<PAGE> 1
As filed with the Securities and Exchange Commission on December 29, 1995
1933 Act Registration No. 2-25469
1940 Act Registration No. 811-1424
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. 47 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 47 [X]
(Check appropriate box or boxes.)
AIM EQUITY FUNDS, INC.
----------------------
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 1919, Houston, TX 77046
-------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
--------------
Charles T. Bauer
11 Greenway Plaza, Suite 1919, Houston, TX 77046
-------------------------------------------------
(Name and Address of Agent for Service)
Copy to:
Ofelia M. Mayo, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll
11 Greenway Plaza, Suite 1919 1735 Market Street, 51st Floor
Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed Public Offering: January 2, 1996
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on January 2, 1996 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) of rule 485.
(continued on next page)
<PAGE> 2
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Registrant continues its election to register an indefinite number of its
shares of Common Stock pursuant to Rule 24f-2 under the Investment Company Act
of 1940 and accordingly, filed its Rule 24f-2 Notice for the fiscal year ended
October 31, 1995, on December 22, 1995.
<PAGE> 3
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
<TABLE>
<CAPTION>
N-1A RETAIL CLASSES
ITEM NO. PROSPECTUS LOCATION
- -------- -------------------
<S> <C> <C> <C>
AIM CHARTER FUND
AIM WEINGARTEN FUND
AIM CONSTELLATION FUND
PART A
Item 1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses
Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . . . . Financial Highlights; Performance
Item 4. General Description of Registrant . . . . . . . . . . . . . . . . . . . . . . . . Cover Page; Summary;
Investment Programs;
Organization of the Company; General Information
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . Management; Financial Highlights;
General Information
Item 5a. Management's Discussion of Fund Performance . . . . . . . . . . . . . . . . [included in annual report]
Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . . . . . . . . . . . . Summary; Dividends,
Distributions and Tax Matters; Terms
and Conditions of Purchases of the
AIM Funds; Managment - Distribution Plans;
Organization of the Company; General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . . . . . . . . . How to Purchase Shares; Terms and
Conditions of Purchase of the AIM Funds;
Exchange Privilege; Table of Fees and Expenses;
Management; Special Plans;
Determination of Net Asset Value
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . How to Redeem Shares
Item 9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
AIM AGGRESSIVE GROWTH FUND
PART A
Item 1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses
Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . . . . Financial Highlights; Performance
Item 4. General Description of Registrant . . . . . . . . . . . . . . . . . . . . . . . . Cover Page; Summary;
Investment Program; Organization of
the Company; General Information
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . Management; Financial Highlights;
General Information
Item 5a. Management's Discussion of Fund Performance . . . . . . . . . . . . . . . . .[included in annual report]
Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . . . . . . . . . . . . Summary; Dividends,
Distributions and Tax Matters;
Organization of the Company; General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . . . . . . . . . How to Purchase Shares; Terms and
Conditions of Purchase of the AIM Funds;
Exchange Privilege; Table of Fees and Expenses;
Management; Special Plans;
Determination of Net Asset Value
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . How to Redeem Shares
Item 9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
RETAIL CLASSES
STATEMENT OF ADDITIONAL INFORMATION LOCATION
--------------------------------------------
<S> <C> <C> <C>
AIM CHARTER FUND
AIM WEINGARTEN FUND
AIM AGGRESSIVE GROWTH FUND
AIM CONSTELLATION FUND
PART B
Item 10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table of Contents
Item 12. General Information and History . . . . . . . . . . . . . . . . . . . . . . General Information
About the Funds
Item 13. Investment Objectives and Policies . . . . . . . . . . . . . . . . . Investment Objectives and
Policies; Portfolio Transactions
and Brokerage; Investment Restrictions
Item 14. Management of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . Management
Item 15. Control Persons and Principal
Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . Miscellaneous Information
Item 16. Investment Advisory and
Other Services . . . . . . . . . . . . . . . . . . . . Management; The Distribution Plans; The
Distributor; Miscellaneous Information
Item 17. Brokerage Allocation . . . . . . . . . . . . . . . . . . . . . . . . . Portfolio Transactions
and Brokerage
Item 18. Capital Stock and
Other Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . General Information
About the Funds
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . . . . . . . . How to Purchase and Redeem Shares;
The Distributor; Net Asset Value Determination
Item 20. Tax Status . . . . . . . . . . . . . . . . . . . . . Dividends, Distributions, and Tax Matters
Item 21. Underwriters . . . . . . . . . . . . . . . . . . . . . The Distribution Plans; The Distributor
Item 22. Calculation of Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . Performance
Item 23. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Statements
INSTITUTIONAL CLASSES
PROSPECTUS LOCATION
-------------------
AIM CHARTER FUND
AIM WEINGARTEN FUND
AIM CONSTELLATION FUND
PART A
Item 1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and
Expenses
Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . . . . . . . Financial Highlights
Item 4. General Description of Registrant . . . . . . . . . . . Cover Page; Summary; Investment Programs;
Organization of the Company; General Information
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . Management; General Information
Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . . . . . . . . . . Summary; Dividends,
Distributions and Tax Matters; General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . . . . . . Purchase of Shares; Determination
of Net Asset Value
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . Redemption of Shares
Item 9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
INSTITUTIONAL CLASSES
STATEMENT OF ADDITIONAL INFORMATION LOCATION
--------------------------------------------
AIM CHARTER FUND
AIM WEINGARTEN FUND
AIM CONSTELLATION FUND
PART B
Item 10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table of Contents
Item 12. General Information and History . . . . . . . . . . . . . . General Information About the Funds
Item 13. Investment Objectives and Policies . . . . . . . . . . . . . . . . . . Investment Programs and
Restrictions; Portfolio Transactions and
Brokerage; Investment Restrictions
Item 14. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management
Item 15. Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . Miscellaneous Information
Item 16. Investment Advisory and Other Services . . . . . . . . . . . . . . . . . . . . . . Management
Item 17. Brokerage Allocation . . . . . . . . . . . . . . . . . . Portfolio Transactions and Brokerage
Item 18. Capital Stock and Other Securities . . . . . . . . . . . . General Information About the Funds
Item 19. Purchase, Redemption and
Pricing of Securities Being Offered . . . . . . . . . . . . . . . . Purchases and Redemptions
Item 20. Tax Status . . . . . . . . . . . . . . . . . . . . . Dividends, Distributions, and Tax Matters
Item 21. Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchases and Redemptions
Item 22. Calculation of Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . Performance
Item 23. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Statements
PART C
Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C
to this Registration Statement.
</TABLE>
<PAGE> 6
APPLICATION
INSIDE
[LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS(R)
RETAIL CLASSES OF AIM EQUITY FUNDS, INC.
AIM CHARTER FUND
(Growth and Income)
AIM WEINGARTEN FUND
(Growth)
AIM CONSTELLATION FUND
(Capital Appreciation)
PROSPECTUS
JANUARY 2, 1996
This Prospectus contains information about the three mutual funds listed above
(individually referred to as a "Fund" or collectively as the "Funds"), which are
separate portfolios of AIM Equity Funds, Inc. (the "Company"), an open-ended,
series management investment company.
AIM CHARTER FUND is a diversified portfolio which seeks to provide growth of
capital, with current income as a secondary objective. To accomplish its
objectives, the Fund invests primarily in dividend-paying common stocks which
have prospects for both growth of capital and dividend income.
AIM WEINGARTEN FUND is a diversified portfolio which seeks to provide growth of
capital through investments primarily in common stocks of leading U.S. companies
considered by management to have strong earnings momentum.
AIM CONSTELLATION FUND is a diversified portfolio which seeks to provide capital
appreciation through investments in common stocks, with emphasis on medium-sized
and smaller emerging growth companies.
This Prospectus sets forth concisely the information about the Funds that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information dated
January 2, 1996, has been filed with the United States Securities and Exchange
Commission (the "SEC") and is incorporated herein by reference. The Statement of
Additional Information is available without charge upon written request to the
Company at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173.
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUNDS' SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUNDS INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 7
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
SUMMARY.................................. 2 How to Purchase Shares................. A-1
THE FUNDS................................ 4 Terms and Conditions of Purchase of the
Table of Fees and Expenses............. 4 AIM Funds........................... A-2
Financial Highlights................... 6 Special Plans.......................... A-8
Performance............................ 10 Exchange Privilege..................... A-10
Investment Programs.................... 10 How to Redeem Shares................... A-12
Management............................. 13 Determination of Net Asset Value....... A-15
Organization of the Company............ 16 Dividends, Distributions and Tax
INVESTOR'S GUIDE TO THE AIM FAMILY OF Matters............................. A-16
FUNDS(R)............................... A-1 General Information.................... A-18
Introduction to The AIM Family of APPLICATION INSTRUCTIONS................. B-1
Funds............................... A-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUNDS
AIM Equity Funds, Inc. (the "Company") is a Maryland corporation organized as
an open-end, diversified, series, management investment company. Currently, the
Company offers four series comprising four separate investment portfolios, each
of which pursues unique investment objectives. This Prospectus relates to Class
A and Class B shares of AIM CHARTER FUND ("CHARTER") and AIM WEINGARTEN FUND
("WEINGARTEN") and Class A shares of AIM CONSTELLATION FUND ("CONSTELLATION"),
(the "Retail Class" or "Retail Classes"). The Company also offers shares of AIM
AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH"), another series portfolio of the
Company, as well as other classes of shares of the Funds, pursuant to separate
prospectuses. The other classes of the funds and the other portfolio of the
Company have different sales charges and expenses, which may affect performance.
To obtain information about AGGRESSIVE GROWTH call (713) 626-1919, Extension
5001 (in Houston) or (800) 347-4246 (elsewhere), or for the other classes of the
Funds call (800) 659-1005. See "General Information."
The assets of each Fund are invested in a separate portfolio. The classes of
each Fund share a common investment objective and portfolio of investments. The
income from the investment portfolio of a Fund is allocated to each class of the
Fund based on the net assets of such class as of the close of business on the
previous business day, as adjusted for the current day's shareholder activity.
Each class bears proportionately those expenses, such as the advisory fee, that
are allocated to the Fund as a whole and bears separately certain expenses, such
as those associated with the distribution of the shares of such class.
Consequently, the amounts available for payment of dividends and the net asset
value per share of each class will vary. See "General Information."
THE ADVISOR. A I M Advisors, Inc. ("AIM") serves as each Fund's investment
advisor pursuant to a Master Investment Advisory Agreement. AIM acts as manager
or advisor to 37 investment company portfolios. As of December 1, 1995, the
total assets of the investment company portfolios advised or managed by AIM or
its affiliates were approximately $41.2 billion. Under the Master Advisory
Agreement dated as of October 18, 1993 (the "Master Advisory Agreement"), AIM
receives a fee for its services based on each Fund's average daily net assets.
Under the Master Administrative Services Agreement between the Company and AIM
dated as of October 18, 1993 (the "Master Administrative Services Agreement"),
AIM may receive reimbursement of its costs to perform certain accounting and
other administrative services to the Funds. Under a Transfer Agency and Service
Agreement, A I M Fund Services, Inc. ("AFS"), AIM's wholly-owned subsidiary and
a registered transfer agent, receives a fee for its provision of transfer
agency, dividend distribution and disbursement, and shareholder services to the
Retail Classes of the Funds. Under the Master Sub-Advisory Agreement dated as of
October 18, 1993 (the "Master Sub-Advisory Agreement") between AIM and A I M
Capital Management, Inc. ("AIM Capital"), a wholly-owned subsidiary of AIM, AIM
Capital serves as sub-advisor for the Funds and receives compensation equal to
50% of the amount paid by the Funds to AIM. The total advisory fees paid by each
Fund are higher than those paid by many other investment companies of all sizes
and investment objectives. However, the effective fee paid by each Fund at its
respective current size is lower than the fees paid by many other funds with
similar investment objectives. See "Management."
PURCHASING SHARES. Investors may select Class A or Class B shares of the Funds
which are offered by this Prospectus at an offering price that reflects
differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions."
Class A Shares (all Funds) -- Shares are offered at net asset value plus any
applicable initial sales charge.
Class B Shares (Charter and Weingarten only) -- Shares are offered at net
asset value without an initial sales charge, and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six
years from the date such shares were purchased. Class B shares automatically
convert to Class A shares of the same Fund eight years following the end of the
calendar month in which a purchase was made. Class B shares are subject to
higher expenses than Class A shares.
2
<PAGE> 8
Initial investments in either class of shares must be at least $500 and
additional investments must be at least $50. The minimum initial investment is
modified for investments through tax-qualified retirement plans and accounts
initially established with an Automatic Investment Plan. The distributor of the
Funds' shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
SUITABILITY FOR INVESTORS. An investor in Class A or Class B shares of CHARTER
or WEINGARTEN should consider the method of purchasing shares that is most
beneficial given the amount of the purchase, the length of time the shares are
expected to be held, whether dividends will be paid in cash or reinvested in
additional shares of the Fund and other circumstances. Investors should consider
whether, during the anticipated life of their investment in the Fund, the
accumulated distribution fees and any applicable contingent deferred sales
charges on Class B shares prior to conversion would be less than the initial
sales charge and accumulated distribution fees on Class A shares purchased at
the same time, and to what extent such differential would be offset by the
higher return on Class A shares. To assist investors in making this
determination, the table under the caption "Table of Fees and Expenses" sets
forth examples of the charges applicable to each class of shares. Class A shares
will normally be more beneficial than Class B shares to the investor who
qualifies for reduced initial sales charges, as described above. Therefore, AIM
Distributors will reject any order for purchase of more than $250,000 for Class
B shares.
EXCHANGE PRIVILEGE. The Funds are among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Class A and Class B
shares of the Funds may be exchanged for shares of other funds in The AIM Family
of Funds in the manner and subject to the policies and charges set forth herein.
See "Exchange Privilege."
REDEEMING SHARES. Class A shareholders of the Funds may redeem all or a
portion of their shares at the respective Fund's net asset value on any business
day, generally without charge. A contingent deferred sales charge of 1% may
apply to certain redemptions where a purchase of more than $1 million is made at
net asset value. See "How to Redeem Shares -- Contingent Deferred Sales Charge
Program for Large Purchases."
Holders of Class B shares may redeem all or a portion of their shares at net
asset value on any business day, less a contingent deferred sales charge for
redemptions made within six years from the date such shares were purchased.
Class B shares redeemed after six years from the date such shares were purchased
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Funds currently declare and pay dividends from net
investment income, if any, on a quarterly basis with respect to CHARTER and on
an annual basis with respect to WEINGARTEN and CONSTELLATION. Each Fund makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions paid with respect to Class A or Class B shares of a Fund may
be reinvested at current net asset value, (without payment of a sales charge) in
additional shares of such class of the Fund or may be invested in shares of such
class of the other funds in The AIM Family of Funds. See "Dividends,
Distributions and Tax Matters" and "Special Plans."
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered
service marks of A I M Management Group Inc.
3
<PAGE> 9
THE FUNDS
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in any of the Funds
understand the various costs that an investor will bear, both directly and
indirectly. The fees and expenses for Class A shares of CHARTER, WEINGARTEN, and
CONSTELLATION set forth in the table are based on the actual average net assets
of each Fund for its 1995 fiscal year. The fees and expenses for Class B shares
of CHARTER and WEINGARTEN set forth in the table are based on the estimated
expenses for the current fiscal year. The rules of the SEC require that the
maximum sales charge be reflected in the table, even though certain investors
may qualify for reduced sales charges. See "How to Purchase Shares."
<TABLE>
<CAPTION>
CHARTER WEINGARTEN CONSTELLATION
----------------- ----------------- -------------
CLASS A CLASS B CLASS A CLASS B CLASS A
------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares
(as a percentage of offering price)............ 5.50% None 5.50% None 5.50%
Maximum sales load imposed on reinvested dividends
and distributions.............................. None None None None None
Deferred sales load (as a percentage of original
purchase price or redemption proceeds,
whichever is lower)............................ None1 5.00% None(1) 5.00% None(1)
Redemption fees................................... None None None None None
Exchange fee(2)................................... None None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management fee (after fee waiver)................. .64% .64% .61%* .61%* .62%*
Distribution plan payments(3)..................... .30% 1.00% .30% 1.00% .30%
Other expenses:
Transfer agent fees and costs.................. .15% .19% .16% .20% .17%
---- ---- ---- ---- ----
Other.......................................... .08% .15% .10% .10% .07%
---- ---- ---- ---- ----
Total other expenses........................... .23% .34% .26% .30% .24%
---- ---- ---- ---- ----
Total fund operating expenses..................... 1.17% 1.98% 1.17% 1.91% 1.16%
==== ==== ==== ==== ====
- ---------------
1 Purchases of $1 million or more are not subject to an initial sales charge.
However, a contingent deferred sales charge of 1% applies to certain
redemptions made within 18 months from the date such shares were purchased.
See the Investor's Guide, under the caption "How to Redeem
Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
2 No fee is charged for exchanges among The AIM Family of Funds; however, a $5
service fee will be charged for exchanges by market timers.
3 As a result of 12b-1 fees, a long-term shareholder may pay more than the
economic equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers, Inc. Given the Rule
12b-1 fee of the Fund, however, it is estimated that it would take a
substantial number of years for a shareholder to exceed such maximum
front-end sales charges.
* WEINGARTEN'S and CONSTELLATION'S investment advisor is currently waiving a
portion of its fees. Had there been no fee waivers during the year,
management fees would have been 0.63% and 0.63%, respectively, of average net
assets. There can be no assurance that future waivers of fees (if any) will
not vary from the figures reflected in the table.
4
<PAGE> 10
EXAMPLES. An investor would pay the following expenses on a $1,000 investment in
Class A shares of the Funds, assuming (a) a 5% annual return and (b) redemption
at the end of each time period:
</TABLE>
<TABLE>
<CAPTION>
CHARTER WEINGARTEN CONSTELLATION
-------- ----------- --------------
<S> <C> <C> <C>
1 year............................................ $ 66 $ 66 $ 66
3 years........................................... $ 90 $ 90 $ 90
5 years........................................... $116 $116 $115
10 years........................................... $189 $189 $188
</TABLE>
The above examples assume payment of a sales charge at the time of purchase;
actual expenses may vary for purchases of $1 million or more, which are made at
net asset value and subject to contingent deferred sales charge for 18 months
following the date such shares were purchased.
An investor would pay the following expenses on a $1,000 investment in Class B
shares of CHARTER and WEINGARTEN, assuming (1) a 5% annual return and (2)
redemption at the end of each time period:
<TABLE>
<CAPTION>
CHARTER WEINGARTEN
FUND FUND
------- ----------
<S> <C> <C>
1 year..................................................... $ 70 $ 69
3 years.................................................... $ 92 $ 90
</TABLE>
An investor would pay the following expenses on the same $1,000 investment in
Class B shares of CHARTER and WEINGARTEN, assuming no redemption at the end of
each time period:
<TABLE>
<CAPTION>
CHARTER WEINGARTEN
FUND FUND
------- ----------
<S> <C> <C>
1 year..................................................... $ 20 $ 19
3 years.................................................... $ 62 $ 60
</TABLE>
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF A PARTICULAR
FUND'S ACTUAL OR FUTURE EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN.
IN ADDITION, WHILE THE EXAMPLES ASSUME A 5% ANNUAL RETURN, A FUND'S ACTUAL
PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN THAT IS GREATER OR LESS
THAN 5%. THE EXAMPLES ASSUME REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS AND
THAT THE PERCENTAGE AMOUNTS FOR TOTAL FUND OPERATING EXPENSES REMAIN THE SAME
FOR EACH YEAR.
5
<PAGE> 11
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Shown below for the periods indicated are per share data, ratios and
supplemental data (collectively, "data") for the Class A and Class B shares of
each of the Funds. The data with respect to Class A shares of CHARTER for the
fiscal years ended October 31, 1995 and 1994, has been audited by KPMG Peat
Marwick LLP, independent auditors, whose unqualified report thereon appears in
the Statement of Additional Information. The data with respect to Class A shares
of CHARTER for the eight years ended October 31, 1993, has been audited by Tait,
Weller & Baker, independent auditors, whose unqualified report thereon appears
in the Statement of Additional Information. The data with respect to Class A
shares of WEINGARTEN and CONSTELLATION for each of the years in the seven year
period ended October 31, 1995, the ten months ended October 31, 1988 and each of
the years in the two-year period ended December 31, 1987 has been audited by
KPMG Peat Marwick LLP, independent auditors, whose unqualified report thereon
appears in the Statement of Additional Information. The data with respect to
Class B shares of CHARTER and WEINGARTEN for the period June 26, 1995 through
October 31, 1995 has been audited by KPMG Peat Marwick LLP, independent
auditors, whose unqualified report thereon appears in the Statement of
Additional Information.
(PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
AIM CHARTER FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- --------- --------
<C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 8.90 $ 9.46 $ 8.36 $ 8.42 $ 6.55
Income from investment
operations:
Net investment income......... 0.15 0.21 0.17 0.18 0.18
Net gains (losses) on
securities (both realized
and unrealized)............. 2.11 (0.45) 1.22 0.16 2.15
---------- ---------- ---------- ----------- --------
Total from investment
operations.................. 2.26 (0.24) 1.39 0.34 2.33
---------- ---------- ---------- ----------- --------
Less distributions:
Dividends from net
investment income........... (0.20) (0.16) (0.29) (0.17) (0.15)
Distributions from capital
gains....................... (0.33) (0.16) -- (0.23) (0.31)
---------- ---------- ---------- ----------- --------
Total distributions........... (0.53) (0.32) (0.29) (0.40) (0.46)
---------- ---------- ---------- ----------- --------
Net asset value, end of period.. $ 10.63 $ 8.90 $ 9.46 $ 8.36 $ 8.42
========== ========== ========== ========== ========
Total return(b)................. 27.03% (2.55)% 16.92% 4.17% 37.65%
========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted).............. $1,974,417 $1,579,074 $1,690,482 $1,256,151 $443,546
========== ========== ========== ========== ========
Ratio of expenses to
average net assets.......... 1.17%(c) 1.17% 1.17% 1.17% 1.29%
========== ========== ========== ========== ========
Ratio of net investment
income to average net
assets...................... 1.55%(c) 2.32% 1.89% 2.14% 2.14%
========== ========== ========== ========== ========
Portfolio turnover rate....... 161% 126% 144% 95% 144%
========== ========== ========== ========== ========
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
1990 1989 1988 1987 1986(a)
-------- ------- ------- ------- -------
<C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 6.97 $ 5.40 $ 6.61 $ 8.18 $ 6.83
Income from investment
operations:
Net investment income......... 0.18 0.21 0.15 0.09 0.16
Net gains (losses) on
securities (both realized
and unrealized)............. 0.08 1.55 0.16 0.35 1.87
-------- ------- ------- ------- -------
Total from investment
operations.................. 0.26 1.76 0.31 0.44 2.03
-------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income........... (0.26) (0.19) (0.12) (0.14) (0.17)
Distributions from capital
gains....................... (0.42) -- (1.40) (1.87) (0.51)
-------- ------- ------- ------- -------
Total distributions........... (0.68) (0.19) (1.52) (2.01) (0.68)
-------- ------- ------- ------- -------
Net asset value, end of period.. $ 6.55 $ 6.97 $ 5.40 $ 6.61 $ 8.18
======== ======= ======= ======= =======
Total return(b)................. 3.86% 33.68% 5.90% 6.72% 31.59%
======== ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted).............. $102,499 $70,997 $65,799 $82,756 $81,985
======== ======= ======= ======= =======
Ratio of expenses to
average net assets.......... 1.35% 1.35% 1.46% 1.15% 1.21%
======== ======= ======= ======= =======
Ratio of net investment
income to average net
assets...................... 2.51% 3.73% 2.83% 1.57% 1.91%
======== ======= ======= ======= =======
Portfolio turnover rate....... 215% 131% 247% 225% 75%
======== ======= ======= ======= =======
</TABLE>
- ---------------
(a) The Fund changed investment advisors on May 2, 1986.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $1,669,053,423.
6
<PAGE> 12
AIM CHARTER FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
PERIOD
JUNE 26,
THROUGH
OCTOBER 31,
1995
-------
<S> <C>
Net asset value, beginning of period............................................................................... $ 9.81
-------
Income from investment operations:
Net investment income............................................................................................ 0.03
-------
Net gains (losses) on securities (both realized and unrealized).................................................... 0.80
-------
Total from investment operations................................................................................. 0.83
-------
Less distributions:
Dividends from net investment income............................................................................. (0.02)
-------
Distributions from capital gains................................................................................. --
-------
Total distributions.............................................................................................. (0.02)
-------
Net asset value, end of period..................................................................................... $ 10.62
========
Total return(a).................................................................................................... 8.48%
========
Ratios/supplemental data:
Net assets, end of period (000s omitted)......................................................................... $67,592
========
Ratio of expenses to average net assets.......................................................................... 1.98%(b)
========
Ratio of net investment income to average net assets............................................................. 0.74%(b)
========
Portfolio turnover rate.......................................................................................... 161%
========
</TABLE>
- ---------------
(a) Total returns do not deduct contingent deferred sales charges and are not
annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $26,935,502.
7
<PAGE> 13
AIM WEINGARTEN FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
OCTOBER 31,
----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 17.82 $ 17.62 $ 16.68 $ 15.76 $ 11.15 $ 12.32
Income from investment
operations:
Net investment income......... -- 0.07 0.10 0.10 0.11 0.09
Net gains (losses) on
securities (both realized
and unrealized)............. 4.36 0.57 0.93 0.98 4.80 (0.56)
---------- ---------- ---------- ---------- ---------- --------
Total from investment
operations.................. 4.36 0.64 1.03 1.08 4.91 (0.47)
---------- ---------- ---------- ---------- ---------- --------
Less distributions:
Dividends from net
investment income........... (0.07) (0.11) (0.09) (0.07) (0.09) (0.06)
Distributions from net
realized capital gains...... (1.78) (0.33) -- (0.09) (0.21) (0.64)
---------- ---------- ---------- ---------- ---------- --------
Total distributions........... (1.85) (0.44) (0.09) (0.16) (0.30) (0.70)
---------- ---------- ---------- ---------- ---------- --------
Net asset value, end of
period...................... $ 20.33 $ 17.82 $ 17.62 $ 16.68 $ 15.76 $ 11.15
========== ========== ========== ========== ========== ========
Total return(c)................. 28.20% 3.76% 6.17% 6.85% 44.88% (4.03)%
========== ========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted).............. $4,564,730 $3,965,858 $4,999,983 $5,198,835 $2,534,331 $632,522
========== ========== ========== ========== ========== ========
Ratio of expenses to
average net assets.......... 1.2%(d) 1.2% 1.1% 1.1% 1.2% 1.3%
========== ========== ========== ========== ========== ========
Ratio of net investment
income to average net
assets...................... 0.0%(d) 0.4% 0.6% 0.6% 0.7% 0.8%
========== ========== ========== ========== ========== ========
Portfolio turnover rate......... 139% 136% 109% 37% 46% 79%
========== ========== ========== ========== ========== ========
Borrowings for the period:
Amount of debt outstanding
at end of period............ -- -- -- -- -- --
Average amount of debt
outstanding during the
period(e)................... $ 593,789 -- -- -- -- $485,359
Average number of shares
outstanding during the
period (000s
omitted)(e)................. 229,272 249,351 314,490 246,273 102,353 44,770
Average amount of debt per
share during the period..... $ 0.0026 -- -- -- -- $ .011
<CAPTION>
OCTOBER 31, DECEMBER 31,(a)
------------------------ --------------------
1989 1988(b) 1987 1986(b)
---------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 9.23 $ 8.36 $ 8.82 $ 9.10
Income from investment
operations:
Net investment income......... 0.10 0.07 0.07 0.09
Net gains (losses) on
securities (both realized
and unrealized)............. 3.10 0.80 0.83 2.11
---------- -------- -------- --------
Total from investment
operations.................. 3.20 0.87 0.90 2.20
---------- -------- -------- --------
Less distributions:
Dividends from net
investment income........... (0.11) -- (0.09) (0.09)
Distributions from net
realized capital gains...... -- -- (1.27) (2.39)
---------- -------- -------- --------
Total distributions........... (0.11) -- (1.36) (2.48)
---------- -------- -------- --------
Net asset value, end of
period...................... $ 12.32 $ 9.23 $ 8.36 $ 8.82
========== ======== ======== ========
Total return(c)................. 35.13% 10.41% 9.75% 25.06%
========== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted).............. $ 393,320 $297,284 $286,453 $171,138
========== ======== ======== ========
Ratio of expenses to
average net assets.......... 1.2% 1.1%(f) 1.0% 1.0%
========== ======== ======== ========
Ratio of net investment
income to average net
assets...................... 1.0% 0.9%(f) 0.7% 0.8%
========== ======== ======== ========
Portfolio turnover rate......... 87% 93% 108% 113%
========== ======== ======== ========
Borrowings for the period:
Amount of debt outstanding
at end of period.............. $3,781,000 -- $355,000 --
Average amount of debt
outstanding during the
period(e)................... $1,082,551 $228,587 $509,259 $ 56,307
Average number of shares
outstanding during the
period (000s
omitted)(e)................. 31,275 33,031 25,825 18,519
Average amount of debt per
share during the period..... $ .035 $ .007 $ .020 $ .003
</TABLE>
- ---------------
(a) Per share information has been restated to reflect a 2 for 1 stock split,
effected in the form of a dividend, on September 29, 1987.
(b) The Fund changed investment advisors on May 1, 1986 and on September 30,
1988.
(c) Does not deduct sales charges and, for periods less than one year, total
returns are not annualized.
(d) After waiver of advisory fees. Ratios of expenses and net investment income
to average net assets prior to waiver of advisory fees were 1.2% and
(0.04%), respectively. Ratios are based on average net assets of
$4,072,429,878.
(e) Averages computed on a daily basis.
(f) Annualized.
8
<PAGE> 14
AIM WEINGARTEN FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
PERIOD
JUNE 26,
THROUGH
OCTOBER 31,
1995
-------
<S> <C>
Net asset value, beginning of period................................................................................. $ 18.56
Income from investment operations: Net investment income (loss)...................................................... (0.03)
Net gains (losses) on securities (both realized and unrealized)..................................................... 1.75
-------
Total from investment operations.................................................................................... 1.72
-------
Less distributions: Dividends from net investment income.............................................................. --
Distributions from net realized capital gains........................................................................ --
-------
Total distributions.................................................................................................. --
-------
Net asset value, end of period....................................................................................... $ 20.28
=======
Total return(a)....................................................................................................... 9.27%
=======
Ratios/supplemental data:
Net assets, end of period (000s omitted)............................................................................. $43,238
=======
Ratio of expenses to average net assets.............................................................................. 1.91%(b)
=======
Ratio of net investment income (loss) to average net assets.......................................................... (0.76)%(b)
=======
Portfolio turnover rate............................................................................................... 139%
=======
Borrowings for the period:
Amount of debt outstanding at end of period (000s omitted)........................................................... --
Average amount of debt outstanding during the period (000s omitted)(c)............................................... 3
Average number of shares outstanding during the period (000s omitted)(c)............................................. 1,036
Average amount of debt per share during the period................................................................... $0.0029
</TABLE>
- ---------------
(a) Do not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Annualized. After waiver of advisory fees. Annualized ratios of expenses and
net investment income (loss) to average net assets prior to waiver of
advisory fees were 1.94% and (0.79)%, respectively. Ratios are based on
average net assets of $19,567,695.
(c) Averages computed on a daily basis.
AIM CONSTELLATION FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
OCTOBER 31,
-------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 18.31 $ 17.04 $ 13.25 $ 11.72 $ 6.59 $ 9.40
Income from investment operations:
Net investment income (loss)........... (0.05) (0.02) (0.04) (0.04) (0.03) (0.03)
Net gains (losses) on securities (both
realized and unrealized)............. 5.95 1.29 3.83 1.76 5.16 (1.23)
---------- ---------- --------- -------- --------- ---------
Total from investment operations....... 5.90 1.27 3.79 1.72 5.13 (1.26)
---------- ---------- --------- -------- --------- ---------
Less distributions:
Dividends from net investment income... -- -- -- -- -- (0.01)
Distributions from capital gains....... (0.52) -- -- (0.19) -- (1.54)
---------- ---------- ---------- -------- --------- ---------
Total distributions.................... (0.52) -- -- (0.19) -- (1.55)
---------- ---------- ---------- -------- --------- ---------
Net asset value, end of period.......... $ 23.69 $ 18.31 $ 17.04 $ 13.25 $ 11.72 $ 6.59
========== ========== ========== ======== ========= =========
Total return(c)......................... 33.43% 7.45% 28.60% 14.82% 77.85% (16.17)%
========== ========== ========== ======== ========= =========
Ratios/supplemental data:
Net assets, end of period (000s
omitted)............................. $7,000,350 $3,726,029 $2,756,497 $966,472 $ 342,835 $ 83,304
========== ========== ========== ======== ========= =========
Ratio of expenses to average net
assets............................... 1.2%(d) 1.2% 1.2% 1.2% 1.4% 1.4%
========== ========== ========== ======== ========= ==========
Ratio of net investment income (loss)
to average net assets................ (0.3)%(d) (0.2)% (0.3)% (0.4)% (0.4)% (0.4)%
========== ========== ========== ======== ========= ==========
Portfolio turnover rate................. 45% 79% 70% 62% 109% 192%
========== ========== ========== ======== ========= ==========
Borrowings for the period:
Amount of debt outstanding at end of
period (000s omitted)................ -- -- -- -- -- --
Average amount of debt outstanding
during the period(f)................. -- -- -- -- -- $2,344,356
Average number of shares outstanding
during the period (000s
omitted)(f).......................... 244,731 182,897 124,101 55,902 21,205 11,397
Average amount of debt per share during
the period........................... -- -- -- -- -- $ 0.21
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 31, DECEMBER 31,
---------------------- -----------------------
1989 1988(b) 1987(a) 1986(b)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 7.34 $ 6.35 $ 10.58 $ 10.90
Income from investment operations:
Net investment income (loss)........... 0.01 (0.03) (0.05) (0.07)
Net gains (losses) on securities (both
realized and unrealized)............. 2.46 1.02 0.36 3.13
---------- ---------- ---------- ----------
Total from investment operations....... 2.47 0.99 0.31 3.06
---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income... -- -- -- --
Distributions from capital gains....... (0.41) -- (4.54) (3.38)
---------- ---------- ---------- ----------
Total distributions.................... (0.41) -- (4.54) (3.38)
---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 9.40 $ 7.34 $ 6.35 $ 10.58
========== ========== ========== ==========
Total return(c)......................... 35.50% 15.59% 2.85% 28.56%
========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s
omitted)............................. $ 74,731 $ 78,272 $ 71,418 $ 78,885
========== ========== ========== ==========
Ratio of expenses to average net
assets............................... 1.4% 1.3%(e) 1.1% 1.1%
========== ========== ========== ==========
Ratio of net investment income (loss)
to average net assets................ 0.1% (0.6)%(e) (0.4)% (0.5)%
========== ========== ========== ==========
Portfolio turnover rate................. 149% 131% 135% 107%
========== ========== ========== ==========
Borrowings for the period:
Amount of debt outstanding at end of
period (000s omitted)................ $ 9,610 $ 5,266 $ 109 $ 3,740
Average amount of debt outstanding
during the period(f)................. $2,608,721 $2,147,733 $2,365,545 $3,187,597
Average number of shares outstanding
during the period (000s
omitted)(f).......................... 10,050 10,845 9,668 8,519
Average amount of debt per share during
the period........................... $ 0.26 $ 0.20 $ 0.24 $ 0.37
</TABLE>
- ---------------
(a) Per share information has been restated to reflect a 2 for 1 stock split,
effected in the form of a dividend, on June 19, 1987.
(b) The Fund changed investment advisors on September 30, 1988 and May 1, 1986.
(c) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(d) Ratios are based on average net assets of $4,968,568,278.
(e) Annualized.
(f) Averages computed on a daily basis.
9
<PAGE> 15
- --------------------------------------------------------------------------------
PERFORMANCE
Each Fund's performance may be quoted in advertising in terms of yield or
total return. All advertisements of the Funds will disclose the maximum sales
charge (including deferred sales charge) to which investments in shares of the
Funds may be subject. CHARTER and WEINGARTEN will also include performance data
on Class A and Class B shares in any advertisement or promotional material which
includes such fund performance data. 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. See the Statement of Additional Information for further details
concerning performance comparisons used in advertisements by the Funds. Further
information regarding each Fund's performance is contained in that Fund's annual
report to shareholders which is available upon request and without charge.
Standardized total return for Class A shares of a Fund reflects the deduction
of the maximum initial sales charge at the time of purchase. Standardized total
return for Class B shares of CHARTER and WEINGARTEN reflects the deduction of
the maximum applicable contingent deferred sales charge on a redemption of
shares held for the period.
A 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 and that all charges and expenses are deducted. A cumulative
total return reflects a Fund's performance over a stated period of time. An
average annual total return reflects the hypothetical annually compounded 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 A 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, a Fund may separate its
cumulative and average annual returns into income results and capital gain or
loss.
Yield is computed in accordance with a standardized formula described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, yield
information may not provide a basis for comparison with investments which pay a
fixed rate of interest for a stated period of time. Yield is a function of the
type and quality of a Fund's investments, the Fund's maturity and the Fund's
operating expense ratio.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of any Fund. Such a practice will
have the effect of increasing that Fund's yield and total return. The
performance of each Fund will vary from time to time and past results are not
necessarily indicative of future results. A 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 a Fund is not insured or guaranteed.
These factors should be carefully considered by the investor before making an
investment in any Fund.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAMS
The Company has four series, each of which is a separate investment
portfolio -- CHARTER, WEINGARTEN, AGGRESSIVE GROWTH and CONSTELLATION. Three of
the investment portfolios, CHARTER, WEINGARTEN and CONSTELLATION are discussed
herein. Each of the Funds has its own investment objectives and investment
program. There can, of course, be no assurance that any Fund will in fact
achieve its objectives since all investments are inherently subject to market
risks. The Board of Directors of the Company reserves the right to change any of
the investment policies, strategies or practices of any of the Funds, as
described in this Prospectus and in the Statement of Additional Information,
without shareholder approval, except in those instances where shareholder
approval is expressly required.
Each of the Funds may invest, for temporary or defensive purposes, all or a
substantial portion of its assets in investment grade (high quality) corporate
bonds, commercial paper, or U.S. Government obligations. In addition, a portion
of each Fund's assets may be held, from time to time, in cash, repurchase
agreements, or other debt securities, when such positions are deemed advisable
in light of economic or market conditions.
AIM CHARTER FUND. The primary investment objective of CHARTER is to seek
growth of capital, with current income as a secondary objective. Although the
amount of CHARTER'S current income will vary from time to time, it is
anticipated that the current income realized by CHARTER will generally be
greater than that realized by mutual funds whose sole objective is growth of
capital. CHARTER seeks to achieve its objective by investing primarily in common
stocks of companies believed by management to have the potential for above
average growth in revenues and earnings. The Fund may satisfy the foregoing
requirement in part through the ownership of securities which are convertible
into, or exchangeable for, common stocks. Generally, at least 80% of CHARTER'S
investments will be in interest, income or dividend paying stocks.
AIM WEINGARTEN FUND. The investment objective of WEINGARTEN is to seek growth
of capital principally through investment in common stocks of seasoned and
better capitalized companies. Current income will not be an important criterion
of investment selection, and any such income should be considered incidental. It
is anticipated that common stocks will be the principal form of investment by
the Fund. WEINGARTEN'S portfolio is primarily comprised of securities of two
basic categories of companies: (a) "core"
10
<PAGE> 16
companies, which Fund management considers to have experienced above-average and
consistent long-term growth in earnings and to have excellent prospects for
outstanding future growth, and (b) "earnings acceleration" companies which Fund
management believes are currently enjoying a dramatic increase in profits. See
"Investment Objectives and Policies" in the Statement of Additional Information.
AIM CONSTELLATION FUND. The investment objective of CONSTELLATION is to seek
capital appreciation. CONSTELLATION aggressively seeks to increase shareholders'
capital by investing principally in common stocks, with emphasis on medium-sized
and smaller emerging growth companies. Management of the Fund will be
particularly interested in companies that are likely to benefit from new or
innovative products, services or processes that should enhance such companies'
prospects for future growth in earnings. As a result of this policy, the market
prices of many of the securities purchased and held by the Fund may fluctuate
widely. Any income received from securities held by the Fund will be incidental,
and an investor should not consider a purchase of shares of the Fund as
equivalent to a complete investment program. CONSTELLATION'S portfolio is
primarily comprised of securities of two basic categories of companies: (a)
"core" companies, which Fund management considers to have experienced
above-average and consistent long-term growth in earnings and to have excellent
prospects for outstanding future growth, and (b) "earnings acceleration"
companies which Fund management believes are currently enjoying a dramatic
increase in profits. See "Certain Investment Strategies and Policies" below and
"Investment Objectives and Policies" in the Statement of Additional Information.
There can, of course, be no assurance that the Funds will in fact achieve
their objectives since all investments are inherently subject to market risks.
The Board of Directors of the Company reserves the right to change any of the
investment policies, strategies or practices of the Funds, as described in this
Prospectus and in the Statement of Additional Information, without shareholder
approval, except in those instances where shareholder approval is expressly
required.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of their respective
objectives and policies, the Funds may employ one or more of the following
strategies in order to enhance investment results:
REPURCHASE AGREEMENTS. Each of the Funds may enter into repurchase agreements.
A repurchase agreement is an instrument under which the Fund acquires ownership
of a debt security and the seller agrees, at the time of the sale, to repurchase
the obligation at a mutually agreed upon time and price, thereby determining the
yield during the Fund's holding period. With regard to repurchase transactions,
in the event of a bankruptcy or other default of a seller of a repurchase
agreement, a Fund could experience both delays in liquidating the underlying
securities and losses, including: (a) a possible decline in the value of the
underlying security during the period while the Fund seeks to enforce its rights
thereto; (b) possible subnormal levels of income and lack of access to income
during this period; and (c) expenses of enforcing its rights.
STOCK INDEX FUTURES CONTRACTS. Each of the Funds may purchase and sell stock
index futures contracts. A stock index futures contract is an agreement pursuant
to which two parties agree to take or make delivery of an amount of cash equal
to a specified dollar amount times the difference between the stock index value
at the close of the last trading day of the contract and the price at which the
futures contract is originally struck. Each of the Funds will only enter into
domestic stock index futures. No physical delivery of the underlying stocks in
the index is made. Each of the Funds will only enter into futures contracts as a
hedge against changes resulting from market conditions in the values of the
securities held or which the Fund intends to purchase. Generally, a Fund may
elect to close a position in a futures contract by taking an opposite position
which will operate to terminate such Fund's position in the futures contract.
See the Statement of Additional Information for a description of the Funds'
investments in futures contracts, including certain related risks. The Funds may
each purchase or sell futures contracts if, immediately thereafter, the sum of
the amount of margin deposits and premiums on open positions with respect to
futures contracts would not exceed 5% of the market value of a Fund's total
assets.
WRITING COVERED CALL OPTION CONTRACTS. WEINGARTEN and CONSTELLATION may write
(sell) covered call options. The purpose of such transactions is to hedge
against changes in the market value of a Fund's portfolio securities caused by
fluctuating interest rates, fluctuating currency exchange rates and changing
market conditions, and to close out or offset existing positions in such options
or futures contracts as described below. None of the Funds will engage in such
transactions for speculative purposes.
CONSTELLATION and WEINGARTEN may each write (sell) call options, but only if
such options are covered and remain covered as long as the Fund is obligated as
a writer of the option (seller). A call option is "covered" if a Fund owns the
underlying security covered by the call. If a "covered" call option expires
unexercised, the writer realizes a gain in the amount of the premium received.
If the covered call option is exercised, the writer realizes either a gain or
loss from the sale or purchase of the underlying security with the proceeds to
the writer being increased by the amount of the premium. Prior to its
expiration, a call option may be closed out by means of a purchase of an
identical option. Any gain or loss from such transaction will depend on whether
the amount paid is more or less than the premium received for the option plus
related transaction costs.
Options are subject to certain risks, including the risk of imperfect
correlation between the option and a Fund's other investments and the risk that
there might not be a liquid secondary market for the option when the Fund seeks
to hedge against adverse market movements. In general, options whose strike
prices are close to their underlying securities' current values will have the
highest trading value, while options whose strike prices are further away may be
less liquid. The liquidity of options may also be affected if options exchanges
impose trading halts, particularly when markets are volatile.
11
<PAGE> 17
The investment policies of WEINGARTEN and CONSTELLATION permit the writing of
call options on securities comprising no more than 25% of the value of each
Fund's net assets. Each Fund's policies with respect to the writing of call
options may be changed by the Company's Board of Directors, without shareholder
approval.
ILLIQUID SECURITIES. None of the Funds will invest more than 15% of their net
assets in illiquid securities, including repurchase agreements with maturities
in excess of seven days.
RULE 144A SECURITIES. Each of the Funds may invest in securities that are
subject to restrictions on resale because they have not been registered under
the Securities Act of 1933 (the "1933 Act"). These securities are sometimes
referred to as private placements. Although securities which may be resold only
to "qualified institutional buyers" in accordance with the provisions of Rule
144A under the 1933 Act are unregistered securities, the Funds may each purchase
Rule 144A securities without regard to the limitation on investments in illiquid
securities described above under "Illiquid Securities," provided that a
determination is made that such securities have a readily available trading
market. AIM will determine the liquidity of Rule 144A securities under the
supervision of the Company's Board of Directors. The liquidity of Rule 144A
securities will be monitored by AIM and, if as a result of changed conditions,
it is determined that a Rule 144A security is no longer liquid, a Fund's
holdings of illiquid securities will be reviewed to determine what, if any,
action is required to assure that the Fund does not exceed its applicable
percentage limitation for investments in illiquid securities.
FOREIGN SECURITIES. To the extent consistent with their respective investment
objectives, each of the Funds may invest in foreign securities. It is not
anticipated that such foreign securities, which may be payable in foreign
currencies and traded abroad, will constitute more than 20% of the value of each
Fund's respective total assets. For purposes of computing such limitation,
American Depository Receipts, European Depository Receipts and other securities
representing underlying securities of foreign issuers are treated as foreign
securities. 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, with their predecessors, have been in
continuous operation for three years or more and 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. For a discussion of the risks pertaining to investments in foreign
obligations, see "Risk Factors Regarding Foreign Securities" below.
RISK FACTORS REGARDING FOREIGN SECURITIES. 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.
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.
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.
PORTFOLIO TURNOVER. Any particular security will be sold, and the proceeds
reinvested, whenever such action is deemed prudent from the viewpoint of a
Fund's investment objectives, regardless of the holding period of that security.
Each Fund's historical portfolio turnover rates are included in the Financial
Highlights tables herein. A higher rate of portfolio turnover may result in
higher transac-
12
<PAGE> 18
tion costs, including brokerage commissions. Also, to the extent that higher
portfolio turnover results in a higher rate of net realized capital gains to a
Fund, the portion of the Fund's distributions constituting taxable capital gains
may increase.
The investment objectives and policies stated above are not fundamental
policies of the Funds and may be changed by the Board of Directors of the
Company without shareholder approval. Shareholders will be notified before any
material change in the investment policies stated above become effective.
INVESTMENT RESTRICTIONS. Each of the Funds has adopted a number of investment
restrictions, including the following:
BORROWING. Each of the Funds may borrow money to a limited extent from banks
(including the Funds' custodian bank) for temporary or emergency purposes.
CHARTER and WEINGARTEN may each borrow amounts of up to 10% of their respective
total assets and may each pledge amounts of up to 20% of their respective total
assets to secure such borrowings. CONSTELLATION may borrow amounts to purchase
or carry securities only if, immediately after such borrowing, the value of its
assets, including the amount borrowed, less its liabilities, is equal to at
least 300% of the amount borrowed, plus all outstanding borrowings.
In addition to the ability to borrow money for temporary or emergency
purposes, CONSTELLATION may, but has no current intention to, borrow money from
banks to purchase or carry securities. The amount of such borrowings is limited
by provisions of the Investment Company Act of 1940 (the "1940 Act"). Any
investment gains made by CONSTELLATION with the borrowed monies in excess of
interest paid by the Fund will cause the net asset value of the Fund's shares to
rise faster than would otherwise be the case. On the other hand, if the
investment performance of the additional securities purchased with the proceeds
of such borrowings fails to cover the interest paid on the money borrowed by the
Fund, the net asset value of the Fund will decrease faster than would otherwise
be the case. This speculative factor is known as "leveraging."
LENDING OF FUND SECURITIES. Each of the Funds may also lend its portfolio
securities in amounts up to 33 1/3% of the total assets of the respective Funds.
Such loans could involve risks of delay in receiving additional collateral in
the event the value of the collateral decreased below the value of the
securities loaned or of delay in recovering the securities loaned or even loss
of rights in the collateral should the borrower of the securities fail
financially. However, loans will be made only to borrowers deemed by AIM to be
of good standing and only when, in AIM's judgment, the income to be earned from
the loans justifies the attendant risks.
The foregoing investment restrictions are matters of fundamental policy and
may not be changed without shareholder approval. For additional investment
restrictions applicable to the Funds, see the Statement of Additional
Information.
- --------------------------------------------------------------------------------
MANAGEMENT
The overall management of the business and affairs of the Funds is vested with
the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Company and persons or companies furnishing
services to a Fund, including the Master Advisory Agreement with AIM, the Master
Sub-Advisory Agreement between AIM and AIM Capital with respect to the Funds,
the Master Administrative Services Agreement with AIM, the Master Distribution
Agreement with AIM Distributors as the distributor of the shares of the Retail
Classes of the Funds, the Custodian Agreement with State Street Bank and Trust
Company as custodian and the Transfer Agency and Service Agreement with AFS as
transfer agent. The day-to-day operations of each Fund are delegated to its
officers and to AIM, subject always to the objectives and policies of the Fund
and to the general supervision of the Companys Board of Directors. Certain
directors and officers of the Company are affiliated with AIM and A I M
Management Group Inc. ("AIM Management"), the parent of AIM. AIM Management is a
holding company engaged in the financial services business. Information
concerning the Board of Directors may be found in the Statement of Additional
Information.
INVESTMENT ADVISOR. AIM, 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, serves as the investment advisor to each Fund pursuant to the Master
Advisory Agreement. AIM was organized in 1976, and advises or manages 37
investment company portfolios (including the Funds). As of December 1, 1995, the
total assets of the investment company portfolios advised or managed by AIM and
its affiliates were approximately $41.2 billion. AIM is a wholly-owned
subsidiary of AIM Management.
Under the terms of the Master Advisory Agreement, AIM supervises all aspects
of the Funds' operations and provides investment advisory services to the Funds.
AIM obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Funds. AIM will not be
liable to the Funds or their shareholders except in the case of AIM's willful
misfeasance, bad faith, gross negligence or reckless disregard of duty;
provided, however that AIM may be liable for certain breaches of duty under the
1940 Act.
For a discussion of AIM's brokerage allocation policies and practices, see
"Portfolio Transactions and Brokerage" in the Statement of Additional
Information. In accordance with policies established by the directors, AIM may
take into account sales of shares of the Funds and other funds advised by AIM in
selecting broker-dealers to effect portfolio transactions on behalf of the
Funds.
ADMINISTRATOR. The Company has entered into a Master Administrative Services
Agreement effective as of October 18, 1993 with AIM, pursuant to which AIM has
agreed to provide or arrange for the provision of certain accounting and other
administrative services to the Funds, including the services of a principal
financial officer of the Funds and related staff. As compensation to AIM for
13
<PAGE> 19
its services under the Master Administrative Services Agreements, the Funds
reimburse AIM for expenses incurred by AIM or its affiliates in connection with
such services.
SUB-ADVISOR. AIM Capital, 11 Greenway Plaza, Suite 1919, Houston, TX
77046-1173, serves as sub-advisor to the Funds pursuant to the Master
Sub-Advisory Agreement between AIM and AIM Capital. Under the terms of the
Master Sub-Advisory Agreement, AIM has appointed AIM Capital to provide certain
investment advisory services for each of the Funds, subject to overall
supervision by AIM and the Company's Board of Directors. Sub-advisory agreements
between AIM and AIM Capital for the Funds, with substantially identical terms to
the Sub-Advisory Agreement, were in effect prior to October 18, 1993. AIM
Capital is a wholly-owned subsidiary of AIM. Certain of the directors and
officers of AIM Capital are also executive officers of the Company.
FEE WAIVERS. AIM may in its discretion from time to time agree to waive
voluntarily all or any portion of its advisory fee and/or assume certain
expenses of any Fund but will retain its ability to be reimbursed prior to the
end of the fiscal year.
ADVISORY FEES. As compensation for its services AIM is paid an investment
advisory fee, which is calculated separately for each Fund. AIM received total
advisory fees from CHARTER, WEINGARTEN and CONSTELLATION for the fiscal year
ended October 31, 1995 which represented 0.64%, 0.61% and 0.62%, respectively,
of each of such Fund's average daily net assets. As compensation for its
services, AIM Capital receives a fee from AIM equal to 50% of the fees received
by AIM under the Master Advisory Agreement on behalf of the Funds.
AIM received reimbursement of administrative services costs with respect to
Class A shares from CHARTER, WEINGARTEN and CONSTELLATION for the fiscal year
ended October 31, 1995 which represented 0.006%, 0.004% and 0.003%,
respectively, of each such Fund's average daily net assets. Total expenses for a
Class A share of the Retail Class for the fiscal year ended October 31, 1995,
stated as a percentage of average net assets of each of CHARTER, WEINGARTEN and
CONSTELLATION were 1.17%, 1.17% and 1.16%, respectively.
AIM received reimbursement of administrative service costs with respect to
Class B shares of Charter and Weingarten for the fiscal year ended October 31,
1995, which represented 0.006% and 0.004%, respectively, of each such Fund's
average daily net assets.
In addition, the Company and AFS, P.O. Box 4739, Houston, TX 77210-4739, a
wholly-owned subsidiary of AIM and registered transfer agent, have entered into
the Transfer Agency and Service Agreement, pursuant to which AFS provides
transfer agency, dividend distribution and disbursement, and shareholder
services to the Retail Classes of the Funds.
DISTRIBUTOR. The Company has entered into Master Distribution Agreements on
behalf of each of the Funds (the "Distribution Agreements") with AIM
Distributors, a registered broker-dealer and a wholly-owned subsidiary of AIM,
to act as the distributor of Class A and Class B shares of the Funds.
Distribution agreements between the Company and AIM Distributors (with respect
to Class A shares of CHARTER, WEINGARTEN, and CONSTELLATION), were in effect
prior to October 18, 1993. Certain directors and officers of the Company are
affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right
to distribute shares of the Retail Classes of the Funds directly and through
institutions with whom AIM Distributors has entered into selected dealer
agreements. Under the Distribution Agreement for the Class B shares, AIM
Distributors sells Class B shares of CHARTER and WEINGARTEN at net asset value
subject to a contingent deferred sales charge established by AIM Distributors.
AIM Distributors is authorized to advance to institutions through whom Class B
shares are sold a sales commission under schedules established by AIM
Distributors. The Distribution Agreement for the Class B shares provides that
AIM Distributors (or its assignee or transferee) will receive 0.75% (of the
total 1.00% payable under the distribution plan applicable to Class B shares) of
each Fund's average daily net assets attributable to Class B shares attributable
to the sales efforts of AIM Distributors. In the event the Class B shares
Distribution Agreement is terminated, AIM Distributors would continue to receive
payments of asset based sales charges in respect of the outstanding Class B
shares attributable to the distribution efforts of AIM Distributors; provided,
however, that a complete termination of the Class B shares master distribution
plan (as defined in the plan) would terminate all payments to AIM Distributors.
Termination of the Class B shares distribution plan or Distribution Agreement
does not affect the obligation of Class B shareholders to pay contingent
deferred sales charges.
DISTRIBUTION PLANS. Class A Plan. The Company has adopted a master
distribution plan applicable to Class A shares of each Fund (the "Class A Plan")
pursuant to Rule 12b-1 under the 1940 Act. Under the Class A Plan, the Company
may compensate AIM Distributors an aggregate amount of 0.30% of the average
daily net assets of the Class A shares of each Fund on an annualized basis for
the purpose of financing any activity that is intended to result in the sale of
shares of each Fund. The Class A 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 to their customers who purchase and own shares of a Fund.
Payments can also be directed by AIM Distributors to selected institutions who
have entered into service agreements with respect to Class A shares of each Fund
and who provide continuing personal services to their customers who own Class A
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 Plan.
Class B Plan. The Company has also adopted a master distribution plan
applicable to Class B shares of CHARTER and WEINGARTEN (the "Class B Plan").
Under the Class B Plan, each of CHARTER and WEINGARTEN pays distribution
expenses at an annual rate of
14
<PAGE> 20
1.00% of the average daily net assets attributable to such Fund's Class B
shares. Of such amount CHARTER and WEINGARTEN each pays a service fee of 0.25%
of the average daily net assets attributable to such Fund's Class B shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class B shares of
the Fund. Any amounts not paid as a service fee would constitute an asset-based
sales charge. Amounts paid in accordance with the Class B Plan with respect to
any Fund may be used to finance any activity primarily intended to result in the
sale of Class B shares of such Fund.
Activities that may be financed under the Class A Plan and the Class B Plan
(collectively, the "Plans") include, but are 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, expense 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 the cost of administering the Plans. These amounts
payable by a Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of each Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Company will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those directors who are not "interested persons" of the Company or by a vote of
the holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time
agree to waive voluntarily all or any portion of its 12b-1 fee, while retaining
its ability to be reimbursed for such fee prior to the end of each fiscal year.
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 such payments. The Funds will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. 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.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
PORTFOLIO MANAGERS
AIM uses a team approach and a disciplined investment process in providing
investment advisory services to all of its accounts, including the Funds. AIM's
investment staff consists of 95 individuals. While individual members of AIM's
investment staff are assigned primary responsibility for the day-to-day
management of each of AIM's accounts, all accounts are reviewed on a regular
basis by AIM's Investment Policy Committee to ensure that they are being
invested in accordance with the account's and AIM's investment policies. The
individuals who are primarily responsible for the day-to-day management of the
Funds and their titles, if any, with AIM or its affiliates and the Fund, the
length of time they have been responsible for the management, and their years of
investment experience and prior experience (if they have been with AIM for less
than five years) are shown below.
Lanny H. Sachnowitz and Joel P. Dobberpuhl are primarily responsible for the
day-to-day management of CHARTER. Mr. Sachnowitz is Vice President of AIM
Capital and has been responsible for the Fund since 1991. Mr. Sachnowitz has
been associated with AIM and/or its affiliates since 1987 and has seven years of
experience as an investment professional. Mr. Dobberpuhl is Vice President of
AIM Capital and has been responsible for the Fund since 1995. Mr. Dobberpuhl has
been associated with AIM since 1990 and has a total of six years of experience
as an investment professional. Prior to 1990, he served as an equity trader and
portfolio analyst for NationsBank of Texas, N.A.
Jonathan C. Schoolar, Robert M. Kippes and David P. Barnard are primarily
responsible for the day-to-day management of WEINGARTEN. Mr. Schoolar is Senior
Vice President and Director of AIM Capital, Vice President of AIM and Senior
Vice President of the Company and has been responsible for the Fund since 1987.
He has been associated with AIM and/or its affiliates since 1986 and has 12
years of experience as an investment professional. Mr. Kippes is Vice President
of AIM Capital and has been responsible for the Fund since 1994. Mr. Kippes has
been associated with AIM and/or its affiliates since 1989 and has six years of
experience as an investment professional. Mr. Barnard is Vice President of AIM
Capital and has been responsible for the Fund since 1986. Mr. Barnard has been
associated with AIM and/or its affiliates since 1982 and has 21 years of
experience as an investment professional.
Robert M. Kippes, David P. Barnard and Jonathan C. Schooler are primarily
responsible for the day-to-day management of CONSTELLATION. Mr. Kippes is Vice
President of AIM Capital. He currently serves as manager of CONSTELLATION and
has been responsible for the Fund since 1993. Mr. Kippes has been associated
with AIM and/or its affiliates since 1989 and has six years of experience as an
investment professional. Mr. Barnard's background is discussed above with
respect to the management of Weingarten; he has also been responsible for the
management of CONSTELLATION since 1990. Mr. Schoolar, whose background is
discussed above with respect to the management of Weingarten, has also been
responsible for the management of CONSTELLATION since 1987.
15
<PAGE> 21
- --------------------------------------------------------------------------------
ORGANIZATION OF THE COMPANY
The Company was organized in 1988 as a Maryland corporation, and is registered
with the SEC as a diversified, open-end, series, management investment company.
The Company currently consists of four separate operating portfolios: CHARTER
and WEINGARTEN, each of which has a Retail Class of shares consisting of Class A
and Class B shares and an Institutional Class; CONSTELLATION, which has a Retail
Class of Class A shares and an Institutional Class, and AGGRESSIVE GROWTH, which
has a Retail Class of Class A shares.
The authorized capital stock of the Company consists of 7,000,000,000 shares
of common stock with a par value of $.001 per share, of which 750,000,000 shares
are classified Class A shares of each investment portfolio (including two that
have not commenced operations), 750,000,000 shares are classified Class B shares
of each of CHARTER and WEINGARTEN, 200,000,000 shares are classified
Institutional Shares of each of the Funds, and the balance of which are
unclassified.
Each class of shares of the same Fund represents interests in that Fund's
assets and have identical voting, dividend, liquidation and other rights on the
same terms and conditions, except that each class of shares bears differing
class-specific expenses, is subject to differing sales loads, conversion
features and exchange privileges, and has exclusive voting rights on matters
pertaining to that class' distribution plan.
Except as specifically noted above, shareholders of each Fund are entitled to
one vote per share (with proportionate voting for fractional shares),
irrespective of the relative net asset value of the different classes of shares,
where applicable, of a Fund. However, on matters affecting one portfolio of the
Company or one class of shares, a separate vote of shareholders of that
portfolio or class is required. Shareholders of a portfolio or class are not
entitled to vote on any matter which does not affect that portfolio or class but
which requires a separate vote of another portfolio or class. An example of a
matter which would be voted on separately by shareholders of a portfolio is the
approval of an advisory agreement, and an example of a matter which would be
voted on separately by shareholders of a class of shares is approval of a
distribution plan. When issued, shares of each Fund are fully paid and
nonassessable, have no preemptive or subscription rights, and are fully
transferable. Other than the automatic conversion of Class B shares to Class A
shares, there are no conversion rights. Shares do not have cumulative voting
rights, which means that in situations in which shareholders elect directors,
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors of the Company, and the holders of less than 50% of
the shares voting for the election of directors will not be able to elect any
directors.
The holder of shares of each Fund is entitled to such dividends payable out of
the net assets allocable to such Fund as may be declared by the Board of
Directors of the Company. In the event of liquidation or dissolution of the
Company, the holders of shares of each Fund will be entitled to receive pro
rata, subject to the rights of creditors, the net assets of the Company
allocable to the Fund. Fractional shares of each Fund have the same rights as
full shares to the extent of their proportionate interest.
Under Maryland law and the Company's By-Laws, the Company need not hold an
annual meeting of shareholders unless a meeting is required under the 1940 Act
to elect directors. Shareholders may remove directors from office, and a meeting
of shareholders may be called at the request of the holders of 10% or more of
the Company's outstanding shares.
16
<PAGE> 22
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 23
[LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS(R)
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046-1173
Investment Sub-Advisor
A I M Capital Management, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046-1173
Principal Underwriter
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
KPMG Peat Marwick LLP
700 Louisiana
NationsBank Building
Houston, TX 77002
For more complete information about any other Fund in The AIM Family of Funds,
including charges and expenses, please call (713) 626-1919, Extension 5001 (in
Houston) or (800) 347-4246 (elsewhere) or write to A I M Distributors, Inc. and
request a free prospectus. Please read the prospectus carefully before you
invest or send money.
<PAGE> 24
APPLICATION
INSIDE
[LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS(R)
RETAIL CLASS OF AIM EQUITY FUNDS, INC.
AIM AGGRESSIVE GROWTH FUND
(Growth)
PROSPECTUS
JANUARY 2, 1996
This Prospectus contains information about the AIM AGGRESSIVE GROWTH
FUND ("AGGRESSIVE GROWTH or the "Fund"), one of four separate
investment portfolios comprising series of AIM Equity Funds, Inc.
(the "Company"), an open-end, series, management investment company.
The Fund is a diversified portfolio which seeks to achieve long-term
growth of capital by investing primarily in common stocks,
convertible bonds, convertible preferred stocks and warrants of
companies which in the opinion of the Fund's investment advisor are
expected to achieve earnings growth over time at a rate in excess
of 15% per year. The Fund has discontinued public sales of its shares
to new investors. See "Summary" and "Closure of the Fund to New
Investors" in this Prospectus for more complete information.
This Prospectus sets forth concisely the information about the Fund
that prospective investors should know before investing. It should
be read and retained for future reference. A Statement of Additional
Information dated January 2, 1996, has been filed with the United
States Securities and Exchange Commission (the "SEC") and is
incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the
Company at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 25
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
SUMMARY.................................. 2 How to Purchase Shares................. A-1
THE FUND................................. 4 Terms and Conditions of Purchase of the
Table of Fees and Expenses............. 4 AIM
Financial Highlights................... 5 Funds............................... A-2
Performance............................ 6 Special Plans.......................... A-8
Investment Program..................... 6 Exchange Privilege..................... A-10
Management............................. 9 How to Redeem Shares................... A-12
Organization of the Company............ 11 Determination of Net Asset Value....... A-15
Closure of the Fund to New Investors... 11 Dividends, Distributions and Tax
INVESTOR'S GUIDE TO THE AIM FAMILY OF Matters............................. A-16
FUNDS(R)............................... A-1 General Information.................... A-18
Introduction to The AIM Family of APPLICATION INSTRUCTIONS................. B-1
Funds............................... A-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
AIM Equity Funds, Inc. (the "Company") is a Maryland corporation organized as
an open-end, diversified, series, management investment company. Currently, the
Company offers four series comprising four separate investment portfolios, each
of which pursues unique investment objectives. This Prospectus relates only to
AGGRESSIVE GROWTH. The Fund's investment objective is to achieve long-term
growth of capital by investing primarily in common stocks, convertible bonds,
convertible preferred stocks and warrants of companies which, in the opinion of
the Fund's investment advisor, are expected to achieve earnings growth over time
at a rate in excess of 15% per year. There is no assurance that the investment
objective of the Fund will be achieved. For more complete information on the
Fund's investment policies, see "Investment Program."
The Company also offers other classes of shares in three other investment
portfolios, AIM CHARTER FUND, AIM CONSTELLATION FUND and AIM WEINGARTEN FUND
each of which pursues unique investment objectives. The other classes of shares
of the other Funds of the Company have different sales charges and expenses,
which may affect performance. To obtain information about the other shares of
AIM CHARTER FUND, AIM CONSTELLATION FUND, or AIM WEINGARTEN FUND call (713)
626-1919, Extension 5001 (in Houston) or (800) 347-4246 (elsewhere). See
"General Information."
AGGRESSIVE GROWTH has discontinued public sales of its shares to new
investors. Shareholders who maintain an open account will be able to continue to
make investments in the Fund and reinvest any dividends and capital gains
distributions, as well as open additional accounts in the Fund under certain
conditions. If an account is closed, however, additional investments in the Fund
may not be possible. The Fund may resume sales of its shares to new investors at
some future date. See "Closure of the Fund to New Investors" in this Prospectus
for additional information.
The assets of each Fund are invested in a separate portfolio. The classes of
each Fund share a common investment objective and portfolio of investments. The
income from the investment portfolio of a Fund is allocated to each class of the
Fund based on the net assets of such class as of the close of business on the
previous business day, as adjusted for the current day's shareholder activity.
Each class bears proportionately those expenses, such as the advisory fee, that
are allocated to the Fund as a whole and bears separately certain expenses, such
as those associated with the distribution of the shares of such class.
Consequently, the amounts available for payment of dividends and the net asset
value per share of each class will vary. See "General Information."
THE ADVISOR. A I M Advisors, Inc. ("AIM") serves as the Fund's investment
advisor pursuant to a Master Investment Advisory Agreement. AIM acts as manager
or advisor to 37 investment company portfolios. As of December 1, 1995, the
total assets of the investment company portfolios advised or managed by AIM or
its affiliates were approximately $41.2 billion. Under the Master Advisory
Agreement dated as of October 18, 1993 (the "Master Advisory Agreement"), AIM
receives a fee for its services based on the Fund's average daily net assets.
Under the Master Administrative Services Agreement between the Company and AIM
dated as of October 18, 1993 (the "Master Administrative Services Agreement"),
AIM may receive reimbursement of its costs to perform certain accounting and
other administrative services to the Fund. Under a Transfer Agency and Service
Agreement, A I M Fund Services, Inc. ("AFS"), AIM's wholly-owned subsidiary and
a registered transfer agent, receives a fee for its provision of transfer
agency, dividend distribution and disbursement, and shareholder services to the
Retail Class of the Fund.
The total advisory fees paid by the Fund is higher than those paid by many
other investment companies of all sizes and investment objectives. However, the
effective fee paid by the Fund at its current size is lower than the fees paid
by many other funds with similar investment objectives. See "Management."
PURCHASING SHARES. Class A shares of the Fund are offered by this Prospectus
at net asset value plus a sales charge of 5.50% of the public offering price
(5.82% of the net amount invested). The sales charge is reduced on purchases of
$25,000 or more. Initial
2
<PAGE> 26
investments must be at least $500 and additional investments must be at least
$50. The minimum initial investment is modified for investments through
tax-qualified retirement plans and accounts initially established with an
Automatic Investment Plan. The distributor of the Fund's shares is A I M
Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, TX 77210-4739.
See "How to Purchase Shares" and "Special Plans."
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Shares of the Fund may
be exchanged for shares of other funds in The AIM Family of Funds in the manner
and subject to the policies and charges set forth herein. See "Exchange
Privilege."
REDEEMING SHARES. Shareholders may redeem all or a portion of their shares at
their net asset value on any business day, generally without charge. A
contingent deferred sales charge of 1.00% may apply to certain redemptions where
a purchase of more than $1 million is made at net asset value. See "How to
Redeem Shares."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund makes distributions of
realized capital gains, if any, on an annual basis. Dividends and distributions
of the Fund may be reinvested at net asset value without payment of a sales
charge in the Fund's shares or may be invested in shares of the other funds in
The AIM Family of Funds. See "Dividends, Distributions and Tax Matters" and
"Special Plans."
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered
service marks of A I M Management Group Inc.
3
<PAGE> 27
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Fund understand the
various costs that an investor will bear, both directly and indirectly. The fees
and expenses set forth in the table have been restated to reflect current
agreements with AIM. The rules of the SEC require that the maximum sales charge
be reflected in the table, even though certain investors may qualify for reduced
sales charges. See "How to Purchase Shares."
<TABLE>
<S> <C> <C> <C>
Shareholder Transaction Expenses (Retail Class)
Maximum sales load imposed on purchase of shares (as a percentage of
offering price)......................................................... 5.50%
Maximum sales load imposed on reinvested dividends and distributions....... None
Deferred sales load1....................................................... None
Redemption fees............................................................ None
Exchange fee2.............................................................. None
Annual Fund Operating Expenses (Retail Class) (as a percentage of average net
assets)
Management fee............................................................. .65%
Distribution plan payments3................................................ .25%
Other expenses:
Transfer agent fees and costs........................................... .19%
Other................................................................... .07%
-----
Total other expenses.................................................... .26%
----
Total fund operating expenses.............................................. 1.16%
=====
</TABLE>
- ---------------
1 Purchases of $1 million or more are not subject to an initial sales charge.
However, a contingent deferred sales charge of 1% applies to certain
redemptions made within 18 months from the date such shares were purchased.
See the Investor's Guide, under the caption "How to Redeem
Shares -- Contingent Deferred Sales Charge Program for Large Purchases."
2 No fee is charged for exchanges among The AIM Family of Funds; however, a $5
service fee may be charged for exchanges by market timers.
3 As a result of 12b-1 fees, a long-term shareholder may pay more than the
economic equivalent of the maximum front-end sales charges permitted by the
rules of the National Association of Securities Dealers, Inc. Given the Rule
12b-1 fee of the Fund, however, it is estimated that it would take a
substantial number of years for a shareholder to exceed such maximum
front-end sales charges.
EXAMPLES. An investor would pay the following expenses on a $1,000 investment,
assuming (a) a 5% annual return and (b) redemption at the end of each time
period:
<TABLE>
<S> <C>
1 year................................................................ $66
3 years............................................................... $90
5 years............................................................... $115
10 years............................................................... $188
</TABLE>
The above examples assume payment of a sales charge at the time of purchase;
actual expenses may vary for purchases of $1 million or more, which are made at
net asset value and subject to a contingent deferred sales charge for 18 months
following the date such shares were purchased.
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED REPRESENTATIVE OF ACTUAL OR FUTURE
EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN. IN ADDITION, WHILE THE
EXAMPLE ASSUMES A 5% ANNUAL RETURN, ACTUAL PERFORMANCE WILL VARY AND MAY RESULT
IN AN ACTUAL RETURN THAT IS GREATER OR LESS THAN 5%. THE EXAMPLE ASSUMES
REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS AND THAT THE PERCENTAGE AMOUNTS
FOR TOTAL FUND OPERATING EXPENSES REMAIN THE SAME FOR EACH YEAR.
4
<PAGE> 28
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Shown below for the periods indicated are per share data, ratios and
supplemental data of the Fund. The data for the fiscal years ended October 31,
1995, 1994 and the ten months ended October 31, 1993 has been audited by KPMG
Peat Marwick LLP, independent auditors, whose unqualified report thereon appears
in the Statement of Additional Information and is available upon request from
AIM Distributors, and the data for the seven years ended December 31, 1992 has
been derived from financial statements audited by Price Waterhouse LLP.
(PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TEN
FISCAL YEAR MONTHS
ENDED OCTOBER 31, ENDED YEAR ENDED DECEMBER 31,
------------------------ OCTOBER 31, ----------------------------------------
1995 1994 1993 1992(A) 1991 1990 1989
--------- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period....... $ 28.37 $ 23.85 $ 18.52 $ 16.06 $ 11.85 $ 13.30 $ 11.07
Income from investment operations:
Net investment income (loss).............. (0.04) (0.05) (0.02) (0.03) (0.04) 0.08 0.03
Net gains (losses) on securities (both
realized
and unrealized)......................... 11.80 4.57 5.35 3.41 7.29 (0.95) 2.28
---------- -------- -------- ------- ------- ------ -------
Total from investment operations.......... 11.76 4.52 5.33 3.38 7.25 (0.87) 2.31
---------- -------- -------- ------- ------- ------ -------
Less distributions:
Dividends from net investment income...... -- -- -- -- -- (0.09) (0.03)
Distributions from capital gains.......... -- -- -- (0.92) (3.04) (0.49) (0.05)
---------- -------- -------- ------- ------- ------ -------
Total distributions....................... -- -- -- (0.92) (3.04) (0.58) (0.08)
---------- -------- -------- ------- ------- ------ -------
Net asset value, end of period............. $ 40.13 $ 28.37 $ 23.85 $ 18.52 $ 16.06 $ 11.85 $ 13.30
========== ======== ======== ======= ======= ====== =======
Total return(b)............................ 41.45% 18.96% 28.78% 21.34% 63.90% (6.50)% 20.89%
========== ======== ======== ======= ======= ====== =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted)................................ $2,245,554 $687,238 $217,256 $38,238 $16,218 $ 9,234 $11,712
========== ======== ======== ======= ======= ====== =======
Ratio of expenses to average net
assets(c)............................... 1.08%(e) 1.07% 1.00%(f) 1.25% 1.25% 1.25% 1.25%
========== ======== ======== ======= ======= ====== =======
Ratio of net investment income (loss) to
average
net assets(d)........................... (0.19)%(e) (0.26)% (0.24)%(f) (0.59)% (0.31)% 0.62% 0.24%
========== ======== ======== ======= ======= ====== =======
Portfolio turnover rate................... 52% 75% 61% 164% 165% 137% 69%
========== ======== ======== ======= ======= ====== =======
<CAPTION>
1988 1987 1986
------- ------- -------
<S> <<C> <C> <C>
Net asset value, beginning of period....... $ 9.86 $ 12.10 $ 12.61
Income from investment operations:
Net investment income (loss).............. 0.05 -- 0.01
Net gains (losses) on securities (both
realized
and unrealized)......................... 1.21 (1.38) 0.05
------- ------- -------
Total from investment operations.......... 1.26 (1.38) 0.06
------- ------- -------
Less distributions:
Dividends from net investment income...... (0.05) -- (0.08)
Distributions from capital gains.......... -- (0.86) (0.49)
------- ------- -------
Total distributions....................... (0.05) (0.86) (0.57)
------- ------- -------
Net asset value, end of period............. $ 11.07 $ 9.86 $ 12.10
======= ======= =======
Total return(b)............................ 12.77% (11.52)% 0.37%
======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted)................................ $12,793 $13,991 $18,547
======= ======= =======
Ratio of expenses to average net
assets(c)............................... 1.22% 1.20% 1.19%
======= ======= =======
Ratio of net investment income (loss) to
average
net assets(d)........................... 0.38% 0.01% 0.11%
======= ======= =======
Portfolio turnover rate................... 56% 118% 106%
======= ======= =======
</TABLE>
- ---------------
(a) The Fund changed investment advisors on June 30, 1992.
(b) Does not deduct sales charges and, for periods less than one year, total
returns are not annualized.
(c) Ratios of expenses to average net assets prior to reduction of advisory fees
and expense reimbursements were 1.15%, 1.09%, 1.17% (annualized), 1.65%,
1.83%, 1.99%, 1.80%, 1.56%, 1.29% and 1.32%, for 1995-86, respectively.
(d) Ratios of net investment income (loss) to average net assets prior to
reduction of advisory fees and expense reimbursements were (0.26)%, (0.28)%,
(0.41)% (annualized), (0.99)%, (0.89)%, (0.11)%, (0.31)%, 0.04%, (0.08)% and
(0.02)% for 1995-86, respectively.
(e) Ratios are based on average net assets of $1,209,574,872.
(f) Annualized.
5
<PAGE> 29
- --------------------------------------------------------------------------------
PERFORMANCE
The Fund's performance may be quoted in advertising in terms of yield or total
return. All advertisements of the Fund will disclose the maximum sales charge
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. See the Statement of Additional Information for further
details concerning performance comparisons used in advertisements by the Fund.
Further information regarding the Fund's performance is contained in the annual
report to shareholders which is available upon request and without charge.
Total return shows the overall change in value, including changes in share
price and assuming all the dividends and capital gain distributions are
reinvested and that all charges and expenses are deducted. A cumulative total
return reflects the Fund's performance over a stated period of time. An average
annual total return reflects the hypothetical annually compounded 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 gain or loss.
Yield is computed in accordance with a standardized formula described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, yield
information may not provide a basis for comparison with investments which pay a
fixed rate of interest for a stated period of time. Yield is a function of the
type and quality of investments, the maturity and the operating expense ratio of
the Fund.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such a practice will
have the effect of increasing the Fund's total return. The performance will vary
from time to time and past results are not necessarily indicative of future
results. 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 is not insured or
guaranteed. These factors should be carefully considered by the investor before
making an investment.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
The Company has four series, each of which is a separate investment
portfolio -- CHARTER, WEINGARTEN, AGGRESSIVE GROWTH and CONSTELLATION. CHARTER,
WEINGARTEN and CONSTELLATION are offered to investors pursuant to a separate
prospectus.
The Fund may invest, for temporary or defensive purposes, all or a substantial
portion of its assets in investment grade (high quality) corporate bonds,
commercial paper, or U.S. Government obligations. In addition, a portion of the
Fund's assets may be held, from time to time, in cash, repurchase agreements, or
other debt securities, when such positions are deemed advisable in light of
economic or market conditions.
The investment objective of the Fund is to achieve long-term growth of capital
by investing primarily in common stocks, convertible bonds, convertible
preferred stocks and warrants of companies which in the opinion of the Fund's
investment advisor are expected to achieve earnings growth over time at a rate
in excess of 15% per year. Many of these companies are in the small to
medium-sized category. Management of the Fund will be particularly interested in
companies that are likely to benefit from new or innovative products, services
or processes that should enhance such companies' prospects for future growth in
earnings. As a result of this policy, the market prices of many of the
securities purchased and held by the Fund may fluctuate widely. Any income
received from securities held by the Fund will be incidental, and an investor
should not consider a purchase of shares of the Fund as equivalent to a complete
investment program. The Fund's portfolio is primarily comprised of securities of
two basic categories of companies: (a) "core" companies, which Fund management
considers to have experienced above-average and consistent long-term growth in
earnings and to have excellent prospects for outstanding future growth, and (b)
"earnings acceleration" companies which Fund management believes are currently
enjoying a dramatic increase in profits. See "Certain Investment Strategies and
Policies" below and "Investment Objectives and Policies" in the Statement of
Additional Information. The Fund's strategy does not preclude investment in
large, seasoned companies which in the judgment of AIM possess superior
potential returns similar to companies with formative growth profiles. The Fund
will also invest in established smaller companies (under $500 million in market
capitalization) which offer exceptional value based upon substantially above
average earnings growth potential relative to market value. Investors should
realize that equity securities of small to medium-sized companies may involve
greater risk than is associated with investing in more established companies.
Small to medium-sized companies often have limited product and market
diversification, fewer financial resources or may be dependent on a few key
managers. Any one of the foregoing may change suddenly and have an immediate
impact on the value of the company's securities. Furthermore, whenever the
securities markets are experiencing rapid price changes due to national economic
trends, secondary growth securities have historically been subject to
exaggerated price changes. The Fund may invest in non-equity securities, such as
corporate bonds or U.S. Government obligations during periods when, in the
opinion of AIM, prevailing market, financial, or economic conditions warrant, as
well as when such holdings are advisable in light of a change in circumstances
of a particular company or within a particular industry.
6
<PAGE> 30
There can, of course, be no assurance that the Fund will in fact achieve its
objectives since all investments are inherently subject to market risks. The
Board of Directors of the Company reserves the right to change any of the
investment policies, strategies or practices of the Fund, as described in this
Prospectus and in the Statement of Additional Information, without shareholder
approval, except in those instances where shareholder approval is expressly
required.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objectives and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements. A
repurchase agreement is an instrument under which the Fund acquires ownership of
a debt security and the seller agrees, at the time of the sale, to repurchase
the obligation at a mutually agreed upon time and price, thereby determining the
yield during the Fund's holding period. With regard to repurchase transactions,
in the event of a bankruptcy or other default of a seller of a repurchase
agreement, the Fund could experience both delays in liquidating the underlying
securities and losses, including: (a) a possible decline in the value of the
underlying security during the period while the Fund seeks to enforce its rights
thereto; (b) possible subnormal levels of income and lack of access to income
during this period; and (c) expenses of enforcing its rights.
STOCK INDEX FUTURES CONTRACTS AND RELATED OPTIONS. The Fund may purchase and
sell stock index futures contracts and may also purchase options on stock index
futures as a hedge against changes in market conditions. A stock index futures
contract is an agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar or other currency
amount times the difference between the stock index value at the close of the
last trading day of the contract and the price at which the futures contract is
originally struck. No physical delivery of the underlying stocks in the index is
made. The Fund will only enter into futures contracts or, purchase options
thereon, as a hedge against changes resulting from market conditions in the
values of the securities held or which the Fund intends to purchase. Generally,
the Fund may elect to close a position in a futures contract by taking an
opposite position which will operate to terminate the Fund's position in the
futures contract. See the Statement of Additional Information for a description
of the Fund's investments in futures contracts and options on futures contracts,
including certain related risks. The Fund may purchase or sell futures contracts
or purchase related options if, immediately thereafter, the sum of the amount of
margin deposits and premiums on open positions with respect to futures contracts
and related options would not exceed 5% of the market value of the Fund's total
assets.
WRITING COVERED CALL OPTION CONTRACTS. The Fund may write (sell) covered call
options. The purpose of such transactions is to hedge against changes in the
market value of the Fund's portfolio securities caused by fluctuating interest
rates, fluctuating currency exchange rates and changing market conditions, and
to close out or offset existing positions in such options or futures contracts
as described below. The Fund will not engage in such transactions for
speculative purposes.
The Fund may write (sell) call options, but only if such options are covered
and remain covered as long as the Fund is obligated as a writer of the option
(seller). A call option is "covered" if the Fund owns the underlying security
covered by the call. If a "covered" call option expires unexercised, the writer
realizes a gain in the amount of the premium received. If the covered call
option is exercised, the writer realizes either a gain or loss from the sale or
purchase of the underlying security with the proceeds to the writer being
increased by the amount of the premium. Prior to its expiration, a call option
may be closed out by means of a purchase of an identical option. Any gain or
loss from such transaction will depend on whether the amount paid is more or
less than the premium received for the option plus related transaction costs.
Options are subject to certain risks, including the risk of imperfect
correlation between the option and the Fund's other investments and the risk
that there might not be a liquid secondary market for the option when the Fund
seeks to hedge against adverse market movements. In general, options whose
strike prices are close to their underlying securities' current values will have
the highest trading value, while options whose strike prices are further away
may be less liquid. The liquidity of options may also be affected if options
exchanges impose trading halts, particularly when markets are volatile.
The investment policies of the Fund permit the writing of call options on
securities comprising no more than 25% of the value of the Fund's net assets.
The Fund's policies with respect to the writing of call options may be changed
by the Company's Board of Directors, without shareholder approval.
ILLIQUID SECURITIES. The Fund will not invest more than 15% of its net assets
in illiquid securities, including repurchase agreements with maturities in
excess of seven days.
RULE 144A SECURITIES. The Fund may invest in securities that are subject to
restrictions on resale because they have not been registered under the
Securities Act of 1933 (the "1933 Act"). These securities are sometimes referred
to as private placements. Although securities which may be resold only to
"qualified institutional buyers" in accordance with the provisions of Rule 144A
under the 1933 Act are unregistered securities, the Fund may purchase Rule 144A
securities without regard to the limitation on investments in illiquid
securities described above under "Illiquid Securities," provided that a
determination is made that such securities have a readily available trading
market. AIM will determine the liquidity of Rule 144A securities under the
supervision of the Company's Board of Directors. The liquidity of Rule 144A
securities will be monitored by AIM and, if as a result of changed conditions,
it is determined that a Rule 144A security is no longer liquid, the Fund's
holdings of illiquid securities will be reviewed to determine what, if any,
action is required to assure that the Fund does not exceed its applicable
percentage limitation for investments in illiquid securities.
7
<PAGE> 31
FOREIGN SECURITIES. The Fund may invest up to 25% of its total assets in
Canadian and other foreign securities which may be payable in U.S. or foreign
currencies and publicly traded in the United States or abroad. For purposes of
computing such limitation, American Depository Receipts, European Depository
Receipts and other securities representing underlying securities of foreign
issues are treated as foreign securities. To the extent the Fund invests in
securities denominated in foreign currencies, the 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, with their
predecessors, have been in continuous operation for three years or more and
which generally are listed on a recognized foreign securities exchange or traded
in a foreign over-the-counter market. The Fund 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. For a discussion of the risks pertaining to
investments in foreign obligations, see "Risk Factors Regarding Foreign
Securities" below.
FOREIGN EXCHANGE TRANSACTIONS. The Fund has authority to deal in foreign
exchange between currencies of the different countries in which it will invest
as a hedge against possible variations in the foreign exchange rate between
those currencies. This may be accomplished through direct purchases or sales of
foreign currency, purchases of options on futures contracts with respect to
foreign currency, and contractual agreements to purchase or sell a specified
currency at a specified future date (up to one year) at a price set at the time
of the contract. Such contractual commitments may be forward contracts entered
into directly with another party or exchange-traded futures contracts. The Fund
may purchase and sell options on futures contracts or forward contracts which
are denominated in a particular foreign currency to hedge the risk of
fluctuations in the value of another currency. The Fund's dealings in foreign
exchange will be limited to hedging involving either specific transactions or
portfolio positions. Transaction hedging is the purchase or sale of foreign
currency with respect to specific receivables or payables of the Fund accruing
in connection with the purchase or sale of its portfolio securities, the sale
and redemption of shares of the Fund, or the payment of dividends and
distributions by the Fund. Position hedging is the purchase or sale of foreign
currency with respect to portfolio security positions denominated or quoted in a
foreign currency. The Fund will not speculate in foreign exchange, nor commit
more than 10% of its total assets to foreign exchange hedges.
RISK FACTORS REGARDING FOREIGN SECURITIES. Investments by the Fund in foreign
securities, whether denominated in U.S. currencies or foreign currencies, may
entail all of the risks set forth below. Investments in ADRs, EDRs or similar
securities also may entail some or all of the risks as set forth below.
Currency Risk. The value of the 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.
Political and Economic Risk. The economies of many of the countries in which
the Fund 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 the 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 Fund may be reduced by a withholding tax at the source, which tax would
reduce dividend income payable to the Fund's shareholders.
Market Risk. The securities markets in many of the countries in which the Fund
invests 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.
PORTFOLIO TURNOVER. Any particular security will be sold, and the proceeds
reinvested, whenever such action is deemed prudent from the viewpoint of the
Fund's investment objectives, regardless of the holding period of that security.
The historical portfolio turnover rates are included in the Financial Highlights
table herein. A higher rate of portfolio turnover may result in higher
transaction costs, including brokerage commissions. Also, to the extent that
higher portfolio turnover results in a higher rate of net realized capital gains
to the Fund, the portion of the Fund's distributions constituting taxable
capital gains may increase.
8
<PAGE> 32
The investment objectives and policies stated above are not fundamental
policies of the Fund and may be changed by the Board of Directors of the Company
without shareholder approval. Shareholders will be notified before any material
change in the investment policies stated above become effective.
INVESTMENT RESTRICTIONS. The Fund has adopted a number of investment
restrictions, including the following:
BORROWING. The Fund may borrow money to a limited extent from banks (including
the Fund's custodian bank) for temporary or emergency purposes. The Fund may
borrow amounts from banks provided that no borrowing may exceed one-third of the
value of its total assets, including the proceeds of such borrowing, and may
secure such borrowings by pledging up to one-third of the value of its total
assets.
LENDING OF FUND SECURITIES. The Fund may also lend its portfolio securities in
amounts up to one-third of the total assets of the Fund. Such loans could
involve risks of delay in receiving additional collateral in the event the value
of the collateral decreased below the value of the securities loaned or of delay
in recovering the securities loaned or even loss of rights in the collateral
should the borrower of the securities fail financially. However, loans will be
made only to borrowers deemed by AIM to be of good standing and only when, in
AIM's judgment, the income to be earned from the loans justifies the attendant
risks.
The foregoing investment restrictions are matters of fundamental policy and
may not be changed without shareholder approval. For additional investment
restrictions applicable to the Fund, see the Statement of Additional
Information.
- --------------------------------------------------------------------------------
MANAGEMENT
The overall management of the business and affairs of the Fund is vested with
the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Company and persons or companies furnishing
services to the Fund, including the Master Advisory Agreement with AIM, the
Master Administrative Services Agreement with AIM, the Master Distribution
Agreement with AIM Distributors as the distributor of the shares of the Fund,
the Custodian Agreement with State Street Bank and Trust Company as custodian
and the Transfer Agency and Service Agreement with AFS as transfer agent. The
day-to-day operations of the Fund are delegated to its officers and to AIM,
subject always to the objectives and policies of the Fund and to the general
supervision of the Company's Board of Directors. Certain directors and officers
of the Company are affiliated with AIM and A I M Management Group Inc. ("AIM
Management"), the parent of AIM. AIM Management is a holding company engaged in
the financial services business. Information concerning the Board of Directors
may be found in the Statement of Additional Information.
INVESTMENT ADVISOR. AIM, 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, serves as the investment advisor to the Fund pursuant to the Master
Advisory Agreement. AIM was organized in 1976, and advises or manages 37
investment company portfolios (including the Fund). As of December 1, 1995, the
total assets of the investment company portfolios advised or managed by AIM and
its affiliates were approximately $41.2 billion. AIM is a wholly-owned
subsidiary of AIM Management.
Under the terms of the Master Advisory Agreement, AIM supervises all aspects
of the Fund's operations and provides investment advisory services to the Fund.
AIM obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Fund. AIM will not be liable
to the Fund or its shareholders except in the case of AIM's willful misfeasance,
bad faith, gross negligence or reckless disregard of duty; provided, however,
that AIM may be liable for certain breaches of duty under the 1940 Act.
For a discussion of AIM's brokerage allocation policies and practices, see
"Portfolio Transactions and Brokerage" in the Statement of Additional
Information. In accordance with policies established by the directors, AIM may
take into account sales of shares of the Fund and other funds advised by AIM in
selecting broker-dealers to effect portfolio transactions on behalf of the Fund.
ADMINISTRATOR. The Company has entered into a Master Administrative Services
Agreement effective as of October 18, 1993 with AIM, pursuant to which AIM has
agreed to provide or arrange for the provision of certain accounting and other
administrative services to the Fund, including the services of a principal
financial officer and related staff. As compensation to AIM for its services
under the Master Administrative Services Agreements, the Fund reimburses AIM for
expenses incurred by AIM or its affiliates in connection with such services.
FEE WAIVERS. AIM may in its discretion, from time to time, agree to
voluntarily waive all or any portion of its advisory fee and/or assume certain
expenses of the Fund but will retain its ability to be reimbursed prior to the
end of the fiscal year.
ADVISORY FEES. As compensation for its services AIM is paid an investment
advisory fee. For the fiscal year ended October 31, 1995, AIM received total
advisory fees (net of fee waivers) of $6,974,263 which represented 0.58% of the
Fund's average daily net assets. Had there been no fee waivers AIM would have
received advisory fees of $7,763,206 which represented 0.64% of the Fund's
average net daily assets.
AIM received reimbursement of administrative services costs for the fiscal
year ended October 31, 1995, which represented 0.01% of the Fund's average net
assets.
9
<PAGE> 33
In addition, the Company and AFS, P.O. Box 4739, Houston, TX 77210-4739, a
wholly-owned subsidiary of AIM and registered transfer agent, have entered into
the Transfer Agency and Service Agreement, pursuant to which AFS provides
transfer agency, dividend distribution and disbursement, and shareholder
services to the Retail Class of the Fund.
DISTRIBUTOR. The Company has entered into a Master Distribution Agreement,
dated as of October 18, 1993, on behalf of Class A shares of the Retail Class of
the Fund (the "Distribution Agreement") with AIM Distributors, a registered
broker-dealer and a wholly-owned subsidiary of AIM, to act as the distributor of
the shares of the Fund. The address of AIM Distributors is 11 Greenway Plaza,
Suite 1919, Houston, TX 77046-1173. The Distribution Agreement provides that AIM
Distributors has the exclusive right to distribute shares of the Retail Class of
the Fund through affiliated broker-dealers and through other broker-dealers with
whom AIM Distributors has entered into selected dealer agreements. Certain
directors and officers of the Company are affiliated with AIM Distributors.
DISTRIBUTION PLAN. The Company has adopted a Master Distribution Plan
applicable to Class A shares of the Fund (the "Class A Plan") pursuant to Rule
12b-1 under the 1940 Act. Under the Class A Plan, the Company may compensate AIM
Distributors an aggregate amount of 0.25% of the average daily net assets of the
Fund on an annualized basis for the purpose of financing any activity that is
intended to result in the sale of shares of the Fund. The Class A 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 to their customers who purchase and own
shares of the Fund. In addition, certain banks who have entered into a Bank
Shareholder Service Agreement and who sell shares of a Fund on an agency basis,
may receive payments pursuant to the Class A Plan. Administrators of retirement
plans may also be paid fees to offset costs of services. The Company will obtain
a representation from financial institutions that they will be licensed as
dealers as required under applicable state law, or that they will not engage in
activities which would constitute acting as a "dealer" as defined under
applicable state law. Activities appropriate for financing under the Class A
Plan include, but are not limited to, the following: preparation and
distribution of advertising material and sales literature; expenses of
organizing and conducting sales seminars; overhead of AIM Distributors; printing
of prospectuses and statements of additional information (and supplements
thereto) and reports for other than existing shareholders; supplemental payments
to dealers under a dealer incentive program; and costs of administering the
Class A Plan. The fees payable to selected dealers, banks and retirement plan
administrators who participate in the program are calculated at the annual rate
of 0.25% of the average daily net asset value of the Fund's 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 Plan.
The Class A Plan became effective on September 5, 1991, and was most recently
amended on September 10, 1994. The Class A Plan conforms to the amended rules of
the National Association of Securities Dealers, Inc., by providing that, of the
aggregate amount payable under the Class A 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 may be characterized as a service fee,
and that 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 Plan. The Class A Plan also imposes a cap
on the total amount of sales charges, including asset-based sales charges, that
may be paid by the Company with respect to the Fund. The Class A 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 Plan on
behalf of the Fund. Thus, under the Class A 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. Payments pursuant to the Plans are subject to
any applicable limitations imposed by rules of the National Association of
Securities Dealers, Inc.
Under the Class A Plan, AIM Distributors may in its discretion from time to
time agree to waive voluntarily all or any portion of its fee, while retaining
its ability to be reimbursed for such fee prior to the end of each fiscal year.
The Plan may be terminated at any time by a vote of the majority of those
directors who are not interested "interested persons" of the Company or by a
vote of the majority of the outstanding shares.
PORTFOLIO MANAGERS
AIM uses a team approach and a disciplined investment process in providing
investment advisory services to all of its accounts, including the Funds. AIM's
investment staff consists of 95 individuals. While individual members of AIM's
investment staff are assigned primary responsibility for the day-to-day
management of each of AIM's accounts, all accounts are reviewed on a regular
basis by AIM's Investment Policy Committee to ensure that they are being
invested in accordance with the account's and AIM's investment policies. The
individuals who are primarily responsible for the day-to-day management of the
Funds and their titles, if any, with AIM or its affiliates and the Fund, the
length of time they have been responsible for the management, and their years of
investment experience and prior experience (if they have been with AIM for less
than five years) are shown below.
Robert M. Kippes and Jonathan C. Schoolar are primarily responsible for the
day-to-day management of AGGRESSIVE GROWTH. Mr. Kippes is Vice President of AIM
Capital. He currently serves as co-manager of AGGRESSIVE GROWTH and has been
responsible for
10
<PAGE> 34
the Fund since 1992. Mr. Kippes has been associated with AIM and/or its
affiliates since 1989 and has six years of experience as an investment
professional. Mr. Schoolar is Senior Vice President and Director of AIM Capital,
Vice President of AIM and Senior Vice President of the Company and has been
responsible for the Fund since 1992. He has been associated with AIM and/or its
affiliates since 1986 and has 12 years of experience as an investment
professional.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE COMPANY
The Company was organized in 1988 as a Maryland corporation, and is registered
with the SEC as a diversified, open-end, series, management investment company.
The Company currently consists of four separate operating portfolios: CHARTER
and WEINGARTEN, each of which has a Retail Class of shares consisting of Class A
and Class B shares and an Institutional Class; CONSTELLATION, which has a Retail
Class of Class A shares and an Institutional Class, and the Fund, which has a
Retail Class of Class A shares. Prior to October 15, 1993, the Fund was a
portfolio of AIM Funds Group, a Massachusetts business trust. Pursuant to an
Agreement and Plan of Reorganization between the Company and AIM Funds Group,
the Fund was redomesticated as a portfolio of the Company effective as of
October 15, 1993.
The authorized capital stock of the Company consists of 7,000,000,000 shares
of common stock with a par value of $.001 per share, of which 750,000,000 shares
are classified Class A Shares of each investment portfolio (including two that
have not commenced operations), 750,000,000 shares are classified Class B Shares
of each of CHARTER and WEINGARTEN, 200,000,000 shares are classified
Institutional Shares of each of CHARTER, WEINGARTEN and CONSTELLATION, and the
balance of which are unclassified. Each class of shares of the same Fund
represent interests in that Fund's assets and have identical voting, dividend,
liquidation and other rights on the same terms and conditions, except that each
class of shares bears differing class-specific expenses, is subject to differing
sales loads, conversion features and exchange privileges, and has exclusive
voting rights on matters pertaining to that class' distribution plan.
Except as specifically noted above, shareholders of each Fund are entitled to
one vote per share (with proportionate voting for fractional shares),
irrespective of the relative net asset value of the different classes of shares,
where applicable, of a Fund. However, on matters affecting one portfolio of the
Company or one class of shares, a separate vote of shareholders of that
portfolio or class is required. Shareholders of a portfolio or class are not
entitled to vote on any matter which does not affect that portfolio or class but
which requires a separate vote of another portfolio or class. An example of a
matter which would be voted on separately by shareholders of a portfolio is the
approval of an advisory agreement, and an example of a matter which would be
voted on separately by shareholders of a class of shares is approval of a
distribution plan. When issued, shares of each Fund are fully paid and
nonassessable, have no preemptive or subscription rights, and are fully
transferable. Other than the automatic conversion of Class B shares to Class A
shares, there are no conversion rights. Shares do not have cumulative voting
rights, which means that in situations in which shareholders elect directors,
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors of the Company, and the holders of less than 50% of
the shares voting for the election of directors will not be able to elect any
directors.
The holder of shares of the Fund is entitled to such dividends payable out of
the net assets allocable to the Fund as may be declared by the Board of
Directors of the Company. In the event of liquidation or dissolution of the
Company, the holders of shares of the Fund will be entitled to receive pro rata,
subject to the rights of creditors, the net assets of the Company allocable to
the Fund. Fractional shares of the Fund have the same rights as full shares to
the extent of their proportionate interest.
Under Maryland law and the Company's By-Laws, the Company need not hold an
annual meeting of shareholders unless a meeting is required under the 1940 Act
to elect directors. Shareholders may remove directors from office, and a meeting
of shareholders may be called at the request of the holders of 10% or more of
the Company's outstanding shares.
- --------------------------------------------------------------------------------
CLOSURE OF THE FUND TO NEW INVESTORS
The Fund reached a size in assets under management where, due to the limited
size of the market of common stocks of small capitalized companies, it became
increasingly difficult to satisfy the investment objective and guidelines. For
this reason, the Board of Directors of the Fund determined that it would be
advisable under the then current market conditions to close AGGRESSIVE GROWTH to
new investors effective as of the close of business July 18, 1995.
Shareholders who maintain open accounts in the Fund will be able to continue
to make additional investments in the Fund. Please note applicable minimum
account balance requirements in the Investor's Guide. Notwithstanding the right
to reinstatement described in the Investor's Guide, no shareholder of AGGRESSIVE
GROWTH who redeems their account in full will have the right of reinstatement.
The Fund may resume sales of shares to new investors at some future date if
the Board of Directors determines that it would be in the best interests of
shareholders.
11
<PAGE> 35
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 36
[LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS(R)
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046-1173
Investment Sub-Advisor
A I M Capital Management, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046-1173
Principal Underwriter
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
KPMG Peat Marwick LLP
700 Louisiana
NationsBank Building
Houston, TX 77002
For more complete information about any other Fund in The AIM Family of Funds,
including charges and expenses, please call (713) 626-1919, Extension 5001 (in
Houston) or (800) 347-4246 (elsewhere) or write to AIM Distributors, Inc. and
request a free prospectus. Please read the prospectus carefully before you
invest or send money.
<PAGE> 37
STATEMENT OF
ADDITIONAL INFORMATION
RETAIL CLASSES OF
AIM CHARTER FUND
AIM WEINGARTEN FUND
AIM AGGRESSIVE GROWTH FUND
AIM CONSTELLATION FUND
(SERIES PORTFOLIOS OF
AIM EQUITY FUNDS, INC.)
11 GREENWAY PLAZA
SUITE 1919
HOUSTON, TX 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 FUNDS, 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, TX 77210-4739
OR BY CALLING (713) 626-1919, EXTENSION 5001 (IN HOUSTON)
OR (800) 347-4246 (ELSEWHERE).
____________________
STATEMENT OF ADDITIONAL INFORMATION DATED JANUARY 2, 1996
RELATING TO THE AIM AGGRESSIVE GROWTH FUND PROSPECTUS DATED JANUARY 2, 1996
AND THE
AIM CHARTER FUND, AIM WEINGARTEN FUND AND AIM CONSTELLATION FUND PROSPECTUS
DATED
JANUARY 2, 1996
<PAGE> 38
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION ABOUT THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Company and its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Total Return Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Yield Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Historical Portfolio Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
General Brokerage Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 28(e) Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Brokerage Commissions Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Foreign Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Rule 144A Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Special Situations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Short Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Writing Covered Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Options on Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Risks as to Futures Contracts and Related Options . . . . . . . . . . . . . . . . . . . . . 14
Certain Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Weingarten . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Aggressive Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Constellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Additional Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Investment Advisory, Administrative Services and Sub-Advisory Agreements . . . . . . . . . 25
THE DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
NET ASSET VALUE DETERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
i
<PAGE> 39
<TABLE>
<S> <C>
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Reinvestment of Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . 35
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Qualification as a Regulated Investment Company . . . . . . . . . . . . . . . . . . . . . . 35
Excise Tax on Regulated Investment Companies . . . . . . . . . . . . . . . . . . . . . . . 37
Fund Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Sale or Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Foreign Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Effect of Future Legislation; Local Tax Considerations . . . . . . . . . . . . . . . . . . 40
MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Shareholder Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Description of Commercial Paper Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Description of Corporate Bond Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
</TABLE>
ii
<PAGE> 40
INTRODUCTION
AIM Equity Funds, Inc. (the "Company") is a series mutual fund. The rules
and regulations of the United States 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 for AIM Charter Fund ("Charter"), AIM Weingarten
Fund ("Weingarten") and AIM Constellation Fund ("Constellation") is included in
a Prospectus dated January 2, 1996 (the "Prospectus") which relates to the
Retail Classes of the Funds (defined below). The information for the Retail
Class of AIM Aggressive Growth Fund ("Aggressive Growth") is contained in a
separate prospectus also dated January 2, 1996. Additional copies of the
Prospectuses and this Statement of Additional Information may be obtained
without charge by writing the principal distributor of the Funds' shares, A I M
Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, TX 77210-4739
or by calling (713) 626-1919, Extension 5001 (in Houston) or (800) 347-4246
(elsewhere). Investors must receive a Prospectus before they invest.
This Statement of Additional Information is intended to furnish prospective
investors with additional information concerning the Funds. Some of the
information required to be in this Statement of Additional Information is also
included in the Prospectus; and, in order to avoid repetition, reference will
be made to sections of the Prospectus. Additionally, the Prospectus and this
Statement of Additional Information omit certain information contained in the
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
described under its rules and regulations.
GENERAL INFORMATION ABOUT THE FUNDS
THE COMPANY AND ITS SHARES
The Company was organized in 1988 as a Maryland corporation, and is
registered with the SEC as a diversified open-end series management investment
company. The Company currently consists of four separate portfolios: Charter,
Weingarten, Aggressive Growth and Constellation (each a "Fund" and
collectively, the "Funds"). Charter and Weingarten each have three separate
classes: Class A and Class B and an Institutional Class. Constellation has
two classes of shares: Class A and an Institutional Class. Aggressive Growth
has Class A only. Class A shares (sold with a front-end load), and Class B
shares (sold with a contingent deferred sales charge) of the Funds are also
referred to as the Retail Classes. Prior to October 15, 1993, Aggressive
Growth was a portfolio of AIM Funds Group ("AFG"), a Massachusetts business
trust. Pursuant to an Agreement and Plan of Reorganization between AFG and the
Company, Aggressive Growth was redomesticated as a portfolio of the Company.
All historical financial and other information contained in this Statement of
Additional Information for periods prior to October 15, 1993 relating to
Aggressive Growth is that of AFG's Aggressive Growth.
This Statement of Additional Information relates solely to the Retail
Classes of the Funds.
The term "majority of the outstanding shares" of the Company, of a
particular Fund or of a particular class of a Fund means, respectively, the
vote of the lesser of (a) 67% or more of the shares of the Company, such Fund
or such class present at a meeting of the Company's shareholders, if the
holders of more than 50% of the outstanding shares of the Company, such Fund or
such class are present or represented by proxy, or (b) more than 50% of the
outstanding shares of the Company, such Fund or such class.
Shares of the Retail Class and the Institutional Class of each 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
Company's Board of Directors with respect to the class of such 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
1
<PAGE> 41
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 share.
Shareholders of the Funds do not have cumulative voting rights, and
therefore the holders of more than 50% of the outstanding shares of all Funds
voting together for election of directors may elect all of the members of the
Board of Directors of the Company. In such event, the remaining holders cannot
elect any directors of the Company.
PERFORMANCE
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of the applicable
Fund's return, including the effect of reinvesting dividends and capital gain
distributions, and any change in such Fund's net asset value per share over the
period. Average annual returns are calculated by determining the growth or
decline in value of a hypothetical investment in a particular Fund over a
stated period, and then calculating the annually compounded percentage rate
that would have produced the same result if the rate of growth or decline in
value had been constant over the period. While average annual returns are a
convenient means of comparing investment alternatives, investors should realize
that a Fund's performance is not constant over time, but changes from year to
year, and that average annual returns do not represent the actual year-to-year
performance of such Fund.
In addition to average annual returns, the Retail Class of each Fund may
quote unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and cumulative
total returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a series of
redemptions, over any time period. Total returns may be broken down into their
components of income and capital (including capital gains and changes in share
price) in order to illustrate the relationship of these factors and their
contributions to total return. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph or similar
illustration. Total returns may be quoted with or without taking the
applicable Fund's maximum applicable Class A front-end or Class B contingent
deferred sales charge into account. Excluding sales charges from a total
return calculation produces a higher total return figure.
YIELD QUOTATIONS
The standard formula for calculating yield, as described in the Prospectus,
is as follows:
6
YIELD = 2[((a-b)/(c x d) + 1) -1]
Where a = dividends and interest earned during a stated 30 day period. For
purposes of this calculation, dividends are accrued rather than
recorded on the ex-dividend date. Interest earned under this
formula must generally be calculated based on the yield to maturity
of each obligation (or, if more appropriate, based on yield to call
date).
b = expense accrued during period (net of reimbursement).
c = the average daily number of shares outstanding during the period.
d = the maximum offering price per share on the last day of the period.
2
<PAGE> 42
HISTORICAL PORTFOLIO RESULTS
Charter, Weingarten, Aggressive Growth and Constellation's total returns for
Class A shares for the following periods ended October 31, 1995 (which include
the maximum sales charge of 5.50% and reinvestment of all dividends and
distributions) were as follows:
CLASS A AVERAGE ANNUAL RETURNS
------------------------------
<TABLE>
<CAPTION>
ONE FIVE TEN FIFTEEN TWENTY
YEAR YEARS YEARS YEARS YEARS
---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
CHARTER 20.02% 14.42% 15.01% 13.24% 16.95%
WEINGARTEN 21.13% 15.62% 16.33% 15.31% 19.16%
AGGRESSIVE GROWTH 33.68% 37.51% 18.04% NA NA
CONSTELLATION 26.06% 28.91% 21.71% 15.80% NA
</TABLE>
CLASS A CUMULATIVE RETURNS
--------------------------
<TABLE>
<CAPTION>
ONE FIVE TEN FIFTEEN TWENTY
YEAR YEARS YEARS YEARS YEARS
---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
CHARTER 20.02% 96.15% 304.77% 545.61% 2,192.80%
WEINGARTEN 21.13% 106.61% 353.87% 747.10% 3,229.09%
AGGRESSIVE GROWTH 33.68% 391.69% 425.35% NA NA
CONSTELLATION 26.06% 255.98% 613.55% 802.51% NA
</TABLE>
______________________________
During the 10 year period ended October 31, 1995, a hypothetical $1,000
investment at the beginning of such period in Class A shares of Charter,
Weingarten, Constellation and Aggressive Growth would have been worth
$4,047.72, $4,538.65, $7,135.50 and $5,253.54, respectively, assuming all
distributions were reinvested.
During the 15 year period ended October 31, 1995, a hypothetical $1,000
investment at the beginning of such period in Class A shares of Charter,
Weingarten and Constellation would have been worth $6,456.09, $8,471.00 and
$9,025.13, respectively, assuming all dividends were reinvested.
During the 20 year period ended October 31, 1995 a hypothetical $1,000
investment at the beginning of such period in Class A shares of Charter and
Weingarten would have been worth $22,928.03 and $33,290.90, respectively,
assuming all distributions were reinvested. This was a period of widely
fluctuating stock and bond prices and interest rates, and should not
necessarily be considered a representation of the income or capital gain or
loss that may be realized from an investment in any of the Funds today.
3
<PAGE> 43
Charter and Weingarten's total returns for Class B shares for the period
June 26, 1995 (inception date for Class B shares of Charter and Weingarten)
through October 31, 1995 (which include the maximum contingent deferred sales
charge of 5% and reinvestment of all dividends and distributions) were as
follows:
CLASS B AVERAGE ANNUAL RETURNS
------------------------------
Since
Inception
---------
CHARTER N/A
WEINGARTEN N/A
CLASS B CUMULATIVE RETURNS
--------------------------
Since
Inception
---------
CHARTER 3.48%
WEINGARTEN 4.27%
Average annual total return is not available for Class B shares of Charter
and Weingarten as the effective date of the Class B shares was June 26, 1995.
Each Fund's performance may be compared in advertising to the performance of
other mutual funds in general, or of particular types of mutual funds,
especially those with similar objectives. Such performance data may be
prepared by Lipper Analytical Services, Inc. and other independent services
which monitor the performance of mutual funds. The Funds may also advertise
mutual fund performance rankings which have been assigned to each respective
Fund by such monitoring services.
Each Fund's performance may also be compared in advertising to the
performance of comparative benchmarks such as the Consumer Price Index ("CPI"),
the Standard & Poor's ("S&P") 500 Stock Index, and fixed-price investments such
as bank certificates of deposit and/or savings accounts.
In addition, each Fund's long-term performance may be described in
advertising in relation to historical, political and/or economic events. For
instance, Charter's Class A shares performance since its inception has been
accomplished through various years in which there have been recessions, a
presidential assassination attempt, a 20% prime rate, an 13% annual inflation
rate, and significant stock market declines. The performance of Class A shares
of Weingarten, Aggressive Growth and Constellation has been achieved through
years in which similar events occurred.
Each Fund's advertising may from time to time include discussions of general
economic conditions and interest rates. Each Fund's advertising may also
include references to the use of the Fund as part of an individual's overall
retirement investment program.
From time to time, Fund sales literature and/or advertisements may disclose
(i) top holdings included in the Fund's portfolio, (ii) certain selling group
members and/or (iii) certain institutional shareholders.
From time to time, the Funds' sales literature and/or advertisements may
discuss generic topics pertaining to the mutual fund industry. These topics
include, but are 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.
4
<PAGE> 44
The following charts show the cumulative total return of Class A shares of
Charter, Weingarten and Constellation (and their predecessors) compared to the
percentage change in the CPI, the S&P 500 Stock Index and a hypothetical 8.00%
fixed-price investment for each specified 10-year period ended December 31.
RELATIVE TOTAL RETURN PERFORMANCE FOR CLASS A SHARES OF CHARTER
(AND ITS PREDECESSOR),
CPI, S&P 500 STOCK INDEX & 8.00% FIXED-PRICE INVESTMENT
FOR ALL 10-YEAR INVESTMENT PERIODS BEGINNING WITH 1969 - 1986
<TABLE>
<CAPTION>
10 YEAR AIM CHARTER 8.00% FIXED PRICE
PERIOD FUND* CPI** S&P 500*** INVESTMENT****
<S> <C> <C> <C> <C>
1969-1978 135.33% 90.70% 36.51% 115.90%
1970-1979 249.95% 103.45% 76.53% 115.90%
1971-1980 462.17% 116.84% 125.00% 115.90%
1972-1981 316.59% 128.71% 87.42% 115.90%
1973-1982 251.54% 129.64% 91.45% 115.90%
1974-1983 384.68% 119.26% 174.67% 115.90%
1975-1984 526.07% 102.89% 295.86% 115.90%
1976-1985 494.52% 96.94% 280.01% 115.90%
1977-1986 391.37% 89.86% 264.08% 115.90%
1978-1987 415.89% 85.83% 312.67% 115.90%
1979-1988 305.19% 77.99% 351.35% 115.90%
1980-1989 288.53% 64.41% 401.33% 115.90%
1981-1990 214.74% 55.03% 266.97% 115.90%
1982-1991 328.08% 46.59% 402.55% 115.90%
1983-1992 274.52% 45.49% 345.17% 115.90%
1984-1993 243.15% 43.93% 299.84% 115.90%
1985-1994 248.63% 42.17% 281.56% 115.90%
1986-1995***** . % . % . % . %
-------- -------- --------- -----------
</TABLE>
RELATIVE TOTAL RETURN PERFORMANCE FOR CLASS A SHARES OF WEINGARTEN
(AND ITS PREDECESSOR),
CPI, S&P 500 STOCK INDEX & 8.00% FIXED-PRICE INVESTMENT
FOR ALL 10-YEAR INVESTMENT PERIODS BEGINNING WITH 1970 - 1986
<TABLE>
<CAPTION>
10 YEAR AIM WEINGARTEN 8.00% FIXED PRICE
PERIOD FUND* CPI** S&P 500*** INVESTMENT****
<S> <C> <C> <C> <C>
1970-1979 183.68% 103.45% 76.53% 115.90%
1971-1980 362.14% 116.84% 125.00% 115.90%
1972-1981 192.63% 128.71% 87.42% 115.90%
1973-1982 225.23% 129.64% 91.45% 115.90%
1974-1983 439.58% 119.26% 174.67% 115.90%
1975-1984 658.94% 102.89% 295.86% 115.90%
1976-1985 677.90% 96.94% 280.01% 115.90%
1977-1986 735.19% 89.86% 264.08% 115.90%
1978-1987 670.91% 85.83% 312.67% 115.90%
1979-1988 577.58% 77.99% 351.35% 115.90%
1980-1989 510.87% 64.41% 401.33% 115.90%
1981-1990 289.25% 55.03% 266.97% 115.90%
1982-1991 550.92% 46.59% 402.55% 115.90%
1983-1992 394.71% 45.49% 345.17% 115.90%
1984-1993 289.86% 43.93% 299.84% 115.90%
1985-1994 313.29% 42.17% 281.56% 115.90%
1986-1995***** . % . % . % . %
------- -------- -------- --------
</TABLE>
5
<PAGE> 45
RELATIVE TOTAL RETURN PERFORMANCE FOR CLASS A SHARES OF CONSTELLATION
(AND ITS PREDECESSOR),
CPI, S&P 500 STOCK INDEX & 8.00% FIXED-PRICE INVESTMENT
FOR ALL 10-YEAR INVESTMENT PERIODS BEGINNING WITH 1977 - 1986
<TABLE>
<CAPTION>
10 YEAR AIM CONSTELLATION 8.00% FIXED-PRICE
PERIOD FUND* CPI** S&P 500*** INVESTMENT****
<S> <C> <C> <C> <C>
1977-1986 462.49% 89.86% 264.08% 115.90%
1978-1987 500.80% 85.83% 312.67% 115.90%
1979-1988 476.45% 77.99% 351.35% 115.90%
1980-1989 350.02% 64.41% 401.33% 115.90%
1981-1990 147.55% 55.03% 266.97% 115.90%
1982-1991 410.95% 46.59% 402.55% 115.90%
1983-1992 412.18% 45.49% 345.17% 115.90%
1984-1993 381.97% 43.93% 299.84% 115.90%
1985-1994 476.07% 42.17% 281.56% 115.90%
1986-1995***** . % . % . % . %
------- ------ ------- -------
</TABLE>
* Includes the effect of the Class A shares maximum sales charge of 5.50%
and assumes all dividends and capital gains are reinvested. Excluding the
effect of any sales charge, Charter appreciated ______%, Weingarten
appreciated ______% and Constellation appreciated ______% for the ten year
period ended December 31, 1995.
** The CPI, published by the U.S. Bureau of Labor Statistics, is a
statistical measure of changes, over time, in the prices of goods and
services.
*** S&P's 500 Stock Index is a group of unmanaged securities widely regarded
by investors as representative of the stock market in general. The
results shown assume the reinvestment of dividends.
**** Fixed Price Investments, such as bank certificates of deposits and savings
accounts, are generally backed by federal agencies for up to $100,000.00.
Class A shares of Charter, Weingarten and Constellation are not insured
and their value will vary with market conditions.
***** CPI and S&P 500 information not available as of filing date.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
Subject to policies established by the Board of Directors of the Company,
A I M Advisors, Inc. ("AIM") is responsible for decisions to buy and sell
securities for each Fund, for the selection of broker-dealers, for the
execution of each Fund's investment portfolio transactions, and for the
allocation of brokerage fees in connection with such transactions. AIM's
primary consideration in effecting a security transaction is to obtain the best
net price and the most favorable execution of the order. While AIM generally
seeks reasonably competitive commission rates, each Fund does not necessarily
pay the lowest commission or spread available.
A portion of the securities in which each Fund invests are traded in
over-the-counter markets, and in such transactions, a Fund deals directly with
the dealers who make markets in the securities involved, except in those
circumstances where better prices and executions are available elsewhere.
Portfolio transactions placed through dealers serving as primary market makers
are effected at net prices, generally without commissions as such, but which
include compensation in the form of mark up or mark down.
6
<PAGE> 46
AIM may from time to time determine target levels of commission business for
AIM to transact with various brokers on behalf of its clients (including the
Funds) over a certain time period. The target levels will be determined based
upon the following factors, among others: (a) the execution services by the
broker; (b) the research services provided by the broker; and (c) the broker's
attitude toward and interest in mutual funds in general and in the Funds and
other mutual funds advised by AIM or A I M Capital Management, Inc. ("AIM
Capital") in particular. No specific formula will be used in connection with
any of the foregoing considerations in determining the target levels. However,
if a broker has indicated a certain level of desired commissions in return for
certain research services provided by the broker, this factor will be taken
into consideration by AIM. Subject to the overall objective of obtaining best
price and execution for the Funds, AIM may also consider sales of shares of the
Funds and of the other mutual funds managed or advised by AIM and AIM Capital
as a factor in the selection of broker-dealers to execute portfolio
transactions for the Funds. AIM will seek, whenever possible, to recapture for
the benefit of each Fund any commission, fee, brokerage or similar payment paid
by such Fund on portfolio transactions. Normally, the only fees which may be
recaptured are the soliciting dealer fees on the tender of an account's
portfolio securities in a tender or exchange offer.
None of the Funds is under any obligation to deal with any broker or group
of brokers in the execution of transactions in portfolio securities. Brokers
who provide supplemental investment research to AIM and AIM Capital may receive
orders for transactions by the Funds. Information so received will be in
addition to and not in lieu of the services required to be performed by AIM and
AIM Capital under their agreements with the Funds and the expenses of AIM and
AIM Capital will not necessarily be reduced as a result of the receipt of such
supplemental information. Certain research services furnished by
broker-dealers may be useful to AIM and AIM Capital in connection with their
services to other advisory clients, including the investment companies which
they advise. Also, each Fund may pay a higher price for securities or higher
commissions in recognition of research services furnished by broker-dealers.
Provisions of the Investment Company Act of 1940, as amended ("1940 Act")
and rules and regulations thereunder have been construed to prohibit the
Company from purchasing securities or instruments from, or selling securities
or instruments to, any holder of 5% or more of the voting securities of any
investment company managed or advised by AIM. The Company has obtained an
order of exemption from the SEC which permits the Company to engage in certain
transactions with such 5% holder, if the Company complies with conditions and
procedures designed to ensure that such transactions are executed at fair
market value and present no conflicts of interest.
AIM, AIM Capital and their affiliates manage several other investment
accounts, some of which may have investment objectives similar to those of one
or more of the Funds. It is possible that, at times, identical securities will
be appropriate for investment by one or more of the Funds and by one or more of
such investment accounts. The position of each account, however, in the
securities of the same issue may vary and the length of time that each account
may choose to hold its investment in the securities of the same issue may
likewise vary. The timing and amount of purchase by each account will be
determined by its cash position. If the purchase or sale of securities
consistent with the investment policies of a Fund and one or more of these
accounts is considered at or about the same time, transactions in such
securities will be allocated among the Fund(s) and such accounts in a manner
deemed equitable by AIM. AIM may combine such transactions, in accordance with
applicable laws and regulations, in order to obtain the best net price and most
favorable execution. Simultaneous transactions could, however, adversely
affect the ability of a Fund to obtain or dispose of the full amount of a
security which it seeks to purchase or sell.
Under the 1940 Act, persons affiliated with the Company 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 Board of Directors has adopted procedures pursuant to Rule 17a-7 under the
1940 Act relating to portfolio transactions among the Funds and other accounts
advised by AIM or AIM Capital and each of the Funds may from time to time enter
into transactions in accordance with such Rule and procedures.
7
<PAGE> 47
From time to time, an identical security may be sold by an AIM Fund or
another investment account advised by AIM or AIM Capital and simultaneously
purchased by another investment account advised by AIM or AIM Capital when such
transactions comply with applicable rules and regulations and are deemed
consistent with the investment objective(s) and policies of the investment
accounts involved. Procedures pursuant to Rule 17a-7 under the 1940 Act
regarding transactions between investment accounts advised by AIM or AIM
Capital have been adopted by the Board of Directors/Trustees of the various AIM
Funds including the Company. Although such transactions may result in
custodian, tax or other related expenses, no brokerage commissions or other
direct transaction costs are generated by transactions among the investment
accounts advised by AIM or AIM Capital.
In some cases the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM and AIM Capital could have an
adverse effect on the price or amount of securities available to a Fund. In
making such allocations, the main factors considered by AIM are the respective
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.
SECTION 28(e) STANDARDS
Under Section 28(e) of the Securities Exchange Act of 1934, AIM shall not be
"deemed to have acted unlawfully or to have breached its fiduciary duty" solely
because under certain circumstances it has caused the account to pay a higher
commission than the lowest available. To obtain the benefit of 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 [its]
overall responsibilities with respect to the accounts as to which [it]
exercises investment discretion," and that the services provided by a broker
provide AIM and AIM Capital with lawful and appropriate assistance in the
performance of their investment decision-making responsibilities. Accordingly,
the price to a Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Broker-dealers utilized by AIM may furnish statistical, research and other
information or services which are deemed by AIM and AIM Capital to be
beneficial to the Funds' investment programs. Research services received from
brokers supplement AIM's and AIM Capital's own research (and the research of
sub-advisors to other clients of AIM and AIM Capital), and may include the
following types of information: statistical and background information on
industry groups and individual companies; forecasts and interpretations with
respect to U.S. and foreign economies, securities, markets, specific industry
groups and individual companies; information on political developments;
portfolio management strategies; performance information on securities and
information concerning prices of securities; and information supplied by
specialized services to AIM and AIM Capital and to the Company's directors with
respect to the performance, investment activities and fees and expenses of
other mutual funds. Such information may be communicated electronically,
orally or in written form. Research services may also include the providing of
equipment used to communicate research information, 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 and AIM Capital since the
brokers utilized by AIM as a group tend to follow a broader universe of
securities and other matters than AIM's and AIM Capital's staff can follow. In
addition, this research provides AIM and AIM Capital with a diverse perspective
on financial markets. Research services which are provided to AIM and AIM
Capital by brokers are available for the benefit of all accounts managed or
advised by AIM and AIM Capital or by sub-advisors to other accounts managed or
advised by AIM and AIM Capital. In some cases, the research services are
available only from the broker providing such services. In other cases, the
research services may be obtainable from alternative sources in return for cash
payments. AIM is of the opinion that because the broker research supplements,
rather than replaces, its research, the receipt of such research does not tend
to decrease its expenses, but tends to improve the quality of its investment
advice. However, to the extent that AIM or AIM Capital would
8
<PAGE> 48
have purchased any such research services had such services not been provided
by brokers, the expenses of such services to AIM or AIM Capital could be
considered to have been reduced accordingly. Certain research services
furnished by broker-dealers may be useful to AIM or AIM Capital with clients
other than the Funds. Similarly, any research services received by AIM or AIM
Capital through the placement of portfolio transactions of other clients may be
of value to AIM or AIM Capital in fulfilling their obligations to the Funds.
