may pay a dealer concession and/or
advance a service fee on such transactions as set forth below.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the
entire initial sales charge to dealers for all sales with respect to which
orders are placed with AIM Distributors during a particular period. Dealers to
whom substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. At the option of the dealer, such
incentives may take the form of payment for travel expenses, including lodging,
incurred in connection with trips taken by qualifying registered representatives
and their families to places within or outside the United States. The total
amount of such additional bonus payments or other consideration shall not exceed
0.25% of the public offering price of the shares sold. Any such bonus or
incentive programs will not change the price paid by investors for the purchase
of the applicable AIM Fund's shares or the amount that any particular AIM Fund
will receive as proceeds from such sales. Dealers may not use sales of the AIM
Funds' shares to qualify for any incentives to the extent that such incentives
may be prohibited by the laws of any state.
42
<PAGE> 65
AIM Distributors may make payments to dealers and institutions who are
dealers of record for purchases of $1 million or more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM Limited Maturity Treasury
Fund and AIM Tax-Free Intermediate Fund as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. AIM Distributors may make payments to dealers
and institutions who are dealers of record for purchases of $1 million or more
of Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM Limited Maturity Treasury Fund, and in an amount up to
0.25% of such purchases of Class A shares of AIM Tax-Free Intermediate Fund.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
are not paid on sales to investors exempt from the CDSC, including shareholders
of record of AIM Advisor Funds, Inc. on April 30, 1995, who purchase additional
shares in any of the Funds on or after May 1, 1995, and in circumstances where
AIM Distributors grants an exemption on particular transactions.
Exchanges of AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares are considered sales of such Class B shares or Class C
shares for purposes of the sales charges and dealer concessions discussed above.
AIM Distributors may pay investment dealers or other financial service firms
for share purchases (measured on an annual basis) of Class A Shares of all AIM
Funds except AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund
and AIM Tax-Exempt Cash Fund sold at net asset value to an employee benefit plan
as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next
$1 million of such purchases, plus 0.50% of the next $17 million of such
purchases, plus 0.25% of amounts in excess of $20 million of such purchases and
up to 0.10% of the net asset value of any Class A shares of AIM Limited Maturity
Treasury Fund sold at net asset value to an employee benefit plan in accordance
with this paragraph.
43
<PAGE> 66
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
B and Class C shares of the AIM Funds will not be taken into account in
determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
o an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a
pension, profit-sharing, or other benefit plan established exclusively
for the benefit of any such person, such as an IRA, Roth IRA, a
single-participant money-purchase/profit-sharing plan or an individual
participant in a 403(b) Plan (unless such 403(b) plan qualifies as the
purchaser as defined below);
o a 403(b) plan, the employer/sponsor of which is an organization
described under Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended (the "Code"), if:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the Funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
o a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of
the Code) and 457 plans, although more than one beneficiary or
participant is involved;
o a Simplified Employee Pension (SEP), Salary Reduction and other Elective
Simplified Employee Pension account (SAR-SEP) or a Savings Incentive
Match Plans for Employees IRA (SIMPLE IRA), where the employer has
notified the distributor in writing that all of its related employee
SEP, SAR-SEP or SIMPLE IRA accounts should be linked; or
o any other organized group of persons, whether incorporated or not,
provided the organization has been in existence for at least six months
and has some purpose other than the purchase at a discount of redeemable
securities of a registered investment company.
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
1. LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for (i) Class A
shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
44
<PAGE> 67
Money Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii)
shares of AIM Floating Rate Fund) within the following 13 consecutive months. By
marking the LOI section on the account application and by signing the account
application, the purchaser indicates that he understands and agrees to the terms
of the LOI and is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gains distributions will not be applied to the LOI. At any time during the
13-month period after meeting the original obligation, a purchaser may revise
his intended investment amount upward by submitting a written and signed
request. Such a revision will not change the original expiration date. By
signing an LOI, a purchaser is not making a binding commitment to purchase
additional shares, but if purchases made within the 13-month period do not total
the amount specified, the investor will pay the increased amount of sales charge
as described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
2. RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund,
(ii) Class B and Class C shares of the AIM Funds and (iii) shares of AIM
Floating Rate Fund) at the time of the proposed purchase. Rights of Accumulation
are also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. To determine whether or not a reduced initial sales charge
applies to a proposed purchase, AIM Distributors takes into account not only the
money which is invested upon such proposed purchase, but also the value of all
shares of the AIM Funds (except for (i) Class A shares of AIM Tax-Exempt Cash
Fund and AIM Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and
Class C shares of the AIM Funds and (iii) shares of AIM Floating Rate Fund)
owned by such purchaser, calculated at their then current public offering price.
If a purchaser so qualifies
45
<PAGE> 68
for a reduced sales charge, the reduced sales charge applies to the total amount
of money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund, with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a
fund; (b) exchanges of shares of certain funds; (c) use of the reinstatement
privilege; or (d) a merger, consolidation or acquisition of assets of a fund.
The following purchasers will not pay initial sales charges on purchases of
Class A shares because there is a reduced sales effort involved in sales to
these purchasers:
o AIM Management and its affiliates, or their clients;
o Any current or retired officer, director or employee (and members of
their immediate family) of AIM Management, its affiliates or The AIM
Family of Funds--Registered Trademark--, and any foundation, trust or
employee benefit plan established exclusively for the benefit of, or
by, such persons;
o Any current or retired officer, director, or employee (and members of
their immediate family), of CIGNA Corporation or its affiliates, or of
First Data Investor Services Group; and any deferred compensation plan
for directors of investment companies sponsored by CIGNA Investments,
Inc. or its affiliates;
o Sales representatives and employees (and members of their immediate
family) of selling group members or financial institutions that have
arrangements with such selling group members;
o Purchases through approved fee-based programs;
o Employee benefit plans designated as purchasers as defined above, and
non-qualified plans offered in conjunction therewith, provided the
initial investment in the plan(s) is at least $1 million; the sponsor
signs a $1 million LOI; the employer-sponsored plan(s) has at least 100
eligible employees; or all plan transactions are executed through a
single omnibus account per Fund and the financial institution or service
organization has entered into the appropriate agreements with the
distributor. Section 403(b) plans sponsored by public educational
institutions are not eligible for a sales charge exception based on the
aggregate investment made by the plan or the number of eligible
employees. Purchases of AIM Small Cap Opportunities Fund by such plans
are subject to initial sales charges;
o Shareholders of record or discretionary advised clients of any
investment advisor holding shares of AIM Weingarten Fund or AIM
Constellation Fund on September 8, 1986, or of AIM Charter Fund on
November 17, 1986, who have continuously owned shares having a market
value of at least $500 and who purchase additional shares of the same
Fund;
o Shareholders of record of Advisor Class shares of AIM International
Growth Fund or AIM Worldwide Growth Fund on February 12, 1999 who have
continuously owned shares of the AIM Funds;
46
<PAGE> 69
o Unitholders of G/SET series unit investment trusts investing proceeds
from such trusts in shares of AIM Weingarten Fund or AIM Constellation
Fund; provided, however, prior to the termination date of the trusts, a
unitholder may invest proceeds from the redemption or repurchase of his
units only when the investment in shares of AIM Weingarten Fund and AIM
Constellation Fund is effected within 30 days of the redemption or
repurchase;
o A shareholder of a fund that merges or consolidates with an AIM Fund or
that sells its assets to an AIM Fund in exchange for shares of an AIM
Fund;
o Shareholders of the GT Global funds as of April 30, 1987 who since that
date continually have owned shares of one or more of these funds;
o Certain former AMA Investment Advisers' shareholders who became
shareholders of the AIM Global Health Care Fund in October 1989, and who
have continuously held shares in the GT Global funds since that time;
and
o Shareholders of record of Advisor Class shares of an AIM Fund on
February 11, 2000 who have continuously owned shares of that AIM Fund,
and who purchase additional shares of that AIM Fund.
As used above, immediate family includes an individual and his or her
spouse, children, parents and parents of spouse.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS
Former GT Global funds Class A shares that are subject to a contingent
deferred sales charge and that were purchased before June 1, 1998 are entitled
to the following waivers from the contingent deferred sales charge otherwise due
upon redemption: (1) minimum required distributions made in connection with an
IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other
retirement plan following attainment of age 70 1/2; (2) total or partial
redemptions resulting from a distribution following retirement in the case of a
tax-qualified employer-sponsored retirement plan; (3) when a redemption results
from a tax-free return of an excess contribution pursuant to Section 408(d)(4)
or (5) of the Code or from the death or disability of the employee; (4)
redemptions pursuant to a Fund's right to liquidate a shareholder's account
involuntarily; (5) redemptions pursuant to distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in the former GT Global
funds, which are permitted to be made without penalty pursuant to the Code,
other than tax-free rollovers or transfers of assets, and the proceeds of which
are reinvested in the former GT Global funds; (6) redemptions made in connection
with participant-directed exchanges between options in an employer-sponsored
benefit plan; (7) redemptions made for the purpose of providing cash to fund a
loan to a participant in a tax-qualified retirement plan; (8) redemptions made
in connection with a distribution from any retirement plan or account that is
permitted in accordance with the provisions of Section 72(t)(2) of the Code, and
the regulations promulgated thereunder; (9) redemptions made in connection with
a distribution from any retirement plan or account that involves the return of
an excess deferral amount pursuant to Section 401(k)(8) or Section 402(g)(2) of
the Code; (10) redemptions made in connection with a distribution from a
qualified profit-sharing or stock bonus plan described in Section 401(k) of the
Code to a participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code
upon hardship of the covered employee (determined pursuant to Treasury
Regulation Section 1.401(k)-1(d)(2)); and (11) redemptions made by or for the
benefit of certain states, counties or cities, or any instrumentalities,
departments or authorities thereof where such entities are prohibited or limited
by applicable law from paying a sales charge or commission.
Former GT Global funds Class B shares purchased before June 1, 1998 are
subject to the following waivers from the contingent deferred sales charge
otherwise due upon redemption in addition to the waivers provided for
redemptions of currently issued Class B shares as described in a Prospectus: (1)
total or partial redemptions resulting from a distribution following retirement
in the case of a tax-
47
<PAGE> 70
qualified employer-sponsored retirement; (2) minimum required distributions made
in connection with an IRA, Keogh Plan or custodial account under Section 403(b)
of the Code or other retirement plan following attainment of age 70 1/2; (3)
redemptions pursuant to distributions from a tax-qualified employer-sponsored
retirement plan, which is invested in the former GT Global funds, which are
permitted to be made without penalty pursuant to the Code, other than tax-free
rollovers or transfers of assets, and the proceeds of which are reinvested in
the former GT Global funds; (4) redemptions made in connection with
participant-directed exchanges between options in an employer-sponsored benefit
plan; (5) redemptions made for the purpose of providing cash to fund a loan to a
participant in a tax-qualified retirement plan; (6) redemptions made in
connection with a distribution from any retirement plan or account that is
permitted in accordance with the provisions of Section 72(t)(2) of the Code, and
the regulations promulgated thereunder; (7) redemptions made in connection with
a distribution from a qualified profit-sharing or stock bonus plan described in
Section 401(k) of the Code to a participant or beneficiary under Section
401(k)(2)(B)(IV) of the Code upon hardship of the covered employee (determined
pursuant to Treasury Regulation Section 1.401(k)-1(d)(2)); and (8) redemptions
made by or for the benefit of certain states, counties or cities, or any
instrumentalities, departments or authorities thereof where such entities are
prohibited or limited by applicable law from paying a sales charge or
commission.
CDSCs will not apply to the following:
o Additional purchases of Class C shares of AIM Advisor Flex Fund, AIM
Advisor International Value Fund, AIM Advisor Large Cap Value Fund and
AIM Advisor Real Estate Fund by shareholders of record on April 30,
1995, of these Funds, except that shareholders whose broker-dealers
maintain a single omnibus account with AFS on behalf of those
shareholders, perform sub-accounting functions with respect to those
shareholders, and are unable to segregate shareholders of record prior
to April 30, 1995, from shareholders whose accounts were opened after
that date will be subject to a CDSC on all purchases made after March 1,
1996;
o Redemptions following the death or post-purchase disability of (1) any
registered shareholders on an account or (2) a settlor of a living
trust, of shares held in the account at the time of death or initial
determination of post-purchase disability;
o Certain distributions from individual retirement accounts, Section
403(b) retirement plans, Section 457 deferred compensation plans and
Section 401 qualified plans, where redemptions result from (i) required
minimum distributions to plan participants or beneficiaries who are age
70-1/2 or older, and only with respect to that portion of such
distributions that does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund; (ii) in kind
transfers of assets where the participant or beneficiary notifies the
distributor of the transfer no later than the time the transfer occurs;
(iii) tax-free rollovers or transfers of assets to another plan of the
type described above invested in Class B or Class C shares of one or
more of the AIM Funds; (iv) tax-free returns of excess contributions or
returns of excess deferral amounts; and (v) distributions on the death
or disability (as defined in the Internal Revenue Code of 1986, as
amended) of the participant or beneficiary;
o Amounts from a Systematic Withdrawal Plan of up to an annual amount of
12% of the account value on a per fund basis, at the time the withdrawal
plan is established, provided the investor reinvests his dividends;
o Liquidation by the Fund when the account value falls below the minimum
required account size of $500;
o Investment account(s) of AIM; and
o Class C shares where the investor's dealer of record notifies the
distributor prior to the time of investment that the dealer waives the
payment otherwise payable to him.
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Upon the redemption of shares of funds in sales charge Categories I and II
(see "Sales Charges and Dealer Concessions") purchased in amounts of $1 million
or more, no CDSC will be applied in the following situations:
o Shares held more than 18 months;
o Redemptions from employee benefit plans designated as qualified
purchasers, as defined above, where the redemptions are in connection
with employee terminations or withdrawals, provided the total amount
invested in the plan is at least $1,000,000; the sponsor signs a $1
million LOI; or the employer-sponsored plan has at least 100 eligible
employees; provided, however, that 403(b) plans sponsored by public
educational institutions shall qualify for the CDSC waiver on the basis
of the value of each plan participant's aggregate investment in the AIM
Funds, and not on the aggregate investment made by the plan or on the
number of eligible employees;
o Private foundations or endowment funds;
o Redemption of shares by the investor where the investor's dealer waives
the amounts otherwise payable to it by the distributor and notifies the
distributor prior to the time of investment; and
o Shares acquired by exchange from Class A shares of funds in sales charge
Categories I and II unless the shares acquired by exchange are redeemed
within 18 months of the original purchase of the Class A shares.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which shares of the Fund may be
purchased appears in the Prospectus under the caption "Purchasing Shares."
The sales charge normally deducted on purchases of Class A shares of the
Fund is used to compensate AIM Distributors and participating dealers for their
expenses incurred in connection with the distribution of such shares. Since
there is little expense associated with unsolicited orders placed directly with
AIM Distributors by persons, who because of their relationship with the Fund or
with AIM and its affiliates, are familiar with the Fund, or whose programs for
purchase involve little expense (e.g., because of the size of the transaction
and shareholder records required), AIM Distributors believes that it is
appropriate and in the Fund's best interests that such persons be permitted to
purchase Class A shares of the Fund through AIM Distributors without payment of
a sales charge. The persons who may purchase Class A shares of the Fund without
a sales charge are shown in the Prospectus.
Complete information concerning the method of exchanging shares of the Funds
for shares of the other mutual funds managed or advised by AIM is set forth in
the Prospectus under the caption "Exchanging Shares."
Information concerning redemption of the Fund's shares is set forth in the
Prospectus under the caption "Redeeming Shares." Shares of the AIM Funds may be
redeemed directly through AIM Distributors or through any dealer who has entered
into an agreement with AIM Distributors. In addition to the obligation of the
Fund to redeem shares, AIM Distributors also repurchases shares. AIM intends to
redeem all shares of the Fund in cash. In addition to the Fund's obligation to
redeem shares, AIM Distributors may also repurchase shares as an accommodation
to shareholders. To effect a repurchase, those dealers who have executed
Selected Dealer Agreements with AIM Distributors must phone orders to the order
desk of the Fund telephone (800) 347-4246 and guarantee delivery of all required
documents in good order. A repurchase is effected at the net asset value of the
Fund next determined after such order is received. Such arrangement is subject
to timely receipt by AFS of all required documents in
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good order. If such documents are not received within a reasonable time after
the order is placed, the order is subject to cancellation. While there is no
charge imposed by the Fund or by AIM Distributors (other than any applicable
CDSC) when shares are redeemed or repurchased, dealers may charge a fair service
fee for handling the transaction.
The right of redemption may be suspended or the date of payment postponed
when (a) trading on the New York Stock Exchange ("NYSE") is restricted, as
determined by applicable rules and regulations of the SEC, (b) the NYSE is
closed for other than customary weekend and holiday closings, (c) the SEC has by
order permitted such suspension, or (d) an emergency as determined by the SEC
exists making disposition of portfolio securities or the valuation of the net
assets of the Fund not reasonably practicable.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will generally be subject to backup withholding.
Each AIM Fund, and other payers, must, according to IRS regulations,
withhold 31% of redemption payments and reportable dividends (whether paid or
accrued) in the case of any shareholder who fails to provide the Fund with a
taxpayer identification number ("TIN") and a certification that he is not
subject to backup withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN,
or
(3) the investor or the Fund is notified by the IRS that the investor is
subject to backup withholding because the investor failed to report all
of the interest and dividends on such investor's tax return (for
reportable interest and dividends only), or
(4) the investor fails to certify to the Fund that the investor is not
subject to backup withholding under (3) above (for reportable interest
and dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to non-exempt
mutual fund accounts opened after 1983.
Interest and dividend payments are subject to backup withholding in all five
situations discussed above. Redemption proceeds and long-term gain distributions
are subject to backup withholding only if (1) (2) or (5) above applies.
Certain payees and payments are exempt from backup withholding and
information reporting. A complete listing of such exempt entities appears in the
Instructions for the Requester of Form W-9 (which can be obtained from the IRS)
and includes, among others, the following:
o a corporation
o an organization exempt from tax under Section 501(a), an individual
retirement plan (IRA), or a custodial account under Section 403(b)(7)
o the United States or any of its agencies or instrumentalities
o a state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities
o a foreign government or any of its political subdivisions, agencies or
instrumentalities
o an international organization or any of its agencies or
instrumentalities
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o a foreign central bank of issue
o a dealer in securities or commodities required to register in the U.S.
or a possession of the U.S.
o a futures commission merchant registered with the Commodity Futures
Trading Commission
o a real estate investment trust
o an entity registered at all times during the tax year under the 1940 Act
o a common trust fund operated by a bank under Section 584(a)
o a financial institution
o a middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List
o a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct
TIN will be subject to a $50 penalty imposed by the IRS unless such failure is
due to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
federal income tax withholding at a 30% rate on ordinary income dividends and
distributions and return of capital distributions. Under applicable treaty law,
residents of treaty countries may qualify for a reduced rate of withholding or a
withholding exemption.
NET ASSET VALUE DETERMINATION
The net asset value per share of the Fund is normally determined daily as of
the close of the customary trading session of the NYSE (generally 4:00 p.m.
Eastern time) on each business day of the Fund. In the event the NYSE closes
early (i.e., before 4:00 p.m. Eastern time) on a particular day, the net asset
value of the Fund is determined as of the close of the NYSE on such day. Net
asset value per share is determined by dividing the value of the Fund's
interests in the Fund attributable to a class, less all its liabilities
attributable to that class, by the total number of shares outstanding of that
class. Determination of the Fund's net asset value per share is made in
accordance with generally accepted accounting principles.
Each equity security held by the Fund is valued at its last sales price on
the exchange where the security is principally traded or, lacking any sales on a
particular day, the security is valued at the last available bid. Each security
traded in the over-the-counter market (but not including securities reported on
the Nasdaq National Market System) is valued at the mean between the last bid
and asked prices
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based upon quotes furnished by market makers for such securities. Each security
reported on the Nasdaq National Market System is valued at the last sales price
on the valuation date or absent a last sales price, at the mean between the
closing bid and asked prices on that day. Debt securities are valued on the
basis of prices provided by an independent pricing service. Prices provided by
the pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as institution-size trading in
similar groups of securities, developments related to special securities, yield,
quality, coupon rate, maturity, type of issue, individual trading
characteristics and other market data. Securities for which market quotations
are not readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Trust's officers in
a manner specifically authorized by the Board of Trustees. Short-term
obligations having 60 days or less to maturity are valued on the basis of
amortized cost. For purposes of determining net asset value per share, futures
and options contracts generally will be valued 15 minutes after the close of the
customary trading session of the NYSE.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the customary trading session of the NYSE.
The values of such securities used in computing the net asset value of the
Fund's shares are determined at such times. Foreign currency exchange rates are
also generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which such values are determined and the close of the
customary trading session of the NYSE which will not be reflected in computation
of the Fund's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities will be valued at
their fair value as determined in good faith by or under the supervision of the
Board of Trustees of the Fund.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
Income dividends and capital gains distributions are automatically
reinvested in additional shares of the same class of the Fund unless the
shareholder has requested in writing to receive such dividends and distributions
in cash or that they be invested in shares of another AIM Fund, subject to the
terms and conditions set forth in "Shareholder Information -- Dividends and
Distributions." If a shareholder's account does not have any shares in it on a
dividend or capital gains distribution payment date, the dividend or
distribution will be paid in cash whether or not the shareholder has elected to
have such dividends or distributions reinvested.
TAX MATTERS
The following is only a summary of certain additional tax considerations
generally affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning.
TAXATION OF THE FUND
To continue to qualify for treatment as a regulated investment company
("RIC") under the Code, the Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income and net short-term capital gain)
("Distribution Requirement") and must meet several additional requirements.
These requirements include the following: (1) the Fund must derive at least 90%
of its gross income each taxable year from dividends, interest, payments with
respect to securities loans and gains from the sale or other disposition of
securities or foreign currencies, or other income (including gains from options,
Futures or Forward Contracts) derived with respect to its business of investing
in securities or those currencies ("Income Requirement"); (2) at the close of
each quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash items, U.S. government securities, securities
of other RICs and
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other securities, with these other securities limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of the Fund's total
assets and that does not represent more than 10% of the issuer's outstanding
voting securities; and (3) at the close of each quarter of the Fund's taxable
year, not more than 25% of the value of its total assets may be invested in
securities (other than U.S. government securities or the securities of other
RICs) of any one issuer.
By qualifying for treatment as a RIC, each Fund (but not its shareholders)
will be relieved of federal income tax on the part of its investment company
taxable income and net capital gain (the excess of net long-term capital gain
over net short-term capital loss) that it distributes to its shareholders. If a
Fund failed to qualify for treatment as a RIC for any taxable year, (1) it would
be taxed as an ordinary corporation on the full amount of its taxable income for
that year without being able to deduct the distributions it makes to its
shareholders and (2) the shareholders would treat all those distributions,
including distributions of net capital gain, as dividends (that is, ordinary
income) to the extent of the Fund's earnings and profits. In addition, the Fund
could be required to recognize unrealized gains, pay substantial taxes and
interest and make substantial distributions before requalifying for RIC
treatment.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 if the distributions are paid by the Fund during the following
January. Accordingly, those distributions will be taxed to shareholders for the
year in which that December 31 falls.
If Fund shares are sold at a loss after being held for six months or less,
the loss will be treated as long-term, instead of short-term, capital loss to
the extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.