AIM is of the opinion that this material is beneficial in supplementing AIM's
and AIM Capital's research and analysis; and, therefore, it may benefit the
Funds by improving the quality of the investment advice. The advisory fees
paid by the Funds are not reduced because AIM and AIM Capital receive such
services. 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 and AIM Capital's clients,
including the Funds.
BROKERAGE COMMISSIONS PAID
For the fiscal years ended October 31, 1995, 1994 and 1993, Charter paid
brokerage commissions of $14,960,600, $4,188,692 and $5,005,249, respectively.
For the fiscal year ended October 31, 1995, AIM directed certain of Charter's
brokerage transactions to certain broker-dealers that provided AIM with certain
research, statistical and other information. Such transactions amounted to
$269,685,180 and the related brokerage commissions were $374,801.
For the fiscal years ended October 31, 1995, 1994 and 1993, Weingarten paid
brokerage commissions of $21,766,760, $17,841,982 and $17,367,904,
respectively. For the fiscal year ended October 31, 1995, AIM directed certain
of Weingarten's brokerage transactions to certain broker-dealers that provided
AIM with certain research, statistical and other information. Such transactions
amounted to $641,610,030 and the related brokerage commissions were $1,017,600.
For the fiscal years ended October 31, 1995, 1994 and the ten-month period
ended October 31, 1993, Aggressive Growth paid brokerage commissions of
$9,917,185, $1,180,323 and $364,786, respectively. For the fiscal year ended
October 31, 1995, AIM directed certain of Aggressive Growth's brokerage
transactions to certain broker-dealers that provided AIM with certain research,
statistical and other information. Such transactions amounted to $92,886,344
and the related brokerage commissions were $223,343.
For the fiscal years ended October 31, 1995, 1994 and 1993, Constellation
paid brokerage commissions of $15,359,510, $6,921,543 and 4,683,461,
respectively. For the fiscal year ended October 31, 1995, AIM directed certain
of Constellation's brokerage transactions to certain broker-dealers that
provided AIM with certain research, statistical and other information. Such
transactions amounted to $353,895,595 and the related brokerage commissions
were $652,417.
PORTFOLIO TURNOVER
The portfolio turnover rate of each Fund is shown under "Financial
Highlights" in the applicable Prospectus. Higher portfolio turnover increases
transaction costs to the Fund.
INVESTMENT OBJECTIVES AND POLICIES
The following discussion of investment policies supplements the discussion
of the investment objectives and policies set forth in the Prospectus under the
heading "Investment Program(s)."
Each of the Funds may invest, for temporary or defensive purposes, all or
substantially all of their assets in investment grade (high quality) corporate
bonds, commercial paper, or U.S. Government obligations. In addition, a
portion of each Fund's assets may be held, from time to time, in cash,
repurchase agreements or other debt securities when such positions are deemed
advisable in light of economic or market conditions.
9
<PAGE> 49
For a description of the various rating categories of corporate bonds and
commercial paper in which the Funds may invest, see the Appendix to this
Statement of Additional Information.
FOREIGN SECURITIES
Aggressive Growth may invest up to 25% of its total assets in foreign
securities. Charter, Weingarten and Constellation may invest up to 20% of its
total assets in foreign securities. For purposes of computing such limitation
American Depository Receipts, European Depository Receipts and other securities
representing underlying securities of foreign issuers are treated as foreign
securities. 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. Investments by the Fund in securities of foreign
corporations may involve considerations and risks that are different in certain
respects from an investment in securities of U.S. companies. Such risks
include possible imposition of withholding taxes on interest or dividends,
possible adoption of foreign governmental restrictions on repatriation of
income or capital invested, or other adverse political or economic
developments. Additionally, it may be more difficult to enforce the rights of
a security holder against a foreign corporation, and information about the
operations of foreign corporations may be more difficult to obtain and
evaluate.
RULE 144A SECURITIES
The Funds may each purchase securities which, while privately placed, are
eligible for purchase and sale pursuant to Rule 144A under the Securities Act
of 1933 (the "1933 Act"). This Rule permits certain qualified institutional
buyers, such as a Fund, to trade in privately placed securities even though
such securities are not registered under the 1933 Act. AIM, under the
supervision of the Company's Board of Directors, will consider whether
securities purchased under Rule 144A are illiquid and thus subject to the
Fund's restriction of investing no more than 15% of its assets in illiquid
securities. Determination of whether a Rule 144A security is liquid or not is a
question of fact. In making this determination AIM will consider the trading
markets for the specific security taking into account the unregistered nature
of a Rule 144A security. In addition, AIM could consider the (i) frequency of
trades and quotes, (ii) number of dealers and potential purchasers, (iii)
dealer undertakings to make a market, and (iv) nature of the security and of
market place trades (for example, the time needed to dispose of the security,
the method of soliciting offers and the mechanics of transfer). The liquidity
of Rule 144A securities will also be monitored by AIM and, if as a result of
changed conditions, it is determined that a Rule 144A security is no longer
liquid, the Fund's holdings of illiquid securities will be reviewed to
determine what, if any, action is required to assure that the Fund does not
invest more than 15% of its assets in illiquid securities. Investing in Rule
144A securities could have the effect of increasing the amount of the Fund's
investments in illiquid securities if qualified institutional buyers are
unwilling to purchase such securities. At the present time, it is not possible
to predict with certainty how the market for Rule 144A securities will develop.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured
loans of portfolio securities amounting to not more than 33-1/3% of its total
assets. Securities loans are made to banks, brokers and other financial
institutions pursuant to agreements requiring that the loans be continuously
secured by collateral at least equal at all times to the value of the
securities lent marked to market on a daily basis. The collateral received will
consist of cash, U.S. Government securities, letters of credit or such other
collateral as may be permitted under the Fund's investment program. While the
securities are being lent, the Fund will continue to receive the equivalent of
the interest or dividends paid by the issuer on the securities, as well as
interest
10
<PAGE> 50
on the investment of the collateral or a fee from the borrower. The Fund has a
right to call each loan and obtain the securities on five business days' notice
or, in connection with securities trading on foreign markets, within such
longer period of time which coincides with the normal settlement period for
purchases and sales of such securities in such foreign markets. The Fund will
not have the right to vote securities while they are being lent, but it will
call a loan in anticipation of any important vote. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral should the borrower
fail financially. Loans will only be made to persons deemed by AIM to be of
good standing and will not be made unless, in the judgment of AIM, the
consideration to be earned from such loans would justify the risk.
REPURCHASE AGREEMENTS
The Funds may each enter into repurchase agreements. A repurchase agreement
is an instrument under which a Fund acquires ownership of a debt security and
the seller (usually a broker or bank) agrees, at the time of the sale, to
repurchase the obligation at a mutually agreed upon time and price, thereby
determining the yield during the Fund's holding period. In the event of
bankruptcy or other default of a seller of a repurchase agreement, the Fund may
experience both delays in liquidating the underlying securities and losses,
including: (a) a possible decline in the value of the underlying security
during the period in which the Fund seeks to enforce its rights thereto; (b) a
possible subnormal level of income and lack of access to income during this
period; and (c) expenses of enforcing its rights. A repurchase agreement is
collateralized by the security acquired by the Fund and its value is marked to
market daily in order to minimize the Fund's risk. Repurchase agreements
usually are for short periods, such as one or two days, but may be entered into
for longer periods of time.
Charter may enter into repurchase agreements (at any time, up to 50% of its
net assets), using only U.S. Government securities, for the sole purpose of
increasing its yield on idle cash. Charter will not invest in a repurchase
agreement of more than seven days' duration if, as a result of that investment,
the amount of repurchase agreements of more than seven days' duration would
exceed 15% of the assets of Charter.
SPECIAL SITUATIONS
Although Constellation does not currently intend to do so, it may invest in
"special situations." A special situation arises when, in the opinion of the
Fund's management, the securities of a particular company will, within a
reasonably estimable period of time, be accorded market recognition at an
appreciated value solely by reason of a development applicable to that company,
and regardless of general business conditions or movements of the market as a
whole. Developments creating special situations might include, among others:
liquidations, reorganizations, recapitalizations, mergers, material litigation,
technical breakthroughs and new management or management policies. Although
large and well known companies may be involved, special situations more often
involve comparatively small or unseasoned companies. Investments in unseasoned
companies and special situations often involve much greater risk than is
inherent in ordinary investment securities. Constellation will not, however,
purchase securities of any company with a record of less than three years'
continuous operation (including that of predecessors) if such purchase would
cause the Fund's investment in all such companies, taken at cost, to exceed 5%
of the value of the Fund's total assets.
SHORT SALES
Although Weingarten, Constellation and Aggressive Growth do not currently
intend to do so, they may each enter into short sales transactions. Neither
Weingarten nor Constellation will make short sales of securities nor maintain a
short position unless at all times when a short position is open, the Fund owns
an equal amount of such securities or securities convertible into or
exchangeable, without payment of any further consideration, for securities of
the same issue as, and equal in amount to, the securities sold short. This is
a technique known as selling short "against the box." Such short sales will be
used by each of Weingarten and Constellation for the purpose of deferring
recognition of gain or loss for federal income tax purposes. In
11
<PAGE> 51
no event may more than 10% of the value of the respective Fund's net assets be
deposited or pledged as collateral for such sales at any time.
WARRANTS
The Funds may, from time to time, invest in warrants. Warrants are, in
effect, longer-term call options. They give the holder the right to purchase a
given number of shares of a particular company at specified prices within
certain periods of time. The purchaser of a warrant expects that the market
price of the security will exceed the purchase price of the warrant plus the
exercise price of the warrant, thus giving him a profit. Of course, since the
market price may never exceed the exercise price before the expiration date of
the warrant, the purchaser of the warrant risks the loss of the entire purchase
price of the warrant. Warrants generally trade in the open market and may be
sold rather than exercised. Warrants are sometimes sold in unit form with
other securities of an issuer. Units of warrants and common stock may be
employed in financing young, unseasoned companies. The purchase price of a
warrant varies with the exercise price of a warrant, the current market value
of the underlying security, the life of the warrant and various other
investment factors. The investment in warrants by the Funds, valued at the
lower of cost or market, may not exceed 5% of the value of their net assets and
not more than 2% of such value may be warrants which are not listed on the New
York or American Stock Exchanges.
WRITING COVERED CALL OPTIONS
Each of Weingarten, Aggressive Growth and Constellation is authorized to
write (sell) covered call options on the securities in which it may invest and
to enter into closing purchase transactions with respect to such options.
Writing a call option obligates a Fund to sell or deliver the option's
underlying security, in return for the strike price, upon exercise of the
option. By writing a call option, the Fund receives an option premium from the
purchaser of the call option. Writing covered call options is generally a
profitable strategy if prices remain the same or fall. Through receipt of the
option premium, the Fund would seek to mitigate the effects of a price decline.
By writing covered call options, however, the Fund gives up the opportunity,
while the option is in effect, to profit from any price increase in the
underlying security above the option exercise price. In addition, the Fund's
ability to sell the underlying security will be limited while the option is in
effect unless the Fund effects a closing purchase transaction.
FUTURES CONTRACTS
Each of the Funds may purchase futures contracts. In cases of purchases of
futures contracts, an amount of cash and cash equivalents, equal to the cost of
the futures contracts (less any related margin deposits), will be segregated
with the Funds' custodian to collateralize the position and ensure that the use
of such futures contracts is unleveraged. Unlike when a Fund purchases or
sells a security, no price is paid or received by a Fund upon the purchase or
sale of a futures contract. Initially, a Fund will be required to deposit with
its custodian for the account of the broker a stated amount, as called for by
the particular contract, of cash or U.S. Treasury bills. This amount is known
as "initial margin." The nature of initial margin in futures transactions is
different from that of margin in securities transactions in that futures
contract margin does not involve the borrowing of funds by the customer to
finance the transactions. Rather, the initial margin is in the nature of a
performance bond or good faith deposit on the contract which is returned to the
Fund upon termination of the futures contract assuming all contractual
obligations have been satisfied. Subsequent payments, called "variation
margin," to and from the broker will be made on a daily basis as the price of
the futures contract fluctuates making the long and short positions in the
futures contract more or less valuable, a process known as "marking-to-market."
For example, when a Fund has purchased a stock index futures contract and the
price of the underlying stock index has risen, that position will have
increased in value and the Fund will receive from the broker a variation margin
payment with respect to that increase in value. Conversely, where a Fund has
purchased a stock index futures contract and the price of the underlying stock
index has declined, that position would be less valuable and the Fund would be
required to make a variation margin payment to the broker. Variation margin
payments would be made in a similar fashion when a Fund has purchased an
interest rate futures contract. At any time prior to expiration of the futures
contract, a Fund
12
<PAGE> 52
may elect to close the position by taking an opposite position which will
operate to terminate the Fund's position in the futures contract. A final
determination of variation margin is then made, additional cash is required to
be paid by or released to the Fund and the Fund realizes a loss or gain.
A description of the various types of futures contract that may be utilized
by the Funds is as follows:
Stock Index Futures Contracts
A stock index assigns relative values to the common stocks included in the
index and the index fluctuates with changes in the market values of the common
stocks so included. A stock index futures contract is an agreement pursuant to
which two parties agree to take or make delivery of an amount of cash equal to
a specified dollar (or, in the case of Aggressive Growth, other currency)
amount times the difference between the stock index value at the close of the
last trading day of the contract and the price at which the futures contract is
originally struck. No physical delivery of the underlying stocks in the index
is made. Currently, stock index futures contracts can be purchased or sold
primarily with respect to broad based stock indices such as the S&P's 500 Stock
Index, the New York Stock Exchange Composite Index, the American Stock Exchange
Major Market Index, the NASDAQ -- 100 Stock Index and the Value Line Stock
Index. The stock indices listed above consist of a spectrum of stocks not
limited to any one industry such as utility stocks. Utility stocks, at most,
would be expected to comprise a minority of the stocks comprising the portfolio
of the index. The Funds will only enter into stock index futures contracts as
a hedge against changes resulting from market conditions in the values of the
securities held or which it intends to purchase. When a Fund anticipates a
significant market or market sector advance, the purchase of a stock index
futures contract affords a hedge against not participating in such advance.
Conversely, in anticipation of or in a general market or market sector decline
that adversely affects the market values of a Fund's portfolio of securities,
the Fund may sell stock index futures contracts.
Foreign Currency Futures Contracts
With respect to Aggressive Growth only, futures contracts may also be used
to hedge the risk of changes in the exchange rate of foreign currencies.
OPTIONS ON FUTURES CONTRACTS
Aggressive Growth may purchase options on futures contracts. An option on a
futures contract gives 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 option exercise period. The writer of the option is
required upon exercise to assume an offsetting futures position (a short
position if the option is a call and a long 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 assumption of offsetting futures positions by the
writer and holder of the option will be accompanied by delivery of the
accumulated cash 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 on
a futures contract is exercised on the last trading date 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 price of the futures contract on the expiration date.
Aggressive Growth will purchase put options on futures contracts to hedge
against the risk of falling prices for its portfolio securities. Aggressive
Growth will purchase call options on futures contracts as a hedge against a
rise in the price of securities which it intends to purchase. Options on
futures contracts may also be used to hedge the risks of changes in the
exchange rate of foreign currencies. The purchase of a put option on a futures
contract is similar to the purchase of protective put options on a portfolio
security or a foreign currency. The purchase of a call option on a futures
contract is similar in some respects to the purchase of a call option on an
individual security or a foreign currency. Depending on the pricing of the
13
<PAGE> 53
option compared to either the price of the futures contract upon which it based
or the price of the underlying securities or currency, it may or may not be
less risky than ownership of the futures contract or underlying securities or
currency.
RISKS AS TO FUTURES CONTRACTS AND RELATED OPTIONS
There are several risks in connection with the use of futures contracts and
related options as hedging devices. One risk arises because of the imperfect
correlation between movements in the price of hedging instruments and movements
in the price of the stock, debt security or foreign currency which are the
subject of the hedge. If the price of a hedging instrument moves less than the
price of the stock, debt security or foreign currency which is the subject of
the hedge, the hedge will not be fully effective. If the price of a hedging
instrument moves more than the price of the stock, debt security or foreign
currency, a Fund will experience either a loss or gain on the hedging
instrument which will not be completely offset by movements in the price of the
stock, debt security or foreign currency which is the subject of the hedge.
The use of options futures contracts involves the additional risk that changes
in the value of the underlying futures contract will not be fully reflected in
the value of the option.
Successful use of hedging instruments by the Funds is also subject to AIM's
ability to predict correctly movements in the direction of the stock market, of
interest rates or of foreign exchange rates. Because of possible price
distortions in the futures and options markets and because of the imperfect
correlation between movements in the prices of hedging instruments and the
investments being hedged, even a correct forecast by AIM of general market
trends may not result in a completely successful hedging transaction.
It is also possible that where a Fund has sold futures contracts to hedge
its portfolio against a decline in the market, the market may advance and the
value of stocks or debt securities held in its portfolio may decline. If this
occurred, a Fund would lose money on the futures contracts and also experience
a decline in the value of its portfolio securities. Similar risks exist with
respect to foreign currency hedges.
Positions in futures contracts or options may be closed out only on an
exchange on which such contracts are traded. Although the Funds intend to
purchase or sell futures contracts or, in the case of Aggressive Growth,
purchase options only on exchanges or boards of trade where there appears to be
an active market, there is no assurance that a liquid market on an exchange or
a board of trade will exist for any particular contract at any particular time.
If there is not a liquid market, it may not be possible to close a futures
position or purchase an option at such time. In the event of adverse price
movements under those circumstances, the Fund would continue to be required to
make daily cash payments of maintenance margin on its futures positions. The
extent to which a Fund may engage in futures contracts or, in the case of
Aggressive Growth, related options will be limited by Internal Revenue Code
requirements for qualification as a regulated investment company and a Fund's
intent to continue to qualify as such. The result of a hedging program cannot
be foreseen and may cause a Fund to suffer losses which it would not otherwise
sustain.
CERTAIN INVESTMENTS
Aggressive Growth does not intend (a) to invest for the purposes of
influencing management or exercising control; (b) to purchase interests in oil,
gas or other mineral exploration or development programs; (c) to purchase
securities which are subject to restrictions on disposition under the
Securities Act of 1933; (d) to buy or sell mortgages; (e) to purchase
securities of any company with a record of less than three years' continuous
operations (including that of predecessors) if such purchase would cause the
Fund's aggregate investments in all such companies taken at cost to exceed 5%
of the Fund's total assets taken at market value; and (f) to purchase or retain
the securities of any issuer if the officers or directors of the Company and
its investment advisor who own beneficially more than 1/2 of 1% of the
securities of such issuer together own more than 5% of the securities of such
issuer. Aggressive Growth may purchase securities directly from an issuer for
its own portfolio and may dispose of such securities.
14
<PAGE> 54
The investment policies stated above are not fundamental policies of the
Funds and may be changed by the Board of Directors of the Company without
shareholder approval. Shareholders will be notified before any material change
in the investment policies stated above become effective.
INVESTMENT RESTRICTIONS
The following additional fundamental policies and investment restrictions
have been adopted by each Fund as indicated and, except as noted, such policies
cannot be changed without the approval of a majority of the outstanding voting
securities of the Fund, as defined in the 1940 Act.
CHARTER
- -------
Charter may not:
(a) purchase the securities of any one issuer (except securities issued or
guaranteed by the U.S. Government) if, immediately after and as a result of
such purchase, (i) the value of the holdings of the Fund in the securities of
such issuer exceeds 5% of the value of the Fund's total assets, or (ii) the
Fund owns more than 10% of the outstanding voting securities of any one class
of securities of such issuer;
(b) purchase securities of other investment companies;
(c) concentrate its investments; that is, invest more than 25% of the value
of its assets in any particular industry;
(d) purchase or sell real estate or other interests in real estate (except
that this restriction does not preclude investments in marketable securities of
companies engaged in real estate activities);
(e) write, purchase, or sell puts, calls, straddles, spreads or
combinations thereof, or deal in commodities or oil, gas, or other mineral
exploration or development programs;
(f) make loans (except that the purchase of a portion of an issue of
publicly distributed bonds, debentures or other debt securities, or entering
into a repurchase agreement, is not considered to be a loan for purposes of
this restriction), provided that the Fund may lend its portfolio securities
provided the value of such loaned securities does not exceed 33-1/3% of its
total assets;
(g) purchase securities on margin or sell short;
(h) borrow money or pledge its assets except that, as a temporary measure
for extraordinary or emergency purposes and not for investment purposes, the
Fund may borrow from banks (including the Fund's custodian bank) amounts of up
to 10% of the value of its total assets, and may pledge amounts of up to 20% of
its total assets to secure such borrowings;
(i) invest in companies for the purpose of exercising control or
management;
(j) act as an underwriter of securities of other issuers;
(k) purchase from or sell to any officer, director or employee of the Fund,
or its advisors or distributor, or to any of their officers or directors, any
securities other than shares of the capital stock of Charter;
(l) purchase or retain the securities of any issuer if those officers and
directors of the Company, its advisors or distributor owning individually more
than 1/2 of 1% of the securities of such issuer, together own more than 5% of
the securities of such issuer; or
15
<PAGE> 55
(m) invest any of its assets in securities of companies having a record
of less than five years' continuous operation, including the operations of
their predecessors.
To permit the sale of shares of Charter in Texas, investments by Charter in
warrants, valued at the lower of cost or market, may not exceed 5% of the value
of Charter's net assets. Included within that amount, but not to exceed 2% of
Charter's net assets, may be warrants which are not listed on the New York or
American Stock Exchanges. This restriction is not a fundamental policy.
The Fund will comply with Texas Rule 123.2(6), and follow SEC guidelines,
that provide that loans of the Fund's securities will be fully collateralized.
If a percentage restriction is adhered to at the time of investment, a later
change in percentage resulting from changes in values or assets will not be
considered a violation of the restriction.
WEINGARTEN
- ----------
Weingarten may not:
(a) issue bonds, debentures or senior equity securities;
(b) underwrite securities of other companies or purchase restricted
securities ("letter stock");
(c) invest in real estate, except that the Fund may purchase securities of
real estate investment trusts;
(d) lend money, except in connection with the acquisition of a portion of
an issue of publicly distributed bonds, debentures or other corporate or
governmental obligations, provided that the Fund may lend its portfolio
securities provided the value of such loaned securities does not exceed 33-1/3%
of its total assets;
(e) purchase securities on margin, except that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of securities;
(f) purchase shares in order to control management of a company;
(g) invest in commodities or commodity contracts or in puts or calls except
as set forth above under "Investment Objectives and Policies - Writing Call
Option Contracts";
(h) invest in securities of other investment companies;
(i) invest more than 25% of the value of its total assets in securities of
issuers all of which conduct their principal business activities in the same
industry; or
(j) borrow money or pledge its assets, except that, as a temporary measure
for extraordinary or emergency purposes and not for investment purposes, the
Fund may borrow from banks (including the Fund's custodian bank) amounts of up
to 10% of the value of its total assets, and may pledge amounts of up to 20% of
its total assets to secure such borrowings.
In addition, Weingarten may not (a) purchase warrants, valued at the lower
of cost or market, in excess of 5% of the value of the Fund's net assets, and
no more than 2% of such value may be warrants which are not listed on the New
York or American Stock Exchanges; (b) purchase or retain the securities of any
issuer, if the officers and directors of the Company, its advisors or
distributor who own individually more than 1/2 of 1% of the securities of such
issuer, together own more than 5% of the securities of such issuer; (c) invest
more than 5% of the total assets of the Fund (valued at market) in securities
of any one issuer (other than obligations of the U.S. Government and its
instrumentalities); (d) purchase more than 10% of the outstanding securities of
any one issuer or more than 10% of any class of securities of an issuer; (e)
deal in forward
16
<PAGE> 56
contracts; (f) invest in interests in oil, gas or other mineral exploration or
development programs; or (g) invest in securities of companies which have a
record of less than three years of continuous operation if such purchase at the
time thereof would cause more than 5% of the total assets of the Fund to be
invested in the securities of such companies (with such period of three years
to include the operation of any predecessor company or companies, partnership
or individual enterprise if the company whose securities are proposed for
investment by the Fund has come into existence as the result of a merger,
consolidation, reorganization or purchase of substantially all of the assets of
such predecessor company or companies, partnership or individual enterprise).
These additional restrictions are not fundamental, and may be changed by the
Board of Directors of the Company without shareholder approval.
If a percentage restriction is adhered to at the time of investment, a later
change in percentage resulting from changes in values or assets will not be
considered a violation of the restriction.
AGGRESSIVE GROWTH
- -----------------
Aggressive Growth may not:
(a) with respect to 75% of the total assets of the Fund, purchase the
securities of any issuer if such purchase would cause more than 5% of the value
of its assets to be invested in the securities of such issuer (except U.S.
Government securities including securities issued by its agencies and
instrumentalities);
(b) concentrate more than 25% of its investments in a particular industry;
(c) make short sales of securities (unless at all times when a short
position is open it either owns an amount of such securities or owns securities
which, without payment of any further consideration, are convertible into or
exchangeable for securities of the same issue as, and equal in amount to, the
securities sold short, and unless not more than 10% of the Fund's total assets
(taken at current value) is held for such sales at any one time) or purchase
securities on margin, but it may obtain such short-term credit as is necessary
for the clearance of purchases and sales of securities and may make margin
payments in connection with transactions in stock index futures contracts and
options thereon;
(d) act as a securities underwriter under the Securities Act of 1933;
(e) make loans, except (i) through the purchase of a portion of an issue of
bonds or other obligations of types commonly offered publicly and purchased by
financial institutions, and (ii) through the purchase of short-term obligations
(maturing within a year), including repurchase agreements, provided that the
Fund may lend its portfolio securities provided the value of such loaned
securities does not exceed 33-1/3% of its total assets;
(f) borrow, except that the Fund may enter into stock index futures
contracts and that the right is reserved to borrow from banks, provided that no
borrowing may exceed one-third of the value of its total assets (including the
proceeds of such borrowing) and may secure such borrowings by pledging up to
one-third of the value of its total assets. (For the purposes of this
restriction, neither collateral arrangements with respect to margin for a stock
index futures contracts nor the segregation of securities in connection with
short sales are deemed to be a pledge of assets);
(g) purchase the securities of any other investment company, except that it
may make such a purchase as part of a merger, consolidation or acquisition of
assets and except for the investment in such securities of funds representing
compensation otherwise payable to the directors of the Company pursuant to any
deferred compensation plan existing at any time between the Company and one or
more of its directors; or
(h) buy or sell commodities, commodity contracts or real estate.
17
<PAGE> 57
To permit the sale of shares of Aggressive Growth in Texas, Aggressive
Growth may not: (a) purchase warrants, valued at the lower of cost or market,
in excess of 5% of the value of the Fund's net assets, and no more than 2% of
such value may be warrants which are not listed on the New York or American
Stock Exchanges; (b) invest more than 15% of its average net assets at the time
of purchase of investments which are not readily marketable. These
restrictions are not fundamental policies and may be changed by the directors
without shareholder approval.
Except for the borrowing policy, if a percentage restriction is adhered to
at the time of investment, a later change in the percentage of such investment
held by a Fund resulting solely from changes in values or assets will not be
considered to be a violation of the restriction.
CONSTELLATION
- -------------
Constellation may not:
(a) invest for the purpose of exercising control over or management of any
company;
(b) engage in the underwriting of securities of other issuers;
(c) purchase and sell real estate or commodities or commodity contracts;
(d) make loans, except by the purchase of a portion of an issue of publicly
distributed bonds, debentures or other obligations, provided that the Fund may
lend its portfolio securities provided the value of such loaned securities does
not exceed 33-1/3% of its total assets;
(e) invest in interests in oil, gas or other mineral exploration or
development programs;
(f) invest in securities of other investment companies; or
(g) invest more than 25% of the value of its total assets in securities of
issuers all of which conduct their principal business activities in the same
industry.
In addition, Constellation treats as fundamental its policy concerning
borrowing described under the caption "Investment Programs - Investment
Restrictions - Borrowing" in the Prospectus. In accordance with this policy,
the Fund may borrow funds from a bank (including its custodian bank) to
purchase or carry securities only if, immediately after such borrowing, the
value of the Fund's assets, including the amount borrowed, less its
liabilities, is equal to at least 300% of the amount borrowed, plus all
outstanding borrowings. For the purpose of determining this 300% asset
coverage requirement, the Fund's liabilities will not include the amount
borrowed but will include the market value, at the time of computation, of all
securities borrowed by the Fund in connection with short sales. The amount of
borrowing will also be limited by the applicable margin limitations imposed by
the Federal Reserve Board. If at any time the value of the Fund's assets
should fail to meet the 300% asset coverage requirement, the Fund will, within
three days, reduce its borrowings to the extent necessary. The Fund may be
required to eliminate partially or totally its outstanding borrowings at times
when it may not be desirable for it to do so.
The Board of Directors of the Company has also adopted the following
limitations which are not matters of fundamental policy of Constellation and
which may be changed without shareholder approval:
(a) the Fund may not purchase or retain the securities of any issuer, if
those officers and directors of the Company, its advisors or distributor owning
individually more than 1/2 of 1% of the securities of such issuer, together own
more than 5% of the securities of such issuer; or
18
<PAGE> 58
(b) the Fund may not purchase warrants, valued at the lower of cost or
market, in excess of 5% of the value of the Fund's net assets, and no more than
2% of such value may be warrants which are not listed on the New York or
American Stock Exchanges.
Except for the borrowing policy, if a percentage restriction is adhered to
at the time of investment, a later change in the percentage of such investment
held by a Fund resulting solely from changes in values or assets, will not be
considered to be a violation of the restriction.
ADDITIONAL RESTRICTIONS
In order to permit the sale of the Funds' shares in certain states, each
Fund may from time to time make commitments more restrictive than the
restrictions described herein. These restrictions are not matters of
fundamental policy, and should a Fund determine that any such commitment is no
longer in the best interests of the Fund and its shareholders, it will revoke
the commitment by terminating sales of its shares in the states involved.
In order to comply with an undertaking to the State of Texas, each Fund has
agreed that any restriction on investments in "oil, gas and other mineral
exploration or development programs" shall include mineral leases and any
restriction on investments in "real estate or other interests in real estate"
shall include real estate limited partnerships.
MANAGEMENT
DIRECTORS AND OFFICERS
The directors and officers of the Company and their principal occupations
during the last five years are set forth below. Unless otherwise indicated,
the address of each director and officer is 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173. All of the Company's executive officers hold
similar offices with some or all of the other AIM Funds.
*CHARLES T. BAUER, Director and Chairman (76)
Director, Chairman and Chief Executive Officer, A I M Management Group Inc.;
Chairman of the Board of Directors, A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company; and Director, AIM Global Advisors
Limited, A I M Global Management Company Limited and AIM Global Ventures Co.
BRUCE L. CROCKETT, Director (51)
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Director, President and Chief Executive Officer, COMSAT Corporation
(Includes COMSAT World Systems, COMSAT Mobile Communications, COMSAT Video
Enterprises, COMSAT RSI and COMSAT International Ventures). Previously,
President and Chief Operating Officer, COMSAT Corporation; President, World
Systems Division, COMSAT Corporation; and Chairman, Board of Governors of
INTELSAT; (each of the COMSAT companies listed above is an international
communication, information and entertainment-distribution services company).
________________________
* A director who is an "interested person," of the Company and A I M
Advisors, Inc. as defined in the 1940 Act.
19
<PAGE> 59
OWEN DALY II, Director (71)
Six Blythewood Road
Baltimore, MD 21210
Director, Cortland Trust Inc. (investment company). Formerly, Director,
CF & I Steel Corp., Monumental Life Insurance Company and Monumental General
Insurance Company; and Chairman of the Board of Equitable Bancorporation.
*CARL FRISCHLING, Director (58)
919 Third Avenue
New York, NY 10022
Partner, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel (law firm).
Formerly, Partner, Reid & Priest (law firm); and, prior thereto, Partner,
Spengler Carlson Gubar Brodsky & Frischling (law firm).
**ROBERT H. GRAHAM, Director and President (49)
Director, President and Chief Operating Officer, 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., A I M Global Associates, Inc., A I M Global Holdings,
Inc., AIM Global Ventures Co., A I M Institutional Fund Services, Inc. and
Fund Management Company; and Senior Vice President, AIM Global Advisors
Limited.
JOHN F. KROEGER, Director (71)
24875 Swan Road - Martingham
Box 464
St. Michaels, MD 21663
Director, Flag Investors International Fund, Inc., Flag Investors Emerging
Growth Fund, Inc., Flag Investors Telephone Income Fund, Inc., Flag Investors
Equity Partners Fund, Inc., Total Return U.S. Treasury Fund, Inc., Flag
Investors Intermediate Term Income Fund, Inc., Managed Municipal Fund, Inc.,
Flag Investors Value Builder Fund, Inc., Flag Investors Maryland Intermediate
Tax-Free Income Fund, Inc., Flag Investors Real Estate Securities Fund, Inc.,
Alex. Brown Cash Reserve Fund, Inc. and North American Government Bond Fund,
Inc. (investment companies). Formerly, Consultant, Wendell & Stockel
Associates, Inc. (consulting firm).
LEWIS F. PENNOCK, Director (53)
8955 Katy Freeway, Suite 204
Houston, TX 77024
Attorney in private practice in Houston, Texas.
IAN W. ROBINSON, Director (72)
183 River Drive
Tequesta, FL 33469
Formerly, Executive Vice President and Chief Financial Officer, Bell
Atlantic Management Services, Inc. (provider of centralized management services
to telephone companies); Executive Vice President, Bell Atlantic
________________________
* A director who is an "interested person" of the Company as defined in the
1940 Act.
** A director who is an "interested person," of the Company and A I M
Advisors, Inc. as defined in the 1940 Act.
20
<PAGE> 60
Corporation (parent of seven telephone companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of Pennsylvania and Diamond State
Telephone Company.
LOUIS S. SKLAR, Director (56)
Transco Tower, 50th Floor
2800 Post Oak Blvd.
Houston, TX 77056
Executive Vice President, Development and Operations, Hines Interests
Limited Partnership (real estate development).
***JOHN J. ARTHUR, Senior Vice President and Treasurer (51)
Senior Vice President and Treasurer, A I M Advisors, Inc.; Vice President
and Treasurer, A I M Management Group Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company; and Vice President, AIM Global
Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings, Inc.
and AIM Global Ventures Co.
GARY T. CRUM, Senior Vice President (48)
Director and President, A I M Capital Management, Inc.; Director and Senior
Vice President, A I M Management Group Inc., A I M Advisors, Inc., A I M Global
Associates, Inc., A I M Global Holdings, Inc., and AIM Global Ventures Co.;
Director, A I M Distributors, Inc.; and Senior Vice President, AIM Global
Advisors Limited.
JONATHAN C. SCHOOLAR, Senior Vice President (33)
Director and Senior Vice President, A I M Capital Management, Inc.; and Vice
President, A I M Advisors, Inc.
***CAROL F. RELIHAN, Vice President and Secretary (41)
Senior Vice President, General Counsel and Secretary, A I M Advisors, Inc.;
Vice President, General Counsel and Secretary, A I M Management Group Inc.;
Vice President and General Counsel, Fund Management Company; Vice President
and Secretary, A I M Global Associates, Inc. and A I M Global Holdings, Inc.;
Vice President and Assistant Secretary, AIM Global Advisors Limited and AIM
Global Ventures Co.; Vice President, A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc. and A I M Institutional Fund
Services, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (36)
Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant Vice
President and Assistant Treasurer, Fund Management Company.
MELVILLE B. COX, Vice President (52)
Vice President, A I M Advisors, Inc., A I M Capital Management, Inc., A I M
Fund Services, Inc. and A I M Institutional Fund Services, Inc.; and Assistant
Vice President, A I M Distributors, Inc. and Fund Management Company.
Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant Secretary,
Charles Schwab Family of Funds and Schwab Investments; Chief Compliance
Officer, Charles Schwab Investment Management, Inc.; and Vice President,
Integrated Resources Life Insurance Co. and Capitol Life Insurance Co.
________________________
*** Mr. Arthur and Ms. Relihan are married to each other.
21
<PAGE> 61
The standing committees of the Board of Directors are the Audit Committee,
the Investments Committee and the Nominating and Compensation Committee.
The members of the Audit Committee are Messrs. Daly, Kroeger (Chairman),
Pennock and Robinson. The Audit Committee is responsible for meeting with the
Company's auditors to review audit procedures and results and to consider any
matters arising from an audit to be brought to the attention of the directors
as a whole with respect to the Company's fund accounting or its internal
accounting controls, and considering such matters as may from time to time be
set forth in a charter adopted by the Board of Directors and such committee.
The members of the Investments Committee are Messrs. Bauer, Crockett, Daly
(Chairman), Kroeger and Pennock. The Investment Committee is responsible for
reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, and considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Directors and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and
Compensation Committee is responsible for considering and nominating
individuals to stand for election as directors who are not interested persons
as long as the Company maintains a distribution plan pursuant to Rule 12b-1
under the 1940 Act, reviewing from time to time the compensation payable to the
disinterested directors, and considering such matters as may from time to time
be set forth in a charter adopted by the Board of Directors and such committee.
Remuneration of Directors
Each director is reimbursed for expenses incurred in connection with each
meeting of the Board of Directors or any Committee attended. The Directors of
the Company who do not serve as officers of the Company are compensated for
their services according to a fee schedule which recognizes the fact that they
also serve as directors or trustees of certain other investment companies
advised or managed by AIM. Each such director receives a fee, allocated among
the AIM Funds for which he serves as a director or trustee, which consists of
an annual retainer component and a meeting fee component.
22
<PAGE> 62
Set forth below is information regarding compensation paid or accrued for
each director of the Company:
<TABLE>
<CAPTION>
RETIREMENT
AGGREGATE BENEFITS
COMPENSATION ACCRUED TOTAL
FROM THE BY ALL AIM COMPENSATION
DIRECTOR COMPANY(1) FUNDS(2) FROM ALL AIM FUNDS(3)
-------- ---------- -------- ---------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
Bruce L. Crockett 13,461 3,655 57,750
Owen Daly II 14,385 18,662 58,125
Carl Frischling 13,938 11,323 57,250
Robert H. Graham 0 0 0
John F. Kroeger 14,807 22,313 58,125
Lewis F. Pennock 13,476 5,067 58,125
Ian Robinson 13,373 15,381 56,750
Louis S. Sklar 14,003 6,632 57,250
</TABLE>
- ----------------
(1) The total amount of compensation deferred by all Directors of the Company
during the fiscal year ended October 31, 1995, including interest earned
thereon, was $53,856.
(2) During the fiscal year ended October 31, 1995, the total amount of
expenses allocated to the Company in respect of such retirement benefits was
$31,585. Data reflects compensation estimated for the calendar year ended
December 31, 1995.
(3) Messrs. Bauer, Daly, Graham, Kroeger and Pennock each serve as Director
or Trustee of a total of 11 AIM Funds. Messrs. Crockett, Frischling, Robinson
and Sklar each serves as a Director or Trustee of a total of 10 AIM Funds.
Data reflects compensation estimated for the calendar year ended December 31,
1995.
23
<PAGE> 63
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not an employee of any
of the AIM Funds, A I M Management Group Inc. or any of their affiliates) may
be entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "AIM
Funds"). Each eligible director is entitled to receive an annual benefit from
the AIM Funds commencing on the first day of the calendar quarter coincident
with or following his date of retirement equal to 75% of the retainer paid or
accrued by the AIM Funds for such director during the twelve-month period
immediately preceding the director's retirement (including amounts deferred
under a separate agreement between the AIM Funds and the director) for the
number of such director's years of service (not in excess of 10 years of
service) completed with respect to any of the AIM Funds. Such benefit is
payable to each eligible director in quarterly installments. If an eligible
director dies after attaining the normal retirement date but before receipt of
any benefits under the Plan commences, the director's surviving spouse (if any)
shall receive a quarterly survivor's benefit equal to 50% of the amount payable
to the deceased director for no more than ten years beginning the first day of
the calendar quarter following the date of the director's death. Payments
under the Plan are not secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming various compensation
and years of service classifications. The estimated credited years of service
for Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar
are 8, 9, 18, 18, 14, 8 and 6 years, respectively.
<TABLE>
<CAPTION>
Annual Compensation
Paid By All AIM Funds
$60,000 $65,000
<S> <C> <C>
Number of 10 $45,000 $48,750
Years of 9 $40,500 $43,875
Service With 8 $36,000 $39,000
the AIM Funds 7 $31,500 $34,125
6 $27,000 $29,250
5 $22,500 $24,375
</TABLE>
Deferred Compensation Agreements
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors may elect to defer receipt of up to 100% of
their compensation payable by the Company, and such amounts are placed into a
deferral account. Currently, the deferring directors may select various AIM
Funds in which all or part of his deferral account shall be deemed to be
invested. Distributions from the deferring directors' deferral accounts will
be paid in cash, in generally equal quarterly installments over a period of ten
years beginning on the date the deferring director's retirement benefits
commence under the Plan. The Company's Board of Directors, in its sole
discretion, may accelerate or extend the distribution of such deferral accounts
after the deferring director's termination of service as a director of the
Company. If a deferring director dies prior to the distribution of amounts in
his deferral account, the balance of the deferral account will be distributed
to his designated
24
<PAGE> 64
beneficiary in a single lump sum payment as soon as practicable after such
deferring director's death. The Agreements are not funded and, with respect to
the payments of amounts held in the deferral accounts, the deferring directors
have the status of unsecured creditors of the Company and of each other AIM
Fund from which they are deferring compensation.
The Company paid the law firm of Kramer, Levin, Naftalis, Nessen,
Kamin & Frankel $6,853, $13,238, $4,657 and $14,394 in legal fees for services
provided to Charter, Weingarten, Aggressive Growth and Constellation,
respectively, during the fiscal year ended October 31, 1995 Mr. Carl
Frischling, a director of the Company, is partner in such firm.
INVESTMENT ADVISORY, ADMINISTRATIVE SERVICES AND SUB-ADVISORY AGREEMENTS
AIM is a wholly owned subsidiary of A I M Management Group Inc. ("AIM
Management"), 11 Greenway Plaza, Suite 1919, Houston, Texas 77046. AIM
Management is a holding company that has been engaged in the financial services
business since 1976. Certain of the directors and officers of AIM are also
executive officers of the Company and their affiliations are shown under
"Directors and Officers". AIM Capital, a wholly owned subsidiary of AIM, is
engaged in the business of providing investment advisory services to investment
companies, corporations, institutions and other accounts.
AIM was organized in 1976, and advises or manages 37 investment
company portfolios. As of December 1, 1995, the total assets of the investment
company portfolios advised or managed by AIM and its affiliates were
approximately $41.2 billion.
AIM and the Company have adopted a Code of Ethics (the "Code") which
requires investment personnel and certain other employees (a) to pre-clear
personal securities transactions subject to the Code, (b) to file reports
regarding such transactions, (c) to 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, and (iii)
transactions involving securities being considered for investment by an AIM
Fund and (d) abide by certain other provisions under the Code. The Code also
prohibits personnel and other employees from purchasing securities in an
initial public offering. Personal trading reports are reviewed periodically by
AIM, and the Board of Directors reviews quarterly and annual reports (including
information on any substantial violations of the Code). Violations of the Code
may result in sanctions which may include censure, monetary penalties,
suspension or termination of employment. [Copies of the Code are on file with
the SEC and available without charge upon written request to the Company.]
The Funds have entered into a Master Investment Advisory Agreement
dated as of October 18, 1993, (the "Master Advisory Agreement") and a Master
Administrative Services Agreement dated as of October 18, 1993 (the "Master
Administrative Services Agreement") with AIM. In addition, AIM has entered
into a Master Sub-Advisory Agreement dated as of October 18, 1993 (the "Master
Sub-Advisory Agreement") with AIM Capital with respect to Charter, Weingarten
and Constellation. Prior investment advisory agreements (the "Prior Investment
Advisory Agreements"), administrative services agreements (the "Prior
Administrative Services Agreements") and sub-advisory agreements (the "Prior
Sub-Advisory Agreements"), with substantially identical terms (including the
fee schedules) to the Master Advisory Agreement, the Master Administrative
Services Agreement and the Master Sub-Advisory Agreement, respectively, were
previously in effect. Prior to June 30, 1992, Aggressive Growth's investment
advisor was CIGNA Investments, Inc. ("CII") (such agreement hereinafter
referred to as the "CII Agreement").
Both the Master Advisory Agreement and the Master Sub-Advisory
Agreement provide that the Fund will pay or cause to be paid all expenses of
the Fund not assumed by AIM or AIM Capital, including, without limitation:
brokerage commissions, taxes, legal, 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 Fund in connection with membership in
25
<PAGE> 65
investment company organizations, the cost of printing copies of prospectuses
and statements of additional information distributed to the Funds' shareholders
and all other charges and costs of the Funds' operations unless otherwise
explicitly provided.
The Master Advisory Agreement and the Master Sub-Advisory Agreement
each provide that if, for any fiscal year, the total of all ordinary business
expenses of any Fund, including all investment advisory fees, but excluding
brokerage commissions and fees, taxes, interest and extraordinary expenses,
such as litigation, exceed the applicable expense limitations imposed by state
securities regulations in any state in which such Fund's shares are qualified
for sale, as such limitations may be raised or lowered from time to time, the
aggregate of all such investment advisory fees with respect to such Fund shall
be reduced by the amount of such excess. The amount of any such reduction to
be borne by AIM shall be deducted from the monthly investment advisory fees
otherwise payable to AIM with respect to such Fund during such fiscal year. If
required pursuant to such state securities regulations, AIM will reimburse each
Fund, no later than the last day of the first month of the next succeeding
fiscal year, for any such annual operating expenses (after reduction of all
investment advisory fees in excess of such limitation).
The Master Advisory Agreement and the Master Sub-Advisory Agreement
became effective on October 18, 1993 and will continue in effect from year to
year thereafter only if such continuance is specifically approved at least
annually by (i) the Company's Board of Directors or the vote of a "majority of
the outstanding voting securities" of the Funds (as defined in the 1940 Act)
and (ii) the affirmative vote of a majority of the directors who are not
parties to the agreements or "interested persons" of any such party (the
"Non-Interested Directors") by votes cast in person at a meeting called for
such purpose. Each agreement provides that the Funds, AIM (in the case of the
Master Advisory Agreement) or AIM Capital (in the case of the Master
Sub-Advisory Agreement) may terminate such agreement on sixty (60) days'
written notice without penalty. Each agreement terminates automatically in the
event of its assignment.
With respect to each of Charter and Constellation, AIM receives a fee
calculated at an annual rate of 1.0% of the first $30 million of such Fund's
average daily net assets, plus 0.75% of such Fund's average daily net assets in
excess of $30 million to and including $150 million, plus 0.625% of such Fund's
average daily net assets in excess of $150 million. With respect to
Weingarten, AIM's fee is calculated at an annual rate of 1.0% of the first $30
million of the Fund's average daily net assets, plus 0.75% of the Fund's
average daily net assets in excess of $30 million to and including $350
million, plus 0.625% of the Fund's average daily net assets in excess of $350
million. With respect to Aggressive Growth, AIM's fee is calculated at an
annual rate of 0.80% of the first $150 million of the Fund's average daily net
assets, plus 0.625% of the Fund's average daily net assets in excess of $150
million. As compensation for its services, AIM pays 50% of the advisory fees
it receives pursuant to the Master Advisory Agreement with respect to Charter,
Weingarten and Constellation to AIM Capital.
Each Fund paid to AIM the following advisory fees net of any expense
limitations for the years ended October 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Charter . . . . . . . . . . . . . . $10,890,335 $10,447,924 $9,635,490
Weingarten . . . . . . . . . . . . 25,448,131 26,472,250 32,301,167
Constellation . . . . . . . . . . . . 31,042,229 19,926,116 12,398,962
Aggressive Growth . . . . . . . . . . 6,974,263 1,903,277 413,370*
</TABLE>
*Fee paid by Aggressive Growth was for the ten-month period ended
October 31, 1993.
Aggressive Growth paid AIM a management fee in the amount of
$413,370 for the six-month period ended December 31, 1992 under the Prior
Investment Advisory Agreements. For the fiscal year ended December 31, 1992,
Aggressive Growth paid CII, pursuant to the CII Agreement, fees net of the
expense
26
<PAGE> 66
limitation of $30,905 in the amount of $17,206. Management fees before
reduction of the expense limitation would have been $48,111 for such period.
AIM, in turn, paid the following sub-advisory fees to AIM Capital,
as sub-advisor for each Fund (other than Aggressive Growth), for the years
ended October 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Charter . . . . . . . . . . . . . . $ 5,445,168 $ 5,223,962 $ 4,817,745
Weingarten . . . . . . . . . . . . 12,724,066 13,236,125 16,150,583
Constellation . . . . . . . . . . . . 15,521,115 9,963,058 6,199,481
</TABLE>
The Master Administrative Services Agreement provides that AIM may
perform or arrange for the performance of certain accounting and, shareholder
services and other administrative services to each Fund which are not required
to be performed by AIM under the Master Advisory Agreement. For such services,
AIM would be entitled to receive from each Fund reimbursement of its costs or
such reasonable compensation as may be approved by the Company's Board of
Directors. The Master Administrative Services Agreement became effective on
October 18, 1993 and will continue in effect until June 30, 1996 and from year
to year thereafter only if such continuance is specifically approved at least
annually by (i) the Company's Board of Directors or the vote of a "majority of
the outstanding voting securities" of the Funds (as defined in the 1940 Act)
and (ii) the affirmative vote of a majority of the Non-Interested Directors by
votes cast in person at a meeting called for such purpose.
In addition, the Transfer Agency and Service agreement for the Funds
provides that A I M Fund Services, Inc. ("AFS"), a registered transfer agent
and wholly-owned subsidiary of AIM, will perform certain shareholder services
for the Funds 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 November 1, 1994.
The Funds paid AIM the following amounts as reimbursement of
administrative services costs for the years ended October 31, 1995, 1994 and
1993:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Charter . . . . . . . . . . . . . . . . $109,054 $ 980,837 $ 806,712
Weingarten . . . . . . . . . . . . . . 182,595 3,161,130 3,168,957
Constellation . . . . . . . . . . . . . 173,257 2,196,752 1,119,692
Aggressive Growth . . . . . . . . . . . . 71,528 472,140 65,561*
</TABLE>
*Fee paid by Aggressive Growth was for the ten-month period ended
October 31, 1993.
For the six month period ended December 31, 1992, AIM received
administrative services fees from Aggressive Growth of $12,353 under the Prior
Administrative Services Agreements.
For the period from November 1, 1993 through October 31, 1994, AFS
received shareholder services fees from AIM with respect to Class A shares of
Charter, Weingarten, Aggressive Growth and Constellation in the amount of
$890,434, $3,015,921, $424,814 and $2,080,638, respectively, under the AFS
Administrative Services Agreement between AIM and AFS. The agreement was
terminated November 1, 1994.
27
<PAGE> 67
For the period November 1, 1994 through October 31, 1995, AFS
received transfer agency and shareholder services fees with respect to Class A
shares of Charter, Weingarten, Aggressive Growth and Constellation in the
amount of $1,555,524, $4,006,530, $1,198,145, and $4,943,213, respectively.
For the period June 26, 1995 (inception date for Class B shares) through
October 31, 1995, AFS received transfer agency and shareholder services fees
with respect to Class B shares of Charter and Weingarten in the amount of
$13,197 and $10,301, respectively.
THE DISTRIBUTION PLANS
THE CLASS A PLAN. The Company has adopted a Master Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act relating to the Class A shares
of the Funds (the "Class A Plan"). The Class A Plan provides that the Class A
shares pay 0.30% per annum of their average daily net assets in the case of
Charter, Weingarten and Constellation and 0.25% per annum of the average net
assets of Aggressive Growth 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. Activities appropriate for financing under the Class A 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 Plan.
THE CLASS B PLAN. The Company has also adopted a Master
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act relating to Class B
shares of Charter and Weingarten (the "Class B Plan", and collectively with the
Class A Plan, the "Plans"). Under the Class B Plan, Charter and Weingarten pay
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, Charter and
Weingarten pay 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. AIM Distributors
may transfer and sell its right under the Class B Plan in order to finance
distribution expenditures in respect of Class B shares.
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 Funds' 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 Funds; assisting customers in changing dividend options, account
designations and addresses, and in enrolling in any of 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 Funds 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. Services
28
<PAGE> 68
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding the Funds
and the Company; 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 shares of the Funds; and such other administrative
services as the Funds 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.
The Company may also enter into Variable Group Annuity Contract
holder Service Agreements ("Variable Contract Agreements") on behalf of
Charter, Weingarten and Constellation authorizing payments to selected
insurance companies offering variable annuity contracts to employers as funding
vehicles for retirement plans qualified under Section 401(a) of the Internal
Revenue Code. Services provided pursuant to such Variable Contract Agreements
may include some or all of the following: answering inquiries regarding the
Fund and the Company; performing sub-accounting; establishing and maintaining
Contract holder accounts and records; processing and bunching purchase and
redemption transactions; providing periodic statements of contract account
balances; forwarding such reports and notices to Contract holders relative to
the Fund as deemed necessary; generally, facilitating communications with
Contract holders concerning investments in a Fund on behalf of Plan
participants; and performing such other administrative services as deemed to be
necessary or desirable, to the extent permitted by applicable statute, rule or
regulation to provide such services.
Financial intermediaries and any other person entitled to receive
compensation for selling shares of the Funds may receive different compensation
for selling shares of one particular class over another.
Under a Shareholder Service Agreement, the Funds agree 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 Funds during such period at the annual rate
of 0.25% of the average daily net asset value of the Funds' 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 Funds' shares are held.
The Plans are subject to any applicable limitations imposed from
time to time by rules of the National Association of Securities Dealers, Inc.
AIM Distributors does not act as principal, but rather as agent for
the Funds, in making dealer incentive and shareholder servicing payments under
the Plans. These payments are an obligation of the Funds and not of AIM
Distributors.
For the fiscal year ended October 31, 1995, with respect to Class A
shares, Charter, Weingarten, Aggressive Growth and Constellation paid AIM
Distributors under the Plan $5,007,160, $12,217,290, $3,023,937 and
$14,905,705, respectively, or an amount equal to 0.30%, 0.30%, 0.25% and 0.30%,
respectively, of each Fund's average daily net assets.
29
<PAGE> 69
For the fiscal year ended October 31, 1995, with respect to Class B
shares, Charter and Weingarten paid AIM Distributors under the Plan $94,462 and
$68,621, respectively, or an amount equal to 1.00% and 1.00%, respectively, of
each Fund's average daily net assets.
An estimate by category of actual fees paid by the following Funds
under the Class A Plan during the year ended October 31, 1995 were allocated
as follows:
<TABLE>
<CAPTION>
AGGRESSIVE
CHARTER WEINGARTEN GROWTH CONSTELLATION
------- ---------- ------ -------------
<S> <C> <C> <C> <C>
Advertising . . . . . . . . . . . . . . . . . $ 506,183 $1,079,097 $ 69,790 $ 1,548,808
----------- ----------- ---------- -----------
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to
current shareholders) . . . . . . . . . . . $ 80,029 $ 177,016 $ 11,964 $ 254,133
----------- ----------- ---------- -----------
Seminars . . . . . . . . . . . . . . . . . . . $ 170,062 $ 379,034 $ 26,919 $ 538,280
----------- ----------- ---------- -----------
Compensation to Underwriters . . . . . . . . . $ 190,069 $1,004,091 $ 0 $ 0
----------- ----------- ---------- -----------
Compensation to Dealers . . . . . . . . . . . $ 4,060,817 $9,578,052 $2,915,264 $12,564,484
----------- ----------- ---------- -----------
</TABLE>
An estimate by category of actual fees paid by the following Funds
under the Class B Plan during the period June 26, 1995 (inception date for
Class B shares) through October 31, 1995, were allocated as follows:
<TABLE>
<CAPTION>
CHARTER WEINGARTEN
------- ----------
<S> <C> <C>
Advertising . . . . . . . . . . . . . . . . . . $ 14,376 $ 11,437
----------- -----------
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to
current shareholders) . . . . . . . . . . . . $ 3,081 $ 1,906
----------- -----------
Seminars . . . . . . . . . . . . . . . . . . . . $ 6,161 $ 3,812
----------- -----------
Compensation to Underwriters . . . . . . . . . . $ 70,844 $ 51,466
----------- -----------
Compensation to Dealers . . . . . . . . . . . . $ 0 $ 0
----------- -----------
</TABLE>
The Plans require AIM Distributors to provide the Board of Directors 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
Directors reviews these reports in connection with their decisions with respect
to the Plans.
30
<PAGE> 70
As required by Rule 12b-1, the Plans and related forms of Shareholder
Service Agreements were approved by the Board of Directors, including a
majority of the directors who are not "interested persons" (as defined in the
1940 Act) of the Company and who have no direct or indirect financial interest
in the operation of the Plans or in any agreements related to the Plans
("Qualified Directors"). In approving the Plans in accordance with the
requirements of Rule 12b-1, the directors considered various factors and
determined that there is a reasonable likelihood that the Plans would benefit
each class of the Fund and its respective shareholders.
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 the Plans are terminated earlier in accordance with their terms, the
Class B Plan continues in effect until June 30, 1996, and thereafter, both
Plans continue as long as such continuance is specifically approved at least
annually by the Board of Directors, including a majority of the Qualified
Directors.
The Plans may be terminated by the vote of a majority of the Qualified
Directors, or, with respect to a particular class, by the vote of 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 directors, including a majority of the Qualified
Directors, 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 Directors is committed to the discretion of the
Qualified Directors. In the event the Class A Plan is amended in a manner
which the Board of Directors determines would materially increase the charges
paid under the Class A Plan, the Class B shares of the Fund will no longer
convert into Class A shares of the Fund unless the Class B shares, voting
separately, approve such amendment. If the Class B shareholders do not approve
such amendment, the Board of Directors 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 Plan and the Class B Plan
are: (i) the Class A Plan allows payment to AIM Distributors or to dealers or
financial institutions of up to .30% of average daily net assets of Charter,
Weingarten and Constellation's Class A shares and up to .25% of average daily
net assets of Aggressive Growth's Class A shares as compared to 1.00% of such
assets of Charter and Weingarten'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 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
Funds' shares is set forth in the Prospectus under the headings "How to
Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." A
Master Distribution Agreement with AIM Distributors relating to the Class A
shares of the Funds was approved by the Board of Directors on July 19, 1993. A
Master Distribution Agreement with AIM Distributors relating to the Class B
shares of Charter and Weingarten was also approved by the Board of Directors on
May 9, 1995. Both such Master Distribution Agreements are hereinafter
collectively referred to as the "Distribution Agreements."
31
<PAGE> 71
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing prospectuses and
statements of additional information of the Funds 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 Funds), 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 Funds' 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 Funds.
AIM Distributors expects to pay sales commissions from its own resources to
dealers and institutions who sell Class B shares of Charter and Weingarten 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 CHARTER or WEINGARTEN, 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 such Fund's Class B
shares sold by or attributable to the distribution efforts of that distributor.
The Company (on behalf of any class of the Funds) 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; provided,
however, that a complete termination of the Class B Plan (as defined in such
Plan) would terminate all payments to AIM Distributors. Termination of the
Class B Plan or Distribution Agreement does not effect the obligations of Class
B shareholders to pay Contingent Deferred Sales Charges.
The following chart reflects the total sales charges paid in connection
with the sale of Class A shares of each Fund and the amount retained by AIM
Distributors for the years ended December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
SALES AMOUNT SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Charter . . . . . . . . . . . . $9,068,400 $ 1,316,019 $10,252,200 $ 1,386,255 $ 13,707,760 $2,444,337
Weingarten . . . . . . . . . . 11,992,225 1,767,515 10,398,176 1,494,020 40,790,427 7,477,924
Constellation . . . . . . . . . 88,958,038 13,097,651 42,593,206 6,482,169 51,092,042 7,847,614
Aggressive Growth* . . . . . . 54,745,243 8,232,597 11,846,706 1,975,968 4,184,518 576,011
</TABLE>
*Sales charges paid and amounts retained by AIM Distributors in connection with
the sale of Class A shares for Aggressive Growth were for the ten-month period
ended October 31, 1993.
32
<PAGE> 72
The following chart reflects the contingent deferred sales charges
paid by Class B shareholders for the period June 26,1995 (inception date of
Class B shares) through October 31, 1995.
<TABLE>
<CAPTION>
1995
----
<S> <C>
Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $55
Weingarten . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which shares of the Funds may
be purchased appears in the Prospectus under the caption "How to Purchase
Shares."
The sales charge normally deducted on purchases of Class A shares of
the Funds 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 Funds or with AIM and its affiliates, are familiar with the Funds, 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 Funds' best interests that such persons be
permitted to purchase Class A shares of the Funds through AIM Distributors
without payment of a sales charge. The persons who may purchase Class A shares
of the Funds 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 "Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in
the Prospectus under the caption "How to Redeem Shares." In addition to the
Funds' 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: (713) 626-1919 (Houston) or
(800) 347-1919 (elsewhere) 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 A I M Fund Services, Inc. of all required documents in 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 Funds 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 is restricted, as
determined by applicable rules and regulations of the SEC, (b) the New York
Stock Exchange 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.
33
<PAGE> 73
NET ASSET VALUE DETERMINATION
In accordance with the current rules and regulations of the SEC, the
net asset value of a share of each Fund is determined once daily as of 4:00
p.m. Eastern Time on each business day of the Fund. In the event the New York
Stock Exchange closes early (i.e. before 4:00 p.m. Eastern Time) on a
particular day, the net asset value of a Fund share is determined as of the
close of the New York Stock Exchange on such day. For purposes of determining
net asset value per share, futures and options contract closing prices which
are available fifteen (15) minutes after the close of trading of the New York
Stock Exchange will generally be used. The net asset values per share of the
Retail Classes and the Institutional Class will differ because different
expenses are attributable to each class. The income or loss and the expenses
common to all classes of a Fund are allocated to each class on the basis of the
net assets of the Fund allocable to each such class, calculated as of the close
of business on the previous business day, as adjusted for the current day's
shareholder activity of each class. In addition to certain common expenses
which are allocated to all classes of a Fund, certain expenses, such as those
related to the distribution of shares of a class, are allocated only to the
class to which such expenses relate. The net asset value per share of a class
is determined by subtracting the liabilities (e.g., the expenses) of the Fund
allocated to the class from the assets of the Fund allocated to the class and
dividing the result by the total number of shares outstanding of such class.
Determination of each Fund's net asset value per share is made in accordance
with generally accepted accounting principles.
Except as provided in the next sentence, a security listed or traded
on an exchange 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 mean between the closing bid and asked prices on that
day. Exchange listed convertible bonds are valued based at the mean between
the closing bid and asked prices obtained from a broker-dealer. 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 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 lacking a last sale, at
the mean between the last bid and asked price on that day; securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the Company's officers
in a manner specifically authorized by the Board of Directors of the Company.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost, which approximates market value. (See also "How to Purchase
Shares," "How to Redeem Shares" and "Determination of Net Asset Value" in the
Prospectus.)
Generally, trading in foreign securities, as well as corporate bonds,
U.S. Government securities and money market instruments, is substantially
completed each day at various times prior to the close of the New York Stock
Exchange. The values of such securities used in computing the net asset value
of a Fund's shares are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the New York Stock
Exchange. 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 New York Stock Exchange which will 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 Directors.
Fund securities primarily traded in foreign markets may be traded in
such markets on days which are not business days of the Fund. Because the net
asset value per share of each Fund is determined only on business days of the
Fund, the net asset value per share of a Fund may be significantly affected on
days when an investor can not exchange or redeem shares of the Fund.
34
<PAGE> 74
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 each 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 the Prospectus under the
caption "Special Plans - Automatic Dividend Investment Plan." 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 Funds and their shareholders that are
not described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of each Fund or its shareholders, and the
discussion here and in the Prospectus is not intended as a substitute for
careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
Each Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As a regulated investment company, each Fund is not subject to
federal income tax on the portion of its net investment income (i.e., taxable
interest, dividends and other taxable ordinary income, net of expenses) and
capital gain net income (i.e., the excess of capital gains over capital losses)
that it distributes to shareholders, provided that it distributes at least 90%
of its investment company taxable income (i.e., net investment income and the
excess of net short-term capital gain over net long-term capital loss) for the
taxable year (the "Distribution Requirement"), and satisfies certain other
requirements of the Code that are described below. Distributions by a Fund
made during the taxable year or, under specified circumstances, within twelve
months after the close of the taxable year, will be considered distributions of
income and gains of the taxable year and can therefore satisfy the Distribution
Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must (a) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities)
and other income (including, but not limited to, gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (b) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or options, futures or forward contracts thereon) held for less
than three months (the "Short-Short Gain Test"). However, foreign currency
gains, including those derived from options, futures and forward contracts,
will not be characterized as Short-Short Gain if they are directly related to
the regulated investment company's principal business of investing in stock or
securities (or options or futures thereon). Because of the Short-Short Gain
Test, a Fund may have to limit the sale of appreciated securities that it has
held for less than three months. However, the Short-Short Gain Test will not
prevent a Fund from disposing of investments at a loss, since the recognition
of a loss before the expiration of the three-month holding period is
disregarded. Interest (including original issue discount) received by a Fund
at maturity or upon the disposition of a security held for less than three
months will not be treated as gross income derived from the sale or other
disposition of a security within the meaning of the Short-Short Gain Test.
However, any other income that is attributable to realized market appreciation
will be treated as gross income from the sale or other disposition of
securities for this purpose.
35
<PAGE> 75
In general, gain or loss recognized by a Fund on the disposition of an
asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by a Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Fund held the debt obligation. In
addition, under the rules of Code Section 988, gain or loss recognized on the
disposition of a debt obligation denominated in a foreign currency or an option
with respect thereto (but only to the extent attributable to changes in foreign
currency exchange rates), and gain or loss recognized on the disposition of a
foreign currency forward contract or of foreign currency itself, will generally
be treated as ordinary income or loss.
In general, for purposes of determining whether capital gain or loss
recognized by a Fund on the disposition of an asset is long-term or short-term,
the holding period of the asset may be affected if (a) the asset is used to
close a "short sale" (which includes for certain purposes the acquisition of a
put option) or is substantially identical to another asset so used, (b) the
asset is otherwise held by the Fund as part of a "straddle" or (c) the asset is
stock and the Fund grants certain call options with respect thereto. However,
for purposes of the Short-Short Gain Test, the holding period of the asset
disposed of is reduced only in the case described in clause (a) above. In
addition, a Fund may be required to defer the recognition of a loss on the
disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position.
Any gain recognized by a Fund on the lapse of, or any gain or loss
recognized by a Fund from a closing transaction with respect to, an option
written by the Fund will be treated as a short-term capital gain or loss. For
purposes of the Short-Short Gain Test, the holding period of an option written
by a Fund will commence on the date it is written and end on the date it lapses
or the date a closing transaction is entered into. Accordingly, a Fund may be
limited in its ability to write options which expire within three months and to
enter into closing transactions at a gain within three months of the writing of
options.
Transactions that may be engaged in by certain of the Funds (such as
futures contracts and options on stock indexes and futures contracts) will be
subject to special tax treatment as "Section 1256 contracts." Section 1256
contracts are treated as if they are sold for their fair market value on the
last business day of the taxable year, regardless of whether a taxpayer's
obligations (or rights) under such contracts have terminated (by delivery,
exercise, entering into a closing transaction or otherwise) as of such date.
The net amount of such gain or loss for the entire taxable year from
transactions involving Section 1256 contracts (including gain or loss arising
as a consequence of the year-end deemed sale of Section 1256 contracts) is
treated as 60% long-term capital gain or loss and 40% short-term capital gain
or loss. A Fund may elect not to have this special tax treatment apply to
Section 1256 contracts that are part of a "mixed straddle" with other
investments of the Fund that are not Section 1256 contracts. The Internal
Revenue Service has held in several private rulings that gains arising from
Section 1256 contracts will be treated for purposes of the Short-Short Gain
Test as being derived from securities held for not less than three months if
the gains arise as a result of a constructive sale under Code Section 1256.
In addition to satisfying the requirement described above, each Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of each
Fund's taxable year, at least 50% of the value of the Fund's assets must
consist of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which
the companies, and securities of other issuers, the Fund has not invested more
than 5% of the value of the Fund's total assets in securities of such issuer
and as to which the Fund does not hold more than 10% of the outstanding voting
securities of such issuer), and no more than 25% of the value of its total
assets may be invested in the securities of any one issuer (other than U.S.
Government securities and securities of other regulated investment companies),
or in two or more issuers which the Fund controls and which are engaged in the
same or similar trades or businesses.
36
<PAGE> 76
If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of such Fund's current and accumulated
earnings and profits. Such distributions generally will be eligible for the
dividends received deduction in the case of corporate shareholders.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98%
of ordinary taxable income for the calendar year and 98% of capital gain net
income for the one-year period ended on October 31 of such calendar year (or,
at the election of a regulated investment company having a taxable year ending
November 30 or December 31, for its taxable year (a "taxable year election")).
The balance of such income must be distributed during the next calendar year.
For the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable
year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall
(a) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year and (b) exclude
foreign currency gains and losses incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
Each Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax.
However, investors should note that a Fund may in certain circumstances be
required to liquidate portfolio investments to make sufficient distributions to
avoid excise tax liability.
FUND DISTRIBUTIONS
Each Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be
taxable to shareholders as ordinary income and treated as dividends for federal
income tax purposes, but they will qualify for the 70% dividends received
deduction for corporations only to the extent discussed below.
A Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. Each Fund currently intends to distribute any such
amounts. If net capital gain is distributed and designated as a capital gain
dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares. Conversely, if a Fund elects to retain its net capital
gain, the Fund will be taxed thereon (except to the extent of any available
capital loss carry forwards) at the 35% corporate tax rate. If a Fund elects
to retain its net capital gain, it is expected that the Fund also will elect to
have shareholders treated as if each received a distribution of its pro rata
share of such gain, with the result that each shareholder will be required to
report its pro rata share of such gain on its tax return as long-term capital
gain, will receive a refundable tax credit for its share of tax paid by the
Fund on the gain, and will increase the tax basis for its shares by an amount
equal to the deemed distribution less the tax credit.
Ordinary income dividends paid by the Fund with respect to a taxable
year will qualify for the 70% dividends received deduction generally available
to corporations (other than corporations, such as "S" corporations, which are
not eligible for the deduction because of their special characteristics and
other than for purposes of special taxes such as the accumulated earnings tax
and the personal holding company tax) to the extent of the amount of qualifying
dividends received by the Fund from domestic corporations for the
37
<PAGE> 77
taxable year. A dividend received by the Fund will not be treated as a
qualifying dividend (a) if it has been received with respect to any share of
stock that the Fund has held for less than 46 days (91 days in the case of
certain preferred stock), excluding for this purpose under the rules of Code
Section 246(c)(3) and (4) (i) any day more than 45 days (or 90 days in the case
of certain preferred stock) after the date on which the stock becomes
ex-dividend and (ii) any period during which the Fund has an option to sell, is
under a contractual obligation to sell, has made and not closed a short sale
of, has granted certain options to buy or has otherwise diminished its risk of
loss by holding other positions with respect to, such (or substantially
identical) stock; (b) to the extent that the Fund is under an obligation
(pursuant to a short sale or otherwise) to make related payments with respect
to positions in substantially similar or related property; or (c) to the extent
the stock on which the dividend is paid is treated as debt-financed under the
rules of Code Section 246A. Moreover, the dividends received deduction for a
corporate shareholder may be disallowed or reduced (a) if the corporate
shareholder fails to satisfy the foregoing requirements with respect to its
shares of the Fund or (b) by application of Code Section 246(b) which in
general limits the dividends received deduction to 70% of the shareholder's
taxable income (determined without regard to the dividends received deduction
and certain other items).
Alternative minimum tax ("AMT") is imposed in addition to, but only to
the extent it exceeds, the regular tax and is computed at a maximum rate of 28%
for non-corporate taxpayers and 20% for corporate taxpayers on the excess of
the taxpayer's alternative minimum taxable income ("AMTI") over an exemption
amount. In addition, under the Superfund Amendments and Reauthorization Act of
1986, a tax is imposed for taxable years beginning after 1986 and before 1996
at the rate of 0.12% on the excess of a corporate taxpayer's AMTI (determined
without regard to the deduction for this tax and the AMT net operating loss
deduction) over $2 million. The corporate dividends received deduction is not
itself an item of tax preference that must be added back to taxable income or
is otherwise disallowed in determining a corporation's AMTI. However,
corporate shareholders will generally be required to take the full amount of
any dividend received from the Fund into account (without a dividend received
deduction) in determining their adjusted current earnings, which are used in
computing an additional corporate preference item (i.e., 75% of the excess of a
corporate taxpayer's adjusted current earnings over its AMTI (determined
without regard to this item and the AMTI net operating loss deduction)) that is
includable in AMTI.
Investment income that may be received by certain of the Funds from
sources within foreign countries may be subject to foreign taxes withheld at
the source. The United States has entered into tax treaties with many foreign
countries which entitle any such Funds to a reduced rate of, or exemption from,
taxes on such income. It is impossible to determine the effective rate of
foreign tax in advance since the amount of any such Fund's assets to be
invested in various countries is not known.
Distributions by a Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another Fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares
received, determined as of the reinvestment date. In addition, if the net
asset value at the time a shareholder purchases shares of a Fund reflects
undistributed net investment income or recognized capital gain net income, or
unrealized appreciation in the value of the assets of the Fund, distributions
of such amounts will be taxable to the shareholder in the manner described
above, although such distributions economically constitute a return of capital
to the shareholder.
Ordinarily, shareholders are required to take distributions by a Fund
into account in the year in which the distributions are made. However,
dividends declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received
38
<PAGE> 78
by the shareholders (and made by the Fund) on December 31 of such calendar year
if such dividends are actually paid in January of the following year.
Shareholders will be advised annually as to the U.S. federal income tax
consequences of distributions made (or deemed made) during the year.
The Funds will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of ordinary income dividends and capital gain dividends,
and the proceeds of redemption of shares, paid to any shareholder (a) who has
provided either an incorrect tax identification number or no number at all; (b)
who is subject to backup withholding by the Internal Revenue Service for
failure to report the receipt of interest or dividend income properly; or (c)
who has failed to certify to a Fund that it is not subject to backup
withholding or that it is a corporation or other "exempt recipient."
SALE OR REDEMPTION OF SHARES
A shareholder will recognize gain or loss on the sale or redemption of
shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of the Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of a Fund will be considered capital
gain or loss and will be long-term capital gain or loss if the shares were held
for longer than one year. However, any capital loss arising from the sale or
redemption of shares held for six months or less will be treated as a long-term
capital loss to the extent of the amount of capital gain dividends received on
such shares. For this purpose, the special holding period rules of Code
Section 246(c)(3) and (4) (discussed above in connection with the dividends
received deduction for corporations) generally will apply in determining the
holding period of shares. Long-term capital gains of non-corporate taxpayers
are currently taxed at a maximum rate 11.6% lower than the maximum rate
applicable to ordinary income. Capital losses in any year are deductible only
to the extent of capital gains plus, in the case of a non-corporate taxpayer,
$3,000 of ordinary income.
If a shareholder (a) incurs a sales load in acquiring shares of a
Fund, (b) disposes of such shares less then 91 days after they are acquired and
(c) subsequently acquires shares of the Fund or another Fund at a reduced sales
load pursuant to a right to reinvest at such reduced sales load acquired in
connection with the acquisition of the shares disposed of, then the sales load
on the shares disposed of (to the extent of the reduction in the sales load on
the shares subsequently acquired) shall not be taken into account in
determining gain or loss on the shares disposed of, but shall be treated as
incurred on the acquisition of the shares subsequently acquired.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
a Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder. If the income from a Fund is not effectively connected with
a U.S. trade or business carried on by a foreign shareholder, dividends and
return of capital distributions (other than capital gain dividends) will be
subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon
the gross amount of the distribution. Such a foreign shareholder would
generally be exempt from U.S. federal income tax on gains realized on the sale
of shares of a Fund, capital gain dividends and amounts retained by a Fund that
are designated as undistributed net capital gains.
If the income from a Fund is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then ordinary income
dividends, capital gain dividends and any gains realized upon the sale or
redemption of shares of the Fund will be subject to U.S. federal income tax at
the rates applicable to U.S. citizens or domestic corporations.
39
<PAGE> 79
In the case of foreign non-corporate shareholders, a Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
that are otherwise exempt from withholding tax (or taxable at a reduced treaty
rate) unless such shareholders furnish the Fund with proper notification of
their foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund,
including the applicability of foreign taxes.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the regulations issued thereunder as in
effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation for ordinary income dividends and
capital gain dividends from regulated investment companies often differ from
the rules for U.S. federal income taxation described above. Shareholders are
urged to consult their tax advisers as to the consequences of these and other
state and local tax rules affecting investment in the Funds.
MISCELLANEOUS INFORMATION
SHAREHOLDER INQUIRIES
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.
AUDIT REPORTS
The Board of Directors will issue semi-annual reports of the
transactions of the Funds to the shareholders. Financial statements, audited by
independent auditors, will be issued annually. The firm of KPMG Peat Marwick
LLP has served as the auditors for the Funds for the fiscal year ended October
31, 1995.
LEGAL MATTERS
Legal matters for the Company have been passed upon by Ballard Spahr
Andrews & Ingersoll, Philadelphia, Pennsylvania.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company (the "Custodian"), 225 Franklin
Street, Boston, Massachusetts 02110, is custodian of all securities and cash of
the Funds. The custodian attends to the collection of principal and income,
pays and collects all monies for securities bought and sold by the Funds and
performs certain other ministerial duties. A I M Fund Services, Inc., P.O. Box
4739, Houston, Texas 77210-4739, (the "Transfer Agent"), acts as transfer and
dividend disbursing agent for the Funds. These services do not include any
supervisory function over management or provide any protection against any
possible depreciation of assets.
40
<PAGE> 80
The Funds pay the Custodian and the Transfer Agent such compensation as may be
agreed upon from time to time.
Texas Commerce Bank National Association, P. O. Box 2558, Houston,
Texas 77252-8084, serves as Sub-Custodian for retail purchases of the AIM
Funds.
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") has
entered into an agreement with the Company (and certain other AIM Funds), State
Street Bank and Trust Company and Financial Data Services, Inc., pursuant to
which MLPF&S has agreed to perform certain shareholder sub-accounting services
for its customers who beneficially own shares of the Fund(s).
41
<PAGE> 81
PRINCIPAL HOLDERS OF SECURITIES
CHARTER
- -------
To the best of the knowledge of the Company, the names and addresses
of the holders of 5% or more of the outstanding shares of the Retail Classes of
Charter as of December 1, 1995, and the Institutional Class of Charter as of
December 1, 1995, and the amount of the outstanding shares held of record and
beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
- --------------- -----------
<S> <C>
RETAIL CLASS A SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith 14.85%
AIDS/Street Account
Mutual Fund Operations
ATTN: Private Client Group
P.O. Box 45286
Jacksonville, FL 32232-5286
Great West Life & Annuity 7.88%
Insurance Co.
Financial Control
401(K) 6T1
8505 E. Orchard
Englewood, CO 80111
RETAIL CLASS B SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith 12.16%
AIDS/Street Account
Mutual Fund Operations
ATTN: Private Client Group
P.O. Box 45286
Jacksonville, FL 32232-5286
</TABLE>
- -------------
* The Funds have no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.
42
<PAGE> 82
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
- --------------- -----------
<S> <C>
INSTITUTIONAL CLASS
Commonwealth of Mass. 84.98%**
Deferred Compensation Plan
One Ashburton Place, 12th Floor
Boston, MA 02108
First Interstate Bank of California 10.66%
P.O. Box 9800
Mutual Funds A88-4
Calabasas, CA 91302-9800
</TABLE>
WEINGARTEN
- ----------
To the best of the knowledge of the Company, the names and addresses
of the holders of 5% or more of the outstanding shares of the Retail Classes of
Weingarten as of December 1, 1995, and of the Institutional Class of Weingarten
as of December 1, 1995, and the amount of the outstanding shares held of record
and beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
- --------------- -----------
<S> <C>
RETAIL CLASS A SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith 20.69%
AIDS/Street Account
Mutual Fund Operations
ATTN: Private Client Group
P.O. Box 45286
Jacksonville, FL 32232-5286
RETAIL CLASS B SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith 12.52%
AIDS/Street Account
Mutual Fund Operations
ATTN: Private Client Group
P.O. Box 45286
Jacksonville, FL 32232-5286
</TABLE>
- -------------
* The Funds have no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined in
the 1940 Act.
43
<PAGE> 83
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
- --------------- -----------
<S> <C>
INSTITUTIONAL CLASS
- -------------------
Commonwealth of Mass. 60.9%**
Deferred Compensation Plan
One Ashburton Place, 12th Floor
Boston, MA 02108
Union Planters National Bank 16.08%
P.O. Box 387
Memphis, TN 38147
Muchmore & Co./Summit Trust 9.26%
750 Walnut Street
Cranford, NJ 07016-1205
</TABLE>
AGGRESSIVE GROWTH
- -----------------
To the best of the knowledge of the Company, the names and addresses of the
holders of 5% or more of the outstanding Class A shares of Aggressive Growth as
of December 1, 1995, and the amount of the outstanding shares held of record
and beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
- --------------- -----------
<S> <C>
RETAIL CLASS A SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith 22.95%
AIDS/Street Account
Mutual Fund Operations
ATTN: Private Client Group
P.O. Box 45286
Jacksonville, FL 32232-5286
</TABLE>
- -------------
* The Funds have no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined in
the 1940 Act.
44
<PAGE> 84
CONSTELLATION
- -------------
To the best of the knowledge of the Company, the names and addresses
of the holders of 5% or more of the outstanding shares of the Retail Class of
Constellation as of December 1, 1995, and the Institutional Class of
Constellation as of December 1, 1995 and the amount of the outstanding shares
held of record and beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
- --------------- -----------
<S> <C>
RETAIL CLASS A SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith 21.6%
AIDS/Street Account
Mutual Fund Operations
ATTN: Private Client Group
P.O. Box 45286
Jacksonville, FL 32232-5286
</TABLE>
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
- --------------- -----------
<S> <C>
INSTITUTIONAL CLASS
- -------------------
City of New York 53.66%**
Deferred Compensation Plan
40 Rector Street, 3rd Floor
New York, NY 10006
Nationwide DVCA 12.57%
P.O. Box 182029
Columbus, OH 43218
Commonwealth of Massachusetts 10.48%
Deferred Compensation Plan
One Ashburton Place, 12th Floor
Boston, MA 02108
West One Bank Idaho, NA 6.21%
A/C Idaho Power 19213085
101 S. Capital Blvd., Rm. 315
P. O. Box 7928
Boise, ID 83707
</TABLE>
- -------------
* The Funds have no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined in
the 1940 Act.
45
<PAGE> 85
As of December 1, 1995, the directors/trustees and officers of the
Company as a group owned beneficially less than 1% of the outstanding shares of
each of any class of Charter, Weingarten, Aggressive Growth and Constellation.
OTHER INFORMATION
The Prospectus and this Statement of Additional Information omit certain
information contained in the Registration Statement which the Company has
filed with the SEC under the Securities Act of 1933 and reference is hereby
made to the Registration Statement for further information with respect to the
Funds and the securities offered hereby. The Registration Statement is
available for inspection by the public at the SEC in Washington, D.C.
46
<PAGE> 86
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER RATINGS
STANDARD & POOR'S
Commercial paper rated by Standard & Poor's Corporation has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and
cash flow have an upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well-established, and the issuer has a
strong position within the industry. The reliability and quality of management
are unquestioned. The relative strength or weakness of the above factors
determines whether the issuer's Commercial Paper is rated A-1 or A-2. A-1
indicates the degree of safety regarding time of payment is very strong. A-2
indicates that the capacity for timely payment is strong, but that the relative
degree of safety is not as overwhelming as for issues designated A-1.
MOODY'S
Prime-1 and Prime-2 are the two highest commercial paper ratings
assigned by Moody's Investors Service, Inc. Among the factors considered by
Moody's in assigning ratings are the following: (a) evaluation of the
management of the issuer; (b) economic evaluation of the issuer's industry or
industries and an appraisal of speculative-type risks which may be inherent in
certain areas; (c) evaluation of the issuer's products in relation to
competition and customer acceptance; (d) liquidity; (e) amount and quality of
long-term debt; (f) trend of earnings over a period of ten years; (g) financial
strength of a parent company and the relationships which exist with the issuer;
and (h) recognition by the management of obligations which may be present or
may arise as a result of public interest questions and preparations to meet
such obligations. Relative strength or weakness of the above factors
determines whether the issuer's commercial paper is rated Prime-1 or Prime-2.
DESCRIPTION OF CORPORATE BOND RATINGS
STANDARD & POOR'S
AAA -- Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
MOODY'S
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt-edge." 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 -- Bonds which are rated Aa are judged to be of 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 risks appear somewhat larger than in
Aaa securities.
47
<PAGE> 87
FINANCIAL STATEMENTS
FS
<PAGE> 88
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Charter Fund:
We have audited the accompanying statement of assets and liabilities of the AIM
Charter Fund (a portfolio of AIM Equity Funds, Inc.), including the schedule of
investments, as of October 31, 1995, the related statement of operations for
the year then ended, and the statement of changes in net assets and financial
highlights for each of the years in the two-year period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Charter Fund as of October 31, 1995, the results of its operations for the year
then ended, and the changes in its net assets and the financial highlights for
each of the years in the two-year period then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 8, 1995
FS-1
<PAGE> 89
Financials
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS - 75.72%
ADVERTISING/BROADCASTING - 0.37%
120,000 Omnicom Group, Inc. $ 7,665,000
- ---------------------------------------------------------------------
AEROSPACE/DEFENSE - 1.71%
240,000 Boeing Co. (The) 15,750,000
- ---------------------------------------------------------------------
160,000 Rockwell International Corp. 7,120,000
- ---------------------------------------------------------------------
140,000 United Technologies Corp. 12,425,000
- ---------------------------------------------------------------------
35,295,000
- ---------------------------------------------------------------------
APPLIANCES - 0.47%
240,000 Newell Co. 5,790,000
- ---------------------------------------------------------------------
84,300 Premark International, Inc. 3,898,875
- ---------------------------------------------------------------------
9,688,875
- ---------------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS) - 1.03%
280,000 Chrysler Corp. 14,455,000
- ---------------------------------------------------------------------
240,000 Ford Motor Co. 6,900,000
- ---------------------------------------------------------------------
21,355,000
- ---------------------------------------------------------------------
AUTOMOBILE/TRUCKS PARTS & TIRES - 0.24%
140,000 Echlin Inc. 5,005,000
- ---------------------------------------------------------------------
BANKING - 0.34%
240,000 Norwest Corp. 7,080,000
- ---------------------------------------------------------------------
BANKING (MONEY CENTER) - 1.57%
180,000 BankAmerica Corp. 10,350,000
- ---------------------------------------------------------------------
160,000 Chemical Banking Corp. 9,100,000
- ---------------------------------------------------------------------
200,000 Citicorp 12,975,000
- ---------------------------------------------------------------------
32,425,000
- ---------------------------------------------------------------------
BEVERAGES - 1.28%
500,000 PepsiCo Inc. 26,375,000
- ---------------------------------------------------------------------
BUILDING MATERIALS - 0.87%
200,000 Black & Decker Corp. (The) 6,775,000
- ---------------------------------------------------------------------
400,000 Masco Corp. 11,250,000
- ---------------------------------------------------------------------
18,025,000
- ---------------------------------------------------------------------
BUSINESS SERVICES - 1.28%
160,000 Diebold, Inc. 8,480,000
- ---------------------------------------------------------------------
320,000 Equifax, Inc. 12,480,000
- ---------------------------------------------------------------------
200,000 Manpower Inc. 5,425,000
- ---------------------------------------------------------------------
26,385,000
- ---------------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 90
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
CHEMICALS - 0.87%
140,000 Dow Chemical Co. $ 9,607,500
- ---------------------------------------------------------------------
140,000 Eastman Chemical Co. 8,330,000
- ---------------------------------------------------------------------
17,937,500
- ---------------------------------------------------------------------
CHEMICALS (SPECIALTY) - 1.01%
200,000 Grace (W.R.) & Co. 11,150,000
- ---------------------------------------------------------------------
140,000 IMC Global, Inc. 9,800,000
- ---------------------------------------------------------------------
20,950,000
- ---------------------------------------------------------------------
COMPUTER MAINFRAMES - 0.94%
200,000 International Business Machines Corp. 19,450,000
- ---------------------------------------------------------------------
COMPUTER MINI/PCS - 2.22%
200,000 COMPAQ Computer Corp.(a) 11,150,000
- ---------------------------------------------------------------------
240,000 Dell Computer Corp.(a) 11,190,000
- ---------------------------------------------------------------------
120,000 Hewlett Packard Co. 11,115,000
- ---------------------------------------------------------------------
160,000 Sun Microsystems, Inc.(a) 12,480,000
- ---------------------------------------------------------------------
45,935,000
- ---------------------------------------------------------------------
COMPUTER NETWORKING - 1.20%
120,000 Cabletron Systems, Inc.(a) 9,435,000
- ---------------------------------------------------------------------
120,000 Cisco Systems, Inc.(a) 9,300,000
- ---------------------------------------------------------------------
320,000 ECI Telecommunications Ltd. 6,080,000
- ---------------------------------------------------------------------
24,815,000
- ---------------------------------------------------------------------
COMPUTER PERIPHERALS - 0.85%
240,000 Adaptec, Inc.(a) 10,680,000
- ---------------------------------------------------------------------
200,000 Read-Rite Corp.(a) 6,975,000
- ---------------------------------------------------------------------
17,655,000
- ---------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 1.94%
240,000 BMC Software, Inc.(a) 8,550,000
- ---------------------------------------------------------------------
500,000 Computer Associates International, Inc. 27,500,000
- ---------------------------------------------------------------------
200,000 NetManage, Inc.(a) 4,075,000
- ---------------------------------------------------------------------
40,125,000
- ---------------------------------------------------------------------
CONGLOMERATES - 0.37%
180,000 Allied-Signal Inc. 7,650,000
- ---------------------------------------------------------------------
CONSUMER NON-DURABLES - 0.30%
120,000 Duracell International, Inc. 6,285,000
- ---------------------------------------------------------------------
</TABLE>
FS-3
<PAGE> 91
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COSMETICS & TOILETRIES - 1.52%
120,000 Gillette Co. (The) $ 5,805,000
- --------------------------------------------------------------------------
240,000 Procter & Gamble Co. 19,440,000
- --------------------------------------------------------------------------
140,000 Tambrands Inc. 6,265,000
- --------------------------------------------------------------------------
31,510,000
- --------------------------------------------------------------------------
ELECTRIC POWER - 2.28%
200,000 Baltimore Gas & Electric Co. 5,350,000
- --------------------------------------------------------------------------
160,000 Carolina Power & Light Co. 5,240,000
- --------------------------------------------------------------------------
120,000 Duke Power Co. 5,370,000
- --------------------------------------------------------------------------
160,000 FPL Group, Inc. 6,700,000
- --------------------------------------------------------------------------
240,000 General Public Utilities Corp. 7,500,000
- --------------------------------------------------------------------------
120,000 Houston Industries, Inc. 5,565,000
- --------------------------------------------------------------------------
120,000 Northern States Power Co. 5,670,000
- --------------------------------------------------------------------------
240,000 Southern Co. 5,730,000
- --------------------------------------------------------------------------
47,125,000
- --------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 3.03%
320,000 AMP Inc. 12,560,000
- --------------------------------------------------------------------------
160,000 General Electric Co. 10,120,000
- --------------------------------------------------------------------------
120,000 Honeywell, Inc. 5,040,000
- --------------------------------------------------------------------------
200,000 Parker-Hannifin Corp. 6,750,000
- --------------------------------------------------------------------------
240,000 Philips Electronics N.V.-New York Shares-ADR 9,270,000
- --------------------------------------------------------------------------
160,000 Tektronix, Inc. 9,480,000
- --------------------------------------------------------------------------
280,000 Teradyne, Inc.(a) 9,345,000
- --------------------------------------------------------------------------
62,565,000
- --------------------------------------------------------------------------
ELECTRONIC/DEFENSE - 0.82%
240,000 Loral Corp. 7,110,000
- --------------------------------------------------------------------------
160,000 Sundstrand Corp. 9,800,000
- --------------------------------------------------------------------------
16,910,000
- --------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS - 1.37%
200,756 Arrow Electronics, Inc.(a) 10,188,367
- --------------------------------------------------------------------------
240,000 Avnet, Inc. 12,090,000
- --------------------------------------------------------------------------
140,000 Wyle Electronics 5,967,500
- --------------------------------------------------------------------------
28,245,867
- --------------------------------------------------------------------------
</TABLE>
FS-4
<PAGE> 92
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FINANCE (ASSET MANAGEMENT) - 1.26%
280,000 Merrill Lynch & Co., Inc. $ 15,540,000
- ---------------------------------------------------------------------
120,000 Morgan Stanley Group, Inc. 10,440,000
- ---------------------------------------------------------------------
25,980,000
- ---------------------------------------------------------------------
FINANCE (CONSUMER CREDIT) - 4.27%
240,000 American Express Co. 9,750,000
- ---------------------------------------------------------------------
400,000 Countrywide Credit Industries, Inc. 8,850,000
- ---------------------------------------------------------------------
160,000 Federal Home Loan Corp. 11,080,000
- ---------------------------------------------------------------------
140,000 Federal National Mortgage Association 14,682,500
- ---------------------------------------------------------------------
126,100 Firstar Corp. 4,460,788
- ---------------------------------------------------------------------
300,000 Green Tree Financial Corp. 7,987,500
- ---------------------------------------------------------------------
240,000 Household International, Inc. 13,500,000
- ---------------------------------------------------------------------
320,000 MBNA Corp. 11,800,000
- ---------------------------------------------------------------------
320,000 Mercury Finance Co. 6,160,000
- ---------------------------------------------------------------------
88,270,788
- ---------------------------------------------------------------------
FINANCE (SAVINGS & LOAN) - 0.31%
240,000 Greenpoint Financial Corp. 6,480,000
- ---------------------------------------------------------------------
FOOD/PROCESSING - 0.68%
220,000 Nabisco Holdings Corp. 5,912,500
- ---------------------------------------------------------------------
240,000 Quaker Oats Co. 8,190,000
- ---------------------------------------------------------------------
14,102,500
- ---------------------------------------------------------------------
HOMEBUILDING - 0.25%
160,000 Centex Corp. 5,240,000
- ---------------------------------------------------------------------
HOTELS/MOTELS - 0.25%
140,000 Marriott International, Inc. 5,162,500
- ---------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY) - 2.57%
220,000 Aetna Life & Casualty Co. 15,482,500
- ---------------------------------------------------------------------
320,000 Allstate Financial Corp. 11,760,000
- ---------------------------------------------------------------------
160,000 CIGNA Corp. 15,860,000
- ---------------------------------------------------------------------
200,000 Travelers Group, Inc. 10,100,000
- ---------------------------------------------------------------------
53,202,500
- ---------------------------------------------------------------------
LEISURE & RECREATION - 0.36%
320,000 Carnival Corp. 7,440,000
- ---------------------------------------------------------------------
</TABLE>
FS-5
<PAGE> 93
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
MACHINERY (HEAVY) - 0.96%
140,000 Case Corp. $ 5,337,500
- --------------------------------------------------------------------------
260,000 Caterpillar Inc. 14,592,500
- --------------------------------------------------------------------------
19,930,000
- --------------------------------------------------------------------------
MEDICAL (DRUGS) - 8.16%
240,000 American Home Products Corp. 21,270,000
- --------------------------------------------------------------------------
240,000 Glaxo Wellcome PLC-ADR 6,510,000
- --------------------------------------------------------------------------
400,000 Johnson & Johnson 32,600,000
- --------------------------------------------------------------------------
160,000 Lilly (Eli) & Co. 15,460,000
- --------------------------------------------------------------------------
600,000 Pfizer Inc. 34,425,000
- --------------------------------------------------------------------------
120,000 Rhone-Poulenc Rorer, Inc. 5,655,000
- --------------------------------------------------------------------------
400,000 Schering-Plough Corp. 21,450,000
- --------------------------------------------------------------------------
300,000 SmithKline Beecham PLC-ADR 15,562,500
- --------------------------------------------------------------------------
400,000 Teva Pharmaceuticals Industries Ltd.-ADR 15,700,000
- --------------------------------------------------------------------------
168,632,500
- --------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES) - 1.33%
200,000 Columbia/HCA Healthcare Corp. 9,825,000
- --------------------------------------------------------------------------
200,000 Horizon/CMS Healthcare Corp.(a) 4,050,000
- --------------------------------------------------------------------------
200,000 Integrated Health Services, Inc. 4,575,000
- --------------------------------------------------------------------------
160,000 U.S. Healthcare Corp. 6,160,000
- --------------------------------------------------------------------------
100,846 Vencor, Inc.(a) 2,798,477
- --------------------------------------------------------------------------
27,408,477
- --------------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS - 0.10%
100,000 De Rigo S.p.A.-ADR(a) 2,062,500
- --------------------------------------------------------------------------
METALS (MISCELLANEOUS) - 0.54%
220,000 Aluminum Co. of America 11,220,000
- --------------------------------------------------------------------------
NATURAL GAS PIPELINE - 0.67%
360,000 Williams Companies, Inc. 13,905,000
- --------------------------------------------------------------------------
OFFICE AUTOMATION - 2.01%
320,000 Xerox Corp. 41,520,000
- --------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.21%
240,000 USX-Marathon Group 4,260,000
- --------------------------------------------------------------------------
OIL & GAS SERVICES - 0.52%
500,000 Occidental Petroleum Corp. 10,750,000
- --------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES - 0.32%
160,000 Halliburton Co. 6,640,000
- --------------------------------------------------------------------------
</TABLE>
FS-6
<PAGE> 94
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
PAPER & FOREST PRODUCTS - 1.58%
240,000 Albany International Corp.-Class A $ 4,980,000
- -------------------------------------------------------------------
140,000 Champion International Corp. 7,490,000
- -------------------------------------------------------------------
120,000 Kimberly-Clark Corp. 8,715,000
- -------------------------------------------------------------------
200,000 Mead Corp. (The) 11,525,000
- -------------------------------------------------------------------
32,710,000
- -------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 0.24%
200,000 Patriot American Hospitality, Inc.(a) 4,875,000
- -------------------------------------------------------------------
RESTAURANTS - 0.55%
200,000 Outback Steakhouse, Inc.(a) 6,275,000
- -------------------------------------------------------------------
260,000 Wendy's International, Inc. 5,167,500
- -------------------------------------------------------------------
11,442,500
- -------------------------------------------------------------------
RETAIL (FOOD & DRUG) - 0.55%
240,000 Safeway Inc.(a) 11,340,000
- -------------------------------------------------------------------
RETAIL (STORES) - 2.77%
120,000 Circuit City Stores, Inc. 4,005,000
- -------------------------------------------------------------------
160,000 Gap, Inc. (The) 6,300,000
- -------------------------------------------------------------------
1,200,000 Intimate Brands, Inc.(a) 20,100,000
- -------------------------------------------------------------------
400,000 Limited (The), Inc. 7,350,000
- -------------------------------------------------------------------
98,600 Pep Boys - Manny, Moe & Jack 2,156,875
- -------------------------------------------------------------------
300,000 Sears, Roebuck & Co. 10,200,000
- -------------------------------------------------------------------
200,000 Shopko Stores, Inc. 2,150,000
- -------------------------------------------------------------------
100,000 Tandy Corp. 4,937,500
- -------------------------------------------------------------------
57,199,375
- -------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS - 0.60%
240,000 Varian Associates, Inc. 12,330,000
- -------------------------------------------------------------------
SEMICONDUCTORS - 7.22%
200,000 Analog Devices, Inc.(a) 7,225,000
- -------------------------------------------------------------------
500,000 Applied Materials, Inc.(a) 25,062,500
- -------------------------------------------------------------------
240,000 Intel Corp. 16,770,000
- -------------------------------------------------------------------
400,000 Micron Technology Inc. 28,250,000
- -------------------------------------------------------------------
200,000 National Semiconductor Corp.(a) 4,875,000
- -------------------------------------------------------------------
900,000 Texas Instruments, Inc. 61,425,000
- -------------------------------------------------------------------
240,000 VLSI Technology, Inc.(a) 5,640,000
- -------------------------------------------------------------------
149,247,500
- -------------------------------------------------------------------
</TABLE>
FS-7
<PAGE> 95
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
TELECOMMUNICATIONS - 3.03%
500,000 A T & T Corp. $ 32,000,000
- -------------------------------------------------------------------------------
300,000 DSC Communications Corp.(a) 11,100,000
- -------------------------------------------------------------------------------
100,000 Nokia Corp.-Class A-ADR 5,575,000
- -------------------------------------------------------------------------------
400,000 Telefonaktiebolaget L.M. Ericsson-ADR 8,543,760
- -------------------------------------------------------------------------------
160,000 Tellabs, Inc.(a) 5,440,000
- -------------------------------------------------------------------------------
62,658,760
- -------------------------------------------------------------------------------
TELEPHONE - 2.74%
200,000 Ameritech Corp. 10,800,000
- -------------------------------------------------------------------------------
160,000 BellSouth Corp. 12,240,000
- -------------------------------------------------------------------------------
200,000 Cincinnati Bell, Inc. 5,875,000
- -------------------------------------------------------------------------------
320,000 GTE Corp. 13,200,000
- -------------------------------------------------------------------------------
260,000 SBC Communications, Inc. 14,527,500
- -------------------------------------------------------------------------------
56,642,500
- -------------------------------------------------------------------------------
TEXTILES - 0.28%
205,500 Liz Claiborne, Inc. 5,831,061
- -------------------------------------------------------------------------------
TOBACCO - 3.51%
800,000 Philip Morris Companies Inc. 67,600,000
- -------------------------------------------------------------------------------
160,000 RJR Nabisco Holdings Corp. 4,920,000
- -------------------------------------------------------------------------------
72,520,000
- -------------------------------------------------------------------------------
Total Common Stocks 1,565,460,703
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS - 11.33%
AUTOMOBILE/TRUCKS PARTS & TIRES - 0.49%
$10,000,000 Magna International Inc., Conv. Sub. Deb., 5.00%,
10/15/02 10,150,000
- -------------------------------------------------------------------------------
BUSINESS SERVICES - 0.42%
4,000,000 Career Horizons Inc., Conv. Bonds, 7.00%,
11/01/02(b)
(Acquired 10/16/95-10/27/95; cost $4,015,000) 4,060,000
- -------------------------------------------------------------------------------
4,000,000 Olsten Corp., Conv. Sub. Deb., 4.875%, 05/15/03 4,692,000
- -------------------------------------------------------------------------------
8,752,000
- -------------------------------------------------------------------------------
CHEMICALS - 0.26%
6,000,000 Sandoz Capital BVI Ltd., Sr. Conv. Deb., 2.00%,
10/06/02(b)
(Acquired 09/28/95; cost $4,947,600) 5,310,000
- -------------------------------------------------------------------------------
</TABLE>
FS-8
<PAGE> 96
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
COMPUTER NETWORKING - 0.75%
$ 8,000,000 Bay Networks Inc., Conv. Sub. Deb., 5.25%,
05/15/03(b)
(Acquired 09/26/95-10/02/95; cost $8,407,500) $ 9,020,000
- -------------------------------------------------------------------------------
4,000,000 3Com Corp., Conv. Sub. Notes, 10.25%, 11/10/01(b)
(Acquired 11/08/94; cost $4,000,000) 6,410,000
- -------------------------------------------------------------------------------
15,430,000
- -------------------------------------------------------------------------------
COMPUTER PERIPHERALS - 1.03%
10,000,000 EMC Corp., Conv. Sub. Notes, 4.25%, 01/01/01 10,000,000
- -------------------------------------------------------------------------------
5,000,000 Sanmina Corp., Conv. Sub. Notes, 5.50%,
08/15/02(b)
(Acquired 08/10/95-09/22/95; cost $5,064,375) 5,750,000
- -------------------------------------------------------------------------------
5,000,000 Seagate Technology Inc., Conv. Sub. Deb., 6.75%,
05/01/12 5,625,000
- -------------------------------------------------------------------------------
21,375,000
- -------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 1.83%
20,000,000 Silicon Graphics Inc., Sr. Conv. Sub. Deb.,
4.15%, 11/02/13(b)(c)
(Acquired 10/26/93-09/22/95; cost $9,835,480) 11,143,000
- -------------------------------------------------------------------------------
20,000,000 SoftKey International Inc., Conv. Notes, 5.50%,
11/01/00(b)
(Acquired 10/17/95-10/30/95; cost $19,788,820) 16,900,000
- -------------------------------------------------------------------------------
6,000,000 Sterling Software Inc., Conv. Sub. Deb., 5.75%,
02/01/03 9,882,000
- -------------------------------------------------------------------------------
37,925,000
- -------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 0.79%
4,000,000 Checkpoint Systems Inc., Conv. Sub. Deb., 5.25%,
11/01/05(b)
(Acquired 10/17/95-10/27/95; cost $4,005,625) 4,060,000
- -------------------------------------------------------------------------------
5,000,000 Dovatron International, Inc., Conv. Sub. Notes,
6.00%, 10/15/02(b)
(Acquired 10/06/95-10/09/95; cost $5,108,750) 5,137,500
- -------------------------------------------------------------------------------
7,500,000 Integrated Device Technology, Inc., Conv. Sub.
Notes, 5.50%, 06/01/02 7,162,500
- -------------------------------------------------------------------------------
16,360,000
- -------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS) - 0.42%
4,000,000 Thermo Electron Corp., Sr. Conv. Deb., 4.625%,
08/01/97(b)
(Acquired 09/28/94; cost $5,779,440) 8,653,000
- -------------------------------------------------------------------------------
MEDICAL (DRUGS) - 0.78%
10,000,000 ICN Pharmaceuticals Inc., Conv. Sub. Notes,
8.50%, 11/15/99 11,183,000
- -------------------------------------------------------------------------------
5,000,000 Ivax Corp., Conv. Deb., 6.50%, 11/15/01(b)
(Acquired 10/19/95-10/20/95; cost $5,095,000) 4,912,500
- -------------------------------------------------------------------------------
16,095,500
- -------------------------------------------------------------------------------
</TABLE>
FS-9
<PAGE> 97
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
MEDICAL (PATIENT SERVICES) - 1.15%
$ 4,000,000 Genesis Health Ventures, Sr. Conv. Sub. Deb.,
6.00%, 11/30/03 $ 5,300,000
- -------------------------------------------------------------------------------
5,000,000 Healthsouth Rehabilitation Corp., Conv. Sub.
Deb., 5.00%, 04/01/01 7,446,750
- -------------------------------------------------------------------------------
6,000,000 Integrated Health Services Inc., Conv. Sub. Deb.,
6.00%, 01/01/03 5,698,800
- -------------------------------------------------------------------------------
5,000,000 Prime Hospitality Corp., Conv. Sub. Notes, 7.00%,
04/15/02 5,275,000
- -------------------------------------------------------------------------------
23,720,550
- -------------------------------------------------------------------------------
OFFICE AUTOMATION - 0.26%
4,000,000 Danka Business Systems, Conv. Sub. Deb., 6.75%,
04/01/02(b)
(Acquired 03/06/95; cost $4,000,000) 5,280,000
- -------------------------------------------------------------------------------
RETAIL (STORES) - 0.72%
5,000,000 Baby Superstore Inc., Conv. Sub. Notes, 4.875%,
10/01/00 5,187,500
- -------------------------------------------------------------------------------
10,000,000 Federated Department Stores, Conv. Notes, 5.00%,
10/01/03 9,800,000
- -------------------------------------------------------------------------------
14,987,500
- -------------------------------------------------------------------------------
SEMICONDUCTORS - 2.43%
8,000,000 Altera Corp., Conv. Sub. Notes, 5.75%,
06/15/02(b)
(Acquired 06/16/95-10/05/95; cost $8,851,250) 10,780,000
- -------------------------------------------------------------------------------
2,000,000 LAM Research Corp., Conv. Sub. Deb., 6.00%,
05/01/03 4,905,000
- -------------------------------------------------------------------------------
2,500,000 LSI Logic Corp., Conv. Sub. Notes, 5.50%,
03/15/01(b)
(Acquired 03/30/94-10/11/95; cost $7,170,340) 9,737,500
- -------------------------------------------------------------------------------
20,000,000 Motorola Inc., Sub. Liquid Yield Option Notes,
2.25%, 09/27/13(c) 16,400,000
- -------------------------------------------------------------------------------
10,000,000 Solectron Corp., Conv. Liquid Yield Option Notes,
7.00%, 05/05/12(c) 8,400,000
- -------------------------------------------------------------------------------
50,222,500
- -------------------------------------------------------------------------------
Total Convertible Corporate Bonds 234,261,050
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS - 6.97%
AUTOMOBILE (MANUFACTURERS) - 0.52%
160,000 General Motors Corp.-Class C, $3.25 Dep. Conv.
Pfd. 10,720,000
- -------------------------------------------------------------------------------
BANKING (MONEY CENTER) - 0.52%
60,000 Citicorp-$5.375 Dep. Conv. Pfd. 10,671,780
- -------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 0.56%
120,000 Ceridian Corp.-$2.75 Conv. Pfd. 11,700,000
- -------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT) - 0.79%
150,000 American General Delaware-Series A, $3.00 Conv.
Pfd. 7,762,500
- -------------------------------------------------------------------------------
160,000 United Companies Finance LP-$2.97 Conv. Pfd.
PRIDES 8,560,000
- -------------------------------------------------------------------------------
16,322,500
- -------------------------------------------------------------------------------
</TABLE>
FS-10
<PAGE> 98
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FINANCE (CONSUMER CREDIT) - 0.88%
200,000 First USA-$1.9922 Conv. Pfd. $ 8,300,000
- -------------------------------------------------------------------------------
160,000 SunAmerica Inc.-Series E, $3.10 Dep. Conv. Pfd. 9,920,000
- -------------------------------------------------------------------------------
18,220,000
- -------------------------------------------------------------------------------
FUNERAL SERVICES - 0.85%
250,000 SCI Financial LLC-Series A, $3.125 Conv. Pfd. 17,625,000
- -------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY) - 0.21%
100,000 Allstate Inc.-$2.30 Conv. Pfd. 4,350,000
- -------------------------------------------------------------------------------
LEISURE & RECREATION - 0.21%
400,000 Bally Entertainment Corp.-$0.89 Conv. Pfd. PRIDES 4,450,000
- -------------------------------------------------------------------------------
OFFICE PRODUCTS - 0.33%
80,000 Alco Standard Corp.-Series BB, $5.04 Dep. Conv.
Pfd. ACES 6,840,000
- -------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.29%
160,000 Bowater Inc.-Series B, $1.645 Dep. Conv. Pfd.
PRIDES 6,000,000
- -------------------------------------------------------------------------------
POLLUTION CONTROL - 0.13%
80,000 Browning-Ferris Industries-$2.5828 Conv. Pfd.
ACES 2,630,000
- -------------------------------------------------------------------------------
PUBLISHING - 0.31%
200,000 Time Warner Financing-$1.24 Conv. Pfd. PERCS 6,400,000
- -------------------------------------------------------------------------------
RETAIL (STORES) - 0.24%
120,000 Best Buy Capital-$3.25 Conv. Pfd. 4,890,000
- -------------------------------------------------------------------------------
SEMICONDUCTORS - 0.85%
200,000 National Semiconductors-$3.25 Conv. Pfd. 17,500,000
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS - 0.28%
120,000 LCI International, Inc.-$1.25 Exch. Conv. Pfd. 5,745,000
- -------------------------------------------------------------------------------
Total Convertible Preferred Stocks 144,064,280
- -------------------------------------------------------------------------------
</TABLE>
FS-11
<PAGE> 99
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
U.S. TREASURY NOTES - 3.81%
$ 6,500,000 7.25%, 11/30/96 $ 6,608,030
- -------------------------------------------------------------------------------
6,500,000 7.50%, 12/31/96 6,636,955
- -------------------------------------------------------------------------------
6,500,000 7.50%, 01/31/97 6,645,145
- -------------------------------------------------------------------------------
6,500,000 6.875%, 02/28/97 6,603,220
- -------------------------------------------------------------------------------
6,500,000 6.625%, 03/31/97 6,589,440
- -------------------------------------------------------------------------------
6,500,000 6.50%, 04/30/97 6,581,185
- -------------------------------------------------------------------------------
6,500,000 6.125%, 05/31/97 6,547,515
- -------------------------------------------------------------------------------
6,500,000 5.625%, 06/30/97 6,501,105
- -------------------------------------------------------------------------------
6,500,000 5.875%, 07/31/97 6,527,690
- -------------------------------------------------------------------------------
6,500,000 6.00%, 08/31/97 6,541,340
- -------------------------------------------------------------------------------
6,500,000 5.75%, 09/30/97 6,517,550
- -------------------------------------------------------------------------------
6,500,000 5.625%, 10/31/97 6,504,095
- -------------------------------------------------------------------------------
Total U.S. Treasury Notes 78,803,270
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 1.73%(d)
955,097 Daiwa Securities America Inc., 5.90%, 11/01/95(e) 955,097
- -------------------------------------------------------------------------------
35,000,000 Lehman Brothers Government Securities, Inc.,
5.92%, 11/01/95(f) 35,000,000
- -------------------------------------------------------------------------------
Total Repurchase Agreements 35,955,097
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.56% 2,058,544,400
- -------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.44% 9,002,438
- -------------------------------------------------------------------------------
NET ASSETS - 100.00% $2,067,546,838
===============================================================================
</TABLE>
Abbreviations:
ACES - Automatically Convertible Equity Securities
ADR - American Depositary Receipt
Conv. - Convertible
Deb. - Debentures
Dep. - Depositary
Exch. - Exchangeable
Pfd. - Preferred
PERCS - Preferred Equity Redemptive Cumulative Stock
PRIDES - Preferred Redeemable Increased Dividend Equity Securities
Sr. - Senior
Sub. - Subordinated
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at October 31, 1995 was
$107,153,500, which represented 5.18% of the net assets.
(c) Zero coupon bond. The interest rate shown represents the rate of the
original issue discount.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102 percent of the sales price of
the repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(e) Joint repurchase agreement entered into 10/31/95 with a maturing value of
$401,494,641. Collateralized by $353,853,000 U.S. Treasury obligations,
8.375% due 08/15/08.
(f) Joint repurchase agreement entered into 10/31/95 with a maturity value of
$100,016,444. Collateralized by $92,004,000 U.S. Treasury obligations,
6.50% to 9.125% due 04/30/99 to 05/31/99.
See Notes to Financial Statements.
FS-12
<PAGE> 100
Financials
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $1,774,220,816) $ 2,058,544,400
- --------------------------------------------------------------------------
Receivables for:
Investments sold 80,911,499
- --------------------------------------------------------------------------
Capital stock sold 12,279,189
- --------------------------------------------------------------------------
Dividends and interest 5,525,541
- --------------------------------------------------------------------------
Investment for deferred compensation plan 13,493
- --------------------------------------------------------------------------
Other assets 73,648
- --------------------------------------------------------------------------
Total assets 2,157,347,770
- --------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 82,514,084
- --------------------------------------------------------------------------
Capital stock reacquired 4,814,964
- --------------------------------------------------------------------------
Deferred compensation 13,493
- --------------------------------------------------------------------------
Accrued advisory fees 1,110,756
- --------------------------------------------------------------------------
Accrued administrative services fees 8,544
- --------------------------------------------------------------------------
Accrued distribution fees 721,859
- --------------------------------------------------------------------------
Accrued transfer agent fees 343,072
- --------------------------------------------------------------------------
Accrued operating expenses 274,160
- --------------------------------------------------------------------------
Total liabilities 89,800,932
- --------------------------------------------------------------------------
Net assets applicable to shares outstanding $ 2,067,546,838
==========================================================================
NET ASSETS:
Class A $ 1,974,417,019
==========================================================================
Class B $ 67,591,852
==========================================================================
Institutional Class $ 25,537,967
==========================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- --------------------------------------------------------------------------
Outstanding 185,803,605
==========================================================================
Class B:
Authorized 750,000,000
- --------------------------------------------------------------------------
Outstanding 6,365,612
==========================================================================
Institutional Class:
Authorized 200,000,000
- --------------------------------------------------------------------------
Outstanding 2,396,343
==========================================================================
CLASS A:
Net asset value and redemption price per share $10.63
==========================================================================
Offering price per share:
(Net asset value of $10.63 divided by 94.50%) $11.25
==========================================================================
CLASS B:
Net asset value and offering price per share $10.62
==========================================================================
INSTITUTIONAL CLASS:
Net asset value, offering and redemption price per share $10.66
==========================================================================
</TABLE>
See Notes to Financial Statements.
FS-13
<PAGE> 101
Financials
STATEMENT OF OPERATIONS
For the year ended October 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 31,720,012
- ----------------------------------------------------------------------------
Interest 15,080,737
- ----------------------------------------------------------------------------
Total investment income 46,800,749
- ----------------------------------------------------------------------------
EXPENSES:
Advisory fees 10,890,335
- ----------------------------------------------------------------------------
Administrative services fees 109,054
- ----------------------------------------------------------------------------
Custodian fees 150,968
- ----------------------------------------------------------------------------
Directors' fees 17,234
- ----------------------------------------------------------------------------
Distribution fees-Class A 5,007,160
- ----------------------------------------------------------------------------
Distribution fees-Class B 94,462
- ----------------------------------------------------------------------------
Transfer agent fees-Class A 2,906,528
- ----------------------------------------------------------------------------
Transfer agent fees-Class B 19,728
- ----------------------------------------------------------------------------
Transfer agent fees-Institutional Class 1,224
- ----------------------------------------------------------------------------
Other 623,804
- ----------------------------------------------------------------------------
Total expenses 19,820,497
- ----------------------------------------------------------------------------
Net investment income 26,980,252
- ----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 179,469,513
- ----------------------------------------------------------------------------
Futures contracts (344,344)
- ----------------------------------------------------------------------------
179,125,169
- ----------------------------------------------------------------------------
UNREALIZED APPRECIATION (DEPRECIATION) OF:
Investment securities 202,231,210
- ----------------------------------------------------------------------------
Foreign currencies (8)
- ----------------------------------------------------------------------------
Futures contracts (1,250,000)
- ----------------------------------------------------------------------------
200,981,202
- ----------------------------------------------------------------------------
Net gain on investment securities, foreign currencies and
futures contracts 380,106,371
- ----------------------------------------------------------------------------
Net increase in net assets resulting from operations $407,086,623
- ----------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
FS-14
<PAGE> 102
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 26,980,252 $ 37,921,889
- ------------------------------------------------------------------------------
Net realized gain on sales of investment
securities, foreign currencies and futures
contracts 179,125,169 56,414,638
- ------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities, foreign
currencies and futures contracts 200,981,202 (136,629,171)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 407,086,623 (42,292,644)
- ------------------------------------------------------------------------------
Dividends to shareholders from net investment
income:
Class A (34,589,802) (28,712,940)
- ------------------------------------------------------------------------------
Class B (55,355) --
- ------------------------------------------------------------------------------
Institutional Class (536,096) (485,084)
- ------------------------------------------------------------------------------
Distributions to shareholders from net
realized gains on investments:
Class A (57,274,888) (28,113,934)
- ------------------------------------------------------------------------------
Class B (12,593) --
- ------------------------------------------------------------------------------
Institutional Class (759,222) (384,536)
- ------------------------------------------------------------------------------
Net equalization credits (charges):
Class A (284,916) (147,034)
- ------------------------------------------------------------------------------
Class B 24,584 --
- ------------------------------------------------------------------------------
Institutional Class (13,270) 335
- ------------------------------------------------------------------------------
Share transactions-net:
Class A 86,486,354 (12,596,188)
- ------------------------------------------------------------------------------
Class B 66,768,426 --
- ------------------------------------------------------------------------------
Institutional Class (206,795) (1,032,133)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets 466,633,050 (113,764,158)
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,600,913,788 1,714,677,946
- ------------------------------------------------------------------------------
End of period $2,067,546,838 $1,600,913,788
- ------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,606,658,340 $1,453,610,355
- ------------------------------------------------------------------------------
Undistributed net investment income 102,563 8,577,166
- ------------------------------------------------------------------------------
Undistributed net realized gain on sales of
investment securities, foreign currencies
and futures contracts 176,462,351 55,383,885
- ------------------------------------------------------------------------------
Unrealized appreciation of investment
securities and futures contracts 284,323,584 83,342,382
- ------------------------------------------------------------------------------
$2,067,546,838 $1,600,913,788
- ------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
FS-15
<PAGE> 103
Financials
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Charter Fund (the "Fund") is a series portfolio of AIM Equity Funds, Inc.
(the "Company"). The Company is a Maryland corporation registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of four diversified portfolios:
AIM Charter Fund, AIM Weingarten Fund, AIM Constellation Fund and AIM
Aggressive Growth Fund. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and the Institutional Class. 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 following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Except as provided in the next sentence, a security
listed or traded on an exchange 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 mean between the closing bid
and asked prices on that day. Exchange listed convertible bonds are valued
at the mean between the closing bid and asked prices obtained from a broker-
dealer. 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 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 of the closing bid
and asked prices. Debt obligations that are issued or guaranteed by the U.S.
Treasury 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 at the mean between last bid and asked prices based upon
quotes furnished by independent sources. Securities for which market
quotations are not readily available are valued at fair value as determined
in good faith by or under the supervision of the Company's officers in a
manner specifically authorized by the Board of Directors of the Company.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value.
B. Securities Transactions, Investment Income and Distributions - 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 and distributions to
shareholders are recorded on the ex-dividend date.
C. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to all
classes, e.g. advisory fees, are allocated among them.
E. Equalization - The Fund follows the accounting practice known as
equalization by which a portion of the proceeds from sales and costs of
repurchases of Fund shares, equivalent on a per share basis to the amount of
undistributed net investment income, is credited or charged to undistributed
net income when the transaction is recorded so that the undistributed net
investment income per share is unaffected by sales or redemptions of Fund
shares.
F. 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.
G. Foreign Currency Contracts - A forward 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 forward 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.
FS-16
<PAGE> 104
Financials
H. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the
Fund's basis in the contract. Risks include the possibility of an illiquid
market and the change in the value of the contracts may not correlate with
changes in the value of the securities being hedged.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.0% of
the first $30 million of the Fund's average daily net assets, plus 0.75% of the
Fund's average daily net assets in excess of $30 million to and including $150
million, plus 0.625% of the Fund's average daily net assets in excess of $150
million. AIM has agreed to voluntarily waive a portion of its advisory fees
paid by the Fund to AIM to the extent necessary to reduce the fees paid by the
Fund at net asset levels higher than those currently incorporated in the
present advisory fee schedule. AIM will receive a fee calculated at the annual
rate of 1.0% of the first $30 million of the Fund's average daily net assets,
plus 0.75% of the Fund's average daily net assets in excess of $30 million to
and including $150 million, plus 0.625% of the Fund's average daily net assets
in excess of $150 million to and including $2 billion, plus 0.60% of the Fund's
average daily net assets in excess of $2 billion. Under the terms of a master
sub-advisory agreement between AIM and A I M Capital Management, Inc. ("AIM
Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM.
These agreements require AIM to reduce its fees or, if necessary, make payments
to the Fund to the extent required to satisfy any expense limitations imposed
by the securities laws or regulations thereunder of any state in which the
Fund's shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the year ended October 31,
1995, AIM was reimbursed $109,054 for such services.
The Fund, pursuant to a transfer agency and services agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency services to the Class A and Class B shares. During the year
ended October 31, 1995, AFS was paid $1,568,721 for such services. During the
year ended October 31, 1995, the Fund paid A I M Institutional Fund Services,
Inc. ("AIFS") $587 for shareholder and transfer agency services with respect to
the Institutional Class. Effective July 1, 1995, AIFS became the exclusive
transfer agent for the Institutional Class of the Fund.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A and Class B shares and a master distribution agreement with Fund
Management Company ("FMC") to serve as the distributor for the Institutional
Class. The Company has adopted Plans pursuant to Rule 12b-1 under the 1940 Act
with respect to the Fund's Class A shares (the "Class A Plan") and with respect
to the Fund's Class B shares (the "Class B Plan") (collectively, the "Plans").
The Fund, pursuant to the Class A Plan, pays AIM Distributors compensation at
the annual rate of 0.30% of the average daily net assets attributable to the
Class A shares. The Class A Plan is designed to compensate AIM Distributors for
certain promotional and other sales related costs, and to implement a program
which provides periodic payments to selected dealers and financial institutions
who furnish continuing personal shareholder services to their customers who
purchase and own Class A shares of the Fund. The Fund, pursuant to the Class B
Plan, pays AIM Distributors compensation at an annual rate of 1.00% of the
average daily net assets attributable to the Class B shares. Of this amount,
the Fund may pay a service fee of 0.25% of the average daily net assets of the
Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and
own Class B shares of the Fund. Any amounts not paid as a service fee under
such 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. AIM Distributors may, from time to time,
assign, transfer or pledge to one or more designees, its right to all or a
designated portion of (a) compensation received by AIM Distributors from the
Fund pursuant to the Class B Plan (but not AIM Distributors' duties and
obligations pursuant to the Class B Plan), and (b) any contingent deferred
sales charges received by AIM Distributors related to the Class B shares.
During the year ended October 31, 1995 for the Class A shares and the period
June 26, 1995 (date sales commenced) through October 31, 1995 for the Class B
shares, the Class A shares and the Class B shares paid AIM Distributors
$5,007,160 and $94,462, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,316,019 from sales of Class A
shares of the Fund during the year ended October 31, 1995. 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 October 31,
1995, AIM Distributors received commissions of $18,452 in contingent deferred
sales charges imposed on redemptions of Class A and Class B shares. Certain
officers and directors of the Company are officers and directors of AIM, AIM
Capital, AIM Distributors, AFS, AIFS and FMC.
FS-17
<PAGE> 105
Financials
During the year ended October 31, 1995, the Fund paid legal fees of $6,853
for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if
so elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4 - BANK BORROWINGS
The Fund has a $28,500,000 committed line of credit with a financial
institution syndicate with Chemical Bank of New York as the administrative
agent. Interest on borrowings under the line of credit is payable on maturity
or prepayment date. During the period July 20, 1995 (effective date of Credit
Agreement) through October 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's
commitment.
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 October 31,
1995 was $2,717,900,855 and $2,713,027,662, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1995, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $307,302,292
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (26,174,954)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $281,127,338
- ---------------------------------------------------------------------------
</TABLE>
Cost of investments for tax purposes is $1,777,417,062.
NOTE 6 - CAPITAL STOCK
Changes in the capital stock outstanding for the years ended October 31, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 40,727,782 $396,439,839 40,711,895 $363,174,892
- ---------------------- ----------- ------------ ----------- ------------
Class B* 6,409,868 67,237,422 -- --
- ---------------------- ----------- ------------ ----------- ------------
Institutional Class 335,121 3,269,772 280,235 2,507,705
- ---------------------- ----------- ------------ ----------- ------------
Issued as reinvestment
of dividends:
Class A 10,283,705 77,653,310 4,862,946 43,539,217
- ---------------------- ----------- ------------ ----------- ------------
Class B* 5,996 64,162 -- --
- ---------------------- ----------- ------------ ----------- ------------
Institutional Class 134,103 1,130,381 83,958 753,348
- ---------------------- ----------- ------------ ----------- ------------
Reacquired:
Class A (42,561,203) (387,606,795) (46,996,269) (419,310,297)
- ---------------------- ----------- ------------ ----------- ------------
Class B* (50,252) (533,158) -- --
- ---------------------- ----------- ------------ ----------- ------------
Institutional Class (519,822) (4,606,948) (476,063) (4,293,186)
====================== =========== ============ =========== ============
14,765,298 $153,047,985 (1,533,298) $(13,628,321)
/Table>
* Class B shares commenced sales on June 26, 1995.
FS-18
<PAGE> 106
Financials
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during each of the years in the ten-year period ended October 31,
1995 and for a Class B share outstanding during the period June 26, 1995 (date
sales commenced) through October 31, 1995.
CLASS A:
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987
---------- ---------- ---------- ---------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 8.90 $ 9.46 $ 8.36 $ 8.42 $ 6.55 $ 6.97 $ 5.40 $ 6.61 $ 8.18
- ----------------------- ---------- ---------- ---------- ---------- -------- -------- ------- ------- -------
Income from investment
operations:
Net investment income 0.15 0.21 0.17 0.18 0.18 0.18 0.21 0.15 0.09
- ----------------------- ---------- ---------- ---------- ---------- -------- -------- ------- ------- -------
Net gains (losses) on
securities (both
realized
and unrealized) 2.11 (0.45) 1.22 0.16 2.15 0.08 1.55 0.16 0.35
- ----------------------- ---------- ---------- ---------- ---------- -------- -------- ------- ------- -------
Total from investment
operations 2.26 (0.24) 1.39 0.34 2.33 0.26 1.76 0.31 0.44
- ----------------------- ---------- ---------- ---------- ---------- -------- -------- ------- ------- -------
Less distributions:
Dividends from net
investment income (0.20) (0.16) (0.29) (0.17) (0.15) (0.26) (0.19) (0.12) (0.14)
- ----------------------- ---------- ---------- ---------- ---------- -------- -------- ------- ------- -------
Distributions from
capital gains (0.33) (0.16) -- (0.23) (0.31) (0.42) -- (1.40) (1.87)
- ----------------------- ---------- ---------- ---------- ---------- -------- -------- ------- ------- -------
Total distributions (0.53) (0.32) (0.29) (0.40) (0.46) (0.68) (0.19) (1.52) (2.01)
- ----------------------- ---------- ---------- ---------- ---------- -------- -------- ------- ------- -------
Net asset value, end of
period $ 10.63 $ 8.90 $ 9.46 $ 8.36 $ 8.42 $ 6.55 $ 6.97 $ 5.40 $ 6.61
======================= ========== ========== ========== ========== ======== ======== ======= ======= =======
Total return(b) 27.03% (2.55)% 16.92% 4.17% 37.65% 3.86% 33.68% 5.90% 6.72%
======================= ========== ========== ========== ========== ======== ======== ======= ======= =======
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $1,974,417 $1,579,074 $1,690,482 $1,256,151 $443,546 $102,499 $70,997 $65,799 $82,756
======================= ========== ========== ========== ========== ======== ======== ======= ======= =======
Ratio of expenses to
average net assets 1.17%(c) 1.17% 1.17% 1.17% 1.29% 1.35% 1.35% 1.46% 1.15%
======================= ========== ========== ========== ========== ======== ======== ======= ======= =======
Ratio of net investment
income to average net
assets 1.55%(c) 2.32% 1.89% 2.14% 2.14% 2.51% 3.73% 2.83% 1.57%
======================= ========== ========== ========== ========== ======== ======== ======= ======= =======
Portfolio turnover rate 161% 126% 144% 95% 144% 215% 131% 247% 225%
======================= ========== ========== ========== ========== ======== ======== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
1986(a)
--------
<S> <C>
Net asset value,
beginning of period $ 6.83
- ------------------------ --------
Income from investment
operations:
Net investment income 0.16
- ------------------------ --------
Net gains (losses) on
securities (both
realized
and unrealized) 1.87
- ------------------------ --------
Total from investment
operations 2.03
- ------------------------ --------
Less distributions:
Dividends from net
investment income (0.17)
- ------------------------ --------
Distributions from
capital gains (0.51)
- ------------------------ --------
Total distributions (0.68)
- ------------------------ --------
Net asset value, end of
period $ 8.18
======================== ========
Total return(b) 31.59%
======================== ========
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $81,985
======================== ========
Ratio of expenses to
average net assets 1.21%
======================== ========
Ratio of net investment
income to average net
assets 1.91%
======================== ========
Portfolio turnover rate 75%
======================== ========
</TABLE>
(a) The Fund changed investment advisers on May 2, 1986.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $1,669,053,423.
FS-19
<PAGE> 107
Financials
NOTE 7 - FINANCIAL HIGHLIGHTS--CONTINUED
CLASS B:
<TABLE>
<CAPTION>
1995
-------
<S> <C>
Net asset value, beginning of period $ 9.81
- ---------------------------------------------------- -------
Income from investment operations:
Net investment income 0.03
- ---------------------------------------------------- -------
Net gains (losses) on securities (both realized
and unrealized) 0.80
- ---------------------------------------------------- -------
Total from investment operations 0.83
- ---------------------------------------------------- -------
Less distributions:
Dividends from net investment income (0.02)
- ---------------------------------------------------- -------
Distributions from capital gains --
- ---------------------------------------------------- -------
Total distributions (0.02)
- ---------------------------------------------------- -------
Net asset value, end of period $ 10.62
==================================================== =======
Total return(a) 8.48%
==================================================== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $67,592
==================================================== =======
Ratio of expenses to average net assets 1.98%(b)
==================================================== =======
Ratio of net investment income to average net assets 0.74%(b)
==================================================== =======
Portfolio turnover rate 161%
==================================================== =======
</TABLE>
(a) Total returns do not deduct contingent deferred sales charges and are not
annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $26,935,502.
FS-20
<PAGE> 108
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Weingarten Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Weingarten Fund (a portfolio of AIM Equity Funds, Inc.), including the schedule
of investments, as of October 31, 1995, the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
years in the two-year period then ended, and financial highlights for each of
the years in the seven year period then ended, the ten months ended October 31,
1988, and the two year period ended December 31, 1987. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Weingarten Fund as of October 31, 1995, the results of its operations for the
year then ended, the changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the seven year period then ended, the ten months ended October 31, 1988, and
the two year period ended December 31, 1987, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 8, 1995
FS-21
<PAGE> 109
Financials
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 82.38%
AEROSPACE/DEFENSE - 0.89%
350,000 Boeing Co. $ 22,968,750
- --------------------------------------------------------------------
116,600 Raytheon Co. 5,086,675
- --------------------------------------------------------------------
150,000 United Technologies Corp. 13,312,500
- --------------------------------------------------------------------
41,367,925
- --------------------------------------------------------------------
APPLIANCES - 0.87%
1,000,000 Newell Co. 24,125,000
- --------------------------------------------------------------------
350,000 Premark International Inc. 16,187,500
- --------------------------------------------------------------------
40,312,500
- --------------------------------------------------------------------
AUTOMOBILE(MANUFACTURERS) - 0.25%
225,000 Chrysler Corp. 11,615,625
- --------------------------------------------------------------------
AUTOMOBILE/TRUCKS PARTS & TIRES - 0.61%
800,000 Echlin Inc. 28,600,000
- --------------------------------------------------------------------
BANKING - 2.38%
455,000 Chase Manhattan Corp. 25,935,000
- --------------------------------------------------------------------
1,250,000 CoreStates Financial Corp. 45,468,750
- --------------------------------------------------------------------
463,600 Norwest Bank Corp. 13,676,200
- --------------------------------------------------------------------
1,000,000 Southern National Corp. 25,750,000
- --------------------------------------------------------------------
110,829,950
- --------------------------------------------------------------------
BEVERAGES - 1.02%
900,000 PepsiCo Inc. 47,475,000
- --------------------------------------------------------------------
BUILDING MATERIALS - 0.89%
548,900 Black & Decker Corp. 18,593,988
- --------------------------------------------------------------------
275,000 Georgia-Pacific Corp. 22,687,500
- --------------------------------------------------------------------
41,281,488
- --------------------------------------------------------------------
BUSINESS SERVICES - 2.21%
330,000 Equifax, Inc. 12,870,000
- --------------------------------------------------------------------
684,800 Healthcare COMPARE Corp.(a) 25,337,600
- --------------------------------------------------------------------
1,000,000 Manpower Inc. 27,125,000
- --------------------------------------------------------------------
712,000 Olsten Corp. 27,412,000
- --------------------------------------------------------------------
368,900 ServiceMaster L.P. 10,467,538
- --------------------------------------------------------------------
103,212,138
- --------------------------------------------------------------------
CHEMICALS (SPECIALTY) - 0.45%
375,000 W.R. Grace & Co. 20,906,250
- --------------------------------------------------------------------
</TABLE>
FS-22
<PAGE> 110
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMPUTER MAINFRAMES - 0.73%
350,000 International Business Machines Corp. $ 34,037,500
- --------------------------------------------------------------------
COMPUTER MINI/PCS - 3.61%
900,000 COMPAQ Computer Corp.(a) 50,175,000
- --------------------------------------------------------------------
1,000,000 Dell Computer Corp. 46,625,000
- --------------------------------------------------------------------
250,000 Digital Equipment Corp.(a) 13,531,250
- --------------------------------------------------------------------
456,600 Hewlett-Packard Co. 42,292,575
- --------------------------------------------------------------------
200,000 Sun Microsystems Inc.(a) 15,600,000
- --------------------------------------------------------------------
168,223,825
- --------------------------------------------------------------------
COMPUTER NETWORKING - 3.51%
725,000 Bay Networks Inc.(a) 48,031,250
- --------------------------------------------------------------------
250,000 Cabletron Systems, Inc.(a) 19,656,250
- --------------------------------------------------------------------
750,000 Cisco Systems, Inc.(a) 58,125,000
- --------------------------------------------------------------------
800,000 3Com Corp.(a) 37,600,000
- --------------------------------------------------------------------
163,412,500
- --------------------------------------------------------------------
COMPUTER PERIPHERALS - 0.92%
500,000 Adaptec Inc.(a) 22,250,000
- --------------------------------------------------------------------
464,600 Seagate Technology Inc.(a) 20,790,850
- --------------------------------------------------------------------
43,040,850
- --------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 4.98%
347,700 Adobe Systems, Inc. 19,818,900
- --------------------------------------------------------------------
1,000,000 BMC Software, Inc.(a) 35,625,000
- --------------------------------------------------------------------
1,050,000 Cadence Design Systems, Inc.(a) 33,862,500
- --------------------------------------------------------------------
1,000,000 Computer Associates International, Inc. 55,000,000
- --------------------------------------------------------------------
489,300 FTP Software, Inc.(a) 13,211,100
- --------------------------------------------------------------------
675,000 Mentor Graphics Corp.(a) 14,175,000
- --------------------------------------------------------------------
115,000 Microsoft Corp.(a) 11,500,000
- --------------------------------------------------------------------
433,000 Policy Management Systems Corp.(a) 20,405,125
- --------------------------------------------------------------------
417,500 SoftKey International Inc.(a) 13,151,250
- --------------------------------------------------------------------
332,900 Sterling Software, Inc.(a) 15,355,013
- --------------------------------------------------------------------
232,103,888
- --------------------------------------------------------------------
CONGLOMERATES - 1.26%
50,200 Dial Corp. (The) 1,223,625
- --------------------------------------------------------------------
200,000 Du Pont De Nemours 12,475,000
- --------------------------------------------------------------------
160,700 Federal Signal Corp. 3,595,663
- --------------------------------------------------------------------
180,000 Loews Corp. 26,392,500
- --------------------------------------------------------------------
250,100 Tyco International Ltd. 15,193,575
- --------------------------------------------------------------------
58,880,363
- --------------------------------------------------------------------
</TABLE>
FS-23
<PAGE> 111
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
CONTAINERS - 0.58%
523,100 Ball Corp. $ 14,450,638
- ------------------------------------------------------------------------
275,000 First Brands Corp. 12,581,250
- ------------------------------------------------------------------------
27,031,888
- ------------------------------------------------------------------------
COSMETICS & TOILETRIES - 0.51%
256,600 Alberto-Culver Co. 6,928,200
- ------------------------------------------------------------------------
100,000 Gillette Co. (The) 4,837,500
- ------------------------------------------------------------------------
150,000 Procter & Gamble Co. 12,150,000
- ------------------------------------------------------------------------
23,915,700
- ------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 2.01%
622,800 Anixter International Inc.(a) 11,911,050
- ------------------------------------------------------------------------
49,900 AVX Corp. 1,553,138
- ------------------------------------------------------------------------
449,700 Tektronix, Inc. 26,644,725
- ------------------------------------------------------------------------
1,600,000 Teradyne, Inc.(a) 53,400,000
- ------------------------------------------------------------------------
93,508,913
- ------------------------------------------------------------------------
ELECTRONIC/DEFENSE - 0.26%
200,000 Sundstrand Corp. 12,250,000
- ------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS - 2.01%
850,000 Arrow Electronics, Inc.(a) 43,137,500
- ------------------------------------------------------------------------
1,000,000 Avnet, Inc. 50,375,000
- ------------------------------------------------------------------------
93,512,500
- ------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT) - 1.03%
668,600 Finova Group, Inc. 30,254,150
- ------------------------------------------------------------------------
815,600 PaineWebber Group, Inc. 17,943,200
- ------------------------------------------------------------------------
48,197,350
- ------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT) - 5.91%
300,000 American Express Co. 12,187,500
- ------------------------------------------------------------------------
1,196,800 Countrywide Credit Industries, Inc. 26,479,200
- ------------------------------------------------------------------------
450,000 Dean Witter Discover & Co. 22,387,500
- ------------------------------------------------------------------------
500,000 Federal Home Loan Mortgage Corp. 34,625,000
- ------------------------------------------------------------------------
33,700 Federal National Mortgage Association 3,534,288
- ------------------------------------------------------------------------
800,000 First USA, Inc. 36,800,000
- ------------------------------------------------------------------------
1,608,200 Green Tree Acceptance, Inc. 42,818,325
- ------------------------------------------------------------------------
1,088,200 MBNA Corp. 40,127,375
- ------------------------------------------------------------------------
650,000 Mercury Finance Co. 12,512,500
- ------------------------------------------------------------------------
252,300 PMI Group, Inc. (The) 12,110,400
- ------------------------------------------------------------------------
250,000 Student Loan Marketing Association 14,718,750
- ------------------------------------------------------------------------
51,400 SunAmerica, Inc. 3,199,650
- ------------------------------------------------------------------------
500,000 United Companies Financial Corp. 14,125,000
- ------------------------------------------------------------------------
275,625,488
- ------------------------------------------------------------------------
</TABLE>
FS-24
<PAGE> 112
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FINANCE (SAVINGS & LOAN) - 0.45%
783,800 Greenpoint Financial Corp. $ 21,162,600
- --------------------------------------------------------------------
FOOD PROCESSING - 0.73%
300,000 ConAgra, Inc. 11,587,500
- --------------------------------------------------------------------
651,600 Hudson Foods, Inc. 9,203,850
- --------------------------------------------------------------------
394,233 Lancaster Colony Corp. 13,108,247
- --------------------------------------------------------------------
33,899,597
- --------------------------------------------------------------------
FUNERAL SERVICES - 0.78%
61,200 Loewen Group, Inc. 2,450,870
- --------------------------------------------------------------------
840,200 Service Corp. International 33,713,025
- --------------------------------------------------------------------
36,163,895
- --------------------------------------------------------------------
HOTELS/MOTELS - 0.33%
600,000 La Quinta Motor Inns, Inc. 15,450,000
- --------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY) - 1.59%
750,000 ACE, Ltd. 25,500,000
- --------------------------------------------------------------------
250,000 CIGNA Corp. 24,781,250
- --------------------------------------------------------------------
76,900 General Re Corp. 11,140,888
- --------------------------------------------------------------------
218,300 Mid Ocean Ltd. 7,722,363
- --------------------------------------------------------------------
236,600 Prudential Reinsurance Holdings(a) 4,820,725
- --------------------------------------------------------------------
73,965,226
- --------------------------------------------------------------------
LEISURE & RECREATION - 0.75%
1,003,900 Carnival Cruise Lines, Inc. 23,340,675
- --------------------------------------------------------------------
400,000 Mattel, Inc. 11,500,000
- --------------------------------------------------------------------
34,840,675
- --------------------------------------------------------------------
MACHINERY (HEAVY) - 0.25%
300,000 Case Corp. 11,437,500
- --------------------------------------------------------------------
MACHINERY (MISCELLANEOUS) - 1.52%
1,600,000 American Standard Companies(a) 42,800,000
- --------------------------------------------------------------------
610,350 Thermo Electron Corp.(a) 28,076,100
- --------------------------------------------------------------------
70,876,100
- --------------------------------------------------------------------
MEDICAL (DRUGS) - 5.55%
600,000 Abbott Laboratories 23,850,000
- --------------------------------------------------------------------
425,000 American Home Products Corp. 37,665,625
- --------------------------------------------------------------------
590,000 AmeriSource Health Corp.(a) 16,077,500
- --------------------------------------------------------------------
357,700 Cardinal Health, Inc. 18,376,838
- --------------------------------------------------------------------
781,400 Mallinckrodt Group, Inc. 27,153,650
- --------------------------------------------------------------------
225,000 Merck & Co., Inc. 12,937,500
- --------------------------------------------------------------------
1,432,100 Mylan Laboratories, Inc. 27,209,900
- --------------------------------------------------------------------
</TABLE>
FS-25
<PAGE> 113
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Medical (Drugs) - continued
470,000 Pfizer, Inc. $ 26,966,250
- -------------------------------------------------------------------
7,500 Rhone-Poulenc Rorer Inc. 353,438
- -------------------------------------------------------------------
1,000,000 Schering-Plough Corp. 53,625,000
- -------------------------------------------------------------------
325,000 Watson Pharmaceuticals, Inc.(a) 14,543,750
- -------------------------------------------------------------------
258,759,451
- -------------------------------------------------------------------
MEDICAL (INSTRUMENTS/PRODUCTS) - 2.90%
325,000 Baxter International Inc. 12,553,125
- -------------------------------------------------------------------
200,000 Becton, Dickinson & Co. 13,000,000
- -------------------------------------------------------------------
744,600 Biomet, Inc.(a) 12,378,975
- -------------------------------------------------------------------
216,600 Boston Scientific Corp.(a) 9,124,275
- -------------------------------------------------------------------
100,000 Cordis Corp. (a) 11,050,000
- -------------------------------------------------------------------
601,300 Heart Technology Inc.(a) 17,137,050
- -------------------------------------------------------------------
406,400 Medtronic, Inc. 23,469,600
- -------------------------------------------------------------------
200,000 St. Jude Medical, Inc. 10,650,000
- -------------------------------------------------------------------
75,000 Stryker Corp. 3,384,375
- -------------------------------------------------------------------
525,000 Sybron International Corp.(a) 22,312,500
- -------------------------------------------------------------------
135,059,900
- -------------------------------------------------------------------
MEDICAL (PATIENT SERVICES) - 3.49%
822,500 Apria Healthcare Group, Inc.(a) 17,786,563
- -------------------------------------------------------------------
500,000 Columbia/HCA Healthcare Corp. 24,562,500
- -------------------------------------------------------------------
510,000 Health Management Associates, Inc.(a) 10,965,000
- -------------------------------------------------------------------
500,000 Healthsource, Inc.(a) 26,500,000
- -------------------------------------------------------------------
1,800,000 Healthsouth Corp.(a) 47,025,000
- -------------------------------------------------------------------
600,000 Lincare Holdings, Inc.(a) 14,925,000
- -------------------------------------------------------------------
750,000 Vencor, Inc.(a) 20,812,500
- -------------------------------------------------------------------
162,576,563
- -------------------------------------------------------------------
OFFICE AUTOMATION - 0.96%
350,000 Xerox Corp. 45,412,500
- -------------------------------------------------------------------
OFFICE PRODUCTS - 0.65%
400,000 Avery Dennison Corp. 17,900,000
- -------------------------------------------------------------------
350,000 Reynolds & Reynolds Co. 12,468,750
- -------------------------------------------------------------------
30,368,750
- -------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES - 0.13%
148,300 Halliburton Co. 6,154,450
- -------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.60%
225,000 Champion International Corp. 12,037,500
- -------------------------------------------------------------------
279,800 Mead Corp. (The) 16,123,475
- -------------------------------------------------------------------
28,160,975
- -------------------------------------------------------------------
</TABLE>
FS-26
<PAGE> 114
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
PUBLISHING - 0.20%
235,500 Harcourt General, Inc. $ 9,331,688
- ------------------------------------------------------------------
RESTAURANTS - 0.27%
400,000 Outback Steakhouse Inc.(a) 12,550,000
- ------------------------------------------------------------------
RETAIL (FOOD & DRUG) - 2.05%
1,000,000 Hannaford Bros. Co. 26,125,000
- ------------------------------------------------------------------
805,700 Kroger Co.(a) 26,890,238
- ------------------------------------------------------------------
900,000 Safeway Inc.(a) 42,525,000
- ------------------------------------------------------------------
95,540,238
- ------------------------------------------------------------------
RETAIL (STORES) - 3.99%
637,300 AutoZone, Inc.(a) 15,773,175
- ------------------------------------------------------------------
1,000,000 Circuit City Stores, Inc. 33,375,000
- ------------------------------------------------------------------
1,500,000 Consolidated Stores Corp.(a) 34,687,500
- ------------------------------------------------------------------
625,000 Gap Inc. 24,609,375
- ------------------------------------------------------------------
1,500,000 Intimate Brands, Inc.(a) 25,125,000
- ------------------------------------------------------------------
393,750 Staples, Inc.(a) 10,483,594
- ------------------------------------------------------------------
261,200 Tandy Corp. 12,896,750
- ------------------------------------------------------------------
648,800 Viking Office Products Inc.(a) 28,871,600
- ------------------------------------------------------------------
185,821,994
- ------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS - 1.10%
1,000,000 Varian Associates, Inc. 51,375,000
- ------------------------------------------------------------------
SEMICONDUCTORS - 12.94%
1,000,000 Analog Devices, Inc.(a) 36,125,000
- ------------------------------------------------------------------
2,000,000 Applied Materials, Inc.(a) 100,250,000
- ------------------------------------------------------------------
508,700 Atmel Corp.(a) 15,896,875
- ------------------------------------------------------------------
250,000 Cirrus Logic, Inc.(a) 10,531,250
- ------------------------------------------------------------------
600,000 Cypress Semiconductor Corp.(a) 21,150,000
- ------------------------------------------------------------------
1,000,000 Integrated Device Technology, Inc.(a) 19,000,000
- ------------------------------------------------------------------
150,000 Intel Corp. 10,481,250
- ------------------------------------------------------------------
651,000 KLA Instruments Corp.(a) 27,830,250
- ------------------------------------------------------------------
900,000 LAM Research Corp.(a) 54,787,500
- ------------------------------------------------------------------
450,000 Linear Technology Corp. 19,687,500
- ------------------------------------------------------------------
300,000 LSI Logic Corp.(a) 14,137,500
- ------------------------------------------------------------------
1,200,000 Micron Technology Inc. 84,750,000
- ------------------------------------------------------------------
175,000 Motorola, Inc. 11,484,375
- ------------------------------------------------------------------
400,000 National Semiconductor Corp.(a) 9,750,000
- ------------------------------------------------------------------
250,000 Novellus Systems, Inc.(a) 17,218,750
- ------------------------------------------------------------------
</TABLE>
FS-27
<PAGE> 115
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Semiconductors - (continued)
718,300 Solectron Corp.(a) $ 28,911,575
- -----------------------------------------------------------------------------
1,000,000 Texas Instruments Inc. 68,250,000
- -----------------------------------------------------------------------------
700,000 Vishay Intertechnology, Inc.(a) 24,675,000
- -----------------------------------------------------------------------------
500,000 VLSI Technology Inc.(a) 11,750,000
- -----------------------------------------------------------------------------
350,000 Xilinx, Inc.(a) 16,100,000
- -----------------------------------------------------------------------------
602,766,825
- -----------------------------------------------------------------------------
SHOES & RELATED APPAREL - 0.61%
500,000 NIKE, Inc. - Class B 28,375,000
- -----------------------------------------------------------------------------
TELECOMMUNICATIONS - 1.41%
800,000 AT&T Corp. 51,200,000
- -----------------------------------------------------------------------------
429,000 Tellabs, Inc.(a) 14,586,000
- -----------------------------------------------------------------------------
65,786,000
- -----------------------------------------------------------------------------
TOBACCO - 1.99%
1,100,000 Philip Morris Companies, Inc. 92,950,000
- -----------------------------------------------------------------------------
TRANSPORTATION - MISCELLANEOUS - 0.25%
390,200 Stolt Nielsen S.A. 11,706,000
- -----------------------------------------------------------------------------
Total Domestic Common Stocks 3,839,832,568
- -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS - 1.65%
COMPUTER SOFTWARE/SERVICES - 0.18%
$ 9,580,000 SoftKey International Inc., Conv. Sr. Notes,
5.50%, 11/01/00(b)
(acquired 10/17/95; cost $9,580,000) 8,095,100
- -----------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 0.44%
15,215,000 Altera Corp., Conv. Sub. Notes, 5.75%,
06/15/02(b)
(acquired 7/27/95-10/17/95; cost
$20,134,139) 20,502,213
- -----------------------------------------------------------------------------
OFFICE AUTOMATION - 0.55%
19,500,000 Danka Business Systems PLC, Conv. Yankee Sub.
Notes, 6.75%, 04/01/02(b)
(acquired 10/26/95; cost $24,960,000) 25,740,000
- -----------------------------------------------------------------------------
RETAIL STORES - 0.48%
34,400,000 Office Depot Inc., Liquid Yield Option Notes,
4.00%, 11/01/08(c) 22,532,000
- -----------------------------------------------------------------------------
Total Convertible Corporate Bonds 76,869,313
- -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS - 0.22%
FINANCE (CONSUMER CREDIT) - 0.22%
165,000 SunAmerica Inc. - Series E, $3.10 Conv. Pfd. 10,230,000
- -----------------------------------------------------------------------------
Total Convertible Preferred Stocks 10,230,000
- -----------------------------------------------------------------------------
</TABLE>
FS-28
<PAGE> 116
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 10.98%
AUSTRALIA - 0.36%
1,255,832 Broken Hill Proprietary Co. Ltd. (Conglomerates) $ 17,008,450
- -----------------------------------------------------------------------------
CANADA - 0.54%
694,900 Northern Telecom Ltd. (Telecommunications) 25,016,400
- -----------------------------------------------------------------------------
DENMARK - 0.28%
290,000 Danisco A/S (Food Processing) 13,215,593
- -----------------------------------------------------------------------------
FINLAND - 0.55%
400,000 Nokia Corp. - ADR (Telecommunications) 22,300,000
- -----------------------------------------------------------------------------
55,450 Nokia Corp. (Telecommunications) 3,172,226
- -----------------------------------------------------------------------------
25,472,226
- -----------------------------------------------------------------------------
FRANCE - 0.28%
65,500 LVMH Moet Hennessy Louis Vuitton (Beverages) 13,032,760
- -----------------------------------------------------------------------------
GERMANY - 0.35%
30,400 Mannesmann A.G. (Machinery - Miscellaneous) 10,005,889
- -----------------------------------------------------------------------------
158,000 Veba A.G. (Electric Services) 6,486,800
- -----------------------------------------------------------------------------
16,492,689
- -----------------------------------------------------------------------------
HONG KONG - 1.05%
820,000 HSBC Holdings PLC (Banking) 11,931,399
- -----------------------------------------------------------------------------
3,077,000 Hutchison Whampoa Ltd. (Conglomerates) 16,953,208
- -----------------------------------------------------------------------------
2,505,000 Sun Hung Kai Properties Ltd. (Real Estate) 20,006,434
- -----------------------------------------------------------------------------
48,891,041
- -----------------------------------------------------------------------------
ISRAEL - 0.53%
625,000 Teva Pharmaceutical Industries Ltd. - ADR
(Medical - Drugs) 24,531,250
- -----------------------------------------------------------------------------
ITALY - 0.35%
167,000 Fila Holding S.p.A. - ADR (Retail Stores) 7,201,875
- -----------------------------------------------------------------------------
2,919,000 Telecom Italia Mobile S.p.A.(a)
(Telecommunications) 4,909,560
- -----------------------------------------------------------------------------
2,919,000 Telecom Italia S.p.A. (Telecommunications) 4,471,893
- -----------------------------------------------------------------------------
16,583,328
- -----------------------------------------------------------------------------
MALAYSIA - 0.58%
2,149,000 Malayan Banking Berhad (Banking) 17,337,465
- -----------------------------------------------------------------------------
1,600,000 United Engineers (Building Materials) 9,948,839
- -----------------------------------------------------------------------------
27,286,304
- -----------------------------------------------------------------------------
NETHERLANDS - 0.79%
550,000 Elsag Bailey Process Automation N.V. - ADR(a)
(Electronic Components/Miscellaneous) 14,987,500
- -----------------------------------------------------------------------------
276,100 Philips Electronics N.V. - New York Shares - ADR
(Electronics) 10,664,363
- -----------------------------------------------------------------------------
120,000 Wolters Kluwer N.V. (Publishing) 10,921,536
- -----------------------------------------------------------------------------
36,573,399
- -----------------------------------------------------------------------------
</TABLE>
FS-29
<PAGE> 117
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
NEW ZEALAND - 0.22%
2,500,000 Telecom Corp. of New Zealand (Telecommunications) $ 10,380,222
- -------------------------------------------------------------------------------
SINGAPORE - 0.20%
1,513,000 City Developments Ltd. (Real Estate) 9,369,249
- -------------------------------------------------------------------------------
SWEDEN - 3.62%
250,000 ASEA AB-B Shares (Conglomerates) 24,658,916
- -------------------------------------------------------------------------------
712,200 ASTRA AB-A Shares (Medical - Drugs) 26,168,840
- -------------------------------------------------------------------------------
625,000 ASTRA AB-B Shares (Medical - Drugs) 22,588,320
- -------------------------------------------------------------------------------
958,900 Pharmacia AB-A Shares (Medical - Drugs) 33,356,308
- -------------------------------------------------------------------------------
719,100 Pharmacia Aktiebolaget SP - ADR (Medical - Drugs) 25,168,500
- -------------------------------------------------------------------------------
490,000 Skandia Forsakrings (Insurance - Multi-Line
Property) 12,433,364
- -------------------------------------------------------------------------------
1,141,976 Telefonaktiebolaget L.M.Ericsson - ADR
(Telecommunications) 24,391,922
- -------------------------------------------------------------------------------
168,766,170
- -------------------------------------------------------------------------------
SWITZERLAND - 0.71%
6,500 BBC Brown Boveri Ltd. (Conglomerates) 7,540,298
- -------------------------------------------------------------------------------
29,200 Ciba-Geigy Ltd. (Medical - Drugs) 25,282,833
- -------------------------------------------------------------------------------
32,823,131
- -------------------------------------------------------------------------------
UNITED KINGDOM - 0.57%
190,300 Danka Business Systems PLC - ADR (Office
Automation) 6,375,050
- -------------------------------------------------------------------------------
1,000,000 Granada Group PLC (Leisure & Recreation) 10,679,841
- -------------------------------------------------------------------------------
410,000 Thorn EMI PLC (Leisure & Recreation) 9,548,300
- -------------------------------------------------------------------------------
26,603,191
- -------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 512,045,403
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENT - 0.03%(d)
$ 1,274,793 Daiwa Securities America Inc., 5.90%, 11/01/95(e) 1,274,793
- -------------------------------------------------------------------------------
Total Repurchase Agreement 1,274,793
- -------------------------------------------------------------------------------
TIME DEPOSIT - 4.40%
205,000,000 Cayman Time Deposit, 5.75%, 11/01/95 205,000,000
- -------------------------------------------------------------------------------
Total Time Deposit 205,000,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.66% 4,645,252,077
- -------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.34% 16,046,672
- -------------------------------------------------------------------------------
NET ASSETS - 100.00% $4,661,298,749
===============================================================================
</TABLE>
FS-30
<PAGE> 118
Financials
Abbreviations:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted Security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of the securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at October 31, 1995 was
$54,337,313 which represented 1.17% of the net assets.
(c) Zero coupon bond. The interest rate shown represents the rate of original
issue discount.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the Investment Advisor.
(e) Joint repurchase agreement entered into 10/31/95 with a maturing value of
$401,494,641. Collateralized by $353,853,000 U.S. Treasury Notes, 8.375%
due 08/15/08.
See Notes to Financial Statements.
FS-31
<PAGE> 119
Financials
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $3,692,990,886) $4,645,252,077
- -------------------------------------------------------------------------
Foreign currencies, at market value (cost $19,248,298) 18,855,785
- -------------------------------------------------------------------------
Receivables for:
Investments sold 81,804,922
- -------------------------------------------------------------------------
Capital stock sold 7,671,955
- -------------------------------------------------------------------------
Dividends and interest 2,040,054
- -------------------------------------------------------------------------
Investment for deferred compensation plan 59,337
- -------------------------------------------------------------------------
Other assets 111,757
- -------------------------------------------------------------------------
Total assets 4,755,795,887
- -------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 79,969,614
- -------------------------------------------------------------------------
Capital stock reacquired 8,329,522
- -------------------------------------------------------------------------
Deferred compensation 59,337
- -------------------------------------------------------------------------
Options repurchased 467,407
- -------------------------------------------------------------------------
Accrued advisory fees 2,411,107
- -------------------------------------------------------------------------
Accrued administrative service fees 33,042
- -------------------------------------------------------------------------
Accrued distribution fees 1,766,732
- -------------------------------------------------------------------------
Accrued transfer agent fees 474,454
- -------------------------------------------------------------------------
Accrued operating expenses 985,923
- -------------------------------------------------------------------------
Total liabilities 94,497,138
- -------------------------------------------------------------------------
Net assets applicable to shares outstanding $4,661,298,749
- -------------------------------------------------------------------------
NET ASSETS:
Class A $4,564,729,631
=========================================================================
Class B $ 42,237,610
=========================================================================
Institutional Class $ 54,331,508
=========================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
=========================================================================
Outstanding 224,564,125
=========================================================================
Class B:
Authorized 750,000,000
=========================================================================
Outstanding 2,082,509
=========================================================================
Institutional Class:
Authorized 200,000,000
=========================================================================
Outstanding 2,652,632
=========================================================================
CLASS A:
Net asset value and redemption price per share $20.33
=========================================================================
Offering price per share:
(Net asset value of $20.33 divided by 94.50%) $21.51
=========================================================================
CLASS B:
Net asset value and offering price per share $20.28
=========================================================================
INSTITUTIONAL CLASS:
Net asset value, offering and redemption price per share $20.48
=========================================================================
</TABLE>
See Notes to Financial Statements.
FS-32
<PAGE> 120
Financials
STATEMENT OF OPERATIONS
For the year ended October 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $693,812 foreign withholding tax) $ 38,215,389
- ------------------------------------------------------------------------
Interest 8,498,626
- ------------------------------------------------------------------------
Total investment income 46,714,015
- ------------------------------------------------------------------------
EXPENSES:
Advisory fees 26,291,625
- ------------------------------------------------------------------------
Administrative service fees 182,595
- ------------------------------------------------------------------------
Custodian fees 871,313
- ------------------------------------------------------------------------
Directors' fees 42,436
- ------------------------------------------------------------------------
Distribution fees-Class A 12,217,290
- ------------------------------------------------------------------------
Distribution fees-Class B 68,621
- ------------------------------------------------------------------------
Transfer agent fees-Class A 7,784,636
- ------------------------------------------------------------------------
Transfer agent fees-Class B 15,054
- ------------------------------------------------------------------------
Transfer agent fees-Institutional Class 2,913
- ------------------------------------------------------------------------
Other 1,340,482
- ------------------------------------------------------------------------
Total expenses 48,816,965
- ------------------------------------------------------------------------
Less fees waived by advisor (843,494)
- ------------------------------------------------------------------------
Net expenses 47,973,471
- ------------------------------------------------------------------------
Net investment income (loss) (1,259,456)
- ------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
SECURITIES, FOREIGN CURRENCIES, FUTURES AND OPTIONS
CONTRACTS:
Net realized gain on sales of:
Investment securities 610,490,585
- ------------------------------------------------------------------------
Foreign currencies 966,904
- ------------------------------------------------------------------------
Futures contracts 6,404,690
- ------------------------------------------------------------------------
Options contracts 2,779,330
- ------------------------------------------------------------------------
620,641,509
- ------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 416,011,617
- ------------------------------------------------------------------------
Foreign currencies (751,970)
- ------------------------------------------------------------------------
Futures contracts (4,057,387)
- ------------------------------------------------------------------------
411,202,260
- ------------------------------------------------------------------------
Net gain on investment securities, foreign currencies,
futures and options contracts 1,031,843,769
- ------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,030,584,313
- ------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
FS-33
<PAGE> 121
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,259,456) $ 18,228,044
- -------------------------------------------------------------------------------
Net realized gain on sales of investment
securities, foreign currencies, futures
and options contracts 620,641,509 387,037,586
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities, foreign
currencies, and futures contracts 411,202,260 (259,837,784)
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 1,030,584,313 145,427,846
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment
income:
Class A (14,842,521) (29,907,523)
- -------------------------------------------------------------------------------
Class B -- --
- -------------------------------------------------------------------------------
Institutional Class (290,923) (363,799)
- -------------------------------------------------------------------------------
Distributions to shareholders from net
realized gains on investment securities:
Class A (387,332,253) (89,314,780)
- -------------------------------------------------------------------------------
Class B -- --
- -------------------------------------------------------------------------------
Institutional Class (4,072,920) (724,291)
- -------------------------------------------------------------------------------
Net equalization credits (charges):
Class A 204,025 (10,126,574)
- -------------------------------------------------------------------------------
Class B 297,921 --
- -------------------------------------------------------------------------------
Institutional Class 71,195 1,640
- -------------------------------------------------------------------------------
Share transactions-net:
Class A (17,628,236) (1,048,548,626)
- -------------------------------------------------------------------------------
Class B 41,458,876 --
- -------------------------------------------------------------------------------
Institutional Class 6,504,480 96,085
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets 654,953,957 (1,033,460,022)
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 4,006,344,792 5,039,804,814
- -------------------------------------------------------------------------------
End of period $4,661,298,749 $ 4,006,344,792
===============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $3,070,552,699 $ 3,040,217,579
- -------------------------------------------------------------------------------
Undistributed net investment income 25,028,873 40,848,632
- -------------------------------------------------------------------------------
Undistributed net realized gain on sales of
investment securities, foreign currencies,
futures and options contracts 613,833,040 384,596,704
- -------------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies, and
futures contracts 951,884,137 540,681,877
- -------------------------------------------------------------------------------
$4,661,298,749 $ 4,006,344,792
===============================================================================
</TABLE>
See Notes to Financial Statements.
FS-34
<PAGE> 122
Financials
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Weingarten Fund (the "Fund") is a series portfolio of AIM Equity Funds,
Inc. (the "Company"). The Company is a Maryland corporation registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of four diversified portfolios:
AIM Weingarten Fund, AIM Charter Fund, AIM Constellation Fund and AIM
Aggressive Growth Fund. The Fund currently offers three different classes of
shares: the Class A shares (formerly "Retail Shares"), Class B shares and the
Institutional Class. Matters affecting each portfolio or class will be voted on
exclusively by such shareholders. The assets, liabilities and operations of
each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The following is a summary of
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 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 mean between the closing bid and asked prices on that day. If a mean is
not available, as is the case in some foreign markets, the closing bid will
be used absent a last sales price. 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
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
of the closing bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined in good
faith by or under the supervision of the Company's officers in a manner
specifically authorized by the Board of Directors of the Company. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
New York Stock Exchange. 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 New York Stock Exchange. 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 New York Stock
Exchange which will 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 Directors.
B. 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.
C. 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 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.
D. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash, and/or by securing a
standby letter of credit from a major commercial bank, as collateral, for
the account of the broker (the Fund's agent in acquiring the futures
position). During the period the futures contract is open, changes in the
value of the contract are recognized as unrealized gains or losses by
"marking to market" on a daily basis to reflect the market value of the
contract at the end of each day's trading. Variation margin payments are
made or received depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the proceeds from (or cost of) the
closing transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and that a change in the value of the
contract may not correlate with changes in the securities being hedged.
E. Covered Call Options - The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is recorded
as an asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the last
sale price, or in the absence of a sale, the mean between the last bid and
asked prices on that day. If a written call option expires on the stipulated
expiration date, or if the Fund enters into a closing purchase transaction,
the Fund realizes a gain (or a loss if the closing purchase transaction
exceeds the premium received when the option was written) without regard to
any unrealized gain or loss on the underlying security, and the liability
related to such option is extinguished. If a written option is exercised,
the Fund realizes a gain or a loss from the sale of the underlying security
and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and
the writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for
FS-35
<PAGE> 123
Financials
capital appreciation above the exercise price should the market price of the
underlying security increase, but has retained the risk of loss should the
price of the underlying security decline. During the option period, the Fund
may be required at any time to deliver the underlying security against
payment of the exercise price. This obligation is terminated upon the
expiration of the option period or at such earlier time at which the Fund
effects a closing purchase transaction by purchasing (at a price which may
be higher than that received when the call option was written) a call option
identical to the one originally written. The Fund will not write a covered
call option if, immediately thereafter, the aggregate value of the
securities underlying all such options, determined as of the dates such
options were written, would exceed 25% of the net assets of the Fund.
F. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the specific identification of securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
G. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
H. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to all
classes, e.g. advisory fees, are allocated among them.
I. Equalization - The Fund follows the accounting practice known as
equalization by which a portion of the proceeds from sales and the costs of
repurchases of Fund shares, equivalent on a per share basis to the amount of
undistributed net investment income, is credited or charged to undistributed
net income when the transaction is recorded so that undistributed net
investment income per share is unaffected by sales or redemptions of Fund
shares.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). The terms of the master investment advisory agreement
provide that the Fund shall pay an advisory fee to AIM at an annual rate of
1.0% of the first $30 million of the Fund's average daily net assets, plus
0.75% of the Fund's average daily net assets in excess of $30 million to and
including $350 million, plus 0.625% of the Fund's average daily net assets in
excess of $350 million. AIM is currently voluntarily waiving a portion of its
advisory fees payable by the Fund to AIM to the extent necessary to reduce the
fees paid by the Fund at net asset levels higher than those currently
incorporated in the present advisory fee schedule. AIM will receive a fee
calculated at the annual rate of 1.0% of the first $30 million of the Fund's
average daily net assets, plus 0.75% of the Fund's average daily net assets in
excess of $30 million to and including $350 million, plus 0.625% of the Fund's
average daily net assets in excess of $350 million to and including $2 billion,
plus 0.60% of the Fund's average daily net assets in excess of $2 billion to
and including $3 billion, plus 0.575% of the Fund's average daily net assets in
excess of $3 billion to and including $4 billion, plus 0.55% of the Fund's
average daily net assets in excess of $4 billion. The waiver of fees is
entirely voluntary and the Board of Directors of the Company would be advised
of any decision by AIM to discontinue the waiver. During the year ended October
31, 1995, AIM waived fees of $843,494. Under the terms of a master sub-advisory
agreement between AIM and A I M Capital Management, Inc. ("AIM Capital"), AIM
pays AIM Capital 50% of the amount paid by the Fund to AIM. These agreements
require AIM to reduce its fees or, if necessary, make payments to the Fund to
the extent required to satisfy any expense limitations imposed by the
securities laws or regulations thereunder of any state in which the Fund's
shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the year ended October 31,
1995, AIM was reimbursed $182,595 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency services to the Class A shares and Class B shares. During the
year ended October 31, 1995, AFS was reimbursed $4,016,831 for such services.
During the year ended October 31, 1995, the Fund, pursuant to a transfer
agency and service agreement, paid A I M Institutional Fund Services, Inc.
("AIFS") $1,260 for shareholder and transfer agency services with respect to
the Institutional Class. Effective July 1, 1995, AIFS became the exclusive
transfer agent for the Institutional Class of the Fund.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A and Class B shares and a master distribution agreement with Fund
Management Company ("FMC") to serve as the distributor for the Institutional
Class. The Company has adopted Plans pursuant to Rule 12b-1 under the 1940 Act
with respect to the Fund's Class A shares (the "Class A Plan") and with respect
to the Fund's Class B shares (the "Class B Plan") (collectively, the "Plans").
The Fund, pursuant to the Class A Plan, pays AIM Distributors compensation at
the annual rate of 0.30% of the average daily net assets attributable to the
Class A shares. The Class A Plan is designed to compensate AIM Distributors for
certain promotional and other sales related costs, and to implement a program
which provides periodic payments to selected dealers and financial institutions
who furnish continuing personal shareholder services to their customers who
purchase and own Class A shares of the Fund. The Fund, pursuant to the Class B
Plan, pays AIM Distributors compensation at an annual rate of 1.00% of the
average daily net assets attributable to the Class B shares. Of this amount,
the Fund may pay a service fee of 0.25% of the average daily net assets of the
Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and
own Class B shares of the Fund. Any amounts not paid as a service fee under
such 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. AIM Distributors may, from time to time,
assign, transfer or pledge to one or more designees, its rights to all or a
designated portion of (a) compensation received by AIM Distributors from the
Fund pursuant to the Class B Plan (but not AIM Distributors duties and
obligations pursuant to the Class B Plan) and (b) any contingent deferred sales
charges received by AIM Distributors related to the Class B shares. During the
year ended October 31, 1995 for the Class A shares and the period June 26, 1995
(date sales commenced) through October 31, 1995 for the Class B shares, the
Class A shares and the Class B shares paid AIM Distributors $12,217,290 and
$68,621, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,767,515 from sales of shares of
the Class A shares of the Fund during the year ended October 31, 1995. 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. Certain officers and
directors of the Company are officers and directors of AIM, AIM Capital, AIM
Distributors, AFS, AIFS and FMC.
During the year ended October 31, 1995, the Fund paid legal fees of $13,238
for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
FS-36
<PAGE> 124
Financials
NOTE 3 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the year ended October 31, 1995 was
$5,516,271,702 and $5,871,965,081, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of October 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $980,791,723
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (39,012,965)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $941,778,758
===========================================================================
</TABLE>
Cost of investments for tax purposes is $3,703,473,319.
NOTE 4 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company invests directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5 - BANK BORROWINGS
The Fund has a $68,400,000 committed line of credit with a financial
institution syndicate with Chemical Bank of New York as the administrative
agent. Interest on borrowings under the line of credit is payable on maturity
or prepayment date. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's
commitment.
NOTE 6 - OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended October 31, 1995 are
summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Beginning of year -- --
- -------------------------------------------------------------------------------
Written 29,413 $ 6,668,627
- -------------------------------------------------------------------------------
Closed (11,309) (3,032,287)
- -------------------------------------------------------------------------------
Exercised (4,833) (887,684)
- -------------------------------------------------------------------------------
Expired (13,271) (2,748,656)
- -------------------------------------------------------------------------------
End of year -- $ --
===============================================================================
</TABLE>
NOTE 7 - CAPITAL STOCK
Changes in the capital stock outstanding during the years ended October 31,
1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
-------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 32,034,901 $ 559,325,258 22,715,102 $ 385,995,119
- -----------------------------------------------------------------------------------
Class B* 2,180,033 43,415,613 -- --
- -----------------------------------------------------------------------------------
Institutional Class 559,557 10,092,219 466,667 7,928,748
- -----------------------------------------------------------------------------------
Issued as a reinvestment
of dividends:
Class A 24,460,017 361,036,594 4,979,521 84,004,521
- -----------------------------------------------------------------------------------
Class B* -- -- -- --
- -----------------------------------------------------------------------------------
Institutional Class 199,304 2,950,819 42,665 721,040
- -----------------------------------------------------------------------------------
Reacquired:
Class A (54,445,065) (937,990,088) (88,892,319) (1,518,548,266)
- -----------------------------------------------------------------------------------
Class B* (97,524) (1,956,737) -- --
- -----------------------------------------------------------------------------------
Institutional Class (363,327) (6,538,558) (503,154) (8,553,703)
- -----------------------------------------------------------------------------------
4,527,896 $ 30,335,120 (61,191,518) $(1,048,452,541)
===================================================================================
</TABLE>
*Class B shares commenced sales on June 26, 1995.
FS-37
<PAGE> 125
Financials
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during each of the years in the seven-year period ended October 31,
1995, the ten months ended October 31, 1988 and each of the years in the two-
year period ended December 31, 1987(a) and for a Class B share outstanding
during the period June 26, 1995 (date sales commenced) through October 31,
1995.
CLASS A:
<TABLE>
<CAPTION>
OCTOBER 31,
--------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988(b)
---------- ---------- ---------- ---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $ 17.82 $ 17.62 $ 16.68 $ 15.76 $ 11.15 $ 12.32 $ 9.23 $ 8.36
- ------------------ ---------- ---------- ---------- ---------- ---------- -------- -------- --------
Income from
investment
operations:
Net investment
income -- 0.07 0.10 0.10 0.11 0.09 0.10 0.07
- ------------------ ---------- ---------- ---------- ---------- ---------- -------- -------- --------
Net gains
(losses) on
securities (both
realized and
unrealized) 4.36 0.57 0.93 0.98 4.80 (0.56) 3.10 0.80
- ------------------ ---------- ---------- ---------- ---------- ---------- -------- -------- --------
Total from
investment
operations 4.36 0.64 1.03 1.08 4.91 (0.47) 3.20 0.87
- ------------------ ---------- ---------- ---------- ---------- ---------- -------- -------- --------
Less
distributions:
Dividends from
net investment
income (0.07) (0.11) (0.09) (0.07) (0.09) (0.06) (0.11) --
- ------------------ ---------- ---------- ---------- ---------- ---------- -------- -------- --------
Distributions
from net
realized capital
gains (1.78) (0.33) -- (0.09) (0.21) (0.64) -- --
- ------------------ ---------- ---------- ---------- ---------- ---------- -------- -------- --------
Total
distributions (1.85) (0.44) (0.09) (0.16) (0.30) (0.70) (0.11) --
- ------------------ ---------- ---------- ---------- ---------- ---------- -------- -------- --------
Net asset value,
end of period $ 20.33 $ 17.82 $ 17.62 $ 16.68 $ 15.76 $ 11.15 $ 12.32 $ 9.23
================== ========== ========== ========== ========== ========== ======== ======== ========
Total return(c) 28.20% 3.76% 6.17% 6.85% 44.88% (4.03)% 35.13% 10.41%
================== ========== ========== ========== ========== ========== ======== ======== ========
Ratios/supplemental
data:
Net assets, end of
period (000s
omitted) $4,564,730 $3,965,858 $4,999,983 $5,198,835 $2,534,331 $632,522 $393,320 $297,284
================== ========== ========== ========== ========== ========== ======== ======== ========
Ratio of expenses
to average net
assets 1.2%(d) 1.2% 1.1% 1.1% 1.2% 1.3% 1.2% 1.1%(f)
================== ========== ========== ========== ========== ========== ======== ======== ========
Ratio of net
investment income
to average net
assets 0.0%(d) 0.4% 0.6% 0.6% 0.7% 0.8% 1.0% 0.9%(f)
================== ========== ========== ========== ========== ========== ======== ======== ========
Portfolio turnover
rate 139% 136% 109% 37% 46% 79% 87% 93%
================== ========== ========== ========== ========== ========== ======== ======== ========
Borrowings for the
period:
Amount of debt
outstanding at
end of period
(000s omitted) -- -- -- -- -- -- $ 3,781 --
================== ========== ========== ========== ========== ========== ======== ======== ========
Average amount of
debt outstanding
during the period
(000s omitted)(e) $ 593 -- -- -- -- $ 485 $ 1,083 $ 229
================== ========== ========== ========== ========== ========== ======== ======== ========
Average number of
shares
outstanding
during the period
(000s omitted)(e) 229,272 249,351 314,490 246,273 102,353 44,770 31,275 33,031
================== ========== ========== ========== ========== ========== ======== ======== ========
Average amount of
debt per share
during the period $ 0.0026 -- -- -- -- $ 0.011 $ 0.035 $ 0.007
================== ========== ========== ========== ========== ========== ======== ======== ========
<CAPTION>
DECEMBER 31,
-------------------
1987 1986(b)
--------- ---------
<S> <C> <C>
Net asset value,
beginning of
period $ 8.82 $ 9.10
- -------------------- --------- ---------
Income from
investment
operations:
Net investment
income 0.07 0.09
- -------------------- --------- ---------
Net gains
(losses) on
securities (both
realized and
unrealized) 0.83 2.11
- -------------------- --------- ---------
Total from
investment
operations 0.90 2.20
- -------------------- --------- ---------
Less
distributions:
Dividends from
net investment
income (0.09) (0.09)
- -------------------- --------- ---------
Distributions
from net
realized capital
gains (1.27) (2.39)
- -------------------- --------- ---------
Total
distributions (1.36) (2.48)
- -------------------- --------- ---------
Net asset value,
end of period $ 8.36 $ 8.82
==================== ========= =========
Total return(c) 9.75% 25.06%
==================== ========= =========
Ratios/supplemental
data:
Net assets, end of
period (000s
omitted) $286,453 $171,138
==================== ========= =========
Ratio of expenses
to average net
assets 1.0% 1.0%
==================== ========= =========
Ratio of net
investment income
to average net
assets 0.7% 0.8%
==================== ========= =========
Portfolio turnover
rate 108% 113%
==================== ========= =========
Borrowings for the
period:
Amount of debt
outstanding at
end of period
(000s omitted) $ 355 --
==================== ========= =========
Average amount of
debt outstanding
during the period
(000s omitted)(e) $ 509 $ 56
==================== ========= =========
Average number of
shares
outstanding
during the period
(000s omitted)(e) 25,825 18,519
==================== ========= =========
Average amount of
debt per share
during the period $ 0.020 $ 0.003
==================== ========= =========
</TABLE>
(a) Per share information has been restated to reflect a 2 for 1 stock split,
effected in the form of a dividend, on September 29, 1987.
(b) The Fund changed investment advisors on May 1, 1986, and on September 30,
1988.
(c) Does not deduct sales charges and, for periods less than one year, total
returns are not annualized.
(d) After waiver of advisory fees. Ratios of expenses and net investment income
to average net assets prior to waiver of advisory fees were 1.2% and
(0.04)%, respectively. Ratios are based on average net assets of
$4,072,429,878.
(e) Averages computed on a daily basis.
(f) Annualized.
FS-38
<PAGE> 126
Financials
CLASS B:
<TABLE>
<CAPTION>
1995
-------
<S> <C>
Net asset value, beginning of period $18.56
- -------------------------------------------------- -------
Income from investment operations:
Net investment income (loss) (0.03)
- -------------------------------------------------- -------
Net gains (losses) on securities (both realized
and unrealized) 1.75
- -------------------------------------------------- -------
Total from investment operations 1.72
- -------------------------------------------------- -------
Less distributions:
Dividends from net investment income --
- -------------------------------------------------- -------
Distributions from net realized capital gains --
- -------------------------------------------------- -------
Total distributions --
- -------------------------------------------------- -------
Net asset value, end of period $20.28
================================================== =======
Total return(a) 9.27%
================================================== =======
Ratios/supplemental data:
Net assets, end of period (000's omitted) $42,238
================================================== =======
Ratio of expenses to average net assets 1.91 %(b)
================================================== =======
Ratio of net investment income (loss) to average
net assets (0.76)%(b)
================================================== =======
Portfolio turnover rate 139%
================================================== =======
Borrowings for the period:
Amount of debt outstanding at end of
period (000s omitted) --
================================================== =======
Average amount of debt outstanding during the
period (000s omitted)(c) $ 3
================================================== =======
Average number of shares outstanding during the
period (000s omitted)(c) 1,036
================================================== =======
Average amount of debt per share during the period $0.0029
================================================== =======
</TABLE>
(a) Do not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Annualized. After waiver of advisory fees. Annualized ratios of expenses
and net investment income (loss) to average net assets prior to waiver of
advisory fees were 1.94% and (0.79)%, respectively. Ratios are based on
average net assets of $19,567,695.
(c) Averages computed on a daily basis.
FS-39
<PAGE> 127
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Aggressive Growth Fund:
We have audited the accompanying statement of assets and liabilities of the AIM
Aggressive Growth Fund (a portfolio of AIM Equity Funds, Inc.), including the
schedule of investments, as of October 31, 1995, the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the years in the two-year period then ended and the financial
highlights for each of the years in the two-year period then ended and the ten
month period ended October 31, 1993. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Aggressive Growth Fund as of October 31, 1995, the results of its operations
for the year then ended, the changes in its net assets for each of the years in
the two-year period then ended and the financial highlights for each of the
years in the two-year period then ended and the ten month period ended October
31, 1993, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 8, 1995
FS-40
<PAGE> 128
Financials
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS - 87.67%
ADVERTISING/BROADCASTING - 0.55%
50,000 Clear Channel Communications, Inc.(a) $ 4,100,000
- -----------------------------------------------------------------------
150,000 Heritage Media Corp.-Class A(A) 4,162,500
- -----------------------------------------------------------------------
100,000 Meredith Corp. 3,575,000
- -----------------------------------------------------------------------
21,300 Sinclair Broadcast Group, Inc.-Class A(a) 441,975
- -----------------------------------------------------------------------
12,279,475
- -----------------------------------------------------------------------
AUTOMOBILE/TRUCKS PARTS & TIRES - 0.44%
150,000 Borg-Warner Automotive, Inc. 4,425,000
- -----------------------------------------------------------------------
300,000 Thompson PBE, Inc.(a) 5,475,000
- -----------------------------------------------------------------------
9,900,000
- -----------------------------------------------------------------------
BEVERAGES - 0.42%
195,000 Canandaigua Wine Co., Inc.-Class A(a) 9,360,000
- -----------------------------------------------------------------------
BUILDING MATERIALS - 0.10%
70,000 Danaher Corp. 2,170,000
- -----------------------------------------------------------------------
BUSINESS SERVICES - 0.79%
195,000 Alternative Resources Corp.(a) 6,045,000
- -----------------------------------------------------------------------
167,700 Brandon Systems Corp. 3,018,600
- -----------------------------------------------------------------------
159,500 Healthcare COMPARE Corp.(a) 5,901,500
- -----------------------------------------------------------------------
200,000 Sterling Healthcare Group(a) 2,750,000
- -----------------------------------------------------------------------
17,715,100
- -----------------------------------------------------------------------
CHEMICALS - 0.12%
175,000 Applied Extrusion Technologies, Inc.(a) 2,690,625
- -----------------------------------------------------------------------
CHEMICALS (SPECIALTY) - 0.58%
355,500 Airgas Inc.(a) 9,465,188
- -----------------------------------------------------------------------
150,000 Mississippi Chemical Corp. 3,618,750
- -----------------------------------------------------------------------
13,083,938
- -----------------------------------------------------------------------
COMPUTER MINI/PCS - 0.28%
400,000 Rational Software Corp.(a) 6,250,000
- -----------------------------------------------------------------------
</TABLE>
FS-41
<PAGE> 129
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMPUTER NETWORKING - 4.93%
400,000 ALANTEC Corp.(a) $ 14,300,000
- ---------------------------------------------------------------------
160,000 Ascend Communications, Inc.(a) 10,400,000
- ---------------------------------------------------------------------
300,000 Auspex Systems, Inc.(a) 4,237,500
- ---------------------------------------------------------------------
125,000 Belden, Inc. 3,015,625
- ---------------------------------------------------------------------
350,000 Black Box Corp.(a) 5,687,500
- ---------------------------------------------------------------------
120,600 Cascade Communications Corp.(a) 8,592,750
- ---------------------------------------------------------------------
500,000 Cheyenne Software, Inc.(a) 10,437,500
- ---------------------------------------------------------------------
100,000 CIDCO, Inc.(a) 2,962,500
- ---------------------------------------------------------------------
315,000 DSP Group, Inc.(a) 5,118,750
- ---------------------------------------------------------------------
279,300 FORE Systems, Inc.(a) 14,802,900
- ---------------------------------------------------------------------
150,000 InterVoice, Inc.(a) 2,737,500
- ---------------------------------------------------------------------
100,000 Lannet Data Communications, Ltd.(a) 2,875,000
- ---------------------------------------------------------------------
230,000 Madge, N.V.(a) 9,631,250
- ---------------------------------------------------------------------
300,000 Microtest, Inc.(a) 4,650,000
- ---------------------------------------------------------------------
200,000 Network Equipment Technologies, Inc.(a) 6,525,000
- ---------------------------------------------------------------------
155,300 Optical Data Systems, Inc.(a) 4,639,588
- ---------------------------------------------------------------------
110,613,363
- ---------------------------------------------------------------------
COMPUTER PERIPHERALS - 3.79%
337,500 Alliance Semiconductor Corp.(a) 10,378,125
- ---------------------------------------------------------------------
210,000 Dialogic Corp.(a) 6,090,000
- ---------------------------------------------------------------------
100,000 Digi International, Inc.(a) 2,675,000
- ---------------------------------------------------------------------
135,000 Eltron International, Inc.(a) 4,387,500
- ---------------------------------------------------------------------
100,000 Filenet Corp.(a) 4,537,500
- ---------------------------------------------------------------------
210,250 Microchip Technology, Inc.(a) 8,344,297
- ---------------------------------------------------------------------
600,000 Mylex Corp.(a) 11,175,000
- ---------------------------------------------------------------------
310,000 Oak Technology, Inc.(a) 16,972,500
- ---------------------------------------------------------------------
190,000 Read-Rite Corp.(a) 6,626,250
- ---------------------------------------------------------------------
150,000 U.S. Robotics Corp.(a) 13,875,000
- ---------------------------------------------------------------------
85,061,172
- ---------------------------------------------------------------------
</TABLE>
FS-42
<PAGE> 130
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES - 14.90%
325,000 Acclaim Entertainment, Inc.(a) $ 7,678,125
- ---------------------------------------------------------------------
400,000 Activision, Inc.(a) 6,700,000
- ---------------------------------------------------------------------
39,000 Adobe Systems, Inc. 2,223,000
- ---------------------------------------------------------------------
225,000 Affiliated Computer Services, Inc.(a) 7,537,500
- ---------------------------------------------------------------------
190,000 Analysts International Corp. 5,628,750
- ---------------------------------------------------------------------
48,800 Astea International, Inc.(a) 878,400
- ---------------------------------------------------------------------
150,000 Atria Software, Inc.(a) 5,362,500
- ---------------------------------------------------------------------
78,500 Bell & Howell Co.(a) 1,962,500
- ---------------------------------------------------------------------
112,500 Cadence Design Systems, Inc.(a) 3,628,125
- ---------------------------------------------------------------------
212,100 Cerner Corp.(a) 5,620,650
- ---------------------------------------------------------------------
46,100 Checkfree Corp.(a) 973,863
- ---------------------------------------------------------------------
1,300,000 Computervision Corp.(a) 15,275,000
- ---------------------------------------------------------------------
39,800 Computron Software, Inc.(a) 676,600
- ---------------------------------------------------------------------
300,000 Corel Corp.(a) 5,137,500
- ---------------------------------------------------------------------
200,000 CyCare Systems, Inc.(a) 6,200,000
- ---------------------------------------------------------------------
18,000 DataWorks Corp.(a) 249,750
- ---------------------------------------------------------------------
200,000 Diamond Multimedia Systems, Inc.(a) 5,900,000
- ---------------------------------------------------------------------
20,000 Edmark Corp.(a) 860,000
- ---------------------------------------------------------------------
50,000 Electronics for Imaging, Inc.(a) 4,112,500
- ---------------------------------------------------------------------
325,000 Expert Software, Inc.(a) 6,743,750
- ---------------------------------------------------------------------
200,000 FTP Software, Inc.(a) 5,400,000
- ---------------------------------------------------------------------
100,000 HBO & Co. 7,075,000
- ---------------------------------------------------------------------
276,600 HCIA, Inc.(a) 7,537,350
- ---------------------------------------------------------------------
32,000 HPR Inc.(a) 832,000
- ---------------------------------------------------------------------
200,000 Hummingbird Communications Ltd.(a) 8,600,000
- ---------------------------------------------------------------------
160,000 Hyperion Software Corp.(a) 7,880,000
- ---------------------------------------------------------------------
215,200 Imnet Systems, Inc.(a) 5,460,700
- ---------------------------------------------------------------------
10,000 Integrated Measurement Systems, Inc.(a) 135,000
- ---------------------------------------------------------------------
250,000 Integrated Silicon Systems, Inc.(a) 7,343,750
- ---------------------------------------------------------------------
288,000 Integrated Systems, Inc.(a) 10,080,000
- ---------------------------------------------------------------------
365,500 Intersolv Inc.(a) 5,756,625
- ---------------------------------------------------------------------
20,500 Logic Works, Inc.(a) 312,625
- ---------------------------------------------------------------------
200,000 Macromedia, Inc.(a) 7,400,000
- ---------------------------------------------------------------------
</TABLE>
FS-43
<PAGE> 131
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Computer Software/Services - (continued)
270,000 Medic Computer Systems, Inc.(a) $ 14,377,500
- ----------------------------------------------------------------------
500,000 Mentor Graphics Corp.(a) 10,500,000
- ----------------------------------------------------------------------
305,000 Microcom, Inc.(a) 6,671,875
- ----------------------------------------------------------------------
140,000 NetManage, Inc.(a) 2,852,500
- ----------------------------------------------------------------------
350,000 Network General Corp.(a) 14,525,000
- ----------------------------------------------------------------------
40,500 ON Technology Corp.(a) 486,000
- ----------------------------------------------------------------------
340,000 PairGain Technologies, Inc.(a) 14,535,000
- ----------------------------------------------------------------------
75,000 PeopleSoft, Inc.(a) 6,450,000
- ----------------------------------------------------------------------
245,900 Phamis, Inc.(a) 6,208,975
- ----------------------------------------------------------------------
250,000 Pinnacle Systems, Inc.(a) 7,843,750
- ----------------------------------------------------------------------
200,000 Planar Systems Inc.(a) 3,475,000
- ----------------------------------------------------------------------
150,000 Platinum Technology, Inc.(a) 2,737,500
- ----------------------------------------------------------------------
50,000 Policy Management Systems Corp.(a) 2,356,250
- ----------------------------------------------------------------------
49,300 Premenos Technology Corp.(a) 1,935,025
- ----------------------------------------------------------------------
200,000 Project Software & Development, Inc.(a) 5,300,000
- ----------------------------------------------------------------------
85,000 Pure Software, Inc.(a) 3,123,750
- ----------------------------------------------------------------------
500,000 S3, Inc.(a) 8,562,500
- ----------------------------------------------------------------------
325,000 Shared Medical Systems Corp. 12,553,125
- ----------------------------------------------------------------------
30,100 Smith Micro Software, Inc.(a) 368,725
- ----------------------------------------------------------------------
290,000 Softdesk, Inc.(a) 6,742,500
- ----------------------------------------------------------------------
250,000 SoftKey International, Inc.(a) 7,875,000
- ----------------------------------------------------------------------
100,000 Sterling Software, Inc.(a) 4,612,500
- ----------------------------------------------------------------------
400,000 Symantec Corp.(a) 9,725,000
- ----------------------------------------------------------------------
10,500 Synopsys, Inc.(a) 393,750
- ----------------------------------------------------------------------
16,500 Unison Software, Inc.(a) 206,250
- ----------------------------------------------------------------------
31,300 Vantive Corp.(a) 500,800
- ----------------------------------------------------------------------
24,500 Verity, Inc.(a) 900,375
- ----------------------------------------------------------------------
170,000 Viasoft, Inc.(a) 2,210,000
- ----------------------------------------------------------------------
350,000 Wind River Systems, Inc.(a) 9,450,000
- ----------------------------------------------------------------------
334,640,213
- ----------------------------------------------------------------------
</TABLE>
FS-44
<PAGE> 132
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
CONSUMER NON-DURABLES - 0.26%
121,600 Department 56, Inc.(a) $ 5,517,600
- -------------------------------------------------------------------------
15,900 USA Detergents, Inc.(a) 405,450
- -------------------------------------------------------------------------
5,923,050
- -------------------------------------------------------------------------
CONTAINERS - 0.18%
150,000 Sealed Air Corp.(a) 3,956,250
- -------------------------------------------------------------------------
COSMETICS & TOILETRIES - 0.09%
101,800 Helen of Troy, Ltd.(a) 1,921,475
- -------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 5.39%
202,500 Aetrium, Inc.(a) 4,404,375
- -------------------------------------------------------------------------
200,000 Ametek, Inc. 3,525,000
- -------------------------------------------------------------------------
200,000 Amphenol Corp.(a) 4,325,000
- -------------------------------------------------------------------------
70,000 BMC Industries, Inc. 2,703,750
- -------------------------------------------------------------------------
150,000 Brooks Automation, Inc.(a) 2,700,000
- -------------------------------------------------------------------------
200,000 California Amplifier, Inc.(a) 5,400,000
- -------------------------------------------------------------------------
300,000 Electro Scientific Industries, Inc.(a) 9,300,000
- -------------------------------------------------------------------------
50,000 Franklin Electronic Publishers, Inc.(a) 2,068,750
- -------------------------------------------------------------------------
224,700 General Scanning, Inc.(a) 2,696,400
- -------------------------------------------------------------------------
126,000 Harman International Industries, Inc. 5,811,750
- -------------------------------------------------------------------------
175,000 Integrated Silicon Solution, Inc.(a) 5,479,688
- -------------------------------------------------------------------------
29,200 Mackie Designs, Inc.(a) 372,300
- -------------------------------------------------------------------------
125,000 Methode Electronics, Inc. 2,875,000
- -------------------------------------------------------------------------
46,875 Molex, Inc. 1,546,875
- -------------------------------------------------------------------------
52,800 Oak Industries, Inc.(a) 1,102,200
- -------------------------------------------------------------------------
200,000 Perceptron, Inc.(a) 5,350,000
- -------------------------------------------------------------------------
250,000 PRI Automation, Inc.(a) 9,250,000
- -------------------------------------------------------------------------
425,000 PSC, Inc.(a) 4,356,250
- -------------------------------------------------------------------------
225,000 Recoton Corp.(a) 5,006,250
- -------------------------------------------------------------------------
104,500 Semitool, Inc.(a) 1,698,125
- -------------------------------------------------------------------------
62,000 Smartflex Systems, Inc.(a) 906,750
- -------------------------------------------------------------------------
300,000 Symbol Technologies, Inc.(a) 10,462,500
- -------------------------------------------------------------------------
100,000 Tektronix, Inc. 5,925,000
- -------------------------------------------------------------------------
500,000 Telxon Corp. 11,562,500
- -------------------------------------------------------------------------
369,000 Teradyne, Inc.(a) 12,315,375
- -------------------------------------------------------------------------
121,143,838
- -------------------------------------------------------------------------
</TABLE>
FS-45
<PAGE> 133
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
ELECTRONIC/DEFENSE - 0.35%
200,000 Alpha Industries, Inc.(a) $ 3,100,000
- -----------------------------------------------------------------
100,000 Watkins-Johnson Co. 4,812,500
- -----------------------------------------------------------------
7,912,500
- -----------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS - 0.73%
250,000 Kent Electronics Corp.(a) 12,187,500
- -----------------------------------------------------------------
300,000 Pioneer-Standard Electronics, Inc. 4,162,500
- -----------------------------------------------------------------
16,350,000
- -----------------------------------------------------------------
FINANCE (CONSUMER CREDIT) - 2.87%
220,000 Aames Financial Corp. 5,500,000
- -----------------------------------------------------------------
100,000 CMAC Investment Corp. 4,750,000
- -----------------------------------------------------------------
200,050 Concord EFS, Inc.(a) 6,901,725
- -----------------------------------------------------------------
500,000 Credit Acceptance Corp.(a) 11,750,000
- -----------------------------------------------------------------
153,800 General Acceptance Corp.(a) 4,075,700
- -----------------------------------------------------------------
475,000 Medaphis Corp.(a) 15,081,250
- -----------------------------------------------------------------
225,000 Money Store Inc. (The) 9,000,000
- -----------------------------------------------------------------
150,000 PMT Services, Inc.(a) 4,031,250
- -----------------------------------------------------------------
40,500 WFS Financial, Inc.(a) 673,312
- -----------------------------------------------------------------
200,000 World Acceptance Corp.(a) 2,600,000
- -----------------------------------------------------------------
64,363,237
- -----------------------------------------------------------------
FINANCE (LEASING COMPANIES) - 0.26%
225,000 Oxford Resources Corp.(a) 5,906,250
- -----------------------------------------------------------------
FINANCE (SAVINGS & LOAN) - 0.20%
75,000 TCF Financial Corp. 4,406,250
- -----------------------------------------------------------------
FUNERAL SERVICES - 0.41%
32,500 Equity Corporation International(a) 682,500
- -----------------------------------------------------------------
250,000 Stewart Enterprises Inc.-Class A 8,437,500
- -----------------------------------------------------------------
9,120,000
- -----------------------------------------------------------------
GAMING - 0.25%
75,000 Grand Casinos, Inc.(a) 2,981,250
- -----------------------------------------------------------------
250,000 Players International, Inc.(a) 2,687,500
- -----------------------------------------------------------------
5,668,750
- -----------------------------------------------------------------
</TABLE>
FS-46
<PAGE> 134
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
HOTELS/MOTELS - 0.40%
175,000 La Quinta Motor Inns, Inc. $ 4,506,250
- ---------------------------------------------------------------------
450,000 Prime Hospitality Corp.(a) 4,443,750
- ---------------------------------------------------------------------
8,950,000
- ---------------------------------------------------------------------
INSURANCE (LIFE & HEALTH) - 0.32%
100,000 American Travelers Corp.(a) 2,237,500
- ---------------------------------------------------------------------
175,000 United Companies Financial Corp. 4,943,750
- ---------------------------------------------------------------------
7,181,250
- ---------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY) - 0.84%
60,000 Allied Group, Inc. 1,950,000
- ---------------------------------------------------------------------
319,500 HCC Insurance Holdings, Inc.(a) 11,102,625
- ---------------------------------------------------------------------
34,200 United Dental Care, Inc.(a) 1,043,100
- ---------------------------------------------------------------------
119,000 Vesta Insurance Group, Inc. 4,804,625
- ---------------------------------------------------------------------
18,900,350
- ---------------------------------------------------------------------
LEISURE & RECREATION - 1.67%
158,800 Avid Technology, Inc.(a) 6,947,500
- ---------------------------------------------------------------------
400,000 Cannondale Corp.(a) 6,400,000
- ---------------------------------------------------------------------
50,000 Coleman Co., Inc.(a) 1,712,500
- ---------------------------------------------------------------------
287,500 Guest Supply, Inc.(a) 5,426,562
- ---------------------------------------------------------------------
300,000 Moovies, Inc.(a) 4,912,500
- ---------------------------------------------------------------------
250,000 Ride, Inc.(a) 6,031,250
- ---------------------------------------------------------------------
200,000 West Marine, Inc.(a) 6,100,000
- ---------------------------------------------------------------------
37,530,312
- ---------------------------------------------------------------------
MACHINE TOOLS - 0.47%
200,000 Acme-Cleveland Corp. 4,375,000
- ---------------------------------------------------------------------
100,000 Applied Power, Inc.-Class A 3,037,500
- ---------------------------------------------------------------------
100,000 Kennametal Inc. 3,112,500
- ---------------------------------------------------------------------
10,525,000
- ---------------------------------------------------------------------
MACHINERY (HEAVY) - 0.27%
34,000 AGCO Corp. 1,521,500
- ---------------------------------------------------------------------
285,000 Tractor Supply Co.(a) 4,488,750
- ---------------------------------------------------------------------
6,010,250
- ---------------------------------------------------------------------
</TABLE>
FS-47
<PAGE> 135
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
MACHINERY (MISCELLANEOUS) - 0.17%
100,000 Kulicke & Soffa Industries, Inc.(a) $ 3,500,000
- ---------------------------------------------------------------------------
37,500 TransPro, Inc. 412,500
- ---------------------------------------------------------------------------
3,912,500
- ---------------------------------------------------------------------------
MEDICAL (DRUGS) - 1.16%
100,000 Alpharma, Inc.-Class A 2,400,000
- ---------------------------------------------------------------------------
79,500 Arbor Drugs, Inc. 1,470,750
- ---------------------------------------------------------------------------
225,000 Cardinal Health, Inc. 11,559,375
- ---------------------------------------------------------------------------
75,000 Express Scripts, Inc.-Class A(a) 2,850,000
- ---------------------------------------------------------------------------
29,000 Gulf South Medical Supply, Inc.(a) 601,750
- ---------------------------------------------------------------------------
160,000 Watson Pharmaceuticals, Inc.(a) 7,160,000
- ---------------------------------------------------------------------------
26,041,875
- ---------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES) - 8.79%
420,000 AHI Healthcare Systems, Inc.(a) 5,880,000
- ---------------------------------------------------------------------------
400,000 American Medical Response, Inc.(a) 11,550,000
- ---------------------------------------------------------------------------
400,000 Apria Healthcare Group, Inc.(a) 8,650,000
- ---------------------------------------------------------------------------
390,000 Arbor Health Care Co.(a) 6,630,000
- ---------------------------------------------------------------------------
300,000 Community Health Systems, Inc.(a) 9,525,000
- ---------------------------------------------------------------------------
145,800 Enterprise Systems, Inc.(a) 3,408,075
- ---------------------------------------------------------------------------
300,000 Genesis Health Ventures, Inc.(a) 8,662,500
- ---------------------------------------------------------------------------
350,000 Health Care and Retirement Corp.(a) 10,281,250
- ---------------------------------------------------------------------------
491,775 Health Management Associates, Inc.-Class A(a) 10,573,163
- ---------------------------------------------------------------------------
250,000 Healthsource, Inc.(a) 13,250,000
- ---------------------------------------------------------------------------
525,530 HEALTHSOUTH Corp.(a) 13,729,470
- ---------------------------------------------------------------------------
200,000 Horizon Healthcare Corp.(a) 4,050,000
- ---------------------------------------------------------------------------
150,000 Integrated Health Services, Inc. 3,431,250
- ---------------------------------------------------------------------------
425,000 Lincare Holdings, Inc.(a) 10,571,875
- ---------------------------------------------------------------------------
268,600 Living Centers of America, Inc.(a) 6,950,025
- ---------------------------------------------------------------------------
250,000 Multicare Companies, Inc. (The)(a) 4,687,500
- ---------------------------------------------------------------------------
27,800 Myraid Genetics, Inc.(a) 750,600
- ---------------------------------------------------------------------------
250,000 OrNda HealthCorp(a) 4,406,250
- ---------------------------------------------------------------------------
100,000 Oxford Health Plans, Inc.(a) 7,825,000
- ---------------------------------------------------------------------------
117,500 Pediatrix Medical Group, Inc.(a) 2,540,938
- ---------------------------------------------------------------------------
115,000 PhyCor, Inc.(a) 4,226,250
- ---------------------------------------------------------------------------
</TABLE>
FS-48
<PAGE> 136
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Medical (Patient Services) - (continued)
134,500 Physician Reliance Network, Inc.(a) $ 4,472,125
- ----------------------------------------------------------------------
400,000 Quorum Health Group, Inc.(a) 8,575,000
- ----------------------------------------------------------------------
400,000 Rotech Medical Corp.(a) 9,100,000
- ----------------------------------------------------------------------
120,000 Sierra Health Services, Inc.(a) 3,435,000
- ----------------------------------------------------------------------
250,000 Summit Care Corp.(a) 5,187,500
- ----------------------------------------------------------------------
239,400 TheraTx Inc.(a) 2,693,250
- ----------------------------------------------------------------------
200,000 Tokos Medical Corp.(a) 1,850,000
- ----------------------------------------------------------------------
99,500 Value Health, Inc.(a) 2,276,062
- ----------------------------------------------------------------------
300,000 Vencor, Inc.(a) 8,325,000
- ----------------------------------------------------------------------
197,493,083
- ----------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS - 3.46%
297,000 Conmed Corp.(a) 10,395,000
- ----------------------------------------------------------------------
52,300 Cordis Corp.(a) 5,779,150
- ----------------------------------------------------------------------
18,300 De Rigo S.p.A.-ADR(a) 377,437
- ----------------------------------------------------------------------
250,000 Empi Inc.(a) 5,562,500
- ----------------------------------------------------------------------
250,000 Haemonetics Corp.(a) 4,718,750
- ----------------------------------------------------------------------
69,800 Heart Technology, Inc.(a) 1,989,300
- ----------------------------------------------------------------------
150,000 MiniMed, Inc.(a) 1,387,500
- ----------------------------------------------------------------------
190,500 Nellcor Puritan Bennett, Inc.(a) 10,953,750
- ----------------------------------------------------------------------
250,000 Omnicare Inc. 9,062,500
- ----------------------------------------------------------------------
250,000 Patterson Dental Co.(a) 6,250,000
- ----------------------------------------------------------------------
200,000 ResMed, Inc.(a) 3,000,000
- ----------------------------------------------------------------------
300,000 Sybron International Corp.(a) 12,750,000
- ----------------------------------------------------------------------
70,000 Target Therapeutics, Inc.(a) 5,425,000
- ----------------------------------------------------------------------
77,650,887
- ----------------------------------------------------------------------
OFFICE AUTOMATION - 0.70%
200,000 Danka Business Systems PLC-ADR 6,700,000
- ----------------------------------------------------------------------
275,000 In Focus Systems, Inc.(a) 9,040,625
- ----------------------------------------------------------------------
15,740,625
- ----------------------------------------------------------------------
</TABLE>
FS-49
<PAGE> 137
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
POLLUTION CONTROL - 0.73%
185,000 Asyst Technologies, Inc.(a) $ 7,770,000
- -------------------------------------------------------------------
50,000 Sanifill, Inc.(a) 1,575,000
- -------------------------------------------------------------------
70,000 United Waste Systems, Inc.(a) 2,765,000
- -------------------------------------------------------------------
206,500 USA Waste Services, Inc.(a) 4,336,500
- -------------------------------------------------------------------
16,446,500
- -------------------------------------------------------------------
PUBLISHING - 0.08%
61,000 Media General, Inc.-Class A 1,692,750
- -------------------------------------------------------------------
RESTAURANTS - 1.74%
251,562 Apple South, Inc. 5,157,020
- -------------------------------------------------------------------
350,000 Buffets, Inc.(a) 4,375,000
- -------------------------------------------------------------------
300,000 Daka International, Inc.(a) 9,112,500
- -------------------------------------------------------------------
700,000 Landry's Seafood Restaurants, Inc.(a) 9,450,000
- -------------------------------------------------------------------
500,000 Sonic Corp.(a) 11,000,000
- -------------------------------------------------------------------
39,094,520
- -------------------------------------------------------------------
RETAIL (FOOD & DRUG) - 0.36%
200,000 Big B, Inc. 2,950,000
- -------------------------------------------------------------------
220,000 Casey's General Stores, Inc. 5,060,000
- -------------------------------------------------------------------
8,010,000
- -------------------------------------------------------------------
RETAIL (STORES) - 6.01%
155,000 Baby Superstore, Inc.(a) 7,323,750
- -------------------------------------------------------------------
200,000 Bed Bath & Beyond, Inc.(a) 6,250,000
- -------------------------------------------------------------------
101,700 CDW Computer Centers, Inc.(a) 4,932,450
- -------------------------------------------------------------------
85,000 CompUSA, Inc.(a) 3,251,250
- -------------------------------------------------------------------
199,100 Corporate Express, Inc.(a) 5,201,488
- -------------------------------------------------------------------
300,000 Creative Computers, Inc.(a) 8,700,000
- -------------------------------------------------------------------
200,100 Duty Free International, Inc. 2,851,425
- -------------------------------------------------------------------
208,600 Eastbay, Inc.(a) 4,432,750
- -------------------------------------------------------------------
35,300 Gadzooks, Inc.(a) 653,050
- -------------------------------------------------------------------
250,000 Global DirectMail Corp.(a) 6,812,500
- -------------------------------------------------------------------
350,000 Gymboree Corp.(a) 7,918,750
- -------------------------------------------------------------------
375,000 Hollywood Entertainment Corp.(a) 10,031,250
- -------------------------------------------------------------------
100,000 Just for Feet, Inc.(a) 2,362,500
- -------------------------------------------------------------------
300,000 Men's Wearhouse, Inc. (The)(a) 11,700,000
- -------------------------------------------------------------------
</TABLE>
FS-50
<PAGE> 138
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Retail (Stores) - (continued)
265,800 Micro Warehouse, Inc.(a) $ 11,828,100
- --------------------------------------------------------------------
115,000 Movie Gallery, Inc.(a) 4,427,500
- --------------------------------------------------------------------
100,000 Oakley, Inc.(a) 3,450,000
- --------------------------------------------------------------------
150,000 Performance Food Group Co.(a) 3,487,500
- --------------------------------------------------------------------
285,000 Petco Animal Supplies, Inc.(a) 7,980,000
- --------------------------------------------------------------------
59,900 Proffitt's, Inc.(a) 1,400,162
- --------------------------------------------------------------------
20,000 Regis Corp.(a) 455,000
- --------------------------------------------------------------------
425,000 Sports Authority, Inc. (The)(a) 9,243,750
- --------------------------------------------------------------------
300,000 Sunglass Hut International, Inc.(a) 8,175,000
- --------------------------------------------------------------------
150,000 Zale Corp.(a) 2,212,500
- --------------------------------------------------------------------
135,080,675
- --------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS - 0.40%
100,000 Dynatech Corp.(a) 1,500,000
- --------------------------------------------------------------------
200,000 Input/Output, Inc.(a) 7,475,000
- --------------------------------------------------------------------
8,975,000
- --------------------------------------------------------------------
SEMICONDUCTORS - 14.34%
129,100 Advanced Technology Materials, Inc.(a) 1,403,963
- --------------------------------------------------------------------
190,000 Altera Corp.(a) 11,495,000
- --------------------------------------------------------------------
125,000 ASM Lithography Holding N.V.(a) 6,203,125
- --------------------------------------------------------------------
300,000 Atmel Corp.(a) 9,375,000
- --------------------------------------------------------------------
250,000 Burr-Brown Corp.(a) 8,125,000
- --------------------------------------------------------------------
300,000 Chips and Technologies, Inc.(a) 2,625,000
- --------------------------------------------------------------------
130,000 Cirrus Logic, Inc.(a) 5,476,250
- --------------------------------------------------------------------
500,000 Computer Products, Inc.(a) 5,812,500
- --------------------------------------------------------------------
225,000 Credence Systems Corp.(a) 8,409,375
- --------------------------------------------------------------------
350,000 Cypress Semiconductor Corp.(a) 12,337,500
- --------------------------------------------------------------------
265,000 Elantec Semiconductor, Inc.(a) 1,921,250
- --------------------------------------------------------------------
85,000 Electroglas, Inc.(a) 5,971,250
- --------------------------------------------------------------------
14,900 ESS Technology, Inc.(a) 447,000
- --------------------------------------------------------------------
250,000 Exar Corp.(a) 5,937,500
- --------------------------------------------------------------------
270,000 FSI International, Inc.(a) 6,412,500
- --------------------------------------------------------------------
95,000 GaSonics International Corp.(a) 3,135,000
- --------------------------------------------------------------------
220,000 HADCO Corp.(a) 6,160,000
- --------------------------------------------------------------------
</TABLE>
FS-51
<PAGE> 139
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Semiconductors - (continued)
250,000 Information Storage Devices, Inc.(a) $ 5,437,500
- -------------------------------------------------------------------
600,000 Integrated Device Technology, Inc.(a) 11,400,000
- -------------------------------------------------------------------
150,000 Integrated Process Equipment Corp.(a) 5,568,750
- -------------------------------------------------------------------
175,000 International Rectifier Corp.(a) 7,896,875
- -------------------------------------------------------------------
400,000 Jabil Circuit, Inc.(a) 6,750,000
- -------------------------------------------------------------------
275,000 KEMET Corp.(a) 9,487,500
- -------------------------------------------------------------------
150,000 KLA Instruments Corp.(a) 6,412,500
- -------------------------------------------------------------------
150,000 LAM Research Corp.(a) 9,131,250
- -------------------------------------------------------------------
214,800 Lattice Semiconductor Corp.(a) 8,430,900
- -------------------------------------------------------------------
200,000 Linear Technology Corp. 8,750,000
- -------------------------------------------------------------------
200,000 LSI Logic Corp.(a) 9,425,000
- -------------------------------------------------------------------
81,000 Maxim Integrated Products, Inc.(a) 6,054,750
- -------------------------------------------------------------------
400,000 MEMC Electronic Materials, Inc.(a) 12,800,000
- -------------------------------------------------------------------
142,200 Merix Corp.(a) 5,261,400
- -------------------------------------------------------------------
100,000 Novellus Systems, Inc.(a) 6,887,500
- -------------------------------------------------------------------
350,000 Paradigm Technology, Inc.(a) 7,700,000
- -------------------------------------------------------------------
97,500 Photronics, Inc.(a) 2,876,250
- -------------------------------------------------------------------
125,000 Sanmina Corp.(a) 6,750,000
- -------------------------------------------------------------------
336,400 SCI Systems, Inc.(a) 11,816,050
- -------------------------------------------------------------------
300,000 Sierra Semiconductor Corp.(a) 5,362,500
- -------------------------------------------------------------------
200,000 Silicon Valley Group, Inc.(a) 6,475,000
- -------------------------------------------------------------------
180,200 Tencor Instruments(a) 7,681,025
- -------------------------------------------------------------------
350,000 Tower Semiconductor Ltd.(a) 10,587,500
- -------------------------------------------------------------------
227,200 Triquint Semiconductor, Inc.(a) 5,168,800
- -------------------------------------------------------------------
350,000 Tylan General, Inc.(a) 5,600,000
- -------------------------------------------------------------------
203,200 Ultratech Stepper, Inc.(a) 8,128,000
- -------------------------------------------------------------------
400,000 Vitesse Semiconductor Corp.(a) 4,700,000
- -------------------------------------------------------------------
475,000 VLSI Technology, Inc.(a) 11,162,500
- -------------------------------------------------------------------
200,000 Zilog, Inc.(a) 7,100,000
- -------------------------------------------------------------------
322,048,763
- -------------------------------------------------------------------
</TABLE>
FS-52
<PAGE> 140
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
SHOES & RELATED APPAREL - 0.36%
145,000 Maxwell Shoe Co., Inc. - Class A $ 652,500
- -------------------------------------------------------------------
250,000 Wolverine World Wide, Inc. 7,500,000
- -------------------------------------------------------------------
8,152,500
- -------------------------------------------------------------------
STEEL - 0.13%
34,100 J & L Specialty Steel, Inc. 558,388
- -------------------------------------------------------------------
112,500 Synalloy Corp. 2,306,250
- -------------------------------------------------------------------
2,864,638
- -------------------------------------------------------------------
TELECOMMUNICATIONS - 5.99%
140,000 ADC Telecommunications, Inc.(a) 5,600,000
- -------------------------------------------------------------------
150,000 Allen Group, Inc.(a) 3,675,000
- -------------------------------------------------------------------
200,000 Andrew Corp.(a) 8,450,000
- -------------------------------------------------------------------
225,000 Aspect Telecommunications Corp.(a) 7,734,375
- -------------------------------------------------------------------
406,250 Brightpoint, Inc.(a) 7,718,750
- -------------------------------------------------------------------
57,500 Brite Voice Systems, Inc.(a) 955,938
- -------------------------------------------------------------------
150,000 DSC Communications Corp.(a) 5,550,000
- -------------------------------------------------------------------
450,000 EIS International, Inc.(a) 8,325,000
- -------------------------------------------------------------------
75,000 Glenayre Technologies, Inc.(a) 4,818,750
- -------------------------------------------------------------------
285,000 Inter-Tel, Inc.(a) 4,239,375
- -------------------------------------------------------------------
160,000 LCI International, Inc.(a) 2,880,000
- -------------------------------------------------------------------
150,000 Microdyne Corp.(a) 4,162,500
- -------------------------------------------------------------------
300,000 Nera AS-ADR(a) 10,650,000
- -------------------------------------------------------------------
170,900 Octel Communications Corp.(a) 5,831,962
- -------------------------------------------------------------------
174,300 Periphonics Corp.(a) 4,270,350
- -------------------------------------------------------------------
75,000 Premisys Communications, Inc.(a) 6,712,500
- -------------------------------------------------------------------
150,000 StrataCom, Inc.(a) 9,225,000
- -------------------------------------------------------------------
223,800 Tekelec(a) 3,245,100
- -------------------------------------------------------------------
75,200 Tel-Save Holdings, Inc.(a) 1,043,400
- -------------------------------------------------------------------
100,000 Tellabs, Inc.(a) 3,400,000
- -------------------------------------------------------------------
300,000 Teltrend, Inc.(a) 8,850,000
- -------------------------------------------------------------------
175,000 TESSCO Technologies, Inc.(a) 4,593,750
- -------------------------------------------------------------------
200,000 Transaction Network Services, Inc.(a) 4,700,000
- -------------------------------------------------------------------
200,000 U.S. Long Distance Corp.(a) 2,575,000
- -------------------------------------------------------------------
300,000 VTEL Corp.(a) 5,400,000
- -------------------------------------------------------------------
134,606,750
- -------------------------------------------------------------------
</TABLE>
FS-53
<PAGE> 141
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
TEXTILES - 1.27%
100,000 Cutter & Buck, Inc.(a) $ 650,000
- --------------------------------------------------------------------------
225,000 Nautica Enterprises, Inc.(a) 7,706,250
- --------------------------------------------------------------------------
212,100 Quicksilver, Inc.(a) 6,575,100
- --------------------------------------------------------------------------
125,000 St. John's Knits, Inc. 5,984,375
- --------------------------------------------------------------------------
198,600 Tommy Hilfiger Corp.(a) 7,571,625
- --------------------------------------------------------------------------
28,487,350
- --------------------------------------------------------------------------
TRANSPORTATION - 0.12%
80,000 Fritz Companies, Inc.(a) 2,800,000
- --------------------------------------------------------------------------
Total Common Stocks 1,968,631,064
- --------------------------------------------------------------------------
PRINCIPAL
AMOUNT
U.S. TREASURY SECURITIES - 11.32%
U.S. TREASURY BILLS - 11.14%(b)
$ 68,000,000(e) 5.41%, 01/11/96 67,297,560
- --------------------------------------------------------------------------
185,000,000(e) 5.415%, 01/18/96 182,900,250
- --------------------------------------------------------------------------
250,197,810
- --------------------------------------------------------------------------
U.S. TREASURY NOTES - 0.18%
4,000,000 4.625%, 02/29/96 3,988,640
- --------------------------------------------------------------------------
Total U.S. Treasury Securities 254,186,450
- --------------------------------------------------------------------------
REPURCHASE AGREEMENT - 2.17%(c)
48,714,848 Daiwa Securities America Inc., 5.90%,
11/01/95(d) 48,714,848
- --------------------------------------------------------------------------
TOTAL INVESTMENTS - 101.16% 2,271,532,362
- --------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - (1.16%) (25,978,432)
- --------------------------------------------------------------------------
NET ASSETS - 100.00% $2,245,553,930
==========================================================================
</TABLE>
Abbreviations:
ADR - American Depository Receipts
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102 percent of the sales price of
the repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(d) Joint repurchase agreement entered into 10/31/95 with a maturing value of
$401,494,601. Collateralized by $353,853,000 U.S. Treasury obligations,
8.375% due 08/15/08.
(e) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 6.
See Notes to Financial Statements.
FS-54
<PAGE> 142
Financials
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $1,831,391,083) $2,271,532,362
- ------------------------------------------------------------------
Foreign currencies, at market value (cost $1,871) 1,913
- ------------------------------------------------------------------
Receivables for:
Investments sold 3,491,766
- ------------------------------------------------------------------
Capital stock sold 7,728,042
- ------------------------------------------------------------------
Dividends and interest 153,869
- ------------------------------------------------------------------
Investment for deferred compensation plan 12,996
- ------------------------------------------------------------------
Other assets 163,005
- ------------------------------------------------------------------
Total assets 2,283,083,953
- ------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 27,426,798
- ------------------------------------------------------------------
Capital stock reacquired 6,342,346
- ------------------------------------------------------------------
Variation margin 1,282,500
- ------------------------------------------------------------------
Deferred compensation 12,996
- ------------------------------------------------------------------
Accrued advisory fees 1,190,410
- ------------------------------------------------------------------
Accrued administrative services fees 5,770
- ------------------------------------------------------------------
Accrued distribution fees 738,680
- ------------------------------------------------------------------
Accrued directors' fees 1,536
- ------------------------------------------------------------------
Accrued transfer agent fees 300,608
- ------------------------------------------------------------------
Accrued operating expenses 228,379
- ------------------------------------------------------------------
Total liabilities 37,530,023
- ------------------------------------------------------------------
Net assets applicable to shares outstanding $2,245,553,930
==================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Authorized 750,000,000
- ------------------------------------------------------------------
Outstanding 55,963,906
==================================================================
Net asset value and redemption price per share $ 40.13
==================================================================
Offering price per share:
(Net asset value of $40.13/94.50%) $ 42.47
==================================================================
</TABLE>
See Notes to Financial Statements.
FS-55
<PAGE> 143
Financials
STATEMENT OF OPERATIONS
For the year ended October 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 9,289,821
- ----------------------------------------------------------------------------
Dividends 1,512,937
- ----------------------------------------------------------------------------
Total investment income 10,802,758
- ----------------------------------------------------------------------------
EXPENSES:
Advisory fees 7,763,206
- ----------------------------------------------------------------------------
Custodian fees 142,952
- ----------------------------------------------------------------------------
Directors' fees 13,172
- ----------------------------------------------------------------------------
Distribution fees 3,023,937
- ----------------------------------------------------------------------------
Administrative services fees 71,528
- ----------------------------------------------------------------------------
Transfer agent fees 2,258,078
- ----------------------------------------------------------------------------
Other 637,102
- ----------------------------------------------------------------------------
Total expenses 13,909,975
- ----------------------------------------------------------------------------
Less fees waived by advisor (788,943)
- ----------------------------------------------------------------------------
Net expenses 13,121,032
- ----------------------------------------------------------------------------
Net investment income (loss) (2,318,274)
- ----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FUTURES CONTRACTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on sales of:
Investment securities 49,680,708
- ----------------------------------------------------------------------------
Futures contracts 2,612,770
- ----------------------------------------------------------------------------
Foreign currencies (3,040)
- ----------------------------------------------------------------------------
52,290,438
- ----------------------------------------------------------------------------
Unrealized appreciation of:
Investment securities 307,131,729
- ----------------------------------------------------------------------------
Futures contracts 7,624,500
- ----------------------------------------------------------------------------
Foreign currencies 42
- ----------------------------------------------------------------------------
314,756,271
- ----------------------------------------------------------------------------
Net gain on investment securities, futures contracts and for-
eign currencies 367,046,709
- ----------------------------------------------------------------------------
Net increase in net assets resulting from operations $364,728,435
============================================================================
</TABLE>
See Notes to Financial Statements.
FS-56
<PAGE> 144
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (2,318,274) $ (1,178,968)
- -------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities, futures contracts and foreign
currencies 52,290,438 (2,796,834)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investment
securities, futures contracts and foreign
currencies 314,756,271 95,272,310
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 364,728,435 91,296,508
- -------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains on investment securities -- (25,209)
- -------------------------------------------------------------------------------
Net increase from capital stock transactions 1,193,587,768 378,710,145
- -------------------------------------------------------------------------------
Net increase in net assets 1,558,316,203 469,981,444
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 687,237,727 217,256,283
- -------------------------------------------------------------------------------
End of period $2,245,553,930 $687,237,727
===============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,748,790,238 $557,508,624
- -------------------------------------------------------------------------------
Undistributed net investment income (loss) (16,714) --
- -------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales
of investment securities and foreign
currencies 49,014,585 (3,280,447)
- -------------------------------------------------------------------------------
Unrealized appreciation of investment
securities and foreign currencies 447,765,821 133,009,550
- -------------------------------------------------------------------------------
$2,245,553,930 $687,237,727
===============================================================================
</TABLE>
See Notes to Financial Statements.
FS-57
<PAGE> 145
Financials
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Aggressive Growth Fund (the "Fund") is a series portfolio of AIM Equity
Funds, Inc. (the "Company"). The Company is a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of four diversified
portfolios: AIM Aggressive Growth Fund, AIM Weingarten Fund, AIM Charter Fund
and AIM Constellation Fund. The Fund has temporarily discontinued public sales
of its shares to new investors. 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 following is a summary of 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 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 mean between the closing bid and asked prices on that day. 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 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 of the closing bid and asked prices. Securities for
which market quotations are not readily available are valued at fair value
as determined in good faith by or under the supervision of the Company's
officers in a manner specifically authorized by the Board of Directors of
the Company. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value. Generally,
trading in foreign securities is substantially completed each day at various
times prior to the close of the New York Stock Exchange. 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 New York Stock Exchange.
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 New York Stock Exchange which will 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 Directors.
B. Securities Transactions, Investment Income and Distributions -- 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 and distributions to
shareholders are recorded on the ex-dividend date. On October 31, 1995,
$4,594 was reclassified from undistributed net realized gains to
undistributed net investment income (loss) as a result of differing book/tax
treatments of foreign currency transactions. In addition, $2,306,154 was
reclassified from net investment income (loss) to paid-in capital as a
result of a net operating tax loss. Net assets of the Fund were unaffected
by the reclassifications discussed above.
C. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Stock Index Futures Contracts -- The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the
Fund's basis in the contract. Risks include the possibility of an illiquid
market and that a change in the value of contracts may not correlate with
changes in the value of the securities being hedged.
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.
F. Foreign Currency Contracts -- A forward 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 forward 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.
FS-58
<PAGE> 146
Financials
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million. This agreement
requires AIM to reduce its fees or, if necessary, make payments to the Fund to
the extent required to satisfy any expense limitations imposed by the
securities laws or regulations thereunder of any state in which the Fund's
shares are qualified for sale. During the year ended October 31, 1995, AIM
waived fees of $788,943. The master investment advisory agreement was amended
on November 14, 1994 with respect to the Fund. The amendment to the master
investment advisory agreement was approved by the Fund's shareholders at a
special meeting held on November 14, 1994. Of the 12,005,913 shares voted at
the meeting, 8,253,959 shares voted for the amendment, 3,243,846 voted against
the amendment, and 508,108 shares abstained. Under the previous terms, the Fund
paid an advisory fee to AIM at the annual rate of 0.60% of the first $200
million of the Fund's average daily net assets, plus 0.50% of the Fund's
average daily net assets in excess of $200 million to and including $500
million, plus 0.40% of the Fund's average daily net assets in excess of $500
million to and including $1 billion, plus 0.30% of the Fund's average daily net
assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the year ended October 31,
1995, AIM was reimbursed $71,528 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency services to the Fund. During the year ended October 31, 1995,
AFS was paid $1,198,145 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund. The Company has adopted a Plan pursuant to Rule 12b-1 under the 1940 Act
(the "Plan"), whereby the Fund pays AIM Distributors an annual rate of 0.25% of
the Fund's average daily net assets as compensation for services related to the
sales and distribution of the Fund's shares. The Plan provides that payments to
dealers and 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, may be characterized as a
service fee. Any amounts not paid as a service fee under the Plan would
constitute an asset-based sales charge. The Plan also imposes a cap on the
total amount of sales charges, including asset-based sales charges, that may be
paid by the Company with respect to the Fund's shares. During the year ended
October 31, 1995, the Fund paid AIM Distributors $3,023,937 as compensation
under the Plan.
AIM Distributors received commissions of $8,232,597 from sales of shares of
the Fund's capital stock during the year ended October 31, 1995. Such
commissions are not an expense of the Fund. They are deducted from, and are not
included in, the proceeds from sales of capital stock. Certain officers and
directors of the Company are officers and directors of AIM, AFS and AIM
Distributors.
During the year ended October 31, 1995, the Fund paid legal fees of $4,657
for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3 - AFFILIATED COMPANY TRANSACTIONS
Affiliated issuers, as defined in the 1940 Act, are issuers in which the Fund
held 5% or more of the outstanding voting securities. A summary of transactions
for each issuer who is or was an affiliate at or during the year ended October
31, 1995, were as follows:
<TABLE>
<CAPTION>
SHARE BALANCE REALIZED SHARE BALANCE MARKET VALUE
OCTOBER 31, PURCHASES SALES GAIN DIVIDEND OCTOBER 31, OCTOBER 31,
NAME OF ISSUER: 1994 COST COST (LOSS) INCOME 1995 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Arbor Health Care Co. -0- $7,817,338 $191,250 $(6,250) -0- 390,000 $6,630,000
- --------------------------------------------------------------------------------------------------------
Brightpoint Inc. -0- 6,938,635 -0- -0- -0- 406,250 7,718,750
- --------------------------------------------------------------------------------------------------------
Cannondale Corp. -0- 6,794,126 -0- -0- -0- 400,000 6,400,000
- --------------------------------------------------------------------------------------------------------
Daka International, Inc. -0- 8,952,002 -0- -0- -0- 300,000 9,112,500
- --------------------------------------------------------------------------------------------------------
General Acceptance Corp. -0- 3,547,890 -0- -0- -0- 153,800 4,075,700
- --------------------------------------------------------------------------------------------------------
General Scanning, Inc. -0- 2,932,596 -0- -0- -0- 224,700 2,696,400
- --------------------------------------------------------------------------------------------------------
Paradigm Technology,
Inc. -0- 10,111,543 -0- -0- -0- 350,000 7,700,000
- --------------------------------------------------------------------------------------------------------
Softdesk, Inc. 175,000 2,417,125 -0- -0- -0- 290,000 6,742,500
- --------------------------------------------------------------------------------------------------------
Tylan General, Inc. -0- 3,553,875 -0- -0- -0- 350,000 5,600,000
========================================================================================================
</TABLE>
FS-59
<PAGE> 147
Financials
NOTE 4 - BANK BORROWINGS
The Fund has a $14,900,000 committed line of credit with a financial
institution syndicate with Chemical Bank of New York as the administrative
agent. Interest on borrowings under the line of credit is payable on maturity
or prepayment date. During the period July 20, 1995 (effective date of Credit
Agreement) through October 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's
commitment.
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 October 31,
1995 was $1,518,659,088 and $556,317,049, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1995, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $485,803,064
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (45,844,209)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $439,958,855
===========================================================================
</TABLE>
Cost of investments for tax purposes is $1,831,573,507.
NOTE 6 - FUTURES CONTRACTS
On October 31, 1995, $10,003,000 U.S. Treasury bills were pledged as collateral
to cover margin requirements for futures contracts.
Futures contracts outstanding at October 31, 1995:
(Contracts - $500 times index/delivery month/commitment)
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
------------
<S> <C>
S&P 500 Index 900 contracts/Dec/buy $7,624,500
=================================================
</TABLE>
NOTE 7 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if
so elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 8 - CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the years ended October
31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold 53,971,580 $1,912,251,434 37,245,080 $ 938,440,033
- --------------------------------------------------------------------------------
Issued as reinvestment
of dividends -- -- 759 16,782
- --------------------------------------------------------------------------------
Reacquired (22,228,120) (718,663,666) (22,135,293) (559,746,670)
- --------------------------------------------------------------------------------
31,743,460 $1,193,587,768 15,110,546 $ 378,710,145
================================================================================
</TABLE>
FS-60
<PAGE> 148
Financials
NOTE 9 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of the Fund
outstanding during each of the years in the two-year period ended October 31,
1995, the ten month period ended October 31, 1993 and each of the years in the
seven-year period ended December 31, 1992.
<TABLE>
<CAPTION>
OCTOBER 31,
-----------------------------------
1995 1994 1993
---------- -------- --------
<S> <C> <C> <C>
Net asset value,
beginning of period $ 28.37 $ 23.85 $ 18.52
- ----------------------- ---------- -------- --------
Income from investment
operations:
Net investment income
(loss) (0.04) (0.05) (0.02)
- ----------------------- ---------- -------- --------
Net gains (losses) on
securities
(both realized and
unrealized) 11.80 4.57 5.35
- ----------------------- ---------- -------- --------
Total from investment
operations 11.76 4.52 5.33
- ----------------------- ---------- -------- --------
Less distributions:
Dividends from net
investment income -- -- --
- ----------------------- ---------- -------- --------
Distributions from
capital gains -- -- --
- ----------------------- ---------- -------- --------
Total distributions -- -- --
- ----------------------- ---------- -------- --------
Net asset value, end of
period $ 40.13 $ 28.37 $ 23.85
======================= ========== ======== ========
Total return(b) 41.45% 18.96% 28.78%
======================= ========== ======== ========
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $2,245,554 $687,238 $217,256
======================= ========== ======== ========
Ratio of expenses to
average net assets(c) 1.08%(e) 1.07% 1.00%(f)
======================= ========== ======== ========
Ratio of net investment
income (loss) to
average net assets(d) (0.19)%(e) (0.26)% (0.24)%(f)
======================= ========== ======== ========
Portfolio turnover rate 52% 75% 61%
======================= ========== ======== ========
<CAPTION>
DECEMBER 31,
-----------------------------------------------------------------
1992(a) 1991 1990 1989 1988 1987 1986
--------- --------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 16.06 $ 11.85 $13.30 $ 11.07 $ 9.86 $ 12.10 $ 12.61
- ------------------------- --------- --------- -------- -------- -------- --------- --------
Income from investment
operations:
Net investment income
(loss) (0.03) (0.04) 0.08 0.03 0.05 -- 0.01
- ------------------------- --------- --------- -------- -------- -------- --------- --------
Net gains (losses) on
securities
(both realized and
unrealized) 3.41 7.29 (0.95) 2.28 1.21 (1.38) 0.05
- ------------------------- --------- --------- -------- -------- -------- --------- --------
Total from investment
operations 3.38 7.25 (0.87) 2.31 1.26 (1.38) 0.06
- ------------------------- --------- --------- -------- -------- -------- --------- --------
Less distributions:
Dividends from net
investment income -- -- (0.09) (0.03) (0.05) -- (0.08)
- ------------------------- --------- --------- -------- -------- -------- --------- --------
Distributions from
capital gains (0.92) (3.04) (0.49) (0.05) -- (0.86) (0.49)
- ------------------------- --------- --------- -------- -------- -------- --------- --------
Total distributions (0.92) (3.04) (0.58) (0.08) (0.05) (0.86) (0.57)
- ------------------------- --------- --------- -------- -------- -------- --------- --------
Net asset value, end of
period $ 18.52 $ 16.06 $11.85 $ 13.30 $ 11.07 $ 9.86 $ 12.10
========================= ========= ========= ======== ======== ======== ========= ========
Total return(b) 21.34% 63.90% (6.50)% 20.89% 12.77% (11.52)% 0.37%
========================= ========= ========= ======== ======== ======== ========= ========
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $38,238 $16,218 $9,234 $11,712 $12,793 $13,991 $18,547
========================= ========= ========= ======== ======== ======== ========= ========
Ratio of expenses to
average net assets(c) 1.25% 1.25% 1.25% 1.25% 1.22% 1.20% 1.19%
========================= ========= ========= ======== ======== ======== ========= ========
Ratio of net investment
income (loss) to
average net assets(d) (0.59)% (0.31)% 0.62% 0.24% 0.38% 0.01% 0.11%
========================= ========= ========= ======== ======== ======== ========= ========
Portfolio turnover rate 164% 165% 137% 69% 56% 118% 106%
========================= ========= ========= ======== ======== ======== ========= ========
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios of expenses to average net assets prior to reduction of advisory
fees and expense reimbursements were 1.15%, 1.09%, 1.17% (annualized),
1.65%, 1.83%, 1.99%, 1.80%, 1.56%, 1.29% and 1.32% for 1995-86,
respectively.
(d) Ratios of net investment income (loss) to average net assets prior to
reduction of advisory fees and expense reimbursements were (0.26)%,
(0.28)%, (0.41)% (annualized), (0.99)%, (0.89)%, (0.11)%, (0.31)%, 0.04%,
(0.08)% and (0.02)%, for 1995-86, respectively.
(e) Ratios are based on average net assets of $1,209,574,872.
(f) Annualized.
FS-61
<PAGE> 149
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Constellation Fund:
We have audited the accompanying statement of assets and liabilities of the AIM
Constellation Fund (a portfolio of AIM Equity Funds, Inc.), including the
schedule of investments, as of October 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the seven-year period then ended, the ten
months ended October 31, 1988, and the year ended December 31, 1987. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Constellation Fund as of October 31, 1995, and the results of its operations
for the year then ended, the changes in its net assets for each of the years in
the two-year period then ended, and the financial highlights for each of the
years in the seven-year period then ended, the ten months ended October 31,
1988, and the year ended December 31, 1987, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 8, 1995
FS-62
<PAGE> 150
Financials
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-87.10%
ADVERTISING/BROADCASTING-0.35%
228,200 Belo (A.H.) Corp. $ 7,901,425
- --------------------------------------------------------------------
525,000 Infinity Broadcasting Corp.-Class A(a) 17,062,500
- --------------------------------------------------------------------
24,963,925
- --------------------------------------------------------------------
AUTOMOBILE/TRUCKS PARTS & TIRES-0.37%
400,000 Echlin Inc. 14,300,000
- --------------------------------------------------------------------
625,000 Mark IV Industries, Inc. 12,187,500
- --------------------------------------------------------------------
26,487,500
- --------------------------------------------------------------------
BEVERAGES-0.50%
750,000 Canandaigua Wine Co., Inc.-Class A(a) 36,000,000
- --------------------------------------------------------------------
BIOTECHNOLOGY-0.13%
102,400 Chiron Corp.(a) 9,318,400
- --------------------------------------------------------------------
BUILDING MATERIALS-0.11%
241,500 Black & Decker Corp. 8,180,812
- --------------------------------------------------------------------
BUSINESS SERVICES-1.73%
194,800 Equifax, Inc. 7,597,200
- --------------------------------------------------------------------
806,500 Healthcare COMPARE Corp.(a) 29,840,500
- --------------------------------------------------------------------
100,000 Interim Services Inc.(a) 2,975,000
- --------------------------------------------------------------------
1,300,000 Manpower Inc. 35,262,500
- --------------------------------------------------------------------
700,000 Olsten Corp. 26,950,000
- --------------------------------------------------------------------
900,691 Value Health, Inc.(a) 20,603,307
- --------------------------------------------------------------------
123,228,507
- --------------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.35%
928,700 Airgas Inc.(a) 24,726,637
- --------------------------------------------------------------------
COMPUTER MINI/PCS-2.95%
1,050,000 COMPAQ Computer Corp.(a) 58,537,500
- --------------------------------------------------------------------
2,000,000 Dell Computer Corp.(a) 93,250,000
- --------------------------------------------------------------------
750,000 Sun Microsystems, Inc.(a) 58,500,000
- --------------------------------------------------------------------
210,287,500
- --------------------------------------------------------------------
COMPUTER NETWORKING-5.77%
500,000 ALANTEC Corp.(a) 17,875,000
- --------------------------------------------------------------------
200,000 Ascend Communications, Inc.(a) 13,000,000
- --------------------------------------------------------------------
</TABLE>
FS-63
<PAGE> 151
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Computer Networking-(continued)
1,000,000 Bay Networks, Inc.(a) $ 66,250,000
- ---------------------------------------------------------------------
550,000 Cabletron Systems, Inc.(a) 43,243,750
- ---------------------------------------------------------------------
900,000 Cheyenne Software, Inc.(a) 18,787,500
- ---------------------------------------------------------------------
500,000 CIDCO, Inc.(a) 14,812,500
- ---------------------------------------------------------------------
1,200,000 Cisco Systems, Inc.(a) 93,000,000
- ---------------------------------------------------------------------
812,800 FORE Systems, Inc.(a) 43,078,400
- ---------------------------------------------------------------------
500,000 Network Equipment Technologies, Inc.(a) 16,312,500
- ---------------------------------------------------------------------
336,800 Optical Data Systems, Inc.(a) 10,061,900
- ---------------------------------------------------------------------
1,600,000 3Com Corp.(a) 75,200,000
- ---------------------------------------------------------------------
411,621,550
- ---------------------------------------------------------------------
COMPUTER PERIPHERALS-4.77%
800,000 Adaptec Inc.(a) 35,600,000
- ---------------------------------------------------------------------
1,125,000 Alliance Semiconductor Corp.(a) 34,593,750
- ---------------------------------------------------------------------
615,500 Cerner, Inc.(a) 16,310,750
- ---------------------------------------------------------------------
600,000 Digi International, Inc.(a) 16,050,000
- ---------------------------------------------------------------------
200,000 Filenet Corp.(a) 9,075,000
- ---------------------------------------------------------------------
257,200 Komag, Inc.(a) 14,660,400
- ---------------------------------------------------------------------
800,000 Microchip Technology, Inc.(a) 31,750,000
- ---------------------------------------------------------------------
400,000 Oak Technology, Inc.(a) 21,900,000
- ---------------------------------------------------------------------
1,604,600 Oracle Systems Corp.(a) 70,000,675
- ---------------------------------------------------------------------
500,000 Read-Rite Corp.(a) 17,437,500
- ---------------------------------------------------------------------
600,000 Seagate Technology Inc.(a) 26,850,000
- ---------------------------------------------------------------------
500,000 U.S. Robotics Corp.(a) 46,250,000
- ---------------------------------------------------------------------
340,478,075
- ---------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-10.80%
1,025,000 Acclaim Entertainment, Inc.(a) 24,215,625
- ---------------------------------------------------------------------
505,900 Adobe Systems, Inc. 28,836,300
- ---------------------------------------------------------------------
1,000,000 BMC Software, Inc.(a) 35,625,000
- ---------------------------------------------------------------------
500,000 Broderbund Software, Inc.(a) 34,687,500
- ---------------------------------------------------------------------
1,125,000 Cadence Design Systems, Inc.(a) 36,281,250
- ---------------------------------------------------------------------
879,300 Ceridian Corp.(a) 38,249,550
- ---------------------------------------------------------------------
1,500,000 Computer Associates International, Inc. 82,500,000
- ---------------------------------------------------------------------
2,000,000 Computervision Corp.(a) 23,500,000
- ---------------------------------------------------------------------
550,000 Electronic Arts, Inc.(a) 20,143,750
- ---------------------------------------------------------------------
418,000 Fiserv, Inc.(a) 10,763,500
- ---------------------------------------------------------------------
741,200 FTP Software, Inc.(a) 20,012,400
- ---------------------------------------------------------------------
</TABLE>
FS-64
<PAGE> 152
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Computer Software/Services-(continued)
600,000 HBO & Co. $ 42,450,000
- -----------------------------------------------------------------------
200,000 Hyperion Software Corp.(a) 9,850,000
- -----------------------------------------------------------------------
1,200,000 Informix Corp.(a) 34,950,000
- -----------------------------------------------------------------------
300,000 Microsoft Corp.(a) 30,000,000
- -----------------------------------------------------------------------
642,900 Network General Corp.(a) 26,680,350
- -----------------------------------------------------------------------
700,000 PairGain Technologies, Inc.(a) 29,925,000
- -----------------------------------------------------------------------
800,000 Parametric Technology Corp.(a) 53,500,000
- -----------------------------------------------------------------------
300,000 Platinum Technology, Inc.(a) 5,475,000
- -----------------------------------------------------------------------
600,000 Policy Management Systems Corp.(a) 28,275,000
- -----------------------------------------------------------------------
500,000 Rational Software Corp.(a) 7,812,500
- -----------------------------------------------------------------------
737,300 SoftKey International Inc.(a) 23,224,950
- -----------------------------------------------------------------------
500,000 Sterling Software, Inc.(a) 23,062,500
- -----------------------------------------------------------------------
600,000 Sybase, Inc.(a) 23,550,000
- -----------------------------------------------------------------------
1,000,000 Symantec Corp.(a) 24,312,500
- -----------------------------------------------------------------------
1,415,700 Synopsys, Inc.(a) 53,088,750
- -----------------------------------------------------------------------
770,971,425
- -----------------------------------------------------------------------
CONGLOMERATES-0.18%
205,991 Tyco International Ltd. 12,513,953
- -----------------------------------------------------------------------
CONSUMER NON-DURABLES-0.16%
252,000 Department 56, Inc.(a) 11,434,500
- -----------------------------------------------------------------------
COSMETICS & TOILETRIES-0.47%
1,360,000 General Nutrition, Inc.(a) 33,830,000
- -----------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-2.46%
200,000 Ametek, Inc. 3,525,000
- -----------------------------------------------------------------------
600,000 Amphenol Corp.(a) 12,975,000
- -----------------------------------------------------------------------
146,200 AVX Corp. 4,550,475
- -----------------------------------------------------------------------
300,000 Methode Electronics, Inc. 6,900,000
- -----------------------------------------------------------------------
156,250 Molex, Inc. 5,156,250
- -----------------------------------------------------------------------
234,375 Molex, Inc.-Class A 7,207,031
- -----------------------------------------------------------------------
187,500 Parker-Hannifin Corp. 6,328,125
- -----------------------------------------------------------------------
300,000 Recoton Corp.(a) 6,675,000
- -----------------------------------------------------------------------
750,000 Symbol Technologies, Inc.(a) 26,156,250
- -----------------------------------------------------------------------
400,000 Tektronix, Inc. 23,700,000
- -----------------------------------------------------------------------
2,177,800 Teradyne, Inc.(a) 72,684,075
- -----------------------------------------------------------------------
175,857,206
- -----------------------------------------------------------------------
</TABLE>
FS-65
<PAGE> 153
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
ELECTRONIC/PC DISTRIBUTORS-0.89%
650,000 Arrow Electronics, Inc.(a) $ 32,987,500
- --------------------------------------------------------------------
600,000 Avnet, Inc. 30,225,000
- --------------------------------------------------------------------
63,212,500
- --------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-3.83%
500,000 ADVANTA Corp.-Class A 19,375,000
- --------------------------------------------------------------------
500,000 ADVANTA Corp.-Class B 17,875,000
- --------------------------------------------------------------------
1,100,000 Credit Acceptance Corp.(a) 25,850,000
- --------------------------------------------------------------------
650,000 First USA, Inc. 29,900,000
- --------------------------------------------------------------------
1,300,000 Green Tree Financial Corp. 34,612,500
- --------------------------------------------------------------------
1,600,000 MBNA Corp. 59,000,000
- --------------------------------------------------------------------
1,220,800 Medaphis Corp.(a) 38,760,400
- --------------------------------------------------------------------
2,500,000 Mercury Finance Co. 48,125,000
- --------------------------------------------------------------------
273,497,900
- --------------------------------------------------------------------
FUNERAL SERVICES-1.46%
814,100 Loewen Group, Inc. 32,602,181
- --------------------------------------------------------------------
1,366,400 Service Corp. International 54,826,800
- --------------------------------------------------------------------
500,000 Stewart Enterprises, Inc.-Class A 16,875,000
- --------------------------------------------------------------------
104,303,981
- --------------------------------------------------------------------
GAMING-0.69%
1,000,000 Mirage Resorts, Inc.(a) 32,750,000
- --------------------------------------------------------------------
750,000 Players International, Inc.(a) 8,062,500
- --------------------------------------------------------------------
476,200 Trump Hotels & Casino Resorts, Inc.(a) 8,095,400
- --------------------------------------------------------------------
48,907,900
- --------------------------------------------------------------------
HOME BUILDING-0.34%
750,000 Clayton Homes, Inc. 19,687,500
- --------------------------------------------------------------------
125,000 Oakwood Homes Corp. 4,687,500
- --------------------------------------------------------------------
24,375,000
- --------------------------------------------------------------------
HOTELS/MOTELS-0.88%
145,900 Doubletree Corp.(a) 3,209,800
- --------------------------------------------------------------------
600,000 Hospitality Franchise Systems, Inc.(a) 36,750,000
- --------------------------------------------------------------------
750,000 La Quinta Inns, Inc. 19,312,500
- --------------------------------------------------------------------
162,500 Promus Companies Inc.(a) 3,575,000
- --------------------------------------------------------------------
62,847,300
- --------------------------------------------------------------------
</TABLE>
FS-66
<PAGE> 154
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
INSURANCE (LIFE & HEALTH)-0.07%
150,000 Equitable of Iowa Companies $ 5,250,000
- ------------------------------------------------------------------
LEISURE & RECREATION-0.46%
429,300 Avid Technology, Inc.(a) 18,781,875
- ------------------------------------------------------------------
500,000 Mattel, Inc. 14,375,000
- ------------------------------------------------------------------
33,156,875
- ------------------------------------------------------------------
MACHINE TOOLS-0.17%
400,000 Kennametal Inc. 12,450,000
- ------------------------------------------------------------------
MACHINERY (HEAVY)-0.08%
131,000 AGCO Corp. 5,862,250
- ------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.39%
600,000 Thermo Electron Corp.(a) 27,600,000
- ------------------------------------------------------------------
MEDICAL (DRUGS)-1.28%
1,000,000 Cardinal Health, Inc. 51,375,000
- ------------------------------------------------------------------
125,800 Forest Laboratories, Inc.(a) 5,204,975
- ------------------------------------------------------------------
1,000,000 Mylan Laboratories, Inc. 19,000,000
- ------------------------------------------------------------------
350,000 Watson Pharmaceuticals, Inc.(a) 15,662,500
- ------------------------------------------------------------------
91,242,475
- ------------------------------------------------------------------
MEDICAL (INSTRUMENTS/PRODUCTS)-3.00%
1,000,000 Biomet, Inc.(a) 16,625,000
- ------------------------------------------------------------------
910,400 Boston Scientific Corp.(a) 38,350,600
- ------------------------------------------------------------------
300,000 Cordis Corp.(a) 33,150,000
- ------------------------------------------------------------------
154,300 Heart Technology, Inc.(a) 4,397,550
- ------------------------------------------------------------------
500,800 Idexx Laboratories, Inc.(a) 20,407,600
- ------------------------------------------------------------------
689,000 Invacare Corp. 17,397,250
- ------------------------------------------------------------------
400,000 Medtronic Inc. 23,100,000
- ------------------------------------------------------------------
500,000 Nellcor, Inc.(a) 28,750,000
- ------------------------------------------------------------------
515,800 St. Jude Medical Inc.(a) 27,466,350
- ------------------------------------------------------------------
100,000 Stryker Corp. 4,512,500
- ------------------------------------------------------------------
214,156,850
- ------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-10.04%
400,000 American Medical Response, Inc.(a) 11,550,000
- ------------------------------------------------------------------
1,750,000 Apria Healthcare Group, Inc.(a) 37,843,750
- ------------------------------------------------------------------
1,128,000 Columbia/HCA Healthcare Corp. 55,413,000
- ------------------------------------------------------------------
900,000 Community Health Systems, Inc.(a) 28,575,000
- ------------------------------------------------------------------
</TABLE>
FS-67
<PAGE> 155
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Medical (Patient Services)-(continued)
500,000 Foundation Health Corp.(a) $ 21,187,500
- ---------------------------------------------------------------------------
700,000 Genesis Health Ventures, Inc.(a) 20,212,500
- ---------------------------------------------------------------------------
1,500,000 Health Care and Retirement Corp.(a) 44,062,500
- ---------------------------------------------------------------------------
1,792,125 Health Management Associates, Inc.-Class A(a) 38,530,688
- ---------------------------------------------------------------------------
732,600 Healthsource, Inc.(a) 38,827,800
- ---------------------------------------------------------------------------
2,500,000 Healthsouth Corp.(a) 65,312,500
- ---------------------------------------------------------------------------
1,250,000 Horizon Healthcare Corp.(a) 25,312,500
- ---------------------------------------------------------------------------
1,000,000 Integrated Health Services, Inc.(a) 22,875,000
- ---------------------------------------------------------------------------
1,300,000 Lincare Holdings Inc.(a) 32,337,500
- ---------------------------------------------------------------------------
600,000 Living Centers of America, Inc.(a) 15,525,000
- ---------------------------------------------------------------------------
1,250,000 Manor Care, Inc. 40,937,500
- ---------------------------------------------------------------------------
600,000 Omnicare Inc. 21,750,000
- ---------------------------------------------------------------------------
1,250,000 OrNda HealthCorp(a) 22,031,250
- ---------------------------------------------------------------------------
600,000 Oxford Health Plans, Inc.(a) 46,950,000
- ---------------------------------------------------------------------------
150,000 Pacificare Health Systems, Inc.-Class A(a) 10,575,000
- ---------------------------------------------------------------------------
150,000 Pacificare Health Systems, Inc.-Class B(a) 10,912,500
- ---------------------------------------------------------------------------
350,000 PhyCor, Inc.(a) 12,862,500
- ---------------------------------------------------------------------------
600,000 Quorum Health Group Inc.(a) 12,862,500
- ---------------------------------------------------------------------------
900,000 Sybron International Corp. 38,250,000
- ---------------------------------------------------------------------------
434,000 Theratx Inc.(a) 4,882,500
- ---------------------------------------------------------------------------
1,350,000 Vencor, Inc.(a) 37,462,500
- ---------------------------------------------------------------------------
717,041,488
- ---------------------------------------------------------------------------
OFFICE PRODUCTS-0.45%
300,000 Avery Dennison Corp. 13,425,000
- ---------------------------------------------------------------------------
517,100 Reynolds & Reynolds Co.-Class A 18,421,688
- ---------------------------------------------------------------------------
31,846,688
- ---------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.09%
400,000 Smith International, Inc.(a) 6,400,000
- ---------------------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.19%
250,000 Champion International Corp. 13,375,000
- ---------------------------------------------------------------------------
POLLUTION CONTROL-0.33%
225,000 Asyst Technologies, Inc.(a) 9,450,000
- ---------------------------------------------------------------------------
658,000 USA Waste Services, Inc.(a) 13,818,000
- ---------------------------------------------------------------------------
23,268,000
- ---------------------------------------------------------------------------
PUBLISHING-0.10%
187,900 Harcourt General, Inc. 7,445,538
- ---------------------------------------------------------------------------
</TABLE>
FS-68
<PAGE> 156
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
RESTAURANTS-0.74%
312,100 Applebee's International, Inc. $ 8,777,813
- ---------------------------------------------------------------------
850,000 Cracker Barrel Old Country Store, Inc. 14,450,000
- ---------------------------------------------------------------------
400,000 Morrison Restaurants Inc. 6,250,000
- ---------------------------------------------------------------------
750,000 Outback Steakhouse, Inc.(a) 23,531,250
- ---------------------------------------------------------------------
53,009,063
- ---------------------------------------------------------------------
RETAIL (FOOD & DRUG)-1.46%
300,000 Casey's General Stores, Inc. 6,900,000
- ---------------------------------------------------------------------
652,500 Eckerd Corp.(a) 25,855,313
- ---------------------------------------------------------------------
1,000,000 Kroger Co.(a) 33,375,000
- ---------------------------------------------------------------------
800,000 Safeway, Inc.(a) 37,800,000
- ---------------------------------------------------------------------
103,930,313
- ---------------------------------------------------------------------
RETAIL (STORES)-7.35%
696,500 AutoZone, Inc.(a) 17,238,375
- ---------------------------------------------------------------------
410,100 Baby Superstore, Inc.(a) 19,377,225
- ---------------------------------------------------------------------
1,000,000 Bed Bath & Beyond, Inc.(a) 31,250,000
- ---------------------------------------------------------------------
18,900 CDW Computer Centers, Inc.(a) 916,650
- ---------------------------------------------------------------------
625,000 Circuit City Stores, Inc. 20,859,375
- ---------------------------------------------------------------------
1,000,000 Consolidated Stores Corp.(a) 23,125,000
- ---------------------------------------------------------------------
572,200 Corporate Express, Inc.(a) 14,948,725
- ---------------------------------------------------------------------
1,399,975 Dollar General Corp. 34,299,387
- ---------------------------------------------------------------------
500,000 Gap, Inc. 19,687,500
- ---------------------------------------------------------------------
900,000 Gymboree Corp.(a) 20,362,500
- ---------------------------------------------------------------------
800,200 Heilig-Meyers Co. 14,703,675
- ---------------------------------------------------------------------
558,000 Kohl's Corp.(a) 25,319,250
- ---------------------------------------------------------------------
400,000 MacFrugals Bargains Close-Outs, Inc.(a) 4,750,000
- ---------------------------------------------------------------------
600,100 Men's Wearhouse, Inc. (The)(a) 23,403,900
- ---------------------------------------------------------------------
837,900 Micro Warehouse Inc.(a) 37,286,550
- ---------------------------------------------------------------------
1,006,450 Office Depot, Inc.(a) 28,809,630
- ---------------------------------------------------------------------
150,000 Petco Animal Supplies, Inc.(a) 4,200,000
- ---------------------------------------------------------------------
153,900 PetSmart, Inc.(a) 5,155,650
- ---------------------------------------------------------------------
1,000,000 Sports Authority, Inc. (The)(a) 21,750,000
- ---------------------------------------------------------------------
1,850,000 Staples Inc.(a) 49,256,250
- ---------------------------------------------------------------------
750,000 Sunglass Hut International, Inc.(a) 20,437,500
- ---------------------------------------------------------------------
800,000 Talbots, Inc. 19,400,000
- ---------------------------------------------------------------------
255,700 Tandy Corp. 12,625,188
- ---------------------------------------------------------------------
1,246,300 Viking Office Products, Inc.(a) 55,460,350
- ---------------------------------------------------------------------
524,622,680
- ---------------------------------------------------------------------
</TABLE>
FS-69
<PAGE> 157
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C>
SCIENTIFIC INSTRUMENTS-0.82%
780,000 Millipore Corp. $ 27,592,500
- ----------------------------------------------------------------
600,000 Varian Associates, Inc. 30,825,000
- ----------------------------------------------------------------
58,417,500
- ----------------------------------------------------------------
SEMICONDUCTORS-16.86%
1,200,000 Altera Corp.(a) 72,600,000
- ----------------------------------------------------------------
1,325,000 Analog Devices, Inc.(a) 47,865,625
- ----------------------------------------------------------------
1,800,000 Applied Materials, Inc.(a) 90,225,000
- ----------------------------------------------------------------
2,200,000 Atmel Corp.(a) 68,750,000
- ----------------------------------------------------------------
800,000 Cirrus Logic Corp.(a) 33,700,000
- ----------------------------------------------------------------
501,450 Credence Systems Corp.(a) 18,741,694
- ----------------------------------------------------------------
1,000,000 Cypress Semiconductor Corp.(a) 35,250,000
- ----------------------------------------------------------------
300,000 Electroglas, Inc.(a) 21,075,000
- ----------------------------------------------------------------
150,000 Gasonics International Corp.(a) 4,950,000
- ----------------------------------------------------------------
2,500,000 Integrated Device Technology, Inc. 47,500,000
- ----------------------------------------------------------------
400,000 Intel Corp. 27,950,000
- ----------------------------------------------------------------
967,000 International Rectifier Corp.(a) 43,635,875
- ----------------------------------------------------------------
800,000 KLA Instruments Corp.(a) 34,200,000
- ----------------------------------------------------------------
850,000 LAM Research Corp.(a) 51,743,750
- ----------------------------------------------------------------
580,700 Lattice Semiconductor Corp.(a) 22,792,475
- ----------------------------------------------------------------
1,000,000 Linear Technology Corp. 43,750,000
- ----------------------------------------------------------------
1,700,000 LSI Logic Corp.(a) 80,112,500
- ----------------------------------------------------------------
313,800 Maxim Integrated Products, Inc.(a) 23,456,550
- ----------------------------------------------------------------
1,000,000 MEMC Electronic Materials, Inc.(a) 32,000,000
- ----------------------------------------------------------------
1,150,000 Micron Technology, Inc. 81,218,750
- ----------------------------------------------------------------
558,900 Novellus Systems, Inc.(a) 38,494,238
- ----------------------------------------------------------------
409,000 SCI Systems, Inc.(a) 14,366,125
- ----------------------------------------------------------------
600,000 Sierra Semiconductor Corp.(a) 10,725,000
- ----------------------------------------------------------------
400,000 Silicon Valley Group, Inc.(a) 12,950,000
- ----------------------------------------------------------------
1,000,000 Solectron Corp.(a) 40,250,000
- ----------------------------------------------------------------
333,400 Tencor Instruments(a) 14,211,175
- ----------------------------------------------------------------
770,000 Texas Instruments Inc. 52,552,500
- ----------------------------------------------------------------
32,200 Ultratech Stepper, Inc.(a) 1,288,000
- ----------------------------------------------------------------
430,000 Vishay Intertechnology, Inc.(a) 15,157,500
- ----------------------------------------------------------------
1,500,000 VLSI Technology, Inc.(a) 35,250,000
- ----------------------------------------------------------------
1,500,000 Xilinx, Inc.(a) 69,000,000
- ----------------------------------------------------------------
500,000 Zilog, Inc.(a) 17,750,000
- ----------------------------------------------------------------
1,203,511,757
- ----------------------------------------------------------------
</TABLE>
FS-70
<PAGE> 158
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
SHOES & RELATED APPAREL-0.44%
500,000 Nine West Group, Inc.(a) $ 22,250,000
- -----------------------------------------------------------------
300,000 Wolverine World Wide, Inc. 9,000,000
- -----------------------------------------------------------------
31,250,000
- -----------------------------------------------------------------
TELECOMMUNICATIONS-3.00%
400,000 ADC Telecommunications, Inc.(a) 16,000,000
- -----------------------------------------------------------------
450,000 Allen Group Inc. 11,025,000
- -----------------------------------------------------------------
500,000 Andrew Corp.(a) 21,125,000
- -----------------------------------------------------------------
700,000 Aspect Telecommunications Corp.(a) 24,062,500
- -----------------------------------------------------------------
425,000 DSC Communications Corp.(a) 15,725,000
- -----------------------------------------------------------------
250,000 Glenayre Technologies, Inc.(a) 16,062,500
- -----------------------------------------------------------------
512,600 Octel Communications Corp.(a) 17,492,475
- -----------------------------------------------------------------
600,000 Scientific-Atlanta, Inc. 7,425,000
- -----------------------------------------------------------------
350,000 StrataCom, Inc.(a) 21,525,000
- -----------------------------------------------------------------
249,100 Tekelec(a) 3,611,950
- -----------------------------------------------------------------
750,000 Tellabs, Inc.(a) 25,500,000
- -----------------------------------------------------------------
112,500 TransPro, Inc. 1,237,500
- -----------------------------------------------------------------
400,000 U.S. Long Distance Corp.(a) 5,150,000
- -----------------------------------------------------------------
875,000 WorldCom, Inc.(a) 28,546,875
- -----------------------------------------------------------------
214,488,800
- -----------------------------------------------------------------
TELEPHONE-0.02%
55,700 Century Telephone Enterprises, Inc. 1,615,300
- -----------------------------------------------------------------
TEXTILES-0.47%
600,000 Nautica Enterprises, Inc.(a) 20,550,000
- -----------------------------------------------------------------
348,700 Tommy Hilfiger Corp.(a) 13,294,188
- -----------------------------------------------------------------
33,844,188
- -----------------------------------------------------------------
TRUCKING-0.10%
391,800 TNT Freightways Corp. 7,052,400
- -----------------------------------------------------------------
Total Domestic Common Stocks 6,217,881,736
- -----------------------------------------------------------------
</TABLE>
FS-71
<PAGE> 159
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY INTERESTS-4.14%
AUSTRALIA-0.09%
480,832 Broken Hill Proprietary Co. Ltd. (Conglomerates) $ 6,512,182
- -------------------------------------------------------------------------------
CANADA-0.22%
900,000 Corel Corp. (Computer Software/Services)(a) 15,412,500
- -------------------------------------------------------------------------------
FINLAND-0.25%
23,170 Nokia Corp. (Telecommunications) 1,325,527
- -------------------------------------------------------------------------------
300,000 Nokia Corp.-ADR (Telecommunications) 16,725,000
- -------------------------------------------------------------------------------
18,050,527
- -------------------------------------------------------------------------------
FRANCE-0.23%
20,000 LVMH Moet Hennessy Louis Vuitton (Beverages-
Alcoholic) 3,979,469
- -------------------------------------------------------------------------------
50,580 Roussel-Uclaf (Medical-Drugs) 8,295,364
- -------------------------------------------------------------------------------
12,650 Sidel S.A. (Machinery-Miscellaneous) 4,392,487
- -------------------------------------------------------------------------------
16,667,320
- -------------------------------------------------------------------------------
GERMANY-0.06%
13,000 Mannesmann A.G. (Machinery-Miscellaneous) 4,278,834
- -------------------------------------------------------------------------------
HONG KONG-0.15%
1,000,000 Hutchison Whampoa Ltd. (Conglomerates) 5,509,655
- -------------------------------------------------------------------------------
628,000 Sun Hung Kai Properties Ltd. (Real Estate) 5,015,585
- -------------------------------------------------------------------------------
10,525,240
- -------------------------------------------------------------------------------
INDONESIA-0.06%
1,250,000 PT Bank International Indonesia (Banking) 4,375,826
- -------------------------------------------------------------------------------
IRELAND-0.13%
221,100 Elan Corp. PLC-ADR (Medical-Drugs)(a) 8,871,638
- -------------------------------------------------------------------------------
ISRAEL-0.22%
250,000 Lannet Data Communications Ltd. (Computer
Networking)(a) 7,187,500
- -------------------------------------------------------------------------------
225,000 Teva Pharmaceutical Industries Ltd.-ADR (Medical-
Drugs) 8,831,250
- -------------------------------------------------------------------------------
16,018,750
- -------------------------------------------------------------------------------
ITALY-0.05%
1,074,000 Telecom Italia Mobile S.p.A.