REINSTATEMENT PRIVILEGES AND WASH SALES
If a shareholder disposes of a Fund's shares ("original shares") within 90
days after purchase thereof and subsequently reacquires shares of that Fund or
acquires shares of another AIM Fund on which a sales charge normally is imposed
("replacement shares"), without paying the sales charge (or paying a reduced
charge) due to an exchange privilege or a reinstatement privilege, then (1) any
gain on the disposition of the original shares will be increased, or the loss
thereon decreased, by the amount of the sales charge paid when those shares were
acquired and (2) that amount will increase the adjusted basis of the replacement
shares that were subsequently acquired. In addition, if a shareholder purchases
shares of a Fund (whether pursuant to the reinstatement privilege or otherwise)
within 30 days before or after redeeming at a loss other shares of that Fund
(regardless of class), all or part of that loss will not be deductible and
instead will increase the basis of the newly purchased shares.
TAXATION OF CERTAIN INVESTMENT ACTIVITIES
Foreign Taxes. Dividends and interest received by the Fund, and gains
realized thereby, may be subject to income, withholding or other taxes imposed
by foreign countries and U.S. possessions ("foreign taxes") that would reduce
the total return on its securities. Tax conventions between certain countries
and the United States may reduce or eliminate foreign taxes, however, and many
foreign countries do not impose taxes on capital gains in respect of investments
by foreign investors. If more than 50% of the value of a Fund's total assets at
the close of its taxable year consists of securities of foreign corporations,
the Fund will be eligible to, and may, file an election with the Internal
Revenue Service that will enable its shareholders, in effect, to receive the
benefit of the foreign tax credit with respect to any foreign taxes paid by it.
Pursuant to the election, the Fund would treat those taxes as dividends paid to
its shareholders and each shareholder would be required to (1) include in gross
income, and treat as paid by
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him, his share of those taxes, (2) treat his share of those taxes and of any
dividend paid by the Fund that represents income from foreign and U.S.
possessions sources as his own income from those sources and (3) either deduct
the taxes deemed paid by him in computing his taxable income or, alternatively,
use the foregoing information in calculating the foreign tax credit against his
federal income tax. The Fund will report to its shareholders shortly after each
taxable year their respective shares of its foreign taxes and income from
sources within, and taxes paid to, foreign countries and U.S. possessions if it
makes this election. Individuals who have no more than $300 ($600 for married
persons filing jointly) of creditable foreign taxes included on Form 1099 and
all of whose foreign source income is "qualified passive income" may elect each
year to be exempt from the foreign tax credit limitation in which event they
would be able to claim a foreign tax credit without having to file the detailed
Form 1116 that otherwise is required.
Passive Foreign Investment Companies. The Fund may invest in the stock of
"passive foreign investment companies" ("PFICs"). A PFIC is any foreign
corporation (with certain exceptions) that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund will be subject to
federal income tax on a portion of any "excess distribution" received on, or of
any gain from the disposition of, stock of a PFIC (collectively "PFIC income"),
plus interest thereon, even if the Fund distributes the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be included in
the Fund's investment company taxable income and, accordingly, will not be
taxable to it to the extent it distributes that income to its shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its pro
rata share of the QEF's ordinary earnings and net capital gain -- which the fund
most likely would have to distribute to satisfy the Distribution Requirement and
avoid imposition of the Excise Tax -- even if they did not receive those
earnings and gain from the QEF. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
The Fund may elect to "mark to market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
taxable year the excess, if any, of the fair market value of the stock over the
Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, the Fund also would be allowed to deduct (as an ordinary, not capital,
loss) the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the taxable year-end, but only to the extent of any
net mark-to-market gains with respect to that stock included in income by the
Fund for prior taxable years under the election (and under regulations proposed
in 1992 provided a similar election with respect to the stock of certain PFICs).
A Fund's adjusted basis in each PFIC's stock subject to the election would be
adjusted to reflect the amounts of income included and deductions taken
thereunder.
Options, Futures and Foreign Currency Transactions. The Fund's use of
hedging transactions, such as selling (writing) and purchasing options and
Futures and entering into Forward Contracts, involves complex rules that will
determine, for federal income tax purposes, the amount, character and timing of
recognition of the gains and losses the Fund realizes in connection therewith.
Gains from the disposition of foreign currencies (except certain gains that may
be excluded by future regulations), and gains from options, Futures and Forward
Contracts derived by the Fund with respect to its business of investing in
securities or foreign currencies, will qualify as permissible income under the
Income Requirement for the Fund.
Futures and foreign currency contracts that are subject to Section 1256 of
the Code (other than those that are part of a "mixed straddle" with respect to
which a fund has elected not to have the following rules apply) ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at that time at market value for
federal income tax purposes. Sixty percent of any net gain or loss recognized on
these deemed sales, and 60% of any net gain or loss realized from any actual
sales of Section 1256 Contracts, will be treated as long-term capital gain or
loss, and the balance will be treated as short-term capital gain or loss. These
rules may operate to increase the amount that a Fund must distribute to satisfy
the Distribution Requirement (i.e.,
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with respect to the portion treated as short-term capital gain), which will be
taxable to the shareholders as ordinary income, and to increase the net capital
gain a Fund recognizes, without in either case increasing the cash available to
the Fund.
Section 988 of the Code also may apply to gains and losses from transactions
in foreign currencies, foreign-currency-denominated debt securities and options,
Futures and Forward Contracts on foreign currencies ("Section 988" gains and
losses). Each Section 988 gain or loss generally is computed separately and
treated as ordinary income or loss. In the case of overlap between sections 1256
and 988, special provisions determine the character and timing of any income,
gain or loss. The Fund attempts to monitor section 988 transactions to minimize
any adverse tax impact.
Code Section 1092 (dealing with straddles) also may affect the taxation of
certain hedging instruments in which a Fund may invest. That section defines a
"straddle" as offsetting positions with respect to actively traded personal
property; for these purposes, options, Futures and Forward Contracts are
personal property. Under that section, any loss from the disposition of a
position in a straddle generally may be deducted only to the extent the loss
exceeds the unrealized gain on the offsetting position(s) of the straddle. In
addition, these rules may postpone the recognition of loss that otherwise would
be recognized under the mark-to-market rules discussed above. The regulations
under Section 1092 also provide certain "wash sale" rules, which apply to
transactions where a position is sold at a loss and a new offsetting position is
acquired within a prescribed period, and "short sale" rules applicable to
straddles. If a Fund makes certain elections, the amount, character and timing
of recognition of gains and losses from the affected straddle positions would be
determined under rules that vary according to the elections made. Because only a
few of the regulations implementing the straddle rules have been promulgated,
the tax consequences to a Fund of straddle transactions are not entirely clear.
If the Fund has an "appreciated financial position" -- generally, an
interest (including an interest through an option, Futures or Forward Contract
or short sale) with respect to any stock, debt instrument (other than "straight
debt") or partnership interest the fair market value of which exceeds its
adjusted basis -- and enters into a "constructive sale" of the position, the
Fund will be treated as having made an actual sale thereof, with the result that
gain will be recognized at that time unless the closed transaction exception
applies. A constructive sale generally consists of a short sale, an offsetting
notional principal contract or Futures or Forward Contract entered into by the
Fund or a related person with respect to the same or substantially identical
property. In addition, if the appreciated financial position is itself a short
sale or such a contract, acquisition of the underlying property or substantially
identical property will be deemed a constructive sale.
TAXATION OF THE FUND'S SHAREHOLDERS
Dividends and other distributions declared by the Fund, and payable to
shareholders of record as of a date, in October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
If Fund shares are sold at a loss after being held for six months or less,
the loss will be treated as long-term, instead of short-term, capital loss to
the extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by the Fund to a shareholder who, as to the United States, is
a nonresident alien individual, nonresident alien fiduciary of a trust or
estate, foreign corporation or foreign partnership ("foreign shareholder")
generally will be subject to U.S. withholding tax (at a rate of 30% or lower
treaty rate). Withholding will not apply, however, to a dividend paid by the
Fund to a foreign shareholder that is "effectively connected with the conduct of
a U.S. trade or business," in which case the reporting and withholding
requirements applicable to domestic shareholders will apply. A distribution of
net capital gain by the Fund to a foreign shareholder generally will be subject
to U.S. federal income tax (at the rates
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applicable to domestic persons) only if the distribution is "effectively
connected" or the foreign shareholder is treated as a resident alien individual
for federal income tax purposes.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisors for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
SHAREHOLDER INFORMATION
This information supplements the discussion in each Fund's Prospectus under
the title "Shareholder Information."
TIMING OF PURCHASE ORDERS. It is the responsibility of the dealer to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. If a check used to purchase
shares does not clear, or if any investment order must be canceled due to
nonpayment, the investor will be responsible for any resulting loss to an AIM
Fund or to AIM Distributors.
SHARE CERTIFICATES. Shareholders of the Funds do not have the right to
demand or require the Trust to issue share certificates, although the Trust in
its sole discretion may issue them.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, all shares
are to be held by the Transfer Agent and all dividends and distributions are
reinvested in shares of the applicable AIM Fund by the Transfer Agent. To
provide funds for payments made under the Systematic Withdrawal Plan, the
Transfer Agent redeems sufficient full and fractional shares at their net asset
value in effect at the time of each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the AIM Funds and AIM Cash Reserve
Shares of AIM Money Market Fund), it is disadvantageous to effect such purchases
while a Systematic Withdrawal Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic
Withdrawal Plan.
TERMS AND CONDITIONS OF EXCHANGE. Normally, shares of an AIM Fund to be
acquired by exchange are purchased at their net asset value or applicable
offering price, as the case may be, determined on the date that such request is
received, but under unusual market conditions such purchases may be delayed for
up to five business days if it is determined that a fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into a fund paying daily dividends, and the release of
the exchange proceeds is delayed for the foregoing five-day period, such
shareholder will not begin to accrue dividends until the sixth business day
after the exchange.
EXCHANGES BY TELEPHONE. AIM Distributors has made arrangements with certain
dealers and investment advisory firms to accept telephone instructions to
exchange shares between any of the AIM Funds. AIM Distributors reserves the
right to impose conditions on dealers or investment advisors who make telephone
exchanges of shares of the funds, including the condition that any such dealer
or investment advisor enter into an agreement (which contains additional
conditions with respect to exchanges of shares) with AIM Distributors. To
exchange shares by telephone, a shareholder, dealer or investment advisor who
has satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
shareholder is unable to reach AFS by telephone, he may also request exchanges
by telegraph or use overnight courier services to expedite exchanges by mail,
which will be effective on the business day
56
<PAGE> 79
received by the Transfer Agent as long as such request is received prior to the
close of the customary trading session of the NYSE. The Transfer Agent and AIM
Distributors may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction.
By signing an account application form, an investor appoints the Transfer
Agent as his true and lawful attorney-in-fact to surrender for redemption any
and all unissued shares held by the Transfer Agent in the designated account(s),
or in any other account with any of the AIM Funds, present or future, which has
the identical registration as the designated account(s), with full power of
substitution in the premises. The Transfer Agent and AIM Distributors are
thereby authorized and directed to accept and act upon any telephone redemptions
of shares held in any of the account(s) listed, from any person who requests the
redemption proceeds to be applied to purchase shares in any one or more of the
AIM Funds, provided that such fund is available for sale and provided that the
registration and mailing address of the shares to be purchased are identical to
the registration of the shares being redeemed. An investor acknowledges by
signing the form that he understands and agrees that the Transfer Agent and AIM
Distributors may not be liable for any loss, expense or cost arising out of any
telephone exchange requests effected in accordance with the authorization set
forth in these instructions if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions. Procedures for verification of telephone transactions
may include recordings of telephone transactions (maintained for six months),
requests for confirmation of the shareholder's Social Security Number and
current address, and mailings of confirmations promptly after the transactions.
The Transfer Agent reserves the right to modify or terminate the telephone
exchange privilege at any time without notice. An investor may elect not to have
this privilege by marking the appropriate box on the application. Then any
exchanges must be effected in writing by the investor.
REDEMPTIONS BY TELEPHONE. By signing an account application form, an
investor appoints the Transfer Agent as his true and lawful attorney-in-fact to
surrender for redemption any and all unissued shares held by the Transfer Agent
in the designated account(s), present or future, with full power of substitution
in the premises. The Transfer Agent and AIM Distributors are thereby authorized
and directed to accept and act upon any telephone redemptions of shares held in
any of the account(s) listed, from any person who requests the redemption. An
investor acknowledges by signing the form that he understands and agrees that
the Transfer Agent and AIM Distributors may not be liable for any loss, expense
or cost arising out of any telephone redemption requests effected in accordance
with the authorization set forth in these instructions if they reasonably
believe such request to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions. Procedures for
verification of telephone transactions may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction. The Transfer Agent reserves the
right to cease to act as attorney-in-fact subject to this appointment, and AIM
Distributors reserves the right to modify or terminate the telephone redemption
privilege at any time without notice. An investor may elect not to have this
privilege by marking the appropriate box on the application. Then any
redemptions must be effected in writing by the investor.
SIGNATURE GUARANTEES. In addition to those circumstances listed in the
"Shareholder Information" section of each Fund's prospectus, signature
guarantees are required in the following situations: (1) requests to transfer
the registration of shares to another owner; (2) telephone exchange and
telephone redemption authorization forms; (3) changes in previously designated
wiring or electronic funds transfer instructions; and (4) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
AIM Funds may waive or modify any signature guarantee requirements at any time.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the
57
<PAGE> 80
SEC, and further provided that such guarantor institution is listed in one of
the reference guides contained in the Transfer Agent's current Signature
Guarantee Standards and Procedures, such as certain domestic banks, credit
unions, securities dealers, or securities exchanges. The Transfer Agent will
also accept signatures with either: (1) a signature guaranteed with a medallion
stamp of the STAMP Program, or (2) a signature guaranteed with a medallion stamp
of the NYSE Medallion Signature Program, provided that in either event, the
amount of the transaction involved does not exceed the surety coverage amount
indicated on the medallion. For information regarding whether a particular
institution or organization qualifies as an "eligible guarantor institution," an
investor should contact the Client Services Department of AFS.
TRANSACTIONS BY INTERNET. An investor may effect transactions in his
account through the Internet by selecting the AIM Internet Connect option on his
completed account application form or completing an AIM Internet Connect
Authorization Form. By signing either form the investor acknowledges and agrees
that the Transfer Agent and AIM Distributors will not be liable for any loss,
expense or cost arising out of any internet transaction effected in accordance
with the instructions set forth in the forms if they reasonably believe such
request to be genuine. Procedures for verification of internet transactions
include requests for confirmation of the shareholder's personal identification
number and mailing of confirmations promptly after the transactions. The
investor also acknowledges that (1) if he no longer wants the AIM Internet
Connect option, he will notify the Transfer Agent in writing, and (2) the AIM
Internet Connect option may be terminated at any time by the AIM Funds.
DIVIDENDS AND DISTRIBUTIONS. In determining the amount of capital
gains, if any, available for distribution, net capital gains are offset against
available net capital losses, if any, carried forward from previous fiscal
periods.
For funds that do not declare a dividend daily, such dividends and
distributions will be reinvested at the net asset value per share determined on
the ex-dividend date. For funds that declare a dividend daily, such dividends
and distributions will be reinvested at the net asset value per share determined
on the payable date.
Dividends on Class B and Class C shares are expected to be lower than
those for Class A shares or AIM Cash Reserve Shares because of higher
distribution fees paid by Class B and Class C shares. Dividends on all shares
may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made
by the shareholder at any time by notice to the Transfer Agent and are effective
as to any subsequent payment if such notice is received by the Transfer Agent
prior to the record date of such payment. Any dividend and distribution election
remains in effect until the Transfer Agent receives a revised written election
by the shareholder.
Any dividend or distribution paid by a fund which does not declare
dividends daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes.
MISCELLANEOUS INFORMATION
CHARGES FOR CERTAIN ACCOUNT INFORMATION
The Transfer Agent may impose certain copying charges for requests for
copies of shareholder account statements and other historical account
information older than the current year and the immediately preceding year.
58
<PAGE> 81
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin
Street, Boston, Massachusetts 02110, acts as custodian of the Fund's assets.
State Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Trust to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
TRANSFER AGENCY AND FUND ACCOUNTING SERVICES
The Transfer Agency and Service Agreement between the Trust and AFS, a
registered transfer agent and wholly owned subsidiary of AIM, provides that AFS
will perform certain shareholder services for the Fund for a fee per account
serviced. The Transfer Agency and Service Agreement provides that AFS will
receive a per account fee plus out-of-pocket expenses to process orders for
purchases, redemptions and exchanges of shares; prepare and transmit payments
for dividends and distributions declared by the Fund; maintain shareholder
accounts and provide shareholders with information regarding the Fund and their
accounts. The Transfer Agency and Service Agreement became effective on
September 8, 1998.
Pursuant to the Master Administrative Services Agreement, AIM serves as
the Fund's pricing and accounting agent. Under the Fund's previous
administration contract, the Fund paid no fund accounting fees for the fiscal
years ended December 31, 1997 and 1998.
INDEPENDENT ACCOUNTANTS
The Trust's independent accountants are PricewaterhouseCoopers LLP.
PricewaterhouseCoopers LLP conducts annual audits of the Fund's financial
statements, assists in the preparation of the Fund's federal and state income
tax returns and consults with the Trust as to matters of accounting, regulatory
filings, and federal and state income taxation.
The audited financial statements of the Trust included in this
Statement of Additional Information have been examined by PricewaterhouseCoopers
LLP, as stated in their opinion appearing herein, and are included in reliance
upon such opinion given upon the authority of that firm as experts in accounting
and auditing.
LEGAL MATTERS
The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust and the Fund.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same
limitations of liability extended to shareholders of private, for-profit
corporations. There is a remote possibility, however, that under certain
circumstances shareholders of the Trust may be held personally liable for the
Trust's obligations. However, the Trust Agreement disclaims shareholder
liability for acts or obligations of the Trust and requires that notice of such
disclaimer be given in each agreement, obligation or instrument entered into or
executed by the Trust or a trustee. If a shareholder is held personally liable
for the obligations of the Trust, the Trust Agreement provides that the
shareholder shall be entitled out of the assets belonging to the Fund (or
allocable to the applicable Class), to be held harmless from and indemnified
against all loss and expense arising from such liability in accordance with the
Trust's Bylaws and applicable law. Thus, the risk of a shareholder incurring
financial loss on account of such liability is limited to circumstances in which
the Trust itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
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<PAGE> 82
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Trust, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of the Trust's
equity securities as of March 31, 2000, and the percentage of the outstanding
shares held by such holders are set forth below.
<TABLE>
<CAPTION>
Percent
Name and Address Owned of
of Record Owner Record*
--------------- -------
<S> <C>
CLASS C
-------
Salomon Smith Barney Inc. 9.55%
333 West 34th St - 3rd Floor
New York, NY 10001
Merrill Lynch Pierce Fenner & Smith 5.40%
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
</TABLE>
- ----------------
* The Trust has no knowledge as to whether all or any portion of
the shares owned of record are also owned beneficially.
INVESTMENT RESULTS
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return is as follows:
n
P(1+T) =ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the
applicable maximum sales load is deducted at the
beginning of the 1, 5, or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical
$1,000 payment at the end of the 1, 5, or 10 year
periods (or fractional portion of such period).
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
n
P(1+U) =ERV
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment of
only a stated portion of, or none of, the
applicable maximum sales load at the beginning of
the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical
$1,000 payment at the end of the stated period.
Cumulative total return across a stated period may be calculated as
follows:
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<PAGE> 83
n
P(1+V) =ERV
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all
of, a stated portion of, or none of, the
applicable maximum sales load at the beginning of
the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.
The cumulative total returns for Class A, Class B and Class C shares of
the Fund for the periods shown, were:
<TABLE>
<CAPTION>
Periods ended
December 31, 1999
------------------------------
1 Year Since Inception
------------------------------
<S> <C> <C>
Class A Shares......................................................... 44.73% 20.73%
Class B Shares......................................................... 46.18% 21.69%
Class C Shares......................................................... 50.33% 28.48%
</TABLE>
The inception date of Class A, Class B and Class C shares of the Fund
are September 15, 1997, September 15, 1997 and January 2, 1998, respectively.
PERFORMANCE INFORMATION
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the Fund's shares. If
any advertised performance data does not reflect the maximum sales charge (if
any), such advertisement will disclose that the sales charge has not been
deducted in computing the performance data, and that, if reflected, the maximum
sales charge would reduce the performance quoted. Further information regarding
the Fund's performance is contained in the Fund's annual report to shareholders,
which is available upon request and without charge.
From time to time, AIM or its affiliates may waive all or a portion of
their fees and/or assume certain expenses of the Fund. Voluntary fee waivers or
reductions or commitments to assume expenses may be rescinded at any time
without further notice to investors. During periods of voluntary fee waivers or
reductions or commitments to assume expenses, AIM will retain its ability to be
reimbursed for such fee prior to the end of each fiscal year. Contractual fee
waivers or reductions or reimbursement of expenses set forth in the Fee Table in
a Prospectus may not be terminated or amended to the Fund's detriment during the
period stated in the agreement between AIM and the Fund. Fee waivers or
reductions or commitments to reduce expenses will have the effect of increasing
the Fund's yield and total return.
The performance of the Fund will vary from time to time and past
results are not necessarily indicative of future results. The Fund's performance
is a function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund and
market conditions. A shareholder's investment in the Fund is not insured or
guaranteed. These factors should be carefully considered by the investor before
making an investment in the Fund.
The Fund's total return is calculated in accordance with a standardized
formula for computation of annualized total return. Standardized total return
for Class A shares reflects the deduction of the Fund's maximum front-end sales
charge at the time of purchase. Standardized total return for Class B and Class
C shares reflects the deduction of the maximum applicable contingent deferred
sales charge on a redemption of shares held for the period.
The Fund's total return shows its overall change in value, including
changes in share price and assuming all the Fund's dividends and capital gain
distributions are reinvested. A cumulative total return
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<PAGE> 84
reflects the Fund's performance over a stated period of time. An average annual
total return reflects the hypothetical compounded annual rate of return that
would have produced the same cumulative total return if the Fund's performance
had been constant over the entire period. Because average annual returns tend to
even out variations in the Fund's return, investors should recognize that such
returns are not the same as actual year-by-year results. To illustrate the
components of overall performance, the Fund may separate its cumulative and
average annual returns into income results and capital gains or losses.
Total return and yield figures for the Fund are neither fixed nor
guaranteed, and the Fund's principal is not insured. Performance quotations
reflect historical information and should not be considered representative of
the Fund's performance for any period in the future. Performance is a function
of a number of factors which can be expected to fluctuate. The Fund may provide
performance information in reports, sales literature and advertisements. The
Fund may also, from time to time, quote information about the Fund published or
aired by publications or other media entities which contain articles or segments
relating to investment results or other data about the Fund. Such publications
or media entities may include the following, among others:
<TABLE>
<S> <C>
Insurance Forum
Advertising Age Institutional Investor
Barron's Insurance Week
Best's Review Investor's Daily
Broker World Journal of the American Society of CLU & ChFC
Business Week Kiplinger Letter
Changing Times Money
Christian Science Monitor Mutual Fund Forecaster
CNBC Mutual Fund Magazine
CNN Nation's Business
Consumer Reports New York Times
Economist PBS
EuroMoney Pension World
FACS of the Week Pensions & Investments
Financial Planning Personal Investor
Financial Product News Philadelphia Inquirer
Financial Services Week Smart Money
Financial World USA Today
Forbes U.S. News & World Report
Fortune Wall Street Journal
Global Finance Washington Post
Hartford Courant Inc.