(Telecommunications)(a) 1,806,395
- -------------------------------------------------------------------------------
1,074,000 Telecom Italia S.p.A. (Telecommunications) 1,645,363
- -------------------------------------------------------------------------------
3,451,758
- -------------------------------------------------------------------------------
JAPAN-0.07%
120,000 Tokyo Electron Ltd. (Electronic
Components/Miscellaneous) 5,208,466
- -------------------------------------------------------------------------------
MALAYSIA-0.11%
938,000 Malayan Banking Berhad (Banking) 7,567,493
- -------------------------------------------------------------------------------
</TABLE>
FS-72
<PAGE> 160
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
NETHERLANDS-0.72%
400,000 ASM Lithography Holding N.V. (Semiconductors)(a) $ 19,850,000
- ------------------------------------------------------------------------------
400,000 Madge, N.V. (Computer Networking)(a) 16,750,000
- ------------------------------------------------------------------------------
270,500 Philips Electronics N.V.-New York Shares-ADR
(Electronic Components/Miscellaneous) 10,448,063
- ------------------------------------------------------------------------------
32,850 Ver Ned Uitgever Bezit (Publishing) 4,605,392
- ------------------------------------------------------------------------------
51,653,455
- ------------------------------------------------------------------------------
SPAIN-0.01%
8,100 Acerinox, S.A. (Metals-Miscellaneous) 852,771
- ------------------------------------------------------------------------------
SWEDEN-0.96%
140,000 Astra AB (Medical-Drugs) 5,059,784
- ------------------------------------------------------------------------------
60,500 Autoliv AB (Automobile/Trucks Parts & Tires) 3,471,147
- ------------------------------------------------------------------------------
2,811,600 Telefonaktiebolaget L.M. Ericsson-ADR
(Telecommunications) 60,054,089
- ------------------------------------------------------------------------------
68,585,020
- ------------------------------------------------------------------------------
SWITZERLAND-0.12%
3,500 BBC Brown Boveri Ltd. (Engineering &
Construction) 4,060,160
- ------------------------------------------------------------------------------
5,000 Ciba-Geigy Ltd. (Chemicals) 4,329,252
- ------------------------------------------------------------------------------
8,389,412
- ------------------------------------------------------------------------------
UNITED KINGDOM-0.69%
2,700,000 Burton Group PLC (Retail-Stores) 4,300,790
- ------------------------------------------------------------------------------
1,075,000 Danka Business Systems PLC-ADR (Office
Automation) 36,012,500
- ------------------------------------------------------------------------------
390,000 Granada Group PLC (Leisure & Recreation) 4,165,138
- ------------------------------------------------------------------------------
210,000 Thorn EMI PLC (Leisure & Recreation) 4,890,593
- ------------------------------------------------------------------------------
49,369,021
- ------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 295,790,213
- ------------------------------------------------------------------------------
</TABLE>
FS-73
<PAGE> 161
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C>
MASTER NOTE AGREEMENT-1.07%
$76,500,000 Citicorp Securities, Inc., 6.125%,
03/11/96(b) $ 76,500,000
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS-4.27%(c)
43,781,167 Daiwa Securities America, Inc., 5.90%,
11/01/95(d) 43,781,167
- -------------------------------------------------------------------------------
261,000,000 Goldman, Sachs & Co. Inc., 5.90%, 11/01/95(e) 261,000,000
- -------------------------------------------------------------------------------
Total Repurchase Agreements 304,781,167
- -------------------------------------------------------------------------------
U.S. TREASURY SECURITIES-3.77%
U.S. TREASURY BILLS-3.06%(f)
195,000,000(g) 5.48%, 11/16/95 194,561,135
- -------------------------------------------------------------------------------
25,000,000 5.22%, 06/27/96 24,132,000
- -------------------------------------------------------------------------------
218,693,135
- -------------------------------------------------------------------------------
U.S. TREASURY NOTES-0.71%
15,000,000 5.50%, 04/30/96 15,000,900
- -------------------------------------------------------------------------------
35,000,000 7.625%, 04/30/96 35,357,000
- -------------------------------------------------------------------------------
50,357,900
- -------------------------------------------------------------------------------
Total U.S. Treasury Securities 269,051,035
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS-100.35% 7,164,004,151
- -------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(0.35)% (24,736,094)
- -------------------------------------------------------------------------------
NET ASSETS-100.00% $7,139,268,057
===============================================================================
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon notice to the issuer. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
October 31, 1995.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102 percent of the sales price of
the repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(d) Joint repurchase agreement entered into 10/31/95 with a maturing value of
$401,494,641. Collateralized by $353,853,000 U.S. Treasury obligations,
8.375% due 08/15/08.
(e) Joint repurchase agreement entered into 10/31/95 with a maturing value of
$360,681,783. Collateralized by $341,411,000 U.S. Treasury obligations,
5.625% to 12.00% due 11/15/95 to 02/15/25.
(f) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(g) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 7.
See Notes to Financial Statements.
FS-74
<PAGE> 162
Financials
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $5,084,052,318) $7,164,004,151
- ------------------------------------------------------------------------
Foreign currencies, at market value (cost $13,642,266) 13,495,706
- ------------------------------------------------------------------------
Receivables for:
Investments sold 28,101,604
- ------------------------------------------------------------------------
Capital stock sold 50,215,325
- ------------------------------------------------------------------------
Dividends and interest 1,095,114
- ------------------------------------------------------------------------
Investment for deferred compensation plan 35,624
- ------------------------------------------------------------------------
Other assets 100,373
- ------------------------------------------------------------------------
Total assets 7,257,047,897
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 57,630,332
- ------------------------------------------------------------------------
Capital stock reacquired 50,907,595
- ------------------------------------------------------------------------
Variation margin 1,239,750
- ------------------------------------------------------------------------
Deferred compensation 35,624
- ------------------------------------------------------------------------
Accrued advisory fees 3,602,549
- ------------------------------------------------------------------------
Accrued administrative services fees 14,663
- ------------------------------------------------------------------------
Accrued directors' fees 3,850
- ------------------------------------------------------------------------
Accrued distribution fees 2,624,668
- ------------------------------------------------------------------------
Accrued transfer agent fees 439,464
- ------------------------------------------------------------------------
Accrued operating expenses 1,281,345
- ------------------------------------------------------------------------
Total liabilities 117,779,840
- ------------------------------------------------------------------------
Net assets applicable to shares outstanding $7,139,268,057
========================================================================
NET ASSETS:
Class A $7,000,350,013
========================================================================
Institutional Class $ 138,918,044
========================================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------------------
Outstanding 295,483,948
========================================================================
Institutional Class:
Authorized 200,000,000
- ------------------------------------------------------------------------
Outstanding 5,775,803
========================================================================
CLASS A:
Net asset value and redemption price per share $23.69
========================================================================
Offering price per share:
(Net asset value of $23.69 divided by 94.50%) $25.07
========================================================================
INSTITUTIONAL CLASS:
Net asset value, offering and redemption price per share $24.05
========================================================================
</TABLE>
See Notes to Financial Statements.
FS-75
<PAGE> 163
Financials
STATEMENT OF OPERATIONS
For the year ended October 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $322,914 foreign withholding tax) $ 14,062,451
- --------------------------------------------------------------------------
Interest 27,896,762
- --------------------------------------------------------------------------
Total investment income 41,959,213
- --------------------------------------------------------------------------
EXPENSES:
Advisory fees 31,803,884
- --------------------------------------------------------------------------
Administrative services fees 173,257
- --------------------------------------------------------------------------
Custodian fees 568,906
- --------------------------------------------------------------------------
Directors' fees 44,198
- --------------------------------------------------------------------------
Distribution fees-Class A 14,905,705
- --------------------------------------------------------------------------
Transfer agent fees-Class A 9,158,530
- --------------------------------------------------------------------------
Transfer agent fees-Institutional Class 5,273
- --------------------------------------------------------------------------
Other 2,078,095
- --------------------------------------------------------------------------
Total expenses 58,737,848
- --------------------------------------------------------------------------
Less fees waived by advisor (761,655)
- --------------------------------------------------------------------------
Net expenses 57,976,193
- --------------------------------------------------------------------------
Net investment income (loss) (16,016,980)
- --------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain on sales of:
Investment securities 198,443,948
- --------------------------------------------------------------------------
Foreign currencies 225,354
- --------------------------------------------------------------------------
Futures contracts 38,758,395
- --------------------------------------------------------------------------
237,427,697
- --------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
Investment securities 1,310,161,937
- --------------------------------------------------------------------------
Foreign currencies (529,855)
- --------------------------------------------------------------------------
Futures contracts (2,597,985)
- --------------------------------------------------------------------------
1,307,034,097
- --------------------------------------------------------------------------
Net gain on investment securities, foreign currencies and
futures contracts 1,544,461,794
- --------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,528,444,814
==========================================================================
</TABLE>
See Notes to Financial Statements.
FS-76
<PAGE> 164
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (16,016,980) $ (4,773,452)
- -----------------------------------------------------------------------------
Net realized gain on sales of investment
securities,
foreign currencies and futures contracts 237,427,697 113,271,698
- -----------------------------------------------------------------------------
Unrealized appreciation of investment
securities,
foreign currencies and futures contracts 1,307,034,097 137,121,005
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 1,528,444,814 245,619,251
- -----------------------------------------------------------------------------
Distributions to shareholders from net
realized gains on investment securities:
Class A (107,823,749) --
- -----------------------------------------------------------------------------
Institutional Class (1,218,145) --
- -----------------------------------------------------------------------------
Share transactions - net:
Class A 1,878,176,040 726,623,024
- -----------------------------------------------------------------------------
Institutional Class 75,813,810 24,797,834
- -----------------------------------------------------------------------------
Net increase in net assets 3,373,392,770 997,040,109
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,765,875,287 2,768,835,178
- -----------------------------------------------------------------------------
End of period $7,139,268,057 $3,765,875,287
=============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $4,828,771,443 $2,890,417,744
- -----------------------------------------------------------------------------
Undistributed net investment income (loss) (54,010) --
- -----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investment securities, foreign currencies
and futures contracts 231,637,155 103,578,171
- -----------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and futures
contracts 2,078,913,469 771,879,372
- -----------------------------------------------------------------------------
$7,139,268,057 $3,765,875,287
=============================================================================
</TABLE>
See Notes to Financial Statements.
FS-77
<PAGE> 165
Financials
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Constellation Fund (the "Fund") is a series portfolio of AIM Equity Funds,
Inc. (the "Company"). The Company is a Maryland corporation registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of four diversified portfolios:
AIM Constellation Fund, AIM Weingarten Fund, AIM Charter Fund and AIM
Aggressive Growth Fund. The Fund currently offers two different classes of
shares: the Class A shares (formerly "Retail Class") and the Institutional
Class. 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
following is a summary of 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 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 mean between the closing bid and asked prices on that day. 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 based upon quotes furnished by market makers for such
securities. If a mean is not available, as is the case in some foreign
markets, the closing bid will be used absent a last sales price. 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
of the closing bid and asked prices. Debt obligations that are issued or
guaranteed by the U.S. Treasury 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 quotations are not readily
available are valued at fair value as determined in good faith by or under
the supervision of the Company's officers in a manner specifically
authorized by the Board of Directors of the Company. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
New York Stock Exchange. 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 New York Stock Exchange. 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 New York Stock
Exchange which will 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 Directors.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the specific identification of securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On October 31, 1995,
$326,819 was reclassified from undistributed net realized gains to
undistributed net investment income (loss) as a result of differing book/tax
treatments of foreign currency transactions. In addition, $15,636,151 was
reclassified from net investment income (loss) to paid-in capital as a
result of a net operating tax loss. Net assets of the Fund were unaffected
by the reclassifications discussed above.
C. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
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.
F. Foreign Currency Contracts - A forward 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 forward 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.
G. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by
FS-78
<PAGE> 166
Financials
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
"marking to market" on a daily basis to reflect the market value of the
contracts at the end of each day's trading. Variation margin payments are made
or received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the possibility
of an illiquid market and the change in the value of the contracts may not
correlate with changes in the value of the securities being hedged.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.0% of
the first $30 million of the Fund's average daily net assets, plus 0.75% of the
Fund's average daily net assets in excess of $30 million to and including $150
million, plus 0.625% of the Fund's average daily net assets in excess of $150
million. AIM has agreed to voluntarily waive a portion of its advisory fees
paid by the Fund to AIM to the extent necessary to reduce the fees paid by the
Fund at net asset levels higher than those currently incorporated in the
present advisory fee schedule. AIM will receive a fee calculated at the annual
rate of 1.0% of the first $30 million of the Fund's average daily net assets,
plus 0.75% of the Fund's average daily net assets in excess of $30 million to
and including $150 million, plus 0.625% of the Fund's average daily net assets
in excess of $150 million to and including $2 billion, plus 0.60% of the Fund's
average daily net assets in excess of $2 billion. During the year ended October
31, 1995, AIM waived fees of $761,655. The waiver is entirely voluntary and the
Board of Directors would be advised of any decision by AIM to discontinue the
waiver. Under the terms of a master sub-advisory agreement between AIM and
A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM Capital 50% of the
amount paid by the Fund to AIM. These agreements require AIM to reduce its fees
or, if necessary, make payments to the Fund to the extent required to satisfy
any expense limitations imposed by the securities laws or regulations
thereunder of any state in which the Fund's shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the year ended October 31,
1995, AIM was reimbursed $173,257 for such services.
The Fund, pursuant to a transfer agency and services agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Class A shares. During the year ended October 31, 1995, AFS was
paid $4,943,213 for such services. During the year ended October 31, 1995, the
Fund paid A I M Institutional Fund Services, Inc. ("AIFS") with respect to the
Institutional Class $2,790 for shareholder and transfer agency services.
Effective July 1, 1995, AIFS became the exclusive transfer agent for the
Institutional Class of the Fund.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and a master distribution agreement with Fund Management Company
("FMC") to serve as the distributor for the Institutional Class. The Company
has adopted a Plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan"), with
respect to the Class A shares, whereby the Fund pays AIM Distributors an annual
rate of 0.30% of the Class A shares average daily net assets as compensation
for services related to the sales and distribution of the Class A shares. The
Plan provides that payments to dealers and financial institutions that provide
continuing personal shareholder services to their customers who purchase and
own shares of the Class A shares, in amounts of up to 0.25% of the average net
assets of the Class A shares attributable to the customers of such dealers or
financial institutions, may be characterized as a service fee. The Plan also
provides that payments in excess of service fees are characterized as an asset-
based sales charge under the Plan. The Plan also imposes a cap on the total
amount of sales charges, including asset-based sales charges, that may be paid
by the Company with respect to the Fund's Class A shares. During the year ended
October 31, 1995, the Class A shares paid AIM Distributors $14,905,705 as
compensation under the Plan.
AIM Distributors received commissions of $13,146,761 from Class A capital
stock transactions during the year ended October 31, 1995. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in,
the proceeds from sales of capital stock. Certain officers and directors of the
Company are officers and directors of AIM, AIM Capital, AIM Distributors, AFS,
AIFS and FMC.
During the year ended October 31, 1995 the Fund paid legal fees of $14,394
for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3 - DIRECTORS' FEES
Director's fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if
so elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
FS-79
<PAGE> 167
Financials
NOTE 4 - BANK BORROWINGS
The Fund has a $83,100,000 committed line of credit with a financial
institution syndicate with Chemical Bank of New York as the administrative
agent. Interest on borrowings under the line of credit is payable on maturity
or prepayment date. During the period July 20, 1995 (effective date of Credit
Agreement) through October 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's
commitment.
NOTE 5 - AFFILIATED COMPANY TRANSACTIONS
Affiliated issuers, as defined in the 1940 Act, are issuers in which the Fund
held 5% or more of the outstanding voting securities. A summary of transactions
for each issuer who is or was an affiliate at or during the year ended October
31, 1995, is as follows:
<TABLE>
<CAPTION>
SHARE SHARE MARKET
BALANCE BALANCE VALUE
OCTOBER 31, PURCHASES REALIZED DIVIDEND OCTOBER 31, OCTOBER 31,
NAME OF ISSUER: 1994 COST SALES COST GAIN INCOME 1995 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Roosevelt Financial
Group, Inc. 315,000 $0 $4,779,251 $392,937 $30,943 $0 $0
===============================================================================================
</TABLE>
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended October 31,
1995 was $4,071,335,941 and $2,213,924,196, respectively. The amount of
unrealized appreciation (depreciation) of investment securities as of October
31, 1995, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $2,178,971,166
- -----------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (99,425,248)
- -----------------------------------------------------------------------------
Net unrealized appreciation of investment securities $2,079,545,918
=============================================================================
</TABLE>
Cost of investments for tax purposes is $5,084,458,233.
NOTE 7- FUTURES CONTRACT
On October 31, 1995, $9,668,000 U.S. Treasury bills were pledged as collateral
to cover margin requirements for futures contracts.
Futures contracts outstanding at October 31, 1995:
(Contracts--$500 times index/delivery month/commitment)
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
(DEPRECIATION)
<S> <C>
S&P 500 Index 370 contracts/Dec95/Buy $ 749,250
S&P 500 Index 500 contracts/Mar96/Buy (1,642,375)
=====================================================
</TABLE>
NOTE 8 - CAPITAL STOCK
Changes in the capital stock outstanding for the years ended October 31, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ----------- --------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 5,036,915 $ 105,368,663 1,908,947 $ 33,070,778
- -----------------------------------------------------------------------------------
Class A 214,014,863 4,411,919,689 100,598,652 1,751,901,830
- -----------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 60,580 1,019,563 -- --
- -----------------------------------------------------------------------------------
Class A 6,006,043 99,940,399 -- --
- -----------------------------------------------------------------------------------
Reacquired:
Institutional Class (1,476,157) (30,574,416) (474,909) (8,272,944)
- -----------------------------------------------------------------------------------
Class A (128,002,913) (2,633,684,048) (58,902,798) (1,025,278,806)
- -----------------------------------------------------------------------------------
95,639,331 $ 1,953,989,850 43,129,892 $ 751,420,858
===================================================================================
</TABLE>
FS-80
<PAGE> 168
Financials
NOTE 9 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during each of the years in the seven-year period ended October 31,
1995, the ten months ended October 31, 1988, and each of the years in the two-
year period ended December 31, 1987.(a)
<TABLE>
<CAPTION>
OCTOBER 31,
-------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988(b)
---------- ---------- ---------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $18.31 $17.04 $13.25 $11.72 $6.59 $9.40 $7.34 $6.35
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Income from investment
operations:
Net investment income
(loss) (0.05) (0.02) (0.04) (0.04) (0.03) (0.03) 0.01 (0.03)
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Net gains (losses) on
securities (both
realized
and unrealized) 5.95 1.29 3.83 1.76 5.16 (1.23) 2.46 1.02
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Total from investment
operations 5.90 1.27 3.79 1.72 5.13 (1.26) 2.47 0.99
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Less distributions:
Dividends from net
investment income -- -- -- -- -- (0.01) -- --
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Distributions from
capital gains (0.52) -- -- (0.19) -- (1.54) (0.41) --
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Total distributions (0.52) -- -- (0.19) -- (1.55) (0.41) --
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Net asset value, end of
period $23.69 $18.31 $17.04 $13.25 $11.72 $6.59 $9.40 $7.34
======================== ========== ========== ========== ======== ======== ======= ======= =======
Total return(c) 33.43 % 7.45 % 28.60 % 14.82 % 77.85 % (16.17)% 35.50% 15.59 %
======================== ========== ========== ========== ======== ======== ======= ======= =======
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $7,000,350 $3,726,029 $2,756,497 $966,472 $342,835 $83,304 $74,731 $78,272
======================== ========== ========== ========== ======== ======== ======= ======= =======
Ratio of expenses to
average net assets 1.2 %(d) 1.2 % 1.2 % 1.2 % 1.4 % 1.4 % 1.4% 1.3 %(e)
======================== ========== ========== ========== ======== ======== ======= ======= =======
Ratio of net investment
income (loss) to
average net assets (0.3)%(d) (0.2)% (0.3)% (0.4)% (0.4)% (0.4)% 0.1% (0.6)%(e)
======================== ========== ========== ========== ======== ======== ======= ======= =======
Portfolio turnover rate 45 % 79 % 70 % 62 % 109 % 192 % 149 % 131 %
======================== ========== ========== ========== ======== ======== ======= ======= =======
Borrowings for the
period:
Amount of debt
outstanding at end of
period (000s omitted) -- -- -- -- -- -- $9,610 $5,266
======================== ========== ========== ========== ======== ======== ======= ======= =======
Average amount of debt
outstanding during the
period (000s
omitted)(f) -- -- -- -- -- $2,344 $2,609 $2,148
======================== ========== ========== ========== ======== ======== ======= ======= =======
Average number of shares
outstanding during the
period (000s
omitted)(f) 244,731 182,897 124,101 55,902 21,205 11,397 10,050 10,845
======================== ========== ========== ========== ======== ======== ======= ======= =======
Average amount of debt
per share during the
period -- -- -- -- -- $0.21 $0.26 $0.20
======================== ========== ========== ========== ======== ======== ======= ======= =======
<CAPTION>
DECEMBER 31,
-------------------
1987 1986(b)
--------- ---------
<S> <C> <C>
Net asset value,
beginning of period $10.58 $10.90
- ------------------------- --------- ---------
Income from investment
operations:
Net investment income
(loss) (0.05) (0.07)
- ------------------------- --------- ---------
Net gains (losses) on
securities (both
realized
and unrealized) 0.36 3.13
- ------------------------- --------- ---------
Total from investment
operations 0.31 3.06
- ------------------------- --------- ---------
Less distributions:
Dividends from net
investment income -- --
- ------------------------- --------- ---------
Distributions from
capital gains (4.54) (3.38)
- ------------------------- --------- ---------
Total distributions (4.54) (3.38)
- ------------------------- --------- ---------
Net asset value, end of
period $6.35 $10.58
========================= ========= =========
Total return(c) 2.85 % 28.56 %
========================= ========= =========
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $71,418 $78,885
========================= ========= =========
Ratio of expenses to
average net assets 1.1 % 1.1 %
========================= ========= =========
Ratio of net investment
income (loss) to
average net assets (0.4)% (0.5)%
- ------------------------- --------- ---------
Portfolio turnover rate 135 % 107 %
========================= ========= =========
Borrowings for the
period:
Amount of debt
outstanding at end of
period (000s omitted) $109 $3,740
========================= ========= =========
Average amount of debt
outstanding during the
period (000s omitted)(f) $2,366 $3,188
========================= ========= =========
Average number of shares
outstanding during the
period (000s omitted)(f) 9,668 8,519
========================= ========= =========
Average amount of debt
per share during the
period $0.24 $0.37
========================= ========= =========
</TABLE>
(a) Per share information has been restated to reflect a 2 for 1 stock split,
effected in the form of a dividend, on June 19, 1987.
(b) The Fund changed investment advisors on September 30, 1988 and May 1, 1986.
(c) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(d) Ratios are based on average net assets of $4,968,568,278.
(e) Annualized.
(f) Averages computed on a daily basis.
FS-81
<PAGE> 169
Prospectus
- --------------------------------------------------------------------------------
AIM EQUITY AIM CHARTER FUND, AIM WEINGARTEN FUND and AIM
FUNDS, INC. CONSTELLATION FUND (collectively, the "Funds") are
three investment portfolios comprising series of AIM
INSTITUTIONAL Equity Funds, Inc. (the "Company"), an open-end,
CLASSES series, management investment company. Each Fund offers
different classes of shares. The Company also offers
AIM CHARTER shares of another investment portfolio, AIM Aggressive
FUND Growth Fund ("Aggressive Growth"). Shares of Aggressive
Growth and other classes of the Funds are sold pursuant
AIM WEINGARTEN to separate prospectuses. This Prospectus relates
FUND solely to the Institutional Classes of the Funds.
AIM CONSTELLATION AIM CHARTER FUND is a diversified portfolio which seeks
FUND to provide growth of capital, with current income as a
secondary objective. To accomplish its objectives, the
JANUARY 2, 1996 Fund invests primarily in dividend-paying common stocks
which have prospects for both growth of capital and
dividend income.
AIM WEINGARTEN FUND is a diversified portfolio which
seeks to provide growth of capital through investments
primarily in common stocks of leading U.S. companies
considered by management to have strong earnings
momentum.
AIM CONSTELLATION FUND is a diversified portfolio which
seeks to provide capital appreciation through
investments in common stocks, with emphasis on
medium-sized and smaller emerging growth companies.
Shares of the Institutional Classes of the Funds
are offered exclusively to clients of banks and other
financial institutions. All shares of common stock of
the Institutional Classes of the Funds are sold and
redeemed without any purchase or redemption charges
imposed by the Funds. Banks and other financial
institutions may charge a recordkeeping, account
maintenance or other fee to their customers. Fund
Management Company is the distributor of the shares of
common stock of the Institutional Classes of the Funds.
This Prospectus sets forth concisely the
information about the Funds that prospective investors
should know before investing. It should be read and
retained for future reference. A Statement of
Additional Information, dated January 2, 1996, has been
filed with the United States Securities and Exchange
Commission (the "SEC") and is incorporated herein by
reference. The Statement of Additional Information is
available without charge upon written request to the
Company at the address shown below.
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE
FUNDS' SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. SHARES OF THE FUNDS INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
[LOGO APPEARS HERE]
11 Greenway Plaza
Suite 1919
Houston, Texas 77046-1173
(800) 659-1005
<PAGE> 170
SUMMARY
THE FUNDS AND THEIR INVESTMENT OBJECTIVES
AIM Equity Funds, Inc. (the "Company") is a Maryland corporation organized as
an open-end, diversified, series, management investment company. Currently, the
Company offers four series comprising four separate investment portfolios, three
of which are offered pursuant to this Prospectus: AIM Charter Fund ("Charter"),
AIM Weingarten Fund ("Weingarten") and AIM Constellation Fund ("Constellation")
(collectively, the "Funds"), each of which pursues unique investment objectives.
The investment objectives of Charter are to seek growth of capital with current
income as a secondary objective. To accomplish its objectives, Charter invests a
substantial portion of its assets in dividend-paying common stocks. The
investment objective of Weingarten is to provide growth of capital through
investments primarily in common stocks of leading U.S. companies considered by
management to have strong earnings momentum. The investment objective of
Constellation is to seek capital appreciation primarily through investments in
common stocks with emphasis on medium-sized and smaller emerging growth
companies. There is no assurance that the investment objective of any of the
Funds will be achieved. For more complete information on each Funds' investment
policies, see "Investment Programs."
Each Fund offers different classes of shares, designed to meet the needs of
different categories of investors. The Institutional Classes are offered
exclusively to clients of banks and other institutions. This Prospectus relates
only to the Institutional Classes of the Funds. The Company offers the other
classes of the Funds pursuant to separate prospectuses. The other classes of
shares of the Funds have different sales charges and expenses which affect
performance. For more information about the other classes of the Funds call
(713) 626-1919, Extension 5001 (in Houston) or (800) 347-4246 (elsewhere). See
"General Information."
The assets of each Fund are invested in a separate portfolio. The classes of
shares of each Fund share a common investment objective and portfolio of
investments. The income from the investment portfolio of a Fund is allocated to
each class of the Fund based on the net assets of such class as of the close of
business on the previous business day, as adjusted for current day's shareholder
activity. Each class bears proportionately those expenses, such as the advisory
fee, that are allocated to the Fund as a whole and bears separately certain
expenses, such as those associated with the distribution of their shares.
Consequently, the amounts available for payment of dividends and the net asset
value per share of each class will vary. See "General Information."
INVESTMENT ADVISOR
A I M Advisors, Inc. ("AIM") serves as each Fund's investment advisor pursuant
to a Master Investment Advisory Agreement (the "Master Advisory Agreement"). AIM
acts as manager or advisor to 37 investment company portfolios. As of December
1, 1995, the total assets of the investment company portfolios advised or
managed by AIM or its affiliates were approximately $41.2 billion. Under the
Master Advisory Agreement dated as of October 18, 1993, AIM receives a fee for
its services based on each Fund's average daily net assets. Under the Master
Administrative Services Agreement (the "Master Administrative Services
Agreement") dated as of October 18, 1993, between the Company and AIM, AIM may
receive reimbursement of its costs to perform certain accounting, shareholder
servicing and other administrative services to the Funds. Under a Transfer
Agency and Service Agreement, A I M Institutional Fund Services, Inc. ("Transfer
Agent" or "AIFS"), AIM's wholly-owned subsidiary and a registered transfer
agent, receives a fee for its provision of transfer agency, dividend
distribution and disbursement, and shareholder services to the Institutional
Classes of the Funds. Under the Master Sub-Advisory Agreement (the "Master
Sub-Advisory Agreement") dated as of October 18, 1993, between AIM and A I M
Capital Management, Inc. ("AIM Capital"), AIM Capital, a wholly-owned subsidiary
of AIM, serves as sub-advisor to the Funds and receives compensation equal to
50% of the amount paid by the Funds to AIM. The total advisory fees paid by the
Funds are higher than those paid by many other investment companies of all sizes
and investment objectives. However, the effective fee paid by the Funds at their
respective current size is lower than the fees paid by many other funds with
similar investment objectives. See "Management."
INVESTORS IN THE FUNDS
The Institutional Classes of the Funds are designed to be convenient and
economical vehicles in which institutions, particularly banks, acting for
themselves or in a fiduciary or other similar capacity, can invest in a
portfolio of equity securities. See "Suitability for Investors."
SHARE PURCHASE
Shares of the Institutional Class of each Fund are offered by this Prospectus
at their respective net asset value without a sales charge. The minimum initial
investment in any of the Funds is $100,000. There is no minimum amount for
subsequent investments. See "Purchase of Shares."
2
<PAGE> 171
SHARE REDEMPTION
Redemptions may be made at any time without charge at net asset value.
Redemption orders received prior to 4:00 p.m. Eastern time will be confirmed at
the price next determined as of that day. See "Redemption of Shares."
DISTRIBUTIONS
The Funds currently declare and pay dividends from net investment income, if
any, on a quarterly basis with respect to Charter and on an annual basis with
respect to Weingarten and Constellation. Each Fund makes distributions of
realized capital gains, if any, on an annual basis. See "Dividends and
Distributions."
DISTRIBUTOR
Fund Management Company ("FMC") acts as the exclusive distributor of the
shares of the Institutional Classes of the Funds. FMC does not receive any fee
from the Funds. See "Management."
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered
service marks of A I M Management Group Inc.
3
<PAGE> 172
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Institutional Class
of any of the Funds understand the various costs that an investor will bear,
both directly and indirectly. The fees and expenses of the Funds set forth in
the table are based on the actual average net assets of each Fund for its 1995
fiscal year.
<TABLE>
<CAPTION>
CHARTER WEINGARTEN CONSTELLATION
------- ---------- -------------
<S> <C> <C> <C>
Shareholder Transaction Expenses (Institutional
Class)
Maximum sales load imposed on purchase of shares
(as a percentage of offering price)............ None None None
Maximum sales load imposed on reinvested dividends
and distributions.............................. None None None
Deferred sales load............................... None None None
Redemption fees................................... None None None
Exchange fee...................................... None None None
Annual Fund Operating Expenses (Institutional Class)
(as a percentage of average net assets)
Management fee (after fee waiver)................. .64% .61% .62%
Distribution fees................................. None None None
Other expenses.................................... .10% .09% .04%
---- ---- ----
Total fund operating expenses..................... .74% .70% .66%
==== ==== ====
</TABLE>
Weingarten's and Constellation's investment advisor is currently waiving a
portion of its fees. Had there been no fee waivers during the year, management
fees would have been 0.63% and 0.63% of average net assets. There can be no
assurance that any future waivers of fees (if any) will not vary from the
figures reflected in the fee table. Beneficial owners of shares of the Funds
should also consider the effect of any charges imposed by the institution
maintaining their accounts.
EXAMPLE
An investor in each of the Funds would pay the following expenses on a $1,000
investment, assuming (a) a 5% annual return and (b) redemption at the end of
each time period:
<TABLE>
<CAPTION>
CHARTER WEINGARTEN CONSTELLATION
------- ---------- -------------
<S> <C> <C> <C>
1 year........................................... $ 8 $ 7 $ 7
3 years.......................................... $24 $22 $21
5 years.......................................... $41 $39 $37
10 years.......................................... $92 $87 $82
</TABLE>
THE EXAMPLES SHOWN IN THE ABOVE TABLE SHOULD NOT BE CONSIDERED TO BE A
REPRESENTATION OF PAST OR FUTURE PERFORMANCE AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN. IN ADDITION, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, A FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN
THAT IS GREATER OR LESS THAN 5%. THE EXAMPLES ASSUME REINVESTMENT OF ALL
DIVIDENDS AND DISTRIBUTIONS AND THAT THE PERCENTAGE AMOUNTS FOR TOTAL FUND
OPERATING EXPENSES REMAIN THE SAME FOR EACH YEAR.
4
<PAGE> 173
FINANCIAL HIGHLIGHTS
Shown below are the per share data, ratios and supplemental data
(collectively, "data") for the fiscal years ended October 31, 1995, 1994, 1993,
1992 and the period July 30, 1991 (date operations commenced) through October
31, 1991, for the Institutional Class of Charter, for the fiscal years ended
October 31, 1995, 1994, 1993, 1992 and the period October 8, 1991 (date
operations commenced) through October 31, 1991, for the Institutional Class of
Weingarten and for the fiscal years ended October 31, 1995, 1994, 1993 and the
period April 8, 1992 (date operations commenced) through October 31, 1992, for
the Institutional Class of Constellation. The data with respect to the
Institutional Class of Charter for the fiscal years ended October 31, 1995 and
1994 has been audited by KPMG Peat Marwick LLP, independent auditors, whose
unqualified report thereon appears in the Statement of Additional Information
and is available upon request. The data with respect to the Institutional Class
of Charter for the periods prior to the October 31, 1994 fiscal year has been
audited by Tait, Weller & Baker, independent auditors, whose unqualified report
thereon appears in the Statement of Additional Information and is available upon
request. The data with respect to the Institutional Classes of Weingarten and
Constellation have been derived from financial statements audited by KPMG Peat
Marwick LLP, independent auditors, whose unqualified report thereon appears in
the Statement of Additional Information and is available upon request.
(PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
AIM CHARTER FUND
<TABLE>
<CAPTION>
JULY 30, 1991
YEAR ENDED OCTOBER 31, THROUGH
----------------------------------------- OCTOBER 31,
1995 1994 1993 1992 1991
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..... $ 8.93 $ 9.48 $ 8.38 $ 8.42 $ 7.92
Income from investment operations:
Net investment income.................. 0.23 0.25 0.19 0.20 0.05
Net gains (losses) on securities (both
realized and unrealized)............ 2.07 (0.44) 1.23 0.16 0.45
------- ------- ------- ------ ------
Total from investment operations....... 2.30 (0.19) 1.42 0.36 0.50
------- ------- ------- ------ ------
Less distributions:
Dividends from net investment income... (0.24) (0.20) (0.32) (0.17) --
Distributions from capital gains....... (0.33) (0.16) -- (0.23) --
------- ------- ------- ------ ------
Total distributions.................... (0.57) (0.36) (0.32) (0.40) --
------- ------- ------- ------ ------
Net asset value, end of period........... $ 10.66 $ 8.93 $ 9.48 $ 8.38 $ 8.42
======= ======= ======= ====== ======
Total return(a).......................... 27.45% (2.02)% 17.39% 4.53% 6.31%
======= ======= ======= ====== ======
Ratios/supplemental data:
Net assets, end of period (000s
omitted)............................ $25,538 $21,840 $24,196 $7,800 $ 775
======= ======= ======= ====== ======
Ratio of expenses to average net
assets.............................. 0.74%(b) 0.73% 0.79% 0.87% 1.00%(c)
======= ======= ======= ====== ======
Ratio of net investment income to
average net assets.................. 1.98%(b) 2.76% 2.26% 2.44% 2.43%(c)
======= ======= ======= ====== ======
Portfolio turnover rate................ 161% 126% 144% 95% 144%
======= ======= ======= ====== ======
</TABLE>
- ---------------
(a) For periods less than one year, total returns are not annualized.
(b) Ratios are based on average net assets of $21,840,593.
(c) Annualized.
5
<PAGE> 174
AIM WEINGARTEN FUND
<TABLE>
<CAPTION>
OCTOBER
8, 1991
THROUGH
YEAR ENDED OCTOBER 31, OCTOBER
-------------------------------------------- 31,
1995 1994 1993 1992 1991
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................. $ 17.94 $ 17.69 $ 16.73 $ 15.77 $15.15
Income from investment operations:
Net investment income.............. 0.10 0.17 0.16 0.14 0.01
Net gains (losses) on securities
(both realized and
unrealized)..................... 4.35 0.58 0.93 0.99 0.61
------- ------- ------- ------- ------
Total from investment operations... 4.45 0.75 1.09 1.13 0.62
------- ------- ------- ------- ------
Less distributions:
Dividends from net investment
income.......................... (0.13) (0.17) (0.13) (0.08) --
Distributions from net realized
capital gains................... (1.78) (0.33) -- (0.09) --
------- ------- ------- ------- ------
Total distributions................ (1.91) (0.50) (0.13) (0.17) --
------- ------- ------- ------- ------
Net asset value, end of period....... $ 20.48 $ 17.94 $ 17.69 $ 16.73 $15.77
======== ======== ======== ======== =======
Total return(a)...................... 28.69% 4.37% 6.53% 7.16% 4.09%
======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted)........................ $54,332 $40,486 $39,821 $16,519 $3,926
======== ======== ======== ======== =======
Ratio of expenses to average net
assets.......................... 0.70%(b) 0.65% 0.78% 0.82% 0.90%(c)
======== ======== ======== ======== =======
Ratio of net investment income to
average net assets.............. 0.45%(b) 1.00% 0.97% 0.91% 1.00%(c)
======== ======== ======== ======== =======
Portfolio turnover rate............ 139% 136% 109% 37% 46%
======== ======== ======== ======== =======
Borrowings for the period:
Amount of debt outstanding at end
of period (000s omitted)........ -- -- -- -- --
Average amount of debt outstanding
during the period (000s
omitted(d)...................... $ 6 -- -- -- --
Average number of shares
outstanding during the period
(000s omitted)(d)............... 2,526 2,256 1,826 707 249
Average amount of debt per share
during period................... $0.0024 -- -- -- --
</TABLE>
(a) For periods less than one year, total returns are not annualized.
(b) After waiver of advisory fees. Ratios of expenses and net investment income
to average net assets prior to waiver of advisory fees were 0.72% and 0.43%,
respectively. Ratios are based on average net assets of $45,368,533.
(c) Annualized.
(d) Averages computed on a daily basis.
- ---------------
6
<PAGE> 175
AIM CONSTELLATION FUND
<TABLE>
<CAPTION>
APRIL 8,
YEAR ENDED 1992
OCTOBER 31, THROUGH
-------------------------------- DECEMBER 31,
1995 1994 1993 1992
-------- ------- ------- ------
<S> <C> <C> <C> <C>
Net asset value, beginning of period............. $ 18.49 $ 17.13 $ 13.27 $12.29
Income from investment operations:
Net investment income (loss)................... 0.02 0.03 -- (0.01)
Net gains (losses) on securities (both realized
and unrealized)............................. 6.06 1.33 3.86 0.99
-------- ------- ------- ------
Total from investment operations............... 6.08 1.36 3.86 0.98
-------- ------- ------- ------
Less distributions:
Dividends from net investment income........... -- -- -- --
Distributions from capital gains............... (0.52) -- -- --
-------- ------- ------- ------
Total distributions............................ (0.52) -- -- --
-------- ------- ------- ------
Net asset value, end of period................... $ 24.05 $ 18.49 $ 17.13 $13.27
========= ======== ======== =======
Total return(a).................................. 34.09% 7.94% 29.09% 7.97%
========= ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)....... $138,918 $39,847 $12,338 $3,087
========= ======== ======== =======
Ratio of expenses to average net assets........ 0.66%(b) 0.69% 0.87% 0.91%(c)
========= ======== ======== =======
Ratio of net investment income (loss) to
average net assets.......................... 0.18%(b) 0.36% 0.04% (0.12)%(c)
========= ======== ======== =======
Portfolio turnover rate........................ 45% 79% 70% 62%
========= ======== ======== =======
</TABLE>
- ---------------
(a) For periods less than one year, total returns are not annualized.
(b) After waiver of advisory fees. Ratios of expenses and net investment income
to average net assets prior to waiver of advisory fees were 0.68% and 0.16%,
respectively. Ratios are based on average net assets of $78,053,151.
(c) After expense reimbursements. Annualized.
SUITABILITY FOR INVESTORS
The Institutional Classes of the Funds are intended for use by institutions,
particularly banks, acting for themselves or in a fiduciary or similar capacity.
Shares of the Institutional Classes of the Funds are available for collective
and common trust funds of banks, banks investing for their own account and banks
investing for the account of a public entity (e.g., Taft-Hartley funds, states,
cities, or government agencies) which does not pay commissions or distribution
fees. Prospective investors should determine if an investment in the Funds is
consistent with the objectives of an account and with applicable state and
federal laws and regulations. FMC will review each application for purchase of
the Institutional Classes and reserves the right to reject any order to purchase
based upon a review of the suitability of the investor.
The Institutional Classes of the Funds are designed to be convenient and
economical vehicles in which institutions can invest in a portfolio of equity
securities. An investment in the Funds may relieve the institution of many of
the investment and administrative burdens encountered when investing in equity
securities directly. These include: selection and diversification of portfolio
investments; surveying the market for the best price at which to buy and sell;
valuation of portfolio securities; receipt, delivery and safekeeping of
securities; and portfolio recordkeeping. It is anticipated that most investors
will perform their own sub-accounting.
7
<PAGE> 176
INVESTMENT PROGRAMS
Each of the Funds has its own investment objectives and investment program.
There can, of course, be no assurance that any Fund will in fact achieve its
objectives since all investments are inherently subject to market risks. The
Board of Directors of the Company reserves the right to change any of the
investment policies, strategies or practices of any of the Funds, as described
in this Prospectus and the Statement of Additional Information, without
shareholder approval, except in those instances where shareholder approval is
expressly required.
Each of the Funds may invest, for temporary or defensive purposes, in
investment grade (high quality) corporate bonds, commercial paper, or U.S.
Government obligations. In addition, a portion of each Fund's assets may be
held, from time to time, in cash, repurchase agreements, or other debt
securities, when such positions are deemed advisable in light of economic or
market conditions.
AIM CHARTER FUND
The primary investment objective of Charter is to seek growth of capital, with
current income as a secondary objective. Although the amount of Charter's
current income will vary from time to time, it is anticipated that the current
income realized by Charter will generally be greater than that realized by
mutual funds whose sole objective is growth of capital. Charter seeks to achieve
its objective by investing primarily in common stocks of companies believed by
management to have the potential for above average growth in revenues and
earnings. The Fund may satisfy the foregoing requirement in part through the
ownership of securities which are convertible into, or exchangeable for, common
stocks. Generally, at least 80% of Charter's investments will be in interest,
income or dividend paying stocks.
AIM WEINGARTEN FUND
The investment objective of Weingarten is to seek growth of capital
principally through investment in common stocks of seasoned and better
capitalized companies. Current income will not be an important criterion of
investment selection, and any such income should be considered incidental. It is
anticipated that common stocks will be the principal form of investment by the
Fund. Weingarten's portfolio is primarily comprised of securities of two basic
categories of companies: (a) "core" companies, which Fund management considers
to have experienced above-average and consistent long-term growth in earnings
and to have excellent prospects for outstanding future growth, and (b) "earnings
acceleration" companies which Fund management believes are currently enjoying a
dramatic increase in profits. See "Investment Program and Restrictions" in the
Statement of Additional Information.
AIM CONSTELLATION FUND
The investment objective of Constellation is to seek capital appreciation.
Constellation aggressively seeks to increase shareholders' capital by investing
principally in common stocks, with emphasis on medium-sized and smaller emerging
growth companies. Management of the Fund will be particularly interested in
companies that are likely to benefit from new or innovative products, services
or processes that should enhance such companies' prospects for future growth in
earnings. As a result of this policy, the market prices of many of the
securities purchased and held by the Fund may fluctuate widely. Any income
received from securities held by the Fund will be incidental, and an investor
should not consider a purchase of shares of the Fund as equivalent to a complete
investment program. Constellation's portfolio is primarily comprised of
securities of two basic categories of companies: (a) "core" companies, which
Fund management considers to have experienced above-average and consistent
long-term growth in earnings and to have excellent prospects for outstanding
future growth, and (b) "earnings acceleration" companies which Fund management
believes are currently enjoying a dramatic increase in profits. See "Certain
Investment Strategies and Policies" and "Investment Restrictions" below and
"Investment Program and Restrictions" in the Statement of Additional
Information.
CERTAIN INVESTMENT STRATEGIES AND POLICIES
In pursuit of its objectives and policies, each of the Funds may employ one or
more of the following strategies in order to enhance investment results:
REPURCHASE AGREEMENTS. Each of the Funds may enter into repurchase agreements.
A repurchase agreement is an instrument under which the Fund acquires ownership
of a debt security and the seller agrees, at the time of the sale, to repurchase
the obligation at a mutually agreed upon time and price, thereby determining the
yield during the Fund's holding period. With regard to repurchase transactions,
in the event of a bankruptcy or other default of a seller of a repurchase
agreement, a Fund could experience both delays in liquidating the underlying
securities and losses, including: (a) a possible decline in the value of
8
<PAGE> 177
the underlying security during the period while the Fund seeks to enforce its
rights thereto; (b) possible subnormal levels of income and lack of access to
income during this period; and (c) expenses of enforcing its rights.
STOCK INDEX FUTURES CONTRACTS. Each of the Funds may purchase and sell stock
index futures contracts as a hedge against changes in market conditions. A stock
index futures contract is an agreement pursuant to which two parties agree to
take delivery of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of the last trading day of
the contract and the price at which the futures contract is originally struck.
Charter, Constellation and Weingarten will only enter into domestic stock index
futures. No physical delivery of the underlying stocks in the index is made.
Each of the Funds will only enter into futures contracts as a hedge against
changes resulting from market conditions in the values of the securities held or
which the Fund intends to purchase. Generally, a Fund may elect to close a
position in a futures contract by taking an opposite position which will operate
to terminate the Fund's position in the futures contract. See the Statement of
Additional Information for a description of the Funds' investments in futures
contracts, including certain related risks. The Funds may each purchase or sell
futures contracts if, immediately thereafter, the sum of the amount of margin
deposits and premiums on open positions with respect to futures contracts would
not exceed 5% of the market value of a Fund's total assets.
WRITING COVERED CALL OPTION CONTRACTS. Each of Weingarten and Constellation
may write (sell) covered call options. The purpose of such transactions is to
hedge against changes in the market value of a Fund's portfolio securities
caused by fluctuating interest rates, fluctuating currency exchange rates and
changing market conditions, and to close out or offset existing positions in
such options or futures contracts as described below. None of the Funds will
engage in such transactions for speculative purposes.
Constellation and Weingarten may each write (sell) call options, but only if
such options are covered and remain covered as long as the Fund is obligated as
a writer of the option (seller). A call option is "covered" if a Fund owns the
underlying security covered by the call. If a "covered" call option expires
unexercised, the writer realizes a gain in the amount of the premium received.
If the covered call option is exercised, the writer realizes either a gain or
loss from the sale or purchase of the underlying security with the proceeds to
the writer being increased by the amount of the premium. Prior to its
expiration, a call option may be closed out by means of a purchase of an
identical option. Any gain or loss from such transaction will depend on whether
the amount paid is more or less than the premium received for the option plus
related transaction costs.
Options are subject to certain risks, including the risk of imperfect
correlation between the option and a Fund's other investments and the risk that
there might not be a liquid secondary market for the option when the Fund seeks
to hedge against adverse market movements. In general, options whose strike
prices are close to their underlying securities' current values will have the
highest trading value, while options whose strike prices are further away may be
less liquid. The liquidity of options may also be affected if options exchanges
impose trading halts, particularly when markets are volatile.
The investment policies of each of Weingarten and Constellation permit the
writing of call options on securities comprising no more than 25% of the value
of each Fund's net assets. Each Fund's policies with respect to the writing of
call options may be changed by the Company's Board of Directors, without
shareholder approval.
ILLIQUID SECURITIES. None of the Funds will invest more than 15% of their net
assets in illiquid securities, including repurchase agreements with maturities
in excess of seven days.
RULE 144A SECURITIES. Each of the Funds may invest in securities that are
subject to restrictions on resale because they have not been registered under
the Securities Act of 1933 (the "1933 Act"). These securities are sometimes
referred to as private placements. Although securities which may be resold only
to "qualified institutional buyers" in accordance with the provisions of Rule
144A under the 1933 Act are unregistered securities, the Funds may each purchase
Rule 144A securities without regard to the limitation on investments in illiquid
securities described above under "Illiquid Securities," provided that a
determination is made that such securities have a readily available trading
market. AIM will determine the liquidity of Rule 144A securities under the
supervision of the Company's Board of Directors. The liquidity of Rule 144A
securities will be monitored by AIM and, if as a result of changed conditions,
it is determined that a Rule 144A security is no longer liquid, a Fund's
holdings of illiquid securities will be reviewed to determine what, if any,
action is required to assure that the Fund does not exceed its applicable
percentage limitation for investments in illiquid securities.
FOREIGN SECURITIES. To the extent consistent with their respective investment
objectives, each of the Funds may invest in foreign securities. It is not
anticipated that such foreign securities, which may be payable in foreign
currencies and traded abroad, will constitute more than 20% of the value of the
Funds' total assets. For purposes of calculating such limitation, American
Depository Receipts, European Depository Receipts and other securities
representing underlying securities of foreign issuers are treated as foreign
securities. 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
9
<PAGE> 178
stock, depositary receipts for stock and fixed income or equity securities
exchangeable for or convertible into stock) of foreign companies which, with
their predecessors, have been in continuous operation for three years or more
and which generally are listed on a recognized foreign securities exchanges 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. For a discussion of
the risks pertaining to investments in foreign obligations, see "Risk Factors"
below.
RISK FACTORS REGARDING FOREIGN SECURITIES. Investments by a Fund in foreign
securities, including Eurodollar, Yankee dollar and other foreign obligations,
may entail all of the risks set forth below. Investments by a Fund in ADRs may
entail certain political and economic risks and regulatory risks as set forth
below.
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.
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.
PORTFOLIO TURNOVER. Any particular security will be sold, and the proceeds
reinvested, whenever such action is deemed prudent from the viewpoint of a
Fund's investment objectives, regardless of the holding period of that security.
Each Fund's historical portfolio turnover rates are included in the Financial
Highlights tables above. A higher rate of portfolio turnover may result in
higher transaction costs, including brokerage commissions. Also, to the extent
that higher portfolio turnover results in a higher rate of net realized capital
gains to a Fund, the portion of the Fund's distributions constituting taxable
capital gains may increase.
The investment objectives and policies stated above are not fundamental
policies of the Funds and may be changed by the Board of Directors of the
Company without shareholder approval. Shareholders will be notified before any
material change in the investment policies stated above become effective.
INVESTMENT RESTRICTIONS
Each of the Funds has adopted a number of investment restrictions, including
the following:
BORROWING. Each of the Funds may borrow money to a limited extent from banks
(including the Funds' custodian bank) for temporary or emergency purposes.
Charter and Weingarten may each borrow amounts of up to 10% of their respective
total assets and may each pledge amounts of up to 20% of their respective total
assets to secure such borrowings. Currently, Charter, Weingarten and
Constellation each have a committed credit facility with Chemical Bank.
Constellation may borrow amounts to purchase or carry securities only if,
immediately after such borrowing, the value of its assets, including the amount
borrowed, less its liabilities, is equal to at least 300% of the amount
borrowed, plus all outstanding borrowings.
10
<PAGE> 179
In addition to the ability to borrow money for temporary or emergency
purposes, Constellation may, but has no current intention to, borrow money from
banks to purchase or carry securities. The amount of such borrowings is limited
by provisions of the Investment Company Act of 1940 (the "1940 Act"). Any
investment gains made by Constellation with the borrowed monies in excess of
interest paid by the Fund will cause the net asset value of the Fund's shares to
rise faster than would otherwise be the case. On the other hand, if the
investment performance of the additional securities purchased with the proceeds
of such borrowings fails to cover the interest paid on the money borrowed by the
Fund, the net asset value of the Fund will decrease faster than would otherwise
be the case. This speculative factor is known as "leveraging."
LENDING OF FUND SECURITIES. Each of the Funds may also lend its portfolio
securities in amounts up to 33 1/3% of the total assets of the respective Funds.
Such loans would involve risks of delay in receiving additional collateral in
the event the value of the collateral decreased below the value of the
securities loaned or of delay in recovering the securities loaned or even loss
of rights in the collateral should the borrower of the securities fail
financially. However, loans will be made only to borrowers deemed by AIM to be
of good standing and only when, in AIM's judgment, the income to be earned from
the loans justifies the attendant risks.
The foregoing investment restrictions are matters of fundamental policy and
may not be changed without shareholder approval. For additional investment
restrictions applicable to the Funds, see the Statement of Additional
Information.
PURCHASE OF SHARES
Shares of the Institutional Classes of the Funds are sold on a continuing
basis at their respective net asset values. Although no sales charge is imposed
in connection with the purchase of shares, banks or other financial institutions
may charge a recordkeeping, account maintenance or other fee to their customers,
and beneficial holders of shares of the Funds should consult with such
institutions to obtain a schedule of such fees. In order to maximize its income,
each Fund attempts to remain as fully invested as practicable. Accordingly, in
order to be accepted for execution, purchase orders must be submitted in proper
form and received by FMC prior to 4:00 p.m. Eastern Time on a business day of
the Funds, and such orders will be confirmed at the net asset value determined
as of the close of that day ("trade date"). A "business day of the Funds" means
any day on which the New York Stock Exchange is open for trading. It is expected
that the New York Stock Exchange will be closed during the next twelve months on
Saturdays and Sundays and on the days on which New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the New York Stock Exchange.
In accordance with the current rules and regulations of the SEC, the net asset
value of a Fund share is determined once daily as of 4:00 p.m. Eastern Time on
each business day of the Funds by dividing the value of the Fund's securities,
cash and other assets (including accrued expenses but excluding capital and
surplus), by the number of shares outstanding. In the event the New York Stock
Exchange closes early (i.e., before 4:00 p.m. Eastern Time) on a particular day,
the net asset value of a Fund share is determined as of the close of the New
York Stock Exchange on such day. For purposes of determining net asset value per
share, futures and options contract closing prices which are available 15
minutes after the close of trading of the New York Stock Exchange will generally
be used. Determination of the Fund's net asset value per share is made in
accordance with generally accepted accounting principles.
Payments for shares purchased must be in the form of federal funds or other
funds immediately available to the Funds and must be made on the "settlement
date," which shall be the next business day of the Funds following the trade
date. Federal Reserve wires should be sent as early as possible on the
settlement date in order to facilitate crediting to the shareholder's account.
Any funds received in respect of an order which is not accepted by a Fund and
any funds received for which an order has not been received will be returned to
the sending institution. An order to purchase shares must specify which Fund is
being purchased, otherwise any funds received will be returned to the sending
institution.
The minimum initial investment in any of the Funds is $100,000. Institutions
may be requested to maintain separate Master Accounts in each Fund for shares
held by the institution (a) for its own account, for the account of other
institutions and for accounts for which the institution acts as a fiduciary, and
(b) for accounts for which the institution acts in some other capacity. An
institution's Master Account(s) and sub-accounts with a Fund may be aggregated
for the purpose of the minimum investment requirement. No minimum amount is
required for subsequent investments in a Fund nor are minimum balances required.
Prior to the initial purchase of shares, an Account Application must be
completed and sent to FMC at 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. An Account Application may be obtained from FMC.
In the interest of economy and convenience, certificates representing shares
of the Funds will not be issued except upon written request to the applicable
Fund. Certificates (in full shares only) will be issued without charge and may
be redeposited at any time.
11
<PAGE> 180
The Company, FMC and their agents reserve the right at any time (a) to
withdraw all or any part of the offering made by this Prospectus; (b) to reject
any purchase or exchange order or to cancel any purchase due to nonpayment of
the purchase price; (c) to increase, waive or lower the minimum investment
requirements; or (d) to modify any of the terms or conditions of purchases of
shares of a Fund.
REDEMPTION OF SHARES
A shareholder may redeem any or all of its shares at the net asset value next
determined after receipt of the redemption request in proper form by the
applicable Fund. See "Determination of Net Asset Value." Redemption requests
with respect to shares for which certificates have not been issued are normally
made by calling FMC.
Payment for redeemed shares is normally made by Federal Reserve wire to the
commercial bank account designated in the shareholder's Account Application, but
may be remitted by check upon request by a shareholder. If a redemption request
is received by AIFS prior to 4:00 p.m. Eastern time on a business day of such
Fund, the redemption will be effected at the net asset value determined as of
the close of that day (the "redemption date"). The proceeds of a redemption
request will be wired on the next business day following the redemption date.
Payment for shares redeemed by mail and payment for telephone redemptions in
amounts under $1,000 may, at the option of a Fund, be made by check mailed
within seven days after receipt of the redemption request in proper form. A Fund
may make payment for telephone redemptions in excess of $1,000 by check when it
is considered to be in the Fund's best interest to do so.
A Fund's shares are not redeemable at the option of the Fund unless the Board
of Directors of the Fund determines in its sole discretion that failure to so
redeem may have materially adverse consequences to the shareholder of such Fund.
DIVIDENDS AND DISTRIBUTIONS
Each Fund's current policy is to pay dividends from net investment income, if
any, on a quarterly basis with respect to Charter and on an annual basis with
respect to Weingarten and Constellation. In addition, each Fund's current policy
is to make distributions of any realized capital gains before the end of each
calendar year. 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. All dividends and
distributions of a Fund are automatically reinvested on the payment date in full
and fractional shares of such Fund, calculated at their net asset value on the
ex-dividend date for the dividend or distribution, unless the shareholder has
elected, by written notice to FMC, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of an Institutional Class of one of the other Funds offered pursuant
to this Prospectus. If a shareholder has redeemed or exchanged all of the shares
in his account between the record date and the payment date for a dividend or
distribution, such dividend or distribution is paid in cash regardless of
whether the shareholder has previously elected to reinvest such dividends or
distributions.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by written notice to FMC and are effective as to any
subsequent payment if such notice is received by FMC prior to the record date of
such payment. Any dividend and distribution election remains in effect until FMC
receives a revised written election by the shareholder.
Any dividend or distribution paid by a Fund 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, as discussed below.
FEDERAL TAXES
Each Fund has qualified and intends to continue to qualify for treatment as a
regulated investment company under Sub-chapter M of the Internal Revenue Code of
1986, as amended (the "Code"). As long as each Fund qualifies for this tax
treatment, it is not subject to federal income taxes on amounts distributed to
shareholders. Each Fund, for purposes of determining taxable income,
distribution requirements and other requirements of Subchapter M, is treated as
a separate corporation. Therefore, no Fund may offset its gains against another
Fund's losses and each Fund must individually comply with all of the provisions
of the Code which are applicable to its operations.
Because the Company intends to distribute substantially all of the net
investment income and net realized capital gains of each Fund to its respective
shareholders, it is not expected that the Funds will be required to pay any
federal income tax. Each Fund also intends to meet the distribution requirements
of the Code to avoid the imposition of a 4% excise tax. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends
12
<PAGE> 181
and distributions received by them from a Fund whether in the form of cash or
additional shares of a Fund. Shareholders are notified annually of the federal
tax status of dividends and capital gains distributions. Dividends paid by a
Fund (other than long-term capital gain distributions) generally will qualify
for the federal 70% dividends received deduction for corporate shareholders to
the extent of the qualifying dividends received by the Fund from domestic
corporations.
For each sale of a Funds' shares by a shareholder who is not an exempt payee,
the Fund or the securities dealer effecting the transaction is required to file
an information return with the IRS.
Distributions may be subject to treatment under foreign, state or local tax
laws which differs from the federal income tax consequences discussed herein.
Shareholders are advised to consult with their own tax advisers concerning the
application of state, local, or foreign taxes. Additional information about
taxes is set forth in the Statement of Additional Information.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of the shares of the
Institutional Class of each of the Funds is determined as of 4:00 p.m. Eastern
Time on each business day of the Funds. In the event the New York Stock Exchange
closes early (i.e. before 4:00 p.m. Eastern Time) on a particular day, the net
asset value will be determined as of the close of the New York Stock Exchange on
such day. For purposes of determining net asset value per share, futures and
options contract closing prices which are available 15 minutes after the close
of trading of the New York Stock Exchange will generally be used. A "business
day" is any day on which the New York Stock Exchange is open for business. It is
expected that the New York Stock Exchange will be closed during the next twelve
months on Saturdays and Sundays and on the days on which New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day are observed by the New York Stock Exchange.
The net asset values per share of the Institutional Class and the Retail Class
of a Fund will differ because of different expenses attributable to each class.
The income or loss and the expenses common to both classes of a Fund are
allocated to each class on the basis of the net assets of each such class
calculated as of the close of business on the previous business day of the Fund,
as adjusted for current day's shareholder activity of each class. In addition to
certain common expenses which are allocated to both classes of a Fund, certain
expenses, such as those related to the distribution of shares of a class, are
allocated only to the class to which such expenses relate. The net asset value
per share of a class is determined by subtracting the liabilities (e.g., the
expenses) allocated to the class from the assets allocated to the class and
dividing the results by the total number of shares outstanding of such class.
The determination of net asset value per share of each class is made in
accordance with generally accepted accounting principles. Among other items, a
Fund's liabilities include accrued expenses and dividends payable, and its total
assets include portfolio securities valued at their market value as well as
income accrued but not yet received. Securities for which market quotations are
not readily available are valued at fair value as determined in good faith by or
under the supervision of the Company's officers and in accordance with methods
which are specifically authorized by the Board of Directors of the Company.
Short-term obligations with maturities of 60 days or less are valued at
amortized cost, which approximates market value.
PERFORMANCE
The performance of the Institutional Class of each Fund may be quoted in
advertising in terms of yield or total return. Performance information can be
obtained by calling the Company at (800) 659-1005. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Funds. Further information regarding each Fund's
performance is contained in that Fund's annual report to shareholders which is
available upon request and without charge.
The total return shows the overall change in value of a Fund's Institutional
Class, including changes in share price assuming all dividends and capital gain
distributions attributable to such Fund's Institutional Class are reinvested. A
cumulative total return reflects the performance of a Fund's Institutional Class
over a stated period of time. An average annual total return reflects the
hypothetical annually compounded return that would have produced the same
cumulative total return if the performance of a Fund's Institutional Class had
been constant over the entire period. Investors should recognize that average
annual returns are not the same as actual year-by-year results because they tend
to even out variations in the total returns. To illustrate the components of
overall performance, the Institutional Class of a Fund may separate its
cumulative and average annual returns into income results and capital gain or
loss.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of any Fund. Such a practice will
have the effect of increasing the Fund's yield and total return.
The performance of the Institutional Class of each Fund will vary from time to
time and past results are not necessarily indicative of future results. The
performance of the Institutional Class of a Fund is a function of its portfolio
management in select-
13
<PAGE> 182
ing the type and quality of portfolio securities and is affected by operating
expenses of the Institutional Class and market conditions.
REPORTS TO SHAREHOLDERS
The Company furnishes shareholders with semi-annual reports containing
information about the Company and its operations, including a list of the
investments held in the Funds and financial statements. The annual financial
statements of each Fund are audited by the Fund's independent auditors. A copy
of the current list of the investments of each Fund will be sent to shareholders
upon request.
Each shareholder will be provided with a written confirmation for each
transaction. Institutions establishing sub-accounts will receive a written
confirmation for each transaction in a sub-account. Duplicate confirmations may
be transmitted to the beneficial owner of the sub-account if requested by the
institution. The institution will receive a monthly statement setting forth, for
each sub-account, the share balance, income earned for the month, income earned
for the year to date and the total current value of the account.
MANAGEMENT
The overall management of the business and affairs of the Funds is vested with
the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Company and persons or companies furnishing
services to a Fund, including the Master Advisory Agreement with AIM, the Master
Sub-Advisory Agreement between AIM and AIM Capital, the Master Administrative
Services Agreement with AIM, the Transfer Agency and Service Agreement with
AIFS, the Funds' agreement with FMC as the distributor of the shares of its
Institutional Class, and the Funds' agreement with State Street Bank and Trust
Company serving as custodian to the Funds. The day-to-day operations of each
Fund are delegated to its officers and to AIM, subject always to the objectives
and policies of the Fund and to the general supervision of the Company's Board
of Directors. Certain directors and officers of the Company are affiliated with
AIM and A I M Management Group Inc. ("AIM Management"), the parent of AIM. AIM
Management is a holding company engaged in the financial services business.
Information concerning the Board of Directors may be found in the Statement of
Additional Information.
INVESTMENT ADVISOR
AIM, 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, serves as the
investment advisor to each Fund pursuant to the Master Advisory Agreement. AIM
was organized in 1976 and advises or manages 37 investment company portfolios
(including the Funds). As of December 1, 1995, the total assets of the mutual
funds managed or advised by AIM and its affiliates were approximately $41.2
billion. AIM is a wholly-owned subsidiary of AIM Management.
Under the terms of the Master Advisory Agreement, AIM supervises all aspects
of the Funds' operations and provides investment advisory services to the Funds.
The Master Advisory Agreement also provides that, upon the request of the
Company's Board of Directors, AIM may perform certain accounting, shareholder
servicing and other administrative services for each Fund which are not required
to be performed by AIM under the Master Advisory Agreement. For such services
AIM, pursuant to the Master Administrative Services Agreement between the
Company and AIM, is entitled to receive from each Fund reimbursement of its
costs or such reasonable compensation as may be approved by the Company's Board
of Directors. Currently, AIM is reimbursed for the services of each Fund's
principal financial officer and his staff, and any expenses related to such
services. Under the Transfer Agency and Service Agreement between the Company
and AIFS, 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, a
wholly-owned subsidiary of AIM and a registered transfer agent, AIFS receives a
fee for its provision of transfer agency, dividend distribution and
disbursement, and shareholder services to the Institutional Classes of the
Funds. AIM obtains and evaluates economic, statistical and financial information
to formulate and implement investment programs for the Funds. AIM will not be
liable to the Funds or their shareholders except in the case of AIM's willful
misfeasance, bad faith, gross negligence or reckless disregard of duty;
provided, however that AIM may be liable for certain breaches of duty under the
1940 Act.
SUB-ADVISOR
AIM Capital, 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, serves
as sub-advisor to each Fund pursuant to the Master Sub-Advisory Agreement
between AIM and AIM Capital. Under the terms of the Master Sub-Advisory
Agreement, AIM has appointed AIM Capital to provide certain investment advisory
services for each Fund, subject to overall supervision by AIM and the Company's
Board of Directors. Prior sub-advisory agreements between AIM and AIM Capital
for each of the Funds, with substantially identical terms to the Master
Sub-Advisory Agreement, were in effect prior to October 18, 1993. AIM Capital is
a wholly-owned subsidiary of AIM. Certain of the directors and officers of AIM
Capital are also executive officers of the Company.
14
<PAGE> 183
FEE WAIVERS
AIM may in its discretion from time to time agree to waive voluntarily all or
any portion of its advisory fee and/or assume certain expenses of any Fund but
will retain its ability to be reimbursed prior to the end of the fiscal year.
ADVISORY FEES
As compensation for its services AIM is paid an investment advisory fee, which
is calculated separately for each Fund. AIM received total advisory fees from
Charter, Weingarten and Constellation for the fiscal year ended October 31,
1995, which represented 0.64%, 0.61% and 0.62%, respectively, of each of such
Fund's average daily net assets. AIM received reimbursement of administrative
services costs from Charter, Weingarten and Constellation for the fiscal year
ended October 31, 1995, which represented 0.006%, 0.004% and 0.003%,
respectively, of each of such Fund's average daily net assets. Total expenses of
the Institutional Class of Charter, Weingarten and Constellation for the fiscal
year ended October 31, 1995, stated as a percentage of average net assets were
0.74%, 0.70% and 0.66%, respectively. As compensation for its services, AIM
Capital receives a fee equal to 50% of the fees received by AIM under the Master
Advisory Agreement on behalf of the Funds.
DISTRIBUTOR
The Company has entered into a Master Distribution Agreement dated as of
October 18, 1993, on behalf of the Institutional Class of each of the Funds (the
"Master Distribution Agreement") with FMC, a registered broker-dealer and a
wholly-owned subsidiary of AIM, to act as the distributor of the shares of the
Funds. The address of FMC is 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Certain directors and officers of the Funds are affiliated with FMC.
The Master Distribution Agreement provides that FMC has the exclusive right to
distribute Institutional Shares of the Funds either directly or through other
broker-dealers. FMC receives no fee for its services as distributor.
Distribution agreements between the Company and FMC with respect to each of the
Funds, with substantially identical terms to the Master Distribution Agreement,
were in effect prior to October 18, 1993. FMC is the distributor of several of
the mutual funds administered or advised by AIM.
FMC may, from time to time, at its expense, pay a bonus or other consideration
or incentive to dealers or banks who sell a minimum dollar amount of the shares
of the Funds during a specific period of time. In some instances, these
incentives may be offered only to certain dealers or institutions who have sold
or may sell significant amounts of shares. The total amount of such additional
bonus payments or other consideration shall not exceed 0.10% of the net asset
value of the shares of the Funds sold. Any such bonus or incentive programs will
not change the price paid by investors for the purchase of shares of the Funds
or the amount received as proceeds from such sales. Dealers or institutions may
not use sales of the shares of the Funds to qualify for any incentives to the
extent that such incentives may be prohibited by the laws of any jurisdiction.
PORTFOLIO MANAGERS
AIM uses a team approach and a disciplined investment process in providing
investment advisory services to all of its accounts, including the Funds. AIM's
investment staff consists of 95 individuals. While individual members of AIM's
investment staff are assigned primary responsibility for the day-to-day
management of each of AIM's accounts, all accounts are reviewed on a regular
basis by AIM's Investment Policy Committee to ensure that they are being
invested in accordance with the account's and AIM's investment policies. The
individuals who are primarily responsible for the day-to-day management of the
Funds and their titles, if any, with AIM or its affiliates and the Fund, the
length of time they have been responsible for the management, and their years of
investment experience and prior experience (if they have been with AIM for less
than five years) are shown below.
Lanny H. Sachnowitz and Joel P. Dobberpuhl are primarily responsible for
day-to-day management of Charter. Mr. Sachnowitz is Vice President of AIM
Capital and has been responsible for the Fund since 1991. Mr. Sachnowitz has
been associated with AIM and/or its affiliates since 1987 and has seven years of
experience as an investment professional. Mr. Dobberpuhl is Vice President of
AIM Capital and has been responsible for the Fund since 1995. Mr. Dobberpuhl has
been associated with AIM since 1990 and has a total of six years of experience
as an investment professional. Prior to 1990, he served as an equity trader and
portfolio analyst for NationsBank of Texas, N.A.
Jonathan C. Schoolar, Robert M. Kippes and David P. Barnard are primarily
responsible for the day-to-day management of Weingarten. Mr. Schoolar is Senior
Vice President and Director of AIM Capital, Vice President of AIM and Senior
Vice President of the Company and has been responsible for the Fund since 1987.
He has been associated with AIM and/or its affiliates since 1986 and has 12
years of experience as an investment professional. Mr. Kippes is Vice President
of AIM Capital and has been responsible for the Fund since 1994. Mr. Kippes has
been associated with AIM and/or its affiliates since 1989 and has six years of
experience as an investment professional. Mr. Barnard is Vice President of AIM
Capital and has been responsible for the Fund since 1986. Mr. Barnard has been
associated with AIM and/or its affiliates since 1982 and has 21 years of
experience as an investment professional.
15
<PAGE> 184
Robert M. Kippes, David P. Barnard and Jonathan C. Schoolar are primarily
responsible for the day-to-day management of Constellation. Mr. Kippes is Vice
President of AIM Capital. He currently serves as manager for Constellation and
has been responsible for the Fund since 1993. Mr. Kippes' background is
discussed above with respect to the management of Constellation. Mr. Barnard's
background is discussed above with respect to the management of Weingarten; he
has also been responsible for the management of Constellation since 1990. Mr.
Schoolar, whose background is discussed above with respect to the management of
Weingarten, has also been responsible for the management of Constellation since
1987.
GENERAL INFORMATION
ORGANIZATION OF THE COMPANY
The Company was organized in 1988 as a Maryland corporation, and is registered
with the Securities and Exchange Commission as a diversified, open-end, series,
management investment company. The Company currently consists of four separate
operating portfolios: Charter and Weingarten, each of which has a Retail Class
of shares consisting of Class A and Class B shares and an Institutional Class;
Constellation, which has a Retail Class of Class A shares and an Institutional
Class, and Aggressive Growth, which has a Retail Class of Class A shares.
The authorized capital stock of the Company consists of 7,000,000,000 shares
of common stock with a par value of $.001 per share, of which 750,000,000 shares
are classified Class A shares of each investment portfolio (including two that
have not commenced operations), 750,000,000 shares are classified Class B shares
of each of Charter and Weingarten, 200,000,000 shares are classified
Institutional Shares of each of the Funds, and the balance of which are
unclassified.
Each class of shares of the same Fund represent interests in that Fund's
assets and have identical voting, dividend, liquidation and other rights on the
same terms and conditions, except that each class of shares bears differing
class-specific expenses, is subject to differing sales loads, conversion
features and exchange privileges, and has exclusive voting rights on matters
pertaining to that class' distribution plan.
Except as specifically noted above, shareholders of each Fund are entitled to
one vote per share (with proportionate voting for fractional shares),
irrespective of the relative net asset value of the different classes of shares,
where applicable, of a Fund. However, on matters affecting one portfolio of the
Company or one class of shares, a separate vote of shareholders of that
portfolio or class is required. Shareholders of a portfolio or class are not
entitled to vote on any matter which does not affect that portfolio or class but
which requires a separate vote of another portfolio or class. An example of a
matter which would be voted on separately by shareholders of a portfolio is the
approval of an advisory agreement, and an example of a matter which would be
voted on separately by shareholders of a class of shares is approval of a
distribution plan. When issued, shares of each Fund are fully paid and
nonassessable, have no preemptive or subscription rights, and are fully
transferable. Other than the automatic conversion of Class B shares to Class A
shares, there are no conversion rights. Shares do not have cumulative voting
rights, which means that in situations in which shareholders elect directors,
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors of the Company, and the holders of less than 50% of
the shares voting for the election of directors will not be able to elect any
directors.
The holders of shares of the Institutional Class of each Fund are entitled to
such dividends payable out of the net assets allocable to such class as may be
declared by the Board of Directors of the Company. In the event of liquidation
or dissolution of the Company, the holders of shares of the Institutional Class
of a Fund will be entitled to receive pro rata, subject to the rights of
creditors, the net assets of the Fund allocable to the Institutional Class.
Fractional shares of each Fund have the same rights as full shares to the extent
of their proportionate interest.
Under Maryland law and the Company's By-Laws, the Company need not hold an
annual meeting of shareholders unless a meeting is required under the 1940 Act
to elect directors. Shareholders may remove directors from office, and a meeting
of shareholders may be called at the request of the holders of 10% or more of
the Company's outstanding shares.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, serves as custodian for the Funds' portfolio securities and
cash.
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173, a wholly-owned subsidiary of AIM and a registered
transfer agent, acts as transfer agent and dividend paying agent for the Funds'
Institutional Classes.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania,
serves as counsel to the Company and has passed upon the legality of the shares
offered pursuant to this Prospectus.
16
<PAGE> 185
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning their account should be directed to FMC at 11
Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, or may be made by calling
(800) 659-1005.
OTHER INFORMATION
This Prospectus sets forth basic information that investors should know about
the Funds prior to investing. A Statement of Additional Information has been
filed with the SEC and is available upon request and without charge by writing
or calling FMC. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
17
<PAGE> 186
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 187
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 188
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 189
<TABLE>
<S> <C>
=================================================== ===================================================
AIM EQUITY FUNDS, INC. PROSPECTUS
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
(800) 659-1005 January 2, 1996
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 1919 AIM EQUITY FUNDS, INC.
Houston, Texas 77046-1173 (INSTITUTIONAL CLASSES)
(713) 626-1919
AIM CHARTER FUND
INVESTMENT SUB-ADVISOR
A I M CAPITAL MANAGEMENT, INC. AIM WEINGARTEN FUND
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173 AIM CONSTELLATION FUND
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY TABLE OF CONTENTS
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173 PAGE
(800) 659-1005 ------
TRANSFER AGENT Summary...................................... 2
A I M INSTITUTIONAL FUND SERVICES, INC.
11 Greenway Plaza, Suite 1919 Table of Fees and Expenses................... 4
Houston, Texas 77046-1173
(800) 340-4246 Financial Highlights......................... 5
AUDITORS Suitability For Investors.................... 7
KPMG PEAT MARWICK LLP
700 Louisiana Investment Programs.......................... 8
NationsBank Building
Houston, Texas 77002 Purchase of Shares........................... 11
CUSTODIAN Redemption of Shares......................... 12
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street Dividends and Distributions.................. 12
Boston, Massachusetts 02110
Federal Taxes................................ 12
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT Determination of Net Asset Value............. 13
CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS, AND IF GIVEN OR Performance.................................. 13
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE Reports to Shareholders...................... 14
FUNDS OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION TO ANY Management................................... 14
PERSON TO WHOM SUCH OFFERING MAY NOT
LAWFULLY BE MADE. General Information.......................... 16
=================================================== ===================================================
</TABLE>
<PAGE> 190
STATEMENT OF
ADDITIONAL INFORMATION
INSTITUTIONAL CLASSES OF
AIM CHARTER FUND
AIM WEINGARTEN FUND
AIM CONSTELLATION FUND
(SERIES PORTFOLIOS OF
AIM EQUITY FUNDS, INC.)
11 GREENWAY PLAZA
SUITE 1919
HOUSTON, TEXAS 77046-1173
(800) 659-1005
_________________________
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS
AND IT SHOULD BE READ IN CONJUNCTION WITH
A PROSPECTUS OF THE ABOVE-NAMED FUNDS,
A COPY OF WHICH MAY BE OBTAINED FREE OF CHARGE
FROM AUTHORIZED DEALERS OR BY WRITING
FUND MANAGEMENT COMPANY,
11 GREENWAY PLAZA, SUITE 1919,
HOUSTON, TEXAS 77046-1173
OR BY CALLING (800) 659-1005
_________________________
STATEMENT OF ADDITIONAL INFORMATION DATED JANUARY 2, 1996
RELATING TO PROSPECTUS DATED JANUARY 2, 1996
<PAGE> 191
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION ABOUT THE FUNDS . . . . . . . . . . . . . 1
The Company and its Shares . . . . . . . . . . . . . . . . . 1
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Directors and Officers . . . . . . . . . . . . . . . . . . . 2
Investment Advisor, Sub-Advisor and Administrator. . . . . . 7
Custodian and Transfer Agent . . . . . . . . . . . . . . . . 10
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . 10
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . 10
Principal Holders of Securities. . . . . . . . . . . . . . . 11
PURCHASES AND REDEMPTIONS. . . . . . . . . . . . . . . . . . . 14
Net Asset Value Determination. . . . . . . . . . . . . . . . 14
The Distribution Agreement . . . . . . . . . . . . . . . . . 15
PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . 16
Total Return Calculations. . . . . . . . . . . . . . . . . . 16
Yield Quotations . . . . . . . . . . . . . . . . . . . . . . 17
Historical Portfolio Results . . . . . . . . . . . . . . . . 17
Suspension of Redemption Rights. . . . . . . . . . . . . . . 17
INVESTMENT PROGRAM AND RESTRICTIONS. . . . . . . . . . . . . . 17
Investment Program . . . . . . . . . . . . . . . . . . . . . 17
Foreign Securities . . . . . . . . . . . . . . . . . . . . . 18
Rule 144A Securities . . . . . . . . . . . . . . . . . . . . 18
Lending of Portfolio Securities. . . . . . . . . . . . . . . 18
Repurchase Agreements. . . . . . . . . . . . . . . . . . . . 19
Special Situations . . . . . . . . . . . . . . . . . . . . . 19
Short Sales . . . . . . . . . . . . . . . . . . . . . . . . 19
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Writing Covered Call Options . . . . . . . . . . . . . . . . 20
Futures Contracts. . . . . . . . . . . . . . . . . . . . . . 20
Risks as to Futures Contracts. . . . . . . . . . . . . . . . 21
Investment Restrictions. . . . . . . . . . . . . . . . . . . 22
Additional Restrictions. . . . . . . . . . . . . . . . . . . 25
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . 25
General Brokerage Policy . . . . . . . . . . . . . . . . . . 25
Section 28(e) Standards . . . . . . . . . . . . . . . . . . 27
Brokerage Commissions Paid . . . . . . . . . . . . . . . . . 28
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . 28
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . 28
Reinvestment of Dividends and Distributions. . . . . . . . . 28
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 28
Qualification as a Regulated Investment Company. . . . . . . 29
Excise Tax on Regulated Investment Companies . . . . . . . . 30
</TABLE>
i
<PAGE> 192
<TABLE>
<S> <C>
Fund Distributions . . . . . . . . . . . . . . . . . . . . . 31
Sale or Redemption of Shares . . . . . . . . . . . . . . . . 32
Foreign Shareholders . . . . . . . . . . . . . . . . . . . . 33
Effect of Future Legislation; Local Tax Considerations . . . 33
Other Information . . . . . . . . . . . . . . . . . . . . . 33
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Description of Commercial Paper Ratings. . . . . . . . . . . 35
Description of Corporate Bond Ratings. . . . . . . . . . . . 35
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . FS
</TABLE>
ii
<PAGE> 193
INTRODUCTION
AIM Equity Funds, Inc. (the "Company") is a series mutual fund. The
rules and regulations of the United States 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 dated January 2, 1996
(the "Prospectus"), which relates to the Institutional Classes of the following
portfolios of the Company: AIM Charter Fund ("Charter"), AIM Weingarten Fund
("Weingarten") and AIM Constellation ("Constellation") (individually, a "Fund"
and collectively, the "Funds"). Additional copies of the Prospectus and this
Statement of Additional Information may be obtained without charge by writing
the principal distributor of the Funds' shares, Fund Management Company
("FMC"), 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173 or by calling
(800) 659-1005. Investors must receive a Prospectus before they invest.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Funds. Some
of the information required to be in this Statement of Additional Information
is also included in the Prospectus; and, in order to avoid repetition,
reference will be made to sections of the Prospectus. Additionally, the
Prospectus and this Statement of Additional Information omits certain
information contained in a 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 FUNDS
THE COMPANY AND ITS SHARES
The Company was organized in 1988 as a Maryland series corporation,
and is registered with the SEC as a diversified open-end series management
investment company. The Company currently consists of four separate
portfolios: Charter and Weingarten, each of which has a Retail Class of shares
consisting of Class A and Class B shares and an Institutional Class;
Constellation, which has a Retail Class of Class A Shares and an Institutional
Class; and AIM Aggressive Growth Fund ("Aggressive Growth"), which has a Retail
Class of Class A shares. Prior to October 15, 1993, Aggressive Growth was a
portfolio of AIM Funds Group ("AFG"), a Massachusetts business trust. Pursuant
to an Agreement and Plan of Reorganization between the Company and AFG,
Aggressive Growth was redomesticated as a portfolio of the Company effective as
of October 15, 1993.
This Statement of Additional Information relates solely to the
Institutional Classes of the Funds.
The term "majority of the outstanding shares" of the Company, of a
particular Fund or of a particular class of a Fund means, respectively, the
vote of the lessor of (a) 67% or more of the shares of the Company, such Fund
or such class present at a meeting of the Company's shareholders, if the
holders of more than 50% of the outstanding shares of the Company, such Fund or
such class are present or represented by proxy, or (b) more than 50% of the
outstanding shares of the Company, such Fund or such class.
Shareholders of the Funds do not have cumulative voting rights, and
therefore the holders of more than 50% of the outstanding shares of all
portfolios of the Company voting together for election of directors may elect
all of the members of the Board of Directors of the Company. In such event,
the remaining holders cannot elect any members of the Board of Directors of the
Company.
Each class of shares of each Fund has 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 Board of Directors with
respect to that class and, upon liquidation of the Fund, to participate
proportionately in the net assets
1
<PAGE> 194
of the Fund allocable to that class remaining after satisfaction of outstanding
liabilities of the Fund allocable to that Class. Fund shares are fully paid,
non-assessable and fully transferable when issued and have no preemptive,
conversion or exchange rights. Fractional shares have proportionately the same
rights, including voting rights, as are provided for a full share.
MANAGEMENT
DIRECTORS AND OFFICERS
The directors and officers of the Company and their principal
occupations during the last five years are set forth below. Unless otherwise
indicated, the address of each director and officer is 11 Greenway Plaza, Suite
1919, Houston, Texas 77046-1173. All of the Company's executive officers hold
similar offices with some or all of the other AIM Funds.
*CHARLES T. BAUER, Director and Chairman (76)
Director, Chairman and Chief Executive Officer, A I M Management Group
Inc.; Chairman of the Board of Directors, A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company; and Director, AIM Global Advisors
Limited, A I M Global Management Company Limited and AIM Global Ventures Co.
BRUCE L. CROCKETT, Director (51)
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Director, President and Chief Executive Officer, COMSAT Corporation
(includes COMSAT World Systems, COMSAT Mobile Communications, COMSAT Video
Enterprises, COMSAT RSI and COMSAT International Ventures). Previously,
President and Chief Operating Officer, COMSAT Corporation; President, World
Systems Division, COMSAT Corporation; and Chairman, Board of Governors of
INTELSAT; (each of the COMSAT companies listed above is an international
communication, information and entertainment-distribution services company).
OWEN DALY II, Director (71)
Six Blythewood Road
Baltimore, MD 21210
Director, Cortland Trust Inc. (investment company). Formerly,
Director, CF & I Steel Corp., Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the Board of Equitable
Bancorporation.
__________________________
* A director who is an "interested person," of the Company and A I M
Advisors, Inc. as defined in the Investment Company Act of 1940 (the
"1940 Act").
2
<PAGE> 195
*CARL FRISCHLING, Director (58)
919 Third Avenue
New York, NY 10022
Partner, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel (law firm).
Formerly, Partner, Reid & Priest (law firm); and, prior thereto, Partner,
Spengler Carlson Gubar Brodsky & Frischling (law firm).
**ROBERT H. GRAHAM, Director and President (49)
Director, President and Chief Operating Officer, 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., A I M Global Associates, Inc., A I M Global Holdings,
Inc., AIM Global Ventures Co., A I M Institutional Fund Services, Inc. and
Fund Management Company; and Senior Vice President, AIM Global Advisors
Limited.
JOHN F. KROEGER, Director (71)
24875 Swan Road - Martingham
Box 464
St. Michaels, MD 21663
Director, Flag Investors International Fund, Inc., Flag Investors
Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund, Inc., Flag
Investors Equity Partners Fund, Inc., Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income Fund, Inc., Managed Municipal Fund,
Inc., Flag Investors Value Builder Fund, Inc., Flag Investors Maryland
Intermediate Tax-Free Income Fund, Inc., Flag Investors Real Estate Securities
Fund, Inc., Alex. Brown Cash Reserve Fund, Inc. and North American Government
Bond Fund, Inc. (investment companies). Formerly, Consultant, Wendell &
Stockel Associates, Inc. (consulting firm).
LEWIS F. PENNOCK, Director (53)
8955 Katy Freeway, Suite 204
Houston, TX 77024
Attorney in private practice in Houston, Texas.
IAN W. ROBINSON, Director (72)
183 River Drive
Tequesta, FL 33469
Formerly, Executive Vice President and Chief Financial Officer, Bell
Atlantic Management Services, Inc. (provider of centralized management services
to telephone companies); Executive Vice President, Bell Atlantic Corporation
(parent of seven telephone companies); and Vice President and Chief Financial
Officer, Bell Telephone Company of Pennsylvania and Diamond State Telephone
Company.
___________________
* A director who is an "interested person" of the Company as defined in
the 1940 Act.
** A director who is an "interested person," of the Company and AIM
Advisors, Inc. as defined in the 1940 Act.
3
<PAGE> 196
LOUIS S. SKLAR, Director (56)
Transco Tower, 50th Floor
2800 Post Oak Blvd.
Houston, TX 77056
Executive Vice President, Development and Operations, Hines Interests
Limited Partnership (real estate development).
***JOHN J. ARTHUR, Senior Vice President and Treasurer (51)
Senior Vice President and Treasurer, A I M Advisors, Inc.; Vice
President and Treasurer, A I M Management Group Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management Company; and Vice President, AIM Global
Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings, Inc.
and AIM Global Ventures Co.
GARY T. CRUM, Senior Vice President (48)
Director and President, A I M Capital Management, Inc.; Director and
Senior Vice President, A I M Management Group Inc., A I M Advisors, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc., and AIM Global Ventures
Co.; Director, A I M Distributors, Inc.; and Senior Vice President, AIM Global
Advisors Limited.
JONATHAN C. SCHOOLAR, Senior Vice President (33)
Director and Senior Vice President, A I M Capital Management, Inc.;
and Vice President, A I M Advisors, Inc.
***CAROL F. RELIHAN, Vice President and Secretary (41)
Senior Vice President, General Counsel and Secretary, A I M Advisors,
Inc.; Vice President, General Counsel and Secretary, A I M Management Group
Inc.; Vice President and General Counsel, Fund Management Company; Vice
President and Secretary, A I M Global Associates, Inc. and A I M Global
Holdings, Inc.; Vice President and Assistant Secretary, AIM Global Advisors
Limited and AIM Global Ventures Co.; Vice President, A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and A I M
Institutional Fund Services, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (36)
Vice President and Fund Controller, A I M Advisors, Inc.; and
Assistant Vice President and Assistant Treasurer, Fund Management Company.
_________________
*** Mr. Arthur and Ms. Relihan are married to each other.
4
<PAGE> 197
MELVILLE B. COX, Vice President (52)
Vice President, A I M Advisors, Inc., A I M Capital Management, Inc.,
A I M Fund Services, Inc. and A I M Institutional Fund Services, Inc.; and
Assistant Vice President, A I M Distributors, Inc. and Fund Management Company.
Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant Secretary,
Charles Schwab Family of Funds and Schwab Investments; Chief Compliance
Officer, Charles Schwab Investment Management, Inc.; and Vice President,
Integrated Resources Life Insurance Co. and Capitol Life Insurance Co.
The standing committees of the Board of Directors are the Audit
Committee, the Investments Committee and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Daly, Kroeger
(Chairman), Pennock and Robinson. The Audit Committee is responsible for
meeting with the Company's auditors to review audit procedures and results and
to consider any matters arising from an audit to be brought to the attention of
the directors as a whole with respect to the Company's fund accounting or its
internal accounting controls, and considering such matters as may from time to
time be set forth in a charter adopted by the Board of Directors and such
committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible
for reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividends and distributions issues, and considering
such matters as may from time to time be set forth in a charter adopted by the
Board of Directors and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and
Compensation Committee is responsible for considering and nominating
individuals to stand for election as directors who are not interested persons
as long as the Company maintains a distribution plan pursuant to Rule 12b-1
under the 1940 Act, reviewing from time to time the compensation payable to the
disinterested directors, and considering such matters as may from time to time
be set forth in a charter adopted by the Board of Directors and such committee.
All of the Company's directors also serve as directors or trustees of
some or all of the other investment companies managed or advised by A I M
Advisors, Inc. ("AIM Funds"). All of the Company's executive officers hold
similar offices with some or all of the other AIM Funds.
Remuneration of Directors
Each director is reimbursed for expenses incurred in connection with
each meeting of the Board of Directors or any Committee attended. The
directors of the Company who do not serve as officers of the Company are
compensated for their services according to a fee schedule which recognizes the
fact that they also serve as directors or trustees of certain other investment
companies advised or managed by AIM. Each such director receives a fee,
allocated among the AIM Funds for which he serves as a director or trustee,
which consists of an annual retainer component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued
for each director of the Company:
5
<PAGE> 198
<TABLE>
<CAPTION>
Retirement
Aggregate Benefits Total
Compensation Accrued Compensation
from By All from all
DIRECTOR Company(1) AIM Funds(2) AIM Funds(3)
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
-------------------------------------------------------------------------------------
Bruce L. Crockett 13,461 3,655 57,750
-------------------------------------------------------------------------------------
Owen Daly II 14,385 18,662 58,125
-------------------------------------------------------------------------------------
Carl Frischling 13,938 11,323 57,250
-------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
-------------------------------------------------------------------------------------
John F. Kroeger 14,807 22,313 58,125
-------------------------------------------------------------------------------------
Lewis F. Pennock 13,476 5,067 58,125
-------------------------------------------------------------------------------------
Ian W. Robinson 13,373 15,381 56,750
-------------------------------------------------------------------------------------
Louis S. Sklar 14,003 6,632 57,250
=====================================================================================
- ----------------------
</TABLE>
(1) The total amount of compensation deferred by all Directors of the
Company during the fiscal year ended October 31, 1995, including
interest earned thereon, was $53,856.
(2) During the fiscal year ended October 31, 1995, the total amount of
expenses allocated to the Company in respect of such retirement
benefits was $31,585. Data reflects compensation estimated for the
calendar year ended December 31, 1995.
(3) Messrs. Bauer, Daly, Graham, Kroeger and Pennock each serves as a
Director or Trustee of a total of 11 AIM Funds. Messrs. Crockett,
Frischling, Robinson and Sklar each serves as a Director or Trustee of
a total of 10 AIM Funds. Data reflects compensation estimated for the
calendar year ended December 31, 1995.
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not an employee of any
of the AIM Funds, A I M Management Group Inc. or any of their affiliates) may
be entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "AIM
Funds"). Each eligible director is entitled to receive an annual benefit from
the AIM Funds commencing on the first day of the calendar quarter coincident
with or following his date of retirement equal to 75% of the retainer paid or
accrued by the AIM Funds for such director during the twelve-month period
immediately preceding the director's retirement (including amounts deferred
under a separate agreement between the AIM Funds and the director) for the
number of such director's years of service (not in excess of 10 years of
service) completed with respect to any of the AIM Funds. Such benefit is
payable to each eligible director in quarterly installments. If an eligible
director dies after attaining the normal retirement date but before receipt of
any benefits under the Plan
6
<PAGE> 199
commences, the director's surviving spouse (if any) shall receive a quarterly
survivor's benefit equal to 50% of the amount payable to the deceased director,
for no more than ten years beginning the first day of the calendar quarter
following the date of the director's death. Payments under the Plan are not
secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming various compensation
and years of service classifications. The estimated credited years of service
for Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar
are 8, 9, 18, 18, 14, 8, and 6 years, respectively.
<TABLE>
Annual Compensation
Paid By All AIM Funds
<CAPTION>
$60,000 $65,000
-------------------------------------------------------
<S> <C> <C>
10 $45,000 $48,750
-------------------------------------------------------
9 $40,500 $43,875
Number of -------------------------------------------------------
Years of 8 $36,000 $39,000
Service With -------------------------------------------------------
the AIM Funds 7 $31,500 $34,125
-------------------------------------------------------
6 $27,000 $29,250
-------------------------------------------------------
5 $22,500 $24,375
=======================================================
</TABLE>
Deferred Compensation Agreements
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors may elect to defer receipt of up to 100% of
their compensation payable by the Company, and such amounts are placed into a
deferral account. Currently, the deferring directors may select various AIM
Funds in which all or part of his deferral account shall be deemed to be
invested. Distributions from the deferring directors' deferral accounts will
be paid in cash, in generally equal quarterly installments over a period of ten
years beginning on the date the deferring director's retirement benefits
commence under the Plan. The Company's Board of Directors, in its sole
discretion, may accelerate or extend the distribution of such deferral accounts
after the deferring director's termination of service as a director of the
Company. If a deferring director dies prior to the distribution of amounts in
his deferral account, the balance of the deferral account will be distributed
to his designated beneficiary in a single lump sum payment as soon as
practicable after such deferring director's death. The Agreements are not
funded and, with respect to the payments of amounts held in the deferral
accounts, the deferring directors have the status of unsecured creditors of the
Company and of each other AIM Fund from which they are deferring compensation.
The Company paid the law firm of Kramer, Levin, Naftalis, Nessen,
Kamin & Frankel $6,853, $13,238 and $14,394 in legal fees for services provided
to Charter, Weingarten and Constellation, respectively, during the fiscal year
ended October 31, 1995. Mr. Carl Frischling, a director of the Company, is a
partner in such firm.
INVESTMENT ADVISOR, SUB-ADVISOR AND ADMINISTRATOR
A I M Advisors, Inc. ("AIM") is a wholly owned subsidiary of A I M
Management Group Inc. ("AIM Management"), 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046. AIM Management is a
7
<PAGE> 200
holding company that has been engaged in the financial services business since
1976. Certain of the directors and officers of AIM are also executive officers
of the Company and their affiliations are shown under "Directors and Officers".
The Funds have entered into a Master Investment Advisory Agreement,
dated as of October 18, 1993, (the "Master Advisory Agreement") and a Master
Administrative Services Agreement, dated as of October 18, 1993, (the "Master
Administrative Services Agreement") with AIM, and AIM has entered into a Master
Sub-Advisory Agreement, dated as of October 18, 1993 (the "Master Sub-Advisory
Agreement"), with A I M Capital Management, Inc. ("AIM Capital") with respect
to the Funds.
AIM Capital, a wholly owned subsidiary of AIM, is engaged in the
business of providing investment advisory services to investment companies,
corporations, institutions and other accounts.
AIM was organized in 1976 and manages or advises 37 investment company
portfolios. As of December 1, 1995, the total assets advised or managed by AIM
or its affiliates were approximately $41.2 billion.
AIM and the Company have adopted a Code of Ethics (the "Code") which
requires investment personnel and certain other employees (a) to pre-clear
personal securities transactions subject to the Code, (b) to file reports
regarding such transactions, (c) to 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, and (iii)
transactions involving securities being considered for investment by an AIM
Fund and (d) abide by certain other provisions under the Code. The Code also
prohibits personnel and other employees from purchasing securities in an
initial public offering. Personal trading reports are reviewed periodically by
AIM, and the Board of Directors reviews quarterly and annual reports (including
information on any substantial violations of the Code). Violations of the Code
may result in sanctions which may include censure, monetary penalties,
suspension or termination of employment. [Copies of the Code are on file with
the SEC and available without charge upon written request to the Company.]
Both the Master Advisory Agreement and the Master Sub-Advisory
Agreement provide that each Fund will pay or cause to be paid all expenses of
such Fund not assumed by AIM or AIM Capital, including, without limitation:
brokerage commissions, taxes, legal, 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, the cost of printing copies of prospectuses and statements of
additional information distributed to the Funds' shareholders, and all other
charges and costs of the Funds' operations unless otherwise explicitly
provided.
The Master Advisory Agreement and the Master Sub-Advisory Agreement
each provide that if, for any fiscal year, the total of all ordinary business
expenses of any Fund, including all investment advisory fees, but excluding
brokerage commissions and fees, taxes, interest and extraordinary expenses,
such as litigation, exceed the applicable expense limitations imposed by state
securities regulations in any state in which such Fund's shares are qualified
for sale, as such limitations may be raised or lowered from time to time, the
aggregate of all such investment advisory fees with respect to such Fund shall
be reduced by the amount of such excess. The amount of any such reduction to
be borne by AIM shall be deducted from the monthly investment advisory fees
otherwise payable to AIM with respect to such Fund during such fiscal year. If
required pursuant to such state securities regulations, AIM will reimburse the
Funds, no later than the last day of the first month of the next succeeding
fiscal year, for any such annual operating expenses (after reduction of all
investment advisory fees in excess of such limitation).
8
<PAGE> 201
The Master Advisory Agreement and the Master Sub-Advisory Agreement
became effective on October 18, 1993 and will continue in effect until June 30,
1996 and from year to year thereafter only if such continuance is specifically
approved at least annually by (i) the Company's Board of Directors or the vote
of a "majority of the outstanding voting securities" of the Funds (as defined in
the 1940 Act) and (ii) the affirmative vote of a majority of the directors who
are not parties to the agreements or "interested persons" of any such party (the
"Non-Interested Directors") by votes cast in person at a meeting called for such
purpose. The Master Advisory Agreement and the Master Sub-Advisory Agreement
provide that the Funds, AIM (in the case of the Master Advisory Agreement) or
AIM Capital (in the case of the Master Sub-Advisory Agreement) may terminate
such agreements on sixty (60) days' written notice without penalty. Each
agreement terminates automatically in the event of its assignment.
With respect to each of Charter and Constellation, AIM receives a fee
calculated at an annual rate of 1.0% of the first $30 million of such Fund's
average daily net assets, plus 0.75% of such Fund's average daily net assets in
excess of $30 million to and including $150 million, plus 0.625% of such Fund's
average daily net assets in excess of $150 million. With respect to
Weingarten, AIM's fee is calculated at an annual rate of 1.0% of the first $30
million of the Fund's average daily net assets, plus 0.75% of the Fund's
average daily net assets in excess of $30 million up to and including $350
million, plus 0.625% of the Fund's average daily net assets in excess of $350
million. As compensation for its services, AIM Capital receives a fee from AIM
equal to 50% of the fee received by AIM from Charter, Weingarten and
Constellation pursuant to the Master Advisory Agreement.
Each Fund paid to AIM the following advisory fees net of any expense
limitations for the years ended October 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Charter . . . . . . . . . . . . . . $10,890,335 $10,447,924 $9,635,490
Weingarten . . . . . . . . . . . . . 25,448,131 26,472,250 32,301,167
Constellation . . . . . . . . . . . 31,042,229 19,926,116 12,398,962
</TABLE>
AIM, in turn, paid the following sub-advisory fees to AIM Capital, as
sub-advisor for each Fund (other than Aggressive Growth), for the years ended
October 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Charter . . . . . . . . . . . . . $ 5,445,168 $ 5,223,962 $ 4,817,745
Weingarten . . . . . . . . . . . . 12,724,066 13,236,125 16,150,583
Constellation . . . . . . . . . . . 15,521,115 9,963,058 6,199,481
</TABLE>
The Master Administrative Services Agreement provides that AIM may
perform or arrange for the performance of certain accounting and other
administrative services to each Fund which are not required to be performed by
AlM under the Master Advisory Agreement. For such services, AIM would be
entitled to receive from each Fund reimbursement of its costs or such
reasonable compensation as may be approved by the Company's Board of Directors.
The Master Administrative Services Agreement became effective on October 18,
1993 and will continue in effect until June 30, 1996 and from year to year
thereafter only if such continuance is specifically approved at least annually
by (i) the Company's Board of Directors or the vote of a "majority of the
outstanding voting securities" of the Funds (as defined in the 1940 Act) and
(ii) the affirmative vote of a majority of the Non-Interested Directors by
votes cast in person at a meeting called for such purpose.
The Funds paid AIM the following amounts as reimbursement of
administrative services costs for the years ended October 31, 1995, 1994 and
1993:
9
<PAGE> 202
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Charter . . . . . . . . . . . . . . . $109,054 $ 980,837 $ 806,712
Weingarten . . . . . . . . . . . . . . 182,595 3,161,130 3,168,957
Constellation . . . . . . . . . . . . . 173,257 2,196,752 1,119,692
</TABLE>
In addition, a sub-contract dated September 16, 1994 between AIM and
A I M Institutional Fund Services, Inc. ("AIFS"), a registered transfer agent
and wholly-owned subsidiary of AIM, provided that AIFS would perform certain
shareholder services for the Funds which are not required to be performed by
AIM under the Master Advisory Agreement. For such services, AIFS was entitled
to receive from AIM such reimbursement of its costs associated with providing
those services. For the eight month period ended June 30, 1995 (date the
sub-contract was terminated), AIFS received shareholder services fees from AIM
with respect to Charter, Weingarten and Constellation in the amount of $587,
$1,260 and $2,790, respectively. For the period September 16, 1994 through
October 31, 1994, AIFS received fees with respect to Charter, Weingarten and
Constellation in the amount of $65, $106 and $119, respectively.
In addition, the Transfer Agency and Service Agreement between the
Company and AIFS, which became effective July 1, 1995, provides that AIFS will
perform certain shareholder services for the Funds and will receive a fee per
account plus out-of-pocket expenses to process orders for purchases,
redemptions and exchanges of shares, prepare and transmit payments for
dividends and distributions, maintain shareholder accounts and provide
shareholders with information regarding the Funds and their accounts.
For the period July 1, 1995 through October 31, 1995, AIFS received
transfer agency and shareholder service fees with respect to Charter, Weingarten
and Constellation in the amount of $587, $1,260 and $2,790, respectively.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company ("State Street"), 225 Franklin
Street, Boston, Massachusetts 02110, is custodian of all securities and cash of
the Funds. The custodian attends to the collection of principal and income,
pays and collects all monies for securities bought and sold by the Funds and
performs certain other ministerial duties. AIM Institutional Fund Services,
Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, serves as
transfer agent and dividend disbursing agent for the Funds' Institutional
Classes. These services do not include any supervisory function over
management or provide any protection against any possible depreciation of
assets. The Funds pay the custodian and the transfer agent such compensation
as may be agreed upon from time to time.
AUDIT REPORTS
The Board of Directors will issue semi-annual reports of the
transactions of the Funds to the shareholders. Financial statements, audited
by independent auditors, will be issued annually. The firm of KPMG Peat
Marwick LLP has served as the auditors for the Funds for the fiscal year ended
October 31, 1995.
LEGAL MATTERS
Legal matters for the Company have been passed upon by Ballard Spahr
Andrews & Ingersoll, Philadelphia, Pennsylvania.
10
<PAGE> 203
PRINCIPAL HOLDERS OF SECURITIES
CHARTER
- -------
To the best of the knowledge of the Company, the names and addresses
of the holders of 5% or more of the outstanding shares of the Retail Classes of
Charter as of December 1, 1995, and the Institutional Class of Charter as of
December 1, 1995, and the amount of the outstanding shares held of record and
beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
- --------------- -----------
<S> <C>
RETAIL CLASS A SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith 14.85%
AIDS/Street Account
Mutual Fund Operations
ATTN: Private Client Group
P.O. Box 45286
Jacksonville, FL 32232-5286
Great West Life & Annuity 7.88%
Insurance Co.
Financial Control
401(K) 6T1
8505 E. Orchard
Englewood, CO 80111
RETAIL CLASS B SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith 12.16%
AIDS/Street Account
Mutual Fund Operations
ATTN: Private Client Group
P.O. Box 45286
Jacksonville, FL 32232-5286
</TABLE>
_____________________
* The Funds have no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
11
<PAGE> 204
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
- --------------- -----------
<S> <C>
INSTITUTIONAL CLASS
- -------------------
Commonwealth of Mass. 84.98%**
Deferred Compensation Plan
One Ashburton Place,12th Floor
Boston, MA 02108
First Interstate Bank of California 10.66%
P.O. Box 9800
Mutual Funds A88-4
Calabasas, CA 91302-9800
</TABLE>
WEINGARTEN
- ----------
To the best of the knowledge of the Company, the names and addresses
of the holders of 5% or more of the outstanding shares of the Retail Classes of
Weingarten as of December 1, 1995, and of the Institutional Class of Weingarten
as of December 1, 1995, and the amount of the outstanding shares held of record
and beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
- --------------- -----------
<S> <C>
RETAIL CLASS A SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith 20.69%
AIDS/Street Account
Mutual Fund Operations
ATTN: Private Client Group
P.O. Box 45286
Jacksonville, FL 32232-5286
RETAIL CLASS B SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith 12.52%
AIDS/Street Account
Mutual Fund Operations
ATTN: Private Client Group
P.O. Box 45286
Jacksonville, FL 32232-5286
</TABLE>
__________________
* The Funds have no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined
in the 1940 Act.
12
<PAGE> 205
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
- --------------- -----------
<S> <C>
INSTITUTIONAL CLASS
- -------------------
Commonwealth of Mass. 60.9%**
Deferred Compensation Plan
One Ashburton Place, 12th Floor
Boston, MA 02108
Union Planters National Bank 16.08%
P.O. Box 387
Memphis, TN 38147
Muchmore & Co./Summit Trust 9.26%
750 Walnut Street
Cranford, NJ 07016-1205
</TABLE>
CONSTELLATION
- -------------
To the best of the knowledge of the Company, the names and addresses
of the holders of 5% or more of the outstanding shares of the Retail Class of
Constellation as of December 1, 1995, and the Institutional Class of
Constellation as of December 1, 1995 and the amount of the outstanding shares
held of record and beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
- --------------- -----------
<S> <C>
RETAIL CLASS A SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith 21.6%
AIDS/Street Account
Mutual Fund Operations
ATTN: Private Client Group
P.O. Box 45286
Jacksonville, FL 32232-5286
</TABLE>
__________________
* The Funds have no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined
in the 1940 Act.
13
<PAGE> 206
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
- --------------- -----------
<S> <C>
INSTITUTIONAL CLASS
- -------------------
City of New York 53.66%**
Deferred Compensation Plan
40 Rector Street, 3rd Floor
New York, NY 10006
Nationwide DVCA 12.57%
P.O. Box 182029
Columbus, OH 43218
Commonwealth of Massachusetts 10.48%
Deferred Compensation Plan
One Ashburton Place, 12th Floor
Boston, MA 02108
West One Bank Idaho, NA 6.21%
A/C Idaho Power 19213085
101 S. Capital Blvd., Rm. 315
P. O. Box 7928
Boise, ID 83707
</TABLE>
As of December 1, 1995, the directors/trustees and officers of the
Company as a group owned beneficially less than 1% of the outstanding shares of
each of any class of Charter, Weingarten, Aggressive Growth and Constellation.
PURCHASES AND REDEMPTIONS
NET ASSET VALUE DETERMINATION
Shares of the Institutional Classes of the Funds that are offered by
the Prospectus are sold at their net asset value. The investor's price for
purchase or redemption will be determined by the net asset value of the
Institutional Class of the applicable Fund's shares next determined following
the receipt of an order to purchase or a request to redeem such shares.
In accordance with the current rules and regulations of the SEC, the
net asset value of a share of each Fund is determined once daily as of 4:00
p.m. Eastern Time on each business day of the Fund. In the event the New York
Stock Exchange closes early (i.e., before 4:00 p.m. Eastern Time) on a
particular day,
__________________
* The Funds have no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined
in the 1940 Act.
14
<PAGE> 207
the net asset value of a Fund's share is determined as of the close of the New
York Stock Exchange on such day. For purposes of determining net asset value
per share, futures and options contract closing prices which are available 15
minutes after the close of trading of the New York Stock Exchange will
generally be used. Determination of a Fund's net asset value per share is made
in accordance with generally accepted accounting principles. The net asset
values per share of the Institutional Class and the Retail Classes of a Fund
will differ because different expenses are attributable to each class. The
income or loss and the expenses common to all classes of a Fund are allocated
to each class on the basis of the net assets of the Fund allocable to each such
class, calculated as of the close of business on the previous business day, as
adjusted for the current day's shareholder activity of each class. In addition
to certain common expenses which are allocated to all classes of a Fund,
certain expenses, such as those related to the distribution of shares of a
class, are allocated only to the class to which such expenses relate. The net
asset value per share of a class is determined by subtracting the liabilities
(e.g., the expenses) of the Fund allocated to the class from the assets of the
Fund allocated to the class and dividing the result by the total number of
shares outstanding of such class.
Except as provided in the next sentence, a security listed or traded
on an exchange 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 mean between the closing bid and asked prices on that
day. Exchange listed convertible debt securities are valued at the mean
between the last bid and asked prices obtained from broker-dealers. 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 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 sale,
at the mean between the last bid and asked price on that day. Securities for
which market quotations are not readily available are valued at fair value, as
determined in good faith by or under the supervision of the Company's officers
in a manner specifically authorized by the Board of Directors of the Company.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost, which approximates market value. (See also "How to Purchase
Shares," "How to Redeem Shares" and "Determination of Net Asset Value" in the
Prospectus.)
Generally, trading in foreign securities, as well as corporate bonds,
U.S. Government securities and money market instruments, is substantially
completed each day at various times prior to the close of the New York Stock
Exchange. 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 New York
Stock Exchange. 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 New York Stock Exchange which will 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 Directors.
THE DISTRIBUTION AGREEMENT
The Company, on behalf of the Institutional Class of each Fund, has
entered into a Master Distribution Agreement, effective as of October 18, 1993,
(the "Distribution Agreement") with FMC, a registered broker-dealer and a
wholly-owned subsidiary of AIM to act as the exclusive distributor of the
Institutional Classes of the Funds' shares. The address of FMC is 11 Greenway
Plaza, Suite 1919, Houston, Texas 77046-1173. See "Directors and Officers" and
"The Investment Advisor" for information as to the affiliation of certain
directors and officers of the Company with FMC and A I M Management Group Inc.
The Distribution Agreement provides that FMC has the exclusive right to
distribute the Institutional Classes of shares of the Funds either directly or
through other broker-dealers. The Distribution Agreement also provides that
FMC will pay promotional expenses, including the incremental costs of printing
prospectuses and statements of additional information, annual reports and other
periodic reports for distribution to persons who are not shareholders of the
Institutional Classes of the Funds and the costs of preparing and distributing
15
<PAGE> 208
any other supplemental sales literature. FMC has not undertaken to sell any
specified number of shares of the Institutional Classes of the Funds. FMC does
not receive any fees from the Company on behalf of the Institutional Classes
pursuant to the Distribution Agreement.
FMC may, from time to time, at its expense, pay a bonus or other
consideration or incentive to dealers or banks who sell a minimum dollar amount
of the shares of the Institutional Class of a Fund during a specific period of
time. In some instances, these incentives may be offered only to certain
dealers or institutions who have sold or may sell significant amounts of
shares. The total amount of such additional bonus payments or other
consideration shall not exceed .10% of the net asset value of the shares sold
of such Institutional Class. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of shares or the amount
received as proceeds from such sales. Dealers or institutions may not use the
sale of shares of the Institutional Class of a Fund to qualify for any
incentives to the extent that such incentives may be prohibited by the laws of
any jurisdiction.
The Distribution Agreement became effective October 18, 1993 and will
continue in effect until June 30, 1996 and from year to year thereafter only if
such continuation is specifically approved at least annually by (i) the
Company's Board of Directors or the vote of a "majority of the outstanding
voting securities" of the Funds (as defined in the 1940 Act) and (ii) the
affirmative vote of a majority of the Non-Interested Directors by votes cast in
person at a meeting called for such purpose. The Company, on behalf of a Fund,
or FMC may terminate the Distribution Agreement on sixty days' written notice
without penalty. The Distribution Agreement will terminate automatically in
the event of its "assignment," as defined in the 1940 Act.