</TABLE>
The Fund and AIM Distributors may from time to time, in advertisements,
sales literature and reports furnished to present or prospective shareholders,
compare the Fund with the following, or compare the Fund's performance to
performance data of similar mutual funds as published in the following, among
others:
Bank Rate National Monitor Index
Bear Stearns Foreign Bond Index
Bond Buyer Index
CDA/Wiesenberger Investment Company Services (data and mutual fund rankings and
comparisons)
CNBC/Financial News Composite Index
COFI
Consumer Price Index
Datastream
Donoghue's
Dow Jones Industrial Average
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<PAGE> 85
EAFE Index
First Boston High Yield Index
Fitch (publications)
Ibbotson Associates International Bond Index
International Bank for Reconstruction and Development (publications)
International Finance Corporation Emerging Markets Database
International Financial Statistics
Lehman Bond Indices
Lipper Inc. (data and mutual fund rankings and comparisons)
Micropal, Inc. (data and mutual fund rankings and comparisons)
Moody's Investors Service (publications)
Morgan Stanley Capital International All
Country (AC) World Index
Morgan Stanley Capital International World Indices
Morningstar, Inc. (data and mutual fund rankings and comparisons)
Nasdaq
Organization for Economic Cooperation and Development (publications)
Salomon Brothers Global Telecommunications Index
Salomon Brothers World Government Bond Index -- Non-U.S.
Salomon Brothers World Government Bond Index
Standard & Poor's (publications)
Standard & Poor's 500 Composite Stock Price Index
Stangar
Wilshire Associates
World Bank (publications and reports)
The World Bank Publication of Trends in Developing Countries
Worldscope
The Fund may also compare its performance to rates on Certificates of
Deposit and other fixed rate investments such as the following:
10-year Treasuries
30-year Treasuries
30-day Treasury Bills
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Fund or AIM
Distributors. Advertising for the Fund may from time to time include discussions
of general economic conditions and interest rates. Advertising for the Fund may
also include reference to the use of the Fund as part of an individual's overall
retirement investment program. From time to time, sales literature and/or
advertisements for the Fund may disclose (i) the largest holdings in the Fund's
portfolio, (ii) certain selling group members and/or (iii) certain institutional
shareholders.
From time to time, the Fund's sales literature and/or advertisements
may discuss generic topics pertaining to the mutual fund industry. This
includes, but is not limited to, literature addressing general information about
mutual funds, variable annuities, dollar-cost averaging, stocks, bonds, money
markets, certificates of deposit, retirement, retirement plans, asset
allocation, tax-free investing, college planning, and inflation.
Although performance data may be useful to prospective investors when
comparing the Fund's performance with other funds and other potential
investments, investors should note that the methods of computing performance of
other potential investments are not necessarily comparable to the methods
employed by the Fund.
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<PAGE> 86
The information quoted will not be independently verified by the Fund
or AIM Distributors and will be based on data provided that is believed to be
reliable and accurate from sources including, but not limited to, the following:
o Consumer and trade groups
o Fortune magazine and other periodicals
o The World Bank and its publications
o The International Monetary Fund (IMF) and its publications
o IFC and its publications
o OECD and its publications
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<PAGE> 87
APPENDIX A
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc. ("Moody's") employs the designations
"Prime-1" and "Prime-2" to indicate commercial paper having the highest capacity
for timely repayment. Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations. This
normally will be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
("S&P") rates commercial paper in four categories ranging from "A-1" for the
highest quality obligations to "D" for the lowest. A-1 -- This highest category
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics will be
denoted with a plus sign (+) designation. A-2 -- Capacity for timely payment on
issues with this designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1." A-3 -- Issues carrying
this designation have adequate capacity for timely payment. They are, however,
more vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations. B -- Issues rated "B" are regarded
as having only speculative capacity for timely payment. C -- This rating is
assigned to short-term debt obligations with a doubtful capacity for payment.
D -- Debt rated "D" is in payment default. The "D" rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities
from "Aaa" to "C." Investment Grade Ratings are the first four categories:
Aaa-- Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as "gilt edged." Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues. Aa -- High quality by all standards. Together with the
Aaa group they comprise what are generally known as high grade bonds. They are
rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than the Aaa securities.
A -- Upper-medium-grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future. Baa -- Medium-grade
obligations (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well. Ba -- Have
speculative elements and their future cannot be considered as well-assured.
Often the protection of interest and principal payments may be very moderate,
and thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class. B -- Generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small. Caa -- Poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca --
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<PAGE> 88
Speculative in a high degree. Such issues are often in default or have other
marked shortcomings. C -- Lowest rated class of bonds. Issues so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.
S&P rates the debt securities of various entities in categories ranging
from "AAA" to "D" according to quality. Investment grade ratings are the first
four categories: AAA -- Highest rating. Capacity to pay interest and repay
principal is extremely strong. AA -- Very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in a small degree.
A -- Has a strong capacity to pay interest and repay principal although it is
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than debt in higher rated categories. BBB -- Regarded as
having adequate capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories. BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" is
regarded, on balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "C" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions. BB -- Has less near-term vulnerability to
default than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic conditions
which could lead to inadequate capacity to meet timely interest and principal
payments. The "BB" rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "BBB -- " rating. B -- Has a greater
vulnerability to default but currently has the capacity to meet interest
payments and principal repayments. Adverse business, financial, or economic
conditions will likely impair capacity or willingness to pay interest and repay
principal. The "B" rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "BB" or "BB -- " rating. CCC -- Has a
currently identifiable vulnerability to default, and is dependent upon favorable
business, financial, and economic conditions to meet timely payment of interest
and repayment of principal. In the event of adverse business, financial, or
economic conditions, it is not likely to have the capacity to pay interest and
repay principal. The "CCC" rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied "B" or "B -- " rating. CC --
Typically applied to debt subordinated to senior debt that is assigned an actual
or implied "CCC" rating. C -- Typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC -- " debt rating. The "C" rating
may be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued. C1 -- Reserved for income bonds on which no
interest is being paid. D -- In payment default. The "D" category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. This rating will also be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS ( -- ): The ratings from "AA" to "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
ABSENCE OF RATING
Where no rating has been assigned or where a rating has been suspended
or withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1 An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or
companies that are not rated as a matter of policy.
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<PAGE> 89
3. There is a lack of essential data pertaining to the issue or
issuer.
4. The issue was privately placed, in which case the rating is
not published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances
arise, the effects of which preclude satisfactory analysis; if there is no
longer available reasonable up-to-date data to permit a judgment to be formed;
if a bond is called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic
rating classification from Aa to B in its corporate bond rating system. The
modifier 1 indicates that the company ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
67
<PAGE> 90
FINANCIAL STATEMENTS
FS
<PAGE> 91
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of AIM Series Trust and Shareholders of
AIM Global Trends Fund:
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of the
AIM Global Trends Fund (hereafter referred to as the
"Fund") at December 31, 1999, and the results of its
operations, 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 securities at December 31, 1999
by correspondence with the custodian and brokers, provide
a reasonable basis for the opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
------------------------------
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
February 16, 2000
FS-1
<PAGE> 92
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-57.51%
BIOTECHNOLOGY-1.46%
Amgen Inc.(a) 12,400 $ 744,775
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-2.46%
AT&T Corp.-Liberty Media Group-Class
A(a) 22,200 1,259,850
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.97%
ADC Telecommunications, Inc.(a) 3,450 250,341
- --------------------------------------------------------------
Comverse Technology, Inc.(a) 4,200 607,950
- --------------------------------------------------------------
Lucent Technologies Inc. 8,800 658,350
- --------------------------------------------------------------
Motorola, Inc. 3,500 515,375
- --------------------------------------------------------------
2,032,016
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-1.15%
Apple Computer, Inc.(a) 3,400 349,562
- --------------------------------------------------------------
Sun Microsystems, Inc.(a) 3,100 240,056
- --------------------------------------------------------------
589,618
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-2.47%
Cisco Systems, Inc.(a) 11,800 1,264,075
- --------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.29%
Lexmark International Group,
Inc.-Class A(a) 7,300 660,650
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-6.69%
Adobe Systems, Inc. 6,000 403,500
- --------------------------------------------------------------
America Online, Inc.(a) 5,700 429,994
- --------------------------------------------------------------
Computer Associates International,
Inc. 14,700 1,028,081
- --------------------------------------------------------------
J.D. Edwards & Co.(a) 9,500 283,813
- --------------------------------------------------------------
Oracle Corp.(a) 8,300 930,119
- --------------------------------------------------------------
Synopsys, Inc.(a) 3,650 243,637
- --------------------------------------------------------------
Digital Impact, Inc.(a) 2,100 105,262
- --------------------------------------------------------------
3,424,406
- --------------------------------------------------------------
CONSUMER FINANCE-1.49%
Providian Financial Corp. 8,400 764,925
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.77%
Sawtek, Inc.(a) 5,900 392,719
- --------------------------------------------------------------
ELECTRONICS (COMPONENT
DISTRIBUTORS)-2.07%
Agilent Technologies, Inc.(a) 6,300 487,069
- --------------------------------------------------------------
CTS Corp. 7,600 572,850
- --------------------------------------------------------------
1,059,919
- --------------------------------------------------------------
ELECTRONICS (DEFENSE)-0.54%
General Motors Corp.-Class H(a) 2,900 278,400
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-4.78%
Altera Corp.(a) 6,700 332,069
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (SEMICONDUCTORS)-(CONTINUED)
Flextronics International Ltd.(a) 10,600 $ 487,600
- --------------------------------------------------------------
Integrated Device Technology, Inc.(a) 9,000 261,000
- --------------------------------------------------------------
Intel Corp. 3,600 296,325
- --------------------------------------------------------------
Microchip Technology, Inc.(a) 6,500 444,844
- --------------------------------------------------------------
National Semiconductor Corp.(a) 10,200 436,687
- --------------------------------------------------------------
Rambus Inc.(a) 2,800 188,825
- --------------------------------------------------------------
2,447,350
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-2.33%
Lam Research Corp.(a) 10,700 1,193,719
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.79%
American Express Co. 3,000 498,750
- --------------------------------------------------------------
Citigroup Inc. 7,500 416,719
- --------------------------------------------------------------
915,469
- --------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-0.25%
Isle of Capri Casinos, Inc.(a) 9,800 129,237
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-2.24%
Allergan, Inc. 9,000 447,750
- --------------------------------------------------------------
Warner-Lambert Co. 8,500 696,469
- --------------------------------------------------------------
1,144,219
- --------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.96%
United Healthcare Corp. 9,200 488,750
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.08%
VISX, Inc.(a) 10,700 553,725
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-1.43%
Goldman Sachs Group, Inc. (The) 2,900 273,144
- --------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 3,200 456,800
- --------------------------------------------------------------
729,944
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-2.95%
Tyco International Ltd. 26,000 1,010,750
- --------------------------------------------------------------
United Technologies Corp. 7,700 500,500
- --------------------------------------------------------------
1,511,250
- --------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-0.76%
BJ Services Co.(a) 9,300 388,856
- --------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.27%
Union Pacific Resources Group, Inc. 11,000 140,250
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-1.65%
Home Depot, Inc. (The) 7,200 493,650
- --------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 93
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (BUILDING SUPPLIES)-(CONTINUED)
Lowe's Cos., Inc. 5,900 $ 352,525
- --------------------------------------------------------------
846,175
- --------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.63%
InterTAN, Inc.(a) 16,700 436,287
- --------------------------------------------------------------
Tandy Corp. 8,100 398,419
- --------------------------------------------------------------
834,706
- --------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.92%
Wal-Mart Stores, Inc. 6,800 470,050
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.89%
Dayton Hudson Corp. 6,200 455,312
- --------------------------------------------------------------
RETAIL (SPECIALTY)-0.30%
Sonic Automotive, Inc.(a) 15,700 153,075
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-2.62%
Lamar Advertising Co.(a) 4,000 242,250
- --------------------------------------------------------------
Metris Companies, Inc. 13,400 478,213
- --------------------------------------------------------------
Young & Rubicam Inc. 8,800 622,600
- --------------------------------------------------------------
1,343,063
- --------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.45%
Sykes Enterprises, Inc.(a) 5,300 232,538
- --------------------------------------------------------------
TELECOMMUNICATIONS-0.51%
Level 3 Communications, Inc.(a) 3,200 262,000
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.94%
Sprint Corp.(a) 4,700 481,750
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.14%
Global TeleSystems Group, Inc.(a) 16,800 581,700
- --------------------------------------------------------------
TELEPHONE-3.26%
CTC Communications Group, Inc.(a) 12,300 479,892
- --------------------------------------------------------------
Intermedia Communications Inc.(a) 8,600 333,788
- --------------------------------------------------------------
NTL Inc.(a) 3,800 474,050
- --------------------------------------------------------------
Qwest Communications International,
Inc.(a) 8,900 382,700
- --------------------------------------------------------------
1,670,430
- --------------------------------------------------------------
Total Domestic Common Stocks
(Cost $24,765,335) 29,444,921
- --------------------------------------------------------------
FOREIGN STOCKS-36.72%
BELGIUM-1.53%
Fortis (B) (Financial-Diversified)(a) 21,700 782,308
- --------------------------------------------------------------
CANADA-7.17%
Alcan Aluminum Ltd. (Aluminum) 18,500 761,380
- --------------------------------------------------------------
BCE Inc. (Telephone) 12,900 1,172,199
- --------------------------------------------------------------
Inco Ltd. (Metals Mining)(a) 37,500 876,897
- --------------------------------------------------------------
Rogers Communications, Inc.-Class B
(Telecommunications-
Cellular/Wireless)(a) 18,400 450,024
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Teleglobe, Inc. (Telecommunications) 18,100 $ 412,589
- --------------------------------------------------------------
3,673,089
- --------------------------------------------------------------
FINLAND-3.72%
Nokia Oyj (Communications Equipment) 10,500 1,902,191
- --------------------------------------------------------------
FRANCE-5.41%
Alcatel Alsthom (Communications
Equipment) 2,200 504,835
- --------------------------------------------------------------
Banque Nationale de Paris
(Banks-Major Regional) 3,750 345,716
- --------------------------------------------------------------
Bouygues Offshore S.A. (Engineering &
Construction) 4,444 166,830
- --------------------------------------------------------------
Renault S.A. (Automobiles) 12,300 592,475
- --------------------------------------------------------------
SEITA (Tobacco) 4,000 181,161
- --------------------------------------------------------------
Societe Generale (Banks-Major
Regional) 1,500 348,735
- --------------------------------------------------------------
Societe Television Francaise 1
(Broadcasting- Television, Radio &
Cable) 1,200 628,025
- --------------------------------------------------------------
2,767,777
- --------------------------------------------------------------
GERMANY-0.69%
Epcos A.G. (Electronics-Component
Distributors)(a) 4,700 352,408
- --------------------------------------------------------------
IRELAND-1.69%
CRH PLC (Construction-Cement &
Aggregates) 23,342 500,391
- --------------------------------------------------------------
Esat Telecom Group PLC-ADR
(Telecommunications-Long Distance)(a) 4,000 366,000
- --------------------------------------------------------------
866,391
- --------------------------------------------------------------
JAPAN-8.02%
Furukawa Electric Co., Ltd. (The)
(Metal Fabricators) 156,000 2,367,687
- --------------------------------------------------------------
Nippon Telegraph & Telephone Corp.
(Telephone) 70 1,199,510
- --------------------------------------------------------------
NTT Mobile Communications Network, Inc.
(Telecommunications-Cellular/Wireless) 14 538,752
- --------------------------------------------------------------
4,105,949
- --------------------------------------------------------------
MEXICO-1.03%
Telefonos de Mexico S.A.-ADR
(Telephone) 4,700 528,750
- --------------------------------------------------------------
NETHERLANDS-2.33%
ASM Lithography Holding N.V.
(Electronics- Semiconductors)(a) 3,100 352,625
- --------------------------------------------------------------
Equant N.V.-New York Shares
(Computers- Software & Services)(a) 2,300 257,600
- --------------------------------------------------------------
Getronics N.V. (Computers-Software &
Services) 7,300 581,889
- --------------------------------------------------------------
1,192,114
- --------------------------------------------------------------
SINGAPORE-0.66%
NatSteel Ltd. (Iron & Steel) 170,000 338,877
- --------------------------------------------------------------
SOUTH KOREA-1.72%
Pohang Iron & Steel Co. Ltd.-ADR
(Iron & Steel) 25,200 882,000
- --------------------------------------------------------------
</TABLE>
FS-3
<PAGE> 94
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-2.75%
BP Amoco PLC-ADR (Oil & Gas-Refining
& Marketing) 4,400 $ 260,975
- --------------------------------------------------------------
Centrica PLC (Oil & Gas-Exploration &
Production) 160,000 453,408
- --------------------------------------------------------------
Rio Tinto PLC (Metals Mining) 28,800 695,225
- --------------------------------------------------------------
1,409,608
- --------------------------------------------------------------
Total Foreign Stocks (Cost
$13,783,164) 18,801,462
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS-3.96%
STIC Liquid Assets Portfolio(b) 1,014,954 $ 1,014,954
- --------------------------------------------------------------
STIC Prime Portfolio(b) 1,014,954 1,014,954
- --------------------------------------------------------------
Total Money Market Funds (Cost
$2,029,908) 2,029,908
- --------------------------------------------------------------
TOTAL INVESTMENTS-98.19% (Cost
$40,578,407) 50,276,291
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.81% 925,385
- --------------------------------------------------------------
NET ASSETS-100.00% $51,201,676
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-4
<PAGE> 95
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$40,578,407) $50,276,291
- ---------------------------------------------------------
Foreign currencies, at value (cost
$1,378,868) 1,385,902
- ---------------------------------------------------------
Receivables for:
Investments sold 62,727
- ---------------------------------------------------------
Fund shares sold 187,666
- ---------------------------------------------------------
Dividends and interest 46,551
- ---------------------------------------------------------
Other assets 2,753
- ---------------------------------------------------------
Total assets 51,961,890
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 527,960
- ---------------------------------------------------------
Fund shares reacquired 116,126
- ---------------------------------------------------------
Accrued distribution fees 91,969
- ---------------------------------------------------------
Accrued transfer agent fees 7,175
- ---------------------------------------------------------
Accrued operating expenses 16,984
- ---------------------------------------------------------
Total liabilities 760,214
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $51,201,676
=========================================================
NET ASSETS:
Class A $20,594,824
=========================================================
Class B $29,118,008
=========================================================
Class C $ 499,576
=========================================================
Advisor Class $ 989,268
=========================================================
SHARES OUTSTANDING:
Class A 1,305,467
=========================================================
Class B 1,863,828
=========================================================
Class C 31,987
=========================================================
Advisor Class 62,532
=========================================================
Class A:
Net asset value and redemption price per
share $ 15.78
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $15.78 divided
by 95.25%) $ 16.57
=========================================================
Class B:
Net asset value and offering price per
share $ 15.62
=========================================================
Class C:
Net asset value and offering price per
share $ 15.62
=========================================================
Advisor Class:
Net asset value, redemption and offering
price per share $ 15.82
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 102,225
- ---------------------------------------------------------
Dividends (net of $10,848 foreign
withholding tax) 118,927
- ---------------------------------------------------------
Total investment income 221,152
- ---------------------------------------------------------
EXPENSES:
Advisory and administrative fees 142,786
- ---------------------------------------------------------
Accounting services fees 17,100
- ---------------------------------------------------------
Custodian fees 11,148
- ---------------------------------------------------------
Distribution fees -- Class A 83,176
- ---------------------------------------------------------
Distribution fees -- Class B 238,049
- ---------------------------------------------------------
Distribution fees -- Class C 2,969
- ---------------------------------------------------------
Printing 39,597
- ---------------------------------------------------------
Trustees' fees 3,941
- ---------------------------------------------------------
Transfer Agent fees 28,880
- ---------------------------------------------------------
Other 29,846
- ---------------------------------------------------------
Total expenses 597,492
- ---------------------------------------------------------
Less: Fees waived and reimbursed by advisor (52,643)
- ---------------------------------------------------------
Expenses paid indirectly (141)
- ---------------------------------------------------------
Net expenses 544,708
- ---------------------------------------------------------
Net investment income (loss) (323,556)
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 10,025,846
- ---------------------------------------------------------
Foreign currencies (29,114)
=========================================================
9,996,732
=========================================================
Net unrealized appreciation of:
Investment securities 8,399,433
- ---------------------------------------------------------
Foreign currencies 6,812
=========================================================
8,406,245
=========================================================
Net gain from investment securities and
foreign currencies 18,402,977
=========================================================
Net increase in net assets resulting from
operations $18,079,421
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE> 96
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 (loss) $ (323,556) $ (226,913)
- ------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies 9,996,732 (1,162,416)
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 8,406,245 4,092,846
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 18,079,421 2,703,517
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A -- (26,011)
- ------------------------------------------------------------------------------------------
Advisor Class (2,325) (5,762)
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (1,767,423) (219,151)
- ------------------------------------------------------------------------------------------
Class B (2,505,025) (311,471)
- ------------------------------------------------------------------------------------------
Class C (39,159) (2,998)
- ------------------------------------------------------------------------------------------
Advisor Class (82,148) (9,683)
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A (2,708,897) 1,720,631
- ------------------------------------------------------------------------------------------
Class B (4,238,502) 5,216,553
- ------------------------------------------------------------------------------------------
Class C 143,802 252,965
- ------------------------------------------------------------------------------------------
Advisor Class (125,191) (440,481)
- ------------------------------------------------------------------------------------------
Net increase in net assets 6,754,553 8,878,109
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 44,447,123 35,569,014
- ------------------------------------------------------------------------------------------
End of period $51,201,676 $44,447,123
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $37,900,018 $44,578,806
- ------------------------------------------------------------------------------------------
Undistributed net investment income (loss) -- 2,313
- ------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies 3,596,963 (1,432,446)
- ------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 9,704,695 1,298,450
- ------------------------------------------------------------------------------------------
$51,201,676 $44,447,123
==========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-6
<PAGE> 97
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Trends Fund (the "Fund") is a separate series of AIM Series Trust
(the "Trust"). The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company having an unlimited number
of shares of beneficial interest.
On June 15, 1999, the Board of Trustees unanimously approved a change to the
fundamental investment restrictions (the "restructuring") of the Fund whereby
the Fund which had operated as a "fund of funds" investing in the Advisor Class
shares of the AIM theme mutual funds: AIM Global Consumer Products and Services
Fund; AIM Global Financial Services Fund; AIM Global Health Care Fund; AIM
Global Infrastructure Fund; AIM Global Resources Fund; and AIM Global
Telecommunications and Technology Fund (collectively, the "Underlying Theme
Funds") would directly invest primarily in equity securities of U.S. and foreign
issuers in any or all of the global industry sectors in which the Underlying
Theme Funds invested. On August 25, 1999, a Special Meeting of Shareholders
approved the restructuring which was effective August 27, 1999.
The Fund consists of four different classes of shares: Class A shares, Class B
shares, Class C shares and Advisor Class shares. Class A shares are sold with a
front-end sales charge. Class B shares and Class C shares are sold with a
contingent deferred sales charge. Advisor Class shares were sold without a sales
charge. Matters affecting each portfolio or class will be voted on exclusively
by the shareholders of such portfolio or class. The assets, liabilities and
operations of each portfolio are accounted for separately. Information presented
in these financial statements pertains only to the Fund. The Fund's investment
objective is growth of capital.
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 in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Trustees.
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. Dividend income is recorded on the ex-dividend date. On
December 31, 1999, undistributed net investment income was increased by
$323,568, undistributed net realized gains decreased by $573,568 and paid-in
capital increased by $250,000 as a result of differing book/tax treatment of
foreign currency transactions and other reclassifications. Net assets of the
Fund were unaffected by the reclassifications.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds of fund share redemptions as
distributions for federal income tax purposes.
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
FS-7
<PAGE> 98
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
G. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO Asset Management Limited is the Fund's sub-advisor and
sub-administrator. Effective August 27, 1999 the Fund pays AIM investment
management and administration fees at an annual rate of 0.975% on the first $500
million of the Fund's average daily net assets, plus 0.95% on the next $500
million of the Fund's average daily net assets, plus 0.925% on the next $500
million of the Fund's average daily net assets, plus 0.90% on the Fund's average
daily net assets exceeding $1.5 billion. 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 2.00%, 2.50%, 2.50% and
1.50% of the average daily net assets of the Fund's Class A, Class B, Class C
and Advisor Class shares, respectively, until June 30, 2000. During the year
ended December 31, 1999, AIM waived fees of $41,316 and reimbursed expenses of
$11,327.
Prior to the restructuring effective August 27, 1999, AIM was the Fund's
investment manager and administrator. AIM as investment manager and
administrator beared all expenses of the Fund (other than expenses reimbursed
pursuant to the Fund's 12b-1 plans of distribution and non-recurring and
extraordinary expenses of the Fund). The Fund as a shareholder in the Underlying
Theme Funds, indirectly beared its proportionate share of any investment
management and other expenses paid by the Underlying Theme Funds. AIM also had
undertaken to limit the Underlying Theme Funds' expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to a maximum annual
rate of 1.50% of the average daily net assets of the Underlying Theme Funds'
Advisor Class shares.
Effective July 1, 1999, the Trust entered into a master administrative
services agreement with AIM. 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. For the year ended
December 31, 1999, AIM was paid $17,100 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 $28,880 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the
1940 Act with respect to the Fund's Class A shares, Class B shares and Class C
shares (collectively, the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.50% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25%
of the average daily net assets of the Class A, 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 the appropriate
class of shares of the Fund. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges that may be paid
by the respective classes. For the year ended December 31, 1999, the Class A,
Class B and Class C shares paid AIM Distributors $83,176, $238,049 and $2,969,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $5,165 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $1,175 in contingent deferred sales 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 $141 under expense offset arrangements. The effect of the
above arrangements resulted in a reduction of the Fund's total expenses of $141
during the year ended December 31, 1999.
FS-8
<PAGE> 99
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-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$58,521,511 and $73,424,249, respectively.
The amount of unrealized appreciation of investment securities, for tax
purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $10,694,077
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (996,193)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 9,697,884
=========================================================
</TABLE>
Investments have the same cost for tax and financial
statement purposes.
NOTE 6-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:
Class A 200,188 $ 2,730,032 952,323 $10,681,667
- --------------------------------------------------------------------------------------------------------------
Class B 181,716 2,419,036 1,302,574 14,551,138
- --------------------------------------------------------------------------------------------------------------
Class C 14,063 186,601 35,723 397,022
- --------------------------------------------------------------------------------------------------------------
Advisor Class 17,792 225,871 29,946 324,974
- --------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 118,185 1,690,082 22,552 245,281
- --------------------------------------------------------------------------------------------------------------
Class B 160,713 2,277,307 26,664 289,152
- --------------------------------------------------------------------------------------------------------------
Class C 2,695 38,132 265 2,876
- --------------------------------------------------------------------------------------------------------------
Advisor Class 5,723 81,816 1,418 15,444
- --------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (568,367) (7,129,011) (843,563) (9,206,317)
- --------------------------------------------------------------------------------------------------------------
Class B (719,011) (8,934,845) (894,609) (9,623,737)
- --------------------------------------------------------------------------------------------------------------
Class C (6,636) (80,931) (14,123) (146,933)
- --------------------------------------------------------------------------------------------------------------
Advisor Class (32,673) (432,878) (76,261) (780,899)
- --------------------------------------------------------------------------------------------------------------
(625,612) $(6,928,788) 542,909 $ 6,749,668
==============================================================================================================
</TABLE>
FS-9
<PAGE> 100
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A, Class B and
Advisor Class shares outstanding during each of the years in the two-year period
ended December 31, 1999 and the period September 15, 1997 (date sales commenced)
through December 31, 1997, and for a share of Class C outstanding during each of
the years in the two-year period ended December 31, 1999.
<TABLE>
<CAPTION>
Class A
------------------------------
1999(a) 1998(a) 1997(a)
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.46 $ 10.63 $ 11.43
- ------------------------------------------------------------ ------- ------- -------
Income from investment operations:
Net investment income (loss) (0.06) (0.02) (0.01)
- ------------------------------------------------------------ ------- ------- -------
Net realized and unrealized gain (loss) on investments 5.86 1.01 (0.31)
- ------------------------------------------------------------ ------- ------- -------
Net increase (decrease) from investment operations 5.80 0.99 (0.32)
- ------------------------------------------------------------ ------- ------- -------
Distributions to shareholders:
From net investment income -- (0.02) --
- ------------------------------------------------------------ ------- ------- -------
From net realized gains (1.48) (0.14) --
- ------------------------------------------------------------ ------- ------- -------
In excess of net investment income -- -- (0.48)
- ------------------------------------------------------------ ------- ------- -------
Total distributions (1.48) (0.16) (0.48)
- ------------------------------------------------------------ ------- ------- -------
Net asset value, end of period $ 15.78 $ 11.46 $ 10.63
============================================================ ======= ======= =======
Total return(b) 51.93% 9.37% (2.68)%
============================================================ ======= ======= =======
Ratios and supplemental data:
Net assets, end of period (in 000s) $20,595 $17,822 $15,145
============================================================ ======= ======= =======
Ratio of expenses to average net assets:
With fee waivers 1.03%(c) 0.50% 0.50%(d)
- ------------------------------------------------------------ ------- ------- -------
Without fee waivers 1.16%(c) 0.50% 0.50%(d)
============================================================ ======= ======= =======
Ratio of net investment income (loss) to average net assets:
With fee waivers (0.50)%(c) (0.21)% (0.35)%(d)
- ------------------------------------------------------------ ------- ------- -------
Without fee waivers (0.63)%(c) (0.21)% (0.35)%(d)
============================================================ ======= ======= =======
Portfolio turnover rate 147% 28% 1%
============================================================ ======= = ====== =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average net assets of $16,635,251.
(d) Annualized.
<TABLE>
<CAPTION>
Class B Class C Advisor Class
----------------------------- ------------------- ---------------------------
1999(a) 1998(a) 1997(a) 1999(a) 1998(a) 1999(a) 1998(a) 1997(a)
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.41 $ 10.62 $ 11.43 $11.40 $10.62 $11.45 $10.64 $11.43
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) (0.13) (0.07) (0.02) (0.13) (0.08) -- 0.03 0.01
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------ ------
Net realized and unrealized gain (loss)
on investment 5.82 1.00 (0.32) 5.83 1.00 5.89 1.00 (0.31)
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------ ------
Net increase (decrease) from
investment operations 5.69 0.93 (0.34) 5.70 0.92 5.89 1.03 (0.30)
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------ ------
Distributions to shareholders:
From net investment income -- -- -- -- -- (0.04) (0.08) --
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------ ------
From net realized gains (1.48) (0.14) -- (1.48) (0.14) (1.48) (0.14) --
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------ ------
In excess of net investment income -- -- (0.47) -- -- -- -- (0.49)
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------ ------
Total distributions (1.48) (0.14) (0.47) (1.48) (0.14) (1.52) (0.22) (0.49)
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------ ------
Net asset value, end of period $ 15.62 $ 11.41 $ 10.62 $15.62 $11.40 $15.82 $11.45 $10.64
========================================== ======= ======= ======= ====== ====== ====== ====== ======
Total return(b) 51.18% 8.83% (2.83)% 51.33% 8.94% 52.81% 9.80% (2.51)%
========================================== ======= ======= ======= ====== ====== ====== ====== ======
Ratios and supplemental data:
Net assets, end of period (in 000s) $29,118 $25,555 $19,184 $500 $249 $989 $821 $1,241
========================================== ======= ======= ======= ====== ====== ====== ====== ======
Ratio of expenses to average net assets:
With fee waivers 1.53%(c) 1.00% 1.00%(d) 1.53%(c) 1.00%(d) 0.53%(c) 0.00% 0.00%(d)
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------ ------
Without fee waivers 1.66%(c) 1.00% 1.00%(d) 1.66%(c) 1.00%(d) 0.66%(c) 0.00% 0.00%(d)
========================================== ======= ======= ======= ====== ====== ====== ====== ======
Ratio of net investment income (loss)
to average net assets:
With fee waivers (1.00)%(c) (0.71)% (0.85)%(d) (1.00)%(c) (0.71)%(d) 0.00(c) 0.28% 0.15%(d)
- ------------------------------------------ ------- ------- ------- ------ ------ ------ ------ ------
Without fee waivers (1.13)%(c) (0.71)% (0.85)%(d) (1.13)%(c) (0.71)% (0.13)%(c) 0.28% 0.15%(d)
========================================== ======= ======= ======= ====== ====== ====== ====== ======
Portfolio turnover rate 147% 28% 1% 147% 28% 147% 28% 1%
========================================== ======= ======= ======= ====== ====== ====== ====== ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average net assets of $23,804,842, $296,927 and $884,810
for Class B, Class C and Advisor Class, respectively.
(d) Annualized.
NOTE 8-SUBSEQUENT EVENT
On November 3, 1999, the Board of Trustees approved the conversion of Advisor
Class Shares into Class A Shares. The effective date of this conversion was
February 11, 2000.
FS-10
<PAGE> 101
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM Series Trust was held on August 25,
1999. The meeting was held for the following purposes:
(1) To approve a new investment advisory agreement with respect to AIM Global
Trends Fund (the "Fund").
(2) To approve changes to the fundamental investment restrictions of the Fund.
(3) To elect a Trustee.
(4) To ratify the selection of PricewaterhouseCoopers LLP as the Trust's
independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
MATTER FOR AGAINST ABSTENTIONS
------ --------- ------- -----------
<S> <C> <C> <C> <C>
(1) Approval of new investment advisory agreement............... 1,371,737 50,002 61,855
(2)(a) Modification of Fundamental Restriction on Concentration.... 1,360,627 55,223 67,743
(2)(b) Modification of Fundamental Restriction on Portfolio 1,368,064 48,189 67,341
Diversification.............................................
(2)(c) Addition of Fundamental Policy on Investments in Investment 1,368,574 47,138 67,882
Companies...................................................
(2)(d) Modification of Fundamental Restriction on Issuing Senior 1,368,051 47,120 68,422
Securities and Borrowing Money..............................
(2)(e) Modification of Fundamental Restriction on Underwriting 1,370,708 45,367 67,518
Securities..................................................
(2)(f) Modification of Fundamental Restriction on Real Estate 1,365,865 48,684 69,044
Investments.................................................
(2)(g) Modification of Fundamental Restriction on Making Loans..... 1,361,342 50,601 71,650
(3) Election of a Trustee Robert H. Graham...................... 1,795,672 1,077 65,374
(4) Ratification of the selection of PricewaterhouseCoopers LLP 1,763,343 16,981 81,797
as the Trust's Independent Public Accounts..................
</TABLE>
FS-11
<PAGE> 102
PART C
OTHER INFORMATION
Item 23. Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C> <C>
a (1) - Agreement and Declaration of Trust of Registrant dated May 7, 1998, was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 4 on June 1, 1998, and is hereby incorporated by
reference.
(2) - First Amendment to Agreement and Declaration of Trust of Registrant was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 7 on February 12, 1999, and is hereby incorporated by
reference.
b (1) - By-Laws of Registrant dated May 7, 1998, were filed as an Exhibit to Registrant's
Post-Effective Amendment No. 4 on June 1, 1998, and is hereby incorporated by reference.
(2) - Amended and Restated By-Laws of Registrant dated December 10, 1998, were filed as an Exhibit to
Registrant's Post-Effective Amendment No. 8 on April 6, 1999, and are hereby incorporated by
reference.
c - Provisions of instruments defining the rights of holders of Registrant's securities are
contained in the Agreement and Declaration of Trust Articles II, VI, VII, VIII and IX. Such
provisions were included as part of Exhibit a(1) to Registrant's Post-Effective Amendment No. 4
filed on June 1, 1998, and are hereby incorporated by reference. Such provisions are also
found in Registrant's Amended and Restated By-Laws Articles IV, V, VI, VII and VIII, which were
filed as an Exhibit to Registrant's Post-Effective Amendment No. 8 on April 6, 1999, and are
hereby incorporated by reference.
d (1) - Master Investment Advisory Agreement dated August 27, 1999 between Registrant and A I M
Advisors, Inc. is herewith filed electronically.
(2) - Master Administrative Services Agreement dated August 27, 1999 between Registrant and A I M
Advisors, Inc. is filed herewith electronically.
(3) - Investment Management and Administration Contract, dated May 29, 1998, between Registrant and
A I M Advisors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on
August 26, 1998.
(4) - Sub-Advisory and Sub-Administration Contract, dated May 29, 1998, between A I M Advisors, Inc.
and INVESCO (NY), Inc. with respect to Registrant was filed as an Exhibit to Registrant"s
Post-Effective Amendment No. 6 on August 26, 1998.
(5) - (a) Foreign Country Selection and Mandatory Securities Depository Responsibilities Delegation
Agreement, dated September 9, 1998, was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 8 on April 6, 1999, and is hereby incorporated by reference.
- (b) Amendment No. 1, dated September 28, 1998, to Foreign Country Selection and Mandatory
Securities Depository Responsibilities Delegation Agreement, dated September 9, 1998, was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 8 on April 6, 1999, and is hereby
incorporated by reference.
</TABLE>
C-1
<PAGE> 103
<TABLE>
<S> <C> <C>
- (c) Amendment No. 2, dated December 14, 1998, to Foreign Country Selection and Mandatory
Securities Depository Responsibilities Delegation Agreement, dated September 9, 1998, was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 8 on April 6, 1999, and is hereby
incorporated by reference.
- (d) Amendment No. 3, dated December 22, 1998, to Foreign Country Selection and Mandatory
Securities Depository Responsibilities Delegation Agreement, dated September 9, 1998, was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 8 on April 6, 1999 and is hereby
incorporated by reference.
- (e) Amendment No. 4, dated January 26, 1999, to Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement, dated September 9, 1998, was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 8 on April 6, 1999, and is hereby incorporated by
reference.
- (f) Amendment No. 5, dated March 1, 1999, to Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement, dated September 9, 1998, was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 8 on April 6, 1999, and is hereby incorporated by
reference.
- (g) Amendment No. 6, dated March 18, 1999, to Foreign Country Selection and Mandatory
Securities Depository Responsibilities Delegation Agreement, dated September 9, 1998, between
Registrant and A I M Advisors, Inc. is filed herewith electronically.
- (h) Amendment No. 7, dated November 19, 1999, to Foreign Country Selection and Mandatory
Securities Depository Responsibilities Delegation Agreement, dated September 9, 1998, between
Registrant and A I M Advisors, Inc. is filed herewith electronically
e (1) - (a) Distribution Agreement, dated May 29, 1998, between Registrant and A I M Distributors, Inc.
with respect to Class A and Class C shares was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 6 on August 26, 1998, and is hereby incorporated by reference.
- (b) Amendment No. 1, dated May 29, 1999, to the Distribution Agreement with respect to Class A
and Class C shares, dated May 29, 1998 between Registrant and A I M Distributors, Inc. is filed
herewith electronically.
(2) - (a) Distribution Agreement, dated May 29, 1998, between Registrant and A I M Distributors, Inc.
with respect to Class B shares was filed as an Exhibit to Registrant's Post-Effective Amendment
No. 6 on August 26, 1998, and is hereby incorporated by reference.
- (b) Amendment No. 1, dated May 29, 1999, to the Distribution Agreement with respect to Class B
shares, dated May 29, 1998 between Registrant and A I M Distributors, Inc. is filed herewith
electronically.
(3) - (a) Distribution Agreement, dated May 29, 1998, between Registrant and A I M Distributors, Inc.
with respect to Advisor Class shares was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 6 on August 26, 1998, and is hereby incorporated by reference.
- (b) Amendment No. 1, dated May 29, 1999, to the Distribution Agreement with respect to Advisor
Class shares, dated May 29, 1998 between Registrant and A I M Distributors, Inc. is filed
herewith electronically.
(4) - Form of Selected Dealer Agreement between A I M Distributors, Inc. and selected dealers was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 7 on February 12, 1999, and is
hereby incorporated by reference.
</TABLE>
C-2
<PAGE> 104
<TABLE>
<S> <C> <C>
(5) - Form of Bank Selling Group Agreement between A I M Distributors, Inc. and banks was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 7 on February 12, 1999, and is hereby
incorporated by reference.
f - Agreements Concerning Officers and Director/Trustee Benefits - None.
g (1) - Custodian Agreement, dated June 1, 1998, between Registrant and State Street Bank and Trust
Company was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on August 26,
1998, and is hereby incorporated by reference.
(2) - Amendment to Custodian Contract, dated January 26, 1999, was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 7 on February 12, 1999, and is hereby incorporated by
reference.
h (1) - (a) Transfer Agency and Service Agreement dated September 8, 1998 between Registrant and A I M
Fund Services, Inc., was filed as an Exhibit to Registrant's Post-Effective Amendment No. 7 on
February 12, 1999, and is hereby incorporated by reference.
- (b) Amendment No. 1 dated July 1, 1999 to the Transfer Agency and Service Agreement between
Registrant and A I M Fund Services, Inc. dated September 8, 1998 is filed herewith
electronically.
- (c) Amendment No. 2 dated July 1, 1999 to the Transfer Agency and Service Agreement between
Registrant and A I M Fund Services, Inc. dated September 8, 1998 is filed herewith
electronically.
- (d) Amendment No. 3 dated February 11, 2000 to the Transfer Agency and Service Agreement
between Registrant and A I M Fund Services, Inc. dated September 8, 1998 is filed herewith
electronically.
(2) - (a) Remote Access and Related Services Agreement, dated as of December 23, 1994, was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 6 on August 26, 1998, and is hereby
incorporated by reference.
- (b) Amendment No. 1, dated October 4, 1995, to Remote Access and Related Services Agreement, dated
as of December 23, 1994, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on
August 26, 1998, and is hereby incorporated by reference.
- (c) Addendum No. 2, dated October 12, 1995, to Remote Access and Related Services Agreement, dated
as of December 23, 1994, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on
August 26, 1998, and is hereby incorporated by reference.
- (d) Amendment No. 3, dated February 1, 1997, to Remote Access and Related Services Agreement,
dated December 23, 1994, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on
August 26, 1998, and is hereby incorporated by reference.
- (e) Exhibit 1, effective as of August 4, 1997, to Remote Access and Related Services Agreement,
dated December 23, 1994, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on
August 26, 1998, and is hereby incorporated by reference.
- (f) Preferred Registration Technology Escrow Agreement, dated September 10, 1997, was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 6 on August 26, 1998, and is hereby
incorporated by reference.
</TABLE>
C-3
<PAGE> 105
<TABLE>
<S> <C> <C>
- (g) Amendment No. 4, dated June 30, 1998, to Remote Access and Related Services Agreement, dated
December 23, 1994, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 7 on
February 12, 1999, and is hereby incorporated by reference.
- (h) Amendment No. 5, dated July 1, 1998, to Remote Access and Related Services Agreement, dated
December 23, 1994, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 7 on
February 12, 1999, and is hereby incorporated by reference.
- (i) Amendment No. 6, dated August 30, 1999, to Remote Access and Related Services Agreement,
dated December 23, 1994, is filed herewith electronically.
(3) - Fund Accounting and Pricing Agent Agreement between Registrant and INVESCO (NY), Inc., dated
May 29, 1998, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 7 on
February 12, 1999.
(4) - Fund Accounting and Pricing Agent Agreement between Registrant and A I M Advisors, Inc., dated
June 1, 1998, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 8 on April
6, 1999, and is hereby incorporated by reference.
i (1) - Opinion and Consent of Kirkpatrick & Lockhart LLP is filed herewith electronically.
(2) - Opinion and Consent of Delaware Counsel is filed herewith electronically.
j - Consent of PricewaterhouseCoopers LLP is filed herewith electronically.
k - Omitted Financial Statements - None.
l - Letter of Investment Intent was filed as an Exhibit to Registrant's Pre-Effective Amendment No.
1 on August 22, 1997, and is hereby incorporated by reference.
m (1) - Distribution Plan adopted pursuant to Rule 12b-1 with respect to Class A and C shares was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 7 on February 12, 1999, and is
hereby incorporated by reference.
(2) - Distribution Plan adopted pursuant to Rule 12b-1 with respect to Class B shares was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 7 on February 12, 1999, and is hereby
incorporated by reference.
(3) - (a) Form of Shareholder Service Agreement to be used in connection with Registrant's Master
Distribution Plan was filed as an Exhibit to Registrant's Post-Effective Amendment No. 8 on April
6, 1999, and is hereby incorporated by reference.
- (b) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's Master
Distribution Plan was filed as an Exhibit to Registrant's Post-Effective Amendment No. 8 on April
6, 1999, and is hereby incorporated by reference.
- (c) Form of Service Agreement for Bank Trust Department and for Broker to be used in connection
with Registrant's Master Distribution Plan was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 8 on April 6, 1999, and is hereby incorporated by reference.
- (d) Form of Agency Pricing Agreement to be used in connection with Registrant's Master
Distribution Plan was filed as an Exhibit to Registrant's Post-Effective Amendment No. 8 on April
6, 1999, and is hereby incorporated by reference.
n - Rule 18f-3 Multiple Class Plan was filed as an Exhibit to Post-Effective Amendment No. 6 on
August 26, 1998, and is hereby incorporated by reference.
</TABLE>
C-4
<PAGE> 106
<TABLE>
<S> <C>
o - Reserved
p The Code of Ethics of Registrant, dated March 14, 2000, is
filed herewith electronically.
</TABLE>
Item 24. Persons Controlled by or Under Common Control with Registrant
Provide a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrant. For any person
controlled by another person, disclose the percentage of voting securities owned
by the immediately controlling person or other basis of that person's control.
For each company, also provide the state or other sovereign power under the laws
of which the company is organized.
None.
Item 25. Indemnification
State the general effect of any contract, arrangements or statute under
which any director, officer, underwriter or affiliated person of the Registrant
is insured or indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any director,
officer, affiliated person or underwriter for their own protection.
Article VIII of the Registrant's Agreement and Declaration of Trust, as
amended, provides for indemnification of certain persons acting on
behalf of the Registrant. Article VIII, Section 8.1 provides that a
Trustee, when acting in such capacity, shall not be personally liable
to any person for any act, omission, or obligation of the Registrant or
any Trustee; provided, however, that nothing contained in the
Registrant's Agreement and Declaration of Trust or in the Delaware
Business Trust Act shall protect any Trustee against any liability to
the Registrant or the Shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of the
office of Trustee.
Article VII, Section 3 of the Registrant's Amended and Restated By-Laws
also provides that every person who is, or has been, a Trustee or
Officer of the Registrant to the fullest extent permitted by the
Delaware Business Trust Act, the Registrant's Amended and Restated
By-Laws and other applicable law.