PERFORMANCE
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of the
applicable Fund's return, including the effect of reinvesting dividends and
capital gain distributions, and any change in such Fund's net asset value per
share over the period. Average annual returns are calculated by determining
the growth or decline in value of a hypothetical investment in a particular
Fund over a stated period, and then calculating the annually compounded
percentage rate that would have produced the same result if the rate of growth
or decline in value had been constant over the period. While average annual
returns are a convenient means of comparing investment alternatives, investors
should realize that a Fund's performance is not constant over time, but changes
from year to year, and that average annual returns do not represent the actual
year-to-year performance of such Fund.
In addition to average annual returns, the Institutional Class of each
Fund may quote unaveraged or cumulative total returns, reflecting the simple
change in value of an investment over a stated period. Average annual and
cumulative total returns may be quoted as a percentage or as a dollar amount,
and may be calculated for a single investment, a series of investments, and/or
a series of redemptions, over any time period. Total returns may be broken
down into their components of income and capital (including capital gains and
changes in share price) in order to illustrate the relationship of these
factors and their contributions to total return. Total returns, yields, and
other performance information may be quoted numerically or in a table, graph,
or similar illustration.
From time to time, Fund sales literature and/or advertisements may
disclose (i) top holdings included in the Fund's portfolio, (ii) certain
selling group members and/or (iii) certain institutional shareholders.
16
<PAGE> 209
YIELD QUOTATIONS
The standard formula for calculating yield, as described in the
Prospectus, is as follows:
6
YIELD = 2[((a-b)/(c x d) + 1) -1]
Where a = dividends and interest earned during a stated 30-day period.
For purposes of this calculation, dividends are accrued rather
than recorded on the ex-dividend date. Interest earned under
this formula must generally be calculated based on the yield to
maturity of each obligation (or, if more appropriate, based on
yield to call date).
b = expenses accrued during period (net of reimbursement).
c = the average daily number of shares outstanding during the period.
d = the maximum offering price per share on the last day of the
period.
HISTORICAL PORTFOLIO RESULTS
The average return of the Institutional Class of Charter was 27.45%
for the fiscal year ended October 31, 1995. The cumulative return of the
Institutional Class of Charter was 51.27% for the period of July 30, 1991 (date
operations commenced) through October 31, 1995. The average return of the
Institutional Class of Weingarten was 28.69% for the fiscal year ended October
31, 1995. The cumulative return of the Institutional Class of Weingarten was
50.94% for the period of October 8, 1991 (date operations commenced) through
October 31, 1995. The average return of the Institutional Class of
Constellation was 34.09% for the fiscal year ended October 31, 1995. The
cumulative return of the Institutional Class of Constellation was 101.73% for
the period of April 8, 1992 (date operations commenced) through October 31,
1995.
SUSPENSION OF REDEMPTION RIGHTS
The right of redemption may be suspended or the date of payment upon
redemption may be postponed when (a) trading on the New York Stock Exchange is
restricted, as determined by applicable rules and regulations of the SEC, (b)
the New York Stock Exchange is closed for other than customary weekend or
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.
INVESTMENT PROGRAM AND RESTRICTIONS
INVESTMENT PROGRAM
The following discussion of investment policies supplements the
discussion of the investment objectives and policies set forth in the
Prospectus under the heading "Investment Programs."
Each of the Funds may be invested, for temporary or defensive
purposes, with regard to all or substantially all of their assets, in
investment grade (high quality) corporate bonds, commercial paper, or U.S.
Government obligations. In addition, a portion of each Fund's assets may be
held, from time to time, in cash, repurchase agreements, or other debt
securities, when such positions are deemed advisable in light of economic or
market conditions. For a description of the various rating categories of
corporate bonds and commercial paper in which the Fund may invest, see the
Appendix to this Statement of Additional Information.
17
<PAGE> 210
FOREIGN SECURITIES
Charter, Weingarten and Constellation may each invest up to 20% of its
total assets in foreign securities. For purposes of computing such limitation
American Depository Receipts, European Depository Receipts and other securities
representing underlying securities of foreign issuers are treated as foreign
securities. 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. Investments by the Fund in securities of foreign
corporations may involve considerations and risks that are different in certain
respects from an investment in securities of U.S. companies. Such risks
include possible imposition of withholding taxes on interest or dividends,
possible adoption of foreign governmental restrictions on repatriation of
income or capital invested, or other adverse political or economic
developments. Additionally, it may be more difficult to enforce the rights of
a security holder against a foreign corporation, and information about the
operations of foreign corporations may be more difficult to obtain and
evaluate.
RULE 144A SECURITIES
The Funds may each purchase securities which, while privately placed,
are eligible for purchase and sale pursuant to Rule 144A under the Securities
Act of 1933 (the "1933 Act"). This Rule permits certain qualified institutional
buyers, such as a Fund, to trade in privately placed securities even though
such securities are not registered under the 1933 Act. AIM, under the
supervision of the Company's Board of Directors, will consider whether
securities purchased under Rule 144A are illiquid and thus subject to the
Fund's restriction of investing no more than 15% of its assets in illiquid
securities. Determination of whether a Rule 144A security is liquid or not is a
question of fact. In making this determination AIM will consider the trading
markets for the specific security taking into account the unregistered nature
of a Rule 144A security. In addition, AIM could consider the (i) frequency of
trades and quotes, (ii) number of dealers and potential purchasers, (iii)
dealer undertakings to make a market, and (iv) nature of the security and of
market place trades (for example, the time needed to dispose of the security,
the method of soliciting offers and the mechanics of transfer). The liquidity
of Rule 144A securities will also be monitored by AIM and, if as a result of
changed conditions, it is determined that a Rule 144A security is no longer
liquid, the Fund's holdings of illiquid securities will be reviewed to
determine what, if any, action is required to assure that the Fund does not
invest more than 15% of its assets in illiquid securities. Investing in Rule
144A securities could have the effect of increasing the amount of the Fund's
investments in illiquid securities if qualified institutional buyers are
unwilling to purchase such securities. At the present time, it is not possible
to predict with certainty how the market for Rule 144A securities will develop.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make
secured loans of portfolio securities amounting to not more than 33-1/3% of its
total assets. Securities loans are made to banks, brokers and other financial
institutions pursuant to agreements requiring that the loans be continuously
secured by collateral at least equal at all times to the value of the
securities lent marked to market on a daily basis. The collateral received
will consist of cash, U.S. Government securities, letters of credit or such
other collateral as may be permitted under the Fund's investment program. While
the securities are being lent, 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 has a right to call each loan and obtain the securities on five business
days' notice or, in connection with securities trading on foreign markets,
within such longer period of time which coincides with the normal settlement
period for purchases
18
<PAGE> 211
and sales of such securities in such foreign markets. The Fund will not have
the right to vote securities while they are being lent, but it will call a loan
in anticipation of any important vote. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delay in receiving additional collateral or in the recovery of the securities
or possible loss of rights in the collateral should the borrower fail
financially. Loans will only be made to persons deemed by AIM to be of good
standing and will not be made unless, in the judgment of AIM, the consideration
to be earned from such loans would justify the risk.
REPURCHASE AGREEMENTS
The Funds may each enter into repurchase agreements. A repurchase
agreement is an instrument under which a Fund acquires ownership of a debt
security and the seller (usually a broker or bank) agrees, at the time of the
sale, to repurchase the obligation at a mutually agreed upon time and price,
thereby determining the yield during the Fund's holding period. In the event
of bankruptcy or other default of a seller of a repurchase agreement, the Fund
may experience both delays in liquidating the underlying securities and losses,
including: (a) a possible decline in the value of the underlying security
during the period in which the Fund seeks to enforce its rights thereto; (b) a
possible subnormal level of income and lack of access to income during this
period; and (c) expenses of enforcing its rights. A repurchase agreement is
collateralized by the security acquired by the Fund and its value is marked to
market daily in order to minimize the Fund's risk. Repurchase agreements
usually are for short periods, such as one or two days, but may be entered into
for longer periods of time.
Charter may enter into repurchase agreements (at any time, up to 50%
of its net assets), using only U.S. Government securities, for the sole purpose
of increasing its yield on idle cash. Charter will not invest in a repurchase
agreement of more than seven days' duration if, as a result of that investment,
the amount of repurchase agreements of more than seven days' duration would
exceed 15% of the assets of Charter.
SPECIAL SITUATIONS
Although Constellation does not currently intend to do so, it may,
invest in "special situations." A special situation arises when, in the
opinion of the Fund's management, the securities of a particular company will,
within a reasonable estimable period of time, be accorded market recognition at
an appreciated value solely by reason of a development applicable to that
company, and regardless of general business conditions or movements of the
market as a whole. Developments creating special situations might include,
among others: liquidations, reorganizations, recapitalizations, mergers,
material litigation, technical breakthroughs and new management or management
policies. Although large and well known companies may be involved, special
situations more often involve comparatively small or unseasoned companies.
Investments in unseasoned companies and special situations often involve much
greater risk than is inherent in ordinary investment securities. Constellation
will not, however, purchase securities of any company with a record of less
than three years continuous operation (including that of predecessors) if such
purchase would cause the Fund's investment in all such companies, taken at
cost, to exceed 5% of the value of the Fund's total assets.
SHORT SALES
Although Weingarten and Constellation do not currently intend to do
so, they may each enter into short sales transactions. Neither Weingarten nor
Constellation will make short sales of securities nor maintain a short position
unless at all times when a short position is open, the Fund owns an equal
amount of such securities or securities convertible into or exchangeable,
without payment of any further consideration, for securities of the same issue
as, and equal in amount to, the securities sold short. This is a technique
known as selling short "against the box." Such short sales will be used by
each of Weingarten and Constellation for the purpose of deferring recognition
of gain or loss for federal income tax purposes. In no event may more than 10%
of the value of either Fund's net assets be deposited or pledged as collateral
for such sales at any time.
19
<PAGE> 212
WARRANTS
The Funds may, from time to time, invest in warrants. Warrants are,
in effect, longer-term call options. They give the holder the right to
purchase a given number of shares of a particular company at specified prices
within certain periods of time. The purchaser of a warrant expects that the
market price of the security will exceed the purchase price of the warrant plus
the exercise price of the warrant, thus giving him a profit. Of course, since
the market price may never exceed the exercise price before the expiration date
of the warrant, the purchaser of the warrant risks the loss of the entire
purchase price of the warrant. Warrants generally trade in the open market and
may be sold rather than exercised. Warrants are sometimes sold in unit form
with other securities of an issuer. Units of warrants and common stock may be
employed in financing young, unseasoned companies. The purchase price of a
warrant varies with the exercise price of a warrant, the current market value
of the underlying security, the life of the warrant and various other
investment factors. The investment in warrants by the Funds valued at the
lower of cost or market, may not exceed 5% of the value of the respective
Fund's net assets and not more than 2% of such value may be warrants which are
not listed on the New York or American Stock Exchanges.
WRITING COVERED CALL OPTIONS
Weingarten and Constellation are authorized to write (sell) covered
call options on the securities in which it may invest and to enter into closing
purchase transactions with respect to such options. Writing a call option
obligates Weingarten and Constellation to sell or deliver the option's
underlying security, in return for the strike price, upon exercise of the
option. By writing a call option, Weingarten and Constellation receive an
option premium from the purchaser of the call option. Writing covered call
options is generally a profitable strategy if prices remain the same or fall.
Through receipt of the option premium, Weingarten and Constellation would seek
to mitigate the effects of a price decline. By writing covered call options,
however, Weingarten and Constellation give up the opportunity, while the option
is in effect, to profit from any price increase in the underlying security
above the option exercise price. In addition, the Funds' ability to sell the
underlying security will be limited while the option is in effect unless
Weingarten and Constellation effect a closing purchase transaction.
FUTURES CONTRACTS
Each of the Funds may purchase futures contracts. In cases of
purchases of futures contracts, an amount of cash and cash equivalents, equal
to the cost of the futures contracts (less any related margin deposits), will
be segregated with the Funds' custodian to collateralize the position and
ensure that the use of such futures contracts is unleveraged. Unlike when a
Fund purchases or sells a security, no price is paid or received by a Fund upon
the purchase or sale of a futures contract. Initially, a Fund will be required
to deposit with its custodian for the account of the broker a stated amount, as
called for by the particular contract, of cash or U.S. Treasury bills. This
amount is known as "initial margin." The nature of initial margin in futures
transactions is different from that of margin in securities transactions in
that futures contract margin does not involve the borrowing of funds by the
customer to finance the transactions. Rather, the initial margin is in the
nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract assuming all
contractual obligations have been satisfied. Subsequent payments, called
"variation margin," to and from the broker will be made on a daily basis as the
price of the futures contract fluctuates making the long and short positions in
the futures contract more or less valuable, a process known as
"marking-to-market." For example, when a Fund has purchased a stock index
futures contract and the price of the underlying stock index has risen, that
position will have increased in value and the Fund will receive from the broker
a variation margin payment with respect to that increase in value. Conversely,
where a Fund has purchased a stock index futures contract and the price of the
underlying stock index has declined, that position would be less valuable and
the Fund would be required to make a variation margin payment to the broker.
Variation margin payments would be made in a similar fashion when a Fund has
purchased an interest rate futures contract. At any time prior to expiration
of the futures contract, a Fund may elect to close the position by taking an
opposite position which will operate to
20
<PAGE> 213
terminate the Fund's position in the futures contract. A final determination
of variation margin is then made, additional cash is required to be paid by or
released to the Fund and the Fund realizes a loss or gain.
A description of the type of futures contract that may be utilized by
the Funds is as follows:
Stock Index Futures Contracts
A stock index assigns relative values to the common stocks included in
the index and the index fluctuates with changes in the market values of the
common stocks so included. A stock index futures contract is an agreement
pursuant to which two parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the stock
index value at the close of the last trading day of the contract and the price
at which the futures contract is originally struck. No physical delivery of
the underlying stocks in the index is made. Currently, stock index futures
contracts can be purchased or sold primarily with respect to broad based stock
indices such as the S&P's 500 Stock Index, the New York Stock Exchange
Composite Index, the American Stock Exchange Major Market Index, the NASDAQ --
100 Stock Index and the Value Line Stock Index. The stock indices listed above
consist of a spectrum of stocks not limited to any one industry such as utility
stocks. Utility stocks, at most, would be expected to comprise a minority of
the stocks comprising the portfolio of the index. The Funds will only enter
into stock index futures contracts as a hedge against changes resulting from
market conditions in the values of the securities held or which it intends to
purchase. When a Fund anticipates a significant market or market sector
advance, the purchase of a stock index futures contract affords a hedge against
not participating in such advance. Conversely, in anticipation of or in a
general market or market sector decline that adversely affects the market
values of a Fund's portfolio of securities, the Fund may sell stock index
futures contracts.
RISKS AS TO FUTURES CONTRACTS
There are several risks in connection with the use of futures
contracts as hedging devices. One risk arises because of the imperfect
correlation between movements in the price of hedging instruments and movements
in the price of the stock, debt security or foreign currency which are the
subject of the hedge. If the price of a hedging instrument moves less than the
price of the stock, debt security or foreign currency which is the subject of
the hedge, the hedge will not be fully effective. If the price of a hedging
instrument moves more than the price of the stock, debt security or foreign
currency, a Fund will experience either a loss or gain on the hedging
instrument which will not be completely offset by movements in the price of the
stock, debt security or foreign currency which is the subject of the hedge.
Successful use of hedging instruments by the Funds is also subject to
AIM's ability to predict correctly movements in the direction of the stock
market, of interest rates or of foreign exchange rates. Because of possible
price distortions in the futures and options markets and because of the
imperfect correlation between movements in the prices of hedging instruments
and the investments being hedged, even a correct forecast by AIM of general
market trends may not result in a completely successful hedging transaction.
It is also possible that where a Fund has sold futures contracts to
hedge its portfolio against a decline in the market, the market may advance and
the value of stocks or debt securities held in its portfolio may decline. If
this occurred, a Fund would lose money on the futures contracts and also
experience a decline in the value of its portfolio securities. Similar risks
exist with respect to foreign currency hedges.
Positions in futures contracts may be closed out only on an exchange
on which such contracts are traded. Although the Funds intend to purchase or
sell futures contracts there is no assurance that a liquid market on an
exchange or a board of trade will exist for any particular contract at any
particular time. If there is not a liquid market, it may not be possible to
close a futures position at such time. In the event of adverse price movements
under those circumstances, the Fund would continue to be required to make daily
cash payments of maintenance margin on its futures positions. The extent to
which a Fund may engage in futures
21
<PAGE> 214
contracts will be limited by Internal Revenue Code requirements for
qualification as a regulated investment company and a Fund's intent to continue
to qualify as such. The result of a hedging program cannot be foreseen and may
cause a Fund to suffer losses which it would not otherwise sustain.
The investment policies stated above are not fundamental policies of
the Funds and may be changed by the Board of Directors of the Company without
shareholder approval. Shareholders will be notified before any material change
in the investment policies stated above become effective.
INVESTMENT RESTRICTIONS
The following additional fundamental policies and investment
restrictions have been adopted by each Fund as indicated and, except as noted,
such policies cannot be changed without the approval of a majority of the
outstanding voting securities of the Fund, as defined in the 1940 Act.
CHARTER
- -------
Charter may not:
(a) purchase the securities of any one issuer (except securities
issued or guaranteed by the U.S. Government) if, immediately after and as a
result of such purchase, (i) the value of the holdings of the Fund in the
securities of such issuer exceeds 5% of the value of the Fund's total assets,
or (ii) the Fund owns more than 10% of the outstanding voting securities of any
one class of securities of such issuer;
(b) purchase securities of other investment companies;
(c) concentrate its investments; that is, invest more than 25% of the
value of its assets in any particular industry;
(d) purchase or sell real estate or other interests in real estate
(except that this restriction does not preclude investments in marketable
securities of companies engaged in real estate activities);
(e) write, purchase, or sell puts, calls, straddles, spreads or
combinations thereof, or deal in commodities or oil, gas, or other mineral
exploration or development programs;
(f) make loans (except that the purchase of a portion of an issue of
publicly distributed bonds, debentures or other debt securities, or entering
into a repurchase agreement, is not considered to be a loan for purposes of
this restriction), provided that the Fund may lend its portfolio securities
provided the value of such loaned securities does not exceed 33-1/3% of its
total assets;
(g) purchase securities on margin or sell short;
(h) borrow money or pledge its assets except that, as a temporary
measure for extraordinary or emergency purposes and not for investment
purposes, the Fund may borrow from banks (including the Fund's custodian bank)
amounts of up to 10% of the value of its total assets, and may pledge amounts
of up to 20% of its total assets to secure such borrowings;
(i) invest in companies for the purpose of exercising control or
management;
(j) act as an underwriter of securities of other issuers;
(k) purchase from or sell to any officer, director or employee of the
Fund, or its advisors or distributor, or to any of their officers or directors,
any securities other than shares of the capital stock of Charter;
22
<PAGE> 215
(l) purchase or retain the securities of any issuer if those officers
and directors of the Company, its advisors or distributor owning individually
more than 1/2 of 1% of the securities of such issuer, together own more than 5%
of the securities of such issuer; or
(m) invest any of its assets in securities of companies having a
record of less than five years' continuous operation, including the operations
of their predecessors.
To permit the sale of shares of Charter in Texas, investments by
Charter in warrants, valued at the lower of cost or market, may not exceed 5%
of the value of Charter's net assets. Included within that amount, but not to
exceed 2% of Charter's net assets, may be warrants which are not listed on the
New York or American Stock Exchanges. This restriction is not a fundamental
policy.
The Fund will comply with Texas Rule 123.2(6), and follow SEC
guidelines, that provide that loans of the Fund's securities will be fully
collateralized.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from changes in values or assets will not
be considered a violation of the restriction.
WEINGARTEN
- ----------
Weingarten may not:
(a) issue bonds, debentures or senior equity securities;
(b) underwrite securities of other companies or purchase restricted
securities ("letter stock");
(c) invest in real estate, except that the Fund may purchase
securities of real estate investment trusts;
(d) lend money, except in connection with the acquisition of a portion
of an issue of publicly distributed bonds, debentures or other corporate or
governmental obligations, provided that the Fund may lend its portfolio
securities provided the value of such loaned securities does not exceed 33 1/3%
of its total assets;
(e) purchase securities on margin, except that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of securities;
(f) purchase shares in order to control management of a company;
(g) invest in commodities or commodity contracts or in puts or calls
except as set forth above under "Investment Objectives and Policies -- Writing
Call Option Contracts";
(h) invest in securities of other investment companies;
(i) invest more than 25% of the value of its total assets in
securities of issuers all of which conduct their principal business activities
in the same industry; or
(j) borrow money or pledge its assets, except that, as a temporary
measure for extraordinary or emergency purposes and not for investment
purposes, the Fund may borrow from banks (including the Fund's custodian bank)
amounts of up to 10% of the value of its total assets, and may pledge amounts
of up to 20% of its total assets to secure such borrowings.
23
<PAGE> 216
In addition, Weingarten may not (a) purchase warrants, valued at the
lower of cost or market, in excess of 5% of the value of the Fund's net assets,
and no more than 2% of such value may be warrants which are not listed on the
New York or American Stock Exchanges; (b) purchase or retain the securities of
any issuer, if the officers and directors of the Company, its advisors or
distributor who own individually more than 1/2 of 1% of the securities of such
issuer, together own more than 5% of the securities of such issuer; (c) invest
more than 5% of the total assets of the Fund (valued at market) in securities
of any one issuer (other than obligations of the U.S. Government and its
instrumentalities); (d) purchase more than 10% of the outstanding securities of
any one issuer or more than 10% of any class of securities of an issuer; (e)
deal in forward contracts; (f) invest in interests in oil, gas or other mineral
exploration or development programs; or (g) invest in securities of companies
which have a record of less than three years of continuous operation if such
purchase at the time thereof would cause more than 5% of the total assets of
the Fund to be invested in the securities of such companies (with such period
of three years to include the operation of any predecessor company or
companies, partnership or individual enterprise if the company whose securities
are proposed for investment by the Fund has come into existence as the result
of a merger, consolidation, reorganization or purchase of substantially all of
the assets of such predecessor company or companies, partnership or individual
enterprise). These additional restrictions are not fundamental, and may be
changed by the Board of Directors of the Company without shareholder approval.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from changes in values or assets will not
be considered a violation of the restriction.
CONSTELLATION
- -------------
Constellation may not:
(a) invest for the purpose of exercising control over or management
of any company;
(b) engage in the underwriting of securities of other issuers;
(c) purchase and sell real estate or commodities or commodity
contracts;
(d) make loans, except by the purchase of a portion of an issue of
publicly distributed bonds, debentures or other obligations, provided that the
Fund may lend its portfolio securities provided the value of such loaned
securities does not exceed 33-1/3% of its total assets;
(e) invest in interests in oil, gas or other mineral exploration or
development programs;
(f) invest in securities of other investment companies; or
(g) invest more than 25% of the value of its total assets in
securities of issuers all of which conduct their principal business activities
in the same industry.
In addition, Constellation treats as fundamental its policy concerning
borrowing described under the caption "Investment Programs - Investment
Restrictions - Borrowing" in the Prospectus. In accordance with this policy,
the Fund may borrow funds from a bank (including its custodian bank) to
purchase or carry securities only if, immediately after such borrowing, the
value of the Fund's assets, including the amount borrowed, less its
liabilities, is equal to at least 300% of the amount borrowed, plus all
outstanding borrowings. For the purpose of determining this 300% asset
coverage requirement, the Fund's liabilities will not include the amount
borrowed but will include the market value, at the time of computation, of all
securities borrowed by the Fund in connection with short sales. The amount of
borrowing will also be limited by the applicable margin limitations imposed by
the Federal Reserve Board. If at any time the value of the Fund's assets
should fail to meet the 300% asset coverage requirement, the Fund will, within
three days, reduce
24
<PAGE> 217
its borrowings to the extent necessary. The Fund may be required to eliminate
partially or totally its outstanding borrowings at times when it may not be
desirable for it to do so.
The Board of Directors of the Company has also adopted the following
limitations which are not matters of fundamental policy of Constellation and
which may be changed without shareholder approval:
(a) the Fund may not purchase or retain the securities of any issuer,
if those officers and directors of the Company, its advisors or distributor
owning individually more than 1/2 of 1% of the securities of such issuer,
together own more than 5% of the securities of such issuer; or
(b) the Fund may not purchase warrants, valued at the lower of cost or
market, in excess of 5% of the value of the Fund's net assets, and no more than
2% of such value may be warrants which are not listed on the New York or
American Stock Exchanges.
Except for the borrowing policy, if a percentage restriction is
adhered to at the time of investment, a later change in the percentage of such
investment held by a Fund resulting solely from changes in values or assets,
will not be considered to be a violation of the restriction.
ADDITIONAL RESTRICTIONS
In order to permit the sale of the Funds' shares in certain states,
each Fund may from time to time make commitments more restrictive than the
restrictions described herein. These restrictions are not matters of
fundamental policy, and should a Fund determine that any such commitment is no
longer in the best interests of the Fund and its shareholders, it will revoke
the commitment by terminating sales of its shares in the states involved.
In order to comply with an undertaking to the State of Texas, each
Fund has agreed that any restriction on investments in "oil, gas and other
mineral exploration or development programs" shall include mineral leases, and
any restriction on investments in "real estate or other interests in real
estate" shall include real estate limited partnerships.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
Subject to policies established by the Board of Directors of the
Company, AIM is responsible for decisions to buy and sell securities for each
Fund, for the selection of broker-dealers, for the execution of each Fund's
investment portfolio transactions and for the allocation of brokerage fees in
connection with such transactions. AIM's primary consideration in effecting a
security transaction is to obtain the best net price and the most favorable
execution of the order. While AIM generally seeks reasonably competitive
commission rates, each Fund does not necessarily pay the lowest commission or
spread available.
A portion of the securities in which each Fund invests are traded in
over-the-counter markets, and in such transactions, a Fund deals directly with
the dealers who make markets in the securities involved, except in those
circumstances where better prices and executions are available elsewhere.
Portfolio transactions placed through dealers serving as primary market makers
are effected at net prices, generally without commissions as such, but which
include compensation in the form of mark up or mark down.
AIM may from time to time determine target levels of commission
business for AIM to transact with various brokers on behalf of its clients
(including the Funds) over a certain time period. The target levels will be
determined based upon the following factors, among others: (a) the execution
services provided by the broker; (b) the research services provided by the
broker; and (c) the broker's attitude toward and interest in
25
<PAGE> 218
mutual funds in general and in the Funds and other mutual funds advised by AIM
or AIM Capital in particular. No specific formula will be used in connection
with any of the foregoing considerations in determining the target levels.
However, if a broker has indicated a certain level of desired commissions in
return for certain research services provided by the broker, this factor will
be taken into consideration by AIM. Subject to the overall objective of
obtaining the best price and execution for the Fund, AIM may also consider
sales of shares of the Fund and of the other mutual funds managed or advised by
AIM and AIM Capital as a factor in the selection of broker-dealers to execute
portfolio transactions for the Fund. AIM will seek, whenever possible, to
recapture for the benefit of each Fund any commission, fee, brokerage or
similar payment paid by such Fund on portfolio transactions. Normally, the
only fees which may be recaptured are the soliciting dealer fees on the tender
of an account's portfolio securities in a tender or exchange offer.
None of the Funds is under any obligation to deal with any broker or
group of brokers in the execution of transactions in portfolio securities.
Brokers who provide supplemental investment research to AIM and AIM Capital may
receive orders for transactions by the Fund. Information so received will be
in addition to and not in lieu of the services required to be performed by AIM
and AIM Capital under their agreements with the Funds and the expenses of AIM
and AIM Capital will not necessarily be reduced as a result of the receipt of
such supplemental information. Certain research services furnished by
broker-dealers may be useful to AIM and AIM Capital in connection with their
services to other advisory clients, including the investment companies which
they advise. Also, each Fund may pay a higher price for securities or higher
commissions in recognition of research services furnished by broker-dealers.
Provisions of the 1940 Act and rules and regulations thereunder have
been construed to prohibit the Company from purchasing securities or
instruments from, or selling securities or instruments to, any holder of 5% or
more of the voting securities of any investment company managed or advised by
AIM. The Company has obtained an order of exemption from the SEC which permits
the Company to engage in certain transactions with such 5% holder, if the
Company complies with conditions and procedures designed to ensure that such
transactions are executed at fair market value and present no conflicts of
interest.
AIM, AIM Capital and their affiliates manage several other investment
accounts, some of which may have investment objectives similar to those of one
or more of the Funds. It is possible that, at times, identical securities will
be appropriate for investment by one or more of the Funds and by one or more of
such investment accounts. The position of each account, however, in the
securities of the same issue may vary and the length of time that each account
may choose to hold its investment in the securities of the same issue may
likewise 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
consistent with the investment policies of a Fund and one or more of these
accounts is considered at or about the same time, transactions in such
securities will be allocated among the Fund(s) and such accounts in a manner
deemed equitable by AIM. AIM may combine such transactions, in accordance with
applicable laws and regulations, in order to obtain the best net price and most
favorable execution. Simultaneous transactions could, however, adversely
affect the ability of a Fund to obtain or dispose of the full amount of a
security which it seeks to purchase or sell.
Under the 1940 Act, persons affiliated with the Company 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 Board of Directors has adopted procedures pursuant to Rule 17a-7 under the
1940 Act relating to portfolio transactions among the Funds other accounts
advised by AIM or AIM Capital and each of the Funds may from time to time enter
into transactions in accordance with such Rule and procedures.
From time to time, an identical security may be sold by an AIM Fund or
another investment account advised by AIM or AIM Capital and simultaneously
purchased by another investment account advised by AIM or AIM Capital when such
transactions comply with applicable rules and regulations and are deemed
consistent with the investment objective(s) and policies of the investment
accounts involved. Procedures pursuant to Rule 17a-7 under the 1940 Act
regarding transactions between investment accounts advised
26
<PAGE> 219
by AIM or AIM Capital have been adopted by the Board of Directors/Trustees of
the various AIM Funds, including the Company. Although such transactions may
result in custodian, tax or other related expenses, no brokerage commissions or
other direct transaction costs are generated by transactions among the
investment accounts advised by AIM or AIM Capital.
In some cases, the procedure for allocating portfolio transactions
among the various investment accounts advised by AIM and AIM Capital could have
an adverse effect on the price or amount of securities available to a Fund. In
making such allocations, the main factors considered by AIM are the respective
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.
SECTION 28(e) STANDARDS
Under Section 28(e) of the Securities Exchange Act of 1934, AIM shall
not be "deemed to have acted unlawfully or to have breached its fiduciary duty"
solely because under certain circumstances it has caused the account to pay a
higher commission than the lowest available. To obtain the benefit of 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 [its]
overall responsibilities with respect to the accounts as to which [it]
exercises investment discretion" and that the services provided by a broker
provide AIM and AIM Capital with lawful and appropriate assistance in the
performance of their investment decision-making responsibilities. Accordingly,
the price to a Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Broker-dealers utilized by AIM may furnish statistical, research and
other information or services which are deemed by AIM and AIM Capital to be
beneficial to the Funds' investment programs. Research services received from
brokers supplement AIM's and AIM Capital's own research (and the research of
sub-advisors to other clients of AIM and AIM Capital), and may include the
following types of information: statistical and background information on
industry groups and individual companies; forecasts and interpretations with
respect to U.S. and foreign economies, securities, markets, specific industry
groups and individual companies; information on political developments;
portfolio management strategies; performance information on securities and
information concerning prices of securities; and information supplied by
specialized services to AIM and AIM Capital and to the Company's directors with
respect to the performance, investment activities and fees and expenses of
other mutual funds. Such information may be communicated electronically,
orally or in written form. Research services may also include the provision of
equipment used to communicate research information, 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 and AIM Capital since
the brokers utilized by AIM as a group tend to follow a broader universe of
securities and other matters than AIM's and AIM Capital's staff can follow. In
addition, this research provides AIM and AIM Capital with a diverse perspective
on financial markets. Research services which are provided to AIM and AIM
Capital by brokers are available for the benefit of all accounts managed or
advised by AIM and AIM Capital or by sub-advisors to other accounts managed or
advised by AIM and AIM Capital. In some cases, the research services are
available only from the broker providing such services. In other cases, the
research services may be obtainable from alternative sources in return for cash
payments. AIM is of the opinion that because the broker research supplements,
rather than replaces, its research, the receipt of such research does not tend
to decrease its expenses, but tends to improve the quality of its investment
advice. However, to the extent that AIM or AIM Capital would have purchased
any such research services had such services not been provided by brokers, the
expenses of such services to AIM or AIM Capital could be considered to have
been reduced accordingly. Certain research services furnished by
broker-dealers may be useful to AIM or AIM Capital with clients other than the
Funds. Similarly, any research services received by AIM or
27
<PAGE> 220
AIM Capital through the placement of portfolio transactions of other clients
may be of value to AIM or AIM Capital in fulfilling their obligations to the
Funds. AIM is of the opinion that this material is beneficial in supplementing
AIM's and AIM Capital's research and analysis; and, therefore, it may benefit
the Funds by improving the quality of the advisors' investment advice. The
advisory fees paid by the Funds are not reduced because AIM and AIM Capital
receive such services. 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 and AIM Capital's clients,
including the Funds.
BROKERAGE COMMISSIONS PAID
For the fiscal years ended October 31, 1995, 1994 and 1993, Charter
paid brokerage commissions of $14,960,600, $4,188,692 and $5,005,249,
respectively. For the fiscal year ended October 31, 1995, AIM directed certain
of Charter's brokerage transactions to certain broker-dealers that provided AIM
with certain research, statistical and other information. Such transactions
amounted to $269,685,180 and the related brokerage commissions were
$374,801.
For the fiscal years ended October 31, 1995, 1994 and 1993, Weingarten
paid brokerage commissions of $21,766,760, $17,367,904 and $17,367,904,
respectively. For the fiscal year ended October 31, 1995, AIM directed certain
of Weingarten's brokerage transactions to certain broker-dealers that provided
AIM with certain research, statistical and other information. Such
transactions amounted to $641,610,030 and the related brokerage
commissions were $1,017,600.
For the fiscal years ended October 31, 1995, 1994 and 1993,
Constellation paid brokerage commissions of $15,359,510, $6,921,543, and
$4,683,461, respectively. For the fiscal year ended October 31, 1995, AIM
directed certain of Constellation's brokerage transactions to certain
broker-dealers that provided AIM with certain research, statistical and other
information. Such transactions amounted to $353,895,595 and the
related brokerage commissions were $652,417.
PORTFOLIO TURNOVER
The portfolio turnover rate of each Fund is shown under "Financial
Highlights" in the Prospectus. Higher portfolio turnover increases transaction
costs to 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 Institutional Class of the applicable
Fund unless the shareholder has requested in writing to receive such dividends
and distributions in cash or that they be invested in shares of the
Institutional Class of another Fund offered pursuant to the Prospectus. 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 Funds and their shareholders that are
not described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of each Fund or its shareholders, and the
discussion here and in the Prospectus is not intended as a substitute for
careful tax planning.
28
<PAGE> 221
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
Each Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As a regulated investment company, each Fund is not subject to
federal income tax on the portion of its net investment income (i.e., taxable
interest, dividends and other taxable ordinary income, net of expenses) and
capital gain net income (i.e., the excess of capital gains over capital losses)
that it distributes to shareholders, provided that it distributes at least 90%
of its investment company taxable income (i.e., net investment income and the
excess of net short-term capital gain over net long-term capital loss) for the
taxable year (the "Distribution Requirement"), and satisfies certain other
requirements of the Code that are described below. Distributions by a Fund
made during the taxable year or, under specified circumstances, within twelve
months after the close of the taxable year, will be considered distributions of
income and gains of the taxable year and can therefore satisfy the Distribution
Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must (a) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities)
and other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (b) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or options, futures or forward contracts thereon) held for less
than three months (the "Short-Short Gain Test"). However, foreign currency
gains, including those derived from options, futures and forward contracts,
will not be characterized as Short-Short Gain if they are directly related to
the regulated investment company's principal business of investing in stock or
securities (or options or futures thereon). Because of the Short-Short Gain
Test, a Fund may have to limit the sale of appreciated securities that it has
held for less than three months. However, the Short-Short Gain Test will not
prevent a Fund from disposing of investments at a loss, since the recognition
of a loss before the expiration of the three-month holding period is
disregarded. Interest (including original issue discount and accrued market
discount) received by a Fund at maturity or upon the disposition of a security
held for less than three months will not be treated as gross income derived
from the sale or other disposition of a security within the meaning of the
Short-Short Gain Test. However, any other income that is attributable to
realized market appreciation will be treated as gross income from the sale or
other disposition of securities for this purpose.
In general, gain or loss recognized by a Fund on the disposition of an
asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by a Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Fund held the debt obligation. In
addition, under the rules of Code Section 988, gain or loss recognized on the
disposition of a debt obligation denominated in a foreign currency or an option
with respect thereto (but only to the extent attributable to changes in foreign
currency exchange rates), and gain or loss recognized on the disposition of a
foreign currency forward contract or of foreign currency itself, will generally
be treated as ordinary income or loss.
In general, for purposes of determining whether capital gain or loss
recognized by a Fund on the disposition of an asset is long-term or short-term,
the holding period of the asset may be affected if (a) the asset is used to
close a "short sale" (which includes for certain purposes the acquisition of a
put option) or is substantially identical to another asset so used, (b) the
asset is otherwise held by the Fund as part of a "straddle" or (c) the asset is
stock and the Fund grants certain call options with respect thereto. However,
for purposes of the Short-Short Gain Test, the holding period of the asset
disposed of is reduced only in the case described in clause (a) above. In
addition, a Fund may be required to defer the recognition of a loss
29
<PAGE> 222
on the disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position.
Any gain recognized by a Fund on the lapse of, or any gain or loss
recognized by a Fund from a closing transaction with respect to, an option
written by the Fund will be treated as a short-term capital gain or loss. For
purposes of the Short-Short Gain Test, the holding period of an option written
by a Fund will commence on the date it is written and end on the date it lapses
or the date a closing transaction is entered into. Accordingly, a Fund may be
limited in its ability to write options which expire within three months and to
enter into closing transactions at a gain within three months of the writing of
options.
Transactions that may be engaged in by certain of the Funds (such as
futures contracts and options on stock indexes and futures contracts) will be
subject to special tax treatment as "Section 1256 contracts." Section 1256
contracts are treated as if they are sold for their fair market value on the
last business day of the taxable year, regardless of whether a taxpayer's
obligations (or rights) under such contracts have terminated (by delivery,
exercise, entering into a closing transaction or otherwise) as of such date.
The net amount of such gain or loss for the entire taxable year from
transactions involving Section 1256 contracts (including gain or loss arising
as a consequence of the year-end deemed sale of Section 1256 contracts) is
treated as 60% long-term capital gain or loss and 40% short-term capital gain
or loss. A Fund may elect not to have this special tax treatment apply to
Section 1256 contracts that are part of a "mixed straddle" with other
investments of the Fund that are not Section 1256 contracts. The Internal
Revenue Service has held in several private rulings that gain arising from
Section 1256 contracts will be treated for purposes of the Short-Short Gain
Test as being derived from securities held for not less than three months if
the gains arise as a result of a constructive sale under Code Section 1256.
In addition to satisfying the requirement described above, each Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of each
Fund's taxable year, at least 50% of the value of the Fund's assets must
consist of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which
companies and securities of other issuers the Fund has not invested more than
5% of the value of the Fund's total assets in securities of such issuer and as
to which the Fund does not hold more than 10% of the outstanding voting
securities of such issuer), and no more than 25% of the value of its total
assets may be invested in the securities of any other issuer (other than U.S.
Government securities and securities of other regulated investment companies),
or in two or more issuers which the Fund controls and which are engaged in the
same or similar trades or businesses.
If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of such Fund's current and accumulated
earnings and profits. Such distributions generally will be eligible for the
dividends received deduction in the case of corporate shareholders.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98%
of ordinary taxable income for the calendar year and 98% of capital gain net
income for the one-year period ended on October 31 of such calendar year (or,
at the election of a regulated investment company having a taxable year ending
November 30 or December 31, for its taxable year (a "taxable year election")).
The balance of such income must be distributed during the next calendar year.
For the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable
year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall
(a) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year and
30
<PAGE> 223
(b) exclude foreign currency gains and losses incurred after October 31 of any
year (or after the end of its taxable year if it has made a taxable year
election) in determining the amount of ordinary taxable income for the current
calendar year (and, instead, include such gains and losses in determining
ordinary taxable income for the succeeding calendar year).
Each Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax.
However, investors should note that a Fund may in certain circumstances be
required to liquidate portfolio investments to make sufficient distributions to
avoid excise tax liability.
FUND DISTRIBUTIONS
Each Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be
taxable to shareholders as ordinary income and treated as dividends for federal
income tax purposes, but they will qualify for the 70% dividends-received
deduction for corporations only to the extent discussed below.
A Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. Each Fund currently intends to distribute any such
amounts. If net capital gain is distributed and designated as a capital gain
dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares. Conversely, if a Fund elects to retain its net capital
gain, the Fund will be taxed thereon (except to the extent of any available
capital loss carryforwards) at the 35% corporate tax rate. If a Fund elects to
retain its net capital gain, it is expected that the Fund also will elect to
have shareholders treated as if each received a distribution of its pro rata
share of such gain, with the result that each shareholder will be required to
report its pro rata share of such gain on its tax return as long-term capital
gain, will receive a refundable tax credit for its share of tax paid by the
Fund on the gain, and will increase the tax basis for its shares by an amount
equal to the deemed distribution less the tax credit.
Ordinary income dividends paid by the Fund with respect to a taxable
year will qualify for the 70% dividends received deduction generally available
to corporations (other than corporations, such as "S" corporations, which are
not eligible for the deduction because of their special characteristics and
other than for purposes of special taxes such as the accumulated earnings tax
and the personal holding company tax) to the extent of the amount of qualifying
dividends received by the Fund from domestic corporations for the taxable year.
A dividend received by the Fund will not be treated as a qualifying dividend
(a) if it has been received with respect to any share of stock that the Fund
has held for less than 46 days (91 days in the case of certain preferred
stock), excluding for this purpose under the rules of Code Section 246(c)(3)
and (4) (i) any day more than 45 days (or 90 days in the case of certain
preferred stock) after the date on which the stock becomes ex-dividend and (ii)
any period during which the Fund has an option to sell, is under a contractual
obligation to sell, has made and not closed a short sale of, has granted
certain options to buy or has otherwise diminished its risk of loss by holding
other positions with respect to, such (or substantially identical) stock; (b)
to the extent that the Fund is under an obligation (pursuant to a short sale or
otherwise) to make related payments with respect to positions in substantially
similar or related property; or (c) to the extent the stock on which the
dividend is paid is treated as debt-financed under the rules of Code Section
246A. Moreover, the dividends-received deduction for a corporate shareholder
may be disallowed or reduced (i) if the corporate shareholder fails to satisfy
the foregoing requirements with respect to its shares of the Fund or (ii) by
application of Code Section 246(b) which in general limits the dividends
received deduction to 70% of the shareholder's taxable income (determined
without regard to the dividends received deduction and certain other items).
Alternative minimum tax ("AMT") is imposed in addition to, but only to
the extent it exceeds, the regular tax and is computed at a maximum rate of 28%
for non-corporate taxpayers and 20% for corporate
31
<PAGE> 224
taxpayers on the excess of the taxpayer's alternative minimum taxable income
("AMTI") over an exemption amount. In addition, under the Superfund Amendments
and Reauthorization Act of 1986, a tax is imposed for taxable years beginning
after 1986 and before 1996 at the rate of 0.12% on the excess of a corporate
taxpayer's AMTI (determined without regard to the deduction for this tax and
the AMT net operating loss deduction) over $2 million. The corporate
dividends-received deduction is not itself an item of tax preference that must
be added back to taxable income or is otherwise disallowed in determining a
corporation's AMTI. However, corporate shareholders will generally be required
to take the full amount of any dividend received from the Fund into account
(without a dividends received deduction) in determining their adjusted current
earnings, which are used in computing an additional corporate preference item
(i.e., 75% of the excess of a corporate taxpayer's adjusted current earnings
over its AMTI (determined without regard to this item and the AMT net operating
loss deduction)) that is includable in AMTI.
Investment income that may be received by certain of the Funds from
sources within foreign countries may be subject to foreign taxes withheld at
the source. The United States has entered into tax treaties with many foreign
countries which entitle any such Fund to a reduced rate of, or exemption from,
taxes on such income. It is impossible to determine the effective rate of
foreign tax in advance since the amount of any such Fund's assets to be
invested in various countries is not known.
Distributions by a Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another Fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares
received, determined as of the reinvestment date. In addition, if the net
asset value at the time a shareholder purchases shares of a Fund reflects
undistributed net investment income or recognized capital gain net income, or
unrealized appreciation in the value of the assets of the Fund, distributions
of such amounts will be taxable to the shareholder in the manner described
above, although such distributions economically constitute a return of capital
to the shareholder.
Ordinarily, shareholders are required to take distributions by a Fund
into account in the year in which the distributions are made. However,
dividends declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
The Funds will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of ordinary income dividends and capital gain dividends,
and the proceeds of redemption of shares paid to any shareholder (a) who has
provided either an incorrect tax identification number or no number at all, (b)
who is subject to backup withholding by the Internal Revenue Service for
failure to report the receipt of interest or dividend income property, or (c)
who has failed to certify to a Fund that it is not subject to backup
withholding or that it is a corporation or other "exempt recipient."
SALE OR REDEMPTION OF SHARES
A shareholder will recognize gain or loss on the sale or redemption of
shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of the Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of a Fund will be considered capital
gain or loss and will be long-term capital gain or loss if the shares were held
for longer
32
<PAGE> 225
than one year. However, any capital loss arising from the sale or redemption
of shares held for six months or less will be treated as a long-term capital
loss to the extent of the amount of capital gain dividends received on such
shares. For this purpose, the special holding period rules of Code Section
246(c)(3) and (4) (discussed above in connection with the dividends received
deduction for corporations) generally will apply in determining the holding
period of shares. Long-term capital gains of non-corporate taxpayers are
currently taxed at a maximum rate 11.6% lower than the maximum rate applicable
to ordinary income. Capital losses in any year are deductible only to the
extent of capital gains plus, in the case of a non-corporate taxpayer, $3,000
of ordinary income.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
a Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder. If the income from a Fund is not effectively connected with a
U.S. trade or business carried on by a foreign shareholder, dividends and
return of capital distributions (other than capital gain dividends) will be
subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon
the gross amount of the distribution. Such a foreign shareholder would
generally be exempt from U.S. federal income tax on gains realized on the sale
of shares of a Fund, capital gain dividends and amounts retained by a Fund that
are designated as undistributed net capital gains.
If the income from a Fund is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then ordinary income
dividends, capital gain dividends and any gains realized upon the sale or
redemption of shares of the Fund will be subject to U.S. federal income tax at
the rates applicable to U.S. citizens or domestic corporations.
In the case of foreign non-corporate shareholders, a Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
that are otherwise exempt from withholding tax (or taxable at a reduced treaty
rate) unless such shareholders furnish the Fund with proper notification of
their foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund,
including the applicability of foreign taxes.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the regulations issued thereunder as in
effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation for ordinary income dividends and
capital gain dividends from regulated investment companies often differ from
the rules for U.S. federal income taxation described above. Shareholders are
urged to consult their tax advisers as to the consequences of these and other
state and local tax rules affecting investment in the Funds.
OTHER INFORMATION
The Prospectus and this Statement of Additional Information omit
certain Information contained in the Registration Statement which the Company
has filed with the SEC under the Securities Act of 1933 and
33
<PAGE> 226
reference is hereby made to the Registration Statement for further information
with respect to the Funds and the securities offered hereby. The Registration
Statement is available for inspection by the public at the SEC in Washington.
D.C.
34
<PAGE> 227
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER RATINGS
STANDARD & POOR'S
Commercial paper rated by Standard & Poor's Corporation has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and
cash flow have an upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well-established and the issuer has a
strong position within the industry. The reliability and quality of management
are unquestioned. The relative strength or weakness of the above factors
determines whether the issuer's Commercial Paper is rated A-1 or A-2. A-1
indicates the degree of safety regarding time of payment is very strong. A-2
indicates that the capacity for timely payment is strong, but that the relative
degree of safety is not as overwhelming as for issues designated A-1.
MOODY'S
Prime-1 and Prime-2 are the two highest commercial paper ratings
assigned by Moody's Investors Service, Inc. Among the factors considered by
Moody's in assigning ratings are the following: (a) evaluation of the
management of the issuer; (b) economic evaluation of the issuer's industry or
industries and an appraisal of speculative-type risks which may be inherent in
certain areas; (c) evaluation of the issuer's products in relation to
competition and customer acceptance; (d) liquidity; (e) amount and quality of
long-term debt; (f) trend of earnings over a period of ten years; (g) financial
strength of a parent company and the relationships which exist with the issuer;
and (h) recognition by the management of obligations which may be present or
may arise as a result of public interest questions and preparations to meet
such obligations. Relative strength or weakness of the above factors
determines whether the issuer's commercial paper is rated Prime-1 or Prime-2.
DESCRIPTION OF CORPORATE BOND RATINGS
STANDARD & POOR'S
AAA -- Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
MOODY'S
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt-edge." 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 -- Bonds which are rated Aa are judged to be of 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 risks appear somewhat larger than in
Aaa securities.
35
<PAGE> 228
FINANCIAL STATEMENTS
FS
<PAGE> 229
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Charter Fund:
We have audited the accompanying statement of assets and liabilities of the AIM
Charter Fund (a portfolio of AIM Equity Funds, Inc.), including the schedule of
investments, as of October 31, 1995, the related statement of operations for
the year then ended, and the statement of changes in net assets and financial
highlights for each of the years in the two-year period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Charter Fund as of October 31, 1995, the results of its operations for the year
then ended, and the changes in its net assets and the financial highlights for
each of the years in the two-year period then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 8, 1995
FS-1
C H A R T E R
<PAGE> 230
Financials
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS - 75.72%
ADVERTISING/BROADCASTING - 0.37%
120,000 Omnicom Group, Inc. $ 7,665,000
- ---------------------------------------------------------------------
AEROSPACE/DEFENSE - 1.71%
240,000 Boeing Co. (The) 15,750,000
- ---------------------------------------------------------------------
160,000 Rockwell International Corp. 7,120,000
- ---------------------------------------------------------------------
140,000 United Technologies Corp. 12,425,000
- ---------------------------------------------------------------------
35,295,000
- ---------------------------------------------------------------------
APPLIANCES - 0.47%
240,000 Newell Co. 5,790,000
- ---------------------------------------------------------------------
84,300 Premark International, Inc. 3,898,875
- ---------------------------------------------------------------------
9,688,875
- ---------------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS) - 1.03%
280,000 Chrysler Corp. 14,455,000
- ---------------------------------------------------------------------
240,000 Ford Motor Co. 6,900,000
- ---------------------------------------------------------------------
21,355,000
- ---------------------------------------------------------------------
AUTOMOBILE/TRUCKS PARTS & TIRES - 0.24%
140,000 Echlin Inc. 5,005,000
- ---------------------------------------------------------------------
BANKING - 0.34%
240,000 Norwest Corp. 7,080,000
- ---------------------------------------------------------------------
BANKING (MONEY CENTER) - 1.57%
180,000 BankAmerica Corp. 10,350,000
- ---------------------------------------------------------------------
160,000 Chemical Banking Corp. 9,100,000
- ---------------------------------------------------------------------
200,000 Citicorp 12,975,000
- ---------------------------------------------------------------------
32,425,000
- ---------------------------------------------------------------------
BEVERAGES - 1.28%
500,000 PepsiCo Inc. 26,375,000
- ---------------------------------------------------------------------
BUILDING MATERIALS - 0.87%
200,000 Black & Decker Corp. (The) 6,775,000
- ---------------------------------------------------------------------
400,000 Masco Corp. 11,250,000
- ---------------------------------------------------------------------
18,025,000
- ---------------------------------------------------------------------
BUSINESS SERVICES - 1.28%
160,000 Diebold, Inc. 8,480,000
- ---------------------------------------------------------------------
320,000 Equifax, Inc. 12,480,000
- ---------------------------------------------------------------------
200,000 Manpower Inc. 5,425,000
- ---------------------------------------------------------------------
26,385,000
- ---------------------------------------------------------------------
</TABLE>
FS-2
C H A R T E R
<PAGE> 231
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
CHEMICALS - 0.87%
140,000 Dow Chemical Co. $ 9,607,500
- ---------------------------------------------------------------------
140,000 Eastman Chemical Co. 8,330,000
- ---------------------------------------------------------------------
17,937,500
- ---------------------------------------------------------------------
CHEMICALS (SPECIALTY) - 1.01%
200,000 Grace (W.R.) & Co. 11,150,000
- ---------------------------------------------------------------------
140,000 IMC Global, Inc. 9,800,000
- ---------------------------------------------------------------------
20,950,000
- ---------------------------------------------------------------------
COMPUTER MAINFRAMES - 0.94%
200,000 International Business Machines Corp. 19,450,000
- ---------------------------------------------------------------------
COMPUTER MINI/PCS - 2.22%
200,000 COMPAQ Computer Corp.(a) 11,150,000
- ---------------------------------------------------------------------
240,000 Dell Computer Corp.(a) 11,190,000
- ---------------------------------------------------------------------
120,000 Hewlett Packard Co. 11,115,000
- ---------------------------------------------------------------------
160,000 Sun Microsystems, Inc.(a) 12,480,000
- ---------------------------------------------------------------------
45,935,000
- ---------------------------------------------------------------------
COMPUTER NETWORKING - 1.20%
120,000 Cabletron Systems, Inc.(a) 9,435,000
- ---------------------------------------------------------------------
120,000 Cisco Systems, Inc.(a) 9,300,000
- ---------------------------------------------------------------------
320,000 ECI Telecommunications Ltd. 6,080,000
- ---------------------------------------------------------------------
24,815,000
- ---------------------------------------------------------------------
COMPUTER PERIPHERALS - 0.85%
240,000 Adaptec, Inc.(a) 10,680,000
- ---------------------------------------------------------------------
200,000 Read-Rite Corp.(a) 6,975,000
- ---------------------------------------------------------------------
17,655,000
- ---------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 1.94%
240,000 BMC Software, Inc.(a) 8,550,000
- ---------------------------------------------------------------------
500,000 Computer Associates International, Inc. 27,500,000
- ---------------------------------------------------------------------
200,000 NetManage, Inc.(a) 4,075,000
- ---------------------------------------------------------------------
40,125,000
- ---------------------------------------------------------------------
CONGLOMERATES - 0.37%
180,000 Allied-Signal Inc. 7,650,000
- ---------------------------------------------------------------------
CONSUMER NON-DURABLES - 0.30%
120,000 Duracell International, Inc. 6,285,000
- ---------------------------------------------------------------------
</TABLE>
FS-3
C H A R T E R
<PAGE> 232
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COSMETICS & TOILETRIES - 1.52%
120,000 Gillette Co. (The) $ 5,805,000
- --------------------------------------------------------------------------
240,000 Procter & Gamble Co. 19,440,000
- --------------------------------------------------------------------------
140,000 Tambrands Inc. 6,265,000
- --------------------------------------------------------------------------
31,510,000
- --------------------------------------------------------------------------
ELECTRIC POWER - 2.28%
200,000 Baltimore Gas & Electric Co. 5,350,000
- --------------------------------------------------------------------------
160,000 Carolina Power & Light Co. 5,240,000
- --------------------------------------------------------------------------
120,000 Duke Power Co. 5,370,000
- --------------------------------------------------------------------------
160,000 FPL Group, Inc. 6,700,000
- --------------------------------------------------------------------------
240,000 General Public Utilities Corp. 7,500,000
- --------------------------------------------------------------------------
120,000 Houston Industries, Inc. 5,565,000
- --------------------------------------------------------------------------
120,000 Northern States Power Co. 5,670,000
- --------------------------------------------------------------------------
240,000 Southern Co. 5,730,000
- --------------------------------------------------------------------------
47,125,000
- --------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 3.03%
320,000 AMP Inc. 12,560,000
- --------------------------------------------------------------------------
160,000 General Electric Co. 10,120,000
- --------------------------------------------------------------------------
120,000 Honeywell, Inc. 5,040,000
- --------------------------------------------------------------------------
200,000 Parker-Hannifin Corp. 6,750,000
- --------------------------------------------------------------------------
240,000 Philips Electronics N.V.-New York Shares-ADR 9,270,000
- --------------------------------------------------------------------------
160,000 Tektronix, Inc. 9,480,000
- --------------------------------------------------------------------------
280,000 Teradyne, Inc.(a) 9,345,000
- --------------------------------------------------------------------------
62,565,000
- --------------------------------------------------------------------------
ELECTRONIC/DEFENSE - 0.82%
240,000 Loral Corp. 7,110,000
- --------------------------------------------------------------------------
160,000 Sundstrand Corp. 9,800,000
- --------------------------------------------------------------------------
16,910,000
- --------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS - 1.37%
200,756 Arrow Electronics, Inc.(a) 10,188,367
- --------------------------------------------------------------------------
240,000 Avnet, Inc. 12,090,000
- --------------------------------------------------------------------------
140,000 Wyle Electronics 5,967,500
- --------------------------------------------------------------------------
28,245,867
- --------------------------------------------------------------------------
</TABLE>
FS-4
C H A R T E R
<PAGE> 233
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FINANCE (ASSET MANAGEMENT) - 1.26%
280,000 Merrill Lynch & Co., Inc. $ 15,540,000
- ---------------------------------------------------------------------
120,000 Morgan Stanley Group, Inc. 10,440,000
- ---------------------------------------------------------------------
25,980,000
- ---------------------------------------------------------------------
FINANCE (CONSUMER CREDIT) - 4.27%
240,000 American Express Co. 9,750,000
- ---------------------------------------------------------------------
400,000 Countrywide Credit Industries, Inc. 8,850,000
- ---------------------------------------------------------------------
160,000 Federal Home Loan Corp. 11,080,000
- ---------------------------------------------------------------------
140,000 Federal National Mortgage Association 14,682,500
- ---------------------------------------------------------------------
126,100 Firstar Corp. 4,460,788
- ---------------------------------------------------------------------
300,000 Green Tree Financial Corp. 7,987,500
- ---------------------------------------------------------------------
240,000 Household International, Inc. 13,500,000
- ---------------------------------------------------------------------
320,000 MBNA Corp. 11,800,000
- ---------------------------------------------------------------------
320,000 Mercury Finance Co. 6,160,000
- ---------------------------------------------------------------------
88,270,788
- ---------------------------------------------------------------------
FINANCE (SAVINGS & LOAN) - 0.31%
240,000 Greenpoint Financial Corp. 6,480,000
- ---------------------------------------------------------------------
FOOD/PROCESSING - 0.68%
220,000 Nabisco Holdings Corp. 5,912,500
- ---------------------------------------------------------------------
240,000 Quaker Oats Co. 8,190,000
- ---------------------------------------------------------------------
14,102,500
- ---------------------------------------------------------------------
HOMEBUILDING - 0.25%
160,000 Centex Corp. 5,240,000
- ---------------------------------------------------------------------
HOTELS/MOTELS - 0.25%
140,000 Marriott International, Inc. 5,162,500
- ---------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY) - 2.57%
220,000 Aetna Life & Casualty Co. 15,482,500
- ---------------------------------------------------------------------
320,000 Allstate Financial Corp. 11,760,000
- ---------------------------------------------------------------------
160,000 CIGNA Corp. 15,860,000
- ---------------------------------------------------------------------
200,000 Travelers Group, Inc. 10,100,000
- ---------------------------------------------------------------------
53,202,500
- ---------------------------------------------------------------------
LEISURE & RECREATION - 0.36%
320,000 Carnival Corp. 7,440,000
- ---------------------------------------------------------------------
</TABLE>
FS-5
C H A R T E R
<PAGE> 234
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
MACHINERY (HEAVY) - 0.96%
140,000 Case Corp. $ 5,337,500
- --------------------------------------------------------------------------
260,000 Caterpillar Inc. 14,592,500
- --------------------------------------------------------------------------
19,930,000
- --------------------------------------------------------------------------
MEDICAL (DRUGS) - 8.16%
240,000 American Home Products Corp. 21,270,000
- --------------------------------------------------------------------------
240,000 Glaxo Wellcome PLC-ADR 6,510,000
- --------------------------------------------------------------------------
400,000 Johnson & Johnson 32,600,000
- --------------------------------------------------------------------------
160,000 Lilly (Eli) & Co. 15,460,000
- --------------------------------------------------------------------------
600,000 Pfizer Inc. 34,425,000
- --------------------------------------------------------------------------
120,000 Rhone-Poulenc Rorer, Inc. 5,655,000
- --------------------------------------------------------------------------
400,000 Schering-Plough Corp. 21,450,000
- --------------------------------------------------------------------------
300,000 SmithKline Beecham PLC-ADR 15,562,500
- --------------------------------------------------------------------------
400,000 Teva Pharmaceuticals Industries Ltd.-ADR 15,700,000
- --------------------------------------------------------------------------
168,632,500
- --------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES) - 1.33%
200,000 Columbia/HCA Healthcare Corp. 9,825,000
- --------------------------------------------------------------------------
200,000 Horizon/CMS Healthcare Corp.(a) 4,050,000
- --------------------------------------------------------------------------
200,000 Integrated Health Services, Inc. 4,575,000
- --------------------------------------------------------------------------
160,000 U.S. Healthcare Corp. 6,160,000
- --------------------------------------------------------------------------
100,846 Vencor, Inc.(a) 2,798,477
- --------------------------------------------------------------------------
27,408,477
- --------------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS - 0.10%
100,000 De Rigo S.p.A.-ADR(a) 2,062,500
- --------------------------------------------------------------------------
METALS (MISCELLANEOUS) - 0.54%
220,000 Aluminum Co. of America 11,220,000
- --------------------------------------------------------------------------
NATURAL GAS PIPELINE - 0.67%
360,000 Williams Companies, Inc. 13,905,000
- --------------------------------------------------------------------------
OFFICE AUTOMATION - 2.01%
320,000 Xerox Corp. 41,520,000
- --------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.21%
240,000 USX-Marathon Group 4,260,000
- --------------------------------------------------------------------------
OIL & GAS SERVICES - 0.52%
500,000 Occidental Petroleum Corp. 10,750,000
- --------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES - 0.32%
160,000 Halliburton Co. 6,640,000
- --------------------------------------------------------------------------
</TABLE>
FS-6
C H A R T E R
<PAGE> 235
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
PAPER & FOREST PRODUCTS - 1.58%
240,000 Albany International Corp.-Class A $ 4,980,000
- -------------------------------------------------------------------
140,000 Champion International Corp. 7,490,000
- -------------------------------------------------------------------
120,000 Kimberly-Clark Corp. 8,715,000
- -------------------------------------------------------------------
200,000 Mead Corp. (The) 11,525,000
- -------------------------------------------------------------------
32,710,000
- -------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 0.24%
200,000 Patriot American Hospitality, Inc.(a) 4,875,000
- -------------------------------------------------------------------
RESTAURANTS - 0.55%
200,000 Outback Steakhouse, Inc.(a) 6,275,000
- -------------------------------------------------------------------
260,000 Wendy's International, Inc. 5,167,500
- -------------------------------------------------------------------
11,442,500
- -------------------------------------------------------------------
RETAIL (FOOD & DRUG) - 0.55%
240,000 Safeway Inc.(a) 11,340,000
- -------------------------------------------------------------------
RETAIL (STORES) - 2.77%
120,000 Circuit City Stores, Inc. 4,005,000
- -------------------------------------------------------------------
160,000 Gap, Inc. (The) 6,300,000
- -------------------------------------------------------------------
1,200,000 Intimate Brands, Inc.(a) 20,100,000
- -------------------------------------------------------------------
400,000 Limited (The), Inc. 7,350,000
- -------------------------------------------------------------------
98,600 Pep Boys - Manny, Moe & Jack 2,156,875
- -------------------------------------------------------------------
300,000 Sears, Roebuck & Co. 10,200,000
- -------------------------------------------------------------------
200,000 Shopko Stores, Inc. 2,150,000
- -------------------------------------------------------------------
100,000 Tandy Corp. 4,937,500
- -------------------------------------------------------------------
57,199,375
- -------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS - 0.60%
240,000 Varian Associates, Inc. 12,330,000
- -------------------------------------------------------------------
SEMICONDUCTORS - 7.22%
200,000 Analog Devices, Inc.(a) 7,225,000
- -------------------------------------------------------------------
500,000 Applied Materials, Inc.(a) 25,062,500
- -------------------------------------------------------------------
240,000 Intel Corp. 16,770,000
- -------------------------------------------------------------------
400,000 Micron Technology Inc. 28,250,000
- -------------------------------------------------------------------
200,000 National Semiconductor Corp.(a) 4,875,000
- -------------------------------------------------------------------
900,000 Texas Instruments, Inc. 61,425,000
- -------------------------------------------------------------------
240,000 VLSI Technology, Inc.(a) 5,640,000
- -------------------------------------------------------------------
149,247,500
- -------------------------------------------------------------------
</TABLE>
FS-7
C H A R T E R
<PAGE> 236
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
TELECOMMUNICATIONS - 3.03%
500,000 A T & T Corp. $ 32,000,000
- -------------------------------------------------------------------------------
300,000 DSC Communications Corp.(a) 11,100,000
- -------------------------------------------------------------------------------
100,000 Nokia Corp.-Class A-ADR 5,575,000
- -------------------------------------------------------------------------------
400,000 Telefonaktiebolaget L.M. Ericsson-ADR 8,543,760
- -------------------------------------------------------------------------------
160,000 Tellabs, Inc.(a) 5,440,000
- -------------------------------------------------------------------------------
62,658,760
- -------------------------------------------------------------------------------
TELEPHONE - 2.74%
200,000 Ameritech Corp. 10,800,000
- -------------------------------------------------------------------------------
160,000 BellSouth Corp. 12,240,000
- -------------------------------------------------------------------------------
200,000 Cincinnati Bell, Inc. 5,875,000
- -------------------------------------------------------------------------------
320,000 GTE Corp. 13,200,000
- -------------------------------------------------------------------------------
260,000 SBC Communications, Inc. 14,527,500
- -------------------------------------------------------------------------------
56,642,500
- -------------------------------------------------------------------------------
TEXTILES - 0.28%
205,500 Liz Claiborne, Inc. 5,831,061
- -------------------------------------------------------------------------------
TOBACCO - 3.51%
800,000 Philip Morris Companies Inc. 67,600,000
- -------------------------------------------------------------------------------
160,000 RJR Nabisco Holdings Corp. 4,920,000
- -------------------------------------------------------------------------------
72,520,000
- -------------------------------------------------------------------------------
Total Common Stocks 1,565,460,703
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS - 11.33%
AUTOMOBILE/TRUCKS PARTS & TIRES - 0.49%
$10,000,000 Magna International Inc., Conv. Sub. Deb., 5.00%,
10/15/02 10,150,000
- -------------------------------------------------------------------------------
BUSINESS SERVICES - 0.42%
4,000,000 Career Horizons Inc., Conv. Bonds, 7.00%,
11/01/02(b)
(Acquired 10/16/95-10/27/95; cost $4,015,000) 4,060,000
- -------------------------------------------------------------------------------
4,000,000 Olsten Corp., Conv. Sub. Deb., 4.875%, 05/15/03 4,692,000
- -------------------------------------------------------------------------------
8,752,000
- -------------------------------------------------------------------------------
CHEMICALS - 0.26%
6,000,000 Sandoz Capital BVI Ltd., Sr. Conv. Deb., 2.00%,
10/06/02(b)
(Acquired 09/28/95; cost $4,947,600) 5,310,000
- -------------------------------------------------------------------------------
</TABLE>
FS-8
C H A R T E R
<PAGE> 237
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
COMPUTER NETWORKING - 0.75%
$ 8,000,000 Bay Networks Inc., Conv. Sub. Deb., 5.25%,
05/15/03(b)
(Acquired 09/26/95-10/02/95; cost $8,407,500) $ 9,020,000
- -------------------------------------------------------------------------------
4,000,000 3Com Corp., Conv. Sub. Notes, 10.25%, 11/10/01(b)
(Acquired 11/08/94; cost $4,000,000) 6,410,000
- -------------------------------------------------------------------------------
15,430,000
- -------------------------------------------------------------------------------
COMPUTER PERIPHERALS - 1.03%
10,000,000 EMC Corp., Conv. Sub. Notes, 4.25%, 01/01/01 10,000,000
- -------------------------------------------------------------------------------
5,000,000 Sanmina Corp., Conv. Sub. Notes, 5.50%,
08/15/02(b)
(Acquired 08/10/95-09/22/95; cost $5,064,375) 5,750,000
- -------------------------------------------------------------------------------
5,000,000 Seagate Technology Inc., Conv. Sub. Deb., 6.75%,
05/01/12 5,625,000
- -------------------------------------------------------------------------------
21,375,000
- -------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 1.83%
20,000,000 Silicon Graphics Inc., Sr. Conv. Sub. Deb.,
4.15%, 11/02/13(b)(c)
(Acquired 10/26/93-09/22/95; cost $9,835,480) 11,143,000
- -------------------------------------------------------------------------------
20,000,000 SoftKey International Inc., Conv. Notes, 5.50%,
11/01/00(b)
(Acquired 10/17/95-10/30/95; cost $19,788,820) 16,900,000
- -------------------------------------------------------------------------------
6,000,000 Sterling Software Inc., Conv. Sub. Deb., 5.75%,
02/01/03 9,882,000
- -------------------------------------------------------------------------------
37,925,000
- -------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 0.79%
4,000,000 Checkpoint Systems Inc., Conv. Sub. Deb., 5.25%,
11/01/05(b)
(Acquired 10/17/95-10/27/95; cost $4,005,625) 4,060,000
- -------------------------------------------------------------------------------
5,000,000 Dovatron International, Inc., Conv. Sub. Notes,
6.00%, 10/15/02(b)
(Acquired 10/06/95-10/09/95; cost $5,108,750) 5,137,500
- -------------------------------------------------------------------------------
7,500,000 Integrated Device Technology, Inc., Conv. Sub.
Notes, 5.50%, 06/01/02 7,162,500
- -------------------------------------------------------------------------------
16,360,000
- -------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS) - 0.42%
4,000,000 Thermo Electron Corp., Sr. Conv. Deb., 4.625%,
08/01/97(b)
(Acquired 09/28/94; cost $5,779,440) 8,653,000
- -------------------------------------------------------------------------------
MEDICAL (DRUGS) - 0.78%
10,000,000 ICN Pharmaceuticals Inc., Conv. Sub. Notes,
8.50%, 11/15/99 11,183,000
- -------------------------------------------------------------------------------
5,000,000 Ivax Corp., Conv. Deb., 6.50%, 11/15/01(b)
(Acquired 10/19/95-10/20/95; cost $5,095,000) 4,912,500
- -------------------------------------------------------------------------------
16,095,500
- -------------------------------------------------------------------------------
</TABLE>
FS-9
C H A R T E R
<PAGE> 238
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
MEDICAL (PATIENT SERVICES) - 1.15%
$ 4,000,000 Genesis Health Ventures, Sr. Conv. Sub. Deb.,
6.00%, 11/30/03 $ 5,300,000
- -------------------------------------------------------------------------------
5,000,000 Healthsouth Rehabilitation Corp., Conv. Sub.
Deb., 5.00%, 04/01/01 7,446,750
- -------------------------------------------------------------------------------
6,000,000 Integrated Health Services Inc., Conv. Sub. Deb.,
6.00%, 01/01/03 5,698,800
- -------------------------------------------------------------------------------
5,000,000 Prime Hospitality Corp., Conv. Sub. Notes, 7.00%,
04/15/02 5,275,000
- -------------------------------------------------------------------------------
23,720,550
- -------------------------------------------------------------------------------
OFFICE AUTOMATION - 0.26%
4,000,000 Danka Business Systems, Conv. Sub. Deb., 6.75%,
04/01/02(b)
(Acquired 03/06/95; cost $4,000,000) 5,280,000
- -------------------------------------------------------------------------------
RETAIL (STORES) - 0.72%
5,000,000 Baby Superstore Inc., Conv. Sub. Notes, 4.875%,
10/01/00 5,187,500
- -------------------------------------------------------------------------------
10,000,000 Federated Department Stores, Conv. Notes, 5.00%,
10/01/03 9,800,000
- -------------------------------------------------------------------------------
14,987,500
- -------------------------------------------------------------------------------
SEMICONDUCTORS - 2.43%
8,000,000 Altera Corp., Conv. Sub. Notes, 5.75%,
06/15/02(b)
(Acquired 06/16/95-10/05/95; cost $8,851,250) 10,780,000
- -------------------------------------------------------------------------------
2,000,000 LAM Research Corp., Conv. Sub. Deb., 6.00%,
05/01/03 4,905,000
- -------------------------------------------------------------------------------
2,500,000 LSI Logic Corp., Conv. Sub. Notes, 5.50%,
03/15/01(b)
(Acquired 03/30/94-10/11/95; cost $7,170,340) 9,737,500
- -------------------------------------------------------------------------------
20,000,000 Motorola Inc., Sub. Liquid Yield Option Notes,
2.25%, 09/27/13(c) 16,400,000
- -------------------------------------------------------------------------------
10,000,000 Solectron Corp., Conv. Liquid Yield Option Notes,
7.00%, 05/05/12(c) 8,400,000
- -------------------------------------------------------------------------------
50,222,500
- -------------------------------------------------------------------------------
Total Convertible Corporate Bonds 234,261,050
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS - 6.97%
AUTOMOBILE (MANUFACTURERS) - 0.52%
160,000 General Motors Corp.-Class C, $3.25 Dep. Conv.
Pfd. 10,720,000
- -------------------------------------------------------------------------------
BANKING (MONEY CENTER) - 0.52%
60,000 Citicorp-$5.375 Dep. Conv. Pfd. 10,671,780
- -------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 0.56%
120,000 Ceridian Corp.-$2.75 Conv. Pfd. 11,700,000
- -------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT) - 0.79%
150,000 American General Delaware-Series A, $3.00 Conv.
Pfd. 7,762,500
- -------------------------------------------------------------------------------
160,000 United Companies Finance LP-$2.97 Conv. Pfd.
PRIDES 8,560,000
- -------------------------------------------------------------------------------
16,322,500
- -------------------------------------------------------------------------------
</TABLE>
FS-10
C H A R T E R
<PAGE> 239
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FINANCE (CONSUMER CREDIT) - 0.88%
200,000 First USA-$1.9922 Conv. Pfd. $ 8,300,000
- -------------------------------------------------------------------------------
160,000 SunAmerica Inc.-Series E, $3.10 Dep. Conv. Pfd. 9,920,000
- -------------------------------------------------------------------------------
18,220,000
- -------------------------------------------------------------------------------
FUNERAL SERVICES - 0.85%
250,000 SCI Financial LLC-Series A, $3.125 Conv. Pfd. 17,625,000
- -------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY) - 0.21%
100,000 Allstate Inc.-$2.30 Conv. Pfd. 4,350,000
- -------------------------------------------------------------------------------
LEISURE & RECREATION - 0.21%
400,000 Bally Entertainment Corp.-$0.89 Conv. Pfd. PRIDES 4,450,000
- -------------------------------------------------------------------------------
OFFICE PRODUCTS - 0.33%
80,000 Alco Standard Corp.-Series BB, $5.04 Dep. Conv.
Pfd. ACES 6,840,000
- -------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.29%
160,000 Bowater Inc.-Series B, $1.645 Dep. Conv. Pfd.
PRIDES 6,000,000
- -------------------------------------------------------------------------------
POLLUTION CONTROL - 0.13%
80,000 Browning-Ferris Industries-$2.5828 Conv. Pfd.
ACES 2,630,000
- -------------------------------------------------------------------------------
PUBLISHING - 0.31%
200,000 Time Warner Financing-$1.24 Conv. Pfd. PERCS 6,400,000
- -------------------------------------------------------------------------------
RETAIL (STORES) - 0.24%
120,000 Best Buy Capital-$3.25 Conv. Pfd. 4,890,000
- -------------------------------------------------------------------------------
SEMICONDUCTORS - 0.85%
200,000 National Semiconductors-$3.25 Conv. Pfd. 17,500,000
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS - 0.28%
120,000 LCI International, Inc.-$1.25 Exch. Conv. Pfd. 5,745,000
- -------------------------------------------------------------------------------
Total Convertible Preferred Stocks 144,064,280
- -------------------------------------------------------------------------------
</TABLE>
FS-11
C H A R T E R
<PAGE> 240
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
U.S. TREASURY NOTES - 3.81%
$ 6,500,000 7.25%, 11/30/96 $ 6,608,030
- -------------------------------------------------------------------------------
6,500,000 7.50%, 12/31/96 6,636,955
- -------------------------------------------------------------------------------
6,500,000 7.50%, 01/31/97 6,645,145
- -------------------------------------------------------------------------------
6,500,000 6.875%, 02/28/97 6,603,220
- -------------------------------------------------------------------------------
6,500,000 6.625%, 03/31/97 6,589,440
- -------------------------------------------------------------------------------
6,500,000 6.50%, 04/30/97 6,581,185
- -------------------------------------------------------------------------------
6,500,000 6.125%, 05/31/97 6,547,515
- -------------------------------------------------------------------------------
6,500,000 5.625%, 06/30/97 6,501,105
- -------------------------------------------------------------------------------
6,500,000 5.875%, 07/31/97 6,527,690
- -------------------------------------------------------------------------------
6,500,000 6.00%, 08/31/97 6,541,340
- -------------------------------------------------------------------------------
6,500,000 5.75%, 09/30/97 6,517,550
- -------------------------------------------------------------------------------
6,500,000 5.625%, 10/31/97 6,504,095
- -------------------------------------------------------------------------------
Total U.S. Treasury Notes 78,803,270
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 1.73%(d)
955,097 Daiwa Securities America Inc., 5.90%, 11/01/95(e) 955,097
- -------------------------------------------------------------------------------
35,000,000 Lehman Brothers Government Securities, Inc.,
5.92%, 11/01/95(f) 35,000,000
- -------------------------------------------------------------------------------
Total Repurchase Agreements 35,955,097
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.56% 2,058,544,400
- -------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.44% 9,002,438
- -------------------------------------------------------------------------------
NET ASSETS - 100.00% $2,067,546,838
===============================================================================
</TABLE>
Abbreviations:
ACES - Automatically Convertible Equity Securities
ADR - American Depositary Receipt
Conv. - Convertible
Deb. - Debentures
Dep. - Depositary
Exch. - Exchangeable
Pfd. - Preferred
PERCS - Preferred Equity Redemptive Cumulative Stock
PRIDES - Preferred Redeemable Increased Dividend Equity Securities
Sr. - Senior
Sub. - Subordinated
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at October 31, 1995 was
$107,153,500, which represented 5.18% of the net assets.
(c) Zero coupon bond. The interest rate shown represents the rate of the
original issue discount.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102 percent of the sales price of
the repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(e) Joint repurchase agreement entered into 10/31/95 with a maturing value of
$401,494,641. Collateralized by $353,853,000 U.S. Treasury obligations,
8.375% due 08/15/08.
(f) Joint repurchase agreement entered into 10/31/95 with a maturity value of
$100,016,444. Collateralized by $92,004,000 U.S. Treasury obligations,
6.50% to 9.125% due 04/30/99 to 05/31/99.
See Notes to Financial Statements.
FS-12
C H A R T E R
<PAGE> 241
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $1,774,220,816) $ 2,058,544,400
- --------------------------------------------------------------------------
Receivables for:
Investments sold 80,911,499
- --------------------------------------------------------------------------
Capital stock sold 12,279,189
- --------------------------------------------------------------------------
Dividends and interest 5,525,541
- --------------------------------------------------------------------------
Investment for deferred compensation plan 13,493
- --------------------------------------------------------------------------
Other assets 73,648
- --------------------------------------------------------------------------
Total assets 2,157,347,770
- --------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 82,514,084
- --------------------------------------------------------------------------
Capital stock reacquired 4,814,964
- --------------------------------------------------------------------------
Deferred compensation 13,493
- --------------------------------------------------------------------------
Accrued advisory fees 1,110,756
- --------------------------------------------------------------------------
Accrued administrative services fees 8,544
- --------------------------------------------------------------------------
Accrued distribution fees 721,859
- --------------------------------------------------------------------------
Accrued transfer agent fees 343,072
- --------------------------------------------------------------------------
Accrued operating expenses 274,160
- --------------------------------------------------------------------------
Total liabilities 89,800,932
- --------------------------------------------------------------------------
Net assets applicable to shares outstanding $ 2,067,546,838
==========================================================================
NET ASSETS:
Class A $ 1,974,417,019
==========================================================================
Class B $ 67,591,852
==========================================================================
Institutional Class $ 25,537,967
==========================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- --------------------------------------------------------------------------
Outstanding 185,803,605
==========================================================================
Class B:
Authorized 750,000,000
- --------------------------------------------------------------------------
Outstanding 6,365,612
==========================================================================
Institutional Class:
Authorized 200,000,000
- --------------------------------------------------------------------------
Outstanding 2,396,343
==========================================================================
CLASS A:
Net asset value and redemption price per share $10.63
==========================================================================
Offering price per share:
(Net asset value of $10.63 divided by 94.50%) $11.25
==========================================================================
CLASS B:
Net asset value and offering price per share $10.62
==========================================================================
INSTITUTIONAL CLASS:
Net asset value, offering and redemption price per share $10.66
==========================================================================
</TABLE>
See Notes to Financial Statements.
FS-13
C H A R T E R
<PAGE> 242
STATEMENT OF OPERATIONS
For the year ended October 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 31,720,012
- --------------------------------------------------------------------------
Interest 15,080,737
- --------------------------------------------------------------------------
Total investment income 46,800,749
- --------------------------------------------------------------------------
EXPENSES:
Advisory fees 10,890,335
- --------------------------------------------------------------------------
Administrative services fees 109,054
- --------------------------------------------------------------------------
Custodian fees 150,968
- --------------------------------------------------------------------------
Directors' fees 17,234
- --------------------------------------------------------------------------
Distribution fees-Class A 5,007,160
- --------------------------------------------------------------------------
Distribution fees-Class B 94,462
- --------------------------------------------------------------------------
Transfer agent fees-Class A 2,906,528
- --------------------------------------------------------------------------
Transfer agent fees-Class B 19,728
- --------------------------------------------------------------------------
Transfer agent fees-Institutional Class 1,224
- --------------------------------------------------------------------------
Other 623,804
- --------------------------------------------------------------------------
Total expenses 19,820,497
- --------------------------------------------------------------------------
Net investment income 26,980,252
- --------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 179,469,513
- --------------------------------------------------------------------------
Futures contracts (344,344)
- --------------------------------------------------------------------------
179,125,169
- --------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
Investment securities 202,231,210
- --------------------------------------------------------------------------
Foreign currencies (8)
- --------------------------------------------------------------------------
Futures contracts (1,251,000)
- --------------------------------------------------------------------------
2,000,981,202
- --------------------------------------------------------------------------
Net gain on investment securities, foreign currencies and
futures contracts 380,106,371
- --------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 407,086,623
==========================================================================
</TABLE>
See Notes to Financial Statements.
FS-14
C H A R T E R
<PAGE> 243
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 26,980,252 $ 37,921,889
- ------------------------------------------------------------------------------
Net realized gain on sales of investment
securities, foreign currencies and futures
contracts 179,125,169 56,414,638
- ------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities, foreign
currencies and futures contracts 200,981,202 (136,629,171)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 407,086,623 (42,292,644)
- ------------------------------------------------------------------------------
Dividends to shareholders from net investment
income:
Class A (34,589,802) (28,712,940)
- ------------------------------------------------------------------------------
Class B (55,355) --
- ------------------------------------------------------------------------------
Institutional Class (536,096) (485,084)
- ------------------------------------------------------------------------------
Distributions to shareholders from net
realized gains on investments:
Class A (57,274,888) (28,113,934)
- ------------------------------------------------------------------------------
Class B (12,593) --
- ------------------------------------------------------------------------------
Institutional Class (759,222) (384,536)
- ------------------------------------------------------------------------------
Net equalization credits (charges):
Class A (284,916) (147,034)
- ------------------------------------------------------------------------------
Class B 24,584 --
- ------------------------------------------------------------------------------
Institutional Class (13,270) 335
- ------------------------------------------------------------------------------
Share transactions-net:
Class A 86,486,354 (12,596,188)
- ------------------------------------------------------------------------------
Class B 66,768,426 --
- ------------------------------------------------------------------------------
Institutional Class (206,795) (1,032,133)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets 466,633,050 (113,764,158)
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,600,913,788 1,714,677,946
- ------------------------------------------------------------------------------
End of period $2,067,546,838 $1,600,913,788
==============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,606,658,340 $1,453,610,355
- ------------------------------------------------------------------------------
Undistributed net investment income 102,563 8,577,166
- ------------------------------------------------------------------------------
Undistributed net realized gain on sales of
investment securities, foreign currencies
and futures contracts 176,462,351 55,383,885
- ------------------------------------------------------------------------------
Unrealized appreciation of investment
securities and futures contracts 284,323,584 83,342,382
- ------------------------------------------------------------------------------
$2,067,546,838 $1,600,913,788
==============================================================================
</TABLE>
See Notes to Financial Statements.
FS-15
C H A R T E R
<PAGE> 244
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Charter Fund (the "Fund") is a series portfolio of AIM Equity Funds, Inc.
(the "Company"). The Company is a Maryland corporation registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of four diversified portfolios:
AIM Charter Fund, AIM Weingarten Fund, AIM Constellation Fund and AIM
Aggressive Growth Fund. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and the Institutional Class. 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 following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Except as provided in the next sentence, a security
listed or traded on an exchange 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 mean between the closing bid
and asked prices on that day. Exchange listed convertible bonds are valued
at the mean between the closing bid and asked prices obtained from a broker-
dealer. 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 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 of the closing bid
and asked prices. Debt obligations that are issued or guaranteed by the U.S.
Treasury 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 at the mean between last bid and asked prices based upon
quotes furnished by independent sources. Securities for which market
quotations are not readily available are valued at fair value as determined
in good faith by or under the supervision of the Company's officers in a
manner specifically authorized by the Board of Directors of the Company.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value.
B. Securities Transactions, Investment Income and Distributions - 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 and distributions to
shareholders are recorded on the ex-dividend date.
C. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to all
classes, e.g. advisory fees, are allocated among them.
E. Equalization - The Fund follows the accounting practice known as
equalization by which a portion of the proceeds from sales and costs of
repurchases of Fund shares, equivalent on a per share basis to the amount of
undistributed net investment income, is credited or charged to undistributed
net income when the transaction is recorded so that the undistributed net
investment income per share is unaffected by sales or redemptions of Fund
shares.
F. 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.
G. Foreign Currency Contracts - A forward 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 forward 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.
FS-16
C H A R T E R
<PAGE> 245
H. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the
Fund's basis in the contract. Risks include the possibility of an illiquid
market and the change in the value of the contracts may not correlate with
changes in the value of the securities being hedged.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.0% of
the first $30 million of the Fund's average daily net assets, plus 0.75% of the
Fund's average daily net assets in excess of $30 million to and including $150
million, plus 0.625% of the Fund's average daily net assets in excess of $150
million. AIM has agreed to voluntarily waive a portion of its advisory fees
paid by the Fund to AIM to the extent necessary to reduce the fees paid by the
Fund at net asset levels higher than those currently incorporated in the
present advisory fee schedule. AIM will receive a fee calculated at the annual
rate of 1.0% of the first $30 million of the Fund's average daily net assets,
plus 0.75% of the Fund's average daily net assets in excess of $30 million to
and including $150 million, plus 0.625% of the Fund's average daily net assets
in excess of $150 million to and including $2 billion, plus 0.60% of the Fund's
average daily net assets in excess of $2 billion. Under the terms of a master
sub-advisory agreement between AIM and A I M Capital Management, Inc. ("AIM
Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM.
These agreements require AIM to reduce its fees or, if necessary, make payments
to the Fund to the extent required to satisfy any expense limitations imposed
by the securities laws or regulations thereunder of any state in which the
Fund's shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the year ended October 31,
1995, AIM was reimbursed $109,054 for such services.
The Fund, pursuant to a transfer agency and services agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency services to the Class A and Class B shares. During the year
ended October 31, 1995, AFS was paid $1,568,721 for such services. During the
year ended October 31, 1995, the Fund paid A I M Institutional Fund Services,
Inc. ("AIFS") $587 for shareholder and transfer agency services with respect to
the Institutional Class. Effective July 1, 1995, AIFS became the exclusive
transfer agent for the Institutional Class of the Fund.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A and Class B shares and a master distribution agreement with Fund
Management Company ("FMC") to serve as the distributor for the Institutional
Class. The Company has adopted Plans pursuant to Rule 12b-1 under the 1940 Act
with respect to the Fund's Class A shares (the "Class A Plan") and with respect
to the Fund's Class B shares (the "Class B Plan") (collectively, the "Plans").
The Fund, pursuant to the Class A Plan, pays AIM Distributors compensation at
the annual rate of 0.30% of the average daily net assets attributable to the
Class A shares. The Class A Plan is designed to compensate AIM Distributors for
certain promotional and other sales related costs, and to implement a program
which provides periodic payments to selected dealers and financial institutions
who furnish continuing personal shareholder services to their customers who
purchase and own Class A shares of the Fund. The Fund, pursuant to the Class B
Plan, pays AIM Distributors compensation at an annual rate of 1.00% of the
average daily net assets attributable to the Class B shares. Of this amount,
the Fund may pay a service fee of 0.25% of the average daily net assets of the
Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and
own Class B shares of the Fund. Any amounts not paid as a service fee under
such 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. AIM Distributors may, from time to time,
assign, transfer or pledge to one or more designees, its right to all or a
designated portion of (a) compensation received by AIM Distributors from the
Fund pursuant to the Class B Plan (but not AIM Distributors' duties and
obligations pursuant to the Class B Plan), and (b) any contingent deferred
sales charges received by AIM Distributors related to the Class B shares.
During the year ended October 31, 1995 for the Class A shares and the period
June 26, 1995 (date sales commenced) through October 31, 1995 for the Class B
shares, the Class A shares and the Class B shares paid AIM Distributors
$5,007,160 and $94,462, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,316,019 from sales of Class A
shares of the Fund during the year ended October 31, 1995. 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 October 31,
1995, AIM Distributors received commissions of $18,452 in contingent deferred
sales charges imposed on redemptions of Class A and Class B shares. Certain
officers and directors of the Company are officers and directors of AIM, AIM
Capital, AIM Distributors, AFS, AIFS and FMC.
FS-17
C H A R T E R
<PAGE> 246
During the year ended October 31, 1995, the Fund paid legal fees of $6,853
for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if
so elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4 - BANK BORROWINGS
The Fund has a $28,500,000 committed line of credit with a financial
institution syndicate with Chemical Bank of New York as the administrative
agent. Interest on borrowings under the line of credit is payable on maturity
or prepayment date. During the period July 20, 1995 (effective date of Credit
Agreement) through October 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's
commitment.
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 October 31,
1995 was $2,717,900,855 and $2,713,027,662, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1995, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $307,302,292
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (26,174,954)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $281,127,338
===========================================================================
</TABLE>
Cost of investments for tax purposes is $1,777,417,062.
NOTE 6 - CAPITAL STOCK
Changes in the capital stock outstanding for the years ended October 31, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 40,727,782 $396,439,839 40,711,895 $363,174,892
- ---------------------- ----------- ------------ ----------- ------------
Class B* 6,409,868 67,237,422 -- --
- ---------------------- ----------- ------------ ----------- ------------
Institutional Class 335,121 3,269,772 280,235 2,507,705
- ---------------------- ----------- ------------ ----------- ------------
Issued as reinvestment
of dividends:
Class A 10,283,705 77,653,310 4,862,946 43,539,217
- ---------------------- ----------- ------------ ----------- ------------
Class B* 5,996 64,162 -- --
- ---------------------- ----------- ------------ ----------- ------------
Institutional Class 134,103 1,130,381 83,958 753,348
- ---------------------- ----------- ------------ ----------- ------------
Reacquired:
Class A (42,561,203) (387,606,795) (46,996,269) (419,310,297)
- ---------------------- ----------- ------------ ----------- ------------
Class B* (50,252) (533,158) -- --
- ---------------------- ----------- ------------ ----------- ------------
Institutional Class (519,822) (4,606,948) (476,063) (4,293,186)
- ---------------------- ----------- ------------ ----------- ------------
14,765,298 $153,047,985 (1,533,298) $(13,628,321)
====================== =========== ============ =========== ============
</TABLE>
* Class B shares commenced sales on June 26, 1995.
FS-18
C H A R T E R
<PAGE> 247
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Institutional Class during the four-year period ended October 31, 1995 and
the period July 30, 1991 (date operations commenced) through October 31, 1991.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------- ------- ------- ------ -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 8.93 $ 9.48 $ 8.38 $ 8.42 $7.92
- ------------------------------ ------- ------- ------- ------ -----
Income from investment
operations:
Net investment income 0.23 0.25 0.19 0.20 0.05
- ------------------------------ ------- ------- ------- ------ -----
Net gains (losses) on
securities (both realized
and unrealized) 2.07 (0.44) 1.23 0.16 0.45
- ------------------------------ ------- ------- ------- ------ -----
Total from investment
operations 2.30 (0.19) 1.42 0.36 0.50
- ------------------------------ ------- ------- ------- ------ -----
Less distributions:
Dividends from net investment
income (0.24) (0.20) (0.32) (0.17) --
- ------------------------------ ------- ------- ------- ------ -----
Distributions from capital
gains (0.33) (0.16) -- (0.23) --
- ------------------------------ ------- ------- ------- ------ -----
Total distributions (0.57) (0.36) (0.32) (0.40) --
- ------------------------------ ------- ------- ------- ------ -----
Net asset value, end of period $ 10.66 $ 8.93 $ 9.48 $ 8.38 $8.42
============================== ======= ======= ======= ====== =====
Total return(a) 27.45% (2.02)% 17.39% 4.53% 6.31%
============================== ======= ======= ======= ====== =====
Net assets, end of period
(000s omitted) $25,538 $21,840 $24,196 $7,800 $ 775
============================== ======= ======= ======= ====== =====
Ratio of expenses to average
net assets 0.74%(b) 0.73% 0.79% 0.87% 1.00%(c)
============================== ======= ======= ======= ====== =====
Ratio of net investment income
to average net assets 1.98%(b) 2.76% 2.26% 2.44% 2.43%(c)
============================== ======= ======= ======= ====== =====
Portfolio turnover rate 161% 126% 144% 95% 144%
============================== ======= ======= ======= ====== =====
</TABLE>
(a) For periods less than one year, total return is not annualized.
(b) Ratios are based on average net assets of $21,840,593.
(c) Annualized.
FS-19
C H A R T E R
<PAGE> 248
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Weingarten Fund:
We have audited the accompanying statement of assets and liabilities of AIM
Weingarten Fund (a portfolio of AIM Equity Funds, Inc.), including the schedule
of investments, as of October 31, 1995, the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
years in the two-year period then ended, and financial highlights for each of
the years in the seven year period then ended, the ten months ended October 31,
1988, and the two year period ended December 31, 1987. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Weingarten Fund as of October 31, 1995, the results of its operations for the
year then ended, the changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the seven year period then ended, the ten months ended October 31, 1988, and
the two year period ended December 31, 1987, in conformity with generally
accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
December 8, 1995
FS-20
W E I N G A R T E N
<PAGE> 249
Financials
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 82.38%
AEROSPACE/DEFENSE - 0.89%
350,000 Boeing Co. $ 22,968,750
- --------------------------------------------------------------------
116,600 Raytheon Co. 5,086,675
- --------------------------------------------------------------------
150,000 United Technologies Corp. 13,312,500
- --------------------------------------------------------------------
41,367,925
- --------------------------------------------------------------------
APPLIANCES - 0.87%
1,000,000 Newell Co. 24,125,000
- --------------------------------------------------------------------
350,000 Premark International Inc. 16,187,500
- --------------------------------------------------------------------
40,312,500
- --------------------------------------------------------------------
AUTOMOBILE(MANUFACTURERS) - 0.25%
225,000 Chrysler Corp. 11,615,625
- --------------------------------------------------------------------
AUTOMOBILE/TRUCKS PARTS & TIRES - 0.61%
800,000 Echlin Inc. 28,600,000
- --------------------------------------------------------------------
BANKING - 2.38%
455,000 Chase Manhattan Corp. 25,935,000
- --------------------------------------------------------------------
1,250,000 CoreStates Financial Corp. 45,468,750
- --------------------------------------------------------------------
463,600 Norwest Bank Corp. 13,676,200
- --------------------------------------------------------------------
1,000,000 Southern National Corp. 25,750,000
- --------------------------------------------------------------------
110,829,950
- --------------------------------------------------------------------
BEVERAGES - 1.02%
900,000 PepsiCo Inc. 47,475,000
- --------------------------------------------------------------------
BUILDING MATERIALS - 0.89%
548,900 Black & Decker Corp. 18,593,988
- --------------------------------------------------------------------
275,000 Georgia-Pacific Corp. 22,687,500
- --------------------------------------------------------------------
41,281,488
- --------------------------------------------------------------------
BUSINESS SERVICES - 2.21%
330,000 Equifax, Inc. 12,870,000
- --------------------------------------------------------------------
684,800 Healthcare COMPARE Corp.(a) 25,337,600
- --------------------------------------------------------------------
1,000,000 Manpower Inc. 27,125,000
- --------------------------------------------------------------------
712,000 Olsten Corp. 27,412,000
- --------------------------------------------------------------------
368,900 ServiceMaster L.P. 10,467,538
- --------------------------------------------------------------------
103,212,138
- --------------------------------------------------------------------
CHEMICALS (SPECIALTY) - 0.45%
375,000 W.R. Grace & Co. 20,906,250
- --------------------------------------------------------------------
</TABLE>
FS-21
W E I N G A R T E N
<PAGE> 250
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMPUTER MAINFRAMES - 0.73%
350,000 International Business Machines Corp. $ 34,037,500
- --------------------------------------------------------------------
COMPUTER MINI/PCS - 3.61%
900,000 COMPAQ Computer Corp.(a) 50,175,000
- --------------------------------------------------------------------
1,000,000 Dell Computer Corp. 46,625,000
- --------------------------------------------------------------------
250,000 Digital Equipment Corp.(a) 13,531,250
- --------------------------------------------------------------------
456,600 Hewlett-Packard Co. 42,292,575
- --------------------------------------------------------------------
200,000 Sun Microsystems Inc.(a) 15,600,000
- --------------------------------------------------------------------
168,223,825
- --------------------------------------------------------------------
COMPUTER NETWORKING - 3.51%
725,000 Bay Networks Inc.(a) 48,031,250
- --------------------------------------------------------------------
250,000 Cabletron Systems, Inc.(a) 19,656,250
- --------------------------------------------------------------------
750,000 Cisco Systems, Inc.(a) 58,125,000
- --------------------------------------------------------------------
800,000 3Com Corp.(a) 37,600,000
- --------------------------------------------------------------------
163,412,500
- --------------------------------------------------------------------
COMPUTER PERIPHERALS - 0.92%
500,000 Adaptec Inc.(a) 22,250,000
- --------------------------------------------------------------------
464,600 Seagate Technology Inc.(a) 20,790,850
- --------------------------------------------------------------------
43,040,850
- --------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 4.98%
347,700 Adobe Systems, Inc. 19,818,900
- --------------------------------------------------------------------
1,000,000 BMC Software, Inc.(a) 35,625,000
- --------------------------------------------------------------------
1,050,000 Cadence Design Systems, Inc.(a) 33,862,500
- --------------------------------------------------------------------
1,000,000 Computer Associates International, Inc. 55,000,000
- --------------------------------------------------------------------
489,300 FTP Software, Inc.(a) 13,211,100
- --------------------------------------------------------------------
675,000 Mentor Graphics Corp.(a) 14,175,000
- --------------------------------------------------------------------
115,000 Microsoft Corp.(a) 11,500,000
- --------------------------------------------------------------------
433,000 Policy Management Systems Corp.(a) 20,405,125
- --------------------------------------------------------------------
417,500 SoftKey International Inc.(a) 13,151,250
- --------------------------------------------------------------------
332,900 Sterling Software, Inc.(a) 15,355,013
- --------------------------------------------------------------------
232,103,888
- --------------------------------------------------------------------
CONGLOMERATES - 1.26%
50,200 Dial Corp. (The) 1,223,625
- --------------------------------------------------------------------
200,000 Du Pont De Nemours 12,475,000
- --------------------------------------------------------------------
160,700 Federal Signal Corp. 3,595,663
- --------------------------------------------------------------------
180,000 Loews Corp. 26,392,500
- --------------------------------------------------------------------
250,100 Tyco International Ltd. 15,193,575
- --------------------------------------------------------------------
58,880,363
- --------------------------------------------------------------------
</TABLE>
FS-22
W E I N G A R T E N
<PAGE> 251
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
CONTAINERS - 0.58%
523,100 Ball Corp. $ 14,450,638
- ------------------------------------------------------------------------
275,000 First Brands Corp. 12,581,250
- ------------------------------------------------------------------------
27,031,888
- ------------------------------------------------------------------------
COSMETICS & TOILETRIES - 0.51%
256,600 Alberto-Culver Co. 6,928,200
- ------------------------------------------------------------------------
100,000 Gillette Co. (The) 4,837,500
- ------------------------------------------------------------------------
150,000 Procter & Gamble Co. 12,150,000
- ------------------------------------------------------------------------
23,915,700
- ------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 2.01%
622,800 Anixter International Inc.(a) 11,911,050
- ------------------------------------------------------------------------
49,900 AVX Corp. 1,553,138
- ------------------------------------------------------------------------
449,700 Tektronix, Inc. 26,644,725
- ------------------------------------------------------------------------
1,600,000 Teradyne, Inc.(a) 53,400,000
- ------------------------------------------------------------------------
93,508,913
- ------------------------------------------------------------------------
ELECTRONIC/DEFENSE - 0.26%
200,000 Sundstrand Corp. 12,250,000
- ------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS - 2.01%
850,000 Arrow Electronics, Inc.(a) 43,137,500
- ------------------------------------------------------------------------
1,000,000 Avnet, Inc. 50,375,000
- ------------------------------------------------------------------------
93,512,500
- ------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT) - 1.03%
668,600 Finova Group, Inc. 30,254,150
- ------------------------------------------------------------------------
815,600 PaineWebber Group, Inc. 17,943,200
- ------------------------------------------------------------------------
48,197,350
- ------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT) - 5.91%
300,000 American Express Co. 12,187,500
- ------------------------------------------------------------------------
1,196,800 Countrywide Credit Industries, Inc. 26,479,200
- ------------------------------------------------------------------------
450,000 Dean Witter Discover & Co. 22,387,500
- ------------------------------------------------------------------------
500,000 Federal Home Loan Mortgage Corp. 34,625,000
- ------------------------------------------------------------------------
33,700 Federal National Mortgage Association 3,534,288
- ------------------------------------------------------------------------
800,000 First USA, Inc. 36,800,000
- ------------------------------------------------------------------------
1,608,200 Green Tree Acceptance, Inc. 42,818,325
- ------------------------------------------------------------------------
1,088,200 MBNA Corp. 40,127,375
- ------------------------------------------------------------------------
650,000 Mercury Finance Co. 12,512,500
- ------------------------------------------------------------------------
252,300 PMI Group, Inc. (The) 12,110,400
- ------------------------------------------------------------------------
250,000 Student Loan Marketing Association 14,718,750
- ------------------------------------------------------------------------
51,400 SunAmerica, Inc. 3,199,650
- ------------------------------------------------------------------------
500,000 United Companies Financial Corp. 14,125,000
- ------------------------------------------------------------------------
275,625,488
- ------------------------------------------------------------------------
</TABLE>
FS-23
W E I N G A R T E N
<PAGE> 252
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FINANCE (SAVINGS & LOAN) - 0.45%
783,800 Greenpoint Financial Corp. $ 21,162,600
- --------------------------------------------------------------------
FOOD PROCESSING - 0.73%
300,000 ConAgra, Inc. 11,587,500
- --------------------------------------------------------------------
651,600 Hudson Foods, Inc. 9,203,850
- --------------------------------------------------------------------
394,233 Lancaster Colony Corp. 13,108,247
- --------------------------------------------------------------------
33,899,597
- --------------------------------------------------------------------
FUNERAL SERVICES - 0.78%
61,200 Loewen Group, Inc. 2,450,870
- --------------------------------------------------------------------
840,200 Service Corp. International 33,713,025
- --------------------------------------------------------------------
36,163,895
- --------------------------------------------------------------------
HOTELS/MOTELS - 0.33%
600,000 La Quinta Motor Inns, Inc. 15,450,000
- --------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY) - 1.59%
750,000 ACE, Ltd. 25,500,000
- --------------------------------------------------------------------
250,000 CIGNA Corp. 24,781,250
- --------------------------------------------------------------------
76,900 General Re Corp. 11,140,888
- --------------------------------------------------------------------
218,300 Mid Ocean Ltd. 7,722,363
- --------------------------------------------------------------------
236,600 Prudential Reinsurance Holdings(a) 4,820,725
- --------------------------------------------------------------------
73,965,226
- --------------------------------------------------------------------
LEISURE & RECREATION - 0.75%
1,003,900 Carnival Cruise Lines, Inc. 23,340,675
- --------------------------------------------------------------------
400,000 Mattel, Inc. 11,500,000
- --------------------------------------------------------------------
34,840,675
- --------------------------------------------------------------------
MACHINERY (HEAVY) - 0.25%
300,000 Case Corp. 11,437,500
- --------------------------------------------------------------------
MACHINERY (MISCELLANEOUS) - 1.52%
1,600,000 American Standard Companies(a) 42,800,000
- --------------------------------------------------------------------
610,350 Thermo Electron Corp.(a) 28,076,100
- --------------------------------------------------------------------
70,876,100
- --------------------------------------------------------------------
MEDICAL (DRUGS) - 5.55%
600,000 Abbott Laboratories 23,850,000
- --------------------------------------------------------------------
425,000 American Home Products Corp. 37,665,625
- --------------------------------------------------------------------
590,000 AmeriSource Health Corp.(a) 16,077,500
- --------------------------------------------------------------------
357,700 Cardinal Health, Inc. 18,376,838
- --------------------------------------------------------------------
781,400 Mallinckrodt Group, Inc. 27,153,650
- --------------------------------------------------------------------
225,000 Merck & Co., Inc. 12,937,500
- --------------------------------------------------------------------
1,432,100 Mylan Laboratories, Inc. 27,209,900
- --------------------------------------------------------------------
</TABLE>
FS-24
W E I N G A R T E N
<PAGE> 253
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Medical (Drugs) - continued
470,000 Pfizer, Inc. $ 26,966,250
- -------------------------------------------------------------------
7,500 Rhone-Poulenc Rorer Inc. 353,438
- -------------------------------------------------------------------
1,000,000 Schering-Plough Corp. 53,625,000
- -------------------------------------------------------------------
325,000 Watson Pharmaceuticals, Inc.(a) 14,543,750
- -------------------------------------------------------------------
258,759,451
- -------------------------------------------------------------------
MEDICAL (INSTRUMENTS/PRODUCTS) - 2.90%
325,000 Baxter International Inc. 12,553,125
- -------------------------------------------------------------------
200,000 Becton, Dickinson & Co. 13,000,000
- -------------------------------------------------------------------
744,600 Biomet, Inc.(a) 12,378,975
- -------------------------------------------------------------------
216,600 Boston Scientific Corp.(a) 9,124,275
- -------------------------------------------------------------------
100,000 Cordis Corp. (a) 11,050,000
- -------------------------------------------------------------------
601,300 Heart Technology Inc.(a) 17,137,050
- -------------------------------------------------------------------
406,400 Medtronic, Inc. 23,469,600
- -------------------------------------------------------------------
200,000 St. Jude Medical, Inc. 10,650,000
- -------------------------------------------------------------------
75,000 Stryker Corp. 3,384,375
- -------------------------------------------------------------------
525,000 Sybron International Corp.(a) 22,312,500
- -------------------------------------------------------------------
135,059,900
- -------------------------------------------------------------------
MEDICAL (PATIENT SERVICES) - 3.49%
822,500 Apria Healthcare Group, Inc.(a) 17,786,563
- -------------------------------------------------------------------
500,000 Columbia/HCA Healthcare Corp. 24,562,500
- -------------------------------------------------------------------
510,000 Health Management Associates, Inc.(a) 10,965,000
- -------------------------------------------------------------------
500,000 Healthsource, Inc.(a) 26,500,000
- -------------------------------------------------------------------
1,800,000 Healthsouth Corp.(a) 47,025,000
- -------------------------------------------------------------------
600,000 Lincare Holdings, Inc.(a) 14,925,000
- -------------------------------------------------------------------
750,000 Vencor, Inc.(a) 20,812,500
- -------------------------------------------------------------------
162,576,563
- -------------------------------------------------------------------
OFFICE AUTOMATION - 0.96%
350,000 Xerox Corp. 45,412,500
- -------------------------------------------------------------------
OFFICE PRODUCTS - 0.65%
400,000 Avery Dennison Corp. 17,900,000
- -------------------------------------------------------------------
350,000 Reynolds & Reynolds Co. 12,468,750
- -------------------------------------------------------------------
30,368,750
- -------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES - 0.13%
148,300 Halliburton Co. 6,154,450
- -------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.60%
225,000 Champion International Corp. 12,037,500
- -------------------------------------------------------------------
279,800 Mead Corp. (The) 16,123,475
- -------------------------------------------------------------------
28,160,975
- -------------------------------------------------------------------
</TABLE>
FS-25
W E I N G A R T E N
<PAGE> 254
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
PUBLISHING - 0.20%
235,500 Harcourt General, Inc. $ 9,331,688
- ------------------------------------------------------------------
RESTAURANTS - 0.27%
400,000 Outback Steakhouse Inc.(a) 12,550,000
- ------------------------------------------------------------------
RETAIL (FOOD & DRUG) - 2.05%
1,000,000 Hannaford Bros. Co. 26,125,000
- ------------------------------------------------------------------
805,700 Kroger Co.(a) 26,890,238
- ------------------------------------------------------------------
900,000 Safeway Inc.(a) 42,525,000
- ------------------------------------------------------------------
95,540,238
- ------------------------------------------------------------------
RETAIL (STORES) - 3.99%
637,300 AutoZone, Inc.(a) 15,773,175
- ------------------------------------------------------------------
1,000,000 Circuit City Stores, Inc. 33,375,000
- ------------------------------------------------------------------
1,500,000 Consolidated Stores Corp.(a) 34,687,500
- ------------------------------------------------------------------
625,000 Gap Inc. 24,609,375
- ------------------------------------------------------------------
1,500,000 Intimate Brands, Inc.(a) 25,125,000
- ------------------------------------------------------------------
393,750 Staples, Inc.(a) 10,483,594
- ------------------------------------------------------------------
261,200 Tandy Corp. 12,896,750
- ------------------------------------------------------------------
648,800 Viking Office Products Inc.(a) 28,871,600
- ------------------------------------------------------------------
185,821,994
- ------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS - 1.10%
1,000,000 Varian Associates, Inc. 51,375,000
- ------------------------------------------------------------------
SEMICONDUCTORS - 12.94%
1,000,000 Analog Devices, Inc.(a) 36,125,000
- ------------------------------------------------------------------
2,000,000 Applied Materials, Inc.(a) 100,250,000
- ------------------------------------------------------------------
508,700 Atmel Corp.(a) 15,896,875
- ------------------------------------------------------------------
250,000 Cirrus Logic, Inc.(a) 10,531,250
- ------------------------------------------------------------------
600,000 Cypress Semiconductor Corp.(a) 21,150,000
- ------------------------------------------------------------------
1,000,000 Integrated Device Technology, Inc.(a) 19,000,000
- ------------------------------------------------------------------
150,000 Intel Corp. 10,481,250
- ------------------------------------------------------------------
651,000 KLA Instruments Corp.(a) 27,830,250
- ------------------------------------------------------------------
900,000 LAM Research Corp.(a) 54,787,500
- ------------------------------------------------------------------
450,000 Linear Technology Corp. 19,687,500
- ------------------------------------------------------------------
300,000 LSI Logic Corp.(a) 14,137,500
- ------------------------------------------------------------------
1,200,000 Micron Technology Inc. 84,750,000
- ------------------------------------------------------------------
175,000 Motorola, Inc. 11,484,375
- ------------------------------------------------------------------
400,000 National Semiconductor Corp.(a) 9,750,000
- ------------------------------------------------------------------
250,000 Novellus Systems, Inc.(a) 17,218,750
- ------------------------------------------------------------------
</TABLE>
FS-26
W E I N G A R T E N
<PAGE> 255
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Semiconductors - (continued)
718,300 Solectron Corp.(a) $ 28,911,575
- -----------------------------------------------------------------------------
1,000,000 Texas Instruments Inc. 68,250,000
- -----------------------------------------------------------------------------
700,000 Vishay Intertechnology, Inc.(a) 24,675,000
- -----------------------------------------------------------------------------
500,000 VLSI Technology Inc.(a) 11,750,000
- -----------------------------------------------------------------------------
350,000 Xilinx, Inc.(a) 16,100,000
- -----------------------------------------------------------------------------
602,766,825
- -----------------------------------------------------------------------------
SHOES & RELATED APPAREL - 0.61%
500,000 NIKE, Inc. - Class B 28,375,000
- -----------------------------------------------------------------------------
TELECOMMUNICATIONS - 1.41%
800,000 AT&T Corp. 51,200,000
- -----------------------------------------------------------------------------
429,000 Tellabs, Inc.(a) 14,586,000
- -----------------------------------------------------------------------------
65,786,000
- -----------------------------------------------------------------------------
TOBACCO - 1.99%
1,100,000 Philip Morris Companies, Inc. 92,950,000
- -----------------------------------------------------------------------------
TRANSPORTATION - MISCELLANEOUS - 0.25%
390,200 Stolt Nielsen S.A. 11,706,000
- -----------------------------------------------------------------------------
Total Domestic Common Stocks 3,839,832,568
- -----------------------------------------------------------------------------
PRINCIPAL
AMOUNT
CONVERTIBLE CORPORATE BONDS - 1.65%
COMPUTER SOFTWARE/SERVICES - 0.18%
$ 9,580,000 SoftKey International Inc., Conv. Sr. Notes,
5.50%, 11/01/00(b)
(acquired 10/17/95; cost $9,580,000) 8,095,100
- -----------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 0.44%
15,215,000 Altera Corp., Conv. Sub. Notes, 5.75%,
06/15/02(b)
(acquired 7/27/95-10/17/95; cost
$20,134,139) 20,502,213
- -----------------------------------------------------------------------------
OFFICE AUTOMATION - 0.55%
19,500,000 Danka Business Systems PLC, Conv. Yankee Sub.
Notes, 6.75%, 04/01/02(b)
(acquired 10/26/95; cost $24,960,000) 25,740,000
- -----------------------------------------------------------------------------
RETAIL STORES - 0.48%
34,400,000 Office Depot Inc., Liquid Yield Option Notes,
4.00%, 11/01/08(c) 22,532,000
- -----------------------------------------------------------------------------
Total Convertible Corporate Bonds 76,869,313
- -----------------------------------------------------------------------------
SHARES
CONVERTIBLE PREFERRED STOCKS - 0.22%
FINANCE (CONSUMER CREDIT) - 0.22%
165,000 SunAmerica Inc. - Series E, $3.10 Conv. Pfd. 10,230,000
- -----------------------------------------------------------------------------
Total Convertible Preferred Stocks 10,230,000
- -----------------------------------------------------------------------------
</TABLE>
FS-27
W E I N G A R T E N
<PAGE> 256
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 10.98%
AUSTRALIA - 0.36%
1,255,832 Broken Hill Proprietary Co. Ltd. (Conglomerates) $ 17,008,450
- -----------------------------------------------------------------------------
CANADA - 0.54%
694,900 Northern Telecom Ltd. (Telecommunications) 25,016,400
- -----------------------------------------------------------------------------
DENMARK - 0.28%
290,000 Danisco A/S (Food Processing) 13,215,593
- -----------------------------------------------------------------------------
FINLAND - 0.55%
400,000 Nokia Corp. - ADR (Telecommunications) 22,300,000
- -----------------------------------------------------------------------------
55,450 Nokia Corp. (Telecommunications) 3,172,226
- -----------------------------------------------------------------------------
25,472,226
- -----------------------------------------------------------------------------
FRANCE - 0.28%
65,500 LVMH Moet Hennessy Louis Vuitton (Beverages) 13,032,760
- -----------------------------------------------------------------------------
GERMANY - 0.35%
30,400 Mannesmann A.G. (Machinery - Miscellaneous) 10,005,889
- -----------------------------------------------------------------------------
158,000 Veba A.G. (Electric Services) 6,486,800
- -----------------------------------------------------------------------------
16,492,689
- -----------------------------------------------------------------------------
HONG KONG - 1.05%
820,000 HSBC Holdings PLC (Banking) 11,931,399
- -----------------------------------------------------------------------------
3,077,000 Hutchison Whampoa Ltd. (Conglomerates) 16,953,208
- -----------------------------------------------------------------------------
2,505,000 Sun Hung Kai Properties Ltd. (Real Estate) 20,006,434
- -----------------------------------------------------------------------------
48,891,041
- -----------------------------------------------------------------------------
ISRAEL - 0.53%
625,000 Teva Pharmaceutical Industries Ltd. - ADR
(Medical - Drugs) 24,531,250
- -----------------------------------------------------------------------------
ITALY - 0.35%
167,000 Fila Holding S.p.A. - ADR (Retail Stores) 7,201,875
- -----------------------------------------------------------------------------
2,919,000 Telecom Italia Mobile S.p.A.(a)
(Telecommunications) 4,909,560
- -----------------------------------------------------------------------------
2,919,000 Telecom Italia S.p.A. (Telecommunications) 4,471,893
- -----------------------------------------------------------------------------
16,583,328
- -----------------------------------------------------------------------------
MALAYSIA - 0.58%
2,149,000 Malayan Banking Berhad (Banking) 17,337,465
- -----------------------------------------------------------------------------
1,600,000 United Engineers (Building Materials) 9,948,839
- -----------------------------------------------------------------------------
27,286,304
- -----------------------------------------------------------------------------
NETHERLANDS - 0.79%
550,000 Elsag Bailey Process Automation N.V. - ADR(a)
(Electronic Components/Miscellaneous) 14,987,500
- -----------------------------------------------------------------------------
276,100 Philips Electronics N.V. - New York Shares - ADR
(Electronics) 10,664,363
- -----------------------------------------------------------------------------
120,000 Wolters Kluwer N.V. (Publishing) 10,921,536
- -----------------------------------------------------------------------------
36,573,399
- -----------------------------------------------------------------------------
</TABLE>
FS-28
W E I N G A R T E N
<PAGE> 257
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
NEW ZEALAND - 0.22%
2,500,000 Telecom Corp. of New Zealand (Telecommunications) $ 10,380,222
- -------------------------------------------------------------------------------
SINGAPORE - 0.20%
1,513,000 City Developments Ltd. (Real Estate) 9,369,249
- -------------------------------------------------------------------------------
SWEDEN - 3.62%
250,000 ASEA AB-B Shares (Conglomerates) 24,658,916
- -------------------------------------------------------------------------------
712,200 ASTRA AB-A Shares (Medical - Drugs) 26,168,840
- -------------------------------------------------------------------------------
625,000 ASTRA AB-B Shares (Medical - Drugs) 22,588,320
- -------------------------------------------------------------------------------
958,900 Pharmacia AB-A Shares (Medical - Drugs) 33,356,308
- -------------------------------------------------------------------------------
719,100 Pharmacia Aktiebolaget SP - ADR (Medical - Drugs) 25,168,500
- -------------------------------------------------------------------------------
490,000 Skandia Forsakrings (Insurance - Multi-Line
Property) 12,433,364
- -------------------------------------------------------------------------------
1,141,976 Telefonaktiebolaget L.M.Ericsson - ADR
(Telecommunications) 24,391,922
- -------------------------------------------------------------------------------
168,766,170
- -------------------------------------------------------------------------------
SWITZERLAND - 0.71%
6,500 BBC Brown Boveri Ltd. (Conglomerates) 7,540,298
- -------------------------------------------------------------------------------
29,200 Ciba-Geigy Ltd. (Medical - Drugs) 25,282,833
- -------------------------------------------------------------------------------
32,823,131
- -------------------------------------------------------------------------------
UNITED KINGDOM - 0.57%
190,300 Danka Business Systems PLC - ADR (Office
Automation) 6,375,050
- -------------------------------------------------------------------------------
1,000,000 Granada Group PLC (Leisure & Recreation) 10,679,841
- -------------------------------------------------------------------------------
410,000 Thorn EMI PLC (Leisure & Recreation) 9,548,300
- -------------------------------------------------------------------------------
26,603,191
- -------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 512,045,403
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT - 0.03%(d)
$ 1,274,793 Daiwa Securities America Inc., 5.90%, 11/01/95(e) 1,274,793
- -------------------------------------------------------------------------------
Total Repurchase Agreement 1,274,793
- -------------------------------------------------------------------------------
TIME DEPOSIT - 4.40%
205,000,000 Cayman Time Deposit, 5.75%, 11/01/95 205,000,000
- -------------------------------------------------------------------------------
Total Time Deposit 205,000,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.66% 4,645,252,077
- -------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.34% 16,046,672
- -------------------------------------------------------------------------------
NET ASSETS - 100.00% $4,661,298,749
===============================================================================
</TABLE>
FS-29
W E I N G A R T E N
<PAGE> 258
Abbreviations:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted Security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of the securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at October 31, 1995 was
$54,337,313 which represented 1.17% of the net assets.
(c) Zero coupon bond. The interest rate shown represents the rate of original
issue discount.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the Investment advisor.
(e) Joint repurchase agreement entered into 10/31/95 with a maturing value of
$401,494,641. Collateralized by $353,853,000 U.S. Treasury Notes, 8.375%
due 08/15/08.
See Notes to Financial Statements.
FS-30
W E I N G A R T E N
<PAGE> 259
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $3,692,990,886) $4,645,252,077
- -------------------------------------------------------------------------
Foreign currencies, at market value (cost $19,248,298) 18,855,785
- -------------------------------------------------------------------------
Receivables for:
Investments sold 81,804,922
- -------------------------------------------------------------------------
Capital stock sold 7,671,955
- -------------------------------------------------------------------------
Dividends and interest 2,040,054
- -------------------------------------------------------------------------
Investment for deferred compensation plan 59,337
- -------------------------------------------------------------------------
Other assets 111,757
- -------------------------------------------------------------------------
Total assets 4,755,795,887
- -------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 79,969,614
- -------------------------------------------------------------------------
Capital stock reacquired 8,329,522
- -------------------------------------------------------------------------
Deferred compensation 59,337
- -------------------------------------------------------------------------
Options repurchased 467,407
- -------------------------------------------------------------------------
Accrued advisory fees 2,411,107
- -------------------------------------------------------------------------
Accrued administrative service fees 33,042
- -------------------------------------------------------------------------
Accrued distribution fees 1,766,732
- -------------------------------------------------------------------------
Accrued transfer agent fees 474,454
- -------------------------------------------------------------------------
Accrued operating expenses 985,923
- -------------------------------------------------------------------------
Total liabilities 94,497,138
- -------------------------------------------------------------------------
Net assets applicable to shares outstanding $4,661,298,749
=========================================================================
NET ASSETS:
Class A $4,564,729,631
=========================================================================
Class B $ 42,237,610
=========================================================================
Institutional Class $ 54,331,508
=========================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- -------------------------------------------------------------------------
Outstanding 224,564,125
=========================================================================
Class B:
Authorized 750,000,000
- -------------------------------------------------------------------------
Outstanding 2,082,509
=========================================================================
Institutional Class:
Authorized 200,000,000
- -------------------------------------------------------------------------
Outstanding 2,652,632
=========================================================================
CLASS A:
Net asset value and redemption price per share $20.33
=========================================================================
Offering price per share:
(Net asset value of $20.33 divided by 94.50%) $21.51
=========================================================================
CLASS B:
Net asset value and offering price per share $20.28
=========================================================================
INSTITUTIONAL CLASS:
Net asset value, offering and redemption price per share $20.48
=========================================================================
</TABLE>
See Notes to Financial Statements.
FS-31
W E I N G A R T E N
<PAGE> 260
STATEMENT OF OPERATIONS
For the year ended October 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $693,812 foreign withholding tax) $ 38,215,389
- ------------------------------------------------------------------------
Interest 8,498,626
- ------------------------------------------------------------------------
Total investment income 46,714,015
- ------------------------------------------------------------------------
EXPENSES:
Advisory fees 26,291,625
- ------------------------------------------------------------------------
Administrative service fees 182,595
- ------------------------------------------------------------------------
Custodian fees 871,313
- ------------------------------------------------------------------------
Directors' fees 42,436
- ------------------------------------------------------------------------
Distribution fees-Class A 12,217,290
- ------------------------------------------------------------------------
Distribution fees-Class B 68,621
- ------------------------------------------------------------------------
Transfer agent fees-Class A 7,784,636
- ------------------------------------------------------------------------
Transfer agent fees-Class B 15,054
- ------------------------------------------------------------------------
Transfer agent fees-Institutional Class 2,913
- ------------------------------------------------------------------------
Other 1,340,482
- ------------------------------------------------------------------------
Total expenses 48,816,965
- ------------------------------------------------------------------------
Less fees waived by advisor (843,494)
- ------------------------------------------------------------------------
Net expenses 47,973,471
- ------------------------------------------------------------------------
Net investment income (loss) (1,259,456)
- ------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
SECURITIES, FOREIGN CURRENCIES, FUTURES AND OPTIONS
CONTRACTS:
Net realized gain on sales of:
Investment securities 610,490,585
- ------------------------------------------------------------------------
Foreign currencies 966,904
- ------------------------------------------------------------------------
Futures contracts 6,404,690
- ------------------------------------------------------------------------
Options contracts 2,779,330
- ------------------------------------------------------------------------
620,641,509
- ------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 416,011,617
- ------------------------------------------------------------------------
Foreign currencies (751,970)
- ------------------------------------------------------------------------
Futures contracts (4,057,387)
- ------------------------------------------------------------------------
411,202,260
- ------------------------------------------------------------------------
Net gain on investment securities, foreign currencies,
futures and options contracts 1,031,843,769
- ------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,030,584,313
========================================================================
</TABLE>
See Notes to Financial Statements.
FS-32
W E I N G A R T E N
<PAGE> 261
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,259,456) $ 18,228,044
- -------------------------------------------------------------------------------
Net realized gain on sales of investment
securities, foreign currencies, futures
and options contracts 620,641,509 387,037,586
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities, foreign
currencies, and futures contracts 411,202,260 (259,837,784)
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 1,030,584,313 145,427,846
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment
income:
Class A (14,842,521) (29,907,523)
- -------------------------------------------------------------------------------
Class B -- --
- -------------------------------------------------------------------------------
Institutional Class (290,923) (363,799)
- -------------------------------------------------------------------------------
Distributions to shareholders from net
realized gains on investment securities:
Class A (387,332,253) (89,314,780)
- -------------------------------------------------------------------------------
Class B -- --
- -------------------------------------------------------------------------------
Institutional Class (4,072,920) (724,291)
- -------------------------------------------------------------------------------
Net equalization credits (charges):
Class A 204,025 (10,126,574)
- -------------------------------------------------------------------------------
Class B 297,921 --
- -------------------------------------------------------------------------------
Institutional Class 71,195 1,640
- -------------------------------------------------------------------------------
Share transactions-net:
Class A (17,628,236) (1,048,548,626)
- -------------------------------------------------------------------------------
Class B 41,458,876 --
- -------------------------------------------------------------------------------
Institutional Class 6,504,480 96,085
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets 654,953,957 (1,033,460,022)
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 4,006,344,792 5,039,804,814
- -------------------------------------------------------------------------------
End of period $4,661,298,749 $ 4,006,344,792
===============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $3,070,552,699 $ 3,040,217,579
- -------------------------------------------------------------------------------
Undistributed net investment income 25,028,873 40,848,632
- -------------------------------------------------------------------------------
Undistributed net realized gain on sales of
investment securities, foreign currencies,
futures and options contracts 613,833,040 384,596,704
- -------------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies, and
futures contracts 951,884,137 540,681,877
- -------------------------------------------------------------------------------
$4,661,298,749 $ 4,006,344,792
===============================================================================
</TABLE>
See Notes to Financial Statements.