A I M Advisors, Inc. ("AIM"), the Registrant and other investment
companies managed by AIM their respective officers, trustees, directors
and employees (the "Insured Parties") are insured under a joint Mutual
Fund and Investment Advisory Professional and Directors and Officers
Liability Policy, issued by ICI Mutual Insurance Company, with a
$35,000,000 limit of coverage.
Section 13 of the Master Investment Advisory Agreement between the
Registrant and AIM provides that AIM shall not be subject to liability
to the Registrant or to the Fund or to any Shareholder of the Fund for
any act or omission in the course of, or connected with, rendering
services pursuant to the Master Investment Advisory Agreement. The
Master Investment Advisory Agreement also provides that AIM shall not
be subject to liability for any losses that may be sustained in the
purchase, holding or sale of any security, except losses resulting from
willful misfeasance, bad faith, gross negligence or reckless disregard
on the part of AIM or any of its officers, director or employees.
C-5
<PAGE> 107
Item 26. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or employment of a
substantial nature in which each investment advisor of the Registrant, and each
director, officer or partner of any such investment advisor, is or has been, at
any time during the past two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner, or trustee.
The only employment of a substantial nature of the Advisor's directors
and officers is with the Advisor and its affiliated companies.
Reference is also made to the caption "Fund Management - The Manager"
of the Prospectus which comprises Part A of the Registration Statement,
and to the caption "Management" of the Statement of Additional
Information which comprises Part B of the Registration Statement, and
to Item 27(b) of this Part C.
Item 27. Principal Underwriters
(a) A I M Distributors, Inc., the Registrant's principal
underwriter, also acts as a principal underwriter to
the following investment companies:
AIM Advisor Funds, Inc.
AIM Equity Funds, Inc. (Retail Classes)
AIM Funds Group
AIM Growth Series
AIM International Funds, Inc.
AIM Investment Funds
AIM Investment Securities Funds (Retail Class)
AIM Special Opportunities Funds
AIM Summit Fund, Inc.
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds
AIM Floating Rate Fund
(b)
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ----------------- -------------------------- ---------------------
<S> <C> <C>
Charles T. Bauer Director and Chairman None
Michael J. Cemo President & Director None
Gary T. Crum Director Vice President
Robert H. Graham Senior Vice President & Director Chairman; President
W. Gary Littlepage Senior Vice President & Director None
James L. Salners Executive Vice President None
John Caldwell Senior Vice President None
Marilyn M. Miller Senior Vice President None
Gene L. Needles Senior Vice President None
</TABLE>
- ---------------
*11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-6
<PAGE> 108
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ----------------- -------------------------- --------------------
<S> <C> <C>
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
B.J. Thompson First Vice President None
James R. Anderson Vice President None
Mary K. Coleman Vice President None
Mary A. Corcoran Vice President None
Melville B. Cox Vice President & Chief Vice President
Compliance Officer
Sidney M. Dilgren Vice President None
Glenda A. Dayton Vice President None
Tony D. Green Vice President None
Dawn M. Hawley Vice President & Treasurer None
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
& Assistant Secretary
Charles H. McLaughlin Vice President None
Ivy B. McLemore Vice President None
Terri L. Ransdell Vice President None
Carol F. Relihan Vice President Vice President
Kamala C. Sachidanandan Vice President None
Christopher T. Simutis Vice President None
Gary K. Wendler Vice President None
Norman W. Woodson Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer
& Controller
Kathleen J. Pflueger Secretary Assistant Secretary
Luke P. Beausoleil Assistant Vice President None
Sheila R. Brown Assistant Vice President None
</TABLE>
- ---------------
*11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-7
<PAGE> 109
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ----------------- -------------------------- --------------------
<S> <C> <C>
Scott E. Burman Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
Simon R. Hoyle Assistant Vice President None
Kathryn A. Jordan Assistant Vice President None
Rebecca Starling-Klatt Assistant Vice President None
Kim T. McAuliffe Assistant Vice President None
David B. O'Neil Assistant Vice President None
Nicholas D. White Assistant Vice President None
Nancy L. Martin Assistant General Counsel Assistant Secretary
& Assistant Secretary
Samuel D. Sirko Assistant General Counsel Vice President & Secretary
& Assistant Secretary
P. Michelle Grace Assistant Secretary None
Lisa A. Moss Assistant Secretary None
Stephen I. Winer Assistant Secretary None
</TABLE>
- ---------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
(c) - Not Applicable
Item 28. Location of Accounts and Records
With respect to each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to
31a-3) promulgated thereunder, furnish the name and address of each person
maintaining physical possession of each such account, book or other document.
Accounts, books and other records required by Rules 31a-1 and 31a-2
under the Investment Company Act of 1940, as amended, are maintained
and held in the offices of the Registrant and its advisor, A I M
Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046, and
its custodian, State Street Bank and Trust Company, 225 Franklin
Street, Boston, MA 02110.
C-8
<PAGE> 110
Records covering shareholder accounts and portfolio transactions are
also maintained and kept by the Registrant's Transfer Agent, A I M Fund
Services, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046, and
by the Registrant's custodian, State Street Bank and Trust Company, 225
Franklin Street, Boston, MA 02110.
Item 29. Management Services
Provide a summary of the substantive provisions of any management-
related service contract not discussed in Part A or Part B disclosing parties to
the contract, the total dollars paid and by whom, for the last three fiscal
years.
None.
Item 30. Undertakings
None.
C-9
<PAGE> 111
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Houston, Texas on the 28th day of
April, 2000.
REGISTRANT: AIM SERIES TRUST
By: /s/ ROBERT H. GRAHAM
----------------------------------
Robert H. Graham, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ ROBERT H. GRAHAM Chairman, Trustee & President April 28, 2000
----------------------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ C. DEREK ANDERSON Trustee April 28, 2000
------------------------------------------
(C. Derek Anderson)
/s/ FRANK S. BAYLEY Trustee April 28, 2000
------------------------------------------
(Frank S. Bayley)
/s/ RUTH H. QUIGLEY Trustee April 28, 2000
------------------------------------------
(Ruth H. Quigley)
/s/ DANA R. SUTTON Vice President & Treasurer April 28, 2000
------------------------------------------ (Principal Financial and
(Dana R. Sutton) Accounting Officer)
</TABLE>
<PAGE> 112
INDEX TO EXHIBITS
AIM SERIES TRUST
<TABLE>
<CAPTION>
Exhibit Number
- --------------
<S> <C>
d(1) Master Investment Advisory Agreement dated August 27, 1999 between Registrant and A I M
Advisors, Inc.
d(2) Master Administrative Services Agreement dated August 27, 1999 between Registrant and A I M
Advisors, Inc.
d(5)(g) Amendment No. 6, dated March 18, 1999, to Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement between Registrant and A I M Advisors, Inc.
d(5)(h) Amendment No. 7, dated November 19, 1999, to Foreign Country Selection and Mandatory
Securities Depository Responsibilities Delegation Agreement between Registrant and A I M
Advisors, Inc.
e(1)(b) Amendment No. 1, dated May 29, 1998, to the Distribution Agreement with respect to Class A and
Class C shares between Registrant and A I M Distributors, Inc.
e(2)(b) Amendment No. 1, dated May 29, 1998, to the Distribution Agreement with respect to Class B
shares between Registrant and A I M Distributors, Inc.
e(3)(b) Amendment No. 1, dated May 29, 1998, to the Distribution Agreement with respect to Advisor
Class shares between Registrant and A I M Distributors, Inc.
h(1)(b) Amendment No. 1 dated July 1, 1999 to the Transfer Agency and Service Agreement between
Registrant and A I M Fund Services, Inc.
h(1)(c) Amendment No. 2 dated July 1, 1999 to the Transfer Agency and Service Agreement between
Registrant and A I M Fund Services, Inc.
h(1)(d) Amendment No. 3 dated February 11, 2000 to the Transfer Agency and Service Agreement between
Registrant and A I M Fund Services, Inc.
h(2)(i) Amendment No. 6, dated August 30, 1999 to Remote Access and Related Services Agreement.
i(1) Opinion and Consent of Kirkpatrick & Lockhart LLP.
i(2) Opinion and Consent of Delaware Counsel.
j Consent of PricewaterhouseCoopers LLP.
p(1) Code of Ethics of Registrant
p(2) The AIM Management Group Code of Ethics, as amended February 24, 2000, relating to AIM Management
Group Inc. and AIM Advisors, Inc.
</TABLE>
C-10
<PAGE> 1
EXHIBIT d(1)
AIM SERIES TRUST
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 27th day of August, 1999, by and between
AIM Series Trust, a Delaware business trust (the "Company") with respect to its
series of shares shown on Appendix A attached hereto, as the same may be amended
from time to time, and A I M Advisors, Inc., a Delaware corporation (the
"Advisor").
RECITALS
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company;
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment advisor and engages in
the business of acting as an investment advisor;
WHEREAS, the Company's Agreement and Declaration of Trust authorizes the
Board of Trustees of the Company to classify shares of the Company, and as of
the date of this Agreement, the Company's Board of Trustees has authorized the
issuance of one series of shares representing interests in one investment
portfolio (such portfolio and any other portfolios hereafter added to the
Company being referred to collectively herein as the "Funds"); and
WHEREAS, the Company and the Advisor desire to enter into an agreement
to provide for investment advisory services to the Funds upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. Advisory Services. The Advisor shall act as investment advisor for
the Funds and shall, in such capacity, supervise all aspects of the Funds'
operations, including the investment and reinvestment of cash, securities or
other properties comprising the Funds' assets, subject at all times to the
policies and control of the Company's Board of Trustees. The Advisor shall give
the Company and the Funds the benefit of its best judgment, efforts and
facilities in rendering its services as investment advisor.
2. Investment Analysis and Implementation. In carrying out its
obligations under Section 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Funds;
(b) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
Funds, and whether concerning the individual issuers whose securities
are included in the assets of the Funds or the activities in which such
issuers
<PAGE> 2
engage, or with respect to securities which the Advisor considers
desirable for inclusion in the Funds' assets;
(c) determine which issuers and securities shall be represented
in the Funds' investment portfolios and regularly report thereon to the
Company's Board of Trustees; and
(d) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers and regularly
report thereon to the Company's Board of Trustees;
and take, on behalf of the Company and the Funds, all actions which appear to
the Company and the Funds necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid, including but not limited to
the placing of orders for the purchase and sale of securities for the Funds.
3. Delegation of Responsibilities. Subject to the approval of the Board
of Trustees and, if required by law, the shareholders of the Funds, the Advisor
may delegate to a sub-advisor certain of its duties enumerated in Section 2
hereof, provided that the Advisor shall continue to supervise the performance of
any such sub-advisor.
4. Control by Board of Trustees. Any investment program undertaken by
the Advisor pursuant to this Agreement, as well as any other activities
undertaken by the Advisor on behalf of the Funds, shall at all times be subject
to any directives of the Board of Trustees of the Company.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the Advisers
Act and any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Company,
as the same may be amended from time to time under the Securities Act of
1933 and the 1940 Act;
(c) the provisions of the Agreement and Declaration of Trust of
the Company, as the same may be amended from time to time;
(d) the provisions of the by-laws of the Company, as the same
may be amended from time to time; and
(e) any other applicable provisions of state, federal or foreign
law.
6. Broker-Dealer Relationships. The Advisor is responsible for decisions
to buy and sell securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The Advisor's primary consideration
in effecting a security transaction will be to obtain execution at the most
favorable price. In selecting a broker-dealer to execute each particular
transaction, the Advisor will take the following into consideration: the best
net price available; the reliability, integrity and financial condition of the
broker-dealer; the size of and the difficulty in executing the order; and the
value of the expected contribution of the broker-dealer to the investment
performance of the Funds on a continuing basis. Accordingly, the price to the
Funds in any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by
2
<PAGE> 3
other aspects of the fund execution services offered. Subject to such policies
as the Board of Trustees may from time to time determine, the Advisor shall not
be deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused the Funds to pay a
broker or dealer that provides brokerage and research services to the Advisor an
amount of commission for effecting a fund investment transaction in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Advisor determines in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Advisor's overall responsibilities
with respect to a particular Fund, other Funds of the Company, and to other
clients of the Advisor as to which the Advisor exercises investment discretion.
The Advisor is further authorized to allocate the orders placed by it on behalf
of the Funds to such brokers and dealers who also provide research or
statistical material, or other services to the Funds, to the Advisor, or to any
sub-advisor. Such allocation shall be in such amounts and proportions as the
Advisor shall determine and the Advisor will report on said allocations
regularly to the Board of Trustees of the Company indicating the brokers to whom
such allocations have been made and the basis therefor. In making decisions
regarding broker-dealer relationships, the Advisor may take into consideration
the recommendations of any sub-advisor appointed to provide investment research
or advisory services in connection with the Funds, and may take into
consideration any research services provided to such sub-advisor by
broker-dealers.
7. Compensation. The Company shall pay the Advisor as compensation for
services rendered hereunder an annual fee, payable monthly, based upon the
average daily net assets of the Funds as the same is set forth in Appendix A
attached hereto. The average daily net asset value of the Funds shall be
determined in the manner set forth in the Agreement and Declaration of Trust and
registration statement of the Company, as amended from time to time.
8. Additional Services. Upon the request of the Company's Board of
Trustees, the Advisor may perform certain accounting, shareholder servicing or
other administrative services on behalf of the Funds which are not required by
this Agreement. Such services will be performed on behalf of the Funds and the
Advisor may receive from the Funds such reimbursement for costs or reasonable
compensation for such services as may be agreed upon between the Advisor and the
Company's Board of Trustees based on a finding by the Board of Trustees that the
provision of such services by the Advisor is in the best interests of the
Company and its shareholders. Payment or assumption by the Advisor of any fund
expense that the Advisor is not otherwise required to pay or assume under this
Agreement shall not relieve the Advisor of any of its obligations to the Funds
nor obligate the Advisor to pay or assume any similar fund expense on any
subsequent occasions. Such services may include, but are not limited to:
(a) the services of a principal financial officer of the Company
(including applicable office space, facilities and equipment) whose
normal duties consist of maintaining the financial accounts and books
and records of the Company and the Funds, including the review and
calculation of daily net asset value and the preparation of tax returns;
and the services (including applicable office space, facilities and
equipment) of any of the personnel operating under the direction of such
principal financial officer;
(b) the services of staff to respond to shareholder inquiries
concerning the status of their accounts; providing assistance to
shareholders in exchanges among the mutual funds managed or advised by
the Advisor; changing account designations or changing addresses;
3
<PAGE> 4
assisting in the purchase or redemption of shares; supervising the
operations of the custodian, transfer agent(s) or dividend disbursing
agent(s) for the Funds; or otherwise providing services to shareholders
of the Funds; and
(c) such other administrative services as may be furnished from
time to time by the Advisor to the Company or the Funds at the request
of the Company's Board of Trustees.
9. Expenses of the Funds. All of the ordinary business expenses incurred
in the operations of the Funds and the offering of their shares shall be borne
by the Funds unless specifically provided otherwise in this Agreement. These
expenses borne by the Funds include but are not limited to brokerage
commissions, taxes, legal, accounting, auditing, or governmental fees, the cost
of preparing share certificates, custodian, transfer and shareholder service
agent costs, expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale, expenses relating to
directors and shareholder meetings, the cost of preparing and distributing
reports and notices to shareholders, the fees and other expenses incurred by the
Company on behalf of the Funds in connection with membership in investment
company organizations and the cost of printing copies of prospectuses and
statements of additional information distributed to the Funds' shareholders.
10. Non-Exclusivity. The services of the Advisor to the Company and the
Funds are not to be deemed to be exclusive, and the Advisor shall be free to
render investment advisory and administrative or other services to others
(including other investment companies) and to engage in other activities. It is
understood and agreed that officers or directors of the Advisor may serve as
officers or directors of the Company, and that officers or directors of the
Company may serve as officers or directors of the Advisor to the extent
permitted by law; and that the officers and directors of the Advisor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
11. Term and Approval. This Agreement shall become effective with
respect to a Fund if approved by the shareholders of such Fund, and if so
approved, this Agreement shall thereafter continue in force for an initial
period of two years and may be continued from year to year thereafter, provided
that the continuation of the Agreement is specifically approved at least
annually:
(a) (i) by the Company's Board of Trustees or (ii) by the vote
of "a majority of the outstanding voting securities" of such Fund (as
defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the trustees who
are not parties to this Agreement or "interested persons" (as defined in
the 1940 Act) of a party to this Agreement (other than as Company
trustees), by votes cast in person at a meeting specifically called for
such purpose.
12. Termination. This Agreement may be terminated as to the Company or
as to any one or more of the Funds at any time, without the payment of any
penalty, by vote of the Company's Board of Trustees or by vote of a majority of
the outstanding voting securities of the applicable Fund, or by the Advisor, on
sixty (60) days' written notice to the other party. The notice provided for
herein may be waived by the party entitled to receipt thereof. This Agreement
shall automatically
4
<PAGE> 5
terminate in the event of its assignment, the term "assignment" for purposes of
this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act.
13. Liability of Advisor and Indemnification. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Advisor or any of its officers, directors or
employees, the Advisor shall not be subject to liability to the Company or to
the Funds or to any shareholder of the Funds for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
14. Liability of Shareholders. Notice is hereby given that, as provided
by applicable law, the obligations of or arising out of this Agreement are not
binding upon any of the shareholders of the Company individually but are binding
only upon the assets and property of the Company and that the shareholders shall
be entitled, to the fullest extent permitted by applicable law, to the same
limitation on personal liability as stockholders of private corporations for
profit.
15. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the other party
entitled to receipt thereof at such address as such party may designate for the
receipt of such notice. Until further notice to the other party, it is agreed
that the address of the Company shall be and that of the Advisor shall be Eleven
Greenway Plaza, Suite 100, Houston, Texas 77046.
16. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act or the Advisers Act shall be resolved
by reference to such term or provision of the 1940 Act or the Advisers Act and
to interpretations thereof, if any, by the United States Courts or in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission issued pursuant to said Acts.
In addition, where the effect of a requirement of the 1940 Act or the Advisers
Act reflected in any provision of the Agreement is revised by rule, regulation
or order of the Securities and Exchange Commission, such provision shall be
deemed to incorporate the effect of such rule, regulation or order. Subject to
the foregoing, this Agreement shall be governed by and construed in accordance
with the laws (without reference to conflicts of law provisions) of the State of
Delaware.
17. License Agreement. The Company shall have the non-exclusive right to
use the name "AIM" to designate any current or future series of shares only so
long as A I M Advisors, Inc. serves as investment manager or advisor to the
Company with respect to such series of shares.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
AIM SERIES TRUST
(a Delaware business trust)
Attest:
/s/ KATHLEEN J. PFLUEGER By: /s/ ROBERT H. GRAHAM
- ------------------------------- -------------------------------
Assistant Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest:
/s/ KATHLEEN J. PFLUEGER By: /s/ ROBERT H. GRAHAM
- ------------------------------- -------------------------------
Assistant Secretary President
(SEAL)
6
<PAGE> 7
APPENDIX A
TO
MASTER INVESTMENT ADVISORY AGREEMENT
OF
AIM SERIES TRUST
The Company shall pay the Advisor, out of the assets of a Fund, as full
compensation for all services rendered and all facilities furnished hereunder, a
management fee for such Fund set forth below. Such fees shall be calculated by
applying the following annual rates to the average daily net assets of such Fund
for the calendar year computed in the manner used for the determination of the
net asset value of shares of such Fund.
AIM GLOBAL TRENDS FUND
<TABLE>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $500 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.975%
Next $500 million. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.95%
Next $500 million. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.925%
On amounts thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.90%
</TABLE>
7
<PAGE> 1
EXHIBIT d(2)
MASTER ADMINISTRATIVE SERVICES AGREEMENT
This MASTER ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is made
this 27th day of August, 1999 by and between A I M ADVISORS, INC., a Delaware
corporation (the "Administrator") and AIM SERIES TRUST, a Delaware business
trust (the "Company") with respect to the series set forth in Appendix A to this
Agreement, as the same may be amended from time to time (the "Portfolios").
W I T N E S S E T H:
WHEREAS, the Company is an open-end investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Company, on behalf of the Portfolios, has retained the
Administrator to provide investment advisory services pursuant to a Master
Investment Advisory Agreement which provides that the Administrator may perform
(or arrange for the performance of) accounting, shareholder servicing and other
administrative services as well as investment advisory services to the
Portfolios, and that the Administrator may receive reasonable compensation or
may be reimbursed for its costs in providing such additional services, upon the
request of the Board of Trustees and upon a finding by the Board of Trustees
that the provision of such services is in the best interest of the Portfolios
and their shareholders; and
WHEREAS, the Board of Trustees has found that the provision of such
administrative services is in the best interest of the Portfolios and their
shareholders, and has requested that the Administrator perform such services;
NOW, THEREFORE, the parties hereby agree as follows:
1. The Administrator hereby agrees to provide, or arrange for the
provision of, any or all of the following services by the Administrator or its
affiliates:
(a) the services of a principal financial officer of the Company
(including related office space, facilities and equipment) whose normal
duties consist of maintaining the financial accounts and books and
records of the Company and the Portfolios, including the review of daily
net asset value calculations and the preparation of tax returns; and the
services (including related office space, facilities and equipment) of
any of the personnel operating under the direction of such principal
financial officer;
(b) the services of staff to respond to shareholder inquiries concerning
the status of their accounts; providing assistance to shareholders in
exchanges among the mutual funds managed or advised by the
Administrator; changing account designations or changing addresses;
assisting in the purchase or redemption of shares of the Portfolios;
supervising the operations of the custodian(s), transfer agent(s) or
dividend agent(s) for the Portfolios; or otherwise providing services to
shareholders of the Portfolios; and
<PAGE> 2
(c) such other administrative services as may be furnished from time to
time by the Administrator to the Company or the Portfolios at the
request of the Company's Board of Trustees.
2. The services provided hereunder shall at all times be subject to the
direction and supervision of the Company's Board of Trustees.
3. As full compensation for the services performed and the facilities
furnished by or at the direction of the Administrator, the Portfolios shall
reimburse the Administrator for expenses incurred by them or their affiliates in
accordance with the methodologies established from time to time by the Company's
Board of Trustees. Such amounts shall be paid to the Administrator on a
quarterly basis.
4. The Administrator shall not be liable for any error of judgment or
for any loss suffered by the Company or the Portfolios in connection with any
matter to which this Agreement relates, except a loss resulting from the
Administrator's willful misfeasance, bad faith or gross negligence in the
performance of its duties or from reckless disregard of its obligations and
duties under this Agreement.
5. The Company and the Administrator each hereby represent and warrant,
but only as to themselves, that each has all requisite authority to enter into,
execute, deliver and perform its obligations under this Agreement and that this
Agreement is legal, valid and binding, and enforceable in accordance with its
terms.
6. Nothing in this Agreement shall limit or restrict the rights of any
director, officer or employee of the Administrator who may also be a trustee,
officer or employee of the Company to engage in any other business or to devote
his time and attention in part to the management or other aspects of any
business, whether of a similar or a dissimilar nature, nor limit or restrict the
right of the Administrator to engage in any other business or to render services
of any kind to any other corporation, firm, individual or association.
7. This Agreement shall continue in effect with respect to a Fund for an
initial period of two years and may be continued from year to year thereafter,
provided that the continuation of the Agreement is specifically approved at
least annually:
(a) (i) by the Company's Board of Trustees or (ii) by the vote
of "a majority of the outstanding voting securities" of such Fund (as
defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the trustees who
are not parties to this Agreement or "interested persons" (as defined in
the 1940 Act) of a party to this Agreement (other than as Company
trustees), by votes cast in person at a meeting specifically called for
such purpose.
This Agreement shall terminate automatically in the event of its
assignment (as defined in Section 2(a) (4) of the 1940 Act) or, with respect to
one or more Portfolios in the event of termination of the Master Investment
Advisory Agreement relating to such Portfolio(s) between the Company and the
Administrator.
2
<PAGE> 3
8. This Agreement may be amended or modified with respect to one or more
Portfolios, but only by a written instrument signed by both the Company and the
Administrator.
9. Notice is hereby given that, as provided by applicable law, the
obligations of or arising out of this Agreement are not binding upon any of the
shareholders of the Company individually but are binding only upon the assets
and property of the Company and that the shareholders shall be entitled, to the
fullest extent permitted by applicable law, to the same limitation on personal
liability as stockholders of private corporations for profit.
10. Any notice or other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (a) to the Administrator at Eleven Greenway Plaza, Suite
100, Houston, Texas 77046, Attention: President, with a copy to the General
Counsel, or (b) to the Company at Eleven Greenway Plaza, Suite 100, Houston,
Texas 77046, Attention: President, with a copy to the General Counsel.
11. This Agreement contains the entire agreement between the parties
hereto and supersedes all prior agreements, understandings and arrangements with
respect to the subject matter hereof.
12. This Agreement shall be governed by and construed in accordance with
the laws (without reference to conflicts of law provisions) of the State of
Delaware.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
A I M ADVISORS, INC.
Attest: /s/ KATHLEEN J. PFLUEGER By: /s/ ROBERT H. GRAHAM
-------------------------- --------------------------
Assistant Secretary President
(SEAL)
AIM SERIES TRUST
Attest: /s/ KATHLEEN J. PFLUEGER By: /s/ ROBERT H. GRAHAM
-------------------------- ---------------------------
Assistant Secretary President
(SEAL)
4
<PAGE> 5
APPENDIX A
TO
MASTER ADMINISTRATIVE SERVICES AGREEMENT
OF
AIM SERIES TRUST
AIM Global Trends Fund
Dated: August 27th, 1999
5
<PAGE> 1
EXHIBIT d(5)(g)
AMENDMENT NO. 6
TO
FOREIGN COUNTRY SELECTION
AND MANDATORY SECURITIES DEPOSITORY RESPONSIBILITIES
DELEGATION AGREEMENT
This Amendment No. 6, dated as of March 18, 1999, amends the Foreign
Country Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, between A I M Advisors, Inc., a
Delaware corporation and each registered Investment company (the "Investment
Companies") and its respective portfolios (the "Funds") listed on the signature
page thereof (as amended and supplemented, the "Agreement").
NOW, THEREFORE, the parties agree as follows;
The list of Investment Companies and Funds covered by the Agreement is
hereby amended to include the following portfolios of AIM Equity Funds,
Inc.:
AIM Dent Demographic Trends Fund
AIM Growth and Income Fund
The list of Investment Companies and Funds covered by the Agreement is
hereby amended to delete the following portfolio of AIM Investment
Funds:
AIM Emerging Markets Fund
The list of Investment Companies and Funds covered by the Agreement is
hereby amended to delete the following portfolios of AIM Growth Series:
AIM International Growth Fund
AIM Worldwide Growth Fund
In all other respects, the Agreement is hereby confirmed and remains in
full force and effect.
<PAGE> 2
IN WITNESS WHEREOF, the parties have caused this Amendment No. 5 to be
executed by their respective officers on the date first written above.
A I M ADVISORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ CAROL F. RELIHAN
------------------------- --------------------------------
Assistant Secretary Senior Vice President
AIM ADVISOR FUNDS, INC. AIM INTERNATIONAL FUNDS, INC.
AIM Advisor Flex Fund AIM Asian Growth Fund
AIM Advisor International Value Fund AIM European Development Fund
AIM Advisor Large Cap Value Fund AIM International Equity Fund
AIM Advisor MultiFlex Fund AIM Global Aggressive Growth Fund
AIM Advisor Real Estate Fund AIM Global Growth Fund
AIM Global Income Fund
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund AIM VARIABLE INSURANCE FUNDS, INC.
AIM Blue Chip Fund AIM V.I. Aggressive Growth Fund
AIM Capital Development Fund AIM V.I. Balanced Fund
AIM Charter Fund AIM V.I. Capital Appreciation Fund
AIM Constellation Fund AIM V.I. Capital Development Fund
AIM Dent Demographic Trends Fund AIM V.I. Diversified Income Fund
AIM Growth and Income Fund AIM V.I. Global Growth and Income Fund
AIM Large Cap Growth Fund AIM V.I. Global Utilities Fund
AIM Weingarten Fund AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM FUNDS GROUP AIM V.I. Growth & Income Fund
AIM Balanced Fund AIM V.I. High Yield Fund
AIM Global Utilities Fund AIM V.I. International Equity Fund
AIM High Yield Fund AIM V.I. Money Market Fund
AIM Income Fund AIM V.I. Telecommunications Fund
AIM Money Market Fund AIM V.I. Value Fund
AIM Select Growth Fund
AIM Value Fund EMERGING MARKETS DEBT PORTFOLIO
AIM INVESTMENT SECURITIES FUNDS GROWTH PORTFOLIO
AIM High Yield Fund II Small Cap Portfolio
Value Portfolio
AIM SPECIAL OPPORTUNITIES FUNDS
AIM Small Cap Opportunities Fund
AIM Mid Cap Opportunities Fund
AIM SUMMIT FUND, INC.
<PAGE> 3
GLOBAL INVESTMENT PORTFOLIO AIM GROWTH SERIES
Global Consumer Products and Services AIM New Pacific Growth Fund
Portfolio AIM Europe Growth Fund
Global Financial Services Portfolio AIM Japan Growth Fund
Global Infrastructure Portfolio AIM Mid Cap Equity Fund
Global Natural Resources Portfolio AIM Small Cap Growth Fund
AIM Basic Value Fund
GT GLOBAL FLOATING RATE FUND, INC.
(doing business as AIM Floating Rate GT GLOBAL VARIABLE INVESTMENT TRUST
Fund) GT Global Variable Latin America Fund
AIM SERIES TRUST GT Global Variable Telecommunications
AIM Global Trends Fund Fund
GT Global Variable Growth & Income Fund
FLOATING RATE PORTFOLIO GT Global Variable Strategic Income Fund
GT Global Variable Emerging Markets Fund
AIM EASTERN EUROPE FUND GT Global Variable Government Income
Fund
AIM INVESTMENT FUNDS GT Global Variable U.S. Government
AIM Global Government Income Fund Income Fund
AIM Strategic Income Fund GT Global Variable Infrastructure Fund
AIM Emerging Markets Debt Fund GT Global Variable Natural Resources
AIM Global Growth & Income Fund Fund
AIM Developing Markets Fund
AIM Latin American Growth Fund GT GLOBAL VARIABLE INVESTMENT SERIES
AIM Global Financial Services Fund GT Global Variable New Pacific Fund
AIM Global Health Care Fund GT Global Variable Europe Fund
AIM Global Telecommunications Fund GT Global Variable America Fund
AIM Global Consumer Products and GT Global Variable International Fund
Services Fund GT Global Variable Money Market Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
-------------------------- ------------------------------------
Assistant Secretary President
<PAGE> 1
EXHIBIT d(5)(h)
AMENDMENT NO. 7
TO
FOREIGN COUNTRY SELECTION
AND MANDATORY SECURITIES DEPOSITORY RESPONSIBILITIES
DELEGATION AGREEMENT
This Amendment No. 7, dated as of November 15, 1999, amends the
Foreign Country Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, between A I M Advisors, Inc., a
Delaware corporation and each registered investment company (the "Investment
Companies") and its respective portfolios (the "Funds") listed on the signature
page thereof (as amended and supplemented, the "Agreement").
NOW, THEREFORE, the parties agree as follows;
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to include the following portfolio of AIM Equity
Funds, Inc.:
AIM Mid Cap Growth Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to include the following portfolio of AIM Special
Opportunities Funds:
AIM Large Cap Opportunities Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to include the following portfolios of AIM
Variable Insurance Funds, Inc.:
AIM V.I. Blue Chip Fund
AIM V.I. Dent Demographic Trends Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to delete the following portfolio of AIM Advisor
Funds, Inc.:
AIM Advisor MultiFlex Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to delete the following fund:
AIM Eastern Europe Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to delete the following fund and portfolios
thereunder:
1
<PAGE> 2
GT Global Variable Investment Trust
-----------------------------------
GT Global Variable Emerging Markets Fund
GT Global Variable Government Income Fund
GT Global Variable Growth & Income Fund
GT Global Variable Infrastructure Fund
GT Global Variable Latin America Fund
GT Global Variable Natural Resources Fund
GT Global Variable Strategic Income Fund
GT Global Variable Telecommunications Fund
GT Global Variable U.S. Government Income Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to delete the following fund and portfolios
thereunder:
GT Global Variable Investment Series
------------------------------------
GT Global Variable America Fund
GT Global Variable Europe Fund
GT Global Variable International Fund
GT Global Variable Money Market Fund
GT Global Variable New Pacific Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to rename the following portfolio of AIM Equity
Funds, Inc.:
AIM Growth and Income Fund, renamed as AIM Large Cap Basic
Value Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to rename the following portfolio of AIM Growth
Series:
AIM Europe Growth Fund, renamed as AIM Euroland Growth Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to rename the following portfolio of AIM
Investment Funds:
AIM Global Telecommunications Fund, renamed as AIM Global
Telecommunications and Technology Fund
In all other respects, the Agreement is hereby confirmed and remains
in full force and effect.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have caused this Amendment No. 7
to be executed by their respective officers on the date first written above.
A I M ADVISORS, INC.
Attest: /s/P. MICHELLE GRACE By: /s/ROBERT H. GRAHAM
------------------------------ ----------------------------
Assistant Secretary President
AIM ADVISOR FUNDS, INC. AIM INTERNATIONAL FUNDS, INC.
AIM Advisor Flex Fund AIM Asian Growth Fund
AIM Advisor International Value Fund AIM European Development Fund
AIM Advisor Large Cap Value Fund AIM International Equity Fund
AIM Advisor Real Estate Fund AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM EQUITY FUNDS, INC. AIM Global Income Fund
AIM Aggressive Growth Fund
AIM Blue Chip Fund AIM VARIABLE INSURANCE FUNDS, INC.
AIM Capital Development Fund AIM V.I. Aggressive Growth Fund
AIM Charter Fund AIM V.I. Balanced Fund
AIM Constellation Fund AIM V.I. Blue Chip Fund
AIM Dent Demographic Trends Fund AIM V.I. Capital Appreciation Fund
AIM Large Cap Basic Value Fund AIM V.I. Capital Development Fund
AIM Large Cap Growth Fund AIM V.I. Dent Demographic Trends Fund
AIM Mid Cap Growth Fund AIM V.I. Diversified Income Fund
AIM Weingarten Fund AIM V.I. Global Growth and Income Fund
AIM V.I. Global Utilities Fund
AIM FUNDS GROUP AIM V.I. Government Securities Fund
AIM Balanced Fund AIM V.I. Growth Fund
AIM Global Utilities Fund AIM V.I. Growth & Income Fund
AIM High Yield Fund AIM V.I. High Yield Fund
AIM Income Fund AIM V.I. International Equity Fund
AIM Money Market Fund AIM V.I. Money Market Fund
AIM Select Growth Fund AIM V.I. Telecommunications Fund
AIM Value Fund AIM V.I. Value Fund
AIM INVESTMENT SECURITIES FUNDS EMERGING MARKETS DEBT PORTFOLIO
AIM High Yield Fund II
GROWTH PORTFOLIO
AIM SPECIAL OPPORTUNITIES FUNDS Small Cap Portfolio
AIM Large Cap Opportunities Fund Value Portfolio
AIM Mid Cap Opportunities Fund
AIM Small Cap Opportunities Fund
AIM SUMMIT FUND, INC.
3
<PAGE> 4
GLOBAL INVESTMENT PORTFOLIO AIM INVESTMENT FUNDS
Global Consumer Products and AIM Developing Markets Fund
Services Portfolio AIM Emerging Markets Debt Fund
Global Financial Services Portfolio AIM Global Consumer Products and
Global Infrastructure Portfolio Services Fund
Global Natural Resources Portfolio AIM Global Financial Services Fund
AIM Global Government Income Fund
GT GLOBAL FLOATING RATE FUND, INC. AIM Global Growth & Income Fund
(doing business as AIM Floating AIM Global Health Care Fund
Rate Fund) AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM SERIES TRUST AIM Global Telecommunications and
AIM Global Trends Fund Technology Fund
AIM Latin American Growth Fund
FLOATING RATE PORTFOLIO AIM Strategic Income Fund
AIM GROWTH SERIES
AIM Basic Value Fund
AIM Euroland Growth Fund
AIM Japan Growth Fund
AIM Mid Cap Equity Fund
AIM New Pacific Growth Fund
AIM Small Cap Growth Fund
Attest: /s/OFELIA M. MAYO By: /s/ROBERT H. GRAHAM
------------------------------ ----------------------------
Assistant Secretary President
4
<PAGE> 1
EXHIBIT e(1)(b)
AMENDMENT NO. 1
TO
DISTRIBUTION AGREEMENT
(CLASS A AND CLASS C SHARES)
The Distribution Agreement (the "Agreement"), dated May 29, 1998, by and
between AIM Series Trust, a Delaware business trust, and A I M Distributors,
Inc., a Delaware corporation, is hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"APPENDIX A
TO
DISTRIBUTION AGREEMENT
OF
AIM SERIES TRUST
(CLASS A AND CLASS C SHARES)
CLASS A SHARES
- --------------
AIM Global Trends Fund
CLASS C SHARES
- --------------
AIM Global Trends Fund"
All other terms and provisions of the Agreement not amended herein shall
remain in full force and effect.
Dated: September 8, 1998.
AIM SERIES TRUST
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------------ ------------------------------
Assistant Secretary President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ ILLEGIBLE
------------------------------ ------------------------------
Assistant Secretary Senior Vice President
(SEAL)
<PAGE> 1
EXHIBIT e(2)(b)
AMENDMENT NO. 1
TO
DISTRIBUTION AGREEMENT
(CLASS B SHARES)
The Distribution Agreement (the "Agreement"), dated May 29, 1998, by
and between AIM Series Trust, a Delware business trust, and A I M Distributors,
Inc., a Delaware corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"SCHEDULE A
TO
DISTRIBUTION AGREEMENT
OF
AIM SERIES TRUST
CLASS B SHARES
- --------------
AIM Global Trends Fund"
All other terms and provisions of the Agreement not amended herein shall
remain in full force and effect.
Dated: September 8, 1998.
AIM SERIES TRUST
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------------ -----------------------------
Assistant Secretary President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ ILLEGIBLE
------------------------------ -----------------------------
Assistant Secretary Senior Vice President
(SEAL)
<PAGE> 1
EXHIBIT e(3)(b)
AMENDMENT NO. 1
TO
DISTRIBUTION AGREEMENT
(ADVISOR CLASS SHARES)
The Distribution Agreement (the "Agreement"), dated May 29, 1998, by and
between AIM Series Trust, a Delaware business trust, and A I M Distributors,
Inc., a Delaware corporation, is hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"APPENDIX A
TO
DISTRIBUTION AGREEMENT
OF
AIM SERIES TRUST
ADVISOR CLASS SHARES
- --------------------
AIM Global Trends Fund"
All other terms and provisions of the Agreement not amended herein shall
remain in full force and effect.
Dated: September 8, 1998.
AIM SERIES TRUST
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------------------ ------------------------------
Assistant Secretary President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By /s/ ILLEGIBLE
------------------------------ -----------------------------
Assistant Secretary Senior Vice President
(SEAL)
<PAGE> 1
EXHIBIT h(1)(b)
AMENDMENT NUMBER 1 TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
This Amendment, dated as of July 1, 1999 is made to the Transfer agency and
Service Agreement dated September 8, 1998 (the "Agreement") between AIM Series
Trust (the"Fund") and A I M Fund Services, Inc. ("AFS") pursuant to Article 10
of the Agreement.
A fee calculated by multiplying the number of shareholder accounts in the Fund
by $.15 shall be paid by the Fund to AFS concurrently with the fees payable by
the Fund to AFS under Article 2 of this Agreement.
Upon a vote of the Board of Directors of the Fund terminating this Amendment,
this Amendment shall cease to apply, and the Transfer Agency and SErvice
Agreement shall be complete without reference hereto.
AIM SERIES TRUST
By: /s/ ROBERT H. GRAHAM
------------------------------
President
ATTEST:
/s/ KATHLEEN J. PFLUEGER
- -------------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By: /s/ ILLEGIBLE
--------------------------------
President
ATTEST:
/s/ LISA A. MOSS
- -------------------------------
Assistant Secretary
<PAGE> 1
EXHIBIT h(1)(c)
AMENDMENT NUMBER 2 TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
This Amendment, dated as of July 1, 1999 is made to the Transfer Agency and
Service Agreement dated September 8, 1998 (the "Agreement") between AIM Series
Trust (the "Fund") and A I M Fund Services, Inc. ("AFS") pursuant to Article 10
of the Agreement.
Paragraph 1 of the Fee Schedule is hereby deleted in its entirety and replaced
with the following:
"1. For performance by the Transfer Agent pursuant to this Agreement, the
Fund agrees on behalf of each of the Portfolios to pay the Transfer
Agent an annualized fee for shareholder accounts that are open during
any monthly period as set forth below, and an annualized fee of $ .70
per shareholder account that is closed during any monthly period. Both
fees shall be billed by the Transfer Agent monthly in arrears on a
prorated basis of 1/12 of the annualized fee for all such accounts.
<TABLE>
<CAPTION>
Per Account Fee
Fund Type Annualized
- --------- ----------------
<S> <C>
Class A Annual/Semi-Annual Dividends $15.15
Class A Quarterly & Monthly Dividends 17.15
Class A Daily Accrual 19.65
Class B 19.65
Class C 19.65
Advisor Class Annual/Semi-Annual Dividends 15.15
Advisor Class Quarterly/Monthly Dividends 17.15
Advisor Class Daily Accrual 19.65"
</TABLE>
All other terms and provisions of the Agreement not amended herein shall remain
in full force and effect.
AIM SERIES TRUST
By: /s/ ROBERT H. GRAHAM
------------------------------
President
ATTEST:
/s/ KATHLEEN J. PFLUEGER
- -------------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By: /s/ ILLEGIBLE
--------------------------------
President
ATTEST:
/s/ LISA A. MOSS
- -------------------------------
Assistant Secretary
<PAGE> 1
EXHIBIT h(1)(d)
AMENDMENT NUMBER 3 TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
This Amendment, dated as of February 11, 2000 is made to the Transfer Agency and
Service Agreement dated September 8, 1998 (the "Agreement") between AIM Series
Trust (the "Fund") and A I M Fund Services, Inc. ("AFS") pursuant to Article 10
of the Agreement.
Paragraph 1 of the Fee Schedule is hereby deleted in its entirety and replaced
with the following:
"1. For performance by the Transfer Agent pursuant to this Agreement, the
Fund agrees on behalf of each of the Portfolios to pay the Transfer
Agent an annualized fee for shareholder accounts that are open during
any monthly period as set forth below, and an annualized fee of $ .70
per shareholder account that is closed during any monthly period. Both
fees shall be billed by the Transfer Agent monthly in arrears on a
prorated basis of 1/12 of the annualized fee for all such accounts.
<TABLE>
<CAPTION>
Per Account Fee
Fund Type Annualized
--------- -----------
<S> <C>
Class A Annual/Semi-Annual Dividends $15.15
Class A Quarterly & Monthly Dividends 17.15
Class A Daily Accrual 19.65
Class B 19.65
Class C 19.65"
</TABLE>
All other terms and provisions of the Agreement not amended herein shall remain
in full force and effect.
AIM SERIES TRUST
By: /s/ ROBERT H. GRAHAM
------------------------------
President
ATTEST:
/s/ SAMUEL D. SIRKO
- -------------------------------
Secretary
A I M FUND SERVICES, INC.
By: /s/ ILLEGIBLE
--------------------------------
President
ATTEST:
/s/ SAMUEL D. SIRKO
- -------------------------------
Secretary
<PAGE> 1
EXHIBIT h(2)(i)
AMENDMENT NO. 6 TO THE REMOTE ACCESS
AND RELATED SERVICES AGREEMENT
FOR IMPRESSNET(TM) SERVICES
THIS AMENDMENT, dated as of the 30th day of August, 1999 is made to the
Remote Access and Related Services Agreement dated as of December 23, 1994, as
amended (the "Agreement") between each registered investment company listed on
Exhibit 1 of the Agreement (the "Fund") and FIRST DATA INVESTOR SERVICES GROUP,
INC. ("Investor Services Group").
WITNESSETH
WHEREAS, the Fund desires to enable Shareholders and Financial
Planners to conduct certain account transactions through the use of the
Internet and Investor Services Group desires to allow such access and provide
certain services as more fully described below in connection therewith;
NOW THEREFORE, the Fund and Investor Services Group agree that as of
the date first referenced above, Investor Services Group Agreement shall be
amended as follows:
1. Definitions. Terms not otherwise defined herein shall have the same
meanings as ascribed them in the Agreement. In addition, the following
definitions are hereby incorporated into Agreement:
(a) "End-User" shall mean any Shareholder or Financial Planner that
accesses the Investor Services Group recordkeeping system via
IMPRESSNet--Registered Trademark--.
(b) "Financial Planner" shall mean any investment advisor,
broker-dealer, financial planner or any other person authorized to act
on behalf of a Shareholder.
(c) "Financial Transaction" shall mean purchase, redemption, exchange
or any other transaction involving the movement of Shares initiated by
an End-User.
(d) "Fund Home Page" shall mean the Fund's proprietary web site on the
Internet used by the Fund to provide information to its shareholders
and potential shareholders.
(e) "IMPRESSNet--Registered Trademark--" shall mean the Investor
Services Group proprietary system consisting of the Investor Services
Group Secure Net Gateway and the Investor Services Group Web
Transaction Engine and shall also be deemed to be part of, and
included within the definition of "FDISG System" and "FDISG
Facilities", as those terms are defined in the Agreement.
(f) "Investor Services Group Secure Net Gateway" shall mean the system
of computer hardware and software and network established by Investor
Services Group to provide access between Investor Services Group
recordkeeping system and the Internet.
<PAGE> 2
(g) "Investor Services Group Web Transaction Engine" shall mean the
system of computer hardware and software created and established by
Investor Services Group in order to enable Shareholders of the Fund to
perform the transactions contemplated hereunder.
(h) "Internet" shall mean the communications network comprised of
multiple communications networks linking education, government,
industrial and private computer networks.
(i) "Shares" refers collectively to such shares of capital stock or
beneficial interest, as the case may be, or class thereof, of a Fund
as may be issued from time to time.
(j) "Shareholder" shall mean a record owner of Shares of the Fund.