FS-33
W E I N G A R T E N
<PAGE> 262
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Weingarten Fund (the "Fund") is a series portfolio of AIM Equity Funds,
Inc. (the "Company"). The Company is a Maryland corporation registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of four diversified portfolios:
AIM Weingarten Fund, AIM Charter Fund, AIM Constellation Fund and AIM
Aggressive Growth Fund. The Fund currently offers three different classes of
shares: the Class A shares (formerly "Retail Shares"), Class B shares and the
Institutional Class. Matters affecting each portfolio or class will be voted on
exclusively by such shareholders. The assets, liabilities and operations of
each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The following is a summary of
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 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 mean between the closing bid and asked prices on that day. If a mean is
not available, as is the case in some foreign markets, the closing bid will
be used absent a last sales price. 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
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
of the closing bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined in good
faith by or under the supervision of the Company's officers in a manner
specifically authorized by the Board of Directors of the Company. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
New York Stock Exchange. 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 New York Stock Exchange. 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 New York Stock
Exchange which will 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 Directors.
B. 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.
C. 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 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.
D. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash, and/or by securing a
standby letter of credit from a major commercial bank, as collateral, for
the account of the broker (the Fund's agent in acquiring the futures
position). During the period the futures contract is open, changes in the
value of the contract are recognized as unrealized gains or losses by
"marking to market" on a daily basis to reflect the market value of the
contract at the end of each day's trading. Variation margin payments are
made or received depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the proceeds from (or cost of) the
closing transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and that a change in the value of the
contract may not correlate with changes in the securities being hedged.
E. Covered Call Options - The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is recorded
as an asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the last
sale price, or in the absence of a sale, the mean between the last bid and
asked prices on that day. If a written call option expires on the stipulated
expiration date, or if the Fund enters into a closing purchase transaction,
the Fund realizes a gain (or a loss if the closing purchase transaction
exceeds the premium received when the option was written) without regard to
any unrealized gain or loss on the underlying security, and the liability
related to such option is extinguished. If a written option is exercised,
the Fund realizes a gain or a loss from the sale of the underlying security
and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for
FS-34
W E I N G A R T E N
<PAGE> 263
capital appreciation above the exercise price should the market price of the
underlying security increase, but has retained the risk of loss should the
price of the underlying security decline. During the option period, the Fund
may be required at any time to deliver the underlying security against
payment of the exercise price. This obligation is terminated upon the
expiration of the option period or at such earlier time at which the Fund
effects a closing purchase transaction by purchasing (at a price which may
be higher than that received when the call option was written) a call option
identical to the one originally written. The Fund will not write a covered
call option if, immediately thereafter, the aggregate value of the
securities underlying all such options, determined as of the dates such
options were written, would exceed 25% of the net assets of the Fund.
F. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the specific identification of securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
G. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
H. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to all
classes, e.g. advisory fees, are allocated among them.
I. Equalization - The Fund follows the accounting practice known as
equalization by which a portion of the proceeds from sales and the costs of
repurchases of Fund shares, equivalent on a per share basis to the amount of
undistributed net investment income, is credited or charged to undistributed
net income when the transaction is recorded so that undistributed net
investment income per share is unaffected by sales or redemptions of Fund
shares.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). The terms of the master investment advisory agreement
provide that the Fund shall pay an advisory fee to AIM at an annual rate of
1.0% of the first $30 million of the Fund's average daily net assets, plus
0.75% of the Fund's average daily net assets in excess of $30 million to and
including $350 million, plus 0.625% of the Fund's average daily net assets in
excess of $350 million. AIM is currently voluntarily waiving a portion of its
advisory fees payable by the Fund to AIM to the extent necessary to reduce the
fees paid by the Fund at net asset levels higher than those currently
incorporated in the present advisory fee schedule. AIM will receive a fee
calculated at the annual rate of 1.0% of the first $30 million of the Fund's
average daily net assets, plus 0.75% of the Fund's average daily net assets in
excess of $30 million to and including $350 million, plus 0.625% of the Fund's
average daily net assets in excess of $350 million to and including $2 billion,
plus 0.60% of the Fund's average daily net assets in excess of $2 billion to
and including $3 billion, plus 0.575% of the Fund's average daily net assets in
excess of $3 billion to and including $4 billion, plus 0.55% of the Fund's
average daily net assets in excess of $4 billion. The waiver of fees is
entirely voluntary and the Board of Directors of the Company would be advised
of any decision by AIM to discontinue the waiver. During the year ended October
31, 1995, AIM waived fees of $843,494. Under the terms of a master sub-advisory
agreement between AIM and A I M Capital Management, Inc. ("AIM Capital"), AIM
pays AIM Capital 50% of the amount paid by the Fund to AIM. These agreements
require AIM to reduce its fees or, if necessary, make payments to the Fund to
the extent required to satisfy any expense limitations imposed by the
securities laws or regulations thereunder of any state in which the Fund's
shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the year ended October 31,
1995, AIM was reimbursed $182,595 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency services to the Class A shares and Class B shares. During the
year ended October 31, 1995, AFS was reimbursed $4,016,831 for such services.
During the year ended October 31, 1995, the Fund, pursuant to a transfer
agency and service agreement, paid A I M Institutional Fund Services, Inc.
("AIFS") $1,260 for shareholder and transfer agency services with respect to
the Institutional Class. Effective July 1, 1995, AIFS became the exclusive
transfer agent for the Institutional Class of the Fund.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A and Class B shares and a master distribution agreement with Fund
Management Company ("FMC") to serve as the distributor for the Institutional
Class. The Company has adopted Plans pursuant to Rule 12b-1 under the 1940 Act
with respect to the Fund's Class A shares (the "Class A Plan") and with respect
to the Fund's Class B shares (the "Class B Plan") (collectively, the "Plans").
The Fund, pursuant to the Class A Plan, pays AIM Distributors compensation at
the annual rate of 0.30% of the average daily net assets attributable to the
Class A shares. The Class A Plan is designed to compensate AIM Distributors for
certain promotional and other sales related costs, and to implement a program
which provides periodic payments to selected dealers and financial institutions
who furnish continuing personal shareholder services to their customers who
purchase and own Class A shares of the Fund. The Fund, pursuant to the Class B
Plan, pays AIM Distributors compensation at an annual rate of 1.00% of the
average daily net assets attributable to the Class B shares. Of this amount,
the Fund may pay a service fee of 0.25% of the average daily net assets of the
Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and
own Class B shares of the Fund. Any amounts not paid as a service fee under
such 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. AIM Distributors may, from time to time,
assign, transfer or pledge to one or more designees, its rights to all or a
designated portion of (a) compensation received by AIM Distributors from the
Fund pursuant to the Class B Plan (but not AIM Distributors duties and
obligations pursuant to the Class B Plan) and (b) any contingent deferred sales
charges received by AIM Distributors related to the Class B shares. During the
year ended October 31, 1995 for the Class A shares and the period June 26, 1995
(date sales commenced) through October 31, 1995 for the Class B shares, the
Class A shares and the Class B shares paid AIM Distributors $12,217,290 and
$68,621, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,767,515 from sales of shares of
the Class A shares of the Fund during the year ended October 31, 1995. 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. Certain officers and
directors of the Company are officers and directors of AIM, AIM Capital, AIM
Distributors, AFS, AIFS and FMC.
During the year ended October 31, 1995, the Fund paid legal fees of $13,238
for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
FS-35
W E I N G A R T E N
<PAGE> 264
NOTE 3 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the year ended October 31, 1995 was
$5,516,271,702 and $5,871,965,081, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of October 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $980,791,723
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (39,012,965)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $941,778,758
===========================================================================
</TABLE>
Cost of investments for tax purposes is $3,703,473,319.
NOTE 4 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company invests directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5 - BANK BORROWINGS
The Fund has a $68,400,000 committed line of credit with a financial
institution syndicate with Chemical Bank of New York as the administrative
agent. Interest on borrowings under the line of credit is payable on maturity
or prepayment date. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's
commitment.
NOTE 6 - OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended October 31, 1995 are
summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Beginning of year -- --
- -----------------------------------------
Written 29,413 $ 6,668,627
- -----------------------------------------
Closed (11,309) (3,032,287)
- -----------------------------------------
Exercised (4,833) (887,684)
- -----------------------------------------
Expired (13,271) (2,748,656)
- -----------------------------------------
End of year -- $ --
=========================================
</TABLE>
NOTE 7 - CAPITAL STOCK
Changes in the capital stock outstanding during the years ended October 31,
1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
-------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 32,034,901 $ 559,325,258 22,715,102 $ 385,995,119
- -----------------------------------------------------------------------------------
Class B* 2,180,033 43,415,613 -- --
- -----------------------------------------------------------------------------------
Institutional Class 559,557 10,092,219 466,667 7,928,748
- -----------------------------------------------------------------------------------
Issued as a reinvestment
of dividends:
Class A 24,460,017 361,036,594 4,979,521 84,004,521
- -----------------------------------------------------------------------------------
Class B* -- -- -- --
- -----------------------------------------------------------------------------------
Institutional Class 199,304 2,950,819 42,665 721,040
- -----------------------------------------------------------------------------------
Reacquired:
Class A (54,445,065) (937,990,088) (88,892,319) (1,518,548,266)
- -----------------------------------------------------------------------------------
Class B* (97,524) (1,956,737) -- --
- -----------------------------------------------------------------------------------
Institutional Class (363,327) (6,538,558) (503,154) (8,553,703)
- -----------------------------------------------------------------------------------
4,527,896 $ 30,335,120 (61,191,518) $(1,048,452,541)
===================================================================================
</TABLE>
*Class B shares commenced sales on June 26, 1995.
FS-36
W E I N G A R T E N
<PAGE> 265
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Institutional Class during each of the years in the four-year period ended
October 31, 1995 and the period October 8, 1991 (date operations commenced)
through October 31, 1991.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 17.94 $ 17.69 $ 16.73 $ 15.77 $15.15
- --------------------------- ------- ------- ------- ------- ------
Income from investment
operations:
Net investment income 0.10 0.17 0.16 0.14 0.01
- --------------------------- ------- ------- ------- ------- ------
Net gains (losses) on
securities (both realized
and unrealized) 4.35 0.58 0.93 0.99 0.61
- --------------------------- ------- ------- ------- ------- ------
Total from investment
operations 4.45 0.75 1.09 1.13 0.62
- --------------------------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net
investment income (0.13) (0.17) (0.13) (0.08) --
- --------------------------- ------- ------- ------- ------- ------
Distributions from net
realized capital gains (1.78) (0.33) -- (0.09) --
- --------------------------- ------- ------- ------- ------- ------
Total distributions (1.91) (0.50) (0.13) (0.17) --
- --------------------------- ------- ------- ------- ------- ------
Net asset value, end of
period $ 20.48 $ 17.94 $ 17.69 $ 16.73 $15.77
=========================== ======= ======= ======= ======= ======
Total return(a) 28.69% 4.37% 6.53% 7.16% 4.09%
=========================== ======= ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $54,332 $40,486 $39,821 $16,519 $3,926
=========================== ======= ======= ======= ======= ======
Ratio of expense to average
net assets 0.70%(b) 0.65% 0.78% 0.82% 0.90%(c)
=========================== ======= ======= ======= ======= ======
Ratio of net investment
income to average net
assets 0.45%(b) 1.00% 0.97% 0.91% 1.00%(c)
=========================== ======= ======= ======= ======= ======
Portfolio turnover rate 139% 136% 109% 37% 46%
=========================== ======= ======= ======= ======= ======
Borrowings for the period:
Amount of debt outstanding
at end of period (000s
omitted) -- -- -- -- --
=========================== ======= ======= ======= ======= ======
Average amount of debt
outstanding during the
period (000s omitted)(d) $ 6 -- -- -- --
=========================== ======= ======= ======= ======= ======
Average number of shares
outstanding during the
period (000s omitted)(d) 2,526 2,256 1,826 707 249
=========================== ======= ======= ======= ======= ======
Average amount of debt per
share during the period $0.0024 -- -- -- --
=========================== ======= ======= ======= ======= ======
</TABLE>
(a) For periods less than one year, total return is not annualized.
(b) After waiver of advisory fees. Ratios of expenses and net investment income
to average net assets prior to waiver of advisory fees were 0.72% and
0.43%, respectively. Ratios are based on average net assets of $45,368,533.
(c) Annualized.
(d) Averages computed on a daily basis.
FS-37
W E I N G A R T E N
<PAGE> 266
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Constellation Fund:
We have audited the accompanying statement of assets and liabilities of the AIM
Constellation Fund (a portfolio of AIM Equity Funds, Inc.), including the
schedule of investments, as of October 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the seven-year period then ended, the ten
months ended October 31, 1988, and the year ended December 31, 1987. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Constellation Fund as of October 31, 1995, and the results of its operations
for the year then ended, the changes in its net assets for each of the years in
the two-year period then ended, and the financial highlights for each of the
years in the seven-year period then ended, the ten months ended October 31,
1988, and the year ended December 31, 1987, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 8, 1995
FS-38
C O N S T E L L A T I O N
<PAGE> 267
Financials
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-87.10%
ADVERTISING/BROADCASTING-0.35%
228,200 Belo (A.H.) Corp. $ 7,901,425
- --------------------------------------------------------------------
525,000 Infinity Broadcasting Corp.-Class A(a) 17,062,500
- --------------------------------------------------------------------
24,963,925
- --------------------------------------------------------------------
AUTOMOBILE/TRUCKS PARTS & TIRES-0.37%
400,000 Echlin Inc. 14,300,000
- --------------------------------------------------------------------
625,000 Mark IV Industries, Inc. 12,187,500
- --------------------------------------------------------------------
26,487,500
- --------------------------------------------------------------------
BEVERAGES-0.50%
750,000 Canandaigua Wine Co., Inc.-Class A(a) 36,000,000
- --------------------------------------------------------------------
BIOTECHNOLOGY-0.13%
102,400 Chiron Corp.(a) 9,318,400
- --------------------------------------------------------------------
BUILDING MATERIALS-0.11%
241,500 Black & Decker Corp. 8,180,812
- --------------------------------------------------------------------
BUSINESS SERVICES-1.73%
194,800 Equifax, Inc. 7,597,200
- --------------------------------------------------------------------
806,500 Healthcare COMPARE Corp.(a) 29,840,500
- --------------------------------------------------------------------
100,000 Interim Services Inc.(a) 2,975,000
- --------------------------------------------------------------------
1,300,000 Manpower Inc. 35,262,500
- --------------------------------------------------------------------
700,000 Olsten Corp. 26,950,000
- --------------------------------------------------------------------
900,691 Value Health, Inc.(a) 20,603,307
- --------------------------------------------------------------------
123,228,507
- --------------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.35%
928,700 Airgas Inc.(a) 24,726,637
- --------------------------------------------------------------------
COMPUTER MINI/PCS-2.95%
1,050,000 COMPAQ Computer Corp.(a) 58,537,500
- --------------------------------------------------------------------
2,000,000 Dell Computer Corp.(a) 93,250,000
- --------------------------------------------------------------------
750,000 Sun Microsystems, Inc.(a) 58,500,000
- --------------------------------------------------------------------
210,287,500
- --------------------------------------------------------------------
COMPUTER NETWORKING-5.77%
500,000 ALANTEC Corp.(a) 17,875,000
- --------------------------------------------------------------------
200,000 Ascend Communications, Inc.(a) 13,000,000
- --------------------------------------------------------------------
</TABLE>
FS-39
C O N S T E L L A T I O N
<PAGE> 268
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Computer Networking-(continued)
1,000,000 Bay Networks, Inc.(a) $ 66,250,000
- ---------------------------------------------------------------------
550,000 Cabletron Systems, Inc.(a) 43,243,750
- ---------------------------------------------------------------------
900,000 Cheyenne Software, Inc.(a) 18,787,500
- ---------------------------------------------------------------------
500,000 CIDCO, Inc.(a) 14,812,500
- ---------------------------------------------------------------------
1,200,000 Cisco Systems, Inc.(a) 93,000,000
- ---------------------------------------------------------------------
812,800 FORE Systems, Inc.(a) 43,078,400
- ---------------------------------------------------------------------
500,000 Network Equipment Technologies, Inc.(a) 16,312,500
- ---------------------------------------------------------------------
336,800 Optical Data Systems, Inc.(a) 10,061,900
- ---------------------------------------------------------------------
1,600,000 3Com Corp.(a) 75,200,000
- ---------------------------------------------------------------------
411,621,550
- ---------------------------------------------------------------------
COMPUTER PERIPHERALS-4.77%
800,000 Adaptec Inc.(a) 35,600,000
- ---------------------------------------------------------------------
1,125,000 Alliance Semiconductor Corp.(a) 34,593,750
- ---------------------------------------------------------------------
615,500 Cerner, Inc.(a) 16,310,750
- ---------------------------------------------------------------------
600,000 Digi International, Inc.(a) 16,050,000
- ---------------------------------------------------------------------
200,000 Filenet Corp.(a) 9,075,000
- ---------------------------------------------------------------------
257,200 Komag, Inc.(a) 14,660,400
- ---------------------------------------------------------------------
800,000 Microchip Technology, Inc.(a) 31,750,000
- ---------------------------------------------------------------------
400,000 Oak Technology, Inc.(a) 21,900,000
- ---------------------------------------------------------------------
1,604,600 Oracle Systems Corp.(a) 70,000,675
- ---------------------------------------------------------------------
500,000 Read-Rite Corp.(a) 17,437,500
- ---------------------------------------------------------------------
600,000 Seagate Technology Inc.(a) 26,850,000
- ---------------------------------------------------------------------
500,000 U.S. Robotics Corp.(a) 46,250,000
- ---------------------------------------------------------------------
340,478,075
- ---------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-10.80%
1,025,000 Acclaim Entertainment, Inc.(a) 24,215,625
- ---------------------------------------------------------------------
505,900 Adobe Systems, Inc. 28,836,300
- ---------------------------------------------------------------------
1,000,000 BMC Software, Inc.(a) 35,625,000
- ---------------------------------------------------------------------
500,000 Broderbund Software, Inc.(a) 34,687,500
- ---------------------------------------------------------------------
1,125,000 Cadence Design Systems, Inc.(a) 36,281,250
- ---------------------------------------------------------------------
879,300 Ceridian Corp.(a) 38,249,550
- ---------------------------------------------------------------------
1,500,000 Computer Associates International, Inc. 82,500,000
- ---------------------------------------------------------------------
2,000,000 Computervision Corp.(a) 23,500,000
- ---------------------------------------------------------------------
550,000 Electronic Arts, Inc.(a) 20,143,750
- ---------------------------------------------------------------------
418,000 Fiserv, Inc.(a) 10,763,500
- ---------------------------------------------------------------------
741,200 FTP Software, Inc.(a) 20,012,400
- ---------------------------------------------------------------------
</TABLE>
FS-40
C O N S T E L L A T I O N
<PAGE> 269
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Computer Software/Services-(continued)
600,000 HBO & Co. $ 42,450,000
- -----------------------------------------------------------------------
200,000 Hyperion Software Corp.(a) 9,850,000
- -----------------------------------------------------------------------
1,200,000 Informix Corp.(a) 34,950,000
- -----------------------------------------------------------------------
300,000 Microsoft Corp.(a) 30,000,000
- -----------------------------------------------------------------------
642,900 Network General Corp.(a) 26,680,350
- -----------------------------------------------------------------------
700,000 PairGain Technologies, Inc.(a) 29,925,000
- -----------------------------------------------------------------------
800,000 Parametric Technology Corp.(a) 53,500,000
- -----------------------------------------------------------------------
300,000 Platinum Technology, Inc.(a) 5,475,000
- -----------------------------------------------------------------------
600,000 Policy Management Systems Corp.(a) 28,275,000
- -----------------------------------------------------------------------
500,000 Rational Software Corp.(a) 7,812,500
- -----------------------------------------------------------------------
737,300 SoftKey International Inc.(a) 23,224,950
- -----------------------------------------------------------------------
500,000 Sterling Software, Inc.(a) 23,062,500
- -----------------------------------------------------------------------
600,000 Sybase, Inc.(a) 23,550,000
- -----------------------------------------------------------------------
1,000,000 Symantec Corp.(a) 24,312,500
- -----------------------------------------------------------------------
1,415,700 Synopsys, Inc.(a) 53,088,750
- -----------------------------------------------------------------------
770,971,425
- -----------------------------------------------------------------------
CONGLOMERATES-0.18%
205,991 Tyco International Ltd. 12,513,953
- -----------------------------------------------------------------------
CONSUMER NON-DURABLES-0.16%
252,000 Department 56, Inc.(a) 11,434,500
- -----------------------------------------------------------------------
COSMETICS & TOILETRIES-0.47%
1,360,000 General Nutrition, Inc.(a) 33,830,000
- -----------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-2.46%
200,000 Ametek, Inc. 3,525,000
- -----------------------------------------------------------------------
600,000 Amphenol Corp.(a) 12,975,000
- -----------------------------------------------------------------------
146,200 AVX Corp. 4,550,475
- -----------------------------------------------------------------------
300,000 Methode Electronics, Inc. 6,900,000
- -----------------------------------------------------------------------
156,250 Molex, Inc. 5,156,250
- -----------------------------------------------------------------------
234,375 Molex, Inc.-Class A 7,207,031
- -----------------------------------------------------------------------
187,500 Parker-Hannifin Corp. 6,328,125
- -----------------------------------------------------------------------
300,000 Recoton Corp.(a) 6,675,000
- -----------------------------------------------------------------------
750,000 Symbol Technologies, Inc.(a) 26,156,250
- -----------------------------------------------------------------------
400,000 Tektronix, Inc. 23,700,000
- -----------------------------------------------------------------------
2,177,800 Teradyne, Inc.(a) 72,684,075
- -----------------------------------------------------------------------
175,857,206
- -----------------------------------------------------------------------
</TABLE>
FS-41
C O N S T E L L A T I O N
<PAGE> 270
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
ELECTRONIC/PC DISTRIBUTORS-0.89%
650,000 Arrow Electronics, Inc.(a) $ 32,987,500
- --------------------------------------------------------------------
600,000 Avnet, Inc. 30,225,000
- --------------------------------------------------------------------
63,212,500
- --------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-3.83%
500,000 ADVANTA Corp.-Class A 19,375,000
- --------------------------------------------------------------------
500,000 ADVANTA Corp.-Class B 17,875,000
- --------------------------------------------------------------------
1,100,000 Credit Acceptance Corp.(a) 25,850,000
- --------------------------------------------------------------------
650,000 First USA, Inc. 29,900,000
- --------------------------------------------------------------------
1,300,000 Green Tree Financial Corp. 34,612,500
- --------------------------------------------------------------------
1,600,000 MBNA Corp. 59,000,000
- --------------------------------------------------------------------
1,220,800 Medaphis Corp.(a) 38,760,400
- --------------------------------------------------------------------
2,500,000 Mercury Finance Co. 48,125,000
- --------------------------------------------------------------------
273,497,900
- --------------------------------------------------------------------
FUNERAL SERVICES-1.46%
814,100 Loewen Group, Inc. 32,602,181
- --------------------------------------------------------------------
1,366,400 Service Corp. International 54,826,800
- --------------------------------------------------------------------
500,000 Stewart Enterprises, Inc.-Class A 16,875,000
- --------------------------------------------------------------------
104,303,981
- --------------------------------------------------------------------
GAMING-0.69%
1,000,000 Mirage Resorts, Inc.(a) 32,750,000
- --------------------------------------------------------------------
750,000 Players International, Inc.(a) 8,062,500
- --------------------------------------------------------------------
476,200 Trump Hotels & Casino Resorts, Inc.(a) 8,095,400
- --------------------------------------------------------------------
48,907,900
- --------------------------------------------------------------------
HOME BUILDING-0.34%
750,000 Clayton Homes, Inc. 19,687,500
- --------------------------------------------------------------------
125,000 Oakwood Homes Corp. 4,687,500
- --------------------------------------------------------------------
24,375,000
- --------------------------------------------------------------------
HOTELS/MOTELS-0.88%
145,900 Doubletree Corp.(a) 3,209,800
- --------------------------------------------------------------------
600,000 Hospitality Franchise Systems, Inc.(a) 36,750,000
- --------------------------------------------------------------------
750,000 La Quinta Inns, Inc. 19,312,500
- --------------------------------------------------------------------
162,500 Promus Companies Inc.(a) 3,575,000
- --------------------------------------------------------------------
62,847,300
- --------------------------------------------------------------------
</TABLE>
FS-42
C O N S T E L L A T I O N
<PAGE> 271
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
INSURANCE (LIFE & HEALTH)-0.07%
150,000 Equitable of Iowa Companies $ 5,250,000
- ------------------------------------------------------------------
LEISURE & RECREATION-0.46%
429,300 Avid Technology, Inc.(a) 18,781,875
- ------------------------------------------------------------------
500,000 Mattel, Inc. 14,375,000
- ------------------------------------------------------------------
33,156,875
- ------------------------------------------------------------------
MACHINE TOOLS-0.17%
400,000 Kennametal Inc. 12,450,000
- ------------------------------------------------------------------
MACHINERY (HEAVY)-0.08%
131,000 AGCO Corp. 5,862,250
- ------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.39%
600,000 Thermo Electron Corp.(a) 27,600,000
- ------------------------------------------------------------------
MEDICAL (DRUGS)-1.28%
1,000,000 Cardinal Health, Inc. 51,375,000
- ------------------------------------------------------------------
125,800 Forest Laboratories, Inc.(a) 5,204,975
- ------------------------------------------------------------------
1,000,000 Mylan Laboratories, Inc. 19,000,000
- ------------------------------------------------------------------
350,000 Watson Pharmaceuticals, Inc.(a) 15,662,500
- ------------------------------------------------------------------
91,242,475
- ------------------------------------------------------------------
MEDICAL (INSTRUMENTS/PRODUCTS)-3.00%
1,000,000 Biomet, Inc.(a) 16,625,000
- ------------------------------------------------------------------
910,400 Boston Scientific Corp.(a) 38,350,600
- ------------------------------------------------------------------
300,000 Cordis Corp.(a) 33,150,000
- ------------------------------------------------------------------
154,300 Heart Technology, Inc.(a) 4,397,550
- ------------------------------------------------------------------
500,800 Idexx Laboratories, Inc.(a) 20,407,600
- ------------------------------------------------------------------
689,000 Invacare Corp. 17,397,250
- ------------------------------------------------------------------
400,000 Medtronic Inc. 23,100,000
- ------------------------------------------------------------------
500,000 Nellcor, Inc.(a) 28,750,000
- ------------------------------------------------------------------
515,800 St. Jude Medical Inc.(a) 27,466,350
- ------------------------------------------------------------------
100,000 Stryker Corp. 4,512,500
- ------------------------------------------------------------------
214,156,850
- ------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-10.04%
400,000 American Medical Response, Inc.(a) 11,550,000
- ------------------------------------------------------------------
1,750,000 Apria Healthcare Group, Inc.(a) 37,843,750
- ------------------------------------------------------------------
1,128,000 Columbia/HCA Healthcare Corp. 55,413,000
- ------------------------------------------------------------------
900,000 Community Health Systems, Inc.(a) 28,575,000
- ------------------------------------------------------------------
</TABLE>
FS-43
C O N S T E L L A T I O N
<PAGE> 272
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Medical (Patient Services)-(continued)
500,000 Foundation Health Corp.(a) $ 21,187,500
- ---------------------------------------------------------------------------
700,000 Genesis Health Ventures, Inc.(a) 20,212,500
- ---------------------------------------------------------------------------
1,500,000 Health Care and Retirement Corp.(a) 44,062,500
- ---------------------------------------------------------------------------
1,792,125 Health Management Associates, Inc.-Class A(a) 38,530,688
- ---------------------------------------------------------------------------
732,600 Healthsource, Inc.(a) 38,827,800
- ---------------------------------------------------------------------------
2,500,000 Healthsouth Corp.(a) 65,312,500
- ---------------------------------------------------------------------------
1,250,000 Horizon Healthcare Corp.(a) 25,312,500
- ---------------------------------------------------------------------------
1,000,000 Integrated Health Services, Inc.(a) 22,875,000
- ---------------------------------------------------------------------------
1,300,000 Lincare Holdings Inc.(a) 32,337,500
- ---------------------------------------------------------------------------
600,000 Living Centers of America, Inc.(a) 15,525,000
- ---------------------------------------------------------------------------
1,250,000 Manor Care, Inc. 40,937,500
- ---------------------------------------------------------------------------
600,000 Omnicare Inc. 21,750,000
- ---------------------------------------------------------------------------
1,250,000 OrNda HealthCorp(a) 22,031,250
- ---------------------------------------------------------------------------
600,000 Oxford Health Plans, Inc.(a) 46,950,000
- ---------------------------------------------------------------------------
150,000 Pacificare Health Systems, Inc.-Class A(a) 10,575,000
- ---------------------------------------------------------------------------
150,000 Pacificare Health Systems, Inc.-Class B(a) 10,912,500
- ---------------------------------------------------------------------------
350,000 PhyCor, Inc.(a) 12,862,500
- ---------------------------------------------------------------------------
600,000 Quorum Health Group Inc.(a) 12,862,500
- ---------------------------------------------------------------------------
900,000 Sybron International Corp. 38,250,000
- ---------------------------------------------------------------------------
434,000 Theratx Inc.(a) 4,882,500
- ---------------------------------------------------------------------------
1,350,000 Vencor, Inc.(a) 37,462,500
- ---------------------------------------------------------------------------
717,041,488
- ---------------------------------------------------------------------------
OFFICE PRODUCTS-0.45%
300,000 Avery Dennison Corp. 13,425,000
- ---------------------------------------------------------------------------
517,100 Reynolds & Reynolds Co.-Class A 18,421,688
- ---------------------------------------------------------------------------
31,846,688
- ---------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.09%
400,000 Smith International, Inc.(a) 6,400,000
- ---------------------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.19%
250,000 Champion International Corp. 13,375,000
- ---------------------------------------------------------------------------
POLLUTION CONTROL-0.33%
225,000 Asyst Technologies, Inc.(a) 9,450,000
- ---------------------------------------------------------------------------
658,000 USA Waste Services, Inc.(a) 13,818,000
- ---------------------------------------------------------------------------
23,268,000
- ---------------------------------------------------------------------------
PUBLISHING-0.10%
187,900 Harcourt General, Inc. 7,445,538
- ---------------------------------------------------------------------------
</TABLE>
FS-44
C O N S T E L L A T I O N
<PAGE> 273
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
RESTAURANTS-0.74%
312,100 Applebee's International, Inc. $ 8,777,813
- ---------------------------------------------------------------------
850,000 Cracker Barrel Old Country Store, Inc. 14,450,000
- ---------------------------------------------------------------------
400,000 Morrison Restaurants Inc. 6,250,000
- ---------------------------------------------------------------------
750,000 Outback Steakhouse, Inc.(a) 23,531,250
- ---------------------------------------------------------------------
53,009,063
- ---------------------------------------------------------------------
RETAIL (FOOD & DRUG)-1.46%
300,000 Casey's General Stores, Inc. 6,900,000
- ---------------------------------------------------------------------
652,500 Eckerd Corp.(a) 25,855,313
- ---------------------------------------------------------------------
1,000,000 Kroger Co.(a) 33,375,000
- ---------------------------------------------------------------------
800,000 Safeway, Inc.(a) 37,800,000
- ---------------------------------------------------------------------
103,930,313
- ---------------------------------------------------------------------
RETAIL (STORES)-7.35%
696,500 AutoZone, Inc.(a) 17,238,375
- ---------------------------------------------------------------------
410,100 Baby Superstore, Inc.(a) 19,377,225
- ---------------------------------------------------------------------
1,000,000 Bed Bath & Beyond, Inc.(a) 31,250,000
- ---------------------------------------------------------------------
18,900 CDW Computer Centers, Inc.(a) 916,650
- ---------------------------------------------------------------------
625,000 Circuit City Stores, Inc. 20,859,375
- ---------------------------------------------------------------------
1,000,000 Consolidated Stores Corp.(a) 23,125,000
- ---------------------------------------------------------------------
572,200 Corporate Express, Inc.(a) 14,948,725
- ---------------------------------------------------------------------
1,399,975 Dollar General Corp. 34,299,387
- ---------------------------------------------------------------------
500,000 Gap, Inc. 19,687,500
- ---------------------------------------------------------------------
900,000 Gymboree Corp.(a) 20,362,500
- ---------------------------------------------------------------------
800,200 Heilig-Meyers Co. 14,703,675
- ---------------------------------------------------------------------
558,000 Kohl's Corp.(a) 25,319,250
- ---------------------------------------------------------------------
400,000 MacFrugals Bargains Close-Outs, Inc.(a) 4,750,000
- ---------------------------------------------------------------------
600,100 Men's Wearhouse, Inc. (The)(a) 23,403,900
- ---------------------------------------------------------------------
837,900 Micro Warehouse Inc.(a) 37,286,550
- ---------------------------------------------------------------------
1,006,450 Office Depot, Inc.(a) 28,809,630
- ---------------------------------------------------------------------
150,000 Petco Animal Supplies, Inc.(a) 4,200,000
- ---------------------------------------------------------------------
153,900 PetSmart, Inc.(a) 5,155,650
- ---------------------------------------------------------------------
1,000,000 Sports Authority, Inc. (The)(a) 21,750,000
- ---------------------------------------------------------------------
1,850,000 Staples Inc.(a) 49,256,250
- ---------------------------------------------------------------------
750,000 Sunglass Hut International, Inc.(a) 20,437,500
- ---------------------------------------------------------------------
800,000 Talbots, Inc. 19,400,000
- ---------------------------------------------------------------------
255,700 Tandy Corp. 12,625,188
- ---------------------------------------------------------------------
1,246,300 Viking Office Products, Inc.(a) 55,460,350
- ---------------------------------------------------------------------
524,622,680
- ---------------------------------------------------------------------
</TABLE>
FS-45
C O N S T E L L A T I O N
<PAGE> 274
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
SCIENTIFIC INSTRUMENTS-0.82%
780,000 Millipore Corp. $ 27,592,500
- ----------------------------------------------------------------
600,000 Varian Associates, Inc. 30,825,000
- ----------------------------------------------------------------
58,417,500
- ----------------------------------------------------------------
SEMICONDUCTORS-16.86%
1,200,000 Altera Corp.(a) 72,600,000
- ----------------------------------------------------------------
1,325,000 Analog Devices, Inc.(a) 47,865,625
- ----------------------------------------------------------------
1,800,000 Applied Materials, Inc.(a) 90,225,000
- ----------------------------------------------------------------
2,200,000 Atmel Corp.(a) 68,750,000
- ----------------------------------------------------------------
800,000 Cirrus Logic Corp.(a) 33,700,000
- ----------------------------------------------------------------
501,450 Credence Systems Corp.(a) 18,741,694
- ----------------------------------------------------------------
1,000,000 Cypress Semiconductor Corp.(a) 35,250,000
- ----------------------------------------------------------------
300,000 Electroglas, Inc.(a) 21,075,000
- ----------------------------------------------------------------
150,000 Gasonics International Corp.(a) 4,950,000
- ----------------------------------------------------------------
2,500,000 Integrated Device Technology, Inc. 47,500,000
- ----------------------------------------------------------------
400,000 Intel Corp. 27,950,000
- ----------------------------------------------------------------
967,000 International Rectifier Corp.(a) 43,635,875
- ----------------------------------------------------------------
800,000 KLA Instruments Corp.(a) 34,200,000
- ----------------------------------------------------------------
850,000 LAM Research Corp.(a) 51,743,750
- ----------------------------------------------------------------
580,700 Lattice Semiconductor Corp.(a) 22,792,475
- ----------------------------------------------------------------
1,000,000 Linear Technology Corp. 43,750,000
- ----------------------------------------------------------------
1,700,000 LSI Logic Corp.(a) 80,112,500
- ----------------------------------------------------------------
313,800 Maxim Integrated Products, Inc.(a) 23,456,550
- ----------------------------------------------------------------
1,000,000 MEMC Electronic Materials, Inc.(a) 32,000,000
- ----------------------------------------------------------------
1,150,000 Micron Technology, Inc. 81,218,750
- ----------------------------------------------------------------
558,900 Novellus Systems, Inc.(a) 38,494,238
- ----------------------------------------------------------------
409,000 SCI Systems, Inc.(a) 14,366,125
- ----------------------------------------------------------------
600,000 Sierra Semiconductor Corp.(a) 10,725,000
- ----------------------------------------------------------------
400,000 Silicon Valley Group, Inc.(a) 12,950,000
- ----------------------------------------------------------------
1,000,000 Solectron Corp.(a) 40,250,000
- ----------------------------------------------------------------
333,400 Tencor Instruments(a) 14,211,175
- ----------------------------------------------------------------
770,000 Texas Instruments Inc. 52,552,500
- ----------------------------------------------------------------
32,200 Ultratech Stepper, Inc.(a) 1,288,000
- ----------------------------------------------------------------
430,000 Vishay Intertechnology, Inc.(a) 15,157,500
- ----------------------------------------------------------------
1,500,000 VLSI Technology, Inc.(a) 35,250,000
- ----------------------------------------------------------------
1,500,000 Xilinx, Inc.(a) 69,000,000
- ----------------------------------------------------------------
500,000 Zilog, Inc.(a) 17,750,000
- ----------------------------------------------------------------
1,203,511,757
- ----------------------------------------------------------------
</TABLE>
FS-46
C O N S T E L L A T I O N
<PAGE> 275
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
SHOES & RELATED APPAREL-0.44%
500,000 Nine West Group, Inc.(a) $ 22,250,000
- -----------------------------------------------------------------
300,000 Wolverine World Wide, Inc. 9,000,000
- -----------------------------------------------------------------
31,250,000
- -----------------------------------------------------------------
TELECOMMUNICATIONS-3.00%
400,000 ADC Telecommunications, Inc.(a) 16,000,000
- -----------------------------------------------------------------
450,000 Allen Group Inc. 11,025,000
- -----------------------------------------------------------------
500,000 Andrew Corp.(a) 21,125,000
- -----------------------------------------------------------------
700,000 Aspect Telecommunications Corp.(a) 24,062,500
- -----------------------------------------------------------------
425,000 DSC Communications Corp.(a) 15,725,000
- -----------------------------------------------------------------
250,000 Glenayre Technologies, Inc.(a) 16,062,500
- -----------------------------------------------------------------
512,600 Octel Communications Corp.(a) 17,492,475
- -----------------------------------------------------------------
600,000 Scientific-Atlanta, Inc. 7,425,000
- -----------------------------------------------------------------
350,000 StrataCom, Inc.(a) 21,525,000
- -----------------------------------------------------------------
249,100 Tekelec(a) 3,611,950
- -----------------------------------------------------------------
750,000 Tellabs, Inc.(a) 25,500,000
- -----------------------------------------------------------------
112,500 TransPro, Inc. 1,237,500
- -----------------------------------------------------------------
400,000 U.S. Long Distance Corp.(a) 5,150,000
- -----------------------------------------------------------------
875,000 WorldCom, Inc.(a) 28,546,875
- -----------------------------------------------------------------
214,488,800
- -----------------------------------------------------------------
TELEPHONE-0.02%
55,700 Century Telephone Enterprises, Inc. 1,615,300
- -----------------------------------------------------------------
TEXTILES-0.47%
600,000 Nautica Enterprises, Inc.(a) 20,550,000
- -----------------------------------------------------------------
348,700 Tommy Hilfiger Corp.(a) 13,294,188
- -----------------------------------------------------------------
33,844,188
- -----------------------------------------------------------------
TRUCKING-0.10%
391,800 TNT Freightways Corp. 7,052,400
- -----------------------------------------------------------------
Total Domestic Common Stocks 6,217,881,736
- -----------------------------------------------------------------
</TABLE>
FS-47
C O N S T E L L A T I O N
<PAGE> 276
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY INTERESTS-4.14%
AUSTRALIA-0.09%
480,832 Broken Hill Proprietary Co. Ltd. (Conglomerates) $ 6,512,182
- -------------------------------------------------------------------------------
CANADA-0.22%
900,000 Corel Corp. (Computer Software/Services)(a) 15,412,500
- -------------------------------------------------------------------------------
FINLAND-0.25%
23,170 Nokia Corp. (Telecommunications) 1,325,527
- -------------------------------------------------------------------------------
300,000 Nokia Corp.-ADR (Telecommunications) 16,725,000
- -------------------------------------------------------------------------------
18,050,527
- -------------------------------------------------------------------------------
FRANCE-0.23%
20,000 LVMH Moet Hennessy Louis Vuitton (Beverages-
Alcoholic) 3,979,469
- -------------------------------------------------------------------------------
50,580 Roussel-Uclaf (Medical-Drugs) 8,295,364
- -------------------------------------------------------------------------------
12,650 Sidel S.A. (Machinery-Miscellaneous) 4,392,487
- -------------------------------------------------------------------------------
16,667,320
- -------------------------------------------------------------------------------
GERMANY-0.06%
13,000 Mannesmann A.G. (Machinery-Miscellaneous) 4,278,834
- -------------------------------------------------------------------------------
HONG KONG-0.15%
1,000,000 Hutchison Whampoa Ltd. (Conglomerates) 5,509,655
- -------------------------------------------------------------------------------
628,000 Sun Hung Kai Properties Ltd. (Real Estate) 5,015,585
- -------------------------------------------------------------------------------
10,525,240
- -------------------------------------------------------------------------------
INDONESIA-0.06%
1,250,000 PT Bank International Indonesia (Banking) 4,375,826
- -------------------------------------------------------------------------------
IRELAND-0.13%
221,100 Elan Corp. PLC-ADR (Medical-Drugs)(a) 8,871,638
- -------------------------------------------------------------------------------
ISRAEL-0.22%
250,000 Lannet Data Communications Ltd. (Computer
Networking)(a) 7,187,500
- -------------------------------------------------------------------------------
225,000 Teva Pharmaceutical Industries Ltd.-ADR (Medical-
Drugs) 8,831,250
- -------------------------------------------------------------------------------
16,018,750
- -------------------------------------------------------------------------------
ITALY-0.05%
1,074,000 Telecom Italia Mobile S.p.A.
(Telecommunications)(a) 1,806,395
- -------------------------------------------------------------------------------
1,074,000 Telecom Italia S.p.A. (Telecommunications) 1,645,363
- -------------------------------------------------------------------------------
3,451,758
- -------------------------------------------------------------------------------
JAPAN-0.07%
120,000 Tokyo Electron Ltd. (Electronic
Components/Miscellaneous) 5,208,466
- -------------------------------------------------------------------------------
938,000 MALAYSIA-0.11%
Malayan Banking Berhad (Banking) 7,567,493
- -------------------------------------------------------------------------------
</TABLE>
FS-48
C O N S T E L L A T I O N
<PAGE> 277
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
NETHERLANDS-0.72%
400,000 ASM Lithography Holding N.V. (Semiconductors)(a) $ 19,850,000
- ------------------------------------------------------------------------------
400,000 Madge, N.V. (Computer Networking)(a) 16,750,000
- ------------------------------------------------------------------------------
270,500 Philips Electronics N.V.-New York Shares-ADR
(Electronic Components/Miscellaneous) 10,448,063
- ------------------------------------------------------------------------------
32,850 Ver Ned Uitgever Bezit (Publishing) 4,605,392
- ------------------------------------------------------------------------------
51,653,455
- ------------------------------------------------------------------------------
SPAIN-0.01%
8,100 Acerinox, S.A. (Metals-Miscellaneous) 852,771
- ------------------------------------------------------------------------------
SWEDEN-0.96%
140,000 Astra AB (Medical-Drugs) 5,059,784
- ------------------------------------------------------------------------------
60,500 Autoliv AB (Automobile/Trucks Parts & Tires) 3,471,147
- ------------------------------------------------------------------------------
2,811,600 Telefonaktiebolaget L.M. Ericsson-ADR
(Telecommunications) 60,054,089
- ------------------------------------------------------------------------------
68,585,020
- ------------------------------------------------------------------------------
SWITZERLAND-0.12%
3,500 BBC Brown Boveri Ltd. (Engineering &
Construction) 4,060,160
- ------------------------------------------------------------------------------
5,000 Ciba-Geigy Ltd. (Chemicals) 4,329,252
- ------------------------------------------------------------------------------
8,389,412
- ------------------------------------------------------------------------------
UNITED KINGDOM-0.69%
2,700,000 Burton Group PLC (Retail-Stores) 4,300,790
- ------------------------------------------------------------------------------
1,075,000 Danka Business Systems PLC-ADR (Office
Automation) 36,012,500
- ------------------------------------------------------------------------------
390,000 Granada Group PLC (Leisure & Recreation) 4,165,138
- ------------------------------------------------------------------------------
210,000 Thorn EMI PLC (Leisure & Recreation) 4,890,593
- ------------------------------------------------------------------------------
49,369,021
- ------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 295,790,213
- ------------------------------------------------------------------------------
</TABLE>
FS-49
C O N S T E L L A T I O N
<PAGE> 278
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
MASTER NOTE AGREEMENT-1.07%
$76,500,000 Citicorp Securities, Inc., 6.125%,
03/11/96(b) $ 76,500,000
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS-4.27%(c)
43,781,167 Daiwa Securities America, Inc., 5.90%,
11/01/95(d) 43,781,167
- -------------------------------------------------------------------------------
261,000,000 Goldman, Sachs & Co. Inc., 5.90%, 11/01/95(e) 261,000,000
- -------------------------------------------------------------------------------
Total Repurchase Agreements 304,781,167
- -------------------------------------------------------------------------------
U.S. TREASURY SECURITIES-3.77%
195,000,000(g) U.S. TREASURY BILLS-3.06%(f)
5.48%, 11/16/95 194,561,135
- -------------------------------------------------------------------------------
25,000,000 5.22%, 06/27/96 24,132,000
- -------------------------------------------------------------------------------
218,693,135
- -------------------------------------------------------------------------------
U.S. TREASURY NOTES-0.71%
15,000,000 5.50%, 04/30/96 15,000,900
- -------------------------------------------------------------------------------
35,000,000 7.625%, 04/30/96 35,357,000
- -------------------------------------------------------------------------------
50,357,900
- -------------------------------------------------------------------------------
Total U.S. Treasury Securities 269,051,035
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS-100.35% 7,164,004,151
- -------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(0.35)% (24,736,094)
- -------------------------------------------------------------------------------
NET ASSETS-100.00% $7,139,268,057
===============================================================================
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon notice to the issuer. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
October 31, 1995.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102 percent of the sales price of
the repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(d) Joint repurchase agreement entered into 10/31/95 with a maturing value of
$401,494,641. Collateralized by $353,853,000 U.S. Treasury obligations,
8.375% due 08/15/08.
(e) Joint repurchase agreement entered into 10/31/95 with a maturing value of
$360,681,783. Collateralized by $341,411,000 U.S. Treasury obligations,
5.625% to 12.00% due 11/15/95 to 02/15/25.
(f) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(g) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 7.
See Notes to Financial Statements.
FS-50
C O N S T E L L A T I O N
<PAGE> 279
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $5,084,052,318) $7,164,004,151
- ------------------------------------------------------------------------
Foreign currencies, at market value (cost $13,642,266) 13,495,706
- ------------------------------------------------------------------------
Receivables for:
Investments sold 28,101,604
- ------------------------------------------------------------------------
Capital stock sold 50,215,325
- ------------------------------------------------------------------------
Dividends and interest 1,095,114
- ------------------------------------------------------------------------
Investment for deferred compensation plan 35,624
- ------------------------------------------------------------------------
Other assets 100,373
- ------------------------------------------------------------------------
Total assets 7,257,047,897
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 57,630,332
- ------------------------------------------------------------------------
Capital stock reacquired 50,907,595
- ------------------------------------------------------------------------
Variation margin 1,239,750
- ------------------------------------------------------------------------
Deferred compensation 35,624
- ------------------------------------------------------------------------
Accrued advisory fees 3,602,549
- ------------------------------------------------------------------------
Accrued administrative services fees 14,663
- ------------------------------------------------------------------------
Accrued directors' fees 3,850
- ------------------------------------------------------------------------
Accrued distribution fees 2,624,668
- ------------------------------------------------------------------------
Accrued transfer agent fees 439,464
- ------------------------------------------------------------------------
Accrued operating expenses 1,281,345
- ------------------------------------------------------------------------
Total liabilities 117,779,840
- ------------------------------------------------------------------------
Net assets applicable to shares outstanding $7,139,268,057
========================================================================
NET ASSETS:
Class A $7,000,350,013
========================================================================
Institutional Class $ 138,918,044
========================================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------------------
Outstanding 295,483,948
========================================================================
Institutional Class:
Authorized 200,000,000
========================================================================
Outstanding 5,775,803
========================================================================
CLASS A:
Net asset value and redemption price per share $23.69
========================================================================
Offering price per share:
(Net asset value of $23.69 divided by 94.50%) $25.07
========================================================================
INSTITUTIONAL CLASS:
Net asset value, offering and redemption price per share $24.05
========================================================================
</TABLE>
See Notes to Financial Statements.
FS-51
C O N S T E L L A T I O N
<PAGE> 280
STATEMENT OF OPERATIONS
For the year ended October 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $322,914 foreign withholding tax) $ 14,062,451
- --------------------------------------------------------------------------
Interest 27,896,762
- --------------------------------------------------------------------------
Total investment income 41,959,213
- --------------------------------------------------------------------------
EXPENSES:
Advisory fees 31,803,884
- --------------------------------------------------------------------------
Administrative services fees 173,257
- --------------------------------------------------------------------------
Custodian fees 568,906
- --------------------------------------------------------------------------
Directors' fees 44,198
- --------------------------------------------------------------------------
Distribution fees-Class A 14,905,705
- --------------------------------------------------------------------------
Transfer agent fees-Class A 9,158,530
- --------------------------------------------------------------------------
Transfer agent fees-Institutional Class 5,273
- --------------------------------------------------------------------------
Other 2,078,095
- --------------------------------------------------------------------------
Total expenses 58,737,848
- --------------------------------------------------------------------------
Less fees waived by advisor (761,655)
- --------------------------------------------------------------------------
Net expenses 57,976,193
- --------------------------------------------------------------------------
Net investment income (loss) (16,016,980)
- --------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain on sales of:
Investment securities 198,443,948
- --------------------------------------------------------------------------
Foreign currencies 225,354
- --------------------------------------------------------------------------
Futures contracts 38,758,395
- --------------------------------------------------------------------------
237,427,697
- --------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
Investment securities 1,310,161,937
- --------------------------------------------------------------------------
Foreign currencies (529,855)
- --------------------------------------------------------------------------
Futures contracts (2,597,985)
- --------------------------------------------------------------------------
1,307,034,097
- --------------------------------------------------------------------------
Net gain on investment securities, foreign currencies and
futures contracts 1,544,461,794
- --------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,528,444,814
==========================================================================
</TABLE>
See Notes to Financial Statements.
FS-52
C O N S T E L L A T I O N
<PAGE> 281
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (16,016,980) $ (4,773,452)
- -----------------------------------------------------------------------------
Net realized gain on sales of investment
securities,
foreign currencies and futures contracts 237,427,697 113,271,698
- -----------------------------------------------------------------------------
Unrealized appreciation of investment
securities,
foreign currencies and futures contracts 1,307,034,097 137,121,005
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 1,528,444,814 245,619,251
- -----------------------------------------------------------------------------
Distributions to shareholders from net
realized gains on investment securities:
Class A (107,823,749) --
- -----------------------------------------------------------------------------
Institutional Class (1,218,145) --
- -----------------------------------------------------------------------------
Share transactions - net:
Class A 1,878,176,040 726,623,024
- -----------------------------------------------------------------------------
Institutional Class 75,813,810 24,797,834
- -----------------------------------------------------------------------------
Net increase in net assets 3,373,392,770 997,040,109
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,765,875,287 2,768,835,178
- -----------------------------------------------------------------------------
End of period $7,139,268,057 $3,765,875,287
=============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $4,828,771,443 $2,890,417,744
- -----------------------------------------------------------------------------
Undistributed net investment income (loss) (54,010) --
- -----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investment securities, foreign currencies
and futures contracts 231,637,155 103,578,171
- -----------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and futures
contracts 2,078,913,469 771,879,372
- -----------------------------------------------------------------------------
$7,139,268,057 $3,765,875,287
=============================================================================
</TABLE>
See Notes to Financial Statements.
FS-53
C O N S T E L L A T I O N
<PAGE> 282
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Constellation Fund (the "Fund") is a series portfolio of AIM Equity Funds,
Inc. (the "Company"). The Company is a Maryland corporation registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of four diversified portfolios:
AIM Constellation Fund, AIM Weingarten Fund, AIM Charter Fund and AIM
Aggressive Growth Fund. The Fund currently offers two different classes of
shares: the Class A shares (formerly "Retail Class") and the Institutional
Class. 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
following is a summary of 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 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 mean between the closing bid and asked prices on that day. 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 based upon quotes furnished by market makers for such
securities. If a mean is not available, as is the case in some foreign
markets, the closing bid will be used absent a last sales price. 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
of the closing bid and asked prices. Debt obligations that are issued or
guaranteed by the U.S. Treasury 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 quotations are not readily
available are valued at fair value as determined in good faith by or under
the supervision of the Company's officers in a manner specifically
authorized by the Board of Directors of the Company. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
New York Stock Exchange. 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 New York Stock Exchange. 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 New York Stock
Exchange which will 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 Directors.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the specific identification of securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On October 31, 1995,
$326,819 was reclassified from undistributed net realized gains to
undistributed net investment income (loss) as a result of differing book/tax
treatments of foreign currency transactions. In addition, $15,636,151 was
reclassified from net investment income (loss) to paid-in capital as a
result of a net operating tax loss. Net assets of the Fund were unaffected
by the reclassifications discussed above.
C. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
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.
F. Foreign Currency Contracts - A forward 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 forward 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.
G. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by
FS-54
C O N S T E L L A T I O N
<PAGE> 283
"marking to market" on a daily basis to reflect the market value of the
contracts at the end of each day's trading. Variation margin payments are
made or received depending upon whether unrealized gains or losses are
incurred. When the contracts are closed, the Fund recognizes a realized
gain or loss equal to the difference between the proceeds from, or cost of,
the closing transaction and the Fund's basis in the contract. Risks include
the possibility of an illiquid market and the change in the value of the
contracts may not correlate with changes in the value of the securities
being hedged.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.0% of
the first $30 million of the Fund's average daily net assets, plus 0.75% of the
Fund's average daily net assets in excess of $30 million to and including $150
million, plus 0.625% of the Fund's average daily net assets in excess of $150
million. AIM has agreed to voluntarily waive a portion of its advisory fees
paid by the Fund to AIM to the extent necessary to reduce the fees paid by the
Fund at net asset levels higher than those currently incorporated in the
present advisory fee schedule. AIM will receive a fee calculated at the annual
rate of 1.0% of the first $30 million of the Fund's average daily net assets,
plus 0.75% of the Fund's average daily net assets in excess of $30 million to
and including $150 million, plus 0.625% of the Fund's average daily net assets
in excess of $150 million to and including $2 billion, plus 0.60% of the Fund's
average daily net assets in excess of $2 billion. During the year ended October
31, 1995, AIM waived fees of $761,655. The waiver is entirely voluntary and the
Board of Directors would be advised of any decision by AIM to discontinue the
waiver. Under the terms of a master sub-advisory agreement between AIM and
A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM Capital 50% of the
amount paid by the Fund to AIM. These agreements require AIM to reduce its fees
or, if necessary, make payments to the Fund to the extent required to satisfy
any expense limitations imposed by the securities laws or regulations
thereunder of any state in which the Fund's shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the year ended October 31,
1995, AIM was reimbursed $173,257 for such services.
The Fund, pursuant to a transfer agency and services agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Class A shares. During the year ended October 31, 1995, AFS was
paid $4,943,213 for such services. During the year ended October 31, 1995, the
Fund paid A I M Institutional Fund Services, Inc. ("AIFS") with respect to the
Institutional Class $2,790 for shareholder and transfer agency services.
Effective July 1, 1995, AIFS became the exclusive transfer agent for the
Institutional Class of the Fund.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and a master distribution agreement with Fund Management Company
("FMC") to serve as the distributor for the Institutional Class. The Company
has adopted a Plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan"), with
respect to the Class A shares, whereby the Fund pays AIM Distributors an annual
rate of 0.30% of the Class A shares average daily net assets as compensation
for services related to the sales and distribution of the Class A shares. The
Plan provides that payments to dealers and financial institutions that provide
continuing personal shareholder services to their customers who purchase and
own shares of the Class A shares, in amounts of up to 0.25% of the average net
assets of the Class A shares attributable to the customers of such dealers or
financial institutions, may be characterized as a service fee. The Plan also
provides that payments in excess of service fees are characterized as an asset-
based sales charge under the Plan. The Plan also imposes a cap on the total
amount of sales charges, including asset-based sales charges, that may be paid
by the Company with respect to the Fund's Class A shares. During the year ended
October 31, 1995, the Class A shares paid AIM Distributors $14,905,705 as
compensation under the Plan.
AIM Distributors received commissions of $13,146,761 from Class A capital
stock transactions during the year ended October 31, 1995. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in,
the proceeds from sales of capital stock. Certain officers and directors of the
Company are officers and directors of AIM, AIM Capital, AIM Distributors, AFS,
AIFS and FMC.
During the year ended October 31, 1995 the Fund paid legal fees of $14,394
for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3 - DIRECTORS' FEES
Director's fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if
so elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
FS-55
C O N S T E L L A T I O N
<PAGE> 284
NOTE 4 - BANK BORROWINGS
The Fund has a $83,100,000 committed line of credit with a financial
institution syndicate with Chemical Bank of New York as the administrative
agent. Interest on borrowings under the line of credit is payable on maturity
or prepayment date. During the period July 20, 1995 (effective date of Credit
Agreement) through October 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's
commitment.
NOTE 5 - AFFILIATED COMPANY TRANSACTIONS
Affiliated issuers, as defined in the 1940 Act, are issuers in which the Fund
held 5% or more of the outstanding voting securities. A summary of transactions
for each issuer who is or was an affiliate at or during the year ended October
31, 1995, is as follows:
<TABLE>
<CAPTION>
SHARE SHARE MARKET
BALANCE BALANCE VALUE
OCTOBER 31, PURCHASES REALIZED DIVIDEND OCTOBER 31, OCTOBER 31,
NAME OF ISSUER: 1994 COST SALES COST GAIN INCOME 1995 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Roosevelt Financial
Group, Inc. 315,000 $0 $4,779,251 $392,937 $30,943 $0 $0
===============================================================================================
</TABLE>
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended October 31,
1995 was $4,071,335,941 and $2,213,924,196, respectively. The amount of
unrealized appreciation (depreciation) of investment securities as of October
31, 1995, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $2,178,971,166
- -----------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (99,425,248)
- -----------------------------------------------------------------------------
Net unrealized appreciation of investment securities $2,079,545,918
=============================================================================
</TABLE>
Cost of investments for tax purposes is $5,084,458,233.
NOTE 7- FUTURES CONTRACT
On October 31, 1995, $9,668,000 U.S. Treasury bills were pledged as collateral
to cover margin requirements for futures contracts.
Futures contracts outstanding at October 31, 1995:
(Contracts--$500 times index/delivery month/commitment)
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
(DEPRECIATION)
<S> <C>
S&P 500 Index 370 contracts/Dec95/Buy $ 749,250
S&P 500 Index 500 contracts/Mar96/Buy (1,642,375)
=====================================================
</TABLE>
NOTE 8 - CAPITAL STOCK
Changes in the capital stock outstanding for the years ended October 31, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ----------- --------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 5,036,915 $ 105,368,663 1,908,947 $ 33,070,778
- -----------------------------------------------------------------------------------
Class A 214,014,863 4,411,919,689 100,598,652 1,751,901,830
- -----------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 60,580 1,019,563 -- --
- -----------------------------------------------------------------------------------
Class A 6,006,043 99,940,399 -- --
- -----------------------------------------------------------------------------------
Reacquired:
Institutional Class (1,476,157) (30,574,416) (474,909) (8,272,944)
- -----------------------------------------------------------------------------------
Class A (128,002,913) (2,633,684,048) (58,902,798) (1,025,278,806)
- -----------------------------------------------------------------------------------
95,639,331 $ 1,953,989,850 43,129,892 $ 751,420,858
===================================================================================
</TABLE>
FS-56
C O N S T E L L A T I O N
<PAGE> 285
NOTE 9 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Institutional Class during the three-year period ended October 31, 1995 and
the period April 8, 1992 (date operations commenced) through October 31, 1992.
<TABLE>
<CAPTION>
1995 1994 1993 1992
-------- ------- ------- ------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $18.49 $17.13 $13.27 $12.29
- ---------------------------------- -------- ------- ------- ------
Income from investment operations:
Net investment income (loss) 0.02 0.03 -- (0.01)
- ---------------------------------- -------- ------- ------- ------
Net gains on securities (both
realized and unrealized) 6.06 1.33 3.86 0.99
- ---------------------------------- -------- ------- ------- ------
Total from investment operations 6.08 1.36 3.86 0.98
- ---------------------------------- -------- ------- ------- ------
Less distributions:
Distributions from capital gains (0.52) -- -- --
- ---------------------------------- -------- ------- ------- ------
Net asset value, end of period $24.05 $18.49 $17.13 $13.27
================================== ======== ======= ======= ======
Total return(a) 34.09% 7.94% 29.09% 7.97%
================================== ======== ======= ======= ======
Net assets, end of period (000s
omitted) $138,918 $39,847 $12,338 $3,087
================================== ======== ======= ======= ======
Ratio of expenses to average net
assets 0.66%(b) 0.69% 0.87% 0.91%(c)
================================== ======== ======= ======= ======
Ratio of net investment income
(loss) to average net assets 0.18%(b) 0.36% 0.04% (0.12)%(c)
================================== ======== ======= ======= ======
Portfolio turnover rate 45% 79% 70% 62%
================================== ======== ======= ======= ======
</TABLE>
(a) For periods less than one year, total return is not annualized.
(b) After waiver of advisory fees. Ratios of expenses and net investment income
to average net assets prior to waiver of advisory fees were 0.68% and
0.16%, respectively. Ratios are based on average net assets of $78,053,151.
(c) After expense reimbursements. Annualized.
FS-57
C O N S T E L L A T I O N
<PAGE> 286
PART C
OTHER INFORMATION
Item 24 (a) Financial Statements:
1. AIM Charter Fund - Retail Classes (Class A and Class B)
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October 31, 1995 (audited)
In Part C:
None
2. AIM Charter Fund - Institutional Class
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October 31, 1995 (audited)
In Part C:
None
3. AIM Weingarten Fund - Retail Classes (Class A and Class B)
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October 31, 1995 (audited)
In Part C:
None
4. AIM Weingarten Fund - Institutional Class
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October 31, 1995 (audited)
In Part C:
None
<PAGE> 287
5. AIM Constellation Fund - Retail Class (Class A)
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October 31, 1995 (audited)
In Part C:
None
6. AIM Constellation Fund - Institutional Class
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditor's Report
(2) Financial Statements as of October 31, 1995 (audited)
In Part C:
None
7. AIM Aggressive Growth Fund - Retail Class (Class A)
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditor's Report
(2) Financial Statements as of October 31, 1995 (audited)
In Part C:
None
(b) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C> <C>
(1) (a) - Articles Supplementary, as filed with the State of Maryland on December 19, 1995, is filed
herewith electronically.
(b) - Articles Supplementary, as filed with the State of Maryland on June 5, 1995, is filed herewith
electronically.
(c) - Articles of Amendment, as filed with the State of Maryland on June 5, 1995, is filed herewith
electronically.
(d) - Articles Supplementary, as filed with the State of Maryland on October 8, 1993, was filed as an
Exhibit to Post-Effective Amendment No. 43 on February 28, 1994, and is filed herewith electronically.
</TABLE>
C-2
<PAGE> 288
<TABLE>
<S> <C> <C>
(e) - Articles Supplementary, as filed with the State of Maryland on December 23, 1991, were filed as an
Exhibit to Post-Effective Amendment No. 40 on February 26, 1992, and is filed herewith electronically.
(f) - Articles Supplementary, as filed with the State of Maryland on March 27, 1991, were filed as an Exhibit
to Post-Effective Amendment No. 40 on February 26, 1992, and is filed herewith electronically.
(g) - Articles of Incorporation of Registrant, as filed with the State of Maryland on May 20, 1988, were
filed as an Exhibit to Post-Effective Amendment No. 34 on June 13, 1988, and is filed herewith
electronically.
(2) (a) - Second Amendment, dated September 28, 1994, to Amended and Restated By-Laws was filed as an Exhibit to
Post-Effective Amendment No. 44 on February 24, 1995, and is hereby incorporated by reference.
(b) - First Amendment, dated April 22, 1991, to Amended and Restated By-Laws was filed as an Exhibit to
Post-Effective Amendment No. 40 on February 26, 1992, and is hereby incorporated by reference.
(c) - Amended and Restated By-Laws of the Registrant were filed as an Exhibit to Post-Effective Amendment
No. 37 on February 28, 1990, and are hereby incorporated by reference.
(d) - By-Laws of Registrant were filed as an Exhibit to Post-Effective Amendment No. 34 on June 13, 1988.
(3) - None.
(4) (a) - Forms of specimen certificates for shares of common stock of Registrant's AIM Aggressive Growth Fund
and the Retail Classes were filed as an Exhibit to Post-Effective Amendment No. 44 on February 24,
1995, and are hereby incorporated by reference.
(b) - Form of specimen certificate for shares of common stock of Registrant's AIM Aggressive Growth Fund was
filed as an Exhibit to Post-Effective Amendment No. 42 on August 16, 1993.
(c) - Forms of specimen certificates for shares of common stock of Registrant's Institutional Classes were
filed as an Exhibit to Post-Effective Amendment No. 39 on March 1, 1991, and are hereby incorporated by
reference.
(d) - Forms of specimen certificates for shares of common stock of Registrant's Retail Classes were filed as
an Exhibit to Post-Effective Amendment No. 34 on June 13, 1988.
(5) (a) - (1) Amendment No. 1, dated November 14, 1994, to the Master Investment Advisory Agreement, dated October 18, 1993,
between Registrant and A I M Advisors, Inc. was filed as an Exhibit to Post-Effective Amendment No. 44 on February
24, 1995, and is filed herewith electronically.
(2) Master Investment Advisory Agreement, dated October 18, 1993, between Registrant and A I M Advisors, Inc. was
filed as an Exhibit to Post-Effective Amendment No. 43 on February 28, 1994, and is filed herewith electronically.
</TABLE>
C-3
<PAGE> 289
<TABLE>
<S> <C> <C>
(3) Investment Advisory Agreement, dated August 6, 1993, between Registrant's AIM Aggressive Growth
Fund and A I M Advisors, Inc., was filed as an Exhibit to Post-Effective Amendment No. 43 on February
28, 1994.
(4) Investment Advisory Agreement, dated September 30, 1988, between Registrant and A I M Advisors,
Inc., was filed as an Exhibit to Post-Effective Amendment No. 38 on February 28, 1991.
(b) - (1) Master Sub-Advisory Agreement, dated October 18, 1993, between Registrant, A I M Advisors, Inc.
and A I M Capital Management, Inc., was filed as an Exhibit to Post-Effective Amendment No. 43 on
February 28, 1994, and is hereby incorporated by reference.
(2) Sub-Advisory Agreement, dated September 30, 1988, between Registrant, A I M Advisors, Inc. and
A I M Capital Management, Inc., was filed as an Exhibit to Post-Effective Amendment No. 38 on
February 28, 1991.
(6) (a) - Master Distribution Agreement, dated June 14, 1995, between Registrant (on behalf of the portfolio's
Class B shares) and A I M Distributors, Inc. is filed herewith electronically.
(b) - Master Distribution Agreement, dated October 18, 1993, between Registrant and Fund Management Company,
was filed as an Exhibit to Post-Effective Amendment No. 43 on February 28, 1994, and is hereby
incorporated by reference.
(c) - Master Distribution Agreement, dated October 18, 1993, between Registrant and A I M Distributors, Inc.
was filed as an Exhibit to Post-Effective Amendment No. 43 on February 28, 1994, and is filed herewith
electronically.
(d) - Distribution Agreement, dated August 6, 1993, between Registrant's AIM Aggressive Growth Fund and A I M
Distributors, Inc., was filed as an Exhibit to Post-Effective Amendment No. 43 on February 28, 1994.
(e) - Distribution Agreement, dated March 15, 1991, between Registrant and Fund Management Company, was filed
as an Exhibit to Post-Effective Amendment No. 39 on March 1, 1991.
(f) - Distribution Agreement, dated May 24, 1988, between Registrant and A I M Distributors, Inc., was filed
as an Exhibit to Post-Effective Amendment No. 38 on February 28, 1991.
(7) (a) - Retirement Plan for Registrant's Non-Affiliated Directors, effective as of March 8, 1994, as restated September 18,
1995, is filed herewith electronically.
(b) - Retirement Plan for Registrant's Non-Affiliated Directors was filed as an Exhibit to Post-Effective Amendment
No. 44 on February 24, 1995.
(c) Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Directors as approved on December 5, 1995,
is filed herewith electronically.
(d) Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Directors was filed as an Exhibit to
Post-Effective Amendment No. 44 on February 24, 1995.
</TABLE>
C-4
<PAGE> 290
<TABLE>
<S> <C> <C>
(8) (a)- (1) Amendment No. 2, dated September 19, 1995, to the Custodian Contract, dated October 1, 1992, between Registrant
and State Street Bank and Trust Company is filed herewith electronically.
(2) Amendment No. 1, dated October 15, 1993, to the Custodian Contract, dated October 1, 1992, between
Registrant and State Street Bank and Trust Company is filed herewith electronically.
(3) Custodian Contract, dated October 1, 1992, between Registrant and State Street Bank and Trust
Company, was filed as an Exhibit to Post-Effective Amendment No. 41 on February 26, 1993, and is filed
herewith electronically.
(b) - Subcustodian Agreement, dated September 9, 1994, between Registrant, Texas Commerce Bank National
Association, State Street Bank and Trust Company and A I M Fund Services, Inc., was filed as an Exhibit
to Post-Effective Amendment No. 44 on February 24, 1995, and is hereby incorporated by reference.
(9) (a) - (1) Transfer Agency and Service Agreement, dated July 1, 1995, between Registrant and A I M
Institutional Fund Services, Inc. is filed herewith electronically.
(2) Transfer Agency and Service Agreement, dated November 1, 1994, between Registrant and A I M Fund
Services, Inc. was filed as an Exhibit to Post-Effective Amendment No. 44 on February 24, 1995, and is
hereby incorporated by reference.
(3) Amendment No. 3, dated April 1, 1994, to the Transfer Agency and Registrar Agreement dated May 15,
1992, as amended, between Registrant and The Shareholder Services Group, Inc. was filed as an Exhibit
to Post-Effective Amendment No. 44 on February 24, 1995.
(4) Amendment No. 2, dated October 15, 1993, to the Transfer Agency and Registrar Agreement dated
May 15, 1992, as amended, between Registrant and The Shareholder Services Group, Inc. was filed as an
Exhibit to Post-Effective Amendment No. 44 on February 24, 1995.
(5) Transfer Agency and Service Agreement, dated July 6, 1992, between State Street Bank and Trust
Company and Registrant with respect to the Institutional Classes, was filed as an Exhibit to
Post-Effective Amendment No. 41 on February 26, 1993.
(6) Transfer Agency and Registrar Agreement, dated May 15, 1992, as amended as of May 15, 1992, between
The Shareholder Services Group, Inc. and Registrant with respect to the Retail Classes, was filed as an
Exhibit to Post-Effective Amendment No. 41 on February 26, 1993.
(7) Transfer Agency Agreement, dated May 15, 1989, between Registrant and TAC Shareholder Services,
Inc. was filed as an Exhibit to Post-Effective Amendment No. 37 on February 28, 1990.
(b) - (1) Addendum No. 2, dated October 12, 1995, to the Remote Access and Related Services Agreement, dated December 23,
1994, between Registrant and First Data Investor Services Group (formerly The shareholder Services Group, Inc.)
is filed herewith electronically.
</TABLE>
C-5
<PAGE> 291
<TABLE>
<S> <C>
(2) Amendment No. 1, dated October 4, 1995, to the Remote Access and Related Services Agreement, dated December 23,
1994, between Registrant and First Data Investor Services Group (formerly The Shareholder Services Group, Inc.)
is filed herewith electronically.
(3) Remote Access and Related Services Agreement, dated December 23, 1994, between Registrant and First Data
Investor Services Group (formerly The Shareholder Services Group, Inc.) was filed as an Exhibit to Post-Effective
Amendment No. 44 on February 24, 1995, and is filed herewith electronically.
(4) Shareholder Sub-Accounting Services Agreement between Registrant, First Data Investor Services Group
(formerly The Shareholder Services Group, Inc.), Financial Data Services Inc. and Merrill Lynch, Pierce,
Fenner & Smith Inc., dated July 1, 1990, was filed as an Exhibit to Post Exhibit to Post-Effective Amendment
No. 40 on February 26, 1992, and is hereby incorporated by reference.
(c) - (1) Agreement and Plan of Merger, dated September 30, 1988, was filed as an Exhibit to Post-Effective Amendment
No. 35 on September 30, 1988, and is hereby incorporated by reference.
(2) Articles of Merger, dated September 30, 1988, was filed as an Exhibit to Post-Effective Amendment No. 35 on
September 30, 1988, and is hereby incorporated by reference.
(d) - (1) Amendment No. 4, dated November 1, 1994, to the Administrative Services Agreement, dated October 18, 1993,
between A I M Advisors, Inc. and A I M Fund Services, Inc. is filed herewith electronically.
(2) Amendment No. 3, dated September 16, 1994, to the Administrative Services Agreement, dated October 18, 1993,
between A I M Advisors, Inc. and A I M Fund Services, Inc. was filed as an Exhibit to Post-Effective Amendment No.
44 on February 24, 1995, and is filed herewith electronically.
(3) Amendment No. 2, dated July 1, 1994, to the Administrative Services Agreement, dated October 18, 1993, between
A I M Advisors, Inc. and A I M Fund Services, Inc. was filed as an Exhibit to Post-Effective Amendment No. 44 on
February 24, 1995, and is filed herewith electronically.
(4) Amendment No. 1, dated May 11, 1994, to the Administrative Services Agreement, dated October 18, 1993, between
A I M Advisors, Inc. and A I M Fund Services, Inc. was filed as an Exhibit to Post-Effective Amendment No. 44 on
February 24, 1995, and is filed herewith electronically.
(5) Administrative Services Agreement, dated October 18, 1993, by and between A I M Advisors, Inc. and A I M Fund
Services, Inc. on behalf of the Retail Classes was filed as an Exhibit to Post-Effective Amendment No. 43 on
February 28, 1994, and is filed herewith electronically.
(6) Master Administrative Services Agreement, dated October 18, 1993, between Registrant and A I M Advisors,
Inc., was filed as an Exhibit to Post-Effective Amendment No. 43 on February 28, 1994, and is filed herewith
electronically.
</TABLE>
C-6
<PAGE> 292
<TABLE>
<S> <C> <C>
(7) Administrative Services Agreement, dated September 16, 1994, between A I M Advisors, Inc. and A I M
Institutional Fund Services, Inc. on behalf of the Institutional Classes, was filed as an Exhibit to Post-Effective
Amendment No. 44 on February 24, 1995.
(8) Administrative Services Agreement, dated August 6, 1993, between Registrant's AIM Aggressive Growth Fund and
A I M Advisors, Inc., was filed as an Exhibit to Post-Effective Amendment No. 43 on February 28, 1994.
(9) Administrative Services Agreement, dated June 11, 1989, between Registrant and A I M Advisors, Inc., was
filed as an Exhibit to Post-Effective Amendment No. 37 on February 28, 1990.
(10) (a) - Opinion of Ballard Spahr Andrews & Ingersoll was filed as an Exhibit to Registrant's Rule 24f-2 Notice
for the fiscal year ending October 31, 1995 on December 22, 1995.
(11) (a) - Consent of KPMG Peat Marwick LLP is filed herewith electronically.
(b) - Consent of Tait, Weller & Baker is filed herewith electronically.
(c) - Consent of Price Waterhouse LLP is filed herewith electronically.
(d) - Consent of Ballard Spahr Andrews & Ingersoll is filed herewith electronically.
(12) - Financial Statements - None.
(13) - None.
(14) (a) - Revised form of Registrant's IRA Documents was filed as an Exhibit to Post-Effective Amendment No. 42
on August 16, 1993, and is hereby incorporated by reference.
(b) - Revised form of Registrant's Simplified Employee Pension - Individual Retirement Accounts Contribution
Agreement was filed as an Exhibit to Post-Effective Amendment No. 42 on August 16, 1993, and is hereby
incorporated by reference.
(c) - Form of Registrant's Combination Profit Sharing-Money Purchase Plan and Trust was filed as an Exhibit
to Post-Effective Amendment No. 38 on February 28, 1991, and is hereby incorporated by reference.
(d) - Form of Registrant's 403(b) Plan was filed as an Exhibit to Post-Effective Amendment No. 37 on February
28, 1990, and is hereby incorporated by reference.
(15) (a) - (1) Registrant's Master Distribution Plan for the Class B shares of AIM Charter Fund and AIM Weingarten Fund,
dated June 14, 1995, is filed herewith electronically.
(2) Registrant's Amended Master Distribution Plan for Retail Classes dated September 27, 1993, as amended March 8,
1994 and September 10. 1994, was filed as an Exhibit to Post-Effective Amendment No. 44 on February 24, 1995,
and is filed herewith electronically.
</TABLE>
C-7
<PAGE> 293
<TABLE>
<S> <C> <C>
(3) Registrant's Amended Master Distribution Plan for Retail Classes and AIM Aggressive Growth Fund, dated
September 27, 1993, as amended March 8, 1994, was filed as an Exhibit to Post-Effective Amendment No. 44 on
February 24, 1995.
(4) Registrant's Master Distribution Plan for Retail Classes and AIM Aggressive Growth Fund, dated September 27,
1993, was filed as an Exhibit to Post-Effective Amendment No. 43 on February 28, 1994.
(5) Registrant's Amended Distribution Plan for AIM Aggressive Growth Fund, dated August 6, 1993, was filed as an
Exhibit to Post-Effective Amendment No. 43 on February 28, 1994.
(6) Registrant's Amended Distribution Plans for Retail Classes, dated September 5, 1991, were filed as
an Exhibit to Post-Effective Amendment No. 40 on February 26, 1992.
(b) - (1) Form of Shareholder Service Agreement to be used in connection with Registrant's Master 12b-1 Plan
is filed herewith electronically.
(2) Form of Shareholder Service Agreement to be used in connection with Registrant's Master 12b-1 Plan was filed
as an Exhibit to Post-Effective Amendment No. 42 on August 16, 1993.
(3) Form of Shareholder Service Agreement to be used in connection with Registrant's AIM Aggressive Growth Fund's
12b-1 Plan was filed as an Exhibit to Post-Effective Amendment No. 42 on August 16, 1993
(4) Form of Dealer Assistance Agreement to be used in connection with Registrant's 12b-1 Plan was filed as an
Exhibit to Post-Effective Amendment No. 34 on June 13, 1988.
(c) - (1) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's Master 12b-1
Plan is filed herewith electronically.
(2) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's Master 12b-1 Plan was
filed as an Exhibit to Post-Effective Amendment No. 42 on August 16, 1993.
(3) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's AIM Aggressive Growth
Fund's 12b-1 Plan was filed as an Exhibit to Post-Effective Amendment No. 42 on August 16, 1993.
(4) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's 12b-1 Plan was filed as
an Exhibit to Post-Effective Amendment 34 on June 13, 1988.
(d) - (1) Form of Variable Group Annuity Contractholder Service Agreements to be used in connection with
Registrant's Master 12b-1 Plan was filed as an Exhibit to Post-Effective Amendment No. 42 on August 16,
1993, and is filed herewith electronically.
(2) Form of Variable Group Annuity Contractholder Service Agreement to be used in connection with
Registrant's 12b-1 Plan was filed as an Exhibit to Post-Effective Amendment No. 40 on February 26,
1992.
</TABLE>
C-8
<PAGE> 294
<TABLE>
<S> <C> <C>
(e) - (1)Form of Service Agreement for Certain Retirement Plans (for the Institutional Classes) to be used in connection
with Registrant's Master 12b-1 Plan is filed herewith electronically.
(2) Form of Service Agreement for Certain Retirement Plans (for the Retail Classes) to be used in connection with
Registrant's Master 12b-1 Plan is filed herewith electronically.
(f) - Form of Service Agreement for Brokers for Bank Trust Departments and for Bank Trust Departments to be used in
connection with Registrant's 12b-1 Plan is filed herewith electronically.
(16) - Schedule of Performance Quotations was filed as an Exhibit to Post-Effective Amendment No. 35 on
September 30, 1988, and is hereby incorporated by reference.
(18) (a) - (1) Amended Multiple Class Plan (Rule 18f-3), as amended December 4, 1995, is filed herewith electronically.
(2) Form of Multiple Class (Rule 18f-3) Plan was electronically filed as an Exhibit to Post-Effective Amendment
No. 46 on June 6, 1995, and is hereby incorporated by reference.
</TABLE>
(27) - Financial Data Schedule.
Item 25. Persons Controlled by or under Common Control With Registrant
Furnish a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrant and as to each such
person indicate (1) if a company, the state or other sovereign power under the
laws of which it is organized, and (2) the percentage of voting securities
owned or other basis of control by the person, if any, immediately controlling
it.
None.
Item 26. Number of Holders of Securities
State in substantially the tabular form indicated, as of a specified
date within 90 days prior to the date of filing, the number of record holders
of each class of securities of the Registrant.
<TABLE>
<CAPTION>
Number of Record Holders
Title Class as of December 1, 1995
----------- ------------------------
<S> <C> <C>
Retail Class: Class A Class B
AIM Charter Fund 99,760 7,470
AIM Weingarten Fund 274,376 4,987
AIM Constellation Fund 441,288 N/A
AIM Aggressive Growth Fund 136,296 N/A
</TABLE>
C-9
<PAGE> 295
<TABLE>
<CAPTION>
Number of Record Holders
Title Class as of December 1, 1995
----------- -----------------------
<S> <C>
Institutional Class:
AIM Charter Fund 8
AIM Weingarten Fund 10
AIM Constellation Fund 23
</TABLE>
Item 27. Indemnification
State the general effect of any contract, arrangement 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.
Under the terms of the Maryland General Corporation Law and the
Registrant's Charter and By-Laws, the Registrant may indemnify any
person who was or is a director, officer or employee of the Registrant
to the maximum extent permitted by the Maryland General Corporation
Law; provided, however, that any such indemnification (unless ordered
by a court) shall be made by the Registrant only as authorized in the
specific case upon a determination that indemnification of such person
is proper in the circumstances. Such determination shall be made (i)
by the Board of Directors, by a majority vote of a quorum which
consists of directors who are neither "interested persons" of the
Registrant as defined in Section 2(a)(19) of the 1940 Act, nor parties
to the proceeding, or (ii) if the required quorum is not obtainable or,
if a quorum of such directors so directs, by independent legal counsel
in a written opinion. No indemnification will be provided by the
Registrant to any director or officer of the Registrant for any
liability to the Registrant or shareholders to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of duty.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the 1940 Act and is, therefore
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the 1940 Act and will be
governed by the final adjudication of such issue. Insurance coverage
is provided under a joint Mutual Fund & Investment Advisory
Professional and Directors & Officers Liability Policy, issued by ICI
Mutual Insurance Company, with a $15,000,000 limit of liability.
C-10
<PAGE> 296
Item 28. 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 "Management--Investment Advisor"
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 29(b) of this Part C.
Item 29. Principal Underwriters
(a) A I M Distributors, Inc., the Registrant's principal
underwriter of its Retail Classes, also acts as a
principal underwriter to the following investment
companies:
AIM Funds Group
AIM International Funds, Inc.
AIM Investment Securities Funds
AIM Summit Fund, Inc.
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds, Inc.
Fund Management Company, the Registrant's principal
underwriter of its Institutional Classes, also acts as a
principal underwriter to the following investment companies:
AIM Investment Securities Funds
(Limited Maturity Treasury Portfolio-Institutional Shares)
Short-Term Investments Co.
Short-Term Investments Trust
Tax-Free Investments Co.
(b) The following table sets forth information with respect to
each director, officer or partner of A I M Distributors,
Inc.:
<TABLE>
<CAPTION>
Name and Principal Position and Offices with Position and Offices
Business Address* Principal Underwriter with Registrant
- ---------------- --------------------- ---------------
<S> <C> <C>
Charles T. Bauer Chairman of the Board of Directors Chairman of the Board of
Directors
Michael J. Cemo President & Director None
Gary T. Crum Director Senior Vice President
Robert H. Graham Senior Vice President & Director President & Director
W. Gary Littlepage Senior Vice President & Director None
James L. Salners Senior Vice President & Director None
John Caldwell Senior Vice President None
Gordon J. Sprague Senior Vice President None
</TABLE>
- ----------------------------------
* 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
C-11
<PAGE> 297
<TABLE>
<CAPTION>
<S> <C> <C>
Michael C. Vessels Senior Vice President None
Lawrence E. Manierre First Vice President None
James E. Stueve First Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
& Assistant Secretary
John J. Arthur Vice President & Treasurer Senior Vice President & Treasurer
Charles R. Dewey Vice President None
Sidney M. Dilgren Vice President None
William H. Kleh Vice President None
Carol F. Relihan Vice President Vice President & Secretary
Frank V. Serebrin Vice President None
B.J. Thompson Vice President None
Robert D. Van Zant Vice President None
David E. Hessel Assistant Vice President, None
Asst Treasurer & Controller
Melville B. Cox Assistant Vice President Vice President
Mary E. Gentempo Assistant Vice President None
Jeffrey L. Horne Assistant Vice President None
Kim T. Lankford Assistant Vice President None
David L. Kite Assistant General Counsel & Assistant Secretary
Assistant Secretary
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Assistant Secretary
Samuel D. Sirko Assistant General Counsel & Assistant Secretary
Assistant Secretary
Stephen I. Winer Assistant Secretary Assistant Secretary
</TABLE>
The following table sets forth information with respect to each director,
office or partner of Fund Management Company:
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Principal Position and Offices with Position and Offices
Business Address* Principal Underwriter with Registrant
- ---------------- --------------------- ---------------
Charles T. Bauer Chairman of the Board of Chairman of the Board
Directors of Directors
J. Abbott Sprague President & Director None
John J. Arthur Vice President & Treasurer Senior Vice President
& Treasurer
Robert H. Graham Senior Vice President & Director President & Director
William H. Kleh Director None
Mark D. Santero Senior Vice President None
Carol F. Relihan Vice President & General Vice President &
Counsel Secretary
Mark E. McMeans Vice President None
Stephen I. Winer Vice President, Assistant Assistant Secretary
General Counsel &
Assistant Secretary
Kathleen J. Pflueger Secretary Assistant Secretary
</TABLE>
- ---------------------------
* 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
C-12
<PAGE> 298
<TABLE>
<CAPTION>
<S> <C> <C>
David E. Hessel Assistant Vice President, None
Assistant Treasurer & Controller
Dana R. Sutton Assistant Vice President & Vice President &
Assistant Treasurer Assistant Treasurer
Melville B. Cox Assistant Vice President Vice President
Jeffrey L. Horne Assistant Vice President None
Margaret A. Reilly Assistant Vice President None
David L. Kite Assistant General Counsel & Assistant Secretary
Assistant Secretary
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Assistant Secretary
Ofelia M. Mayo Assistant General Counsel Assistant Secretary
Assistant Secretary
Samuel D. Sirko Assistant General Counsel & Assistant Secretary
Assistant Secretary
</TABLE>
Item 30. 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.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, will maintain physical possession of each such account,
book or other document of the Registrant at its principal executive
offices, except for those maintained by the Registrant's Custodian,
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, and the Registrant's Transfer Agent and Dividend
Paying Agent, A I M Institutional Fund Services, Inc. for the
Institutional Classes and A I M Fund Services, Inc., P. O. Box 4739,
Houston, Texas 77210-4739, for the Retail Classes.
Item 31. Management Services
Furnish a summary of the substantive provisions of any management
related service contract not discussed in Part I of this Form (because
the contract was not believed to be material to a purchaser of
securities of the Registrant) under which services are provided to the
Registrant, indicating the parties to the contract, the total dollars
paid and by whom, for the last three fiscal years.
None.
Item 32. Undertakings
(c) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered, a copy of the applicable Fund's latest
annual report to shareholders, upon request and without charge.
C-13
<PAGE> 299
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 29th day of
December, 1995.
REGISTRANT: AIM EQUITY FUNDS, INC.
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/ Charles T. Bauer Chairman & Director December 29, 1995
- ----------------------------------------
(Charles T. Bauer)
/s/ Robert H. Graham Director & President December 29, 1995
- ---------------------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ B. L. Crockett Director December 29, 1995
- ----------------------------------------
(Bruce L. Crockett)
/s/ Owen Daly II Director December 29, 1995
- ----------------------------------------
(Owen Daly II)
/s/ Carl Frischling Director December 29, 1995
- ----------------------------------------
(Carl Frischling)
/s/ John F. Kroeger Director December 29, 1995
- ----------------------------------------
(John F. Kroeger)
/s/ Lewis F. Pennock Director December 29, 1995
- ----------------------------------------
(Lewis F. Pennock)
/s/ Ian W. Robinson Director December 29, 1995
- ----------------------------------------
(Ian W. Robinson)
/s/ Louis S. Sklar Director December 29, 1995
- ----------------------------------------
(Louis S. Sklar)
Senior Vice President &
/s/ John J. Arthur Treasurer (Principal Financial December 29, 1995
- ---------------------------------------- and Accounting Officer)
(John J. Arthur)
</TABLE>
<PAGE> 300
INDEX TO EXHIBITS
AIM EQUITY FUNDS, INC.
<TABLE>
<CAPTION>
Exhibit Number
- --------------
<S> <C>
1(a) Articles Supplementary, as filed with the State of Maryland on December 19, 1995
1(b) Articles Supplementary, as filed with the State of Maryland on June 5, 1995
1(c) Articles of Amendment, as filed with the State of Maryland on June 5, 1995
1(d) Articles Supplementary, as filed with the State of Maryland on October 8, 1993
1(e) Articles Supplementary, as filed with the State of Maryland on December 23, 1991
1(f) Articles Supplementary, as filed with the State of Maryland on March 27, 1991
1(g) Articles of Incorporation of Registrant, as filed with the State of Maryland on May 20, 1988
5(a)(1) Amendment No. 1, dated November 14, 1994, to the Master Investment Advisory Agreement, dated
October 18, 1993, between Registrant and A I M Advisors, Inc.
5(a)(2) Master Investment Advisory Agreement, dated October 18, 1993, between Registrant and A I M Advisors,
Inc.
6(a) Master Distribution Agreement, dated June 14, 1995, between Registrant (on behalf of the portfolio's
Class B shares) and A I M Distributors, Inc.
6(c) Master Distribution Agreement, dated October 18, 1993, between Registrant and A I M Distributors,
Inc.
7(a) Retirement Plan for Registrant's Non-Affiliated Directors, effective as of March 8, 1994, as restated
September 18, 1995
7(c) Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Directors as approved on December 5, 1995
8(a)(1) Amendment No. 2, dated September 19, 1995, to the Custodian Contract, dated October 1, 1992, between Registrant
and State Street Bank and Trust Company
8(a)(2) Amendment No. 1, dated October 15, 1993, to the Custodian Contract, dated October 1, 1992, between
Registrant and State Street Bank and Trust Company
8(a)(3) Custodian Contract, dated October 1, 1992, between Registrant and State Street Bank and Trust
Company
9(a)(1) Transfer Agency and Service Agreement, dated July 1, 1995, between Registrant and A I M Institutional
Fund Services, Inc.
</TABLE>
<PAGE> 301
<TABLE>
<S> <C>
9(b)(1) Addendum No. 2, dated October 12, 1995, to the Remote Access and Related Services Agreement, dated December 23,
1994, between Registrant and First Data Investor Services Group (formerly The Shareholder Services Group, Inc.)
9(b)(2) Amendment No. 1, dated October 4, 1995, to the Remote Access and Related Services Agreement, dated December 23,
1994, between Registrant and First Data Investor Services Group (formerly The Shareholder Services Group, Inc.)
9(b)(3) Remote Access and Related Services Agreement, dated December 23, 1994, between Registrant and First Data Investor
Services Group (formerly The Shareholder Services Group, Inc.)
9(d)(1) Amendment No. 4, dated November 1, 1994, to the Administrative Services Agreement, dated October 18,
1993, between A I M Advisors, Inc. and A I M Fund Services, Inc.
9(d)(2) Amendment No. 3, dated September 16, 1994, to the Administrative Services Agreement, dated October
18, 1993, between A I M Advisors, Inc. and A I M Fund Services, Inc.
9(d)(3) Amendment No. 2, dated July 1, 1994, to the Administrative Services Agreement, dated October 18,
1993, between A I M Advisors, Inc. and A I M Fund Services, Inc.
9(d)(4) Amendment No. 1, dated May 11, 1994, to the Administrative Services Agreement, dated October 18,
1993, between A I M Advisors, Inc. and A I M Fund Services, Inc.
9(d)(5) Administrative Services Agreement, dated October 18, 1993, by and between A I M Advisors, Inc. and
A I M Fund Services, Inc. on behalf of the Retail Classes
9(d)(6) Master Administrative Services Agreement, dated October 18, 1993, between Registrant and A I M
Advisors, Inc.
11(a) Consent of KPMG Peat Marwick LLP
11(b) Consent of Tait, Weller & Baker
11(c) Consent of Price Waterhouse LLP
11(d) Consent of Ballard Spahr Andrews & Ingersoll
15(a)(1) Registrant's Master Distribution Plan for the Class B shares of AIM Charter Fund and AIM Weingarten Fund, dated
June 14, 1995
15(a)(2) Registrant's Amended Master Distribution Plan for Retail Classes dated September 27, 1993, as amended March 8,
1994 and September 10, 1994
15(b)(1) Form of Shareholder Service Agreement to be used in connection with Registrant's Master 12b-1 Plan
15(c)(1) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's Master 12b-1 Plan
15(d)(1) Form of Variable Group Annuity Contractholder Service Agreement to be used in connection with Registrant's
Master 12b-1 Plan
15(e)(1) Form of Service Agreement for Certain Retirement Plans (for the Institutional Classes) to be used in connection
with Registrant's Master 12b-1 Plan
</TABLE>
<PAGE> 302
<TABLE>
<S> <C>
15(e)(2) Form of Service Agreement for Certain Retirement Plans (for the Retail Classes) to be used in connection with
Registrant's Master 12b-1 Plan
15(f) Forms of Service Agreement for Brokers for Bank Trust Departments and for Bank Trust Departments to be used in
connection with Registrant's 12b-1 Plan
18(a)(1) Amended Multiple Class Plan (Rule 18f-3), as amended December 4, 1995
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 1(a)
AIM EQUITY FUNDS, INC.
ARTICLES SUPPLEMENTARY
AIM EQUITY FUNDS, INC., a Maryland corporation registered as an open-end
investment company under the Investment Company Act of 1940 having its
principal office in the State of Maryland in Baltimore City (hereinafter called
the "Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation has adopted a resolution
increasing the total number of shares of common stock of the Corporation that
the Corporation has authority to issue to 7,000,000,000 shares, par value $.001
per share in accordance with Section 2-105(c) of the Maryland General
Corporation Law, and thereby increasing the aggregate par value of all shares
of common stock of the Corporation to $7,000,000;
SECOND: The Board of Directors of the Corporation has adopted a
resolution increasing the number of shares of common stock that are classified
into separate classes by:
classifying an additional 750,000,000 shares of the previously
authorized, unissued and unclassified shares of the common stock,
par value $.001 per share, with an aggregate par value of $750,000,
as AIM Blue Chip Fund - Class A Shares; and
classifying an additional 750,000,000 shares of the previously
authorized, unissued and unclassified shares of the common stock,
par value $.001 per share, with an aggregate par value of $750,000,
as AIM Capital Development Fund - Class A Shares.
THIRD: A description of the Shares so classified with the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption, as set or
changed by the Board of Directors of the Corporation, is as follows:
The preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms
and conditions of redemption of the shares of each class of the
common stock of the Corporation classified hereby is set forth in
ARTICLE FIFTH, paragraph (b) of the Corporation's Charter, and has
not been changed by the Board of Directors of the Corporation.
FOURTH: The Board of Directors of the Corporation has increased the total
number of shares of capital stock that the corporation has authority to issue
and classified the shares described above under the authority contained in the
Charter of the Corporation, in accordance with Section 2-105(c) of the Maryland
General Corporation Law.
FIFTH: Immediately prior to the filing of these Articles Supplementary,
the Corporation had authority to issue 5,500,000,000 shares with a par value of
$.001 each, and an aggregate par value
<PAGE> 2
of $5,000,000. Of these shares, 750,000,000 shares had been classified as
AIM Charter Fund - Class A Shares, 750,000,000 shares had been classified as
AIM Charter Fund - Class B Shares, 200,000,000 shares had been classified as
AIM Charter Fund - Institutional Class Shares, 750,000,000 shares had been
classified as AIM Weingarten Fund - Class A Shares, 750,000,000 shares had been
classified as AIM Weingarten Fund - Class B Shares, 200,000,000 shares had been
classified as AIM Weingarten Fund - Institutional Class Shares, 750,000,000
shares had been classified as AIM Constellation Fund - Class A Shares,
200,000,000 shares had been classified as AIM Constellation Fund -
Institutional Class Shares, and 750,000,000 shares had been classified as AIM
Aggressive Growth Fund - Class A Shares.
SIXTH: As of the filing of these Articles Supplementary, the Corporation
shall have authority to issue 7,000,000,000 shares with a par value of $.001
each, and an aggregate par value of $7,000,000. Of these shares, 750,000,000
shares are classified as AIM Charter Fund - Class A Shares, 750,000,000 shares
are classified as AIM Charter Fund - Class B Shares, 200,000,000 shares are
classified as AIM Charter Fund - Institutional Class Shares, 750,000,000
shares are classified as AIM Weingarten Fund - Class A Shares,
750,000,000 shares are classified as AIM Weingarten Fund - Class B
Shares, 200,000,000 shares are classified as AIM Weingarten Fund -
Institutional Class Shares, 750,000,000 shares are classified as AIM
Constellation Fund - Class A Shares, 200,000,000 shares are classified
as AIM Constellation Fund - Institutional Class Shares, 750,000,000
shares are classified as AIM Aggressive Growth Fund - Class A Shares,
750,000,000 shares are classified as AIM Blue Chip Fund - Class A Shares,
750,000,000 shares are classified as AIM Capital Development Fund - Class A
Shares, and 400,000,000 shares remain unclassified.
SEVENTH: The Corporation is registered as an open-end company under the
Investment Company Act of 1940.
The undersigned President acknowledges these Articles Supplementary to be
the corporate act of the Corporation and states that to the best of his or her
knowledge, information and belief, the matters and facts set forth in these
Articles with respect to authorization and approval are true in all material
respects and that this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, AIM EQUITY FUNDS, INC. has caused these Articles
Supplementary to be executed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on December 4, 1995.
AIM EQUITY FUNDS, INC.
Witness:
/s/ NANCY L. MARTIN /s/ ROBERT H. GRAHAM
_________________________________ ____________________________________
Assistant Secretary President
2
<PAGE> 1
EXHIBIT (1)(b)
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
6-5-95 at 2:55 p.m.
AIM EQUITY FUNDS, INC.
ARTICLES SUPPLEMENTARY
AIM EQUITY FUNDS, INC., a Maryland corporation registered as
an open-end investment company under the Investment Company Act of 1940 having
its principal office in the State of Maryland in Baltimore City (hereinafter
called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: Pursuant to and in accordance with Section 2-105(c) of
the Corporations and Associations Article of the Annotated Code of Maryland,
the Board of Directors of the Corporation hereby increases the number of shares
of common stock which the Corporation shall have the authority to issue from
4,000,000,000 shares to 5,500,000,000 shares with a par value of $.001 each.
SECOND: Immediately prior to the filing of these Articles
Supplementary, the Corporation had authority to issue 4,000,000,000 shares,
with a par value of $.001 each, of which seven hundred fifty million
(750,000,000) shares have been classified as AIM Weingarten Fund shares, two
hundred million (200,000,000) shares have been classified as AIM Weingarten
Fund-Institutional shares, seven hundred fifty million (750,000,000) shares
have been classified as AIM Constellation Fund shares, two hundred million
(200,000,000) shares have been classified as AIM Constellation Fund-
- --------------------------------------------------------------------------------
STATE OF MARYLAND
I hereby certify that this is a true and complete copy of the 7 page document
on file in this office: DATED 6-5-95.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: /s/ ILLEGIBLE, Custodian.
This stamp replaces our previous certification system. Effective: 6/95
- --------------------------------------------------------------------------------
<PAGE> 2
Institutional shares, seven hundred fifty million (750,000,000) shares have
been classified as AIM Charter Fund shares, two hundred million (200,000,000)
shares have been classified as AIM Charter Fund-Institutional shares, and seven
hundred fifty million (750,000,000) shares have been classified as AIM
Aggressive Growth Fund. Four hundred million (400,000,000) shares were
unclassified. The aggregate par value of all such classified and unclassified
shares of common stock of the Corporation was $4,000,000. Shares of AIM
Weingarten Fund, AIM Constellation Fund, AIM Charter Fund and AIM Aggressive
Growth Fund shall be referred to herein as the "Class A Shares," and holders of
such Class A shares shall be referred to herein as the "Class A Shareholders."
THIRD: As of the filing of these Articles Supplementary, the
Corporation shall have authority to issue 5,500,000,000 shares with a par value
of $.001 each. Of the additional 1,500,000,000 shares, seven hundred fifty
million (750,000,000) shares are classified as AIM Weingarten Fund Class B
Shares and seven hundred fifty million (750,000,000) shares are classified as
AIM Charter Fund Class B Shares (which additional classified shares shall be
referred to collectively as the "Class B Shares" and the holders of such Class
B Shares shall be referred to herein as the "Class B Shareholders").
FOURTH: As of the filing of these Articles Supplementary, the
aggregate par value of all the shares of common stock of the Corporation, both
classified and unclassified, is $5,500,000.
2
<PAGE> 3
FIFTH: The preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and terms
and conditions of redemption of the Class A Shares as set forth in ARTICLE
FIFTH, paragraph (b) of the Corporation's Articles of Incorporation (the
"Articles of Incorporation"), and in the provisions of the Articles of
Incorporation relating to stock of the Corporation generally, remain unchanged.
SIXTH: Except as set forth below, the Class B Shares shall
have the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption as set forth in ARTICLE FIFTH, paragraph (b) of the Articles of
Incorporation and shall be subject to all provisions of the Articles of
Incorporation relating to stock of the Corporation generally. In addition, the
Class B Shares shall have the following preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption:
(a) Subject to the provisions of paragraph (c) below, all
Class B Shares other than those purchased through the reinvestment of dividends
and distributions shall automatically convert to Class A Shares eight (8) years
after the end of the calendar month in which a shareholder's order to purchase
such shares was accepted.
(b) Subject to the provisions of paragraph (c) below,
Class B Shares purchased through the reinvestment of dividends and
distributions paid in respect of Class
3
<PAGE> 4
B Shares will be considered held in a separate sub-account, and will
automatically convert to Class A Shares in the same proportion as any Class B
Shares (other than those in the sub-account) convert to Class A Shares. Other
than this conversion feature, the Class B Shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares
shall have all the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of Class B Shares generally.
(c) If an investment portfolio of the Corporation
implements any amendment to a Rule 12b-1 Plan (or, if presented to
shareholders, adopts or implements a non-Rule 12b-1 shareholder services plan)
that the Board of Directors determines would materially increase the charges
that may be borne by the Class A Shareholders under such plan, the Class B
Shares will stop converting to the Class A Shares unless the Class B Shares,
voting separately, approve the amendment or adoption. The Board of Directors
shall have sole discretion in determining whether such amendment or adoption is
submitted to a vote of the Class B Shareholders. Should such amendment or
adoption not be submitted to a vote of the Class B Shareholders or, if
submitted, should the Class B Shareholders fail to approve such amendment or
adoption, the Board of Directors shall take such action as is necessary to:
(1) create a new class (the "New Class A Shares") which shall be identical in
all material respects to the Class A Shares as they existed prior to the
implementation of the amendment or adoption; and (2) ensure that the existing
Class B Shares will exchanged or converted into New Class A Shares no later
than the date such Class B Shares were scheduled to convert to Class A Shares.
If deemed
4
<PAGE> 5
advisable by the Board of Directors to implement the foregoing, and at the sole
discretion of the Board of Directors, such action may include the exchange of
all Class B Shares for a new class (the "New Class B Shares"), identical in all
respects to the Class B Shares except that the New Class B Shares will
automatically convert into the New Class A Shares. Such exchanges or
conversions shall be effected in a manner that the Board of Directors
reasonably believes will not be subject to federal taxation.
SEVENTH: The Board of Directors of the Corporation has
authorized and classified the Class B Shares under authority contained in the
Articles of Incorporation of the Corporation.
EIGHTH: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940.
The undersigned President acknowledges these Articles
Supplementary to be the corporate act of the Corporation and states that to the
best of his or her knowledge, information and belief, the matters and facts set
forth in these Articles with respect to authorization and approval are true in
all material respects and that this statement is made under the penalties for
perjury.
5
<PAGE> 6
IN WITNESS WHEREOF, AIM EQUITY FUNDS, INC. has caused these
Articles Supplementary to be executed under seal in its name and on its behalf
by its President and witnessed by its Secretary on June 5, 1995.
AIM EQUITY FUNDS, INC.
Witness:
/s/ CAROL F. RELIHAN By: /s/ ROBERT H. GRAHAM
- ----------------------- -------------------------
Secretary President
(SEAL)
6
<PAGE> 1
EXHIBIT (1)(c)
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
6-5-95 at 2:57 p.m.
AIM EQUITY FUNDS, INC.
ARTICLES OF AMENDMENT
AIM EQUITY FUNDS, INC., a Maryland corporation registered as
an open-end investment company under the Investment Company Act of 1940 having
its principal office in the State of Maryland in Baltimore City (hereinafter
called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: In Article FIFTH, paragraph (a) of the Corporation's
Articles of Incorporation (the "Charter"), the seven hundred fifty million
(750,000,000) shares of AIM Weingarten Fund shall be redesignated as the AIM
Weingarten Fund Class A Shares, the seven hundred fifty million (750,000,000)
shares of AIM Constellation Fund shall be redesignated as the AIM Constellation
Fund Class A Shares, the seven hundred fifty million (750,000,000) shares of
AIM Charter Fund shall be redesignated as the AIM Charter Fund Class A Shares,
and the seven hundred fifty million (750,000,000) shares of AIM Aggressive
Growth Fund shall be redesignated as the AIM Aggressive Growth Fund Class A
Shares.
SECOND: A majority of the entire Board of Directors of the
Corporation has duly adopted resolutions in which was set forth the foregoing
amendment (the "Amendment") to the Charter.
- --------------------------------------------------------------------------------
STATE OF MARYLAND
-----------------
I hereby certify that this is a true and complete copy of the 3 page document
on file in this office, DATED: 6-5-95.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: /s/ ILLEGIBLE, Custodian.
This stamp replaces our previous certification system. Effective: 6/95
- --------------------------------------------------------------------------------
<PAGE> 2
THIRD: This Amendment is limited to a change expressly
permitted by Section 2-605(a)(4) of the Maryland General Corporation Law to be
made without action by stockholders, and the Corporation is registered as an
open-end investment company under the Investment Company Act of 1940.
The undersigned President acknowledges these Articles of
Amendment to be the corporate act of the Corporation and states that to the
best of his or her knowledge, information and belief, the matters and facts set
forth in these Articles with respect to authorization and approval are true in
all material respects and that this statement is made under the penalties for
perjury.
IN WITNESS WHEREOF, AIM EQUITY FUNDS, INC. has caused these
Articles of Amendment to be executed under seal in its name and on its behalf
by its President and witnessed by its Secretary on June 5, 1995.
AIM EQUITY FUNDS, INC.
Witness:
/s/ CAROL F. RELIHAN By: /s/ ROBERT H. GRAHAM
- --------------------------- ------------------------
Secretary President
(SEAL)
2
<PAGE> 1
EXHIBIT 1(d)
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
RECEIVED
10/8/93 12:32 p.m.
'93 Oct 8 pm 12:32
AIM EQUITY FUNDS, INC.
ARTICLES SUPPLEMENTARY
AIM EQUITY FUNDS, INC., a Maryland corporation, having its principal
office in the State of Maryland in Baltimore City (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The aggregate number of shares of Common Stock of the
Corporation is increased by one billion fifty million (1,050,000,000) shares,
which are classified and allocated as follows: seven hundred fifty million
(750,000,000) shares to AIM Aggressive Growth Fund and three hundred million
(300,000,000) shares which shall be unclassified. The shares of AIM Aggressive
Growth Fund as so classified by the Board of Directors shall have the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption as set forth in ARTICLE FIFTH, paragraph (b) of the Corporation's
Articles of Incorporation and shall be subject to all provisions of the
Articles of Incorporation relating to stock of the Corporation generally.
SECOND: Immediately before the increase in the aggregate number of
shares as set forth in Article FIRST hereto, the Corporation was authorized to
issue two billion nine hundred fifty million (2,950,000,000) shares of Common
Stock, all of which are of a par value $.001 per share having an aggregate par
value of two million nine hundred fifty thousand dollars ($2,950,000), of which
seven hundred fifty million (750,000,000) shares were classified as shares of
the AIM Charter Fund, seven hundred fifty million (750,000,000) shares were
classified as shares of the AIM Constellation Fund, seven hundred fifty million
(750,000,000) shares were classified as shares of the AIM Weingarten Fund, two
hundred million (200,000,000) shares were classified as shares of the AIM
Charter Fund-Institutional shares, two hundred million (200,000,000) shares
were classified as shares of the AIM Constellation Fund-Institutional shares,
and two hundred million (200,000,000) shares were classified as shares of the
AIM Weingarten Fund-Institutional shares. One hundred million (100,000,000)
shares were unclassified.
THIRD: As hereby increased, the total number of shares of stock which
the Corporation has authority to issue is four billion (4,000,000,000) shares
of Common Stock, all of which are of a par value of one tenth of one cent
($.001) per share having an aggregate par value of four million dollars
($4,000,000), of which seven hundred fifty million (750,000,000) shares are
classified as AIM Weingarten Fund, two hundred million (200,000,000) shares are
classified as
- --------------------------------------------------------------------------------
STATE OF MARYLAND
-----------------
I hereby certify that this is a true and complete copy of the 3 page document
on file in this office. Dated: 10-8-93
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: /s/ ILLEGIBLE
This stamp replaces our previous certification system. Effective: 10/84
- --------------------------------------------------------------------------------
-1-
<PAGE> 2
AIM Weingarten Fund-Institutional, seven hundred fifty million (750,000,000)
shares are classified as AIM Constellation Fund, two hundred million
(200,000,000) shares are classified as AIM Constellation Fund-Institutional
shares, seven hundred fifty million (750,000,000) shares are classified as AIM
Charter Fund, two hundred million (200,000,000) are classified as AIM Charter
Fund-Institutional, and seven hundred fifty million (750,000,000) shares are
classified as AIM Aggressive Growth Fund. Four hundred million (400,000,000)
shares are unclassified.
FOURTH: The Corporation is registered as an open-end investment
company under the Investment Company Act of 1940, as amended.
FIFTH: The Board of Directors of the Corporation increased the total
number of shares of Common Stock the Corporation has authority to issue
pursuant to Section 2-105(c) of the Maryland General Corporation Law and
classified the shares of AIM Aggressive Growth Fund under authority contained
in the Charter of the Corporation.
The undersigned President acknowledges these Articles Supplementary to
be the corporate act of the Corporation and states that to the best of his
knowledge, information and belief the matters and facts set forth in these
Articles with respect to authorization and approval are true in all material
respects and that this statement is made under the penalties of perjury.
IN WITNESS WHEREOF, AIM EQUITY FUNDS, INC. has caused these Articles
Supplementary to be executed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on October 7, 1993.
AIM EQUITY FUNDS, INC.
By: /s/ CHARLES T. BAUER
-----------------------------------
President
Witness:
/s/ CAROL F. RELIHAN
- -------------------------------------
Assistant Secretary
-2-
<PAGE> 1
EXHIBIT 1(e)
RECEIVED
'91 Dec 23 pm 2:30
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
AIM EQUITY FUNDS, INC.
ARTICLES SUPPLEMENTARY
AIM EQUITY FUNDS, INC., a Maryland corporation, having its principal
office in the State of Maryland in Baltimore City (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The aggregate number of shares of Common Stock of the
Corporation is increased by one billion (1,000,000,000) shares, which are
allocated as follows: three hundred million (300,000,000) shares to AIM
Weingarten Fund, one hundred million (100,000,000) shares to AIM Weingarten
Fund - Institutional, two hundred million (200,000,000) shares to AIM
Constellation Fund, one hundred million (100,000,000) shares to AIM
Constellation Fund - Institutional, two hundred million (200,000,000) shares to
AIM Charter Fund, and one hundred million (100,000,000) shares to AIM Charter
Fund - Institutional.
SECOND: Immediately before the increase in the aggregate number of
shares as set forth in Article FIRST hereto, the Corporation was authorized to
issue one billion (1,000,000,000) shares of Common Stock having an aggregate
par value of one million dollars ($1,000,000), of which two hundred million
(200,000,000) shares were classified as shares of the AIM Charter Fund, two
hundred million (200,000,000) shares were classified as shares of the AIM
Constellation Fund, two hundred million (200,000,000) shares were classified as
shares of the AIM Weingarten Fund, one hundred million (100,000,000) shares
were classified as shares of the AIM Charter Fund - Institutional shares, one
hundred million (100,000,000) shares were classified as shares of the AIM
Constellation Fund - Institutional shares, and one hundred million
(100,000,000) shares were classified as shares of the AIM Weingarten Fund -
Institutional shares. One hundred million (100,0000,000) shares were
unclassified.
THIRD: As hereby increased, the total number of shares of stock which
the Corporation has authority to issue is two billion (2,000,000,000) shares of
Common Stock, all of which are of a par value of one tenth of one cent ($.001)
per share having an aggregate par value of two million dollars ($2,000,000), of
I.D. NO. D2565273
ACKN. NO. - 126C3052456
AIM EQUITY FUNDS, INC.
NO. OF CERTIFIED COPIES - 2
- --------------------------------------------------------------------------------
STATE OF MARYLAND
-----------------
I hereby certify that this is a true and complete copy of the 3 page document
on file in this office. Dated: 1-10-92
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: /s/ ILLEGIBLE
-------------------------
This stamp replaces our previous certification system. Effective: 10/84
- --------------------------------------------------------------------------------
-1-
<PAGE> 2
which five hundred million (500,000,000) shares are classified as AIM
Weingarten Fund, two hundred million (200,000,000) shares are classified as AIM
Weingarten Fund - Institutional, four hundred million (400,000,000) shares are
classified as AIM Constellation Fund, two hundred million (200,000,000) shares
are classified as AIM Constellation Fund - Institutional shares, four hundred
million (400,000,000) shares are classified as AIM Charter Fund, and two
hundred million (200,000,000) are classified as AIM Charter Fund -
Institutional. One hundred million (100,000,000) shares are unclassified.
FOURTH: The Corporation is registered as an open-end investment
company under the Investment Company Act of 1940, as amended.
FIFTH: The Board of Directors of the Corporation increased the total
number of shares of Common Stock the Corporation has authority to issue
pursuant to Section 2-105(c) of the Maryland General Corporation Law.
The undersigned Executive Vice President acknowledges these Articles
Supplementary to be the corporate act of the Corporation and states that to the
best of his knowledge, information and belief the matters and facts set forth
in these Articles are true in all material respects and that this statement is
made under the penalties of perjury.
IN WITNESS WHEREOF, AIM EQUITY FUNDS, INC. has caused these Articles
Supplementary to be executed in its name and on its behalf by its Executive
Vice President and witnessed by its Secretary on December 20, 1991.
AIM EQUITY FUNDS, INC.
By: /s/ ROBERT H. GRAHAM
------------------------------------
Executive Vice President
Witness:
/s/ WILLIAM H. KLEH
- ------------------------------------
Secretary
-2-
<PAGE> 1
EXHIBIT 1(f)
RECEIVED
'91 Mar 27 pm 1:56
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
AIM EQUITY FUNDS, INC.
ARTICLES SUPPLEMENTARY
AIM Equity Funds, Inc., a Maryland corporation, having its principal
office in the State of Maryland in Baltimore City (hereinafter called the
"Corporation"), certifies:
FIRST: The Board of Directors of the Corporation hereby classifies
300,000,000 authorized but unclassified shares of Common Stock as follows:
100,000,000 of such shares are classified as AIM Charter Fund-Institutional
shares, 100,000,000 of such shares are classified as AIM Constellation
Fund-Institutional shares and 1000,000,000 of such shares are classified as AIM
Weingarten Fund-Institutional shares.
SECOND: The assets belonging to each such class may be invested
together with the assets belonging to each other class now or hereafter
authorized of the same series, such series being the AIM Charter Fund, the AIM
Constellation Fund and the AIM Weingarten Fund. The net asset values per share
of the Institutional Class and the Retail Class of a series will differ because
of different expenses attributable to each class. The income or loss from the
common investment portfolio and the expenses or liabilities of the Corporation
allocated to the series shall be allocated to each class on the basis of the
number of shares outstanding in each class in relation to the total number of
shares outstanding in the series, and expenses related solely to one class
shall be allocated to that class, in each case as determined by or pursuant to
the direction of the Board of Directors of the Corporation. Except as provided
above, the shares of Common Stock classified hereby shall have the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption as set forth
in ARTICLE FIFTH, paragraph (b) of the Corporation's charter.
THIRD: The stock has been classified by the Board of Directors under
the authority contained in the charter of the Corporation.
The Vice President acknowledges these Articles Supplementary to be the
corporate act of the Corporation and states that to the best of his knowledge,
information and belief the matters and facts set forth in these Articles are
true in all material respects and that this statement is made under the
penalties of perjury.
IN WITNESS WHEREOF, AIM Equity Funds, Inc. has caused these Articles
Supplementary to be filed in its name and on its behalf by its Executive Vice
President and witnessed by its Secretary on March 26, 1991.
ATTEST: AIM EQUITY FUNDS, INC.
/s/ WILLIAM H. KLEH By: /s/ ROBERT H. GRAHAM
- ---------------------------------- --------------------------------
William H. Kleh Robert H. Graham
Secretary Executive Vice President
- --------------------------------------------------------------------------------
STATE OF MARYLAND
-----------------
I hereby certify that this is a true and complete copy of the 2 page document
on file in this office. Dated: March 27, 1991.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: /s/ ILLEGIBLE
-----------------------
This stamp replaces our previous certification system. Effective: 10/84
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 1(g)
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
APPROVED FOR RECORD
5/20/88 at 3:23 p.m.
ARTICLES OF INCORPORATION
OF
AIM EQUITY FUNDS, INC.
FIRST: THE UNDERSIGNED, PAULETTA P. COHN, whose address is Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77047, being at least eighteen years
of age, does, under and by virtue of the general laws of the State of Maryland
authorizing the formation of corporations, act as incorporator with the
intention of forming a corporation.
SECOND: The name of the corporation is AIM EQUITY FUNDS, INC.
(hereinafter called the "Corporation").
THIRD: The purpose of which the Corporation is formed and the
business or objects to be transacted, carried on and promoted by it, is to act
as an open-end investment company of the management type registered as such
with the Securities and Exchange Commission pursuant to the Investment Company
Act of 1940, as amended, (the "1940 Act"), and to exercise and generally to
enjoy all of the powers, rights and privileges granted to, or conferred upon,
corporations by the general laws of the State of Maryland now or hereafter in
force.
FOURTH:The post office address of the principal office of the
Corporation in the State of Maryland is c/o The Corporation Trust Incorporated,
32 South Street, Baltimore, Maryland 21202. The name of the resident agent of
the Corporation in Maryland is The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202.
FIFTH: (a) The total number of shares of common stock which the
Corporation shall have authority to issue is 1,000,000,000 shares of the par
value of $.001 each, of which 200,000,000 shares are classified AIM Charter
Fund shares, 200,000,000 shares are classified as the AIM Constellation Fund
shares, and 200,000,000 shares are classified as the AIM Weingarten Fund shares
and the balance of which are unclassified. Unissued shares of common stock may
be classified and reclassified by the Board of Directors. The aggregate par
value of common stock of all classes is $1,000,000.
(b) Subject to the power of the Board of Directors to
reclassify unissued shares, the shares of each class or series of stock of the
Corporation shall have the following preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption:
(i) All consideration received by the Corporation
for the issue or sale of shares of a class or series together with all income,
earnings, profits and proceeds thereof, shall irrevocably belong to such class
or series for all purposes, subject only to the rights of creditors, and are
herein referred to as "assets belonging to" such class.
(ii) The assets belonging to such class or series
shall be charged with the liabilities of the Corporation in respect of such
class or series and with such class' or series' share of the general
liabilities of the Corporation, in the latter case in the proportion that the
net asset value of such class or series bears to the net asset value of all
classes or series. The determination of
- --------------------------------------------------------------------------------
STATE OF MARYLAND
-----------------
I hereby certify that this is a true and complete copy of the 7 page document
on file in this office. DATED 6-1-88.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
By: /s/ ILLEGIBLE
------------------------
This stamp replaces our previous certification system. Effective: 10/84
- --------------------------------------------------------------------------------
<PAGE> 2
the Board of Directors shall be conclusive as to the allocation of liabilities,
including accrued expenses and reserves, to a class or series.
(iii) Dividends or distributions on shares of any
class or series, whether payable in stock or cash, shall be paid only out of
earnings, surplus or other assets belonging to such class or series.
(iv) In the event of the liquidation or
dissolution of the Corporation, stockholders of each class or series shall be
entitled to receive, as a class or series, out of the assets of the Corporation
available for distribution to stockholders, the assets belonging to such class
or series and the assets so distributable to the stockholders of such class or
series shall be distributed among such stockholders in proportion to the number
of shares of such class or series held by them.
(v) On each matter submitted to a vote of the
stockholders, each holder of a share of stock shall be entitled to one vote for
each such share of stock standing in his name on the books of the Corporation
irrespective of the class or series thereof; provided, however, that to the
extent class voting is required by the 1940 Act or Maryland law as to any such
matter, those requirements shall apply. No holder of shares of any class or
series of stock shall be entitled to vote on any merger of another corporation
with and into the Corporation if the consideration for such merger consists
solely of the shares of another class or series of stock of the Corporation.
Except as provided above, all provisions of the
Articles of Incorporation relating to stock of the Corporation shall apply to
shares of and to the holders of shares of all classes or series of stock.
(c) To the extent that the Corporation has funds or
property legally available therefor, each holder of shares of stock of the
Corporation, upon proper written request (including signature guarantees, if
required by the Board of Directors) to the Corporation accompanied, when stock
certificates representing such shares are outstanding, by surrender of the
appropriate stock certificate or certificates in proper form for transfer, or
any such form as the Board of Directors may provide, shall be entitled to
require the Corporation to redeem all or any number of the shares outstanding
in the name of such holder on the books of the Corporation, at the net asset
value of such shares. Notwithstanding the foregoing, the Board of Directors of
the Corporation may suspend the right of the holders of the shares of stock of
the Corporation to require the Corporation to redeem such shares or to receive
payment for redeemed shares when permitted or required to do so by the 1940 Act
or any rule or regulation of the Securities and Exchange Commission promulgated
thereunder.
When the Board of Directors of the Corporation, including a
majority of the Directors who are not interested persons as defined in Section
2(a)(19) of the 1940 Act, determines in its sole discretion, that the action is
necessary for the business success and general welfare of the Corporation in
order to reduce disproportionate and unduly burdensome expenses in the operation
of the Corporation's affairs, to achieve efficiencies in the administration of
its activities, or to reduce or eliminate excessive expenditures and undue
difficulties in servicing, accounting and reporting requirements with respect to
the accounts of shareholders, it may by resolution order the redemption of all
shares of the stock of the Corporation at the net asset value of such shares
computed as hereinafter provided in accounts having a net
2
<PAGE> 3
asset value for a period of three months less than that specified in such
resolution (but not exceeding $500 on the date of notice), excepting accounts
established within one year and accounts in which a purchase (other than
reinvestment of dividends and/or capital gains distributions) has been made
within the preceding six calendar months, and further excepting accounts having
a net asset value less than that specified in such resolution as a result of a
decline in the net asset value per share, following notice to affected holders
by mail, postage prepaid, at their addresses contained in the books and records
of the Corporation or its transfer agent, and subject to such other reasonable
terms and conditions as the Board of Directors may, in its sole discretion,
determine to be appropriate and desirable and subject to any requirements of
applicable statutes or regulations.
(d) All persons who shall acquire stock or securities of
the Corproation shall acquire the same subject to the provisions of these
Articles of Incorporation.
SIXTH: The initial number of directors of the Corporation shall be
three and the names of those who will serve as such until the first annual
meeting and until their succesors are duly chosen and qualified are as follows:
Charles T. Bauer
Gary T. Crum
Robert H. Graham
The By-laws fo the Corporation may fix the number of dirctors at a
number greater or less than that named in these Articles of Incorporation and
may authorize the Board of Directors, by the vote of a majority of the entire
Board of Directors, to increase or decrease the number of directors fixed by
these Articles of Incorporation or by the By-laws, provided that in no case
shall the number of directors be less than three or the number of
stockholders, whichever is less, and to fill the vacancies created by any such
increase in the number of directors. Unless otherwise provided by the By-laws
of the Corporation, the directors of the Corporation need not be stockholders
therein.
SEVENTH: In furtherance and not in limiation of the powers conferred
by the laws of the State of Maryland, the following provisions are hereby
adopted for the purpose of defining and regulating the powers of the
Corporation and of the directors and stockholders:
(a) The Board of Directors of this Corporation is hereby empowered
to authorize the issuance from time to time of shares of its stock of any
class, whether now or hereafter authorized, and securities convertible into
shares of its stock of any class or classes, whether now or hereafter
authorized, in each case upon such terms and conditions and for such
consideration as such Board of Directors shall from time to time determine.
(b) No holder of shares of stock of the Corporation shall, as such
holder, have any right to purchase or subscribe for any shares of stock of the
Corporation, other than such rights, if any, as the Board of Directors of the
Corporation, in its discretion, may from time to time determine.
(c) The board of Directors of this Corporation is hereby empowered
to authorize the issuance from time to time of fractional shares of stock of
this Corporation, whether now or hereafter authorized, and any fractional
shares so issued shall entitle the holder thereof to exercise voting rights,
receive dividends
3
<PAGE> 4
and participate in the distribution of assets of the Corporation in the event of
liquidation or dissolution to the extent of the proportionate interest
represented by such fractional shares, except the right to receive a stock
certificate evidencing a fractional share.
(d) The Corporation reserves the right to make from time to time
any amendment of its Articles of Incorporation, now or hereafter authorized
by law, including, but without limitation, any amendment which alters the
contract rights as expressly set forth in such Articles of Incorporation of any
outstanding stock.