2. Responsibilities of Investor Services Group. In addition to the
services rendered by Investor Services Group as set forth in the
Agreement, Investor Services Group agrees to provide the following
services for the fees set forth in the Schedule of
IMPRESSNet--Registered Trademark-- Fees attached hereto as Schedule A
of this Amendment:
(a) In accordance with the written IMPRESSNet--Registered Trademark--
procedures and product functionality documentation provided to the
Fund by Investor Services Group, Investor Services Group shall,
through the use of the Investor Services Group Web Transaction Engine
and Secure Net Gateway enable End-Users to utilize the Internet to
access the Investor Services Group System in order to perform
transactions in Shareholder accounts. IMPRESSNet--Registered
Trademark-- shall be accessible by End-Users in order to perform
transactions in Shareholder accounts via the Internet at least 95% of
the time during any 24 hour period, excluding a) the standard Initial
Program Loads (IPL) which shall be scheduled from 9:00 p.m. Saturday
through 7:00 a.m. Sunday Central Time, and b) the software change
windows which shall be scheduled from 12:00 a.m. Friday through 4:00
a.m. Friday Central Time and 12:00 a.m. Monday through 4:00 a.m.
Monday Central Time.
(b) (i) With respect to Shareholders, process the set up of personal
identification numbers ("PIN") which shall include verification of
initial identification numbers issued, reset and activate personalized
PIN's and reissue new PIN's in connection with lost PIN's; and (ii)
with respect to Financial Planners process the set up of digital
certificates which shall include verification of initial digital
certificates issued, reset and activate digital certificates and
reissue digital certificates in connection with expired or terminated
certificates.
(c) Installation services which shall include, review and sign off on
the Fund's network requirements, recommending method of linking to the
FDISG Web Transaction Engine, installing network hardware and
software, implementing the network connectivity, and testing the
network connectivity and performance;
2
<PAGE> 3
(d) Maintenance and support of the Investor Services Group Secure Net
Gateway and the Investor Services Group Web Transaction Engine, which
includes the following:
(i) error corrections, minor enhancements and interim upgrades to
IMPRESSNet--Registered Trademark-- which are made generally
available by FDISG to IMPRESSNet--Registered Trademark--
customers;
(ii) help desk support to provide assistance to Fund employees
with the Fund's use of IMPRESSNet--Registered Trademark--.
Maintenance and support shall not include (i) access to or use of any
substantial added functionality, new interfaces, new architecture, new
platforms, new versions or major development efforts, unless made
generally available by FDISG to IMPRESSNet--Registered Trademark--
clients, as determined solely by FDISG; or (ii) development of
customized features.
(e) Maintenance and upkeep of the security infrastructure and
capabilities described in the procedures and product functionality
documentation.
(f) Prepare and forward monthly usage reports to the Fund which shall
provide the Fund with a summary of activity and functionality used by
End-Users. In addition, the Fund will be provided web-site access for
determination of daily usage activity.
3. Responsibility of the Fund. In connection with the services provided
by Investor Services Group hereunder, the Fund shall be responsible
for the following:
(a) establishment and maintenance of the Fund Home Page on the
Internet;
(b) services and relationships between the Fund and any third party
on-line service providers to enable End-Users to access the Fund Home
Page and/or the Investor Services System via the Internet;
(c) provide Investor Services Group with access to and information
regarding the Fund Home Page in order to enable Investor Services
Group to provide the services contemplated hereunder.
4 Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software paid for by the Fund. Such exclusivity would
extend for a period of nine (9) months from the date the enhancement
is placed into the production libraries. Software exclusivity would be
waived if the Fund accepts either of the following conditions:
a). If prior to implementation, Investor Services Group or other
Investor Services Group clients agree to share in the expense of
the enhancements.
b). At any time during the 9 months following implementation, Investor
Services Group or other Investor Services Group clients agree to
share the expense for the enhancements.
3
<PAGE> 4
The Agreement, as previously amended and as amended by this Amendment,
("Modified Agreement") constitutes the entire agreement between the parties
with respect to the subject matter hereof. The Modified Agreement supersedes
all prior and contemporaneous agreements between the parties in connection with
the subject matter hereof. No officer, employee, servant or other agent of
either party is authorized to make any representation, warranty, or other
promises not expressly contained herein with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers, as of the day and year first
above written.
On behalf of the Funds and respective FIRST DATA INVESTOR SERVICES
Portfolios and Classes set forth in GROUP, INC.
Exhibit 1 of the Agreement which may
be amended from time to time.
<TABLE>
<S> <C>
By: /s/ROBERT H. GRAHAM By: /s/DEBRLEE G. GOLDBERG
-------------------------------- -------------------------------
Name: Robert H. Graham Name: Debrlee G. Goldberg
------------------------------- ----------------------------
Title: President Title: SVP
------------------------------ ---------------------------
</TABLE>
4
<PAGE> 5
SCHEDULE A
IMPRESSNET(TM) Fees
WEB TRANSACTION ENGINE
SET UP FEE: $150.00 PER HOUR
o Reviewing client network requirements and signing off on the
requirements
o Recommending method of linking to the Web Transaction Engine
o Installing the network hardware and software
o Implementing the network connectivity
o Testing the network connectivity and performance
FINANCIAL TRANSACTION COST:
<TABLE>
<CAPTION>
NUMBER OF TRANSACTIONS PER MONTH FEE PER TRANSACTION
-------------------------------- -------------------
<S> <C>
0-10,000 $.50
10,001-20,000 $.40
20,001+ $.25
</TABLE>
SOFTWARE MAINTENANCE FEE: $25,000 PER ANNUM
o Releases of new versions of Web Transaction Engine (does not include
customization)
o Maintain security infrastructure with auditing function for the
purpose of Fund and Shareholder protection
o Monthly Usage Reports and web access as described in Paragraph 2(f) of
this Amendment No. 6
o Help Desk Support (contact and escalation procedures set forth in
Exhibit 1)
HARDWARE MAINTENANCE FEE: $25,000 PER ANNUM
o Does not include client hardware and software requirements.
o Installation of hardware is billed as time and materials
o Does not include third party hardware and software maintenance
agreements
The Software Maintenance Fee and Hardware Maintenance Fee shall remain
unchanged until December 31, 2002. During each one year term of the agreement
after December 31, 2002, the Software Maintenance Fee and Hardware Maintenance
Fee may be changed no more than 5% than the then-current Software Maintenance
Fee and Hardware Maintenance Fee upon 90 days' prior written notice to the
Funds. Such change to the Software Maintenance Fee and Hardware Maintenance Fee
shall be effective at the beginning of the next one year term of the Agreement.
5
<PAGE> 6
CUSTOMIZED DEVELOPMENT: $150 PER HOUR
The above referenced fees do not include fees associated with third party
software products which may be required to utilize future releases of
IMPRESSNet(TM) .
6
<PAGE> 7
EXHIBIT 1 OF SCHEDULE A
IMPRESSNET HELP DESK AND ESCALATION PROCEDURES
This is directed to the IMPRESSNet staff as well as the customer base to ensure
a common understanding of the expectations surrounding help desk support.
It is assumed that each site has a front line of technical support which
filters out calls and determines that the issue is IMPRESSNet related and is
severe enough to justify immediate attention. It is requested that off-hour
calls be reserved for major production or data integrity issues.
Once an issue is determined to be IMPRESSNet related, the client representative
(either the user or a point of contact) should call the First Data Help Desk at
(508) 871-8550.
The Help Desk has a list of primary and secondary developers on call by
product. It is advantageous to provide a clear and concise problem statement to
the Help Desk personnel along with a telephone number and point of contact. The
caller should be sure to obtain a ticket number to facilitate progress tracking
if necessary.
o The Help Desk will call and/or page the primary on-call developer and
allow 15 minutes for a return call.
o If no response is received, the Help Desk will call and/or page the
secondary on call and wait 10 minutes for a return call.
o If no response is received, the manager on call will be called and/or
paged.
o If no response is received, the Help Desk personnel will contact the
Vice President of Corporate Systems and then the Manager of the
Environmental Support Group.
o Finally, if no response is received the Help Desk personnel has access
to SCONCALL (special procedures utilized by help desk personnel)
Once the developer or manager is assigned the call, they are responsible for
seeing that the issue is satisfactorily addressed. They are not necessarily
responsible for physically addressing the issue.
The assigned person will contact the designated client personnel to inform them
the issue is being addressed and to collect any relevant information.
If an issue will take more than an hour to resolve, the assigned person will
periodically update the Help Desk with a progress status.
Once the issue has been addressed it is the responsibility of the assigned
person to notify the Help Desk that the issue can be marked as "resolved".
7
<PAGE> 8
The Help Desk will contact the client to obtain confirmation of resolution
prior to closing the ticket.
If there has been a lack of response on a particular issue after the specified
time period, please contact your Client Service or IMPRESSNet Manager.
8
<PAGE> 1
EXHIBIT i(1)
KIRKPATRICK & LOCKHART LLP 1800 Massachusetts Avenue, NW
Second Floor
Washington, DC 20036-1800
202.778.9000
www.kl.com
April 28, 2000
AIM Series Trust
11 Greenway Plaza
Suite 100
Houston, Texas 77046
Ladies and Gentlemen:
We have acted as counsel to AIM Series Trust, a Delaware business
trust (the "Trust"), in connection with Post-Effective Amendment No. 11 ("PEA")
to the Trust's Registration Statement on Form N-1A (File No. 333-30551)
relating to the issuance and sale of Shares of the Trust. You have requested
our opinion with respect to the matters set forth below.
In this opinion letter, the term "Shares" refers to the Class A,
Class B, and Class C shares of beneficial interest in each series of the Trust
listed in Schedule A attached to this opinion letter (each, a "Portfolio"),
that may be issued during the time that the PEA is effective and has not been
superseded by another post-effective amendment.
In connection with rendering the opinions set forth below, we have
examined copies, believed by us to be genuine, of the Trust's Agreement and
Declaration of Trust dated as of May 7, 1998 (the "Agreement"), and Bylaws, and
any amendments thereto, and such other documents relating to its organization
and operation as we have deemed relevant to our opinions, as set forth herein.
With respect to matters governed by the laws of the State of Delaware
(excluding the securities laws thereof), we have relied solely on the opinion
letter of Potter Anderson & Corroon LLP, special Delaware counsel to the Trust,
an executed copy of which is appended hereto as Exhibit A.
The opinions set forth in this letter are limited to the laws and
facts in existence on the date hereof, and are further limited to the laws
(other than laws relating to choice of law) of the State of Delaware that in
our experience are normally applicable to the issuance of shares of beneficial
interest by business trusts and to the Securities Act of 1933, as amended (the
"1933 Act"), the Investment Company Act of 1940, as amended (the "1940 Act"),
and the rules and regulations of the Securities and Exchange Commission (the
"SEC") thereunder. Based on and subject to the foregoing, and the additional
qualifications and other matters set forth below, it is our opinion that as of
the date hereof the Shares, when sold in accordance with the terms contemplated
by the PEA, including receipt by the Trust of full payment for the Shares and
compliance with the 1933 Act and 1940 Act, will have been validly issued and
will be fully paid and non-assessable.
<PAGE> 2
KIRKPATRICK & LOCKHART LLP
AIM Series Trust
April 28, 2000
Page 2
We are furnishing this opinion letter to you solely in connection
with the issuance of the Shares. You may not rely on this opinion letter in any
other connection, and it may not be furnished to or relied upon by any other
person for any purpose, without specific prior written consent.
The foregoing opinions are rendered as of the date of this letter,
except as otherwise indicated. We assume no obligation to update or supplement
our opinions to reflect any changes of law or fact that may occur.
We hereby consent to this opinion letter accompanying the PEA when
it is filed with the SEC and to the reference to our firm in the statement of
additional information that are being filed as part of such PEA.
Very truly yours,
/s/ KIRKPATRICK & LOCKHART LLP
-------------------------------
KIRKPATRICK & LOCKHART LLP
<PAGE> 3
KIRKPATRICK & LOCKHART LLP
SCHEDULE A
AIM SERIES TRUST
AIM Global Trends Fund
<PAGE> 1
EXHIBIT i(2)
[POTTER ANDERSON & CORROON LLP]
April 28, 2000
Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave., NW
2nd Floor
Washington, DC 20036
Re: AIM Series Trust
Ladies and Gentlemen:
We have acted as special Delaware counsel for AIM Series Trust, a
Delaware business trust (the "Trust") in connection with the proposed issuance
of shares (collectively the "Shares") of Class A, Class B, and Class C
(collectively, the "Classes") of AIM Global Trends Fund (the "Portfolio") as
designated on Schedule A to that certain Agreement and Declaration of Trust
dated as of May 7, 1998, entered into among William J. Guilfoyle, C. Derek
Anderson, Frank S. Bayley, Arthur C. Patterson, and Ruth H. Quigley, as
Trustees, and the Shareholders of the Trust (the "Original Declaration").
Initially capitalized terms used herein and not otherwise defined are used
herein as defined in the Declaration.
For purposes of giving the opinions hereinafter set forth, we have
examined only the following documents and have conducted no independent factual
investigation of our own:
1. The Certificate of Trust for the Trust, dated as of May 7, 1998, as
filed in the Office of the Secretary of State of the State of Delaware (the
"Secretary of State") on May 7, 1998;
2. The Original Declaration;
3. The First Amendment to Original Declaration of Trust of the Trust
entered into as of September 8, 1998 (the "First Amendment");
4. The Second Amendment to the Original Declaration of Trust of the
Trust entered into as of February 11, 2000 (the "Second Amendment" together with
the Original Declaration, and the First Amendment, the "Declaration");
<PAGE> 2
Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave., NW
2nd Floor
Washington, DC 20036
April 28, 2000
Page 2
5. Schedule A to the Declaration as in effect on the date hereof;
6. The By-laws of the Trust as in effect on the date hereof;
7. Resolutions of the Trustees as in effect on the date hereof
designating and eliminating, as the case may be, Classes and approving the
issuance of the Shares (collectively, the "Share Resolutions");
8. Resolutions of the Trustees (the "18f-3 Resolutions" and together
with the Share Resolutions, the "Resolutions") adopting that certain plan
pursuant to Rule 18f-3 under the Investment Company Act of 1940 (the "18f-3
Plan");
9. A Certificate of the Secretary of the Trust dated as of April 28,
2000 certifying as to the organizational documents of the Trust, certain
authorizing resolutions, the Resolutions, and the signatures of the Trust's
officers;
10. A Certificate of Good Standing for the Trust, dated April 28, 2000
obtained from the Secretary of State; and
11. The Post-Effective Amendment No. 11 (the "PEA") to the Trust's
registration statement on Form N-1A (the "Form N-1A") as filed with the
Securities and Exchange Commission on or about April 28, 2000, pursuant to the
Securities Act of 1933, as amended, covering the Shares (the PEA together with
the Form N-1A, the "Registration Statement").
As to certain facts material to the opinions expressed herein, we have
relied upon the representations and warranties contained in the documents
examined by us.
Based upon the foregoing, and upon an examination of such questions of
law of the State of Delaware as we have considered necessary or appropriate, and
subject to the assumptions, qualifications, limitations and exceptions set forth
herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Act.
2. The Portfolio has been duly created and is validly existing as a
series under Section 3804 of the Delaware Act.
<PAGE> 3
Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave., NW
2nd Floor
Washington, DC 20036
April 28, 2000
Page 3
3. The Declaration constitutes the legal, valid and binding obligation
of the Trustees, enforceable against the Trustees, in accordance with its terms.
4. Subject to the other qualifications set forth herein, the Shares
have been duly authorized and when the Shares shall have been otherwise issued
and sold in accordance with the Declaration, the Resolutions, the 18f-3 Plan and
the By-laws, such Shares will be validly issued, fully paid, and non-assessable
undivided beneficial interests in the assets of the Portfolio.
5. When and if the actions referred to in paragraph 4 have occurred,
the holders of the Shares as beneficial owners of the Shares will be entitled to
the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware, except that such holders of Shares may be obligated to provide
indemnity and/or security in connection with the issuance of replacement
certificates for lost or destroyed certificates, if any, representing such
Shares, if such holders request certificates in accordance with the By-laws and
such certificates are lost.
In addition to the assumptions and qualifications set forth above, all
of the foregoing opinions contained herein are subject to the following
assumptions, qualifications, limitations and exceptions:
a. The foregoing opinions are limited to the laws of the State of
Delaware presently in effect, excluding the securities laws thereof. We have not
considered and express no opinion on the laws of any other jurisdiction,
including, without limitation, federal laws and rules and regulations relating
thereto.
b. We have assumed the legal capacity of any natural persons who are
parties to any of the documents examined by us.
c. The foregoing opinion regarding the enforceability of the
Declaration is subject to (i) applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, fraudulent transfer and similar laws relating to or
affecting creditors rights generally including, without limitation, the Delaware
Uniform Fraudulent Conveyance Act, the provisions of the United States
Bankruptcy Code and the Delaware insolvency statutes, (ii) principles of equity
including, without limitation, concepts of materiality, good faith, fair
dealing, conscionability and reasonableness (regardless of whether such
enforceability is considered in a proceeding in equity or at law), (iii)
applicable law relating to fiduciary duties, and (iv) public policy limitations
with respect to exculpation, contribution and indemnity provisions.
<PAGE> 4
Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave., NW
2nd Floor
Washington, DC 20036
April 28, 2000
Page 4
d. We have assumed that all signatures on documents examined by us
are genuine, that all documents submitted to us as originals are authentic and
that all documents submitted to us as copies conform with the originals.
e. We have assumed that the Declaration, the By-laws, the 18f-3 Plan
and the Resolutions, collectively, constitute the entire agreement with respect
to the subject matter thereof, including (i) with respect to the creation,
dissolution and winding up of the Trust and the Portfolio, (ii) the terms
applicable to the Shares, and (iii) the power and authority of the Trustees.
f. We have assumed that to the extent any additional rights and/or
preferences are stated in the 18f-3 Plan, such additional rights and/or
preferences (x) are enforceable in accordance with their terms, and (y) do not
conflict with the Certificate of Trust, the Declaration, the By-laws, or any
statute, rule or regulation applicable to the Trust or the Portfolio.
g. We have assumed that no event set forth in Section 9.3(a) of the
Declaration has occurred with respect to the Trust or the Portfolio.
h. Notwithstanding any provision in the Declaration to the contrary,
we note that upon the occurrence of an event set forth in Section 9.3(a)
thereof, with respect to the Trust or the Portfolio, as the case may be, the
Trust or the Portfolio, as applicable, cannot make any payments or distributions
to the Shareholders thereof until their respective creditors' claims are either
paid in full or reasonable provision for payment thereof has been made.
i. With respect to the enforceability of any provision of the
Declaration wherein the parties provide for the appointment of a liquidator, we
note that upon the application of any beneficial owner, the Delaware Court of
Chancery has the power, upon cause shown, to wind up the affairs of a Delaware
business trust or series thereof and in connection therewith to appoint a
liquidating trustee other than the one agreed to by the beneficial owners
thereof.
j. We have assumed that the 18f-3 Plan has not been amended,
modified, or revoked in any manner from the date of its adoption, and that the
18f-3 Plan remains in full force and effect on the date hereof.
k. We have assumed that the Trust maintains separate and distinct
records for the Portfolio and that the Trust and the Trustees hold and account
for the assets belonging to the Portfolio separately from the assets of the
Trust generally, if any.
<PAGE> 5
Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave., NW
2nd Floor
Washington, DC 20036
April 28, 2000
Page 4
l. We note that we do not assume responsibility for the contents of
any registration statement pursuant to which the shares have been, are, or may
be sold.
This opinion is rendered solely for your benefit in connection with the
matters set forth herein and, without our prior written consent, may not be
furnished (except that it may be furnished to any federal, state or local
regulatory agencies or regulators having appropriate jurisdiction and entitled
to such disclosure) or quoted to, or relied upon by, any other person or entity
for any purpose. Kirkpatrick & Lockhart LLP may rely on this opinion with
respect to the matters set forth herein in connection with its opinion being
delivered on even date herewith.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In giving the
foregoing consent, we do not thereby admit that we come within the category of
Persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
<PAGE> 1
EXHIBIT j
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in this Registration Statement on Form N-1A of our
report dated February 16, 2000, relating to the financial statements and
financial highlights of the AIM Series Trust (AIM Global Trends Fund) which
appears in such Registration Statement. We also consent to the references to us
under the headings "Financial Statements", "Independent Accountants" and
"Financial Highlights" in such Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
May 1, 2000
<PAGE> 1
EXHIBIT p(1)
CODE OF ETHICS
OF
AIM SERIES TRUST
WHEREAS, AIM Series Trust (the "Company") is a registered investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, Rule 17j-1 under the 1940 Act requires the Company to adopt a
Code of Ethics ("the Code"); and
NOW, THEREFORE, the Company hereby adopts the following Code,
effective as of March 14, 2000.
I. Definitions
For the purpose of the Code the following terms shall have the meanings
set forth below:
A. "Access person" means any director, trustee, officer, or advisory
person of the Company; provided, however, that any person who is
an access person of any investment advisor of, or principal
underwriter for, any registered investment company and who is
required by Rule 17j-1 of the 1940 Act to report his or her
securities transactions to such investment advisor or principal
underwriter, shall not be deemed an access person of the Company.
B. "Advisory person" means
1. any employee of the Company, its investment advisor or
administrator (or of any entity in a control relationship
with the Company, its investment advisor or administrator,
as defined in Section I.D. hereof), who, in connection with
his or her regular functions or duties, makes, participates
in, or obtains information (other than publicly available
information) regarding the purchase or sale of a security by
the Company, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and
2. any natural person directly or indirectly owning,
controlling, or holding with power to vote, 25% or more of
the outstanding voting securities of any of the Company, its
investment advisor or administrator, who obtains information
(other than publicly available information) concerning
recommendations made by the Company, its investment advisor
or administrator with regard to the purchase or sale of a
security.
C. "Affiliated persons" or "Affiliates" means
1. any employee or access person of the Company, and any member
of the immediate family (defined as spouse, child, mother,
father, brother, sister, in-law or any other relative) of
any such person who lives in the same household as such
person or who is financially dependent upon such person;
2. any account for which any of the persons described in
Section I.C.1. hereof is a custodian, trustee or otherwise
acting in a fiduciary capacity, or with respect to which any
such person either has the authority to make investment
decisions or from time to time give investment advice; and
3. any partnership, corporation, joint venture, trust or other
entity in which any employee of the Company or access person
of the Company directly or indirectly, in the aggregate, has
a 10% or more beneficial interest or for which any such
person is a general partner or an executive officer.
-1-
<PAGE> 2
D. "Control" means the power to exercise a controlling influence over
the management or policies of a corporation. Any person who owns
beneficially, either directly or through one or more controlled
corporations, more than 25% of the voting securities of a
corporation shall be presumed to control such corporation.
E. "Security" means any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust
certificate, pre-organization certificate or subscription,
transferable share, investment contract, voting-trust
certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, or, in
general, any interest or instrument commonly known as a
"security", or any certificate of interest or participation in,
temporary or interim certificate for, receipt of, guarantee of,
or warrant or right to subscribe to or purchase, any of the
foregoing; provided, however, that "security" shall not mean
securities issued or guaranteed by the Government of the United
States, its agencies or instrumentalities, bankers' acceptances,
bank certificates of deposit, commercial paper and shares of
registered open-end investment companies.
F. "Purchase or sale of a security" includes the writing of an
option to purchase or sell a security.
G. "Security held or to be acquired" by the Company means any
security that, within the most recent fifteen (15) days:
1. is or has been held by the Company, or
2. is being or has been considered by the Company for purchase
by the Company.