(e) Except to the extent otherwise prohibited by applicable
law, the Corporation may enter into any management or investment advisory
contract or underwriting contract or any other type of contract with, and
may otherwise engage in any transaction or do business with, any person, firm or
corporation or any subsidiary or other affiliate of any such person, firm or
corporation and may authorize such person, firm or corporation or such
subsidiary or other affiliate to enter into any other contracts or arrangements
with any other person, firm or corporation which relate to the Corporation or
the conduct of its business, notwithstanding that any directors or officers of
the Corporation are or may subsequently become partners, directors, officers,
stockholders or employees of such person, firm or corporation or of such
subsidiary or other affiliate or may have a material financial interest in any
such contract or, transaction or business; and except to the extent otherwise
provided by applicable law, no such contract or transaction or business shall
be invalidated or voidable or in any way affected thereby nor shall any of such
directors or officers of the Corporation be liable to the Corporation or to any
stockholder or creditor thereof or to any other person for any loss incurred
solely because of the entering into and performance of such contract or the
engaging in such transaction or business or the existence of such material
financial interest therein, provided that such relationship to such person,
firm or corporation or said subsidiary or affiliate or such material financial
interest was disclosed or otherwise known to the Board of Directors prior to
the Corporation's entering into such contract or engaging in such transaction
or business and in the case of directors of the Corporation that any
requirements of the Maryland General Corporation Law have been satisfied; and
provided further that nothing herein shall protect any director or officer of
the Corporation from liability to the Corporation or its security holders to
which he would be otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.
(f) The net asset value of a share of any class or series of stock
of the Corporation will be determined by or pursuant to the determination of the
Board of Directors, which is authorized to determine the methods to be used to
value the assets of a class or series, the amount and allocation of liabilities
of the Fund to each class or series and all other matters in connection
therewith.
(g) Any determination made in good faith by or pursuant to the
direction of the Board of Directors as to the amount of the assets, debts,
obligations or liabilities of the Corporation, as to the amount of any reserves
or charges set up and the propriety thereof, as to the time of or purpose for
creating such reserves or charges, as to the use, alteration, cancellation of
any reserves or charges (whether or not any debt, obligation or liability for
which such reserves or charges shall have been created shall have been paid or
discharged or shall be then or thereafter required to be paid or discharged),
as to the value of any security or
4
<PAGE> 5
other asset owned or held by the Corporation, as to the number of shares of the
Corporation outstanding, as to the net investment income of the Corporation or
as to any other matters relating to the issue, sale, purchase and/or other
acquisition or disposition of securities or shares of the Corporation or the
amount or payment of dividends shall be final and conclusive, and shall be
binding upon the Corporation and all holders of its shares, past, present and
future, and shares of the Corporation are issued and sold on the condition and
understanding, evidenced by acceptance of certificates for such shares, that
any and all determinations shall be binding as aforesaid.
(h) The stockholders of the Corporation may remove any director of
the Corporation prior to the expiration of his term of office for cause, and
not otherwise, by the affirmative vote of a majority of all votes entitled to
be cast for the election of directors.
(I) Notwithstanding any provision of law requiring any action to
be taken or authorized by the affirmative vote of the holders of a designated
proportion greater than a majority of the shares or votes entitled to be cast,
such action shall be effective and valid if taken or authorized by the
affirmative vote of the holders of a majority of the total number of shares
entitled to vote thereon.
NINTH: (a) To the fullest extent that limitations on the
liability of directors and officers are permitted by the Maryland General
Corporation Law, no director or officer of the Corporation shall have any
liability to the Corporation or its stockholders for damages. This limitation
on liability applies to events occurring at the time a person serves as a
director or officer of the Corporation whether or not such person is a director
or officer at the time of any proceeding in which liability is asserted.
(b) The Corporation shall indemnify and advance expenses
to its currently acting and its former directors to the fullest extent that
indemnification of directors is permitted by the Maryland General Corporation
Law. The Corporation shall indemnify and advance expenses to its officers to
the same extent as its directors and to such further extent as is consistent
with law. The Board of Directors may by By-Law, resolution or agreement make
further provisions for indemnification of directors, officers, employees and
agents to the fullest extent permitted by the Maryland General Corporation Law.
(c) No provision of this Article shall be effective to
protect or purport to protect any director or officer of the Corporation
against any liability to the Corporation or its security holders 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 his
office.
(d) References to Maryland General Corporation Law in
this Article are to the law as from time to time amended. No further amendment
to the Articles of Incorporation shall affect any right of any person under
this Article based on any event, omission or proceeding prior to such
amendment.
5
<PAGE> 6
IN WITNESS WHEREOF, the undersigned incorporator of AIM EQUITY FUNDS,
INC. who executed the foregoing Articles of Incorporation hereby acknowledges
the same to be his act.
Dated the 19th day of May, 1988.
/s/ PAULETTA P. COHN
--------------------
Pauletta P. Cohn
Sole Incorporator
<PAGE> 1
EXHIBIT 5(a)(1)
AMENDMENT NO. 1
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This Amendment dated as of November 14, 1994, amends the Master
Investment Advisory Agreement (the "Agreement"), dated October 18, 1993,
between AIM Equity Funds, Inc., a Maryland corporation (the "Company"), and
A I M Advisors, Inc., a Delaware corporation (the "Advisor").
W I T N E S S E T H :
WHEREAS, the parties desire to amend the Agreement to increase the
compensation payable thereunder to the Advisor with respect to AIM Aggressive
Growth Fund, a portfolio of the Company;
NOW, THEREFORE, the parties agree as follows:
1. The section in Appendix A to the Agreement relating to AIM
Aggressive Growth Fund is hereby amended to read in full as follows:
NET ASSETS RATE
---------- ----
First $150 million . . . . . . . . . . . . . . . . . . . . . . . . 0.80%
Over $150 million . . . . . . . . . . . . . . . . . . . . . . . 0.625%
2. In all other respects, the Agreement is hereby confirmed and
remains in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their respective officers on the date first written above.
AIM EQUITY FUNDS, INC.
By: /s/ ROBERT H. GRAHAM
-----------------------------------
Title: President
--------------------------------
A I M ADVISORS, INC.
By: /s/ ROBERT H. GRAHAM
------------------------------------
Title: President
---------------------------------
<PAGE> 1
EXHIBIT 5(a)(2)
AIM EQUITY FUNDS, INC.
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 18th day of October, 1993, by and between
AIM Equity Funds, Inc., a Maryland corporation (the "Company") 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, consisting of multiple series of investment portfolios;
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 charter authorizes the Board of Directors of
the Company to classify or reclassify authorized but unissued shares of the
Company and, as of the date of this Agreement, the Company's Board of Directors
has authorized the issuance of four series of shares representing interests in
four investment portfolios: AIM Aggressive Growth Fund, AIM Charter Fund, AIM
Constellation Fund and AIM Weingarten Fund (such portfolios and any other
portfolios hereafter added to the Company being referred to collectively herein
as the "Portfolios"); and
WHEREAS, the Company and the Advisor desire to enter into an agreement
to provide for investment advisory services to the Company 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 whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Advisory Services. The Advisor shall act as investment
advisor for each Portfolio and shall, in such capacity, supervise all aspects
of the Portfolios' operations, including the investment and reinvestment of the
cash, securities or other properties comprising the Portfolios, subject at all
times to the policies and control of the Company's Board of Directors. The
Advisor shall give the Company and the Portfolios 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
Portfolios;
(b) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether
-1-
<PAGE> 2
affecting the economy generally or the Portfolios, and whether
concerning the individual issuers whose securities are included in the
Portfolios or the activities in which such issuers engage, or with
respect to securities which the Advisor considers desirable for
inclusion in the Portfolios;
(c) determine which issuers and securities shall be
represented in the Portfolios and regularly report thereon to the
Company's Board of Directors; 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 Directors;
and take, on behalf of the Company and the Portfolios, all actions which appear
to the Company and the Portfolios 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 of the
Portfolios.
3. Delegation of Responsibilities. Subject to the approval of
the Board of Directors and the shareholders of the Portfolios, 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 Directors. 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 Portfolios, shall at all
times be subject to any directives of the Board of Directors 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 corporate charter 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 or federal
law.
6. Broker-Dealer Relationships. The Advisor is responsible for
decisions to buy and sell securities for the Portfolios, broker-dealer
selection, and negotiation of brokerage commission rates. The Advisor's
primary consideration in effecting a security transaction will be execution at
the most favorable price. In selecting a broker-dealer to execute each
particular transaction, the
-2-
<PAGE> 3
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 difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of the Portfolios on a continuing basis. Accordingly, the price to the
Portfolios in any transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified by other
aspects of the portfolio execution services offered. Subject to such policies
as the Board of Directors 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
Portfolios to pay a broker or dealer that provides brokerage and research
services to the Advisor an amount of commission for effecting a portfolio
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 the Portfolios, 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 Portfolios to such brokers and dealers who also provide research or
statistical material, or other services to the Portfolios, 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 Directors 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 Portfolios, 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, as
set forth in Appendix A to this Agreement. The Company acknowledges that the
Advisor may from time to time pay a fee to any sub-advisor engaged pursuant to
Section 3 of this Agreement, according to a fee schedule set forth in the
applicable sub-advisory agreement.
The average daily net asset value of the Portfolios shall be
determined in the manner set forth in the corporate charter and registration
statement of the Portfolios, as amended from time to time.
8. Additional Services. Upon the request of the Company's Board
of Directors, the Advisor may perform (or arrange for the performance of)
certain accounting, shareholder servicing or other administrative services on
behalf of the Portfolios which are not required by this Agreement. Such
services will be performed on behalf of the Portfolios and the Advisor may
receive from the Portfolios such reimbursement for costs or reasonable
compensation for such services as may be agreed upon between the Advisor and
the Company's Board of Directors based on a finding by the Board of Directors
that the provision of such services by the Advisor is in the best interests of
the Portfolios and their shareholders. Payment or assumption by the Advisor of
any Portfolio 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 Portfolios nor obligate the Advisor to pay or assume any
similar Portfolio expense on any subsequent occasions. Such services may
include, but are not limited to:
-3-
<PAGE> 4
(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 Portfolios, including the
review and calculation of daily net asset value and the preparation of
tax returns; 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;
assisting in the purchase or redemption of shares; supervising the
operations of the custodian, transfer agent(s) or dividend disbursing
agent(s) for the Portfolios; or otherwise providing services to
shareholders of the Portfolios; and
(c) such other administrative services as may be furnished
from time to time by the Advisor to the Company or the Portfolios at
the request of the Company's Board of Directors.
9. Expenses of the Portfolios. All of the ordinary business
expenses incurred in the operations of the Portfolios and the offering of their
shares shall be borne by the Portfolios unless specifically provided otherwise
in this Agreement. These expenses borne by the Portfolios include but are not
limited to brokerage commissions, taxes, legal, 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 Portfolios in connection with
membership in investment company organizations and the cost of printing copies
of prospectuses and statements of additional information distributed to the
Portfolios' shareholders.
10. Expense Limitation. If, for any fiscal year, the total of all
ordinary business expenses of the Portfolios, including all investment advisory
fees, but excluding brokerage commissions and fees, taxes, interest and
extraordinary expenses, such as litigation, would exceed the applicable expense
limitations imposed by state securities regulations in any state in which the
Portfolios' shares are qualified for sale, as such limitations may be raised or
lowered from time to time, the aggregate of all such investment advisory fees
shall be reduced by the amount of such excess. The amount of any such
reduction to be borne by the Advisor shall be deducted from the monthly
investment advisory fee otherwise payable to the Advisor during such fiscal
year. If required pursuant to such state securities regulations, the Advisor
will, not later than the last day of the first month of the next succeeding
fiscal year, reimburse the Portfolios for any such annual operating expenses
(after reduction of all investment advisory fees in excess of such limitation).
For the purposes of this paragraph, the term "fiscal year" shall exclude the
portion of the current fiscal year which shall have elapsed prior to the date
hereof and shall include the portion of the then current fiscal year which
shall have elapsed at the date of termination of this Agreement. The
application of expense limitations shall be applied to each Portfolio of the
Company separately unless the laws or regulations of any state shall require
that the expense limitations be imposed with respect to the Company as a whole.
-4-
<PAGE> 5
11. Non-Exclusivity. The services of the Advisor to the Company
and the Portfolios 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.
12. Term and Approval. This Agreement shall become effective if
approved by the shareholders of the Portfolios, and if so approved, this
Agreement shall thereafter continue in force and effect until June 30, 1994,
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 Directors or (ii) by the
vote of "a majority of the outstanding voting securities" of the
Portfolios (as defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the directors
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 directors), by votes cast in person at a meeting specifically
called for such purpose.
13. Termination. This Agreement may be terminated as to the
Portfolios at any time, without the payment of any penalty, by vote of the
Company's Board of Directors or by vote of a majority of the Portfolios'
outstanding voting securities, or by the Advisor, on sixty (60) days' written
notice to the other party. The notice provided for herein may be waived by
either party. This Agreement shall automatically 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.
14. 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 Portfolios or to any shareholder of the Portfolios 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.
15. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the other party at
such address as such other 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 and that of the Advisor shall be Eleven Greenway Plaza, Suite 1919,
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
-5-
<PAGE> 6
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 1940 Act. In addition, where the effect of a
requirement of the Acts 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.
17. License Agreement. The Company shall be entitled to use the
names "AIM Aggressive Growth Fund, AIM Charter Fund, AIM Constellation Fund and
AIM Weingarten Fund" to designate its classes of shares only so long as A I M
Advisors, Inc. serves as investment manager or advisor to the Portfolios.
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 EQUITY FUNDS, INC.
(a Maryland corporation)
Attest:
/s/ NANCY L. MARTIN By: /s/ CHARLES T. BAUER
- ------------------------------ -----------------------------------
Assistant Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest:
/s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
- ------------------------------ -----------------------------------
Assistant Secretary President
(SEAL)
-6-
<PAGE> 7
APPENDIX A TO MASTER INVESTMENT ADVISORY AGREEMENT
OF AIM EQUITY FUNDS, INC.
The Company shall pay the Advisor as full compensation for all
services rendered and all facilities furnished hereunder, a management fee for
each Portfolio by applying the following annual rates to the average daily net
assets of each Portfolio for the calendar year, computed in the manner used for
the determination of the offering price of shares of each Portfolio.
AIM AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS RATE
- ---------- ----
<S> <C>
First $200 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.50%
Next $300 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40%
Next $500 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.35%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.30%
</TABLE>
AIM CHARTER FUND
AIM CONSTELLATION FUND
<TABLE>
<CAPTION>
NET ASSETS RATE
- ---------- ----
<S> <C>
First $30 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00%
Over $30 million to and including $150 million . . . . . . . . . . . . . . . . . 0.75%
Over $150 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.625%
</TABLE>
AIM WEINGARTEN FUND
<TABLE>
<CAPTION>
NET ASSETS RATE
- ---------- ----
<S> <C>
First $30 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00%
Over $30 million to and including $350 million . . . . . . . . . . . . . . . . . 0.75%
Over $350 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.625%
</TABLE>
-7-
<PAGE> 1
EXHIBIT 6(a)
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM EQUITY FUNDS, INC.
(CLASS B SHARES)
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT made as of this 14th day of June, 1995, by and between
AIM Equity Funds, Inc., a Maryland corporation (the "Company"), with respect to
each of the Class B shares (the "Shares") of each series of shares of common
stock set forth on Schedule A to this agreement (the "Portfolios"), and A I M
DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby acknowledged,
the parties hereto agree as follows:
FIRST: The Company hereby appoints the Distributor as its exclusive
agent for the sale of the Shares to the public directly and through investment
dealers in the United States and throughout the world. If subsequent to the
termination of the Distributor's services to the Company pursuant to this
Agreement, the Company retains the services of another distributor, the
distribution agreement with such distributor shall contain provisions
comparable to Clauses FOURTH and SEVENTH hereof and Exhibit A hereto, and
without limiting the generality of the foregoing, will require such distributor
to maintain and make available to the Distributor records regarding sales,
redemptions and reinvestments of Shares necessary to implement the terms of
Clauses FOURTH, SEVENTH and EIGHTH hereof.
SECOND: The Company shall not sell any Shares except through the
Distributor and under the terms and conditions set forth in paragraph FOURTH
below. Notwithstanding the provisions of the foregoing sentence, however:
(A) the Company may issue Shares to any other investment company
or personal holding company, or to the shareholders thereof, in exchange for
all or a majority of the shares or assets of any such company;
(B) the Company may issue Shares at their net asset value in
connection with certain classes of transactions or to certain classes of
persons, in accordance with Rule 22d-1 under the Investment Company Act of
1940, as amended (the "1940 Act"), provided that any such class is specified in
the then current prospectus of the applicable Shares; and
1
<PAGE> 2
(C) the Company shall have the right to specify minimum amounts
for initial and subsequent orders for the purchase of Shares.
THIRD: The Distributor hereby accepts appointment as exclusive agent
for the sale of the Shares and agrees that it will use its best efforts to sell
such Shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on
behalf of the Shares shall, suspend its efforts to effectuate such sales at any
time when, in the opinion of the Distributor or of the Company, no sales should
be made because of market or other economic considerations or abnormal
circumstances of any kind;
(B) the Company may withdraw the offering of the Shares (i) at any
time with the consent of the Distributor, or (ii) without such consent when so
required by the provisions of any statute or of any order, rule or regulation
of any governmental body having jurisdiction; and
(C) the Distributor does not undertake to sell any specific amount
of the Shares.
FOURTH:
(A) The public offering price of the Shares shall be the net asset
value per share of the applicable Shares. Net asset value per share shall be
determined in accordance with the provisions of the then current prospectus and
statement of additional information of the applicable Portfolio. The
Distributor may establish a schedule of contingent deferred sales charges to be
imposed at the time of redemption of the Shares, and such schedule shall be
disclosed in the current prospectus of each Portfolio. Such schedule of
contingent deferred sales charges may reflect variations in or waivers of such
charges on redemptions of Shares, either generally to the public or to any
specified class of shareholders and/or in connection with any specified class
of transactions, in accordance with applicable rules and regulations and
exemptive relief granted by the Securities and Exchange Commission, and as set
forth in the Portfolios' current prospectus(es). The Distributor and the
Company shall apply any then applicable scheduled variation in or waiver of
contingent deferred sales charges uniformly to all shareholders and/or all
transactions belonging to a specified class.
(B) The Distributor may pay to investment dealers and other
financial institutions through whom Shares are sold, such sales commission as
the Distributor may specify from time to time. Payment of any such sales
commissions shall be the sole obligation of the Distributor.
(C) No provision of this Agreement shall be deemed to prohibit any
payments by the Company to the Distributor or by the Company or the Distributor
to investment dealers, financial institutions and 401(k) plan service providers
through whom the Shares are sold where such payments are made under a
distribution plan adopted by the Company pursuant to Rule 12b-1 under the 1940
Act.
(D) The Company shall redeem the Shares from shareholders in
accordance with the terms set forth from time to time in the current prospectus
and statement of additional information of each Portfolio. The price to be
paid to a shareholder to redeem the Shares shall be equal to the net asset
value of the Shares being redeemed ("gross redemption proceeds"), less any
applicable contingent deferred sales charge, calculated pursuant to the then
applicable schedule of contingent deferred sales charges ("net redemption
proceeds"). The Distributor shall be
2
<PAGE> 3
entitled to receive the amount of the contingent deferred sales charge that has
been subtracted from gross redemption proceeds (the "CDSC"), provided that the
Shares being redeemed were (i) issued by a Portfolio during the term of this
Agreement and any predecessor Agreement between the Company and the Distributor
or (ii) issued by a Portfolio during or after the term of this Agreement or any
predecessor Agreement between the Company and the Distributor in one or a
series of free exchanges of Shares for class B shares of another portfolio,
which can be traced to Shares or class B shares of another portfolio initially
issued by a Portfolio or such other portfolio during the term of this
Agreement, any predecessor Agreement or any other distribution agreement with
the Distributor with respect to such other portfolio (the "Distributor's Earned
CDSC"). The Company shall pay or cause the Company's transfer agent to pay the
Distributor's Earned CDSC to the Distributor on the date net redemption
proceeds are payable to the redeeming shareholder.
(E) The Distributor shall maintain adequate books and records to
identify Shares (i) issued by a Portfolio during the term of this Agreement and
any predecessor Agreement between the Company and the Distributor or (ii)
issued by a Portfolio during or after the term of this Agreement or any
predecessor Agreement between the Company and the Distributor in one or a
series of free exchanges of Shares for class B shares of another portfolio,
which can be traced to Shares or class B shares of another portfolio initially
issued by a Portfolio or such other portfolio during the term of this
Agreement, any predecessor Agreement or any other distribution agreement with
the Distributor with respect to such other portfolio and shall calculate the
Distributor's Earned CDSC, if any, with respect to such Shares, upon their
redemption. The Company shall be entitled to rely on Distributor's books,
records and calculations with respect to Distributor's Earned CDSC.
FIFTH: The Distributor shall act as an agent of the Company in
connection with the sale and redemption of Shares. Except with respect to such
sales and redemptions, the Distributor shall act as principal in all matters
relating to the promotion of the sale of Shares and shall enter into all of its
own engagements, agreements and contracts as principal on its own account. The
Distributor shall enter into Selected Dealer Agreements with investment dealers
and financial institutions selected by the Distributor, authorizing such
investment dealers and financial institutions to offer and sell the Shares to
the public upon the terms and conditions set forth therein, which shall not be
inconsistent with the provisions of this Agreement. Each Selected Dealer
Agreement shall provide that the investment dealer or financial institution
shall act as a principal, and not as an agent, of the Company.
SIXTH: The Shares shall bear:
(A) the expenses of qualification of Shares for sale in connection
with such public offerings in such states as shall be selected by the
Distributor, and of continuing the qualification therein until the Distributor
notifies the Company that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
3
<PAGE> 4
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the
final proof and distributing the prospectuses and statements of additional
information for the Shares (including supplements thereto) relating to public
offerings made by the Company pursuant to such prospectuses (which shall not
include those prospectuses and statements of additional information, and
supplements thereto, to be distributed to existing shareholders of the Shares),
and any other promotional or sales literature used by the Distributor or
furnished by the Distributor to dealers in connection with such public
offerings, and expenses of advertising in connection with such public
offerings.
(B) Subject to the limitations, if any, of applicable law
including the NASD Rules of Fair Practice regarding asset-based sales charges,
the Company shall pay to the Distributor as a reimbursement for all or a
portion of such expenses, or as reasonable compensation for distribution of the
Shares, an asset-based sales charge in an amount equal to 0.75% per annum of
the average daily net asset value of the Shares of each Portfolio from time to
time (the "Distributor's 12b-1 Share"), such sales charge to be payable
pursuant to the distribution plan adopted pursuant to Rule 12b-1 under the 1940
Act (the "Plan"). The Distributor's 12b-1 Share shall be a percentage, which
shall be recomputed periodically (but not less than monthly) in accordance with
Exhibit A to this Agreement. The Distributor's 12b-1 Share shall accrue daily
and be paid to the Distributor as soon as practicable after the end of each
calendar month within which it accrues but in any event within 10 business days
after the end of each such calendar month (unless the Distributor shall specify
a later date in written instructions to the Company) provided, however, that
any notices and calculation required by Section EIGHTH: (B) and (C) have been
received by the Company.
(C) The Distributor shall maintain adequate books and records to
permit calculations periodically (but not less than monthly) of, and shall
calculate on a monthly basis, the Distributor's 12b-1 Share to be paid to the
Distributor. The Company shall be entitled to rely on Distributor's books,
records and calculations relating to Distributor's 12b-1 Share.
EIGHTH:
(A) The Distributor may, from time to time, assign, transfer or
pledge ("Transfer") to one or more designees (each an "Assignee"), its rights
to all or a designated portion of (i) the Distributor's 12b-1 Share (but not
the Distributor's duties and obligations pursuant hereto or pursuant to the
Plan), and (ii) the Distributor's Earned CDSC, free and clear of any offsets or
claims the Company may have against the Distributor. Each such Assignee's
ownership interest in a Transfer of a designated portion of a Distributor's
12b-1 Share and a Distributor's Earned CDSC is hereinafter referred to as an
"Assignee's 12b-1 Portion" and an "Assignee's CDSC Portion," respectively. A
Transfer pursuant to this Section EIGHTH: (A) shall not reduce or extinguish
any claim of the Company against the Distributor.
(B) The Distributor shall promptly notify the Company in writing
of each Transfer pursuant to Section EIGHTH: (A) by providing the Company with
the name and address of each such Assignee.
(C) The Distributor may direct the Company to pay directly to an
Assignee such Assignee's 12b-1 Portion and Assignee's CDSC Portion. In such
event, Distributor shall provide
4
<PAGE> 5
the Company with a monthly calculation of (i) the Distributor's Earned CDSC and
Distributor's 12b-1 Share and (ii) each Assignee's 12b-1 Portion and Assignee's
CDSC Portion, if any, for such month (the "Monthly Calculation"). The Monthly
Calculation shall be provided to the Company by the Distributor promptly after
the close of each month or such other time as agreed to by the Company and the
Distributor which allows timely payment of the Distributor's 12b-1 Share and
Distributor's Earned CDSC and/or the Assignee's 12b-1 Portion and Assignee's
CDSC Portion. The Company shall not be liable for any interest on such
payments occasioned by delayed delivery of the Monthly Calculation by the
Distributor. In such event following receipt from the Distributor of (i)
notice of Transfer referred to in Section EIGHTH: (B) and (ii) each Monthly
Calculation, the Company shall make all payments directly to the Assignee or
Assignees in accordance with the information provided in such notice and
Monthly Calculation, on the same terms and conditions as if such payments were
to be paid directly to the Distributor. The Company shall be entitled to rely
on Distributor's notices, and Monthly Calculations in respect of amounts to be
paid pursuant to this Section EIGHTH: (B).
(D) Alternatively, in connection with a Transfer the Distributor
may direct the Company to pay all of such Distributor's 12b-1 Share and
Distributor's Earned CDSC from time to time to a depository or collection agent
designated by any Assignee, which depository or collection agent may be
delegated the duty of dividing such Distributor's 12b-1 Share and Distributor's
Earned CDSC between the Assignee's 12b-1 Portion and Assignee's CDSC Portion
and the balance of the Distributor's 12b-1 Share (such balance, when
distributed to the Distributor by the depository or collection agent, the
"Distributor's 12b-1 Portion") and of the Distributor's Earned CDSC (such
balance, when distributed to the Distributor by the depository or collection
agent, the "Distributor's Earned CDSC Portion"), in which case only the
Distributor's 12b-1 Portion and Distributor's Earned CDSC Portion may be
subject to offsets or claims the Company may have against the Distributor.
(E) The Company shall not amend the Plan to reduce the amount payable
to the Distributor or any Assignee under Section SEVENTH: (B) hereof with
respect to the Shares for any Shares which have been issued prior to the date
of such amendment.
NINTH: The Distributor will accept orders for the purchase of Shares
only to the extent of purchase orders actually received and not in excess of
such orders, and it will not avail itself of any opportunity of making a profit
by expediting or withholding orders.
TENTH:
(A) Pursuant to the Plan and this Agreement, the Distributor shall
enter into Shareholder Service Agreements with investment dealers, financial
institutions and certain 401(K) plan service providers (collectively "Service
Providers") selected by the Distributor for the provision of certain continuing
personal services to customers of such Service Providers who have purchased
Shares. Such agreements shall authorize Service Providers to offer and sell
the Shares to the public upon the terms and conditions set forth therein, which
shall not be inconsistent with the provisions of this Agreement. Each
Shareholder Service Agreement shall provide that the Service Provider shall act
as principal, and not as an agent of the Company.
(B) Shareholder Service Agreements may provide that the Service
Providers may receive a service fee in the amount of .25% of the average daily
net assets of the Shares held by customers of such Service Providers provided
that such Service Providers furnish continuing
5
<PAGE> 6
personal shareholder services to their customers in respect of such Shares.
The continuing personal services to be rendered by Service Providers under the
Shareholder Service Agreements may include, but shall not be limited to, some
or all of the following: distributing sales literature; answering routine
customer inquiries concerning the Company; assisting customers in changing
dividend elections, options, account designations and addresses, and in
enrolling in any of several special investment plans offered in connection with
the purchase of Shares; assisting in the establishment and maintenance of or
establishing and maintaining customer accounts and records and the processing
of purchase and redemption transactions; performing subaccounting; investing
dividends and any capital gains distributions automatically in the Company's
shares; providing periodic statements showing a customer's account balance and
the integration of such statements with those of other transactions and
balances in the customer's account serviced by the Service Provider; forwarding
applicable prospectus, proxy statements, reports and notices to customers who
hold Shares and providing such other information and services as the Company or
the customers may reasonably request.
(C) The Distributor may advance service fees payable to Service
Providers pursuant to the Plan or any other distribution plan adopted by the
Company with respect to Shares of one or more of the Portfolios pursuant to
Rule 12b-1 under the 1940 Act; and thereafter the Distributor may be reimbursed
for such advances through retention of service fee payments during the period
for which the service fees were advanced.
ELEVENTH: The Company and the Distributor shall each comply with all
applicable provisions of the 1940 Act, the Securities Act of 1933, as amended,
and of all other federal and state laws, rules and regulations governing the
issuance and sale of the Shares.
TWELFTH:
(A) In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Distributor, the Company shall indemnify the Distributor against any and
all claims, demands, liabilities and expenses which the Distributor may incur
under the Securities Act of 1933, or common law or otherwise, arising out of or
based upon any alleged untrue statement of a material fact contained in any
registration statement or prospectus of the Shares, or any omission to state a
material fact therein, the omission of which makes any statement contained
therein misleading, unless such statement or omission was made in reliance
upon, and in conformity with, information furnished to the Company in
connection therewith by or on behalf of the Distributor. The Distributor shall
indemnify the Company and the Shares against any and all claims, demands,
liabilities and expenses which the Company or the Shares may incur arising out
of or based upon (i) any act or deed of the Distributor or its sales
representatives which has not been authorized by the Company in its prospectus
or in this Agreement and (ii) the Company's reliance on the Distributor's
books, records, calculations and notices in Sections FOURTH: (E), SEVENTH: (C),
EIGHTH: (B), EIGHTH: (C) and EIGHTH: (D).
(B) The Distributor shall indemnify the Company and the Shares
against any and all claims, demands, liabilities and expenses which the Company
or the Shares may incur under the Securities Act of 1933, as amended, or common
law or otherwise, arising out of or based upon any alleged untrue statement of
a material fact contained in any registration statement or prospectus of the
Shares, or any omission to state a material fact therein if such statement or
6
<PAGE> 7
omission was made in reliance upon, and in conformity with, information
furnished to the Company in connection therewith by or on behalf of the
Distributor.
(C) Notwithstanding any other provision of this Agreement, the
Distributor shall not be liable for any errors of the transfer agent(s) of the
Shares, or for any failure of any such transfer agent to perform its duties.
THIRTEENTH: Nothing herein contained shall require the Company to
take any action contrary to any provision of its Agreement and Declaration of
Trust, as amended, or to any applicable statute or regulation.
FOURTEENTH: This Agreement shall become effective with respect to the
Shares of each Portfolio upon its approval by the Board of Trustees of the
Company and by vote of a majority of the Company's trustees who are not
interested parties to this Agreement or "interested persons" (as defined in
Section 2(a)(19) of the 1940 Act) of any party to this Agreement cast in person
at a meeting called for such purpose, shall continue in force and effect until
June 30, 1996, and from year to year thereafter, provided, that such
continuance is specifically approved with respect to the Shares of each
Portfolio at least annually (a)(i) by the Board of Trustees of the Company or
(ii) by the vote of a majority of the outstanding Shares of such class of such
Portfolio, and (b) by vote of a majority of the Company's trustees who are not
parties to this Agreement or "interested persons" (as defined in Section
2(a)(19) of the 1940 Act) of any party to this Agreement cast in person at a
meeting called for such purpose.
FIFTEENTH:
(A) This Agreement may be terminated with respect to the Shares of
any Portfolio, at any time, without the payment of any penalty, by vote of the
Board of Trustees of the Company or by vote of a majority of the outstanding
Shares of such Portfolio, or by the Distributor, on sixty (60) days' written
notice to the other party; and
(B) This Agreement shall also automatically terminate in the event
of its assignment, the term "assignment" having the meaning set forth in
Section 2(a)(4) of the 1940 Act; provided, that, subject to the provisions of
the following sentence, if this Agreement is terminated for any reason, the
obligations of the Company and the Distributor pursuant to Sections FOURTH:
(D), FOURTH: (E), SEVENTH: (B), SEVENTH: (C), EIGHTH: (A) through (E) and
TWELFTH: (A) of this Agreement will continue and survive any such termination.
Notwithstanding the foregoing, upon Complete Termination of the Plan (as such
term is defined in Section 8 of the Plan in effect at the date of this
Agreement), the obligations of the Company pursuant to the terms of Sections
SEVENTH: (B), EIGHTH: (A), EIGHTH: (C), EIGHTH: (D) and EIGHTH: (E) (with
respect to payments of Distributor's 12b-1 Share and Assignee's 12b-1 Portion)
of this Agreement shall terminate. A termination of the Plan with respect to
any or all Shares of any or all Portfolios shall not affect the obligations of
the Company pursuant to Sections FOURTH: (D), EIGHTH: (A), EIGHTH: (C), EIGHTH:
(D) and EIGHTH: (E) (with respect to payments of Distributor's Earned CDSC or
Assignee's CDSC Portion) hereof or of the obligations of the Distributor
pursuant to Section FOURTH: (E) or EIGHTH: (B) hereof.
(C) The Transfer of the Distributor's rights to Distributor's
12b-1 Share or Distributor's Earned CDSC shall not cause a termination of this
Agreement or be deemed to be an assignment for purposes of Section FIFTEENTH:
(B) above.
7
<PAGE> 8
SIXTEENTH: Any notice under this Agreement shall be in writing,
addressed and delivered, or mailed postage prepaid, to the other party at such
address as the other party may designate for the receipt of notices. Until
further notice to the other party, the addresses of both the Company and the
Distributor shall be 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173.
SEVENTEENTH: 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 or any Portfolio individually, but are
binding only upon the assets and property of the Company or such Portfolio 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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate on the day and year first above written.
AIM Equity Funds, Inc.
By: /s/ CHARLES T. BAUER
----------------------------
Charles T. Bauer
Chairman
Attest:
/s/ OFELIA M. MAYO
- -------------------------------
Assistant Secretary
A I M DISTRIBUTORS, INC.
By: /s/ ROBERT H. GRAHAM
----------------------------
Robert H. Graham
President
Attest:
/s/ OFELIA M. MAYO
- -------------------------------
Assistant Secretary
8
<PAGE> 9
SCHEDULE A
CLASS B SHARES
AIM Charter Fund
AIM Weingarten Fund
9
<PAGE> 10
EXHIBIT A
The Distributor's 12b-1 Share in respect of each Portfolio
shall be 100 percent until such time as the Distributor shall cease to serve as
exclusive distributor of the Shares of such Portfolio and thereafter shall be a
percentage, recomputed first on the date of any termination of the
Distributor's services as exclusive distributor of Shares of any Portfolio and
thereafter periodically (but not less than monthly), representing the
percentage of Shares of such Portfolio outstanding on each such computation
date allocated to the Distributor in accordance with the following rules:
1. DEFINITIONS. For purposes of this Exhibit A defined
terms used herein shall have the meaning assigned to such terms in the
Distribution Agreement and the following terms shall have the following
meanings:
"Commission Shares" shall mean shares of the
Portfolio or another portfolio the redemption of which would, in the absence of
the application of some standard waiver provision, give rise to the payment of
a CDSC and shall include Commission Shares which due to the expiration of the
CDSC period no longer bear a CDSC.
"Distributor" shall mean the Distributor.
"Other Distributor" shall mean each person appointed
as the exclusive distributor for the Shares of the Portfolio after the
Distributor ceases to serve in that capacity.
2. ALLOCATION RULES. In determining the Distributor's
12b-1 Share in respect of a particular Portfolio:
(a) There shall be allocated to the Distributor
and each Other Distributor all Commission Shares of such Portfolio which were
sold while such Distributor or such Other Distributor, as the case may be, was
the exclusive distributor for the Shares of the Portfolio, determined in
accordance with the transfer records maintained for such Portfolio.
(b) Reinvested Shares: On the date that any
Shares are issued by a Portfolio as a result of the reinvestment of dividends
or other distributions, whether ordinary income, capital gains or
exempt-interest dividend or distributions ("Reinvested Shares"), Reinvested
Shares shall be allocated to the Distributor and each Other Distributor in a
number obtained by multiplying the total number of Reinvested Shares issued on
such date by a fraction, the numerator of which is the total number of all
Shares outstanding in such Fund as of the opening of business on such date and
allocated to the Distributor or Other Distributor as of such
A-1
<PAGE> 11
date of determination pursuant to these allocation procedures and the
denominator is the total number of Shares outstanding as of the opening of
business on such date.
(c) Exchange Shares: There shall be allocated to
the Distributor and each Other Distributor, as the case may be, all Commission
Shares of such Portfolio which were issued during or after the period referred
to in (a) as a consequence of one or more free exchanges of Commission Shares
of the Portfolio or of another portfolio (other than Free Appreciation Shares)
(the "Exchange Shares"), which in accordance with the transfer records
maintained for such Portfolio can be traced to Commission Shares of the
Portfolio or another portfolio initially issued by the Company or such other
portfolio during the time the Distributor or such Other Distributor, as the
case may be, was the exclusive distributor for the Shares of the Portfolio or
such other portfolio.
(d) Free Appreciation Shares: Shares (other than
Exchange Shares) that were acquired by the holders of such Shares in a free
exchange of Shares of any other Portfolio, which represent the appreciated
value of the Shares of the exiting portfolio over the initial purchase price
paid for the Shares being redeemed and exchanged and for which the original
purchase date and the original purchase price are not identified on an on-going
basis, shall be allocated to the Distributor and each Other Distributor ("Free
Appreciation Shares") daily in a number obtained by multiplying the total
number of Free Appreciation Shares issued by the exiting portfolio on such date
by a fraction, the numerator of which is the total number of all Shares
outstanding as of the opening of business on such date allocated to the
Distributor or such Other Distributor as of such date of determination pursuant
to these allocation procedures and the denominator is the total number of
Shares outstanding as of the opening of business on such date.
(e) Redeemed Shares: Shares (other than
Reinvested Shares and Free Appreciation Shares) that are redeemed will be
allocated to the Distributor and each Other Distributor to the extent such
Share was previously allocated to the Distributor or such Other Distributor in
accordance with the rules set forth in 2(a) or (c) above. Reinvested Shares
and Free Appreciation Shares that are redeemed will be allocated to the
Distributor and each Other Distributor daily in an amount equal to the number
of Free Appreciation Shares and Reinvested Shares of such Portfolio being
redeemed on such date, which amount is obtained by multiplying the total number
of Free Appreciation Shares and Reinvested Shares being redeemed by such
Portfolio on such date by a fraction, the numerator of which is the total
number of all Free Appreciation Shares and Reinvested Shares of such Portfolio
outstanding as of the opening of business on such date and the denominator is
the total number of Free Appreciation Shares and Reinvested Shares of such
Portfolio outstanding as of the opening of business on such date.
A-2
<PAGE> 1
EXHIBIT 6(c)
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM EQUITY FUNDS, INC.
(RETAIL CLASSES)
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT is made this 18th day of October, 1993, by and between
AIM EQUITY FUNDS, INC., a Maryland corporation (the "Company"), and A I M
DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other good
and valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:
FIRST: The Company hereby appoints the Distributor as its exclusive
agent for the sale of shares set forth in Appendix A attached hereto
(collectively, the "Funds" and each separately a "Fund"), and any applicable
classes thereof, to the public through investment dealers in the United States
and throughout the world in accordance with the terms of the Company's current
prospectus applicable to the Funds.
SECOND: The Company shall not sell any shares of a Fund except through
the Distributor and under the terms and conditions set forth in paragraph
FOURTH below. Notwithstanding the provisions of the foregoing sentence,
however:
(A) the Company may issue shares of a Fund to any other investment
company or personal holding company, or to the shareholders thereof, in
exchange for all or a majority of the shares or assets of any such company; and
(B) the Company may issue shares of a Fund at their net asset value in
connection with certain classes of transactions or to certain categories of
persons, in accordance with Rule 22d-1 under the Investment Company Act of
1940, as amended (the "1940 Act"), provided that any such category is specified
in the then current prospectus of the Funds.
THIRD: The Distributor hereby accepts appointment as exclusive agent
for the sale of the shares of the Funds and agrees that it will use its best
efforts to sell such shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on behalf of
each Fund shall, suspend its efforts to effectuate such sales at any time when,
in the opinion of the Distributor or of the Company, no sales should be made
because of market or other economic considerations or abnormal circumstances of
any kind; and
(B) the Company may withdraw the offering of the shares of a Fund (i) at
any time with the consent of the Distributor, or (ii) without such consent when
so required by the provisions
-1-
<PAGE> 2
of any statute or of any order, rule or regulation of any governmental body
having jurisdiction. It is mutually understood and agreed that the Distributor
does not undertake to sell any specific amount of the shares of a Fund. The
Company shall have the right to specify minimum amounts for initial and
subsequent orders for the purchase of Fund shares.
FOURTH:
(A) The public offering price of shares of a Fund (the "offering
price") shall be the net asset value per share plus a sales charge, if any.
Net asset value per share shall be determined in accordance with the provisions
of the then current prospectus and statement of additional information of the
Funds. The sales charge shall be established by the Distributor, may reflect
scheduled variations in, or the elimination of, sales charges on sales of a
Fund's shares either generally to the public, or to any specified class of
investors or in connection with any specified class of transactions, in
accordance with Rule 22d-1 and as set forth in the then current prospectus and
statement of additional information of the Funds. The Distributor shall apply
any scheduled variation in, or elimination of, the selling commission uniformly
to all offerees in the class specified.
(B) The Funds shall allow directly to investment dealers through whom
shares of each Fund are sold such portion of the sales charge as may be payable
to them and specified by the Distributor up to but not exceeding the amount of
the total sales charge. The difference between any commissions so payable to
investment dealers and the total sales charges included in the offering price
shall be paid to the Distributor.
(C) No provision of this Agreement shall be deemed to prohibit any
payments by a Fund to the Distributor or by a Fund or the Distributor to
investment dealers through whom the shares of each Fund are sold where such
payments are made under a distribution plan adopted by the Company on behalf of
each Fund pursuant to Rule 12b-1 under the 1940 Act.
FIFTH: The Distributor shall act as agent of the Company on behalf of
each Fund in connection with the sale and repurchase of shares of a Fund.
Except with respect to such sales and repurchases, the Distributor shall act as
principal in all matters relating to the promotion of the sale of shares of the
Funds and shall enter into all of its own engagements, agreements and contracts
as principal on its own account. The Distributor shall enter into Selected
Dealer Agreements with investment dealers selected by the Distributor,
authorizing such investment dealers to offer and sell shares of each Fund to
the public upon the terms and conditions set forth therein, which shall not be
inconsistent with the provisions of this Agreement. Each Selected Dealer
Agreement shall provide that the investment dealer shall act as a principal,
and not as an agent, of the Company on behalf of the Funds.
SIXTH: The Funds shall bear:
(A) the expenses of qualification of shares of a Fund for sale in
connection with such public offerings in such states as shall be selected by
the Distributor, and of continuing the qualification therein until the
Distributor notifies the Company that it does not wish such qualification
continued; and
(B) all legal expenses in connection with the foregoing.
-2-
<PAGE> 3
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the final
proof and distributing the Funds' prospectuses and statements of additional
information (including supplements thereto) relating to public offerings made
by the Distributor pursuant to this Agreement (which shall not include those
prospectuses and statements of additional information, and supplements thereto,
to be distributed to shareholders of each Fund), and any other promotional or
sales literature used by the Distributor or furnished by the Distributor to
dealers in connection with such public offerings, and expenses of advertising
in connection with such public offerings.
(B) The Distributor may be reimbursed for all or a portion of such
expenses, or may receive reasonable compensation for distribution related
services, to the extent permitted by a distribution plan adopted by the Company
on behalf of the Funds pursuant to Rule 12b-1 under the 1940 Act.
EIGHTH: The Distributor will accept orders for the purchase of shares
of each Fund only to the extent of purchase orders actually received and not in
excess of such orders, and it will not avail itself of any opportunity of
making a profit by expediting or withholding orders. It is mutually understood
and agreed that the Company may reject purchase orders where, in the judgment
of the Company, such rejection is in the best interest of the Company.
NINTH: The Company, on behalf of the Funds, and the Distributor shall
each comply with all applicable provisions of the 1940 Act, the Securities Act
of 1933 and of all other federal and state laws, rules and regulations
governing the issuance and sale of shares of each Fund.
TENTH:
(A) In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties hereunder on the part of the
Distributor, the Company on behalf of the Funds agrees to indemnify the
Distributor against any and all claims, demands, liabilities and expenses which
the Distributor may incur under the Securities Act of 1933, or common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or prospectus of the
Funds, or any omission to state a material fact therein, the omission of which
makes any statement contained therein misleading, unless such statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Company or Fund in connection therewith by or on behalf of the
Distributor. The Distributor agrees to indemnify the Company and the Funds
against any and all claims, demands, liabilities and expenses which the Company
or the Funds may incur arising out of or based upon any act or deed of the
Distributor or its sales representatives which has not been authorized by the
Company or the Funds in its prospectus or in this Agreement.
(B) The Distributor agrees to indemnify the Company and the Funds
against any and all claims, demands, liabilities and expenses which the Company
or the Funds may incur under the Securities Act of 1933, or common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or
-3-
<PAGE> 4
prospectus of the Funds, or any omission to state a material fact therein if
such statement or omission was made in reliance upon, and in conformity with,
information furnished to the Company or the Funds in connection therewith by or
on behalf of the Distributor.
(C) Notwithstanding any other provision of this Agreement, the
Distributor shall not be liable for any errors of the Funds' transfer agent(s),
or for any failure of any such transfer agent to perform its duties.
ELEVENTH: Nothing herein contained shall require the Company to take
any action contrary to any provision of its Articles of Incorporation, or to
any applicable statute or regulation.
TWELFTH: This Agreement shall become effective at the close of business
on the date hereof, shall continue in force and effect until June 30, 1994, and
shall continue in force and effect from year to year thereafter, provided, that
such continuance is specifically approved at least annually (a)(i) by the Board
of Directors of the Company or (ii) by the vote of a majority of the Funds'
outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act),
and (b) by vote of a majority of the Company's directors who are not parties to
this Agreement or "interested persons" (as defined in Section 2(a)(19) of the
1940 Act) of any party to this Agreement cast in person at a meeting called for
such purpose.
THIRTEENTH:
(A) This Agreement may be terminated at any time, without the payment
of any penalty, by vote of the Board of Directors of the Company or by vote of
a majority of the outstanding voting securities of each Fund, or by the
Distributor, on sixty (60) days' written notice to the other party.
(B) This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" having the meaning set forth in Section
2(a)(4) of the 1940 Act.
FOURTEENTH: Any notice under this Agreement shall be in writing,
addressed and delivered, or mailed postage prepaid, to the other party at such
address as the other party may designate for the receipt of notices. Until
further notice to the other party, it is agreed that the addresses of both the
Company and the Distributor shall be Eleven Greenway Plaza, Suite 1919,
Houston, Texas 77046.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate on the day and year first above written.
AIM EQUITY FUNDS, INC.
By: /s/ CHARLES T. BAUER
--------------------------------
President
Attest:
/s/ NANCY L. MARTIN
- -----------------------
Assistant Secretary
A I M DISTRIBUTORS, INC.
By: /s/ MICHAEL J. CEMO
--------------------------------
President
Attest:
/s/ NANCY L. MARTIN
- -----------------------
Assistant Secretary
-5-
<PAGE> 6
APPENDIX A TO
MASTER DISTRIBUTION AGREEMENT OF
AIM EQUITY FUNDS, INC.
AIM Charter Fund
Retail Class
AIM Constellation Fund
Retail Class
AIM Weingarten Fund
Retail Class
AIM Aggressive Growth Fund
-6-
<PAGE> 1
EXHIBIT 7(a)
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
Effective as of March 8, 1994
As Restated September 18, 1995
<PAGE> 2
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITION OF TERMS AND CONSTRUCTION . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Accrued Benefit . . . . . . . . . . . . . . . . . . . 1
(b) Actuary . . . . . . . . . . . . . . . . . . . . . . . 1
(c) Administrator . . . . . . . . . . . . . . . . . . . . 1
(d) AIM Funds . . . . . . . . . . . . . . . . . . . . . . 1
(e) Board of Directors . . . . . . . . . . . . . . . . . 1
(f) Code . . . . . . . . . . . . . . . . . . . . . . . . 2
(g) Compensation . . . . . . . . . . . . . . . . . . . . 2
(h) Deferred Retirement Date . . . . . . . . . . . . . . 2
(i) Director . . . . . . . . . . . . . . . . . . . . . . 2
(j) Disability . . . . . . . . . . . . . . . . . . . . . 2
(k) Effective Date . . . . . . . . . . . . . . . . . . . 2
(l) Fund . . . . . . . . . . . . . . . . . . . . . . . . 2
(m) Normal Retirement Date . . . . . . . . . . . . . . . 2
(n) Participant . . . . . . . . . . . . . . . . . . . . . 2
(o) Plan . . . . . . . . . . . . . . . . . . . . . . . . 2
(p) Plan Year . . . . . . . . . . . . . . . . . . . . . . 2
(q) Retirement . . . . . . . . . . . . . . . . . . . . . 2
(r) Retirement Benefit . . . . . . . . . . . . . . . . . 3
(s) Service . . . . . . . . . . . . . . . . . . . . . . . 3
(t) Year of Service . . . . . . . . . . . . . . . . . . . 3
1.2 Plurals and Gender . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II PARTICIPATION . . . . . . . . . . . . . . . . . . . . . 4
2.1 Commencement of Participation . . . . . . . . . . . . . . . . 4
2.2 Termination of Participation . . . . . . . . . . . . . . . . . 4
2.3 Resumption of Participation . . . . . . . . . . . . . . . . . 4
2.4 Determination of Eligibility . . . . . . . . . . . . . . . . . 4
-i-
<PAGE> 3
Page
----
ARTICLE III BENEFITS UPON RETIREMENT AND OTHER
TERMINATION OF SERVICE. . . . . . . . . . . . . . . . . 4
3.1 Retirement. . .. . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Termination of Service Before Retirement . . . . . . . . . . . 5
3.3 Termination of Service by Reason of Death. . . . . . . . . . . 5
3.4 Benefits Calculated in the Aggregate for all of the AIM Funds. 5
ARTICLE IV DEATH BENEFITS. . . . . . . . . . . . . . . . . . . . . 5
4.1 Death Prior to Commencement of Benefits . . . . . . . . . . . 5
4.2 Death Subsequent to Commencement of Benefits . . . . . . . . 5
4.3 Death of Spouse . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V SUSPENSION OF BENEFITS, ETC. . . . . . . . . . . . . . 6
5.1 Suspension of Benefits Upon Resumption of Service . . . . . . 6
5.2 Payments Due Missing Persons . . . . . . . . . . . . . . . . . 6
ARTICLE VI ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . 7
6.1 Appointment of Administrator . . . . . . . . . . . . . . . . . 7
6.2 Powers and Duties of Administrator . . . . . . . . . . . . . . 7
6.3 Action by Administrator . . . . . . . . . . . . . . . . . . . 8
6.4 Participation by Administrators . . . . . . . . . . . . . . . 8
6.5 Agents and Expenses. . . . . . . . . . . . . . . . . . . . . . 8
6.6 Allocation of Duties . . . . . . . . . . . . . . . . . . . . . 8
6.7 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . 9
6.8 Administrator's Action Conclusive . . . . . . . . . . . . . . 9
6.9 Records and Reports . . . . . . . . . . . . . . . . . . . . . 9
6.10 Information from the AIM Funds . . . . . . . . . . . . . . . . 9
6.11 Reservation of Rights by Boards of Directors . . . . . . . . . 9
6.12 Liability and Indemnification. . . . . . . . . . . . . . . . . 9
ARTICLE VII AMENDMENTS AND TERMINATION . . . . . . . . . . . . . . 10
7.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 10
8.1 Rights of Creditors . . . . . . . . . . . . . . . . . . . . . 10
8.2 Liability Limited. . . . . . . . . . . . . . . . . . . . . . . 11
8.3 Incapacity . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.4 Cooperation of Parties . . . . . . . . . . . . . . . . . . . . 11
8.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 11
8.6 Nonguarantee of Directorship . . . . . . . . . . . . . . . . . 12
8.7 Counsel . . . . . . . . . . . . . . . .. . . . . . . . . . . . 12
8.8 Spendthrift Provision . . . . . . . . . . . . . . . . . . . . 12
8.9 Forfeiture for Cause . . . . . . . . . . . . . . . . . . . . . 12
-ii-
<PAGE> 4
Page
----
ARTICLE IX CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . 12
9.1 Notice of Denial . . . . . . . . . . . . . . . . . . . . . . . 12
9.2 Right to Reconsideration . . . . . . . . . . . . . . . . . . . 13
9.3 Review of Documents. . . . . . . . . . . . . . . . . . . . . . 13
9.4 Decision by Administrator. . . . . . . . . . . . . . . . . . . 13
9.5 Notice by Administrator. . . . . . . . . . . . . . . . . . . . 13
-iii-
<PAGE> 5
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
PREAMBLE
Effective as of March 8, 1994, the regulated investment
companies managed, administered and/or distributed by AIM Advisors, Inc. or its
affiliates (the "AIM Funds") have adopted THE AIM FUNDS RETIREMENT PLAN FOR
ELIGIBLE DIRECTORS/TRUSTEES (the "Plan") for the benefit of each of the
directors and trustees of each of the AIM Funds who is not an employee of any
of the AIM Funds, A I M Management Group Inc. or any of their affiliates. As
the Plan does not benefit any employees of the AIM Funds, it is not intended to
be classified as an employee benefit plan within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
ARTICLE I
DEFINITION OF TERMS AND CONSTRUCTION
------------------------------------
1.1 Definitions.
------------
Unless a different meaning is plainly implied by the context,
the following terms as used in this Plan shall have the following meanings:
(a) "Accrued Benefit" shall mean, as of any date prior to
a Participant's Normal Retirement Date, his Retirement Benefit commencing on
his Normal Retirement Date, but based upon his Compensation and Years of
Service computed as of such date of determination.
(b) "Actuary" shall mean the independent actuary selected
by the Administrator.
(c) "Administrator" shall mean the administrative
committee provided for in Article VI.
(d) "AIM Funds" shall mean the regulated investment
companies managed, administered or distributed by A I M Advisors, Inc. or its
affiliates.
(e) "Board of Directors" shall mean the Board of
Directors of each of the AIM Funds.
<PAGE> 6
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute.
(g) "Compensation" shall mean, for any Director, the
amount of the retainer paid or accrued by the AIM Funds for such Director
during the twelve month period immediately preceding the Director's Retirement,
including amounts deferred under a separate agreement between the AIM Funds and
the Director. The amount of such retainer Compensation shall be as determined
by the Administrator.
(h) "Deferred Retirement Date" shall mean the first day
of the month coincident with or next following the date on which a Participant
terminated Service after his Normal Retirement Date.
(i) "Director" shall mean an individual who is a director
or trustee of one or more of the AIM Funds which have adopted the Plan but who
is not an employee of any of the AIM Funds, A I M Management Group Inc. or any
of their affiliates.
(j) "Disability" shall mean the inability of the
Participant to participate in meetings of the Board of Directors, either in
person or by telephone, for a period of at least nine (9) months.
(k) "Effective Date" shall mean March 8, 1994.
(l) "Fund" shall mean an AIM Fund which has adopted this
Plan.
(m) "Normal Retirement Date" shall mean, the date on
which a Participant has both attained age 65 (or at least age 55 in the event
of the Director's termination of Service by reason of death or Disability) and
has completed at least five continuous and non-forfeited Years of Service (and
thirty months of Service with one or more of the AIM Funds).
(n) "Participant" shall mean a Director who has met all
of the eligibility requirements of the Plan and who is currently included in
the Plan as provided in Article II hereof.
(o) "Plan" shall mean the "AIM Funds Retirement Plan for
Eligible Directors/Trustees" as described herein or as hereafter amended from
time to time.
(p) "Plan Year" shall mean the calendar year.
(q) "Retirement" shall mean a Director's termination of
his active Service with the AIM Funds on or after his Normal Retirement Date,
due to his death, Disability, or voluntary or involuntary termination of his
Service.
(r) "Retirement Benefit" shall mean the benefit described
under Section 3.1 hereof.
-2-
<PAGE> 7
(s) "Service" shall mean an individual's serving as a
Director of one or more of the AIM Funds. Furthermore, any unbroken service
provided by a Participant (i) to an AIM Fund immediately prior to its being
managed or administered by A I M Advisors, Inc. (or any of its affiliates) or
(ii) to a predecessor of an AIM Fund immediately prior to its being merged into
such AIM Fund, will be taken into account in determining such Participant's
Years of Service, subject to all restrictions and other forfeiture provisions
contained herein.
(t) "Year of Service" shall mean a twelve consecutive
month period of Service. For all purposes in this Plan, if a Participant's
Service terminates prior to his Retirement, he shall forfeit credit for all
Years of Service completed prior to such termination unless (a) he again
becomes a Director and (b) the number of Years of Service he accumulated prior
to such termination exceeded the number of years in which he did not serve as a
Director.
1.2 Plurals and Gender.
Where appearing in the Plan, the masculine gender shall
include the feminine and neuter genders, and the singular shall include the
plural, and vice versa, unless the context clearly indicates a different
meaning.
1.3 Directors/Trustees.
Where appropriate, the term "director" shall refer to
"trustee", "directorship" shall refer to "trusteeship" and "Board of Directors"
shall refer to "Board of Trustees."
1.4 Headings.
The headings and sub-headings in this Plan are inserted for
the convenience of reference only and are to be ignored in any construction of
the provisions hereof.
1.5 Severability.
In case any provision of this Plan shall be held illegal or
void, such illegality or invalidity shall not affect the remaining provisions
of this Plan, but shall be fully severable, and the Plan shall be construed and
enforced as if said illegal or invalid provisions had never been inserted
herein.
-3-
<PAGE> 8
ARTICLE II
PARTICIPATION
-------------
2.1 Commencement of Participation.
------------------------------
Each Director shall become a Participant hereunder on the date
his directorship of one or more of the AIM Funds commences.
2.2 Termination of Participation.
-----------------------------
After commencement or resumption of his participation, a
Director shall remain a Participant until the earliest of the following dates:
(a) His actual Retirement date;
(b) His date of death;
(c) The date on which he otherwise incurs a termination
of Service; or
(d) The effective date of the termination of the Plan.
2.3 Resumption of Participation.
----------------------------
Any Participant whose Service terminates and who thereafter
again becomes a Director shall resume participation immediately upon again
becoming a Director except that, as provided in Section 1.1(t) hereof, if his
Service is terminated prior to his Normal Retirement Date, for all purposes of
this Plan he shall forfeit credit for all Years of Service completed prior to
such termination of his Service.
2.4 Determination of Eligibility.
-----------------------------
The Administrator shall determine the eligibility of Directors
in accordance with the provisions of this Article.
ARTICLE III
BENEFITS UPON
-------------
RETIREMENT AND OTHER TERMINATION OF SERVICE
-------------------------------------------
3.1 Retirement.
-----------
Upon Retirement a Participant shall be entitled to receive an
annual benefit from the AIM Funds commencing on the first day of the calendar
quarter coincident with or next following his date of Retirement, payable in
quarterly installments for a period of no more than
-4-
<PAGE> 9
ten (10) years (or, if less, the number of his Years of Service) equal
to seventy-five percent (75%) of his Compensation.
3.2 Termination of Service Before Retirement.
-----------------------------------------
In the event that a Participant's Service terminates by reason
of death, Disability or removal by the Board for cause (as defined in Section
8.9) prior to his Normal Retirement Date, he shall not be entitled to receive
any benefits hereunder. If a Participant's Service terminates for any other
reason and he has accumulated at least five (5) continuous and non-forfeited
Years of Service, he shall be entitled to receive his Accrued Benefit
determined as of such date of termination.
3.3 Termination of Service by Reason of Death.
------------------------------------------
No benefits will be paid under this Plan with respect to a
Participant after his death other than as provided in Article IV.
3.4 Benefits Calculated in the Aggregate for all of the AIM Funds.
--------------------------------------------------------------
With respect to each Participant, the benefits payable
hereunder shall be based on the aggregate Compensation paid by the AIM Funds
and on the Participant's non-forfeited Years of Service. Each Fund's share of
the obligation to provide such benefits shall be determined by use of
accounting methods adopted by the Administrator.
ARTICLE IV
DEATH BENEFITS
--------------
4.1 Death Prior to Commencement of Benefits.
----------------------------------------
In the event of a Participant's death subsequent to his Normal
Retirement Date, but prior to the commencement of his Retirement Benefits under
Article III hereof, the surviving spouse (if any) of such Participant shall be
entitled to receive a quarterly survivor's benefit for a period of no more than
ten (10) years (or, if less, the number of the Participant's Years of Service)
beginning on the first day of the calendar quarter next following the date of
the Participant's death equal to fifty percent (50%) of the amount of the
quarterly installments of Retirement Benefits that would have been paid to the
Participant under Sections 3.1 or 3.2 hereof had his Retirement occurred on his
date of death.
4.2 Death Subsequent to Commencement of Benefits.
---------------------------------------------
In the event a Participant dies after the commencement of his
Retirement Benefit under Article III, but prior to the cessation of the payment
of such Retirement Benefits, the surviving spouse (if any) of such Participant
shall be entitled to receive survivor's benefits equal to fifty percent (50%)
of the amount of the annual Retirement Benefit payable to the Participant
-5-
<PAGE> 10
under Article III hereunder, paid at such times, and for such period, as such
Retirement Benefit would have continued to have been paid to the Participant
had he not died.
4.3 Death of Spouse.
----------------
(a) In the event a Participant is not survived by a
spouse, no benefits will be paid hereunder upon the Participant's death.
(b) If a deceased Participant's surviving spouse dies
while receiving survivor's benefits hereunder, any installments not paid at the
time of the surviving spouse's death shall be forfeited.
ARTICLE V
SUSPENSION OF BENEFITS, ETC.
----------------------------
5.1 Suspension of Benefits Upon Resumption of Service.
--------------------------------------------------
In the case of a Participant who, at a time when he is
receiving Retirement Benefits under Article III of this Plan, resumes Service
with any AIM Fund, such Retirement Benefits shall be suspended until his
subsequent Retirement, termination of Service or death. Subject to the Years
of Service limitations of Section 3.1 hereof, in the event of his Retirement
or termination of Service following such a suspension, the quarterly amount of
his remaining Retirement Benefits shall thereafter be adjusted, if
appropriate, to reflect any additional Years of Service completed by, or a
higher rate of Compensation received by, such Participant.
5.2 Payments Due Missing Persons.
-----------------------------
The Administrator shall make a reasonable effort to locate all
persons entitled to benefits (including Retirement Benefits and survivor's
benefits for spouses) under the Plan; however, notwithstanding any provisions
of this Plan to the contrary, if, after a period of 5 years from the date any
of such benefits first become due, any such persons entitled to benefits have
not been located, their rights under the Plan shall stand suspended. Before
this provision becomes operative, the Administrator shall send a certified
letter to all such persons (if any) at their last known address advising them
that their benefits under the Plan shall be suspended. Any such suspended
amounts shall be held by the AIM Funds for a period of 3 additional years (or a
total of 8 years from the time the benefits first became payable) and
thereafter such amounts shall be forfeited.
-6-
<PAGE> 11
ARTICLE VI
ADMINISTRATOR
-------------
6.1 Appointment of Administrator.
-----------------------------
This Plan shall be administered by the Nominating and
Compensation Committees of the Boards of Directors of the AIM Funds. The
members of such committees are not "interested persons" (within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940) of any of the AIM
Funds. The term "Administrator" as used in this Plan shall refer to the
members of such committees, either individually or collectively, as
appropriate.
6.2 Powers and Duties of Administrator.
-----------------------------------
Except as provided below, the Administrator shall have the
following duties and responsibilities in connection with the administration of
this Plan:
(a) To promulgate and enforce such rules, regulations and
procedures as shall be proper for the efficient administration of the Plan;
(b) To determine all questions arising in the
administration, interpretation and application of the Plan, including questions
of eligibility and of the status and rights of Participants and any other
persons hereunder;
(c) To decide any dispute arising hereunder; provided,
however, that no Administrator shall participate in any matter involving any
questions relating solely to his own participation or benefits under this Plan;
(d) To advise the Boards of Directors of the AIM Funds
regarding the known future need for funds to be available for distribution;
(e) To correct defects, supply omissions and reconcile
inconsistencies to the extent necessary to effectuate the Plan;
(f) To compute the amount of benefits and other payments
which shall be payable to any Participant or surviving spouse in accordance
with the provisions of the Plan and to determine the person or persons to whom
such benefits shall be paid;
(g) To make recommendations to the Boards of Directors of
the AIM Funds with respect to proposed amendments to the Plan;
(h) To file all reports with government agencies,
Participants and other parties as may be required by law, whether such reports
are initially the obligation of the AIM Funds, or the Plan;
-7-
<PAGE> 12
(i) To engage the Actuary of the Plan and to cause the
liabilities of the Plan to be evaluated by the Actuary; and
(j) To have all such other powers as may be necessary to
discharge its duties hereunder.
6.3 Action by Administrator.
------------------------
The Administrator may elect a Chairman and Secretary from
among its members and may adopt rules for the conduct of its business. A
majority of the members then serving shall constitute a quorum for the
transacting of business. All resolutions or other action taken by the
Administrator shall be by vote of a majority of those present at such meeting
and entitled to vote. Resolutions may be adopted or other action taken without
a meeting upon written consent signed by at least a majority of the members.
All documents, instruments, orders, requests, directions, instructions and
other papers shall be executed on behalf of the Administrator by either the
Chairman or the Secretary of the Administrator, if any, or by any member or
agent of the Administrator duly authorized to act on the Administrator's
behalf.
6.4 Participation by Administrators.
--------------------------------
No Administrator shall be precluded from becoming a
Participant in the Plan if he would be otherwise eligible, but he shall not be
entitled to vote or act upon matters or to sign any documents relating
specifically to his own participation under the Plan, except when such matters
or documents relate to benefits generally. If this disqualification results in
the lack of a quorum, then the Boards of Directors, by majority vote of the
members of a majority of such Boards of Directors (a "Majority Vote"), shall
appoint a sufficient number of temporary Administrators, who shall serve for
the sole purpose of determining such a question.
6.5 Agents and Expenses.
--------------------
The Administrator may employ agents and provide for such
clerical, legal, actuarial, accounting, medical, advisory or other services as
it deems necessary to perform its duties under this Plan. The cost of such
services and all other expenses incurred by the Administrator in connection
with the administration of the Plan shall be allocated to each Fund pursuant to
the method utilized under Section 3.4 hereof with respect to costs related to
benefit accruals. For purposes of the preceding sentence, if an individual
serves as a Director for more than one Fund, he shall be deemed to be a
separate Director for each such Fund in determining the aggregate number of
Directors of the AIM Funds.
6.6 Allocation of Duties.
---------------------
The duties, powers and responsibilities reserved to the
Administrator may be allocated among its members so long as such allocation is
pursuant to written procedures adopted by the Administrator, in which case no
Administrator shall have any liability, with respect to any duties, powers or
responsibilities not allocated to him, for the acts or omissions of any other
Administrator.
-8-
<PAGE> 13
6.7 Delegation of Duties.
---------------------
The Administrator may delegate any of its duties to employees
of A I M Advisors, Inc. or any of its affiliates or to any other person or
firm, provided that the Administrator shall prudently choose such agents and
rely in good faith on their actions.
6.8 Administrator's Action Conclusive.
----------------------------------
Any action on matters within the discretion of the
Administrator shall be final and conclusive.
6.9 Records and Reports.
--------------------
The Administrator shall maintain adequate records of its
actions and proceedings in administering this Plan and shall file all reports
and take all other actions as it deems appropriate in order to comply with any
federal or state law.
6.10 Information from the AIM Funds.
-------------------------------
The AIM Funds shall promptly furnish all necessary information
to the Administrator to permit it to perform its duties under this Plan. The
Administrator shall be entitled to rely upon the accuracy and completeness of
all information furnished to it by the AIM Funds, unless it knows or should
have known that such information is erroneous.
6.11 Reservation of Rights by Boards of Directors.
---------------------------------------------
When rights are reserved in this plan to the Boards of
Directors, such rights shall be exercised only by Majority Vote of the Boards
of Directors, except where the Boards of Directors, by unanimous written
resolution, delegate any such rights to one or more persons or to the
Administrator. Subject to the rights reserved to the Boards of Directors as
set forth in this Plan, no member of the Boards of Directors shall have any
duties or responsibilities under this Plan, except to the extent he shall be
acting in the capacity of an Administrator.
6.12 Liability and Indemnification.
------------------------------
(a) The Administrator shall perform all duties required
of it under this Plan in a prudent manner. The Administrator shall not be
responsible in any way for any action or omission of the AIM Funds or their
employees in the performance of their duties and obligations as set forth in
this Plan. The Administrator also shall not be responsible for any act or
omission of any of its agents provided that such agents were prudently chosen
by the Administrator and that the Administrator relied in good faith upon the
action of such agents.
(b) Except for its own gross negligence, willful
misconduct or willful breach of the terms of this Plan, the Administrator shall
be indemnified and held harmless by the AIM Funds against any and all
liability, loss, damages, cost and expense which may arise, occur by reason of,
or be based upon, any matter connected with or related to this Plan or its
-9-
<PAGE> 14
administration (including, but not limited to, any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending any litigation,
commenced or threatened, or in settlement of any such claim).
ARTICLE VII
AMENDMENTS AND TERMINATION
--------------------------
7.1 Amendments.
-----------
The Boards of Directors reserve the right at any time and from
time to time, and retroactively if deemed necessary or appropriate by them, to
amend in whole or in part by Majority Vote any or all of the provisions of this
Plan, provided that:
(a) No amendment shall make it possible for any part of a
Participant's or former Participant's Retirement Benefit to be used for, or
diverted to, purposes other than for the exclusive benefit of such Participant
or surviving spouse, except to the extent otherwise provided in this Plan;
(b) No amendment may reduce any Participant's or former
Participant's Retirement Benefit as of the effective date of the amendment;
Amendments may be made in the form of Board of Directors'
resolutions or separate written document.
7.2 Termination.
------------
Except as provided below, the Boards of Directors reserve the
right to terminate this Plan at any time by Majority Vote by giving to the
Administrator notice in writing of such desire to terminate. The Plan shall
terminate upon the date of receipt of such notice and the rights of all
Participants to their Retirement Benefits (determined as of the date the Plan
is terminated) shall become payable upon the effective date of the termination
of the Plan in quarterly installments or in an actuarially equivalent lump sum
as determined by the Administrator.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Rights of Creditors.
--------------------
(a) The Plan is unfunded. Neither the Participants nor
any other persons shall have any interest in any fund or in any specific asset
or assets of any of the AIM Funds by
-10-
<PAGE> 15
reason of any Accrued or Retirement Benefit hereunder, nor any rights to
receive distribution of any Retirement Benefit except and as to the extent
expressly provided hereunder.
(b) The Accrued and Retirement Benefits of each
Participant are unsecured and shall be subject to the claims of the general
creditors of the AIM Funds.
8.2 Liability Limited.
------------------
Neither the AIM Funds, the Administrator, nor any agents,
employees, officers, directors or shareholders of any of them, nor any other
person shall have any liability or responsibility with respect to this Plan,
except as expressly provided herein.
8.3 Incapacity.
-----------
If the Administrator shall receive evidence satisfactory to it
that a Participant or surviving spouse entitled to receive any benefit under
the Plan is, at the time when such benefit becomes payable, physically or
mentally incompetent to receive such benefit and to give a valid release
therefor, and that another person or an institution is then maintaining or has
custody of such Participant or surviving spouse and that no guardian, committee
or other representative of the estate of such Participant or surviving spouse
shall have been duly appointed, the Administrator may make payment of such
benefit otherwise payable to such Participant or surviving spouse to such other
person or institution, and the release of such other person or institution
shall be a valid and complete discharge for the payment of such benefit.
8.4 Cooperation of Parties.
-----------------------
All parties to this Plan and any person claiming any interest
hereunder agree to perform any and all acts and execute any and all documents
and papers which are necessary or desirable for carrying out this Plan or any
of its provisions.
8.5 Governing Law.
--------------
All rights under the Plan shall be governed by and construed
in accordance with rules of Federal law applicable to such plans and, to the
extent not preempted, by the laws of the State of Texas without regard to
principles of conflicts of law. No action shall be brought by or on behalf of
any Participant for or with respect to benefits due under this Plan unless the
person bringing such action has timely exhausted the Plan's claim review
procedure. Any such action must be commenced within three years. This
three-year period shall be computed from the earlier of (a) the date a final
determination denying such benefit, in whole or in part, is issued under the
Plan's claim review procedure or (b) the date such individual's cause of action
first accrued. Any dispute, controversy or claim arising out of or in
connection with this Plan (including the applicability of this arbitration
provision) and not resolved pursuant to the Plan's claim review procedure shall
be determined and settled by arbitration conducted by the American Arbitration
Association ("AAA") in the County and State of the Funds' principal place of
business and in accordance with the then existing rules, regulations, practices
and procedures of the AAA. Any award in such arbitration shall be final,
conclusive and binding upon the
-11-
<PAGE> 16
parties to the arbitration and may be enforced by either party in any court of
competent jurisdiction. Each party to the arbitration will bear its own costs
and fees (including attorney's fees).
8.6 Nonguarantee of Directorship.
-----------------------------
Nothing contained in this Plan shall be construed as a
guaranty or right of any Participant to be continued as a Director of one or
more of the AIM Funds (or of a right of a Director to any specific level of
Compensation) or as a limitation of the right of the AIM Funds to remove any of
its directors.
8.7 Counsel.
--------
The Administrator may consult with legal counsel, who may be
counsel for one or more of the Boards of Directors of the AIM Funds and for the
Administrator, with respect to the meaning or construction of this Plan, its
obligations or duties hereunder or with respect to any action or proceeding or
any question of law, and they shall be fully protected with respect to any
action taken or omitted by them in good faith pursuant to the advice of legal
counsel.
8.8 Spendthrift Provision.
----------------------
A Participant's interest in his Accrued Benefit or Retirement
Benefit may not be transferred, alienated, assigned nor become subject to
execution, garnishment or attachment, and any attempt to do so will render
benefits hereunder immediately forfeitable.
8.9 Forfeiture for Cause.
---------------------
Notwithstanding any other provision of this Plan to the
contrary, any benefits to which a Participant (or his surviving spouse) may
otherwise be entitled hereunder will be forfeited in the event the
Administrator, in its sole discretion, determines that a Participant's
termination of Service is due to such Participant's willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Director.
ARTICLE IX
CLAIMS PROCEDURE
----------------
9.1 Notice of Denial.
-----------------
If a Participant is denied any Retirement Benefit (or a
surviving spouse is denied a survivor's benefit) under this Plan, either in
total or in an amount less than the full Retirement Benefit to which he would
normally be entitled, the Administrator shall advise the Participant (or
surviving spouse) in writing of the amount of his Retirement Benefit (or
survivor's benefit), if any, and the specific reasons for the denial. The
Administrator shall also furnish the Participant (or surviving spouse) at that
time with a written notice containing:
-12-
<PAGE> 17
(a) A specific reference to pertinent Plan provisions.
(b) A description of any additional material or
information necessary for the Participant (or surviving spouse) to perfect his
claim, if possible, and an explanation of why such material or information is
needed.
(c) An explanation of the Plan's claim review procedure.
9.2 Right to Reconsideration.
-------------------------
Within 60 days of receipt of the information stated in Section
9.1 above, the Participant (or surviving spouse) shall, if he desires further
review, file a written request for reconsideration with the Administrator.
9.3 Review of Documents.
--------------------
So long as the Participant's (or surviving spouse's) request
for review is pending (including the 60 day period in 9.2 above), the
Participant (or surviving spouse) or his duly authorized representative may
review pertinent Plan documents and may submit issues and comments in writing
to the Administrator.
9.4 Decision by Administrator.
--------------------------
A final and binding decision shall be made by the
Administrator within 60 days of the filing by the Participant (or surviving
spouse) of his request for reconsideration, provided, however, that if the
Administrator, in its discretion, feels that a hearing with the Participant (or
surviving spouse) or his representative present is necessary or desirable, this
period shall be extended an additional 60 days.
9.5 Notice by Administrator.
------------------------
The Administrator's decision shall be conveyed to the
Participant (or surviving spouse) in writing and shall include specific reasons
for the provisions on which the decision is based.
-13-
<PAGE> 1
EXHIBIT 7(c)
THE AIM GROUP OF FUNDS
DEFERRED COMPENSATION PLAN
FOR ELIGIBLE DIRECTORS/TRUSTEES
<PAGE> 2
DEFERRED COMPENSATION AGREEMENT
SUMMARY
Your Deferred Compensation Agreement (the "Agreement") allows
you to defer some or all of your annual trustee's fees otherwise payable by the
Funds. Deferred fees are deemed invested in certain mutual funds selected by
you. The deferral is pre-tax, and the deferred amount and the credited gains,
losses and income are not subject to tax until paid out to you.
Your deferrals (and investment experience) are posted to a
bookkeeping account maintained by the Funds in your name. In order for you to
enjoy the tax deferral, the payments due under the Agreement will be paid from
the Funds' general assets, and you are considered a general unsecured creditor
of the Funds; you may not transfer your right to receive payments under the
Agreement to any other person, nor may you pledge that right to secure any debt
or other obligation; finally, an election to defer must be made in writing
before the first day of the calendar year for which the fees are earned (the
"Election Date") and elections can be changed only prospectively, effective for
the next calendar year.
An important change has been made to your Agreement to give
you greater flexibility to select the time of payment of amounts that you
defer: for amounts previously deferred and for future elections you now
designate a specific Payment Date.
PAYMENT DATE ELECTION
Deferred fees (and the income, gains and losses credited
during the deferral period) will be paid out in a single sum in cash within 30
days of the Payment Date elected for that deferral. (For payments in
connection with your termination of service as a trustee, see below.)
Deferrals must be for a minimum three year period (unless the
your retirement date under the Retirement Plan is earlier). Thus, the Payment
Date may be the first day of any calendar quarter that follows the third
anniversary of the applicable Election Date or your retirement date. For your
first Payment Date election that applies to previously deferred fees, the
Election Date is considered to be January 1, 1996. Thus, fees previously
deferred and fees payable for the calendar year beginning January 1, 1996 may
be deferred to the first day of any calendar quarter in any year from 1999.
EXTENDING A PAYMENT DATE
One year prior to any Payment Date, you will have a one-time
opportunity to extend that Date, provided that the additional period of
deferral satisfies the requirements described above.
<PAGE> 3
TERMINATION OF SERVICE
Upon your death, your account under the Agreement will be paid
out in a single sum in cash as soon as practicable. Payment will be made to
your designated Beneficiary or Beneficiaries or to your estate if there is no
surviving Beneficiary.
Upon termination of your service as trustee for any reason
other than death or your retirement (as defined in the Retirement Plan), your
account will be paid to you as a single sum (or in installments if you had
elected that method) in cash within three months following the end of the
fiscal year in which you terminate, regardless of the Payment Dates you
elected.
<PAGE> 4
ARTICLE Page
------- ----
1. Definitions of Terms and Construction 1
2. Period During Which Compensation Deferrals are Permitted 2
3. Compensation Deferrals 2
4. Distributions from Deferral Account 4
5. Amendments and Termination 5
6. Miscellaneous
<PAGE> 5
DEFERRED COMPENSATION AGREEMENT
-------------------------------
AGREEMENT, made on this __ day of _______, 19__, by and
between the registered open-end investment companies listed on Appendix A
hereto (the "Funds"), and
________________________________________________________________ (the
"Director") residing at ___________________________________________________.
WHEREAS, the Funds and the Director have entered into
agreements pursuant to which the Director will serve as a director/trustee of
the Funds; and
WHEREAS, the Funds and the Director have previously entered
into an additional agreement whereby the Funds will provide to the Director a
vehicle under which the Director can defer receipt of directors' fees payable
by the Funds and now desire to amend and restate such agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the Funds and the Director hereby
agree as follows:
1. DEFINITION OF TERMS AND CONSTRUCTION
------------------------------------
1.1 Definitions. Unless a different meaning is plainly implied by
the context, the following terms as used in this Agreement shall have the
following meanings:
(a) "Beneficiary" shall mean such person or persons
designated pursuant to Section 4.3 hereof to receive benefits after the death
of the Director.
(b) "Boards of Directors" shall mean the respective
Boards of Directors of the Funds.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute.
(d) "Compensation" shall mean the amount of directors'
fees paid by each of the Funds to the Director during a Deferral Year prior to
reduction for Compensation Deferrals made under this Agreement.
(e) "Compensation Deferral" shall mean the amount or
amounts of the Director's Compensation deferred under the provisions of Section
3 of this Agreement.
-1-
<PAGE> 6
(f) "Deferral Accounts" shall mean the accounts
maintained to reflect the Director's Compensation Deferrals made pursuant to
Section 3 hereof and any other credits or debits thereto.
(g) "Deferral Year" shall mean each calendar year during
which the Director makes, or is entitled to make, Compensation Deferrals under
Section 3 hereof.
(h) "Retirement" shall have the same meaning as set forth
under the Retirement Plan.
(i) "Retirement Plan" shall mean the "AIM Funds
Retirement Plan for Eligible Directors/Trustees."
(j) "Valuation Date" shall mean the last business day of
each calendar year and any other day upon which the Funds makes valuations of
the Deferral Accounts.
1.2 Plurals and Gender. Where appearing in this Agreement the
singular shall include the plural and the masculine shall include the feminine,
and vice versa, unless the context clearly indicates a different meaning.
1.3 Directors and Trustees. Where appearing in this Agreement,
"Director" shall also refer to "Trustee" and "Board of Directors" shall also
refer to "Board of Trustees."
1.4 Headings. The headings and sub-headings in this Agreement are
inserted for the convenience of reference only and are to be ignored in any
construction of the provisions hereof.
1.5 Separate Agreement for Each Fund. This Agreement is drafted,
and shall be construed, as a separate agreement between the Director and each
of the Funds.
2. PERIOD DURING WHICH COMPENSATION DEFERRALS ARE PERMITTED
--------------------------------------------------------
2.1 Commencement of Compensation Deferrals. The Director may
elect, on a form provided by, and submitted to, the Presidents of the
respective Funds, to commence Compensation Deferrals under Section 3 hereof for
the period beginning on the later of (i) the date this Agreement is executed or
(ii) the date such form is submitted to the Presidents of the Funds.
2.2 Termination of Deferrals. The Director shall not be eligible
to make Compensation Deferrals after the earliest of the following dates:
(a) The date on which he ceases to serve as a Director of
all of the Funds; or
(b) The effective date of the termination of this
Agreement.
-2-
<PAGE> 7
3. COMPENSATION DEFERRALS
----------------------
3.1 Compensation Deferral Elections.
(a) On or prior to the first day of any Deferral Year,
the Director may elect, on the form described in Section 2.1 hereof, to defer
the receipt of all or a portion of his Compensation for such Deferral Year.
Such writing shall set forth the amount of such Compensation Deferral (in whole
percentage amounts). Such election shall continue in effect for all subsequent
Deferral Years unless it is canceled or modified as provided below.
(b) Compensation Deferrals shall be withheld from each
payment of Compensation by the Funds to the Director based upon the percentage
amount elected by the Director under Section 3.1(a) hereof.
(c) The Director may cancel or modify the amount of his
Compensation Deferrals on a prospective basis by submitting to the Presidents
of the Funds a revised Compensation Deferral election form. Such change will
be effective as of the first day of the Deferral Year following the date such
revision is submitted to the Presidents of the Funds.
3.2 Valuation of Deferral Account.
(a) Each Fund shall establish a bookkeeping Deferral
Account to which will be credited an amount equal to the Director's
Compensation Deferrals under this Agreement made with respect to Compensation
earned from each such Fund. Compensation Deferrals shall be allocated to the
Deferral Accounts on the first business day following the date such
Compensation Deferrals are withheld from the Director's Compensation. As of
the date of this Agreement, the Deferral Accounts also shall be credited with
the amounts credited to the Director under each other outstanding elective
deferred compensation agreement entered into by and between the Funds and the
Director which is superseded by this Agreement pursuant to Section 6.11 hereof.
The Deferral Accounts shall be debited to reflect any distributions from such
Accounts. Such debits shall be allocated to the Deferral Accounts as of the
date such distributions are made.
(b) As of each Valuation Date, income, gain and loss
equivalents (determined as if the Deferral Accounts are invested in the manner
set forth under Section 3.3, below) attributable to the period following the
next preceding Valuation Date shall be credited to and/or deducted from the
Director's Deferral Accounts.
3.3 Investment of Deferral Account Balances.
(a) (1) The Director may select, from various options
made available by the Funds, the investment media in which all or part of his
Deferral Accounts shall be deemed to be invested.
-3-
<PAGE> 8
(2) The Director shall make an investment
designation on a form provided by the Presidents of the Funds which shall
remain effective until another valid direction has been made by the Director as
herein provided. The Director may amend his investment designation as of the
end of each calendar quarter by giving written direction to the Presidents of
the Funds at least thirty (30) days prior to the end of such calendar quarter.
A timely change to a Director's investment designation shall become effective
on the first day of the calendar quarter following receipt by the Presidents of
the Funds.
(3) The investment media deemed to be made
available to the Director, and any limitation on the maximum or minimum
percentages of the Director's Deferral Accounts that may be invested any
particular medium, shall be the same as from time-to-time communicated to the
Director by the Presidents of the Funds.
(b) Except as provided below, the Director's Deferral
Accounts shall be deemed to be invested in accordance with his investment
designations, provided such designations conform to the provisions of this
Section. If -
(1) the Director does not furnish the Presidents
of the Funds with complete, written investment instructions, or
(2) the written investment instructions from the
Director are unclear,
then the Director's election to make Compensation Deferrals hereunder shall be
held in abeyance and have no force or effect until such time as the Director
shall provide the Presidents of the Funds with complete investment
instructions. Notwithstanding the above, the Boards of Directors, in their
sole discretion, may disregard the Director's election and determine that all
Compensation Deferrals shall be deemed to be invested in a fund determined by
the Boards of Directors. In the event that any fund under which any portion of
the Director's Deferral Accounts is deemed to be invested ceases to exist, such
portion of the Deferral Accounts thereafter shall be held in the successor to
such fund, subject to subsequent deemed investment elections.
The Fund shall provide an annual statement to the Director
showing such information as is appropriate, including the aggregate amount in
the Deferral Accounts, as of a reasonably current date.
-4-
<PAGE> 9
4. DISTRIBUTIONS FROM DEFERRAL ACCOUNTS
------------------------------------
4.1 Payment Date and Methods.
(a) Designation of Date. Each deferral direction given
pursuant to Section 3.1 shall include designation of the Payment Date for the
value of the amount deferred. Such Payment Date shall be the first day of any
calendar quarter, subject to the limitation set forth in paragraph 4.1(c).
(b) Extension Date. One year before the Payment Date
initially designated pursuant to paragraph 4.1(a) above, the Participant may
irrevocably elect to extend such Payment Date to the first day of any calendar
quarter, subject to the limitation set forth in paragraph 4.1(c).
(c) Limitation. The Director shall select a Payment Date
(or extended Payment Date) that is no sooner than the earlier of (i) the
January 1 that follows the third anniversary of the Participant's deferral
election made pursuant to paragraph 4.1(a) or (b) or (ii) the January 1 of the
year after the Participant's Retirement.
(d) Methods of Payment. Distributions from the
Director's Deferral Accounts shall be paid in cash. A Participant may elect,
at the time a Payment Date is selected, to receive the amount which will become
payable as of such Payment Date in generally equal quarterly installments over
a period not to exceed ten (10) years. Except as may be elected pursuant to
this paragraph, all amounts becoming payable under this Plan shall be paid in a
single sum.
(e) Irrevocability. Except as provided in paragraph
4.1(b), a designation of a Payment Date and an election of installment payments
shall be irrevocable; provided, however, that payment shall be made or begin on
a different date as follows:
(1) Upon the Director's death, payment shall be
made in accordance with Section 4.2,
(2) Upon the Director's ceasing to serve as a
director of all of the Funds for reasons other than death or Retirement,
payment shall be made or begin within three months after the end of the
calendar year in which such termination occurs in accordance with the method
elected by the Director pursuant to paragraph 4.1(d), except that the Boards of
Directors, in their sole discretion, may accelerate the distribution of such
Deferral Accounts,
(3) Upon termination of this Agreement, payment
shall be made in accordance with Section 5.2, and
(4) In the event of the liquidation, dissolution
or winding up of a Fund or the distribution of all or substantially all of a
Fund's assets and property relating to one or
-5-
<PAGE> 10
more series of its shares to the shareholders of such series (for this purpose
a sale, conveyance or transfer of a Fund's assets to a trust, partnership,
association or corporation in exchange for cash, shares or other securities
with the transfer being made subject to, or with the assumption by the
transferee of, the liabilities of the Fund shall not be deemed a termination of
the Fund or such a distribution), all unpaid balances of the Deferral Accounts
related to such Fund as of the effective date thereof shall be paid in a lump
sum on such effective date.
4.2 Death Prior to Complete Distribution of Deferral Accounts.
Upon the death of the Director prior to the commencement of the distribution of
the amounts credited to his Deferral Accounts, the balance of such Accounts
shall be distributed to his Beneficiary in a lump sum as soon as practicable
after the Director's death. In the event of the death of the Director after
the commencement of such distribution, but prior to the complete distribution
of his Deferral Accounts, the balance of the amounts credited to his Deferral
Accounts shall be distributed to his Beneficiary over the remaining period
during which such amounts were distributable to the Director under Section 4.1
hereof. Notwithstanding the above, the Boards of Directors, in their sole
discretion, may accelerate the distribution of the Deferral Accounts.
4.3 Designation of Beneficiary. For purposes of Section 4.2
hereof, the Director's Beneficiary shall be the person or persons so designated
by the Director in a written instrument submitted to the Presidents of the
Funds. In the event the Director fails to properly designate a Beneficiary,
his Beneficiary shall be the person or persons in the first of the following
classes of successive preference Beneficiaries surviving at the death of the
Director: the Director's (1) surviving spouse or (2) estate.
4.4 Payments Due Missing Persons. The Funds shall make a
reasonable effort to locate all persons entitled to benefits under this
Agreement. However, notwithstanding any provisions of this Agreement to the
contrary, if, after a period of five (5) years from the date such benefit shall
be due, any such persons entitled to benefits have not been located, their
rights under this Agreement shall stand suspended. Before this provision
becomes operative, the Funds shall send a certified letter to all such persons
to their last known address advising them that their benefits under this
Agreement shall be suspended. Any such suspended amounts shall be held by the
Funds for a period of three (3) additional years (or a total of eight (8) years
from the time the benefits first become payable) and thereafter, if unclaimed,
such amounts shall be forfeited.
5. AMENDMENTS AND TERMINATION
--------------------------
5.1 Amendments.
(a) The Funds and the Director may, by a written
instrument signed by, or on behalf of, such parties, amend this Agreement at
any time and in any manner.
-6-
<PAGE> 11
(b) The Funds reserve the right to amend, in whole or in
part, and in any manner, any or all of the provisions of this Agreement by
action of their Boards of Directors for the purposes of complying with any
provision of the Code or any other technical or legal requirements, provided
that:
(1) No such amendment shall make it possible for
any part of the Director's Deferral Accounts to be used for, or diverted to,
purposes other than for the exclusive benefit of the Director or his
Beneficiaries, except to the extent otherwise provided in this Agreement;
and
(2) No such amendment may reduce the amount of
the Director's Deferral Accounts as of the effective date of such amendment.
5.2 Termination. The Director and the Funds may, by written
instrument signed by, or on behalf of, such parties, terminate this Agreement
at any time. In the event of the termination of this Agreement, the Boards of
Directors, in their sole discretion, may choose to pay out the Director's
Deferral Accounts prior to the designated Payment Dates. Otherwise, following
a termination of the Plan, such Accounts shall continue to be maintained in
accordance with the provisions of this Plan until the time they are paid out.
6. MISCELLANEOUS.
--------------
6.1 Rights of Creditors.
(a) This Agreement is unfunded. Neither the Director nor
any other persons shall have any interest in any specific asset or assets of
the Funds by reason of any Deferral Accounts hereunder, nor any rights to
receive distribution of his Deferral Accounts except and as to the extent
expressly provided hereunder. The Funds shall not be required to purchase,
hold or dispose of any investments pursuant to this Agreement; however, if in
order to cover their obligations hereunder the Funds elect to purchase any
investments the same shall continue for all purposes to be a part of the
general assets and property of the Funds, subject to the claims of their
general creditors and no person other than the Funds shall by virtue of the
provisions of this Agreement have any interest in such assets other than an
interest as a general creditor.
(b) The rights of the Director and the Beneficiaries to
the amounts held in the Deferral Accounts are unsecured and shall be subject to
the creditors of the Funds. With respect to the payment of amounts held under
the Deferral Accounts, the Director and his Beneficiaries have the status of
unsecured creditors of the Funds. This Agreement is executed on behalf of the
Funds by an officer, or other representative, of the Funds as such and not
individually. Any obligation of the Funds hereunder shall be an unsecured
obligation of the Funds and not of any other person.
-7-
<PAGE> 12
6.2 Agents. The Funds may employ agents and provide for such
clerical, legal, actuarial, accounting, advisory or other services as it deems
necessary to perform their duties under this Agreement. The Funds shall bear
the cost of such services and all other expenses they incur in connection with
the administration of this Agreement.
6.3 Liability and Indemnification. Except for their own gross
negligence, willful misconduct or willful breach of the terms of this
Agreement, the Funds shall be indemnified and held harmless by the Director
against liability or losses occurring by reason of any act or omission of the
Funds or any other person.
6.4 Incapacity. If the Funds shall receive evidence satisfactory
to them that the Director or any Beneficiary entitled to receive any benefit
under the Agreement is, at the time when such benefit becomes payable, a minor,
or is physically or mentally incompetent to receive such benefit and to give a
valid release therefor, and that another person or an institution is then
maintaining or has custody of the Director or Beneficiary and that no guardian,
committee or other representative of the estate of the Director or Beneficiary
shall have been duly appointed, the Funds may make payment of such benefit
otherwise payable to the Director or Beneficiary to such other person or
institution, including a custodian under a Uniform Gifts to Minors Act, or
corresponding legislation (who shall be an adult, a guardian of the minor or a
trust company), and the release of such other person or institution shall be a
valid and complete discharge for the payment of such benefit.
6.5 Cooperation of Parties. All parties to this Agreement and any
person claiming any interest hereunder agree to perform any and all acts and
execute any and all documents and papers which are necessary or desirable for
carrying out this Agreement or any of its provisions.
6.6 Governing Law. This Agreement is made and entered into in the
State of Texas and all matters concerning its validity, construction and
administration shall be governed by the laws of the State of Texas.
6.7 Nonguarantee of Directorship. Nothing contained in this
Agreement shall be construed as a contract or guarantee of the right of the
Director to be, or remain as, a director of any of the Funds or to receive any,
or any particular rate of, Compensation from any of the Funds.
6.8 Counsel. The Funds may consult with legal counsel with
respect to the meaning or construction of this Agreement, their obligations or
duties hereunder or with respect to any action or proceeding or any question of
law, and they shall be fully protected with respect to any action taken or
omitted by them in good faith pursuant to the advice of legal counsel.
6.9 Spendthrift Provision. The Director's and Beneficiaries'
interests in the Deferral Accounts may not be anticipated, sold, encumbered,
pledged, mortgaged, charged, transferred,
-8-
<PAGE> 13
alienated, assigned nor become subject to execution, garnishment or
attachment and any attempt to do so by any person shall render the Deferral
Accounts immediately forfeitable.
6.10 Notices. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, or by nationally recognized overnight delivery service providing for a
signed return receipt, addressed to the Director at the home address set forth
in the Funds' records and to the Funds at the address set forth on the first
page of this Agreement, provided that all notices to the Funds shall be
directed to the attention of the Presidents of the Funds or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
6.11 Entire Agreement. This Agreement contains the entire
understanding between the Funds and the Director with respect to the payment of
non-qualified elective deferred compensation by the Fund to the Director.
Effective as of the date hereof, this Agreement replaces, and supersedes, all
other non-qualified elective deferred compensation agreements by and between
the Director and the Funds.
6.12 Interpretation of Agreement. Interpretations of, and
determinations (including factual determinations) related to, this Agreement
made by the Funds in good faith, including any determinations of the amounts of
the Deferral Accounts, shall be conclusive and binding upon all parties; and
the Funds shall not incur any liability to the Director for any such
interpretation or determination so made or for any other action taken by it in
connection with this Agreement in good faith.
6.13 Successors and Assigns. This Agreement shall be binding upon,
and shall inure to the benefit of, the Funds and their successors and assigns
and to the Director and his heirs, executors, administrators and personal
representatives.
6.14 Severability. In the event any one or more provisions of this
Agreement are held to be invalid or unenforceable, such illegality or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof and such other provisions shall remain in full force and
effect unaffected by such invalidity or unenforceability.
6.15 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same instrument.
-9-
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
The Funds
________________________ By:_________________________
Witness Name:
Title:
________________________ ____________________________
Witness Director
-10-
<PAGE> 15
APPENDIX A
----------
AIM EQUITY FUNDS, INC.
AIMS FUNDS GROUP
AIM INTERNATIONAL FUNDS, INC.
AIM INVESTMENT SECURITIES FUNDS
AIM STRATEGIC INCOME FUND, INC.
AIM SUMMIT FUND, INC.
AIM TAX-EXEMPT FUNDS, INC.
AIM VARIABLE INSURANCE FUNDS, INC.
SHORT-TERM INVESTMENTS CO.
SHORT-TERM INVESTMENTS TRUST
TAX-FREE INVESTMENTS CO.
<PAGE> 16
DEFERRED COMPENSATION AGREEMENT
DEFERRAL ELECTION FORM
-------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation agreement (the
"Agreement") dated as of ________________ by and between the undersigned and
the AIM Funds, I hereby make the following elections:
Deferral of Compensation
------------------------
Starting with Compensation to be paid to me with respect to
services provided by me to the AIM Funds after the date this election Form is
received by the AIM Funds, I hereby elect that ______ percent (_____%) of my
Compensation (as defined under the Agreement) be reduced and that the Fund
establish a bookkeeping account credited with amounts equal to the amount so
reduced (the "Deferral Account"). The Deferral Account shall be further
credited with income equivalents as provided under the Agreement. I understand
that this election will remain in effect with respect to Compensation I earn in
subsequent years unless I modify or revoke it. I further understand that such
modification or revocation will be effective only prospectively and will apply
commencing with the Compensation I earn in the calendar year that begins after
the change is received by you.
Payment Date
------------
I hereby designate ________ 1 (select the first month in any
calendar quarter) in the year ______ (select a year that is at least four years
after the year this election is made) as the Payment Date for the amounts
credited to my Deferral Account pursuant to the election made above. If my
Retirement (as defined in the Agreement) occurs sooner, I o do o do not (check
the appropriate box) want payment of such amounts to commence effective the
January 1 following my Retirement. I understand that amounts credited to my
Deferral Account may be paid to me prior to the Payment Date as provided in the
Agreement.
Payment Method
--------------
I hereby elect to receive the amounts credited to my Deferral
Account in (check one)
o a single payment in cash
o annual installments for a period of ____ (select no more than 10
years)
-12-
<PAGE> 17
beginning within 30 days following the payment date selected above.
I understand that the amounts credited to my Deferral Account
shall remain the general assets of the AIM Funds and that, with respect to the
payment of such amounts, I am merely a general creditor of the AIM Funds. I
may not sell, encumber, pledge, assign or otherwise alienate the amounts
credited to my Deferral Account.
I hereby agree that the terms of the Agreement are
incorporated herein and are made a part hereof. Dated as of the day and year
first above written.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
-13-
<PAGE> 18
DEFERRED COMPENSATION AGREEMENT
INVESTMENT DIRECTION FORM
-------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the
"Agreement") dated as of ________________ by and between the undersigned and
the AIM Funds, I hereby elect that my Deferral Account under the Agreement be
considered to be invested as follows (in multiples of 10%):
AIM WEINGARTEN FUND ____________%
AIM CONSTELLATION FUND ____________%
AIM HIGH YIELD FUND ____________%
AIM INTERNATIONAL EQUITY FUND ____________%
AIM AGGRESSIVE GROWTH EQUITY FUND __________%
AIM LIMITED MATURITY TREASURY SHARES FUND __________%
AIM VALUE FUND _____________%
AIM MONEY MARKET FUND ___________%
AIM BALANCED FUND ____________%
AIM CHARTER FUND _____________%
I acknowledge that I may amend this Investment Agreement in
the manner, and at such time, as permitted under the Agreement. Furthermore, I
acknowledge that, pursuant to Section 3.3(b) of the Agreement, the Fund has
reserved the right to disregard the elections made above to consider my
Deferral Account to be deemed to be invested in a fund of its choosing.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
<PAGE> 19
DEFERRED COMPENSATION AGREEMENT
BENEFICIARY DESIGNATION FORM
-------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the
"Agreement") dated as of _____________ by and between the undersigned and the
AIM Funds, I hereby make the following beneficiary designations:
I. Primary Beneficiary
-------------------
I hereby appoint the following as my Primary Beneficiary(ies)
to receive at my death the amounts credited to my Deferral Account under the
Agreement. In the event I am survived by more than one Primary Beneficiary,
such Primary Beneficiaries shall share equally in such amounts unless I
indicate otherwise on an attachment to this form:
_________________________________________________________________
Name Relationship
_________________________________________________________________
Address
_________________________________________________________________
City State Zip
<PAGE> 20
II. Secondary Beneficiary
---------------------
In the event I am not survived by any Primary Beneficiary, I
hereby appoint the following as Secondary Beneficiary(ies) to receive death
benefits under the Agreement. In the event I am survived by more than one
Secondary Beneficiary, such Secondary Beneficiaries shall share equally unless
I indicate otherwise on an attachment to this form:
_________________________________________________________________
Name Relationship
_________________________________________________________________
Address
_________________________________________________________________
City State Zip
I understand that I may revoke or amend the above designations
at any time. I further understand that if I am not survived by a Primary or
Secondary Beneficiary, my Beneficiary shall be as set forth under the
Agreement.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
-2-
<PAGE> 21
INITIAL PAYMENT DATE ELECTION FORM
FOR PREVIOUSLY DEFERRED COMPENSATION
------------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation agreement (the
"Agreement") dated as of ________________ by and between the undersigned and
the AIM Funds, pursuant to which I have previously elected to defer
Compensation, I hereby designate ________ 1 (select the first month in any
calendar quarter) in the year ______ (select a year that is at least four years
after the year this election is made) as the Payment Date for the amounts
previously credited to my Deferral Account and amounts subsequently credited
thereto. If my Retirement (as defined in the Agreement) occurs sooner, I o do
o do not (check the appropriate box) want payment of such amounts to commence
effective the January 1 following my Retirement. I understand that amounts
credited to my Deferral Account may be paid to me prior to the Payment Date as
provided in the Agreement.
I understand that I may amend this Investment Agreement in the
manner, and at such time, as permitted under the Agreement.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
-3-
<PAGE> 1
EXHIBIT 8(a) (1)
AMENDMENT NO. 2
TO
CUSTODIAN CONTRACT
AMENDMENT No. 2 made as of this 19th day of September,
1995 to that certain Custodian Contract dated as of October 1, 1992, as amended
(the "Custody Agreement") between State Street Bank and Trust Company, a
Massachusetts trust company (the "Custodian") and AIM Equity Funds, Inc., a
Maryland corporation (the "Fund").
WHEREAS, the Custodian and Fund have previously entered into a Custody
Agreement;
WHEREAS, the Fund and the Custodian desire to amend the Custody
Agreement to provide for the implementation of Electronic Trade Delivery
("ETD"), the automated process of notifying the Custodian of trades for
settlement processing; and
WHEREAS, the Board of Directors of the Fund has approved the amendment
of the Custody Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises set forth, the
Fund and the Custodian agree to amend the Custody Agreement by replacing
"Section 5. - Proper Instructions" in its entirety with the following:
5. Proper Instructions
-------------------
Proper Instructions as used throughout this Contract includes
the following:
(a) a writing signed or initialled by one or more person or
persons as the Board of Directors shall have from time to time
authorized. Each such writing shall set forth the specific
transaction or type or transaction involved, including a specific
statement of the purpose for which such action is requested;
(b) communications effected directly between
electro-mechanical or electronic devices provided that the Board of
Directors and the Custodian are satisfied that procedures relating to
the use of such electro-mechanical and electronic devices afford
adequate safeguards for the Portfolios' assets and have been followed.
The Fund shall provide a Certificate of the Secretary or the Assistant
Secretary as to the authorization for use of electro-mechanical or
electronic devices by the Board of Directors of the Fund accompanied
by a detailed description of procedures approved by the Fund's Board
of Directors;
(c) oral instructions will be considered Proper Instructions
if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral instructions to
be confirmed in writing or through electro-mechanical or electronic
devices; or
(d) Proper Instructions in connection with a segregated asset
account which has been established pursuant to Section 2.11, hereof,
shall include instructions received by the
<PAGE> 2
Custodian in accordance with the provisions of any three-party
agreement, to which the Fund and the Custodian are each a party,
governing such account or accounts.
IN WITNESS WHEREOF, each of the parties has caused this
Amendment to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed as of the day and
year first above written.
ATTEST STATE STREET BANK AND TRUST COMPANY
By
- -------------------------- -------------------------
Assistant Secretary
ATTEST AIM EQUITY FUNDS, INC.
/s/ NANCY L. MARTIN By /s/ ROBERT H. GRAHAM
- ------------------------ -------------------------
Assistant Secretary
2
<PAGE> 1
EXHIBIT 8(a)(2)
AMENDMENT NO.1
TO
CUSTODIAN CONTRACT
Pursuant to paragraph 17 of the Custodian Contract dated October 1, 1992
between AIM Equity Funds, Inc. (the "Fund") and State Street Bank and Trust
Company (the "Custodian"), the Fund hereby requests that the Custodian render
services as custodian to the following additional portfolio:
AIM Aggressive Growth Fund
Please indicate acceptance of this addition by signing and returning this
Amendment to our offices at 11 Greenway Plaza, Suite 1919, Houston, Texas
77046.
Effective Date: October 15, 1993
AIM EQUITY FUNDS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
----------------------------- -----------------------------------
Title: Assistant Secretary Title: Executive Vice President
------------------------------ --------------------------------
STATE STREET BANK AND TRUST COMPANY
Attest: /s/ A. CONNELLY By: /s/ N. GRADY
----------------------------- -----------------------------------
Title: Assistant Secretary Title: Vice President
------------------------------ --------------------------------
<PAGE> 1
EXHIBIT 8(a)(3)
CUSTODIAN CONTRACT
Between
AIM EQUITY FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
-----------------
PAGE
----
1. Employment of Custodian and Property to be Held By It . . . . . . . 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States . . . . . . . 3
2.1 Holding Securities . . . . . . . . . . . . . . . . . . . . . 3
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . . 3
2.3 Registration of Securities . . . . . . . . . . . . . . . . . 8
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Availability of Federal Funds. . . . . . . . . . . . . . . .10
2.6 Collection of Income . . . . . . . . . . . . . . . . . . . .10
2.7 Payment of Fund Monies . . . . . . . . . . . . . . . . . . .11
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased. . . . . . . . . . . . . . .14
2.9 Appointment of Agents. . . . . . . . . . . . . . . . . . . .15
2.10 Deposit of Fund Assets in Securities Systems . . . . . . . .15
2.10A Fund Assets Held in the Custodian's Direct
Paper System . . . . . . . . . . . . . . . . . . . . . . .18
2.11 Segregated Account . . . . . . . . . . . . . . . . . . . . .20
2.12 Ownership Certificates for Tax Purposes. . . . . . . . . . .21
2.13 Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . .22
2.14 Communications Relating to Portfolio
Securities . . . . . . . . . . . . . . . . . . . . . . . . .22
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States . . . . . . . . . . . . .23
3.1 Appointment of Foreign Sub-Custodians . . . . . . . . . . .23
3.2 Assets to be Held. . . . . . . . . . . . . . . . . . . . . .23
3.3 Foreign Securities Depositories. . . . . . . . . . . . . . .24
3.4 Segregation of Securities. . . . . . . . . . . . . . . . . .24
3.5 Agreements with Foreign Banking Institutions . . . . . . . .25
3.6 Access of Independent Accountants of the Fund. . . . . . . .25
3.7 Reports by Custodian . . . . . . . . . . . . . . . . . . . .26
3.8 Transactions in Foreign Custody Account . . . . . . . . . .26
3.9 Liability of Foreign Sub-Custodians. . . . . . . . . . . . .27
3.10 Liability of Custodian . . . . . . . . . . . . . . . . . . .28
3.11 Reimbursement for Advances . . . . . . . . . . . . . . . . .29
3.12 Monitoring Responsibilities . . . . . . . . . . . . . . . .29
3.13 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . .30
3.14 Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . .30
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund . . . . . . . . . . . . . . . . . . . . . . .31
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . .32
6. Actions Permitted without Express Authority . . . . . . . . . . . .33
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . .34
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income . . . . . . . . .34
<PAGE> 3
9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
10. Opinion of Fund's Independent Accountants . . . . . . . . . . . . .35
11. Reports to Fund by Independent Public Accountants . . . . . . . . .36
12. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . .36
13. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . .36
14. Effective Period, Termination and Amendment . . . . . . . . . . . .39
15. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . .40
16. Interpretive and Additional Provisions . . . . . . . . . . . . . . .42
17. Additional Funds . . . . . . . . . . . . . . . . . . . . . . . . . .42
18. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . .43
19. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . .43
<PAGE> 4
CUSTODIAN CONTRACT
------------------
This Contract between AIM Equity Funds, Inc., a corporation organized
and existing under the laws of Maryland, having its principal place of business
at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046 hereinafter called the
"Fund", and State Street Bank and Trust Company, a Massachusetts trust company,
having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund offers shares in three series, the AIM Charter Fund,
AIM Constellation Fund, and AIM Weingarten Fund (such series together with all
other series subsequently established by the Fund and made subject to this
Contract in accordance with paragraph 17, being herein referred to as the
"Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets
of the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic
<PAGE> 5
securities") and securities it desires to be held outside the United States
("foreign securities") consistent with the provisions of the Articles of
Incorporation. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of
income, payments of principal or capital distributions received by it with
respect to all securities owned by the Portfolio(s) from time to time, and the
cash consideration received by it for such new or treasury shares of capital
stock of the Fund representing interests in the Portfolios, ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible
for any property of a Portfolio held or received by the Portfolio and not
delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, located in the United States but only
in accordance with an applicable vote by the Board of Directors of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
-2-
<PAGE> 6
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash property, to
be held by it in the United States including all domestic securities
owned by such Portfolio, other than (a) securities which are maintained
pursuant to Section 2.10 in a clearing agency which acts as a
securities depository or in a book-entry system authorized by the U. S.
Department of the Treasury, collectively referred to herein as
"Securities System" and (b) commercial paper of an issuer for which
State Street Bank and Trust Company acts as issuing and paying agent
("Direct Paper") which is deposited and/or maintained in the Direct
Paper System of the Custodian pursuant to Section 2.10A.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or in a
Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System Account")
only upon receipt of Proper Instructions from the Fund on behalf of
the applicable Portfolio, which may be continuing instructions when
deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the
Portfolio and receipt for payment therefor;
-3-
<PAGE> 7
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities
entered into by the Portfolio;
3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section
2.10 hereof;
4) To the depository agent in connection with tender or
other similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or
otherwise become payable; provided that, in any such
case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer
into the name of the Portfolio or into the name of any
nominee or nominees of the Custodian or into the name
or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for
exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units; provided
that, in any such case, the new securities are to be
delivered to the Custodian;
-4-
<PAGE> 8
7) Upon the sale of such securities for the account of
the Portfolio, to the broker or its clearing agent,
against a receipt, for examination in accordance with
"street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or
liability for any loss arising from the delivery of
such securities prior to receiving payment for such
securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization,
reorganization or readjustment of the securities of
the issuer of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities
and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of
such warrants, rights or similar securities or the
surrender of interim receipts or temporary securities
for
-5-
<PAGE> 9
definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of
securities made by the Portfolio, but only against
receipt of adequate collateral as agreed upon from
time to time by the Custodian and the Fund on behalf
of the Portfolio, which may be in the form of cash or
obligations issued by the United States government,
its agencies or instrumentalities, except that in
connection with any loans for which collateral is to
be credited to the Custodian's account in the
book-entry system authorized by the U.S. Department
of the Treasury, the Custodian will not be held
liable or responsible for the delivery of securities
owned by the Portfolio prior to the receipt of such
collateral;
11) For delivery as security in connection with any
borrowings by the Fund on behalf of the Portfolio
requiring a pledge of assets by the Fund on behalf of
the Portfolio, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of
any agreement among the Fund on behalf of the
Portfolio, the Custodian and a
-6-
<PAGE> 10
broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of
any registered national securities exchange, or of
any similar organization or organizations, regarding
escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio,
the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating
to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any
similar organization or organizations, regarding
account deposits in connection with transactions by
the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such
Transfer Agent or to the holders of shares in
connection with distributions in kind, as may be
described
-7-
<PAGE> 11
from time to time in the currently effective
prospectus and statement of additional information of
the Fund, related to the Portfolio ("Prospectus"), in
satisfaction of requests by holders of Shares for
repurchase or redemption; and
15) For any other proper corporate purpose, but only upon
receipt of, in addition Proper Instructions from the
Fund on behalf of the applicable Portfolio, a
certified copy of a resolution of the Board of
Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or
an Assistant Secretary, specifying the securities of
the Portfolio to be delivered, setting forth the
purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized
in writing the appointment of a nominee to
-8-
<PAGE> 12
be used in common with other registered investment companies having
the same investment adviser as the Portfolio, or in the name or
nominee name of any agent appointed pursuant to Section 2.9 or in the
name or nominee name of any sub-custodian appointed pursuant
to Article 1. All securities accepted by the Custodian on behalf of
the Portfolio under the terms of this Contract shall be in "street
name" or other good delivery form. If, however, the Fund directs the
Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on
such securities and to notify the Fund on a best efforts basis only of
relevant corporate actions including, without limitation, pendency of
calls, maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio
of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained
by the Portfolio in a bank account established and used in accordance
with Rule 17f-3 under the Investment Company Act of 1940. Funds held
by the Custodian for a Portfolio may be deposited by it to its credit
as Custodian in the Banking Department
-9-
<PAGE> 13
of the Custodian or in such other banks or trust companies as it may in
its discretion deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified to act as a
custodian under the Investment Company Act of 1940 and that each such
bank or trust company and the funds to be deposited with each such bank
or trust company shall on behalf of each applicable Portfolio be
approved by vote of a majority of the Board of Directors of the Fund.
Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that
capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund
on behalf of each applicable Portfolio and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions from the Fund
on behalf of a Portfolio, make federal funds available to such
Portfolio as of specified times agreed upon from time to time by the
Fund and the Custodian in the amount of checks received in payment for
Shares of such Portfolio which are deposited into the Portfolio's
account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other
payments with respect to registered domestic securities held hereunder
to which each Portfolio shall be entitled either by law or pursuant to
custom in the securities business, and shall
-10-
<PAGE> 14
collect on a timely basis all income and other payments with respect
to bearer domestic securities if, on the date of payment by the
issuer, such securities are held by the Custodian or its agent thereof
shall credit such income, as collected, to such Portfolio's custodian
account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other
income items requiring presentation as and when they become due and
shall collect interest when due on securities held hereunder. Income
due each Portfolio on securities loaned pursuant to the provisions of
Section 2.2 (10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection therewith,
other than to provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely delivery to
the Custodian of the income to which the Portfolio is properly
entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options,
futures contracts or options on futures contracts for
the account of the Portfolio but only (a) against the
delivery
-11-
<PAGE> 15
of such securities or evidence of title to such
options, futures contracts or options on futures
contracts to the Custodian (or any bank, banking firm
or trust company doing business in the United States
or abroad which is qualified under the Investment
Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as
its agent for this purpose) registered in the name of
the Portfolio or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in
accordance with the conditions set forth in Section
2.10 hereof; (c) in the case of a purchase involving
the Direct Paper System, in accordance with the
conditions set forth in Section 2.10A; (d) in the
case of repurchase agreements entered into between
the Fund on behalf of the Portfolio and the
Custodian, or another bank, or a broker-dealer which
is a member of NASD, (i) against delivery of the
securities either in certificate form or through an
entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or
-12-
<PAGE> 16
(ii) against delivery of the receipt evidencing
purchase by the Portfolio of securities owned by the
Custodian along with written evidence of the
agreement by the custodian to repurchase such
securities from the Portfolio or (e) for transfer to
a time deposit account of the Fund in any bank,
whether domestic or foreign; such transfer may be
effected prior to receipt of a confirmation from a
broker and/or the applicable bank pursuant to Proper
Instructions from the Fund as defined in Article 5;
2) In connection with conversion, exchange or
surrender of securities owned by the Portfolio as
set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares
issued by the Portfolio as set forth in Article 4
hereof;
4) For the payment of any expense or liability
incurred by the Portfolio, including but not limited
to the following payments for the account of the
Portfolio: interest, taxes, management, accounting,
transfer agent and legal fees, and operating expenses
of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred
expenses;
-13-
<PAGE> 17
5) For the payment of any dividends on Shares of the
Portfolio declared pursuant to the governing
documents of the Fund;
6) For payment of the amount of dividends received in
respect of securities sold short;
7) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions from the Fund
on behalf of the Portfolio, a certified copy of a
resolution of the Board of Directors or of the
Executive Committee of the Fund signed by an officer
of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such
payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a
proper purpose, and naming the person or persons to
whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in advance of receipt
of the securities purchased in the absence of specific written
instructions from the Fund on behalf of such Portfolio to so pay in
advance, the Custodian shall be absolutely liable to the Fund for such
securities to the
-14-
<PAGE> 18
same extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) and other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may from
time to time direct; provided, however, that the appointment of any
agent shall not relieve the Custodian of its responsibilities or
liabilities hereunder.
2.10 Deposit of Fund Assets in Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep securities of the Portfolio in
a Securities System provided that such securities are
represented in an account ("Account") of the
Custodian in the
-15-
<PAGE> 19
Securities System which shall not include any assets
of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to
securities of the Portfolio which are maintained in a
Securities System shall identify by book-entry those
securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for
the account of the Portfolio upon (i) receipt of
advice from the Securities System that such
securities have been transferred to the Account, and
(ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for
the account of the Portfolio. The Custodian shall
transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the
Securities System that payment for such securities
has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian
to reflect such transfer and payment for the account
of the Portfolio. Copies of all advices from the
Securities System of transfers of securities for the
-16-
<PAGE> 20
account of the Portfolio shall identify the
Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request.
Upon request, the Custodian shall furnish the Fund on
behalf of the Portfolio confirmation of each transfer
to or from the account for the Portfolio in the form
of a written advice or notice and shall furnish to
the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions
in the Securities System for the account of the
Portfolio.
4) The Custodian shall provide the Fund for the
Portfolio with any report obtained by the Custodian
on the Securities System's accounting system,
internal accounting control and procedures for
safeguarding securities deposited in the Securities
System;
5) The Custodian shall have received from the Fund on
behalf of the Portfolio the initial or annual
certificate, as the case may be, required by Article
14 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the
Fund for the benefit of the Portfolio for any loss or
damage to the
-17-
<PAGE> 21
Portfolio resulting from use of the Securities System
by reason of any negligence, misfeasance or misconduct
of the Custodian or any of its agents or of any of its
or their employees or from failure of the Custodian or
any such agent to enforce effectively such rights as
it may have against the Securities System; at the
election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with
respect to any claim against the Securities System or
any other person which the Custodian may have as a
consequence of any such loss or damage if and to the
extent that the Portfolio has not been made whole for
any such loss or damage.
2.10A Fund Assets Held in the Custodian's Direct Paper System
The Custodian may deposit and/or maintain securities owned by a
Portfolio in the Direct Paper System of the custodian subject to the
following provisions:
1) No transaction relating to securities in the
Direct Paper System will be effected in the
absence of Proper Instructions from the Fund
on behalf of the Portfolio;
2) The Custodian may keep securities of the
Portfolio in the Direct Paper System only if
such securities are represented in an account
-18-
<PAGE> 22
("Account") of the Custodian in the Direct
Paper System which shall not include any
assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise
for customers;
3) The records for the Custodian with respect to
securities of the Portfolio which are
maintained in the direct Paper System shall
identify by book-entry those securities
belonging to the Portfolio;
4) The Custodian shall pay for securities
purchased for the account of the Portfolio
upon the making of an entry on the records of
the Custodian to reflect such payment and
transfer of securities to the account of the
Portfolio. The Custodian shall transfer
securities sold for the account of the
Portfolio upon the making of an entry on the
records of the Custodian to reflect such
transfer and receipt of payment for the
account of the Portfolio;
5) The Custodian shall furnish the Fund on
behalf of the Portfolio confirmation of each
transfer to or from the account of the
Portfolio, in the form of a written advice or
notice, of Direct Paper on the next business
day following such transfer and shall furnish
-19-
<PAGE> 23
to the Fund on behalf of the Portfolio copies
of daily transaction sheets reflecting each
day's transaction in the Securities System
for the account of the Portfolio;
6) The Custodian shall provide the Fund on
behalf of the Portfolio with any report on
its system of internal account control as the
Fund may reasonably request from time to
time.
2.11 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.10 hereof, (i) in
accordance with the provisions of any agreement among the Fund on
behalf of the Portfolio, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with
-20-
<PAGE> 24
transactions by the Portfolio, (ii) for the purposes of segregating
cash or government securities in connection with options purchased,
sold or written by the Portfolio or commodity futures contracts or
options thereon purchased or sold by the Portfolio, (iii) for the
purposes of compliance by the Portfolio with the procedures required
by Investment Company Act Release No. 10666, or any subsequent release
or releases of the Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered investment companies
and (iv) for other proper corporate purposes,but only, in the case of
clause (iv), upon receipt of, in addition to Proper Instructions from
the Fund on behalf of the applicable Portfolio, a certified copy of a
resolution of the Board of Directors or of the Executive Committee
signed by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper corporate
purposes.
2.12 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Portfolio held
by it and in connection with transfers of securities.
-21-
<PAGE> 25
2.13 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are to be
voted, and shall promptly deliver to the Portfolio such proxies, all
proxy soliciting materials and all notices relating to such
securities.
2.14 Communications Relating to Portfolio Securities Subject to the
provisions of Section 2.3, the Custodian shall transmit
promptly to the Fund for each Portfolio all written information
(including, without limitation, pendency of calls and maturities of
domestic securities and expirations of rights in connection therewith
and notices of exercise of call and put options written by the Fund on
behalf of the Portfolio and the maturity of futures contracts
purchased or sold by the Portfolio) received by the Custodian from
issuers of the securities being held for the Portfolio. With respect
to tender or exchange offers, the Custodian shall transmit promptly to
the Portfolio all written information received by the Custodian from
issuers of the securities whose tender or exchange is sought and from
the party (or his agents) making the tender or exchange offer. If the
Portfolio desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the
-22-
<PAGE> 26
Portfolio shall notify the Custodian at least three business days
prior to the date on which the Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
3.1 Appointment of Foreign Sub-Custodians
The Fund hereby authorizes and instructs the Custodian to employ as
sub-custodians for the Portfolio's securities and other assets
maintained outside the United States the foreign banking institutions
and foreign securities depositories designated on Schedule A hereto
("foreign sub-custodians"). Upon receipt of "Proper Instructions", as
defined in Section 5 of this Contract, together with a certified
resolution of the Fund's Board of Directors, the Custodian and the
Fund may agree to amend Schedule A hereto from time to time to
designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of
Proper Instructions, the Fund may instruct the Custodian to cease the
employment of any one or more such sub-custodians for maintaining
custody of the Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and
other assets maintained in the custody of the foreign sub-custodians
to: (a) "foreign securities", as defined in paragraph (c)(1) of Rule
17f-5 under the Investment Company Act of 1940, and (b) cash and cash
-23-
<PAGE> 27
equivalents in such amounts as the Custodian or the Fund may determine
to be reasonably necessary to effect the Portfolio's foreign
securities transactions.
3.3 Foreign Securities Depositories. Except as may otherwise be agreed
upon in writing by the Custodian and the Fund, assets of the
Portfolios shall be maintained in foreign securities depositories only
through arrangements implemented by the foreign banking institutions
serving as sub-custodians pursuant to the terms hereof. Where
possible, such arrangements shall include entry into agreements
containing the provisions set forth in Section 3.5 hereof.
3.4 Segregation of Securities. The Custodian shall identify on its books
as belonging to each applicable Portfolio of the Fund, the foreign
securities of such Portfolios held by each foreign sub-custodian.
Each agreement pursuant to which the Custodian employs a foreign
banking institution shall require that such institution establish a
custody account for the Custodian on behalf of the Fund for each
applicable Portfolio of the Fund and physically segregate in each
account, securities and other assets of the Portfolios, and, in the
event that such institution deposits the securities of one or more of
the Portfolios in a foreign securities depository, that it shall
identify on its books as belonging to the Custodian, as agent for each
applicable Portfolio, the securities so deposited.
-24-
<PAGE> 28
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the assets of
each Portfolio will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking
institution or its creditors or agent, except a claim of payment for
their safe custody or administration; (b) beneficial ownership for the
assets of each Portfolio will be freely transferable without the
payment of money or value other than for custody or administration;
(c) adequate records will be maintained identifying the assets as
belonging to each applicable Portfolio; (d) officers of or auditors
employed by, or other representatives of the Custodian, including to
the extent permitted under applicable law the independent public
accountants for the Fund, will be given access to the books and
records of the foreign banking institution relating to its actions
under its agreement with the Custodian; and (e) assets of the
Portfolios held by the foreign sub-custodian will be subject only to
the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books
and records of any foreign banking institution employed as a foreign
-25-
<PAGE> 29
sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio(s) held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio(s) securities and other
assets and advices or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of each applicable Portfolio
indicating, as to securities acquired for a Portfolio, the identity of
the entity having physical possession of such securities.
3.8 Transactions in Foreign Custody Account
(a) Except as otherwise provided in paragraph (b) of this Section
3.8, the provision of Sections 2.2 and 2.7 of this Contract shall
apply, mutatis mutandis to the foreign securities of the Fund held
outside the United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of each
applicable Portfolio and delivery of securities maintained for the
account of each applicable Portfolio may be effected in accordance
with
-26-
<PAGE> 30
the customary established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or an
agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such
purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian
may be maintained in the name of such entity's nominee to the same
extent as set forth in Section 2.3 of this Contract, and the Fund
agrees to hold any such nominee harmless from any liability as a
holder of record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to
which the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable
care in the performance of its duties and to indemnify, and hold
harmless, the Custodian and each Fund from and against any loss,
damage, cost, expense, liability or claim arising out of or in
connection with the institution's performance of such obligations. At
the election of the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims against a foreign
banking institution as a consequence of any such loss, damage, cost,
expense, liability or claim if and to
-27-
<PAGE> 31
the extent that the Fund has not been made whole for any such loss,
damage, cost, expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts
or omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. bank as contemplated by paragraph 3.13 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.10, in delegating custody duties to
State Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except
such loss as may result from (a) political risk (including, but not
limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or
(b) other losses (excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due to Acts of God, nuclear
incident or other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.