H. "Beneficial ownership of a security" by any person includes
securities held by:
1. a spouse, minor children or relatives who share the same
home with such person;
2. an estate for such person's benefit;
3. a trust, of which
a. such person is a trustee or such person or members of
such person's immediate family have a vested interest
in the income or corpus of the trust, or
b. such person owns a vested beneficial interest, or
c. such person is the settlor and such person has the
power to revoke the trust without the consent of all
the beneficiaries;
4. a partnership in which such person is a partner;
5. a corporation (other than with respect to treasury shares
of the corporation) of which such person is an officer,
director or 10% stockholder;
6. any other person if, by reason of contract, understanding,
relationship, agreement or other arrangement, such person
obtains therefrom benefits substantially equivalent to
those of ownership; or
7. such person's spouse or minor children or any other person,
if, even though such person does not obtain therefrom the
above-mentioned benefits of ownership, such person can vest
or re-vest title in himself at once or at some future time.
A beneficial owner of a security also includes any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting
power and/or investment power with respect to such security.
Voting power includes the power to vote, or to direct the voting
of such security, and investment power includes the power to
-2-
<PAGE> 3
dispose, or to direct the disposition of such security. A person
is the beneficial owner of a security if he has the right to
acquire beneficial ownership of such security at any time within
sixty (60) days.
II. Identification of access persons
A. The Company will maintain a list of all access persons and will
notify each access person in writing that such person is an access
person. Once a person has been so identified, he/she shall
continue to be an access person until otherwise notified in
writing by the Company; provided, however, if such person is an
access person solely because he/she is a director/trustee of the
Company, such person shall cease to be an access person at the
time such person ceases to be a director/trustee.
B. Each access person will be given a copy of the Code at the time
such person becomes an access person.
III. Compliance with Governing Laws, Regulations and Procedures
A. Each access person shall comply strictly with all applicable
federal and state laws and all rules and regulations of any
governmental agency or self-regulatory organization governing his
or her activities.
B. Each access person shall comply strictly with procedures
established by the Company to ensure compliance with applicable
federal and state laws and regulations of governmental agencies
and self-regulatory organizations.
C. Access persons shall not knowingly participate in, assist, or
condone any acts in violation of any statute or regulation
governing securities matters, nor any act that would violate any
provision of this Code or any rules adopted thereunder.
IV. Confidentiality of Transactions
A. Information relating to the Company's portfolio and research and
studies activities is confidential until publicly available.
Whenever statistical information or research is supplied to or
requested by the Company, such information must not be disclosed
to any persons other than as duly authorized by the President or
the Board of Directors/Trustees of the Company. If the Company is
considering a particular purchase or sale of a security, this must
not be disclosed except to such duly authorized persons.
B. If any access person should obtain information concerning the
Company's portfolio (including the consideration by the Company of
acquiring or recommending any security for the Company's
portfolio), whether in the course of such person's duties or
otherwise, such person shall respect the confidential nature of
this information and shall not divulge it to anyone unless it is
properly part of such person's services to the Company to do so or
such person is specifically authorized to do so by the President
of the Company.
V. Ethical Standards
A. Access persons shall conduct themselves in a manner consistent
with the highest ethical standards. They shall avoid any action,
whether for personal profit or otherwise, that results in an
actual or potential conflict of interest, or the appearance of a
conflict of interest, with the Company or which may be otherwise
detrimental to the interests of the Company.
B. Conflicts of interest generally result from a situation in which
an individual has personal interests in a matter that is or may be
competitive with his responsibilities to another person or entity
(such as the Company) or where an individual has or may have
competing obligations or responsibilities to two or more persons
or entities. In the case of the relationship between the
-3-
<PAGE> 4
Company on the one hand, and its employees and access persons and
their respective affiliates on the other hand, such conflicts may
result from the purchase or sale of securities for the account of
the Company and for the personal account of the individual
involved or the account of any affiliate of such person. Such
conflict may also arise from the purchase or sale for the account
of the Company of securities in which an access person or employee
of the Company (or an affiliate of such person) has an interest.
In any such case, potential or actual conflicts must be disclosed
to the Company, and the first preference and priority must be to
avoid such conflicts of interest wherever possible and, where they
unavoidably occur, to resolve them in a manner not disadvantageous
to the Company.
VI. Activities and Transactions of Access Persons
A. No access person shall recommend to, or cause or attempt to cause,
the Company to acquire, dispose of, or hold any security
(including, any option, warrant or other right or interest
relating to such security) which such access person or an
affiliate of such access person has direct or indirect beneficial
ownership, unless the access person shall first disclose to the
Board of Directors/Trustees all facts reasonably necessary to
identify the nature of the ownership of such access person or his
or her affiliate in such security.
B. No access person or affiliate of such access person shall engage
in a purchase or sale of a security (including, any option,
warrant or other right or interest relating to such security),
other than on behalf of the Company, with respect to any security,
which, to the actual knowledge of such access person at the time
of such purchase or sale, is (i) being considered for purchase or
sale by the Company; or (ii) being purchased or sold by the
Company.
C. The prohibitions of Section VI.B. above shall not apply to:
1. Purchases or sales effected in any account over which the
access person has no direct or indirect influence or control.
2. Purchases or sales which are non-volitional on the part of
either the access person or the Company.
3. Purchases that are part of an automatic dividend reinvestment
plan.
4. Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
to the extent such rights were acquired from such issuer,
and sales of such rights so acquired.
5. Purchases or sales which receive the prior approval of the
President of the Company because they are only remotely
potentially harmful to the Company because they would be
very unlikely to affect trading in or the market value of
the security, or because they clearly are not related
economically to the securities to be purchased, sold or held
by the Company.
D. If, in compliance with the limitations and procedures set forth in
this Section VI, any access person or an affiliate of such person
shall engage in a purchase or sale of a security held or to be
acquired by the Company, first preference and priority must be
given to any transactions that involve the Company, and the
Company must have the benefit of the best price obtainable on
acquisition and the best price obtainable on disposition of such
securities.
E. If, as a result of fiduciary obligations to other persons or
entities, an access person believes that such person or an
affiliate of such person is unable to comply with certain
provisions of the Code, such access person shall so advise the
Board of Directors/Trustees in writing, setting forth with
reasonable specificity the nature of such fiduciary obligations
and the reasons why such access person believes such person is
unable to comply with any such provisions. The Board of
Directors/Trustees may, in its discretion, exempt such access
person or an affiliate of
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<PAGE> 5
such person from any such provisions, if the Board of
Directors/Trustees shall determine that the services of such
access person are valuable to the Company and the failure to grant
such exemption is likely to cause such access person to be unable
to render services to the Company. Any access person granted an
exemption (including, an exception for an affiliate of such
person) pursuant to this Section VI.E. shall, within three
business days after engaging in a purchase or sale of a security
held or to be acquired by a client, furnish the Board of
Directors/Trustees with a written report concerning such
transaction, setting forth the information specified in Section
VII.B. hereof.
VII. Reporting Procedures
A. Except as provided by Sections VII.C. and VII.D. hereof, every
access person shall report to the Board of Directors/Trustees the
information described in Section VII.B. hereof with respect to
transactions in any security in which such access person has, or
by reason of such transaction acquires, any direct or indirect
beneficial ownership in the security (whether or not such security
is a security held or to be acquired by a client); provided,
however, that any such report may contain a statement that the
report shall not be construed as an admission by the person making
such report that he has any direct or indirect beneficial
ownership in the security to which the report relates.
B. Every report required to be made pursuant to Section VII.A. hereof
shall be made not later than ten days after the end of the
calendar quarter in which the transaction to which the report
relates was effected and shall contain the following information:
1. The date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
2. The nature of the transaction (i.e., purchase, sale or
any other type of acquisition or disposition);
3. The price at which the transaction was effected; and
4. The name of the broker, dealer or bank with or through whom
the transaction was effected.
C. Notwithstanding the provisions of Section VII.A. and VII.B. hereof,
no person shall be required to make a report with respect to
transactions effected for any account over which such person does
not have any direct or indirect influence or control.
D. Notwithstanding the provisions of Section VII.A. and VII.B.
hereof, an access person who is not an "interested person" of the
Company within the meaning of Section 2(a)(19) of the 1940 Act,
and who would be required to make a report solely by reason of
being a director/trustee of the Company, need only report a
transaction in a security if such director/trustee, at the time of
the transaction, knew or, in the ordinary course of fulfilling his
official duties as a director/trustee of the Company, should have
known, that, during the 15-day period immediately preceding or
after the date of the transaction by the director/trustee, such
security is or was purchased or sold, or considered by the Company
or its investment advisor for purchase or sale by the Company.
E. Every access person who beneficially owns, directly or indirectly,
1/2% or more of the stock of any company the securities of which
are eligible for purchase by the Company shall report such
holdings to the Company.
VIII. Review Procedures
A. The reports submitted by access persons pursuant to Section VII.B.
hereof shall be reviewed at least quarterly by the Board of
Directors/Trustees or such other persons or committees as shall
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<PAGE> 6
be designated by the Board of Directors/Trustees, in order to
monitor compliance with this Code.
B. If it is determined by the Board of Directors/Trustees that a
violation of this Code has occurred and that the person violating
this Code has purchased or sold a security at a more advantageous
price than that obtained by the Company, such person shall be
required to offer to sell to or purchase from the Company, as the
case may be, such security at the more advantageous price. If this
cannot be consummated, then the Board of Directors/Trustees shall
take such other course of action as it may deem appropriate. With
respect to any violation of this Code, the Board of
Directors/Trustees may take any preventive, remedial or other
action that it may deem appropriate. In determining whether or not
there has been, or may be, a conflict of interest between the
Company and any person subject to this Code, the Board of
Directors/Trustees shall consider all of the relevant facts and
circumstances.
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<PAGE> 1
EXHIBIT p(2)
A I M MANAGEMENT GROUP INC.
CODE OF ETHICS
(ADOPTED MAY 1, 1981)
(AS LAST AMENDED FEBRUARY 24, 2000)
WHEREAS, the members of the AIM Management Group are A I M Management Group
Inc. ("AIM Management") and A I M Advisors, Inc. ("AIM Advisors") and its wholly
owned and indirect subsidiaries (individually and collectively referred to as
"AIM"); and
WHEREAS, certain members of AIM provide investment advisory services to
AIM's investment companies and other clients; and
WHEREAS, certain members of AIM provide distribution services as principal
underwriters for AIM's investment company clients; and
WHEREAS, certain members of AIM provide shareholder services as the
transfer agent, dividend disbursing agent and shareholder processing agent for
AIM's investment company clients; and
WHEREAS, the investment advisory business involves decisions and
information which may have at least a temporary impact on the market price of
securities, thus creating a potential for conflicts of interest between the
persons engaged in such business and their clients; and
WHEREAS, the members of AIM have a fiduciary relationship with respect to
each portfolio under management and the interests of the client accounts and of
the shareholders of AIM's investment company clients must take precedence over
the personal interests of the employees of AIM, thus requiring a rigid adherence
to the highest standards of conduct by such employees; and
WHEREAS, every practical step must be taken to ensure that no intentional
or inadvertent action is taken by an employee of AIM which is, or appears to be,
adverse to the interests of AIM or any of its client accounts, including the
defining of standards of behavior for such employees, while at the same time
avoiding unnecessary interference with the privacy or personal freedom of such
employees; and
WHEREAS, the members of AIM originally adopted a Code of Ethics ("the
Code") on May 1, 1981, and adopted amendments thereto in January 1989, October
1989, April 1991, December 6, 1994 and December 5, 1995, December 10, 1996, and
now deem it advisable to update and revise said Code in light of new investment
company products developed by AIM and changing circumstances in the securities
markets in which AIM conducts business; and
NOW, THEREFORE, the Boards of Directors of AIM Management and AIM Advisors
hereby adopt the following revised Code pursuant to the provisions of Rule 17j-1
under the Investment Company Act of 1940 ("1940 Act"), with the intention that
certain provisions of the Code shall become applicable to the officers,
directors and employees of AIM.
I. APPLICABILITY
A. The provisions of AIM's Code shall apply to certain officers,
directors and employees (as hereinafter designated) of AIM. Unless
otherwise indicated, the term "employee" as used herein means: (i) all
officers, directors and employees of AIM Advisors and its wholly owned
and indirect subsidiaries and (ii) officers, directors and employees
of AIM Management who
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<PAGE> 2
have an active part in the management, portfolio selection,
underwriting or shareholder functions with respect to AIM's investment
company clients or provide one or more similar services for AIM's
non-investment company clients. The term "employee" does not include
directors of AIM Management who do not maintain an office at the home
office of AIM Management and who do not regularly obtain information
concerning the investment recommendations or decisions made by AIM on
behalf of client accounts ("independent directors").
B. The Code shall also apply to any person or entity appointed as a
sub-advisor for an AIM investment company client account unless such
person or entity has adopted a code of ethics in compliance with
Section 17(j) of the 1940 Act; or, in the event that such person or
entity is domiciled outside of the United States, has adopted employee
standards of conduct that provide equivalent protections to AIM's
client accounts. In performing sub-advisory services, such person or
entity will be subject to the direction and supervision of AIM, and
subject to the policies and control of the Boards of
Directors/Trustees of the respective AIM investment company client(s).
II. INTERPRETATION AND ENFORCEMENT
A. The Chief Executive Officer of AIM Management shall appoint a Code of
Ethics Committee ("Committee"). The Committee shall have the
responsibility for interpreting the provisions of the Code, for
adopting and implementing Procedures for the enforcement of the
provisions of the Code, and for determining whether a violation of the
provisions of the Code, or of any such related Procedures has
occurred. The Committee will appoint an officer to monitor personal
investment activity by "Covered Persons" (as defined in the Procedures
adopted hereunder), both before and after any trade occurs and to
prepare periodic and annual reports, conduct education seminars and
obtain employee certifications as deemed appropriate. In the event of
a finding that a violation has occurred requiring significant remedial
action, the Committee shall take such action as it deems appropriate
on the imposition of sanctions or initiation of disgorgement
proceedings. The Committee shall also make recommendations and submit
reports to the Boards of Directors/Trustees of AIM's investment
company clients.
B. If a sub-advisor has adopted a code of ethics in accordance with
Section 17(j) of the 1940 Act, then pursuant to a sub-advisory
agreement with AIM, it shall be the duty of such sub-advisor to
furnish AIM with a copy of the following:
o code of ethics and related procedures of the sub-advisor, and a
statement as to its employees' compliance therewith;
o any statement or policy on insider trading adopted pursuant to
Section 204A under the 1940 Act; and the procedures designed to
prevent the misuse of material non-public information by any
person associated with such sub-advisor; and
o such other information as may reasonably be necessary for AIM to
report to the Boards of Directors/Trustees of its investment
company client account(s) as to such sub-advisor's adherence to
the Boards' policies and controls referenced in Section I.B.
above.
III. PROCEDURES ADOPTED UNDER THE CODE
From time to time, AIM's Committee shall adopt Procedures to carry out the
intent of the Code. Among other things, the Procedures require certain new
employees to complete an Asset Disclosure Form, a Brokerage Accounts
Listing Form and such other forms as deemed appropriate by the Committee.
Such Procedures are hereby incorporated into the Code and are made a part
of the Code. Therefore, a violation of the Procedures shall be deemed a
violation of the Code itself.
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<PAGE> 3
IV. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
A. Each employee shall have and maintain knowledge of and shall comply
strictly with all applicable federal and state laws and all rules and
regulations of any governmental agency or self-regulatory organization
governing his/her actions as an employee.
B. Each employee shall comply with all laws and regulations, and AIM's
prohibition against insider trading. Trading on or communicating
material non-public information, or "inside information", of any sort,
whether obtained in the course of research activities, through a
client relationship or otherwise, is strictly prohibited.
C. Each employee shall comply with the procedures and guidelines
established by AIM to ensure compliance with applicable federal and
state laws and regulations of governmental agencies and
self-regulatory organizations. No employee shall knowingly participate
in, assist, or condone any act in violation of any statute or
regulation governing AIM or any act that would violate any provision
of this Code, or of the Procedures adopted hereunder.
D. Each employee shall have and maintain knowledge of and shall comply
with the provisions of this Code and any Procedures adopted hereunder.
E. Each employee having supervisory responsibility shall exercise
reasonable supervision over employees subject to his/her control, with
a view to preventing any violation by such persons of applicable
statutes or regulations, AIM's corporate procedures, or the provisions
of the Code, or the Procedures adopted hereunder.
F. Any employee obtaining evidence that an act in violation of applicable
statutes, regulations or provisions of the Code or of any Procedures
adopted hereunder has occurred shall immediately report such evidence
to the Chief Compliance Officer of AIM. Such action by the employee
will remain confidential, unless the employee waives confidentiality
or federal or state authorities compel disclosure. Failure to report
such evidence may result in disciplinary proceedings and may include
sanctions as set forth in Section VI hereof.
V. ETHICAL STANDARDS
A. Employees shall conduct themselves in a manner consistent with the
highest ethical and fiduciary standards. They shall avoid any action,
whether for personal profit or otherwise, that results in an actual or
potential conflict of interest with AIM or its client accounts, or
which may be otherwise detrimental to the interests of the members of
AIM or its client accounts.(1)
B. Employees shall act in a manner consistent with their fiduciary
obligation to clients of AIM, and shall not deprive any client account
of an investment opportunity in order to personally benefit from that
opportunity.
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(1)Conflicts of interest generally result from a situation in which an
individual has a personal interest in a matter that is or may be competitive
with his or her responsibilities to other persons or entities (such as AIM or
its client accounts) or where an individual has or may have competing
obligations or responsibilities to two or more persons or entities. In the case
of the relationship between a client account on the one hand, and AIM, its
officers, directors and employees, on the other hand, such conflict may result
from the purchase or sale of securities for a client account and for the
personal account of the individual involved or the account of any "affiliate" of
such individual, as such term is defined in the 1940 Act. Such conflict may also
arise from the purchase or sale for a client account of securities in which an
officer, director or employee of AIM has an economic interest. Moreover, such
conflict may arise in connection with vendor relationships in which such
employee has any direct or indirect financial interest, family interests or
other personal interest. To the extent of conflicts of interest between AIM and
a vendor, such conflicts must be resolved in a manner that is not
disadvantageous to AIM. In any such case, potential or actual conflicts must be
disclosed to AIM and the first preference and priority must be to avoid such
conflicts of interest wherever possible and, where they unavoidably occur, to
resolve them in a manner that is not disadvantageous to a client.
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<PAGE> 4
C. Without the knowledge and approval of the Chief Executive Officer of
AIM Management, employees shall not engage in a business activity or
practice for compensation in competition with the members of AIM. Each
employee, who is deemed to be a "Covered Person" as defined in the
Procedures adopted hereunder, shall obtain the written approval of AIM
Management's Chief Executive Officer to participate on a board of
directors/trustees of any of the following organizations:
o publicly traded company, partnership or trust;
o hospital or philanthropic institution;*
o local or state municipal authority;* and/or
o charitable organization.*
* These restrictions relate to organizations that have or intend to
raise proceeds in a public securities offering.
In the relatively small number of instances in which board approval is
authorized, investment personnel serving as directors shall be
isolated from those making investment decisions through AIM's "Chinese
Wall" Procedures.
D. Each employee, in making an investment recommendation or taking any
investment action, shall exercise diligence and thoroughness, and
shall have a reasonable and adequate basis for any such recommendation
or action.
E. Each employee shall not attempt to improperly influence for such
person's personal benefit any investment strategy to be followed or
investment action to be taken by the members of AIM for its client
accounts.
F. Each employee shall not improperly use for such person's personal
benefit any knowledge, whether obtained through such person's
relationship with AIM or otherwise, of any investment recommendation
made or to be made, or of any investment action taken or to be taken
by AIM for its client accounts.
G. Employees shall not disclose any non-public information relating to a
client account's portfolio or transactions or to the investment
recommendations of AIM, nor shall any employee disclose any non-public
information relating to the business or operations of the members of
AIM, unless properly authorized to do so.
H. Employees shall not accept, directly or indirectly, from a
broker/dealer or other vendor who transacts business with AIM or its
client accounts, any gifts, gratuities or other things of more than de
minimis value or significance that their acceptance might reasonably
be expected to interfere with or influence the exercise of independent
and objective judgment in carrying out such person's duties or
otherwise gives the appearance of a possible impropriety. For this
purpose, gifts, gratuities and other things of value shall not include
unsolicited entertainment so long as such unsolicited entertainment is
not so frequent or extensive as to raise any question of impropriety.
I. Employees who are registered representatives and/or principals of AIM
shall not acquire securities for an account for which he/she has a
direct or indirect beneficial interest in an initial public offering
("IPO") or on behalf of any person, entity or organization that is not
an AIM client. All other employees shall not acquire securities for an
account for which he/she has a direct or indirect beneficial interest
offered in an IPO or on behalf of any person, entity or organization
that is not an AIM client account except in those circumstances where
different amounts of such offerings are specified for different
investor types (e.g., private investors and institutional investors)
and such transaction has been pre-cleared by the Compliance Office.
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<PAGE> 5
J. All personal securities transactions by employees must be conducted
consistent with this Code and the Procedures adopted hereunder, and in
such a manner as to avoid any actual or potential conflicts of
interest or any abuse of such employee's position of trust and
responsibility. Unless an exemption is available, employees who are
deemed to be "Covered Persons" as defined in the Procedures adopted
hereunder, shall pre-clear all personal securities transactions in
securities in accordance with the Procedures adopted hereunder.
K. Each employee, who is deemed to be a "Covered Person" as defined in
the Procedures adopted hereunder, (or registered representative and/or
principal of AIM), shall refrain from engaging in personal securities
transactions in connection with a security that is not registered
under Section 12 of the Securities Act of 1933 (i.e., a private
placement security) unless such transaction has been pre-approved by
the Chief Compliance Officer or the Director of Investments (or their
designees).
L. Employees, who are deemed to be "Covered Persons" as defined in the
Procedures adopted hereunder, may not engage in a transaction in
connection with the purchase or sale of a security within seven
calendar days before and after an AIM investment company client trades
in that same (or equivalent) security unless the de minimis exemption
is available.
M. Each employee, who is deemed to be a "Covered Person" as defined in
the Procedures adopted hereunder, may not purchase and voluntarily
sell, or sell and voluntarily purchase the same (or equivalent)
securities of the same issuer within 60 calendar days unless such
employee complies with the disgorgement procedures adopted by the Code
of Ethics Committee. Subject to certain limited exceptions set forth
in the related Procedures, any transaction under this provision may
result in disgorgement proceedings for any profits received in
connection with such transaction by such employee.
VI. SANCTIONS
Employees violating the provisions of AIM's Code or any Procedures adopted
hereunder may be subject to sanctions, which may include, among other
things, restrictions on such person's personal securities transactions; a
letter of admonition, education or formal censure; fines, suspension,
re-assignment, demotion or termination of employment; or other significant
remedial action. Employees may also be subject to disgorgement proceedings
for transactions in securities that are inconsistent with Sections V.L. and
V.M. above.
VII. ADDITIONAL DISCLOSURE
This Code and the related Procedures cannot, and do not, cover every
situation in which choices and decisions must be made, because other
company policies, practices and procedures (as well as good common sense)
and good business judgment also apply. Every person subject to this Code
should read and understand these documents thoroughly. They present
important rules of conduct and operating controls for all employees.
Employees are also expected to present questions to the attention of their
supervisors and to the Chief Compliance Officer (or designee) and to report
suspected violations as specified in these documents.
For the Boards of Directors:
The AIM Management Group
by: /s/ CHARLES T. BAUER
------------------------------------
Charles T. Bauer
February 24, 2000
------------------------------------
Date
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