-28-
<PAGE> 32
3.11 Reimbursement for Advances. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a
Portfolio including the purchase or sale of foreign exchange or of
contracts for foreign exchange, or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance
of this Contract, except such as may arise from its or its nominee's
own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable
Portfolio shall be security therefor and should the Fund fail to repay
the Custodian promptly after notice, the Custodian shall be entitled
to utilize available cash and to dispose of such Portfolios assets to
the extent necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the
Custodian will promptly inform the Fund in the event that the
Custodian learns of a material adverse change in the financial
condition of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-custodian
-29-
<PAGE> 33
not the subject of an exemptive order from the Securities and Exchange
Commission is notified by such foreign sub-custodian that there
appears to be a substantial likelihood that its shareholders' equity
will decline below $200 million (U.S. dollars or the equivalent
thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.13 Branches of U.S. Banks
(a) Except as otherwise set forth in this Contract, the provisions
hereof shall not apply where the custody of the Portfolios assets are
maintained in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment Company Act of
1940 meeting the qualification set forth in Section 26(a) of said Act.
The appointment of any such branch as a sub-custodian shall be
governed by paragraph 1 of this Contract.
(b) Cash held for each Portfolio of the Fund in the United Kingdom
shall be maintained in an interest bearing account established for
the Fund with the Custodian's London branch, which account shall be
subject to the direction of the Custodian, State Street London Ltd.
or both.
3.14 Tax Law
The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund
-30-
<PAGE> 34
or the Custodian as custodian of the Fund by the tax law of the United
States of America or any state or political subdivision thereof. It
shall be the responsibility of the Fund to notify the Custodian of the
obligations imposed on the Fund or the Custodian as custodian of the
Fund by the tax law of jurisdictions other than those mentioned in the
above sentence, including responsibility for withholding and other
taxes, assessments or other governmental charges, certifications and
governmental reporting. The sole responsibility of the Custodian with
regard to such tax law shall be to use reasonable efforts to assist
the Fund with respect to any claim for exemption or refund under the
tax law of jurisdictions for which the Fund has provided such
information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer
Agent of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to
the limitations of the Articles of Incorporation and any applicable votes of
the Board of Directors of the Fund
-31-
<PAGE> 35
pursuant thereto, the Custodian shall, upon receipt of instructions from the
Transfer Agent, make funds available for payment to holders of Shares who have
delivered to the Transfer Agent a request for redemption or repurchase of their
Shares. In connection with the redemption or repurchase of Shares of a
Portfolio, the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank designated by the
redeeming shareholders. In connection with the redemption or repurchase of
Shares of the Fund, the Custodian shall honor checks drawn on the Custodian by
a holder of Shares, which checks have been furnished by the Fund to the holder
of Shares, when presented to the Custodian in accordance with such procedures
and controls as are mutually agreed upon from time to time between the Fund and
the Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Contract means a writing
signed or initialled by one or more person or persons as the Board of Directors
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes
them to have been given by a person authorized to give such instructions with
respect to the transaction involved. The Fund shall cause all oral instructions
to be confirmed in writing. Upon receipt of a certificate of the Secretary or
an Assistant Secretary as to the authorization by
-32-
<PAGE> 36
the Board of Directors of the Fund accompanied by a detailed description of
procedures approved by the Board of Directors, Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Directors and the Custodian are satisfied
that such procedures afford adequate safeguards for the Portfolios' assets. For
purposes of this Section, Proper Instructions shall include instructions
received by the Custodian pursuant to any three-party agreement which requires
a segregated asset account in accordance with Section 2.11.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from
the Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to the Fund on
behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as otherwise
directed by the Board of Directors of the Fund.
-33-
<PAGE> 37
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the
Fund. The Custodian may receive and accept a certified copy of a vote of the
Board of Directors of the Fund as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or b) of any determination or of
any action by the Board of Directors pursuant to the Articles of Incorporation
as described in such vote, and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Directors of the Fund to keep
the books of account of each Portfolio and/or compute the net asset value per
share of the outstanding shares of each Portfolio or, if directed in writing to
do so by the Fund on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Portfolio as
described in the Fund's currently effective prospectus related to such
Portfolio and shall advise the Fund and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an officer of the
Fund to do so, shall advise the Transfer Agent
-34-
<PAGE> 38
periodically of the division of such net income among its various components.
The calculations of the net asset value per share and the daily income of each
Portfolio shall be made at the time or times described from time to time in the
Fund's currently effective prospectus related to such Portfolio.
9. Records
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under the Investment
Company Act of 1940, with particular attention to Section 31 thereof and Rules
31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund
and shall at all times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or agents of the
Fund and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by each Portfolio and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be agreed
upon between the Fund and the Custodian, include certificate numbers in such
tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to its activities hereunder in connection with the preparation of the Fund's
Form
-35-
<PAGE> 39
N1-A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities System, relating to the services provided by the Custodian
under this Contract; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so
state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon in writing from time to time
between the Fund on behalf of each applicable Portfolio and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this
-36-
<PAGE> 40
Contract and shall be held harmless in acting upon any notice, request,
consent, certificate or other instrument reasonably believed by it to be
genuine and to be signed by the proper party or parties, including any futures
commission merchant acting pursuant to the terms of a three-party futures or
options agreement. The Custodian shall be held to the exercise of reasonable
care in carrying out the provisions of this Contract, but shall be kept
indemnified by and shall be without liability to the Fund for any action taken
or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for the Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States (except as specifically provided in Article 3.10)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by paragraph 3.13 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by, the direction of or authorization by the Fund to maintain custody of any
securities or cash of the Fund in a foreign country including, but not limited
to, losses resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism.
-37-
<PAGE> 41
If the Fund on behalf of a Portfolio requires the Custodian to take
any action with respect to securities, which action involves the payment of
money or which action may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Fund or the Portfolio being liable for
the payment of money or incurring liability of some other form, the Fund on
behalf of the Portfolio, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement) for the benefit of a Portfolio including the purchase or sale of
foreign exchange or of contracts for foreign exchange or in the event that the
Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any property
at any time held for the account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
-38-
<PAGE> 42
14. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors of the Fund has
approved the initial use of a particular Securities System by such Portfolio
and the receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Board of Directors has reviewed the use by such Portfolio of
such Securities System, as required in each case by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall not
with respect to a Portfolio act under Section 2.10A hereof in the absence of
receipt of an initial certificate of the Secretary or an Assistant Secretary
that the Board of Directors has approved the initial use of the Direct Paper
System by such Portfolio and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Directors has reviewed
the use by such Portfolio of the Direct Paper System; provided further,
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state
-39-
<PAGE> 43
regulations, or any provision of the Articles of Incorporation, and further
provided, that the Fund on behalf of one or more of the Portfolios may at any
time by action of its Board of Directors (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event of the appointment of
a conservator or receiver for the Custodian by the Comptroller of the Currency
or upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
15. Successor Custodian
If a successor custodian for the Fund, of one or more of the
Portfolios shall be appointed by the Board of Directors of the Fund, the
Custodian shall, upon termination, deliver to such successor custodian at the
office of the Custodian, duly endorsed and in the form for transfer, all
securities of each applicable Portfolio then held by it hereunder and shall
transfer to an account of the successor custodian all of the securities of each
such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the Board
of Directors of the Fund, deliver at the
-40-
<PAGE> 44
office of the Custodian and transfer such securities, funds and other
properties in accordance with such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board of Directors shall have been delivered
to the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities,
-41-
<PAGE> 45
funds and other properties and the provisions of this Contract relating to the
duties and obligations of the Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Articles of Incorporation
of the Fund. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.
17. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to AIM Charter Fund, AIM Constellation Fund, and AIM Weingarten Fund
with respect to which it desires to have the Custodian render services as
custodian under the terms hereof, it shall so notify the Custodian in writing,
and if the Custodian agrees in writing to provide such services, such series of
Shares shall become a Portfolio hereunder.
-42-
<PAGE> 46
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed as of the 1st day of October, 1992.
ATTEST AIM EQUITY FUNDS, INC.
/s/ SAMUEL D. SIRKO By /s/ GARY T. CRUM
- ------------------------- -------------------------
Assistant Secretary Vice President
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ CLAIRE E. RODOWICZ By [ILLEGIBLE]
- ------------------------- -------------------------
Assistant Secretary Senior Vice President
-43-
<PAGE> 47
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of AIM Equity Funds,
Inc. for use as sub-custodians for the Fund's securities and other assets:
State Street London Ltd.
Euroclear
Certified:
- ----------------------------------
Fund's Authorized Officer
Date:
-------------
-44-
<PAGE> 1
EXHIBIT 9(a)(1)
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
AIM EQUITY FUNDS, INC.
AND
A I M INSTITUTIONAL FUND SERVICES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 5 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 6 COVENANTS OF THE FUND AND THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 7 TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 8 ADDITIONAL FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 9 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 10 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 11 TEXAS LAW TO APPLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 12 MERGER OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 13 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of July, 1995, by and between AIM
EQUITY FUNDS, INC., a Maryland corporation having its principal office and
place of business at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046 (the
"Fund"), and A I M Institutional Fund Services, Inc., a Delaware corporation
having its principal office and place of business at 11 Greenway Plaza, Suite
1919, Houston, Texas 77046 (the "Transfer Agent").
WHEREAS, the Transfer Agent is registered as such with the Securities
and Exchange Commission (the "SEC"); and
WHEREAS, the Fund is authorized to issue shares in separate series and
classes, with each such series representing interests in a separate portfolio
of securities and other assets and each such class having different
distribution arrangements; and
WHEREAS, the Fund on behalf of the Institutional Class of each of the
portfolios thereof (the "Portfolios") desires to appoint the Transfer Agent as
its transfer agent, and agent in connection with certain other activities, with
respect to the Portfolios, and the Transfer Agent desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE 1
TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT
1.01 Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints the Transfer Agent to act as,
and the Transfer Agent agrees to act as, its transfer agent for the authorized
and issued shares of common stock of the Fund representing interests in the
Institutional Class of each of the respective Portfolios ("Shares"), dividend
disbursing agent, and agent in connection with any accumulation or similar
plans provided to shareholders of each of the Portfolios (the "Shareholders"),
including without limitation any periodic investment plan or periodic
withdrawal program, as provided in the currently effective prospectus and
statement of additional information (the "Prospectus") of the Fund on behalf of
the Portfolios.
1.02 The Transfer Agent agrees that it will perform the following
services:
(a) The Transfer Agent shall, in accordance with procedures
established from time to time by agreement between the Fund on behalf of each
of the Portfolios, as applicable, and the Transfer Agent:
(i) receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation thereof to the Custodian of the Fund
authorized pursuant to the Charter of the Fund (the
"Custodian");
(ii) pursuant to purchase orders, issue the appropriate
number of Shares and hold such Shares in the
appropriate Shareholder account;
1
<PAGE> 4
(iii) receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation thereof to the Custodian;
(iv) at the appropriate time as and when it receives
monies paid to it by the Custodian with respect to
any redemption, pay over or cause to be paid over in
the appropriate manner such monies as instructed by
the Fund;
(v) effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vi) prepare and transmit payments for dividends and
distributions declared by the Fund on behalf of the
Shares;
(vii) maintain records of account for and advise the Fund
and its Shareholders as to the foregoing; and
(viii) record the issuance of Shares of the Fund and
maintain pursuant to SEC Rule 17Ad-10(e) a record of
the total number of Shares which are authorized,
based upon data provided to it by the Fund, and
issued and outstanding.
The Transfer Agent shall also provide the Fund on a regular basis with
the total number of Shares which are authorized and issued and outstanding but
shall have no obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any laws relating to the issue
or sale of such Shares, which function shall be the sole responsibility of the
Fund.
(b) In addition to the services set forth in the above paragraph
(a), the Transfer Agent shall: (i) perform the customary services of a transfer
agent, including but not limited to: maintaining all Shareholder accounts,
mailing Shareholder reports and prospectuses to current Shareholders, preparing
and mailing confirmation forms and statements of accounts to Shareholders for
all purchases and redemptions of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information.
(c) Procedures as to who shall provide certain of these services
in Article 1 may be established from time to time by agreement between the Fund
on behalf of each Portfolio and the Transfer Agent. The Transfer Agent may at
times perform only a portion of these services and the Fund or its agent may
perform these services on the Fund's behalf.
ARTICLE 2
FEES AND EXPENSES
2.01 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 annual fee in the amount of .007% of average daily net
assets, payable monthly. Such fee may be changed from time to time subject to
mutual written agreements between the Fund and the Transfer Agent.
2
<PAGE> 5
2.02 The Fund agrees on behalf of each of the Portfolios to pay all
fees following the mailing of a billing notice.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT
The Transfer Agent represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good
standing under the laws of the state of Delaware.
3.02 It is duly qualified to carry on its business in Delaware and
in Texas.
3.03 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.06 It is registered as a Transfer Agent as required by the
federal securities laws.
3.07 This Agreement is a legal, valid and binding obligation to it.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Transfer Agent that:
4.01 It is a business corporation duly organized and existing and
in good standing under the laws of Maryland.
4.02 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
4.03 All proceedings required by said Charter and By-Laws have been
taken to authorize it to enter into and perform this Agreement.
4.04 It is an open-end, management investment company registered
under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as
amended, on behalf of each of the Portfolios is currently effective and will
remain effective, with respect to all Shares of the Fund being offered for
sale.
3
<PAGE> 6
ARTICLE 5
INDEMNIFICATION
5.01 The Transfer Agent shall not be responsible for, and the Fund
shall on behalf of the applicable Portfolio, indemnify and hold the Transfer
Agent harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:
(a) all actions of the Transfer Agent or its agents or
subcontractors required to be taken pursuant to this Agreement, provided that
such actions are taken in good faith and without negligence or willful
misconduct;
(b) the Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation or warranty of
the Fund hereunder;
(c) the reliance on or use by the Transfer Agent or its agents or
subcontractors of information, records and documents or services which (i) are
received or relied upon by the Transfer Agent or its agents or subcontractors
and/or furnished to it or performed by on behalf of the Fund, and (ii) have
been prepared, maintained and/or performed by the Fund or any other person or
firm on behalf of the Fund; provided such actions are taken in good faith and
without negligence or willful misconduct;
(d) the reliance on, or the carrying out by the Transfer Agent or
its agents or subcontractors of any instructions or requests of the Fund on
behalf of the applicable Portfolio; provided such actions are taken in good
faith and without negligence or willful misconduct; or
(e) the offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
5.02 The Transfer Agent shall indemnify and hold the Fund harmless
from and against any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or attributable to any action
or failure or omission to act by the Transfer Agent as result of the Transfer
Agent's lack of good faith, negligence or willful misconduct.
5.03 At any time the Transfer Agent may apply to any officer of the
Fund for instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the Transfer
Agent under this Agreement, and the Transfer Agent and its agents or
subcontractors shall not be liable to and shall be indemnified by the Fund on
behalf of the applicable Portfolio for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The
Transfer Agent shall be protected and indemnified in acting upon any paper or
document furnished by or on behalf of the Fund, reasonably believed to be
genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided to the Transfer
Agent or its agents or subcontractors by machine readable input, telex, CRT
data entry or other similar means authorized by the Fund, and shall not be held
to have notice of any change of authority of any person, until receipt of
written notice thereof from the Fund.
4
<PAGE> 7
5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to
the other for any damages resulting from such failure to perform or otherwise
from such causes.
5.05 Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for
any consequential damages arising out of any act or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The
party who may be required to indemnify shall have the option to participate
with the party seeking indemnification in the defense of such claim. The party
seeking indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to indemnify it
except with the other party's prior written consent.
ARTICLE 6
COVENANTS OF THE FUND AND THE TRANSFER AGENT
6.01 The Fund shall, upon request, on behalf of each of the
Portfolios promptly furnish to the Transfer Agent the following:
(a) a certified copy of the resolution of the Board of Directors
of the Fund authorizing the appointment of the Transfer Agent and the execution
and delivery of this Agreement; and
(b) a copy of the Charter and By-Laws of the Fund and all
amendments thereto.
6.02 The Transfer Agent shall keep records relating to the services
to be performed hereunder, in the form and manner as it may deem advisable. To
the extent required by Section 31 of the Investment Company Act of 1940, as
amended, and the Rules thereunder, the Transfer Agent agrees that all such
records prepared or maintained by the Transfer Agent relating to the services
to be performed by the Transfer Agent hereunder are the property of the Fund
and will be preserved, maintained and made available in accordance with such
Section and Rules, and will be surrendered promptly to the Fund on and in
accordance with its request.
6.03 The Transfer Agent and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
6.04 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Transfer Agent will endeavor to notify the
Fund and to secure instructions from an authorized officer of the Fund as to
such inspection. The Transfer Agent reserves the right, however, to exhibit
the Shareholder records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the Shareholder records
to such person.
5
<PAGE> 8
ARTICLE 7
TERMINATION OF AGREEMENT
7.01 This Agreement may be terminated by either party upon sixty
(60) days written notice to the other.
7.02 Should the Fund exercise its right to terminate this
Agreement, all out-of-pocket expenses associated with the movement of records
and material will be borne by the Fund on behalf of the applicable
Portfolio(s). Additionally, the Transfer Agent reserves the right to charge
for any other reasonable expenses associated with such termination and/or a
charge equivalent to the average of three (3) months' fees.
ARTICLE 8
ADDITIONAL FUNDS
8.01 In the event that the Fund establishes one or more series of
Shares in addition to the Portfolios with respect to which it desires to have
the Transfer Agent render services as transfer agent under the terms hereof, it
shall so notify the Transfer Agent in writing, and if the Transfer Agent agrees
in writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
ARTICLE 9
ASSIGNMENT
9.01 Except as provided in Section 9.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
9.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
9.03 The Transfer Agent may, without further consent on the part of
the Fund, subcontract for the performance hereof with any entity which is duly
registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities
Exchange Act of 1934 as amended ("Section 17A(c)(1)"); provided, however, that
the Transfer Agent shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
ARTICLE 10
AMENDMENT
10.01 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution
of the Board of [Directors] [Trustees] of the Fund.
ARTICLE 11
TEXAS LAW TO APPLY
11.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Texas.
6
<PAGE> 9
ARTICLE 12
MERGER OF AGREEMENT
12.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
ARTICLE 13
COUNTERPARTS
13.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
7
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
AIM EQUITY FUNDS, INC.
By: /s/ ROBERT H. GRAHAM
---------------------------------
President
ATTEST:
/s/ STEPHEN I. WINER
- ----------------------------
Assistant Secretary
A I M INSTITUTIONAL FUND SERVICES, INC.
By: /s/ J. ABBOTT SPRAGUE
---------------------------------
President
ATTEST:
/s/ STEPHEN I. WINER
- ----------------------------
Assistant Secretary
8
<PAGE> 1
EXHIBIT 9(b)(1)
ADDENDUM NUMBER 2 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
This Amendment Number 2 effective October 12, 1995 is made to the
Remote Access and Related Services Agreement dated December 23, 1994 (the
"Remote Agreement") by and between each registered investment company listed on
the signature pages hereof, either for itself or, with respect to each such
company that is a series investment company, on behalf of each of the series or
class named on the signature pages hereof (the "Fund") and THE SHAREHOLDER
SERVICES GROUP, INC. ("TSSG"), a Massachusetts corporation with principal
offices at One Exchange Place, Boston, Massachusetts 02109.
WHEREAS, the Fund desires to incorporate any changes or deletions to
those registered investment companies listed on the signature page of the
Remote Agreement as set forth on the signature page hereof;
WHEREAS, the Fund desires to use an additional product to the TSSG
System known as the Price Rate Capture System (the "PRAT Application"); and
WHEREAS, TSSG desires to provide the PRAT Application to the Fund
solely in conjunction with the Fund's use of the TSSG System;
In consideration of their mutual promises contained herein, the Fund
and TSSG agree to modify the Remote Access and Related Services Agreement (the
"Remote Agreement") as follows:
1. Modify Schedule D to include the attached Exhibit 3 to Schedule D
The Agreement as modified by this Addendum ("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 promise not expressly
contained herein with respect to the subject matter hereof.
The parties to this Addendum have caused it to be executed by their
duly authorized officers as of the date and year referenced above.
<TABLE>
<CAPTION>
<S> <C>
AIM EQUITY FUNDS, INC. AIM FUNDS GROUP,
on behalf of the Class A and B Shares of the Retail on behalf of the Class A and Class B Shares of its
Classes of its AIM Charter Fund and AIM AIM Balanced Fund, AIM Intermediate Government
Weingarten Fund, and on behalf of the Class A Fund, AIM Growth Fund, AIM High Yield Fund,
Shares of the Retail Classes of AIM Constellation AIM Income Fund, AIM Municipal Bond Fund,
Fund and AIM Aggressive Growth Fund Portfolios AIM Global Utilities Fund and AIM Value Fund
Portfolios and on behalf of the Class A, Class B and
BY:/s/ Robert H. Graham Class C Shares of its AIM Money Market Fund Portfolio
--------------------------
Title: President By:/s/ Robert H. Graham
----------------------- --------------------------
Title: President
----------------------
AIM INTERNATIONAL FUNDS, INC.
on behalf of the Class A and Class B Shares of its
AIM International Equity Fund, AIM Global
Aggressive Growth Fund, AIM Global Growth Fund
and AIM Global Income Fund Portfolios
By:/s/ Robert H. Graham
--------------------------
Title: President
-----------------------
</TABLE>
<PAGE> 2
AIM INVESTMENT SECURITIES FUNDS,
on behalf of its AIM Limited Maturity Treasury
Shares
By:/s/ Robert H. GRAHAM
--------------------------
Title: President
-----------------------
AIM TAX-EXEMPT FUNDS, INC.,
on behalf of its AIM Tax-Exempt Cash Fund and
AIM Tax-Exempt Bond Fund of Connecticut
Portfolios and the AIM Tax-Free Intermediate Shares
of its Intermediate Portfolio
By:/s/ Robert H. GRAHAM
--------------------------
Title: President
-----------------------
THE SHAREHOLDER SERVICES GROUP,
INC.
By:/s/ JACK PUTNER
--------------------------
Title: COO - EVP
-----------------------
<PAGE> 3
SCHEDULE D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse TSSG monthly for applicable out-of-pocket expenses,
including, but not limited to the following items:
o Microfiche/microfilm production
o Magnetic media tapes and freight
o Telephone and telecommunication costs, including all lease,
maintenance and line costs
o NSCC transaction charges at $.15/per financial transaction
o Shipping, Certified and Overnight mail and insurance
o Year-End form production and mailings
o Terminals, communication lines, printers and other equipment and
any expenses incurred in connection with such terminals and lines
o Duplicating services, as pre-approved by the Fund
o Courier services
o Due Diligence Mailings
o Rendering fees as billed
o Overtime, as pre-approved by the Fund
o Temporary staff, as pre-approved by the Fund
o Travel and entertainment, as pre-approved by the Fund
o Record retention, retrieval and destruction costs, including,
but not limited to exit fees charged by third party record
keeping vendors
o Third party audit review
o All conversion costs: including System start up costs, but
excluding costs associated with conversations between TSSG
systems.
o Such other miscellaneous expenses reasonably incurred by TSSG in
performing its duties and responsibilities under this Agreement.
Such expenses incurred with consent of the Fund, not to be
unreasonably withheld.
o The costs associated with the Year-End Support Services set
forth on the attached Exhibit 1 of this Schedule D.
o The costs associated with the Broker Dealer Support Services set
forth on the attached Exhibit 2 of this Schedule D.
o The costs associated with the Price Rate Transmission Services
set forth on the attached Exhibit 3 of this Schedule D.
<PAGE> 4
EXHIBIT 3 TO SCHEDULE D
Price Rate Capture System Services (PRAT)
- -----------------------------------------
The PRAT Application will accept prices and dividend rates from the Fund
Accounting Department of A I M Advisors, Inc. electronically and post them to
the TSSG Pricing System. The PRAT Application will run interconnected via
Local Area Network hardware and software.
The fees for the PRAT Service shall be as follows:
o One Time Set Up Fee $5,000.
o Annual Fee* $7,500.
*The annual fee provides system and personnel resources required to support a
maximum average of 50 transmissions per month. A charge of $30.00 per
transmission will be assessed for all transmissions incurred in excess of the
average 2 per day per month.
<PAGE> 1
EXHIBIT 9(b)(2)
AMENDMENT NUMBER 1 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
This Amendment Number 1 effective October 4, 1995 is made to the Remote
Access and Related Services Agreement dated December 23, 1994 (the "Remote
Agreement") by and between each registered investment company listed on the
signature pages hereof, either for itself or, with respect to each such company
that is a series investment company, on behalf of each of the series or class
named on the signature pages hereof (the "Fund") and THE SHAREHOLDER SERVICES
GROUP, INC. ("TSSG"), a Massachusetts corporation with principal offices at One
Exchange Place, Boston, Massachusetts 02109.
WHEREAS, the Fund desires to incorporate any changes or deletions to those
registered investment companies listed on the signature page of the Remote
Agreement as set forth on the signature page hereof;
WHEREAS, the Fund in connection with its access to the TSSG System,
desires to access and use TSSG's proprietary software known as the Structured
Query Language Application Programming Interface Product Release 5.0 (the
"SQL/API Product"); and
WHEREAS, TSSG desires to provide such access to the Fund solely in
conjunction with the Fund's use of the TSSG System;
In consideration of their mutual promises contained herein, the Fund and
TSSG agree to modify the Remote Access and Related Services Agreement (the
"Remote Agreement") as follows:
1. TSSG grants to the Fund a non-transferable and non-exclusive license to
access and use TSSG's SQL/API Product, maintained on the TSSG System at the
TSSG Facility, solely to process data with respect to the Fund's internal
business. The Fund is authorized to use the SQL/API Product only in
connection with the Fund's remote use of the TSSG System. The Fund shall be
prohibited from the further sale, lease, transfer, license or sub-license,
assignment or marketing in any manner of the SQL/API Product, or any other
proprietary software used in conjunction with the TSSG System. The Fund
shall also be prohibited from the sale, lease, transfer, license,
sub-license, assignment, or marketing in any manner of any software product
developed in conjunction with the SQL/API Product.
2. It is acknowledged that the Fund acquires only the right to use the SQL/API
Product while the Remote Agreement is in effect between the parties and
such right and said license shall terminate upon termination of the Remote
Agreement. The Fund acknowledges that it does not acquire any rights of
ownership in the SQL/API Product. This Agreement and the license granted
pursuant hereto may not be assigned, sublicensed or transferred.
<PAGE> 2
3. The Fund shall not have the right to use the SQL/API Product other than in
connection with the use of the TSSG System in compliance with the Remote
Agreement. The Fund may use the SQL/API Product to access the TSSG System
using only TSSG Proprietary Software or software developed internally by
the Fund.
4. EXCEPT AS EXPRESSLY PROVIDED FOR IN THIS AMENDMENT, TSSG MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, TO THE FUND OR ANY OTHER
PERSON, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY,
SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHER
WISE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) OR
ANY SERVICES PROVIDED UNDER THIS AGREEMENT.
5. Infringement Indemnity TSSG shall defend, at its expense, any action
brought against the Fund to the extent that is based on a claim that the
SQL/API Product infringes a United States copyright or duly issued patent,
or misappropriates the trade secrets of a third party. TSSG shall indemnify
and hold harmless the Fund against damages and costs (including penalties,
interest and reasonable attorney's fees) finally awarded against the Fund
directly attributable to such claim provided that the Fund gives TSSG
prompt written notice of such claim, reasonable assistance and sole
authority to defend or settle such claim. If the SQL/API Product becomes,
or in TSSG's opinion is likely to become, the subject of such a claim then
TSSG may, at its option: (a) procure for the Fund the right to use the
SQL/API Product free of any liability for infringement or (b) replace or
modify the SQL/API Product to make it noninfringing. If TSSG is unable or
determines that it is commercially impracticable to undertake clause (a) or
(b) of this Section 5, the Fund will cease to use the directly affected
portion of the SQL/API Product, and if such SQL/API Product is in the
Fund's control, the Fund shall return or destroy it, and (c) TSSG will
grant to the Fund a pro-rata credit for the annual maintenance fee that the
Fund paid computed by dividing such fee by the total number of months in
the then current term of the license for the SQL/API Product and
multiplying the result by the number of months left in the unexpired
license term for the SQL/API Product.
TSSG shall have no obligation under this Section 5 if the alleged
infringement or violation is based upon the use of the SQL/API Product in
combination with other equipment or other software not furnished by TSSG or
if such claim arises from TSSG's compliance with the Fund's designs,
specifications or instructions or from the Fund's modification of the
SQL/API Product.
THIS SECTION STATES THE ENTIRE LIABILITY OF TSSG CONCERNING PATENT,
COPYRIGHT, TRADE SECRET OR OTHER PROPRIETARY RIGHTS INFRINGEMENT.
<PAGE> 3
6. Notwithstanding anything in this Amendment to the contrary, the Fund's
license to use the SQL/API Product will automatically terminate upon
termination of the Remote Agreement. This Amendment will terminate
automatically in the event of a breach of the sublicense.
7. TSSG shall take reasonable measures to enforce appropriate compliance with
the foregoing restrictions, up to and including the institution and
diligent prosecution of proper legal proceedings.
8. The Fund will agree to compensate TSSG for all fees as referenced on the
attached Schedule #1 to this Amendment, and such other schedules as may be
agreed upon between the parties from time to time.
The Agreement as modified 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 promise not expressly contained herein
with respect to the subject matter hereof.
<PAGE> 4
The parties to this Amendment have caused it to be executed by their duly
authorized officers as of the date and year referenced above.
AIM EQUITY FUNDS, INC. AIM INVESTMENT SECURITIES
on behalf of the Class A and B Shares of FUNDS,
the Retail Classes of its AIM Charter Fund on behalf of its AIM Limited
and AIM Weingarten Fund, and on behalf Maturity Treasury Shares
of the Class A Shares of the Retail Classes
of AIM Constellation Fund and AIM By: /s/ ROBERT H. GRAHAM
Aggressive Growth Fund Portfolios --------------------------
By: /s/ ROBERT H. GRAHAM Title: PRESIDENT
------------------------------------ -----------------------
Title: PRESIDENT
--------------------------------- AIM TAX-EXEMPT FUNDS, INC.,
on behalf of its AIM Tax-Exempt
Cash Fund and AIM Tax-Exempt Bond
AIM FUNDS GROUP, Fund of Connecticut Portfolios
on behalf of the Class A and Class B and the AIM Tax-Free Intermediate
Shares of its AIM Balanced Fund, AIM Inter- Shares of its Intermediate
mediate Government Fund, AIM Growth Portfolio
Fund, AIM High Yield Fund, AIM Income
Fund, AIM Municipal Bond Fund, AIM By: /s/ ROBERT H. GRAHAM
Global Utilities Fund and AIM Value Fund ---------------------------
Portfolios and on behalf of the Class A, Title: PRESIDENT
Class B and Class C Shares of its AIM ------------------------
Money Market Fund Portfolio
THE SHAREHOLDER SERVICES
By: /s/ ROBERT H. GRAHAM GROUP, INC.
-----------------------------------
Title: PRESIDENT By: /s/ JACK PUTNER
-------------------------------- ---------------------------
Title: EVP-COO
AIM INTERNATIONAL FUNDS, INC., ------------------------
on behalf of the Class A and Class B
Shares of its AIM International Equity
Fund, AIM Global Aggressive Growth
Fund, AIM Global Growth Fund and AIM
Global Income Fund Portfolios
By: /s/ ROBERT H. GRAHAM
----------------------------------
Title: PRESIDENT
-------------------------------
<PAGE> 5
SCHEDULE #1 TO AMENDMENT NUMBER 1
SQL/API FEES
Listed below are TSSG's License Fees for the SQL/API Product
<TABLE>
<S> <C> <C>
- - One Time License Fee $30,000
- - Annual Maintenance Fee(1) $15,000
billed quarterly in advance beginning
the first month of the Agreement
- - On-Going Development Cost(2) $125 per hour
- - Out of Pocket Expenses Per the existing
Remote Agreement
dated 12/23/94.
</TABLE>
The Fund and TSSG intend to implement initially Release 5.0 of the SQL/API
Product on 150 Workstations. For additional workstations beyond the 150
licensed, the Fund shall pay TSSG the then-current license, usage and support
fees for each additional Workstation
- ----------
(1) The increase in the maintenance fee after the first year will be
equal to the lesser of (i) the previous year's 12 month average increase in the
Consumer Price Index (CPI) or (ii) seven percent (7%) of the maintenance fee
charged by TSSG for the preceding twelve month period.
(2) Development work includes product installation, customization and
enhancements requested by the Fund.
<PAGE> 1
EXHIBIT 9(b)(3)
REMOTE ACCESS
-------------
AND
---
RELATED SERVICES AGREEMENT
--------------------------
AGREEMENT dated as December 23, 1994 between each registered investment
company listed on the signature pages hereof, either for itself or, with respect
to each such company that is a series investment company, on behalf of each of
the series or class named on the signature pages hereof (the "Fund") and THE
SHAREHOLDER SERVICES GROUP, INC. ("TSSG"), a Massachusetts corporation with
principal offices at One Exchange Place, Boston, Massachusetts 02109.
W I T N E S S E T H
-------------------
That for and in consideration of the mutual promises hereinafter set forth,
the Fund and TSSG agree as follows:
1. Appointment of TSSG. The Fund appoints TSSG as servicing agent to provide
and support remote terminal access through dedicated transmission lines to
its computerized data processing record keeping system for Fund shareholder
accounting more fully described on the attached Schedule A (the "TSSG
System") installed on TSSG computer hardware and using TSSG software ("TSSG
Facilities") to provide and support remote terminal access to the TSSG
System and the TSSG Facilities for the maintenance of Fund shareholder
records, processing of information and generation of information with
respect thereto. TSSG hereby accepts such appointment for the compensation
described below.
2. Oral and Written Instructions. "Written Instructions" shall mean a written
communication signed by a person reasonably believed by TSSG to be a person
named on the list of authorized persons as it may be amended by amendment
provided by the Fund to TSSG from time to time ("Schedule B"). "Oral
Instructions" shall mean instructions, other than Written Instructions,
actually received by TSSG from a person reasonably believed by TSSG to be
an Authorized Person listed on Schedule B. Written communication shall
include manually executed originals and authorized electronic
transmissions, including telefacsimile of a manually executed original or
other process.
3. Compensation.
(a) The Fund will compensate TSSG for the performance of its obligations
hereunder in accordance with the Fee Schedule attached hereto as
Schedule C. Such fees may be adjusted from time to time by attaching
to or substituting for Schedule C a revised Fee Schedule, dated and
signed by an authorized officer of each party hereto.
<PAGE> 2
(b) In addition to the fees payable pursuant to Schedule C, the Fund will
pay all out-of-pocket expenses incurred by TSSG in performing its
duties hereunder. Out-of-pocket expenses shall include the items
specified in the written schedule of out-of-pocket charges attached
hereto as Schedule D. Upon written approval of the Fund, Schedule D
may be modified by TSSG. The Fund agrees to approve all reasonable
changes in Schedule D. Unscheduled out-of-pocket expenses shall be
limited to those out-of-pocket expenses directly related to TSSG's
performance of its obligations hereunder.
(c) TSSG will provide an invoice as soon as practicable after the end of
each calendar month detailed in accordance with Schedule C and
Schedule D. The Fund will pay to TSSG the amount so billed within
fifteen (15) days after the Fund's receipt of the invoice.
4. Duties of TSSG.
(a) Subject to the provisions of this Agreement, the Fund hereby agrees to
use or employ the TSSG System and the TSSG Facilities to maintain
certain Fund shareholder records and generate output with respect to
the Fund's shareholders, and subject to the provisions of this
Agreement, TSSG will provide the use of the TSSG System and the TSSG
Facilities to maintain Fund shareholder records and generate such
output with respect to the Fund's shareholders.
(b) TSSG agrees to provide to the Fund at its facility located at Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77046 or at such other
location as may be mutually agreed upon in writing by TSSG and the
Fund (the "Fund Facility") remote access to the use of information
processing capabilities of the TSSG System as it may be modified from
time to time by TSSG.
5. Changes and Modifications.
(a) During the term of this Agreement, TSSG will make available for Fund
use, without additional costs, all modifications and improvements to
the TSSG System (excluding those modifications and improvements TSSG
views as additional products and/or those developed exclusively for
other TSSG clients) made in the ordinary course of business. In
addition, TSSG will use its best efforts to make reasonable changes to
the TSSG System requested by the Fund, subject to payment of
additional fees as mutually agreed upon in writing and as reflected in
Schedule C.
(b) TSSG shall have the right, at any time, and from time to time, to
alter and modify any systems, programs, procedures or facilities used
or employed in performing its duties and obligations hereunder (a
"System Modification"), provided that no
2
<PAGE> 3
System Modification shall, without the consent of the Fund, materially
adversely change or affect the operations and procedures of the Fund
in using or employing the TSSG System or the TSSG Facilities
hereunder. TSSG will use its best efforts to notify the Fund in
writing at least five business days prior to implementing any System
Modification which impacts or effects AFS' day to day operations, and
in any event by 8 a.m. CST the following business day.
(c) TSSG agrees to make any System Modifications necessary to meet
federal, state or local government or self-regulatory organization
requirements ("Regulatory Adherence Enhancements") in a timely
fashion. TSSG agrees to advise the Fund promptly upon notification of
any change in or receipt of any information or advice concerning any
change in the requirements of any federal, state, local or
self-regulatory organization which might require such System
Modifications. The Fund shall obtain any additional software required
to comply with such changes in federal, state, and local government or
self regulatory organization requirements. Regulatory Adherence
Enhancements shall be limited to technically and commercially
practical System modifications which are within the scope of the
functions, capabilities and any database of the TSSG System. TSSG will
provide Regulatory Adherence Enhancements only after final
specification, agreed upon by TSSG, the Fund and affected third
parties, have been established and delivered to TSSG.
(d) During the term of this Agreement TSSG shall expend no less than
$1,000,000 (one million dollars) per calendar year for the enhancement
and maintenance of TSSG's recordkeeping and associated system that are
utilized by TSSG to provide services to the Fund under this Agreement
(or a successor Remote Service Agreement). At least once each calendar
year, TSSG shall provide the Fund with a schedule of the enhancements
planned by the TSSG for the succeeding 12 month period.
6. Duties of the Fund.
(a) The Fund will transmit all information and data required by TSSG
hereunder to the TSSG Facilities in the format and form specified by
TSSG, so that the output produced by the Fund shall be complete and
accurate when it is generated by the TSSG System and the TSSG
Facilities. The Fund shall be responsible and liable for the costs and
expenses of regenerating any output if the Fund provides nonconforming
or erroneous data or shall have failed to transmit any such data or
information or verify any such data and information when it is
generated by the TSSG System and the TSSG Facilities.
(b) In the event the Fund shall erroneously transmit information or shall
transmit incorrect information or data to the TSSG System or the TSSG
Facilities, the Fund
3
<PAGE> 4
shall correct such information and data and retransmit the same to the
TSSG System or to the TSSG Facilities. Upon consent of the Fund, which
shall not be unreasonably withheld, TSSG shall take the necessary
steps at Fund expense to correct any files affected by the original
incorrect transmission.
(c) In the event the TSSG System malfunctions or a TSSG programming error
(other than programming changes made pursuant to paragraph 5(a)
above), causes an error or mistake in any of the output generated by
the TSSG System under the terms of this Agreement, TSSG will, at its
expense, correct and retransmit such output so long as the Fund has
notified TSSG of such error or mistake within five (5) business days
of its discovery and the data used to generate such output is
available as set forth in Schedule E attached hereto.
If such data is available as set forth in Schedule E, the Fund shall
take reasonable necessary steps to manually correct any records due to
a TSSG system malfunction or programming error that TSSG is unable to
correct systematically and the parties shall mutually agree upon the
allocation of expenses related to such manual processing.
7. System Access and Training.
(a) TSSG shall provide the Fund on-line access as provided for and set
forth in the attached Schedule F, and agrees to meet the performance
standards set forth therein. Additional access to the TSSG System may
be arranged by mutual agreement of the parties.
(b) The Fund will reimburse TSSG for any reasonable costs and expenses
incurred for training hereunder. All travel and other out-of-pocket
expenses incurred by Fund personnel in connection with and during the
training periods shall be borne by the Fund.
8. Indemnification. TSSG shall not be responsible for and the Fund shall
indemnify and hold TSSG harmless from and against any and all claims,
costs, expenses (including reasonable attorneys' fees), losses, damages,
charges, payments and liabilities of any sort or kind which may be asserted
against TSSG or for which TSSG may be held to be liable (a "Claim")
arising out of or attributable to any of the following:
(a) Any actions of TSSG required to be taken pursuant to this Agreement
unless such Claim resulted from a negligent act or omission to act or
bad faith by TSSG in the performance of its duties hereunder.
(b) The Fund's failure to use and employ the TSSG System and the TSSG
Facilities in accordance with the procedures set forth in any on-line
documentation made
4
<PAGE> 5
available to the Fund, the Fund's failure to utilize the control
procedures set forth and described in the on-line user documentation,
or the Fund's failure to verify promptly reports or output received
through use of the TSSG System and the TSSG Facilities.
(c) The Fund's errors and mistakes in the use of the TSSG System, TSSG
Facilities and control procedures.
(d) TSSG's reasonable reliance on, or reasonable use of information, data,
records and documents received by TSSG from the Fund in the
performance of TSSG's duties and obligations hereunder.
(e) The reliance on, or the implementation of, any Written or Oral
Instructions or any other instructions or requests of the Fund.
(f) The Fund's refusal or failure to comply with the terms of this
Agreement, or any Claim which arises out of the Fund's negligence or
misconduct or the breach of any representation or warranty of the Fund
made herein.
(g) Unavailability of communications or utilities facilities or other
equipment failures provided TSSG has maintained such equipment
appropriately, Acts of God, acts of the public enemy,
governmentally-mandated priorities in allocating its services, labor
disputes, fires, floods, strikes, riots or war or other causes beyond
its control.
9. Standard of Care.
(a) TSSG shall at all times act in good faith and agrees to use its best
efforts within commercially reasonable standards to insure the
accuracy of all services performed under this Agreement, but assumes
no responsibility and shall not be liable for loss or damage due to
errors unless said errors are caused by its negligence, bad faith, or
willful misconduct or that of its employees.
(b) Notwithstanding the foregoing Section 9(a) or anything else contained
in this Agreement to the contrary, TSSG's liability hereunder shall,
in no event exceed four million dollars ($4,000,000.00).
The parties agree to review the limitation of liability provision set
forth in this Section 9(b) on an annual basis.
10. Instructions. TSSG may apply at any time to a person listed as an
Authorized Person identified on Schedule B for instructions with respect to
any matter arising in connection with this Agreement. TSSG may also consult
with legal counsel for the Fund or, at
5
<PAGE> 6
TSSG's expense, its own legal counsel with respect to actions to be taken
hereunder. TSSG shall not be liable for, and shall be indemnified by the
Fund against, any Claim arising from any action taken or omitted to be
taken by TSSG in good faith in reliance upon such instruction from the
Fund or upon the advice of such legal counsel.
11. Consequential Damages. In no event and under no circumstances shall either
party under this Agreement be liable to the other party for consequential
or indirect loss of profits, reputation or business or any other special
damages under any provision of this Agreement or for any act or failure to
act hereunder.
12. Covenants of TSSG.
(a) TSSG shall maintain the appropriate computer files of all required
information and data transmitted to the TSSG Facilities by the Fund,
provided, however, that TSSG shall not be responsible or liable for
any damage, alterations, modifications thereto or failure to maintain
the same if the Fund made, or TSSG made at the Fund's request, such
changes, alterations or modifications or if the Fund causes the
failure. It is expressly understood that all such shareholder records
transmitted by the Fund and maintained by TSSG remain the exclusive
property of the Fund.
(b) All information furnished by the Fund to TSSG is confidential and TSSG
agrees that it shall not disclose such information to any third party
except pursuant to Written or Oral Instructions received from the Fund
or to the extent that TSSG is required by law to make such disclosure.
13. Covenants of the Fund. The Fund shall utilize and employ all reasonable
control procedures available under the TSSG System of which the Fund may be
advised. The Fund will promptly advise TSSG of any errors or mistakes in
the data or information transmitted to the TSSG Facilities or in the
records maintained by TSSG or output generated hereunder. The Fund will
verify the accuracy of all output it receives consistent with industry
custom and practice by utilizing proper auditing procedures.
All information furnished to or obtained by the Fund pertaining to the TSSG
Facilities, the TSSG System, or TSSG procedures, data bases and programs is
confidential and proprietary to TSSG. The Fund shall not disclose such
information to any third party except to the extent that the Fund is
required by law to make such disclosures.
14. Term and Termination.
(a) This Agreement shall become effective on the date first set forth
above and shall continue in effect through December 31, 1997 ("Initial
Term").
6
<PAGE> 7
(b) Unless it is the intention of either party for this Agreement to
terminate upon the expiration of the Initial Term, within six (6)
months prior to the end of the Initial Term but no later than such
date, AIM and TSSG will negotiate diligently and in good faith and
either (i) enter into an agreement extending the term of this
Agreement; or (ii) enter into a new agreement for TSSG to provide
remote services substantially similar to those contemplated hereunder.
(c) Notwithstanding the foregoing, if a party hereto is guilty of a
material failure to perform its duties and obligations hereunder
(a "Defaulting Party") the other party (the "Non-Defaulting Party")
may give written notice thereof to the Defaulting Party, and if such
material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may
terminate this Agreement by giving thirty (30) days written notice of
such termination to the Defaulting Party. If TSSG is the
Non-Defaulting Party, its termination of this Agreement shall not
constitute a waiver of any other rights or remedies of TSSG with
respect to services performed prior to such termination or rights of
TSSG to be reimbursed for out-of-pocket expenses. In all cases,
termination by the Non-Defaulting Party shall not constitute a
waiver by the Non-Defaulting Party of any other rights it might have
under this Agreement or otherwise against the Defaulting Party.
15. Post-Termination Procedures. Upon termination for any reason by either
party to this Agreement TSSG shall promptly, at the Fund's expense, provide
immediate and full access to the Fund data files on magnetic tape in
machine readable form and shall cooperate with the Fund in its efforts to
transfer all such data files to another person chosen by the Fund. In
addition, TSSG agrees to return, at the expense of the terminating party,
all backup tapes and other storage media upon which Fund data is then
stored.
16. Amendment. This Agreement may only be amended or modified by written
agreement executed by both parties.
17. Assignment. This Agreement and any interest hereunder shall inure to
the benefit of and be binding upon the Parties and their respective
successors, legal representatives and permitted assigns including the
successor entity in any merger or reorganization of the Funds. Except as
otherwise expressly provided for in this Agreement, neither Party may
assign or delegate this Agreement or any of its rights or obligations
without the other Party's prior approval which shall not be unreasonably
withheld. Upon prior notice to the Fund, TSSG may assign this Agreement to
(i) any person in connection with the merger or consolidation of TSSG into
such person, or the sale of all or substantially all of the assets of TSSG
to such person or (ii) any direct or indirect subsidiary of First Data
Corporation in connection with any corporate reorganization. Any attempt to
assign, delegate or otherwise transfer this Agreement in violation of this
Section will be voidable by the other party.
7
<PAGE> 8
18. Subcontracting. TSSG may subcontract to agents the services required to be
performed pursuant to this Agreement and the Schedules hereto, if any. The
appointment of any such agent shall not relieve TSSG of its
responsibilities hereunder.
19. Use of TSSG's Name. The Fund shall not use TSSG's name in any Prospectus,
Statement of Additional Information, Shareholders's Report, sales
literature or other material relating to the Fund without TSSG's prior
written approval unless such use is required by law or merely refers in
accurate terms to the services rendered hereunder. Any reference to TSSG
shall include a statement to the effect that it is an indirect, wholly
owned subsidiary of First Data Corporation.
20. Use of the Fund's Name. Except as provided herein, TSSG shall not use the
name of the Fund, its Advisor or material relating to any of them on any
documents or forms (other than internal documents) without the Fund's prior
written approval unless such use is required by law or merely refers in
accurate terms to the services rendered hereunder.
21. Security.
(a) TSSG will provide the Fund with a User Identifier (also known as
"User I.D.") and a User Password. TSSG will also assign the initial
Operator Password to each of the Fund's employees who are authorized
to access the TSSG System. The Operator Passwords may be changed at
any time in the discretion of the Fund without any notice to or
knowledge of TSSG by using procedures set forth in the user manual.
(b) The Fund agrees that it is responsible for selection, use and
protection of the confidentiality of passwords; however, TSSG may for
security reasons at any time and from time to time, upon seven days
written notice to the Fund (or immediately upon notice by telephone,
confirmed in writing, in the event of an emergency), deny access to
the TSSG System until one or more User I.D.s is changed by the Fund.
(c) TSSG will provide the Fund with online procedures enabling the Fund to
reset passwords, correct password violations and add/change/delete
User I.D.s within existing security profiles.
(d) TSSG will use its best efforts to ensure that the Fund's data files
which are input into the TSSG System will remain confidential and
protected from unauthorized access by third persons. Specifically,
TSSG will adhere to its normal security procedures for protection of
computer-stored files or programs from unauthorized access. It is
agreed that such procedures will be subject to review by the Fund and
audit by its independent accountants and that TSSG will take under
advisement
8
<PAGE> 9
recommendations of such independent accountants concerning changes to
such procedures.
(e) The Fund or duly authorized independent auditors will have the right
upon 5 business days' notice under this Agreement to perform on-site
audits of records and accounts directly pertaining to Fund shareholder
accounts serviced by TSSG facilities in accordance with reasonable
procedures and at reasonable frequencies.
(f) The parties agree that all tapes, books, user manuals, instructions,
records, information and data pertaining to the business of the other
party, the TSSG System and the Fund clients services by the Fund which
are exchanged or received pursuant to the negotiation of or carrying
out of this Agreement shall remain confidential except to the extent
required by applicable laws, and shall not be voluntarily disclosed to
any other person and that all such tapes, books, reference manuals,
instructions, records, information and data in the possession of each
of the parties hereto shall be returned to the party from whom it was
obtained upon the termination or expiration of this Agreement.
(g) The Fund acknowledges that TSSG has proprietary rights in and to the
TSSG System and any other TSSG programs, data basis, supporting
documentation or procedures ("TSSG Protected Information") of which
the Fund or its employees or agents become aware as a result of the
Fund's access to the TSSG System or TSSG Facilities and that the TSSG
Protected Information constitutes confidential material and trade
secrets of TSSG. The Fund agrees to maintain the confidentiality of
the TSSG Protected Information. The Fund acknowledges that any
unauthorized use, misuse, disclosure or taking of TSSG Protected
Information which is confidential or which is a trade secret, whether
residing or existing internally or externally to a computer, computer
system or computer network, or the knowing and unauthorized accessing
or causing to be accessed of any computer, computer system or computer
network, may be subject to civil liabilities and criminal penalties
under applicable law. The Fund will advise all of its employees and
agents who have access to any TSSG Protected Information or to any
computer equipment capable of accessing TSSG Facilities of the
foregoing.
22. Additional Funds. In the event that additional funds, within the same family
as the Funds, are established ("Additional Funds") and such Additional Funds
desire to avail themselves of the benefits of and become a party to this
Agreement, the Additional Funds shall notify TSSG in writing, and if TSSG agrees
in writing, such Additional Funds shall become a party to this Agreement.
9
<PAGE> 10
23. Miscellaneous.
(a) Notices. Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or TSSG shall be
sufficiently given if addressed to that party and received by it at
its office set forth below or at such other place as it may from time
to time designate in writing.
To: AIM Family of Funds
c/o John Caldwell, President
AIM Fund Services, Inc.
Eleven Greenway Plaza, Suite 1919
Houston, Texas 77046
Attention: William Kleh, Secretary
with a copy to:
Fund Legal Department at the same address
Attention: Carol Relihan, VP and General Counsel
To: The Shareholder Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
Attention: Robert F. Radin, President
with a copy to:
General Counsel at the same address
(b) Successors. This Agreement shall extend to and shall be binding upon
the parties hereto, and their respective successors upon the parties
hereto, and their respective successors and assigns; provided,
however, that this Agreement may not be assigned without the written
consent of the other party.
(c) Governing Law. This Agreement shall be governed exclusively by and
interpreted in accordance with the internal substantive laws of the
Commonwealth of Massachusetts without reference to the choice of the
law provisions thereof.
(d) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated.
10
<PAGE> 11
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all
of which together will constitute only one instrument.
(f) Captions. The captions of this Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(g) Sole Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with
respect to the subject matter hereof.
(h) Specific Performance. Each of the parties hereto agrees that the other
party would be irreparably damaged by breaches of this Agreement
relating to confidential or proprietary information and accordingly
each agrees that each of them is entitled, without bond or other
security, to an injunction or injunctions to prevent breaches of the
provisions of this Agreement relating to such information.
(i) It is understood and agreed that all services performed hereunder by
TSSG shall be as an independent contractor and not as an employee,
joint venturer, or partner of the Fund. This Agreement is between the
Fund and TSSG, and there are no third party beneficiaries hereto.
(j) Limitation of Shareholder Liability. Notice is hereby given that the
Declaration of Trust of each Fund which is a Delaware business trust,
is on file with the Secretary of State of Delaware, and this Agreement
was executed on behalf of each such Trust by a duly authorized officer
thereof acting as such and not individually. The obligations of this
Agreement are not binding upon any of the Trustees, officers or
Shareholders of any such Trust individually but are binding only upon
the assets and property of the respective portfolio of each such Trust
for the benefit of which the Trustees have caused this Agreement to be
executed.
11
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
AIM EQUITY FUNDS, INC.
on behalf of the Retail Classes of its AIM Charter
Fund, AIM Constellation Fund, AIM Weingarten Fund
and AIM Aggressive Growth Fund Portfolios
By: /s/ ROBERT H. GRAHAM
------------------
Title: President
---------------
AIM FUNDS GROUP,
on behalf of the Class A and Class B Shares of its
AIM Balanced Fund, AIM Government Securities Fund,
AIM Growth Fund, AIM High Yield Fund, AIM Income
Fund, AIM Municipal Bond Fund, AIM Utilities Fund
and AIM Value Fund portfolios and on behalf of the
Class A, Class B and Class C Shares of its AIM
Money Market Fund Portfolio
By: /s/ ROBERT H. GRAHAM
------------------
Title: President
---------------
AIM INTERNATIONAL FUNDS, INC.,
on behalf of the Class A and Class B shares of its
AIM International Equity Fund, AIM Global
Aggressive Growth Fund, AIM Global Growth Fund and
AIM Global Income Fund Portfolios
By: /s/ ROBERT H. GRAHAM
---------------------
Title: President
------------------
12
<PAGE> 13
AIM INVESTMENT SECURITIES FUNDS,
on behalf of its AIM Adjustable Rate Government
Fund portfolio and the AIM Limited Maturity
Treasury Shares class of its Limited Maturity
Treasury Portfolio
By: /s/ ROBERT H. GRAHAM
---------------------
Title: President
------------------
AIM TAX-EXEMPT FUNDS, INC.,
on behalf of its AIM Tax-Exempt Cash Fund and AIM
Tax-Exempt Bond Fund of Connecticut portfolios and
the AIM Tax-Free Intermediate Shares class of its
Intermediate Portfolio
By: /s/ ROBERT H. GRAHAM
---------------------
Title: President
------------------
THE SHAREHOLDER SERVICES GROUP, INC.
By: /s/ JACK PUTNER
----------------
Title: EVP - COO
-------------
13
<PAGE> 14
SCHEDULE A
SYSTEM FEATURES AND CAPABILITIES
The FSR System consists of computer hardware, operating system software and
application software which contains functions as defined below. The operating
environment configuration consists of IBM-compatible mainframe computers
running on an MVS operating system. The configuration includes controllers,
direct access storage devices, tape drives, security access software and other
operating system hardware and software that enable TSSG to meet the contractual
commitments herein.
The Transfer Agent Application includes Job Control Language (JCL), Catalog
Procedures (PROCS) and program modules written primarily in COBOL.
The FSR Transfer Agency System supports the following subsystems and third
party systems:
NSCC (National Securities Clearing Corporation) support:
- FundSERV
- Networking
- Commissions
- Exchanges
- ACATS (Automated Customer Account Transfer System)
- TNET
Cost basis accounting
UNISYS Interface
Sales file download
Price Waterhouse Blue Sky download
File downloads to support DDA (Demand Deposit Account) Reconciliation
<PAGE> 15
Year-End Statements and Tax Reporting:
- 1099D
- 1099R
- 1042S
- 5498
- 1099B
Transmission send/receive functionality for broker/dealers and other third
parties
Electronic Funds Transfer processing to move in and out of funds using automated
clearing house facilities
KMS Microfilm Interface
Third part interfaces with:
Applied Mailing Systems for print/mail support
Microdata for checkbook production
Mellon and Texas Commerce for banking services
Other third party software packages i.e. ACE/DISC
<PAGE> 16
SCHEDULE B
AIM FAMILY OF FUNDS - LIST OF AUTHORIZED PERSONS
/s/ ROBERT H. GRAHAM
-----------------------
Robert Graham
President, A I M Management Group Inc.
/s/ JOHN CALDWELL (JACK)
------------------------
Jack Caldwell
President, A I M Fund Services, Inc.
/s/ CAROL F. RELIHAN
-----------------------
Carol Relihan
Secretary and General Counsel,
A I M Management Group Inc.
/s/ NANCY MARTIN
-----------------------
Nancy Martin
Counsel, A I M Management Group Inc.
<PAGE> 17
SCHEDULE C
FEE SCHEDULE
I. SHAREHOLDER ACCOUNT FEES. The fund shall pay the following fees
("Shareholder Account Fees"):
For the period beginning on the date of this Agreement, and continuing through
December 31, 1997, the Fund shall pay TSSG an annualized fee of $3.60 per
shareholder account that is open during any monthly period ("Open Account
Fee"). The Fund also shall pay TSSG an annualized fee of $1.80 per shareholder
account that is closed during any monthly period ("Closed Account Fee") (The
Open Account Fees and the Closed Account Fees hereafter collectively referred
to as "Shareholder Account Fees"). The Shareholder Account Fees shall be billed
by TSSG monthly in arrears on a prorated basis of 1/12 of the annualized fee
for all such accounts.
In addition, beginning on the one year anniversary date of this Agreement, and
on each yearly anniversary date thereafter, the Shareholder Account fees may be
increased by TSSG in an amount equal to the lesser of (i) the cumulative
percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U)
U.S. City Average, All Items (unadjusted -- (1982-84 + 100), published by the
U.S. Department of Labor, or (ii) seven percent (7%) of the Shareholder Account
Fees charged by TSSG to the Fund for the preceding twelve (12) month period.
II. FEES FOR DEDICATED PROGRAMMING SUPPORT
TSSG and the Fund will jointly determine the level of dedicated system
resources required to meet the Fund's enhancement priorities. At the Fund's
expense, TSSG agrees to use reasonable efforts to make dedicated programming
support available for all projects required by the Fund. The amount of the
resources required and the projects to be worked on shall be determined jointly
based upon joint periodic review of project requirements; however, the Fund
will decide the priorities which will be assigned to each project and will
determine what projects the dedicated resources are to work on. Such resources
will be charged to the Fund at the rates set forth below. All enhancement,
improvements, modifications or new features added to the TSSG System shall be,
and shall remain, the confidential, exclusive property of, and proprietary to,
TSSG. Request for software changes may be initiated by those representatives of
the Fund identified in Exhibit 1 of this Schedule C. The Fund will use its best
efforts to notify TSSG in writing of requests for software changes within 72
hours of an initial verbal request. TSSG reserves the right to stop work on a
request for which written specifications have not been received.
1
<PAGE> 18
a. SUPPORT TO BE PROVIDED TO THE FUND FREE OF CHARGE. TSSG will provide
the following support at no additional cost to the fund:
1. Coding to correct deficiencies in the system, unless such deficiencies
are included in item (II)(b)(9) below in which event the Fund will be
charged for such services. A system deficiency is defined as a system
process which does not operate according to the design of the computer
application or system specifications. To correct system deficiencies,
TSSG will, at its own expense, expend whatever resources are necessary
to analyze the deficiency and apply an appropriate remedy, in the form
of corrected application code as expeditiously as possible. An
alternate process, in the form of a functional work around, may be a
suitable substitute for the actual system fix, if the level of effort
to develop the system fix is deemed to be impractical or the elapsed
time to develop and apply the fix extends beyond the reasonable time
needed. For deficiencies identified by the Fund, the use of a
functional work around as an alternate process shall be mutually agreed
upon by the parties.
TSSG will evaluate all reported referrals, to validate deficiency
status or reclassify as a system enhancement, based on the above
definition.
2. Simple Maintenance determined to be core processing.
3. TSSG generated (i.e., internal) requests to extend system
functionality and ensure industry competitiveness.
4. Enhancements required to comply with regulatory changes; provided,
however, TSSG will only make such changes to the extent that they are
technically and commercially practical and are within the scope of the
software functions, capabilities and database.
b. SUPPORT TO BE PROVIDED TO THE FUND, BUT WHICH WILL BE BILLED AS
"DEDICATED PROGRAMING SUPPORT": The following activities are examples
of "dedicated programming support" which will be billed to the Fund:
1. Customized form output (i.e., statements, confirmation statements,
commission statements).
2. Customized reports.
3. Addition of new features (enhancements) requested by the Fund.
4. Addition of existing features not used by the Fund.
5. Addition of new funds to the fund group.
6. Customized year-end processing.
7. Conversions from other systems to FSR subsequent to initial funds
being live.
(continued on next page)
2
<PAGE> 19
8. Clean-up/Recovery project resulting from Fund error or causes beyond
the reasonable control of either party.
9. System "fixes" - coding to correct errors attributable to code
developed, and currently maintained by the dedicated teams.
10. Customization of existing functions specific to the Fund.
11. Program documentation as requested by the Fund.
Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software developed by its dedicated programming staff. 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, TSSG or other TSSG clients agree to share
in the expense of the enhancements.
b). At any time during the 9 months following implementation, TSSG or
other TSSG clients agree to share the expense for the enhancements.
Access and Capability. The Funds' dedicated programmers will have access
and capability to update any part of the System. However, depending on the
skill set of the programmers, as well as the scope of the requested
enhancement, it may be in the best interest of both the Fund and TSSG to
utilize non-dedicated programmers to address certain enhancements. In
addition, because many programs are shared by multiple clients, some
enhancements may require approval from those clients. These enhancements
should be handled on an item by item basis.
c. FEES FOR DEDICATED PERSONNEL WHICH WILL BE BILLED TO THE FUND. TSSG
will bill the Fund monthly in arrears on a prorated basis of 1/12 of
the following annualized charges for each person dedicated to the
following positions:
<TABLE>
<S> <C>
Manager $100,000
Programmer $ 90,000
Business System Analyst/Tester $ 85,000
Non-dedicated programmer-hourly charge $100 per hour
</TABLE>
TSSG may adjust these salaries on the anniversary date of this agreement to
reflect salary increases, provided that they do not exceed seven percent (7%)
of the fees charged to the Fund for the identical positions during the
immediately preceding twelve (12) month period.
3
<PAGE> 20
SCHEDULE C
EXHIBIT 1
AIM FAMILY OF FUNDS
AUTHORIZED PERSONS REQUESTING
SYSTEM MODIFICATIONS
/s/ JOHN CALDWELL
-------------------------
John Caldwell
/s/ RICHARD SNYDER
---------------------
Richard Snyder
/s/ JOSEPH CHARPENTIER
----------------------
Joseph Charpentier
/s/ MARC VARGAS
---------------------
Marc Vargas
4
<PAGE> 21
SCHEDULED
OUT-OF-POCKET EXPENSES
The Fund shall reimburse TSSG monthly for applicable out-of-pocket expenses,
including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Telephone and telecommunication cost, including all lease, maintenance
and line costs
- NSCC transaction charges at $.15/per financial transaction
- Shipping, Certified and Overnight mail and insurance
- Year-End form production and mailings
- Terminals, communication lines, printers and other equipment and any
expenses incurred in connection with such terminals and lines
- Duplicating services, as per-approved by the Fund
- Courier services
- Due Diligence Mailings
- Rendering fees as billed
- Overtime, as pre-approved by the Fund
- Temporary staff, as pre-approved by the Fund
- Travel and entertainment, as pre-approved by the Fund
- Record retention, retrieval and destruction costs, including, but not
limited to exit fees charged by third party record keeping vendors
- Third party audit review
- All conversion costs: including System start up costs, but excluding
costs associated with conversations between TSSG systems.
- Such other miscellaneous expenses reasonably incurred by TSSG in
performing its duties and responsibilities under this Agreement. Such
expenses incurred with consent of the Fund, not to be unreasonably
withheld.
- The costs associated with the Year-End Support Services set forth on
the attached Exhibit 1 of this Schedule D.
- The costs associated with the Broker Dealer Support Services set forth
on the attached Exhibit 2 of this Schedule D.
<PAGE> 22
EXHIBIT 1 OF SCHEDULE D
Year-End Support Services: Flat rate of $.12/per shareholder account open as of
December 31, 1994.
The services listed below will be performed by TSSG for the Fund in support of
reporting for tax year 1994 and compliance mailings for calendar year 1994.
TSSG assumes responsibility for performing the services in compliance with
current IRS rules and regulations.
(a) Up-front year-end planning and communication of year-end related system
modifications.
(b) Production of IRS required tax forms and amended/corrected tax forms as
requested by the Fund.
(c) Production of IRS required 1099 magnetic tape filings.
(d) Production of tax forms on microfiche.
(e) Maintenance of year-end data files and the handling of transaction code
updates to those files.
(f) Submission of year-end jobs.
(g) B-notice processing as follows:
- receipt of B-notice listing from IRS or
- AFS upload of data entry of all accounts to B-Notice subsystem
- execution and generation of B-Notice defense reports
- analysis of B-Notice Defense Reports to ensure accurate coding
- coordination of mailings with vendor, including generation of vendor
tapes
- notification to Client Services of anticipated and actual mailing
dates, including volume, sample letters and confirmation of the date
backup withholding will be imposed if no response is received
- systematic upload of W-9 responses as volumes warrant
(h) Correction processing resulting from the monthly review of the year-end
files - "balancing."
(i) Production of cost basis information on 1099B forms.
(j) All required state filings as requested by the Fund.
(k) All IRS required mailings requested by the Fund: B-Notice, Safe Harbor,
W-9, TEFRA election, IRS Penalty Notice, and TIN solicitation.
<PAGE> 1
EXHIBIT 9(d)(1)
AMENDMENT NO. 4
ADMINISTRATIVE SERVICES AGREEMENT
The Administrative Services Agreement (the "Agreement"), dated October
18, 1993, as amended, by and between A I M Advisors, Inc., a Delaware
corporation and A I M Fund Services, Inc., a Delaware corporation, on behalf of
the Portfolios and Classes of shares of the Funds set forth in Appendix A
thereto is hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"APPENDIX A
AIM SUMMIT FUND, INC."
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: November 1, 1994
A I M ADVISORS, INC.
Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM
---------------------------- ------------------------
Assistant Secretary Robert H. Graham
President
(SEAL)
A I M FUND SERVICES, INC.
Attest: /s/ STEPHEN I. WINER By: /s/ JOHN CALDWELL
---------------------------- ------------------------
Assistant Secretary John Caldwell
President
(SEAL)
<PAGE> 1
EXHIBIT 9(d)(2)
AMENDMENT NO. 3
ADMINISTRATIVE SERVICES AGREEMENT
The Administrative Services Agreement (the "Agreement"), dated October
18, 1993, by and between A I M Advisors, Inc., a Delaware corporation and A I M
Fund Services, Inc. on behalf of the Portfolios and Classes of shares of the
Funds set forth in appendix A thereto is hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
APPENDIX A
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM FUNDS GROUP (All Classes)
AIM Balanced Fund
AIM Government Securities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Utilities Fund
AIM Value Fund
AIM INTERNATIONAL FUNDS, INC. (All Classes)
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM INVESTMENT SECURITIES FUNDS
AIM Adjustable Rate Government Fund
Limited Maturity Treasury Portfolio (AIM Limited Maturity Treasury
Shares)
AIM SUMMIT FUND, INC.
<PAGE> 2
AIM TAX-EXEMPT FUNDS, INC.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio (AIM
Tax-Free Intermediate Shares)
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: September 16, 1994
A I M ADVISORS, INC.
Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM
---------------------------- ------------------------
Assistant Secretary Robert H. Graham
President
(SEAL)
A I M FUND SERVICES, INC.
Attest: /s/ STEPHEN I. WINER By: /s/ JOHN CALDWELL
---------------------------- ------------------------
Assistant Secretary John Caldwell
President
(SEAL)
<PAGE> 1
EXHIBIT 9(d)(3)
AMENDMENT NO. 2
ADMINISTRATIVE SERVICES AGREEMENT
The Administrative Services Agreement (the "Agreement"), dated October
18, 1993, by and between A I M Advisors, Inc., a Delaware corporation and A I M
Fund Services, Inc. on behalf of the Portfolios and Classes of shares of the
Funds set forth in appendix A thereto shall hereby be amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
APPENDIX A
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM FUNDS GROUP (All Classes)
AIM Balanced Fund
AIM Government Securities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Municipal Bond Fund
AIM Money Market Fund
AIM Utilities Fund
AIM Value Fund
AIM INTERNATIONAL FUNDS, INC. (All Classes)
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM INVESTMENT SECURITIES FUNDS
AIM Adjustable Rate Government Fund
Limited Maturity Treasury Portfolio (AIM Limited Maturity Treasury
Shares)
AIM SUMMIT FUND, INC.
<PAGE> 2
AIM TAX-EXEMPT FUNDS, INC.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio (AIM
Tax-Free Intermediate Shares)
SHORT-TERM INVESTMENTS CO.
Prime Portfolio (All Classes)
Liquid Assets Portfolio
SHORT-TERM INVESTMENTS TRUST
Treasury Portfolio (All Classes)
Treasury TaxAdvantage Portfolio
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: July 1, 1994
A I M ADVISORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
---------------------------- ------------------------
Assistant Secretary Robert H. Graham
President
(SEAL)
A I M FUND SERVICES, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ J. ABBOTT SPRAGUE
---------------------------- ------------------------
Assistant Secretary J. Abbott Sprague
Senior Vice President
(SEAL)
<PAGE> 1
EXHIBIT 9(d)(4)
AMENDMENT NO. 1
ADMINISTRATIVE SERVICES AGREEMENT
The Administrative Services Agreement (the "Agreement"), dated October
18, 1993, by and between A I M Advisors, Inc., a Delaware corporation and A I M
Fund Services, Inc. on behalf of the Portfolios and Classes of shares of the
Funds set forth in appendix A thereto shall hereby be amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"APPENDIX A
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM FUNDS GROUP (All Classes)
AIM Balanced Fund
AIM Government Securities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Municipal Bond Fund
AIM Money Market Fund
AIM Utilities Fund
AIM Value Fund
AIM INTERNATIONAL FUNDS, INC.
AIM International Equity Fund
AIM INVESTMENT SECURITIES FUNDS
AIM Adjustable Rate Government Fund
Limited Maturity Treasury Portfolio (AIM Limited Maturity Treasury
Shares)
AIM SUMMIT FUND, INC.
AIM TAX-EXEMPT FUNDS, INC.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut Intermediate Portfolio (AIM
Tax-Free Intermediate Shares)
<PAGE> 2
SHORT-TERM INVESTMENTS CO.
Prime Portfolio (All Classes)
Liquid Assets Portfolio
SHORT-TERM INVESTMENTS TRUST
Treasury Portfolio (All Classes)
Treasury TaxAdvantage Portfolio"
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: May 11, 1994
A I M ADVISORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
---------------------------- ------------------------
Assistant Secretary Robert H. Graham
President
(SEAL)
A I M FUND SERVICES, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ JOHN CALDWELL
---------------------------- ------------------------
Assistant Secretary John Caldwell
President
(SEAL)
<PAGE> 1
EXHIBIT 9(d)(5)
ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement"), dated as of the
18th day of October, 1993, by and between A I M ADVISORS, INC., a Delaware
corporation (the "Advisor"), and A I M Fund Services, Inc. (the "Administrator)
on behalf of the Portfolios and Classes of shares of the Funds set forth in
Appendix A to this agreement (the "Portfolios").
W I T N E S S E T H:
- - - - - - - - - --
WHEREAS, each of the Funds listed in Appendix A hereto is an open-end
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, each of the Funds, on behalf of the Portfolios, has retained
the Advisor to provide investment advisory services pursuant to a Master
Investment Advisory Agreement which provides that the Advisor 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 Advisor may receive reasonable compensation or may be
reimbursed for its costs in providing such additional services, upon the
request of the Board of Directors/Trustees and upon a finding by the Board of
Directors/Trustees that the provision of such services is in the best interests
of each Portfolio and its shareholders; and
WHEREAS, the Board of Directors/Trustees has found that the provision
of such administrative services is in the best interests of the Portfolios and
their shareholders, and has requested that the Administrator perform certain of
such services;
NOW, THEREFORE, the parties hereby agree as follows:
1. The Administrator hereby agrees to provide 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; assisting in the purchase or redemption of the Portfolios' shares;
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.
2. The services provided hereunder shall at all times be subject to
the direction and supervision of the Funds' Boards of Directors/Trustees.
3. As full compensation for the services performed and the
facilities furnished by or at the direction of the Administrator, the Advisor
shall reimburse the Administrator for
-1-
<PAGE> 2
expenses incurred by it or its affiliates in accordance with the methodologies
established from time to time by the Funds' Boards of Directors/Trustees with
respect to the Portfolios. 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 Funds or a Portfolio 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 Advisor 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 Funds to engage in any other business or to
devote his or her 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 for a period of one (1)
year from the date hereof, and shall continue in effect from year to year
thereafter; provided that such continuance is specifically approved at least
annually:
(a) (i) by each Fund's Board of Directors/Trustees or (ii) by
the vote of a majority of the outstanding voting securities of the
applicable Portfolio (as defined in Section 2(a)(42) of the 1940 Act);
and
(b) by the affirmative vote of a majority of each Fund's
directors/trustees who are not parties to this Agreement or interested
persons of a party to this Agreement, by votes cast in person at a
meeting specifically called for such purpose.
This Agreement shall terminate automatically as to a Portfolio in the
event of its assignment (as defined in Section 2(a) (4) of the 1940 Act) or in
the event of termination of the Master Investment Advisory Agreement relating
to such Portfolio between a Fund and the Advisor.
8. This Agreement may be amended or modified, but only by a written
instrument signed by both the Advisor and the Administrator.
-2-
<PAGE> 3
9. 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 11 Greenway
Plaza, Suite 1919, Houston, Texas 77046, Attention: President, with a copy to
the General Counsel, or (b) to the Advisor at 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046, Attention: President, with a copy to the General Counsel.
10. 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.
11. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
-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/ NANCY L. MARTIN By:/s/ ROBERT H. GRAHAM
----------------------- ---------------------------
[Assistant] Secretary Robert H. Graham
President
(SEAL)
AIM FUND SERVICES, INC.
Attest: /s/ NANCY L. MARTIN By:/s/ JOHN CALDWELL
----------------------- ---------------------------
[Assistant] Secretary John Caldwell
President
(SEAL)
-4-
<PAGE> 5
APPENDIX A
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM FUNDS GROUP (All Classes)
AIM Balanced Fund
AIM Government Securities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Municipal Bond Fund
AIM Money Market Fund
AIM Utilities Fund
AIM Value Fund
AIM INTERNATIONAL FUNDS, INC.
AIM International Equity Fund
AIM INVESTMENT SECURITIES FUNDS
AIM Adjustable Rate Government Fund
Limited Maturity Treasury Portfolio (AIM Limited Maturity Treasury
Shares)
AIM SUMMIT FUND, INC.
AIM TAX-EXEMPT FUNDS, INC.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio (AIM Tax-Free Intermediate Shares)
-5-
<PAGE> 1
EXHIBIT 9(d)(6)
MASTER ADMINISTRATIVE SERVICES AGREEMENT
This MASTER ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is
made this 18th day of October, 1993 by and between A I M ADVISORS, INC., a
Delaware corporation (the "Administrator"), and AIM EQUITY FUNDS, INC., a
Maryland corporation (the "Company"), with respect to the separate series set
forth from time to time in an Appendix to this Agreement (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 Portfolios are separate series of common stock
representing interests in separate investment portfolios of the Company; 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 Directors and upon a finding by the Board of Directors
that the provision of such services is in the best interest of the Portfolios
and their shareholders; and
WHEREAS, the Board of Directors 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 the Portfolios
shares; supervising the operations of the custodian(s), transfer
-1-
<PAGE> 2
agent(s) or dividend agent(s) for the Portfolios; or otherwise providing
services to shareholders of the Portfolios; and
(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 Directors.
2. The services provided hereunder shall at all times be subject
to the direction and supervision of the Company's Board of Directors.
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 Directors. 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
director, 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 until June 30, 1994,
and shall continue in effect from year to year thereafter; provided that such
continuance is specifically approved at least annually:
(a) (i) by the Company's Board of Directors or (ii) by the
vote of a majority of the outstanding voting securities of the Company
(as defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the Company's
directors who are not parties to this Agreement or interested persons
of a party to this Agreement, 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
-2-
<PAGE> 3
termination of the Master Investment Advisory Agreement relating to such
Portfolio(s) between the Company and the Administrator.
8. This Agreement may be amended or modified, but only by a
written instrument signed by both the Company and the Administrator.
9. 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 1919, Houston, Texas 77046, Attention: President, with a copy to
the General Counsel, or (b) to the Company at Eleven Greenway Plaza, Suite
1919, Houston, Texas 77046, Attention: President, with a copy to the General
Counsel.
10. 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.
11. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
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/ NANCY L. MARTIN By:/s/ ROBERT H. GRAHAM
----------------------- ---------------------------
Assistant Secretary President
(SEAL)
AIM EQUITY FUNDS, INC.
Attest: /s/ NANCY L. MARTIN By:/s/ CHARLES T. BAUER
----------------------- ---------------------------
Assistant Secretary President
(SEAL)
-3-
<PAGE> 4
AIM EQUITY FUNDS, INC.
APPENDIX A TO MASTER ADMINISTRATIVE SERVICES AGREEMENT
October 18, 1993
AIM Charter Fund
Institutional Class
Retail Class
AIM Constellation Fund
Institutional Class
Retail Class
AIM Weingarten Fund
Institutional Class
Retail Class
AIM Aggressive Growth Fund
-4-
<PAGE> 1
Exhibit 11(a)
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
AIM Equity Funds, Inc.
We consent to the use of our reports on AIM Weingarten Fund, AIM Constellation
Fund, AIM Charter Fund and AIM Aggressive Growth Fund (portfolios of AIM Equity
Funds, Inc.) dated December 8, 1995 included herein and to the references to
our firm under the headings "Financial Highlights" in the Prospectus of the
Retail Classes and Institutional Classes, and "Audit Reports" in the Statement
of Additional Information of the Retail Classes and Institutional Classes.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
December 18, 1995
<PAGE> 1
EXHIBIT 11(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use of our reports each dated November 12, 1993 on the
financial statements of AIM Charter Fund, a portfolio of AIM Equity Funds,
Inc., including the financial highlights of the Retail Class and the
Institutional Class for the periods indicated therein. Such financial
statements and financial highlights appear in the Statements of Additional
Information which are included in Post Effective Amendment No. 47 to the
Registration Statement on Form N-1A or AIM Equity Funds, Inc. We also consent
to the references to our Firm in such Registration Statement.
/s/ TAIT, WELLER & BAKER
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
December 22, 1995
<PAGE> 1
EXHIBIT 11(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of Post-Effective
Amendment No. 47 to the registration statement of AIM Equity Funds, Inc. on
Form N-1A of our report dated February 16, 1993 relating to selected per-share
data and ratios of AIM Aggressive Growth Fund appearing in the December 31,
1992 Annual Report to Shareholders of AIM Funds Group (formerly AIM Funds
(C)). We also consent to the references to us under the heading "Financial
Highlights" in the Prospectus.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
1201 Louisiana
Houston, Texas
December 18, 1995
<PAGE> 1
EXHIBIT 11(d)
CONSENT OF COUNSEL
AIM EQUITY FUNDS, INC.
We hereby consent to the use of our name and to the references to our firm
under the captions "General Information -- Legal Counsel" in the Prospectus for
the Institutional Classes of Shares of the AIM Charter Fund, AIM Weingarten
Fund and AIM Constellation Fund Portfolios and under the caption "Management --
Legal Matters" in the Statement of Additional Information for such shares and
"General Information -- Legal Counsel" in the Prospectuses for the Retail
Classes of Shares of the AIM Aggressive Growth Fund, AIM Charter Fund, AIM
Weingarten Fund and AIM Constellation Fund Portfolios and "Miscellaneous
Information -- Legal Matters" in the Statement of Additional Information for
such Shares, which are included in Post-Effective Amendment No. 47 to the
Registration Statement under the Securities Act of 1933 and Amendment No. 47 to
the Registration Statement under the Investment Company Act of 1940 (No.
2-25469) on Form N-1A of AIM Equity Funds, Inc.
/s/ BALLARD SPAHR ANDREWS & INGERSOLL
Ballard Spahr Andrews & Ingersoll
Philadelphia, Pennsylvania
December 18, 1995
<PAGE> 1
EXHIBIT 15(a)(1)
MASTER DISTRIBUTION PLAN
OF
AIM EQUITY FUNDS, INC.
("CLASS B" SHARES)
(SECURITIZATION FEATURE)
Section 1. AIM Equity Funds, Inc. (the "Fund"), on behalf of the
series of beneficial interest set forth in Schedule A to this plan (the
"Portfolios"), may pay for distribution of the Class B Shares of such
Portfolios (the "Shares") which the Fund issues from time to time, pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"), according
to the terms of this Distribution Plan (the "Plan").
Section 2. The Fund may incur expenses for and pay any institution
selected to act as the Fund's agent for distribution of the Shares of any
Portfolio from time to time (each, a "Distributor") at the rates set forth on
Schedule A hereto based on the average daily net assets of each class of Shares
subject to any applicable limitations imposed by the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. in effect from time to
time (the "Rules of Fair Practice"). All such payments are the legal
obligation of the Fund and not of any Distributor or its designee.
Section 3.
(a) Amounts set forth in Section 2 may be used to
finance any activity which is primarily intended to result in the sale of the
Shares, including, but not limited to, expenses of organizing and conducting
sales seminars and running advertising programs, payment of finders fees,
printing of prospectuses and statements of additional information (and
supplements thereto) and reports for other than existing shareholders,
preparation and distribution of advertising material and sales literature,
payment of overhead and supplemental payments to dealers and other institutions
as asset-based sales charges or as payments of service fees under a shareholder
service arrangement, which may be established by each Distributor in accordance
with Section 4, the costs of administering the Plan. To the extent that
amounts paid hereunder are not used specifically to reimburse the Distributor
for any such expense, such amounts may be treated as compensation for the
Distributor's distribution-related services.
(b) Subject to the provisions of Sections 8 and 9
hereof, amounts payable pursuant to Section 2 in respect of Shares of each
Portfolio shall be paid by the Fund to the Distributor in respect of such
Shares or, if more than one institution has acted or is acting as Distributor
in respect of such Shares, then amounts payable pursuant to Section 2 in
respect of such Shares shall be paid to each such Distributor in proportion to
the number of such Shares sold by or attributable to such Distributor's
distribution efforts in respect of such Shares in accordance with allocation
provisions of each Distributor's distribution agreement (the "Distributor's
12b-1 Share") notwithstanding that such Distributor's distribution agreement
with the Fund may have been terminated. That portion of the amounts paid under
the Plan that is not paid or advanced by the Distributor to dealers or other
institutions that provide personal continuing
1
<PAGE> 2
shareholder service as a service fee pursuant to Section 4 shall be deemed an
asset-based sales charge.
(c) Any Distributor may assign, transfer or
pledge ("Transfer") to one or more designees (each an "Assignee"), its rights
to all or a designated portion of its Distributor's 12b-1 Share from time to
time (but not such Distributor's duties and obligations pursuant hereto or
pursuant to any distribution agreement in effect from time to time, if any,
between such Distributor and the Fund), free and clear of any offsets or claims
the Fund may have against such Distributor. Each such Assignee's ownership
interest in a Transfer of a specific designated portion of a Distributor's
12b-1 Share is hereafter referred to as an "Assignee's 12b-1 Portion." A
Transfer pursuant to this Section 3(c) shall not reduce or extinguish any
claims of the Fund against the Distributor.
(d) Each Distributor shall promptly notify the
Fund in writing of each such Transfer by providing the Fund with the name and
address of each such Assignee.
(e) A Distributor may direct the Fund to pay an
Assignee's 12b-1 Portion directly to such Assignee. In such event, the
Distributor shall provide the Fund with a monthly calculation of the amount of
(i) the Distributor's 12b-1 Share and (ii) each Assignee's 12b-1 Portion, if
any, for such month (the "Monthly Calculation"). In such event, the Fund
shall, upon receipt of such notice and Monthly Calculation from the
Distributor, make all payments required under such distribution agreement
directly to the Assignee in accordance with the information provided in such
notice and Monthly Calculation upon the same terms and conditions as if such
payments were to be paid to the Distributor.
(f) Alternatively, in connection with a Transfer,
a Distributor may direct the Fund to pay all of such Distributor's 12b-1 Share
from time to time to a depository or collection agent designated by any
Assignee, which depository or collection agent may be delegated the duty of
dividing such Distributor's 12b-1 Share between the Assignee's 12b-1 Portion
and the balance of the Distributor's 12b-1 Share (such balance, when
distributed to the Distributor by the depository or collection agent, the
"Distributor's 12b-1 Portion"), in which case only the Distributor's 12b-1
Portion may be subject to offsets or claims the Fund may have against such
Distributor.
Section 4.
(a) Amounts expended by the Fund under the Plan
shall be used in part for the implementation by the Distributor of shareholder
service arrangements with respect to the Shares. The maximum service fee
payable to any provider of such shareholder service shall be twenty-five
one-hundredths of one percent (0.25%) per annum of the average daily net assets
of the Shares attributable to the customers of such service provider. All such
payments are the legal obligation of the Fund and not of any Distributor or its
designee.
(b) Pursuant to this Plan, the Distributor may
enter into agreements substantially in the form attached hereto as Exhibit A
("Service Agreements") with such broker-dealers ("Dealers") as may be selected
from time to time by the Distributor for the provision of continuing
shareholder services in connection with Shares held by such Dealers' clients
and customers ("Customers") who may from time to time directly or beneficially
own Shares. The personal continuing shareholder services to be rendered by
Dealers under the
2
<PAGE> 3
Service Agreements may include, but shall not be limited to, some or all of the
following: distributing sales literature; answering routine Customer inquiries
concerning the Fund and the Shares; assisting Customers in changing dividend
options, account designations and addresses, and enrolling in any of several
retirement plans offered in connection with the purchase of Shares; assisting
in the establishment and maintenance of Customer accounts and records and in
the processing of purchase and redemption transactions; investing dividends and
capital gains distributions automatically in Shares; performing sub-accounting;
providing periodic statements showing a Customer's shareholder account balance
and the integration of such statements with those of other transactions and
balances in the Customer's account serviced by such institution; forwarding
applicable prospectuses, proxy statements and reports and notices to Customers
who hold Shares and providing such other information and administrative
services as the Fund or the Customer may reasonably request ("Shareholder
Services").
(c) The Distributor may also enter into Bank
Shareholder Service Agreements substantially in the form attached hereto as
Exhibit B ("Bank Agreements") with selected banks and financial institutions
acting in an agency capacity for their customers ("Banks"). Banks acting in
such capacity will provide some or all of the Shareholder Services to their
customers as set forth in the Bank Agreements from time to time.
(d) The Distributor may also enter into 401(k)
Plan Shareholder Service Agreements substantially in the form attached hereto
as Exhibit C ("401(k) Agreements") with selected 401(k) Plan service providers
acting in an agency capacity for their customers ("401(k) Providers"). 401(k)
Providers acting in such capacity will provide some or all of the Shareholder
Services to their customers set forth in the 401(k) Agreements from time to
time.
(e) The Distributor may also enter into
Shareholder Service Agreements substantially in the form attached hereto as
Exhibit D ("Bank Trust Department Agreements") with selected bank trust
departments. Such bank trust departments will provide shareholder services to
customers as set forth in the Bank Trust Department Agreements from time to
time.
Section 5. This Plan shall not take effect until (i) it has been
approved, together with any related agreements, by votes of the majority of
both (a) the Board of Trustees of the Fund and (b) those trustees of the Fund
who are not "interested persons" of the Fund (as defined in the 1940 Act) and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it (the "Dis-interested Trustees"), cast in person at
a meeting called for the purpose of voting on this Plan or such agreements and
(ii) the execution by the Fund and A I M Distributors, Inc. of a Master
Distribution Agreement in respect of the Shares.
Section 6. Unless sooner terminated pursuant to Section 8, this Plan
shall continue in effect until June 30, 1996 and thereafter shall continue in
effect so long as such continuance is specifically approved at least annually
in the manner provided for approval of this Plan in Section 5.
Section 7. Each Distributor shall provide to the Fund's Board of
Trustees and the Board of Trustees shall review, at least quarterly, a written
report of the amounts expended for distribution of the Shares and the purposes
for which such expenditures were made.
Section 8. This Plan may be terminated with respect to the Shares of
any Portfolio at any time by vote of a majority of the Dis-interested Trustees,
or by vote of a majority of outstanding
3
<PAGE> 4
Shares of such Portfolio. Upon termination of this Plan with respect to any or
all such classes, the obligation of the Fund to make payments pursuant to this
Plan with respect to such classes shall terminate, and the Fund shall not be
required to make payments hereunder beyond such termination date with respect
to expenses incurred in connection with Shares sold prior to such termination
date, provided, in each case that each of the requirements of a Complete
Termination of this Plan in respect of such class, as defined below, are met.
A termination of this Plan with respect to any or all Shares of any or all
Portfolios shall not affect the obligation of the Fund to withhold and pay to
any Distributor contingent deferred sales charges to which such distributor is
entitled pursuant to any distribution agreement. For purposes of this Section
8 a "Complete Termination" of this Plan in respect of any Portfolio shall mean
a termination of this Plan in respect of such Portfolio, provided that: (i) the
Dis-interested Trustees of the Fund shall have acted in good faith and shall
have determined that such termination is in the best interest of the Fund and
the shareholders of such Portfolio; (ii) and the Fund does not alter the terms
of the contingent deferred sales charges applicable to Shares outstanding at
the time of such termination; and (iii) unless the applicable Distributor at
the time of such termination was in material breach under the distribution
agreement in respect of such Portfolio, the Fund shall not, in respect of such
Portfolio, pay to any person or entity, other than such Distributor or its
designee, either the asset based sales charge or the service fee (or any
similar fee) in respect of the Shares sold by such Distributor prior to such
termination.
Section 9. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated with
respect to the Shares of any or all Portfolios at any time, without payment of
any penalty, by vote of a majority of the Dis-interested Trustees or by a vote
of the majority of the outstanding Shares of such Portfolio, on not more than
sixty (60) days' written notice to any other party to the agreement; and
(b) that such agreement shall terminate
automatically in the event of its assignment; provided, however, that, subject
to the provisions of Section 8 hereof, if such agreement is terminated for any
reason, the obligation of the Fund to make payments of (i) the Distributor's
Share in accordance with the directions of the Distributor pursuant to Section
3(e) or (f) hereof if there exist Assignees for all or any portion of such
Distributor's 12b-1 Share and (ii) the remainder of such Distributor's 12b-1
Share to such Distributor if there are no Assignees for such Distributor's
Share, pursuant to such agreement and this Plan will continue with respect to
the Shares until such Shares are redeemed or automatically converted into
another class of shares of the Fund.
4
<PAGE> 5
Section 10. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved by a vote of at least a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of the Shares, and no material
amendment to the Plan shall be made unless approved in the manner provided for
in Section 5 hereof.
AIM EQUITY FUNDS, INC.
(on behalf of its Class B Shares)
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
------------------ --------------------
Assistant Secretary President
Effective as of June 14, 1995
5
<PAGE> 6
SCHEDULE A TO
MASTER DISTRIBUTION PLAN OF
AIM EQUITY FUNDS, INC.
(CLASS B SHARES)
<TABLE>
<CAPTION>
MAXIMUM
ASSET BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE FEE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
AIM Charter Fund 0.75% 0.25% 1.00%
AIM Weingarten Fund 0.75% 0.25% 1.00%
</TABLE>
6
<PAGE> 1
EXHIBIT 15(a)(2)
AMENDED
MASTER DISTRIBUTION PLAN
OF
AIM EQUITY FUNDS, INC.
(Retail Classes, Front-End Sales Charge)
SECTION 1. AIM Equity Funds, Inc. (the "Fund") on behalf of the
Shares of common stock set forth in Appendix A attached hereto (the
"Portfolios") may act as a distributor of securities of such Portfolios (the
"Shares") of which the Fund is the issuer, pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act"), according to the terms of this
Distribution Plan (the "Plan").
SECTION 2. Amounts set forth in Appendix A may be used to finance any
activity which is primarily intended to result in the sale of the Shares,
including, but not limited to, expenses of organizing and conducting sales
seminars, advertising programs, finders fees, printing of prospectuses and
statements of additional information (and supplements thereto) and reports for
other than existing shareholders, preparation and distribution of advertising
material and sales literature, overhead, supplemental payments to dealers and
other institutions as asset-based sales charges or as payments of service fees
under a shareholder service arrangement to be established by A I M
Distributors, Inc. ("Distributors") as the Fund's distributor in accordance
with Section 3, and the costs of administering the Plan. To the extent that
amounts paid hereunder are not used specifically to reimburse Distributors for
any such expense, such amounts may be treated as compensation for Distributors'
distribution-related services. All amounts expended pursuant to the Plan shall
be paid to Distributors and are the legal obligation of the Fund and not of
Distributors. That portion of the amounts paid under the Plan that is not paid
or advanced by Distributors to dealers or other institutions that provide
personal continuing shareholder service as a service fee pursuant to Section 3
shall be deemed an asset-based sales charge.
SECTION 3.
(a) Amounts expended by the Fund under the Plan shall be used
in part for the implementation by Distributors of shareholder service
arrangements with respect to the Shares. (With respect to AIM Charter
Fund, AIM Constellation Fund and AIM Weingarten Fund, the previous
sentence applies only to shares purchased on or after September 9,
1986.) The maximum service fee paid to any service provider shall be
twenty-five one-hundredths of one percent (0.25%) per annum of the
average daily net assets of the Fund attributable to the Shares
owned by the customers of such service provider.
(b) Pursuant to this program Distributors may enter into
agreements substantially in the form attached hereto as Exhibit A
("Service Agreements") with such broker-dealers ("Dealers") as may be
selected from time to time by Distributors for the provision of
distribution-related personal shareholder services in connection with
the sale of Shares to the Dealers' clients and customers ("Customers")
to Customers who may from time to time directly or beneficially own
Shares. The distribution-related personal continuing shareholder
services to be rendered by Dealers under the Service Agreements may
include, but shall not be limited to, the following: distributing
sales literature; answering routine Customer inquiries concerning the
Fund and the Shares; assisting Customers in changing dividend
options, account designations and addresses, and in enrolling into any
<PAGE> 2
of several retirement plans offered in connection with the purchase of
Shares; assisting in the establishment and maintenance of customer
accounts and records and in the processing of purchase and redemption
transactions; investing dividends and capital gains distributions
automatically in Shares and providing such other information and
services as the Fund or the Customer may reasonably request.
(c) Distributors may also enter into Bank Shareholder Service
Agreements substantially in the form attached hereto as Exhibit B
("Bank Agreements") with selected banks acting in an agency capacity
for their customers ("Banks"). Banks acting in such capacity will
provide shareholder services to their customers as set forth in the
Bank Agreements from time to time.
(d) Distributors may also enter into Variable Group Annuity
Contractholder Service Agreements substantially in the form attached
hereto as Exhibit C ("Variable Contract Agreements") (with respect to
AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund) with
selected insurance companies ("Companies") offering variable annuity
contracts to employers as funding vehicles for retirement plans
qualified under Section 401(a) of the Internal Revenue Code, where
amounts contributed under such plans are invested pursuant to such
variable annuity contracts in Shares of the Fund. The Companies
receiving payments under such Variable Contract Agreements will
provide specialized services to contractholders and plan participants,
as set forth in the Variable Contract Agreements from time to time.
(e) Distributors may also enter into Shareholder Service
Agreements substantially in the form attached hereto as Exhibit D
("401(k) Service Agreements") with selected providers of 401(k) plans.
Such plan providers will provide services to their customers as set
forth in the 401(k) Service Agreements from time to time.
(f) Distributors may also enter into Shareholder Service
Agreements substantially in the form attached hereto as Exhibit E
("Bank Trust Department Agreements") with selected bank trust
departments. Such bank trust departments will provide shareholder
services to their customers as set forth in the Bank Trust Department
Agreements.
SECTION 4. This Plan shall not take effect until it has been approved
by a vote of at least a "majority of the outstanding voting securities" (as
defined in the 1940 Act) of the Shares.
SECTION 5. This Plan shall not take effect until it has been
approved, together with any related agreements, by votes of the majority of
both (a) the Board of Directors of the Fund and (b) those directors of the Fund
who are not "interested persons" of the Fund (as defined in the 1940 Act) and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it (the "Dis-interested Directors"), cast in person
at a meeting called for the purpose of voting on this Plan or such agreements.
SECTION 6. Unless sooner terminated pursuant to Section 8, this Plan
shall continue in effect until June 30, 1994 and thereafter shall continue in
effect so long as such continuance is specifically approved at least annually
in the manner provided for approval of this Plan in Section 5.
<PAGE> 3
SECTION 7. Distributors shall provide to the Fund's Board of
Directors and the Board of Directors shall review, at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 8. This Plan may be terminated at any time by vote of a
majority of the Dis-interested Directors, or by vote of a majority of the
outstanding voting securities of the Shares. If this Plan is terminated, the
obligation of the Fund to make payments pursuant to this Plan will also cease
and the Fund will not be required to make any payments beyond the termination
date even with respect to expenses incurred prior to the termination date.
SECTION 9. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the Dis-interested
Directors or by a vote of the outstanding voting securities of the
Fund attributable to the Shares, on not more than sixty (60) days'
written notice to any other party to the agreement; and
(b) that such agreement shall terminate automatically in the
event of its assignment.
SECTION 10. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved in the manner provided in Section 4 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for in Section 5 hereof.
AIM EQUITY FUNDS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
--------------------------------- ------------------------
Assistant Secretary President
Effective as of September 27, 1993, as amended as of March 8, 1994 and as of
September 10, 1994 (Effective October 4, 1993, with respect to AIM
Constellation Fund)
<PAGE> 4
APPENDIX A TO
MASTER DISTRIBUTION PLAN
OF
AIM EQUITY FUNDS, INC.
DISTRIBUTION FEE
The Fund shall pay the Distributor as full compensation for all
services rendered and all facilities furnished under the Distribution Plan for
each Portfolio as designated below, a Distribution Fee* determined by applying
the annual rate set forth below as to each Portfolio (or Retail Class thereof)
to the average daily net assets of the Portfolio (or Retail Class thereof) for
the plan year, computed in a manner used for the determination of the offering
price of shares of the Portfolio (or Retail Class).
<TABLE>
<CAPTION>
PORTFOLIO ANNUAL RATE
--------- -----------
<S> <C>
AIM Aggressive Growth Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 0.25%
AIM Charter Fund (Retail Class) . . . . . . . . . . . . . . . . . . . . . . . 0.30%
AIM Constellation Fund (Retail Class) . . . . . . . . . . . . . . . . . . . . 0.30%
AIM Weingarten Fund (Retail Class) . . . . . . . . . . . . . . . . . . . . . . 0.30%
</TABLE>
______________________
* The Distribution Fee is payable apart from the sales charge, if any,
as stated in the current prospectus for the applicable Class and the
applicable Portfolio. The amount of the Distribution Fee is subject
to any applicable limitations imposed from time to time by applicable
Rules of the National Association of Securities Dealers, Inc.
<PAGE> 1
EXHIBIT 15(b)(1)
EXHIBIT A
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE] FOR SALE OF SHARES
A I M Distributors, Inc. OF THE AIM MUTUAL FUNDS
This Shareholder Service Agreement (the "Agreement") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") by each
of the AIM-managed mutual funds (or designated classes of such funds) listed on
Schedule A to this Agreement (the "Funds"), under a Distribution Plan (the
"Plan") adopted pursuant to said Rule. This Agreement, being made between A I M
Distributors, Inc. ("Distributors"), solely as agent for the Funds, and the
undersigned authorized dealer, defines the services to be provided by the
authorized dealer for which it is to receive payments pursuant to the Plan
adopted by each of the Funds. The Plan and the Agreement have been approved by
a majority of the directors of each of the Funds, including a majority of the
directors who are not interested persons of such Funds, and who have no direct
or indirect financial interest in the operation of the Plan or related
agreements (the "Dis-interested Directors"), by votes cast in person at a
meeting called for the purpose of voting on the Plan. Such approval included a
determination that in the exercise of their reasonable business judgement and
in light of their fiduciary duties, there is a reasonable likelihood that the
Plan will benefit such Fund and its shareholders. The Plan has also been
approved by a vote of at least a majority of each of such Funds' (or applicable
class of such Funds) outstanding securities, as defined in the 1940 Act.
1 To the extent that you provide distribution-related continuing personal
shareholder services to customers who may, from time to time, directly or
beneficially own shares of the Funds, including but not limited to,
distributing sales literature, answering routine customer inquiries
regarding the Funds, assisting customers in changing dividend options,
accounting designation and addresses, and in enrolling into any of 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 capital gains distributions
automatically in shares and providing such other services as the Funds or
the customer may reasonably request, we, solely as agent for the Funds,
shall pay you a fee periodically or arrange for such fee to be paid to you.
2 The fee paid with respect to each Fund will be calculated at the end of each
payment period (as indicated in Schedule A) for each business day of the
Fund during such payment period at the annual rate set forth in Schedule A
as applied to the average net asset value of the shares of such Fund
purchased or acquired through exchange on or after the Plan Calculation
Date shown for such Fund on Schedule A. Fees calculated in this manner
shall be paid to you only if your firm is the dealer of record at the close
of business on the last business day of the applicable payment period, for
the account in which such shares are held (the "Subject Shares"). In cases
where Distributors has advanced payment to you of the first year's fee for
shares sold at net asset value and subject to contingent deferred sales
charge, no additional payments will be made to you during the first year
the Subject Shares are held.
3 The total of the fees calculated for all of the Funds listed on Schedule A
for any period with respect to which calculations are made shall be paid
to you within 45 days after the close of such period.
4 We reserve the right to withhold payment with respect to the Subject Shares
purchased by you and redeemed or repurchased by the Fund or by us as Agent
within seven (7) business days after the date of our confirmation of such
purchase. We reserve the right at any time to impose minimum fee payment
requirements before any periodic payments will be made to you hereunder.
5 This Agreement does not require any broker-dealer to provide transfer
agency and recordkeeping related services as nominee for its customers.
6 You shall furnish us and the Funds with such information as shall
reasonably be requested either by the directors of the Funds or by us with
respect to the fees paid to you pursuant to this Agreement.
7 We shall furnish the directors of the Funds, for their review on a
quarterly basis, a written report of the amounts expended under the Plan by
us and the purposes for which such expenditures were made.
<PAGE> 2
8 Neither you nor any of your employees or agents are authorized to make any
representation concerning shares of the Funds except those contained in
the then current Prospectus for the Funds, and you shall have no authority
to act as agent for the Funds or for Distributors.
9 We may enter into other similar Shareholder Service Agreements with any
other person without your consent.
10 This Agreement and Schedule A may be amended at any time without your
consent by Distributors mailing a copy of an amendment to you at the address
set forth below. Such amendment shall become effective on the date
specified in such amendment unless you elect to terminate this Agreement
within thirty (30) days of your receipt of such amendment.
11 This Agreement may be terminated with respect to any Fund at any time
without payment of any penalty by the vote of a majority of the directors
of such Fund who are Dis-interested Directors or by a vote of a majority of
the Fund's outstanding shares, on sixty (60) days' written notice. It will
be terminated by any act which terminates either the Fund's Distribution
Agreement with us, the Selected Dealer Agreement between your firm and us
or the Fund's Distribution Plan, and in any event, it shall terminate
automatically in the event of its assignment as that term is defined in the
1940 Act.
12 The provisions of the Distribution Agreement between any Fund and us,
insofar as they relate to the Plan, are incorporated herein by reference.
This Agreement shall become effective upon execution and delivery hereof
and shall continue in full force and effect as long as the continuance of
the Plan and this related Agreement are approved at least annually by a
vote of the directors, including a majority of the Dis-interested
Directors, cast in person at a meeting called for the purpose of voting
thereon. All communications to us should be sent to the address of
Distributors as shown at the bottom of this Agreement. Any notice to you
shall be duly given if mailed or telegraphed to you at the address
specified by you below.
13 You represent that you provide to your customers who own shares of the
Funds personal services as defined from time to time in applicable
regulations of the National Association of Securities Dealers, Inc., and
that you will continue to accept payments under this Agreement only so long
as you provide such services.
14 This Agreement shall be construed in accordance with the laws of the State
of Texas.
A I M DISTRIBUTORS, INC.
/S/ MICHAEL J. CEMO
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 3
SCHEDULE "A"
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------
<S> <C> <C>
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund A Shares 0.25 September 15, 1994
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM Limited Maturity Treasury Shares 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Tax-Exempt Bond Fund of Connecticut 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund 0.10 July 1, 1992
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
</TABLE>
*Frequency of Payments: Quarterly, B share payments begin after an initial
12 month holding period.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
<PAGE> 1
EXHIBIT 15(c)(1)
EXHIBIT B
[LOGO APPEARS HERE] BANK SHAREHOLDER
A I M Distributors, Inc. SERVICE AGREEMENT
We desire to enter into an Agreement with A I M Distributors, Inc. (the
"Company") acting as agent for the "AIM Funds", for servicing of our agency
clients who are shareholders of, and the administration of such shareholder
accounts in the shares of the AIM Funds (hereinafter referred to as the
"Shares"). Subject to the Company's acceptance of this Agreement, the terms and
conditions of this Agreement shall be as follows:
1 We shall provide continuing personal shareholder and administration
services for holders of the Shares who are also our clients. Such services
to our clients may include, without limitation, some or all of the
following: answering shareholder inquiries regarding the Shares and the AIM
Funds; performing subaccounting; establishing and maintaining shareholder
accounts and records; processing and bunching 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 us; forwarding applicable AIM Funds prospectuses, proxy
statements, reports and notices to our clients who are holders of Shares;
and such other administrative services as you reasonably may request, to
the extent we are permitted by applicable statute, rule or regulations to
provide such services. We represent that we shall accept fees hereunder
only so long as we continue to provide personal shareholder services to our
clients.
2 Shares purchased by us as agents for our clients will be registered (choose
one) (in our name or in the name of our nominee) (in the names of our
clients). The client will be the beneficial owner of the Shares purchased
and held by us in accordance with the client's instructions and the client
may exercise all applicable rights of a holder of such Shares. We agree to
transmit to the AIM Funds' transfer agent in a timely manner, all purchase
orders and redemption requests of our clients and to forward to each
client any proxy statements, periodic shareholder reports and other
communications received from the Company by us on behalf of our clients.
The Company agrees to pay all out-of-pocket expenses actually incurred by
us in connection with the transfer by us of such proxy statements and
reports to our clients as required by applicable law or regulation. We
agree to transfer record ownership of a client's Shares to the client
promptly upon the request of a client. In addition, record ownership will
be promptly transferred to the client in the event that the person or
entity ceases to be our client.
3 Within five (5) business days of placing a purchase order we agree to send
(i) a cashiers check to the Company, or (ii) a wire transfer to the AIM
Funds' transfer agent, in an amount equal to the amount of all purchase
orders placed by us on behalf of our clients and accepted by the Company.
4 We agree to make available to the Company, upon the Company's request, such
information relating to our clients who are beneficial owners of Shares and
their transactions in such Shares as may be required by applicable laws and
regulations or as may be reasonably requested by the Company. The names of
our customers shall remain our sole property and shall not be used by the
Company for any other purpose except as needed for servicing and
information mailings in the normal course of business to holders of the
Shares.
5 We shall provide such facilities and personnel (which may be all or any
part of the facilities currently used in our business, or all or any
personnel employed by us) as may be necessary or beneficial in carrying out
the purposes of this Agreement.
6 Except as may be provided in a separate written agreement between the
Company and us, neither we nor any of our employees or agents are
authorized to assist in distribution of any of the AIM Funds' shares except
those contained in the then current Prospectus applicable to the Shares;
and we shall have no authority to act as agent for the Company or the AIM
Funds. Neither the AIM Funds, A I M Advisors, Inc. nor A I M Distributors,
Inc. will be a party, nor will they be represented as a party, to any
agreement that we may enter into with our clients.
<PAGE> 2
7 In consideration of the services and facilities described herein, we shall
receive from the Company on behalf of the AIM Funds an annual service fee,
payable at such intervals as may be set forth in Schedule A hereto, of a
percentage of the aggregate average net asset value of the Shares owned
beneficially by our clients during each payment period, as set forth in
Schedule A hereto. We understand that this Agreement and the payment of
such service fees has been authorized and approved by the Boards of
Directors/Trustees of the AIM Funds, and is subject to limitations imposed
by the National Association of Securities Dealers, Inc. In cases where the
Company has advanced payments to us of the first year's fee for shares sold
with a contingent deferred sales charge, no payments will be made to us
during the first year the subject Shares are held.
8 The AIM Funds reserve the right, at their discretion and without notice, to
suspend the sale of any Shares or withdraw the sale of Shares.
9 We understand that the Company reserves the right to amend this Agreement
or Schedule A hereto at any time without our consent by mailing a copy of
an amendment to us at the address set forth below. Such amendment shall
become effective on the date specified in such amendment unless we elect to
terminate this Agreement within thirty (30) days of our receipt of such
amendment.
10 This Agreement may be terminated at any time by the Company on not less
than 15 days' written notice to us at our principal place of business. We,
on 15 days' written notice addressed to the Company at its principal place
of business, may terminate this Agreement, said termination to become
effective on the date of mailing notice to us of such termination. The
Company's failure to terminate for any cause shall not constitute a waiver
of the Company's right to terminate at a later date for any such cause.
This Agreement shall terminate automatically in the event of its assigment,
the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940, as amended.
11 All communications to the Company shall be sent to it at Eleven Greenway
Plaza, Suite 1919, Houston, Texas, 77046-1173. Any notice to us shall be
duly given if mailed or telegraphed to us at this address shown on this
Agreement.
12 This Agreement shall become effective as of the date when it is executed
and dated below by the Company. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
/S/ MICHAEL J. CEMO
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 3
SCHEDULE "A" TO BANK
[AIM LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------
<S> <C> <C>
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund A Shares 0.25 September 15, 1994
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM Limited Maturity Treasury Shares 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Tax-Exempt Bond Fund of Connecticut 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund 0.10 July 1, 1992
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
</TABLE>
*Frequency of Payments: Quarterly, B share payments begin after an initial
12 month holding period.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
<PAGE> 1
EXHIBIT 15(d)(1)
EXHIBIT C
AIM EQUITY FUNDS, INC.
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
______________________, 1994
AIM Equity Funds, Inc.
11 Greenway Plaza
Suite 1919
Houston, Texas 77046
Gentlemen:
We desire to enter into an Agreement with AIM Equity Funds, Inc. (the
"Company"), for the provision of specialized services to holders of Group
Annuity Contracts (the "Contracts") issued by us to employers for their
pension, stock bonus or profit-sharing plans qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Plans"), where amounts
contributed under such plans are invested pursuant to the Contracts in shares
of one or more of the series portfolios of the Company (the "Fund(s)") listed
in Appendix A, attached hereto. Subject to the Company's acceptance of this
Agreement, the terms and conditions of this Agreement shall be as follows:
1. We shall provide specialized services to holders of Contracts who
have selected the Fund(s) for purposes of their Group Annuity Contracts
("Contractholders"). Such services to Group Contractholders may include,
without limitation, some or all of the following: answering inquiries
regarding the Fund(s) and the Company; performing sub-accounting for
Contractholders; establishing and maintaining Contractholder accounts and
records; processing and bunching purchase and redemption transactions;
providing periodic statements of Contract account balances; forwarding such
reports and notices to Contractholders relative to the Fund(s) as we deem
necessary; generally, facilitating communications with Contractholders
concerning investments in the Fund(s) on behalf of Plan participants; and
performing such other administrative services as we deem to be necessary or
desirable, to the extent permitted by applicable statute, rule or
regulation. We represent that we will accept a fee hereunder only so long
as we continue to provide personal services to Contractholders.
2. Shares of the Fund(s) purchased by us will be registered in our
name and we may exercise all applicable rights of a holder of such Shares.
We agree to transmit to the Company, in a timely manner, all purchase
orders and redemption requests and to forward to each of our
Contractholders as we deem necessary, periodic shareholder reports and
other communications received from the Company by us.
3. We agree to wire to the Company's custodian bank, within five (5)
business days of the placing of a purchase order, federal funds in an
amount equal to the amount of all purchase orders placed by us on behalf of
our Contractholders and accepted by the Company (net of any redemption
orders placed by us on behalf of our Contractholders).
<PAGE> 2
4. We shall provide such facilities and personnel (which may be all
or any part of the facilities currently used in our business, or all or any
personnel employed by us) as may be necessary or beneficial in carrying out
the purposes of this Agreement.
5. Except as may be provided in a separate written agreement between
A I M Distributors, Inc. and us, neither we nor any of our employees or
agents are authorized to assist in the distribution of any shares of the
Fund(s) to the public or to make any representations to Contractholders
concerning the Fund(s) except those contained in the then current Company
Prospectus applicable to the Fund(s), copies of which will be supplied by
the Company to us, as we may request. Neither the Company, A I M Advisors,
Inc. nor A I M Distributors, Inc. will be a party, nor will they be
represented as a party, to any Group Annuity Contract agreement between us
and the Contractholders nor shall the Company, A I M Advisors, Inc. or
A I M Distributors, Inc. participate, directly or indirectly, in any
compensation that we may receive from Contractholders and their Plans'
participants.
6. In consideration of the services and facilities described herein,
we shall receive from the Company an annual service fee, payable
semi-annually, of 0.25 percent of the aggregate average net asset value of
shares of the Fund(s) owned by us during each semi-annual period for the
benefit of Contractholders' Plans' participants. We understand that this
Agreement and the payment of such service fees have been authorized and
approved by the Board of Directors of the Company. We further understand
that this Agreement and the fees payable hereunder are subject to
limitations imposed by applicable rules of the National Association of
Securities Dealers, Inc.
7. The Company reserves the right, at its discretion and without
notice, to suspend the sale of shares of the Fund(s) or to withdraw the
sale of shares of the Fund(s).
8. This Agreement may be amended at any time without our consent by
the Company mailing a copy of an amendment to us at the address set forth
below. Such amendment shall become effective on the date set forth in such
amendment unless we terminate this Agreement as set forth below within
thirty (30) days of our receipt of such amendment.
9. This Agreement may be terminated at any time by the Company on not
less than 60 days' written notice to us at our principal place of business.
We may terminate this Agreement on 60 days' written notice addressed to the
Company at its principal place of business. The Company may also terminate
this Agreement for cause on violation by us of any of the provisions of
this Agreement, said termination to become effective on the date of mailing
notice to us of such termination. The Company's failure to terminate for
any cause shall not constitute a waiver of the Company's right to terminate
at a later date for any such cause. This Agreement shall terminate
automatically in the event of its assignment, the term "assignment" for
this purpose having the meaning defined in Section 2(a)(4) of the
Investment Company Act of 1940.
10. All communications to the Company shall be sent to it at 11
Greenway Plaza, Suite 1919, Houston, Texas 77046. Any notice to us shall
be duly given if mailed or telegraphed to us at the address shown on this
Agreement.
-2-
<PAGE> 3
11. This Agreement shall become effective as of the date when it is
executed and dated below by the Company. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
________________________________________
(Firm Name)
________________________________________
(Address)
________________________________________
(City) / (State) / (County)
BY: _______________________________
Name: _______________________________
Title: _______________________________
Dated: _______________________________
ACCEPTED:
BY: _______________________________
Name: _______________________________
Title: _______________________________
Dated: _______________________________
-3-
<PAGE> 4
APPENDIX A
TO
AIM EQUITY FUNDS, INC.
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
-4-
<PAGE> 1
EXHIBIT 15(e)
SERVICE AGREEMENT FOR
CERTAIN RETIREMENT PLANS
(AIM INSTITUTIONAL FUNDS(R))
This Agreement is entered into as of the _______ of _________________,
19___, between __________________________________________ (the "Plan Provider")
and Fund Management Company (the "Distributor").
RECITAL
-------
Plan Provider acts as a trustee and/or servicing agent for defined
contribution plans and/or deferred compensation plans (the "Plans") and invests
and reinvests such Plans' assets as specified by an investment adviser, sponsor
or administrative committee of the Plan (a "Plan Representative") generally
upon the direction of Plan beneficiaries (the "Participants").
Plan Provider and Distributor desire to facilitate the purchase and
redemption of shares (the "Shares") of the funds listed on Exhibit A hereto
(the "Fund" or "Funds"), registered investment companies distributed by
Distributor, on behalf of the Plans, through one or more accounts (not to
exceed one per Plan) in each Fund (individually an "Account" and collectively
the "Accounts"), subject to the terms and conditions of this Agreement.
AGREEMENT
---------
1. PRICING INFORMATION
Each Fund or its designee will furnish Plan Provider on each business
day that the New York Stock Exchange is open for business ("Business
Day"), with (i) net asset value information as of the close of trading
(currently 4:15 p.m. Eastern Time) on the New York Stock Exchange or
as at such later times at which a Fund's net asset value is calculated
as specified in such Fund's prospectus ("Close of Trading"), (ii)
dividend and capital gains information as it becomes available, and
(iii) in the case of income Funds, the daily accrual or interest rate
factor (mil rate). The Funds shall use their best efforts to provide
such information to Plan Provider by 6:00 p.m. Central Time on the
same Business Day.
2. ORDERS AND SETTLEMENT
Plan Provider will calculate order allocations among designated
investment media and transmit to Distributor orders to purchase or
redeem Shares for specified Accounts. Plan Provider agrees that
orders for net purchases or net redemptions of Shares derived from
instructions received in proper form by Plan Provider from Plan
Representatives prior to the Close of Trading on any given Business
Day will be processed that same evening and transmitted to Distributor
or its designee by 9:00 a.m. Central Time on the following Business
Day. Plan Provider agrees that payment for net purchases of Shares
attributable to all orders executed for the Accounts on a given
Business Day will be wired by Plan Provider or its designee no later
than 3:00 p.m. Central Time to a custodial account designated by
Distributor. Distributor agrees that payment for net redemptions of
Shares
<PAGE> 2
attributable to all orders executed for the Accounts on a given
Business Day will be wired by Distributor on the next Business Day
after such redemption orders are transmitted to Distributor or its
designee no later than the close of business on the next Business Day
to an account designated by Plan Provider.
Subject to Plan Provider's compliance with the foregoing, Plan
Provider will be considered agent for the Funds and the Business Day
on which instructions are received in proper form by Plan Provider
from Participants or Plan Representatives by the Close of Trading will
be the date as of which Shares will be purchased and redeemed as a
result of such instructions. Plan Provider will time and date stamp
instructions received from Participants or Plan Representatives and
will make such instructions and other records relating to the services
performed hereunder (the "Services") available for audit by
Distributor's auditors upon request. Instructions received in proper
form by Plan Provider from Participants or Plan Representatives after
the Close of Trading on any given Business Day shall be treated as if
received on the next following Business Day. Dividends and capital
gains distributions will be automatically reinvested on payable date
at net asset value in accordance with each Fund's then current
prospectus.
3. PARTICIPANT RECORD KEEPING
Record keeping and other services to Plan Participants shall be the
responsibility of the record keeper for the Plans and shall not be the
responsibility of the Distributor or its transfer agent. Distributor
will recognize each Plan as a single shareholder and as an unallocated
account in the Funds, and will not maintain separate accounts for Plan
participants.
4. ACCOUNT INFORMATION
Distributor will provide Plan Provider (a) daily confirmations of
Account activity within five Business Days after each day on which a
purchase or redemption of Shares is effected for the particular
Account, (b) if requested by Plan Provider, monthly statements
detailing activity in each Account within fifteen Business Days after
the end of each month, and (c) such other reports as may be reasonably
requested by Plan Provider.
5. MAINTENANCE OF RECORDS
Each party shall maintain and preserve all records as required by law
to be maintained and preserved in connection with providing the
Services and in making Shares available to the Plans. Upon the
request of Distributor, the Plan Provider shall provide copies of all
records relating to the Funds as may reasonably be requested to enable
the Funds or their representatives to comply with any request of a
governmental body or self-regulatory organization.
6. COMPLIANCE WITH LAWS
At all times Plan Provider shall comply with all laws, rules and
regulations applicable to it by virtue of entering into this
Agreement, including but not limited to those applicable to a transfer
agent under the Federal securities laws, including, without
limitation, all prospectus
-2-
<PAGE> 3
delivery requirements. The parties agree that Plan Provider may
satisfy prospectus delivery requirements by sub-contracting with Plan
Representatives. At all times, Distributor and the Funds shall comply
with all laws, rules and regulations applicable to them by virtue of
entering into this Agreement. The Plan Provider and Plan
Representatives, and not the Distributor shall take such action as may
be necessary so that the transactions contemplated by this Service
Agreement shall not be "Prohibited Transactions" under section 406 of
the Employee Retirement Income Security Act of 1974, or section 4975
of the Internal Revenue Code.
7. REPRESENTATIONS WITH RESPECT TO THE DISTRIBUTOR AND THE FUNDS
Plan Provider and its agents shall not make representations concerning
a Fund or Shares except those contained in the then current prospectus
of such Fund, in current sales literature furnished by Distributor to
Plan Provider, in publicly available databases, such as those
databases created by Standard & Poor's Corporation and Morningstar,
and in current sales literature created by Plan Provider and submitted
to and approved in writing by Distributor prior to its use.
8. EXPENSES
(a) Each party shall bear all expenses incidental to the
performance of its obligations under this Agreement.
(b) Each Fund shall pay the cost of registration of its shares
with the Securities and Exchange Commission and in states
where required. Each Fund shall distribute or cause to be
distributed to Plan Provider its proxy material, periodic Fund
reports to shareholders and other material as such Fund may
require to be sent to shareholders. The cost of preparing and
printing this material shall be paid by the applicable Fund or
Distributor, and the cost of distributing such items shall be
borne by Plan Provider or the Plan(s) Representatives.
9. RELATIONSHIP OF PARTIES
Except to the extent provided in Section 2, it is understood and
agreed that all Services performed hereunder by Plan Provider shall be
as an independent contractor and not as an employee or agent of
Distributor or any of the Funds, and none of the parties shall hold
itself out as an agent of any other party with the authority to bind
such party.
10. USE OF NAMES
Plan Provider and its affiliates will not, without the prior written
approval of Distributor, make public references to A I M Management
Group Inc. or any of its subsidiaries, or to the Funds. For purposes
of this provision, the public does not include Plan Providers'
representatives who are actively engaged in promoting the Funds. Any
brochure or other communication to the public that mentions the Funds
shall be submitted to the compliance officer of Distributor, or its
affiliates, for his written approval prior to use by Plan Provider or
its affiliates. Plan Provider shall provide copies to Distributor's
or its affiliates' compliance officer of any of Plan Provider's
regulatory filings that include any reference to A I M
-3-
<PAGE> 4
Management Group Inc. or its subsidiaries or the Funds. If Plan
Provider or its affiliates should make unauthorized references or
representations, Plan Provider agrees to indemnify and hold harmless
the Funds, A I M Management Group Inc. and its subsidiaries from any
claims, losses, expenses or liability arising in any way out of or
connected in any way with such references or representations.
11. TERMINATION
(a) This Agreement may be terminated with respect to any Fund at
any time without payment of any penalty by the vote of a
majority of the directors of such Fund who are "disinterested
directors", as that term is defined in the Investment Company
Act of 1940, as amended (the "1940 Act"), or by a vote of a
majority of the Fund's outstanding shares, on sixty (60) days'
written notice. It will be terminated by any act which
terminates the Fund's distribution agreement with the
Distributor.
(b) Either party may terminate this Agreement upon sixty (60)
days' prior written notice to the other party.
12. INDEMNIFICATION
(a) Plan Provider agrees to indemnify and hold harmless the
Distributor, its affiliates, the Funds, the Funds' investment
advisers, and each of their directors, officers, employees,
agents and each person, if any, who controls them within the
meaning of the Securities Act of 1933, as amended (the
"Securities Act"), (the "Distributor Indemnitees") against any
losses, claims, damages, liabilities or expenses to which a
Distributor Indemnitee may become subject insofar as those
losses, claims, damages, liabilities or expenses or actions in
respect thereof, arise out of or are based upon (i) Plan
Provider's negligence or willful misconduct in performing the
Services, (ii) any breach by Plan Provider of any material
provision of this Agreement, or (iii) any breach by Plan
Provider of a representation, warranty or covenant made in
this Agreement; and Plan Provider will reimburse the
Distributor Indemnitee for any legal or other expenses
reasonably incurred, as incurred, by them in connection with
investigating or defending such loss, claim or action. This
indemnity agreement will be in addition to any liability which
Plan Provider may otherwise have.
(b) Distributor agrees to indemnify and hold harmless Plan
Provider and its affiliates, and each of its directors,
officers, employees, agents and each person, if any, who
controls Plan Provider within the meaning of the Securities
Act (the "Plan Provider Indemnitees") against any losses,
claims, damages, liabilities or expenses to which a Plan
Provider Indemnitee may become subject insofar as such losses,
claims, damages, liabilities or expenses (or actions in
respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact
contained in the Registration Statement or Prospectus of a
Fund, or the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to
make statements therein not misleading, (ii) any breach by
Distributor of any material provision of this Agreement, (iii)
Distributor's negligence or willful misconduct in carrying out
its duties and responsibilities under this
-4-
<PAGE> 5
Agreement, or (iv) any breach by Distributor of a
representation, warranty or covenant made in this Agreement;
and Distributor will reimburse the Plan Provider Indemnitees
for any legal or other expenses reasonably incurred, as
incurred, by them, in connection with investigating or
defending any such loss, claim or action. This indemnity
agreement will be in addition to any liability which
Distributor may otherwise have.
(c) If any third party threatens to commence or commences any
action for which one party (the "Indemnifying Party") may be
required to indemnify another person hereunder (the
"Indemnified Party"), the Indemnified Party shall promptly
give notice thereof to the Indemnifying Party. The
Indemnifying Party shall be entitled, at its own expense and
without limiting its obligations to indemnify the Indemnified
Party, to assume control of the defense of such action with
counsel selected by the Indemnifying Party which counsel shall
be reasonably satisfactory to the Indemnified Party. If the
Indemnifying Party assumes the control of the defense, the
Indemnified Party may participate in the defense of such claim
at its own expense. Without the prior written consent of the
Indemnified Party, which consent shall not be withheld
unreasonably, the Indemnifying Party may not settle or
compromise the liability of the Indemnified Party in such
action or consent to or permit the entry of any judgment in
respect thereof unless in connection with such settlement,
compromise or consent each Indemnified Party receives from
such claimant an unconditional release from all liability in
respect of such claim.
13. NOTICE
Each notice required by this Agreement shall be given in writing and
delivered personally or mailed by certified mail or courier service to
the other party at the following address or such other address as each
party may give notice to the other.
If to Plan Provider, to:
__________________________________
__________________________________
__________________________________
__________________________________
If to Distributor or any Fund, to:
J. Abbott Sprague, President
Fund Management Company
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
with a copy to the General Counsel of Distributor.
-5-
<PAGE> 6
14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Texas applicable to agreements fully
executed and to be performed therein.
15. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each party represents that it is free to enter into this Agreement and
that by doing so it will not breach or otherwise impair any other
agreement or understanding with any other person, corporation or other
entity. Plan Provider further represents, warrants, and covenants
that:
(a) it has full power and authority under applicable law, and has
taken all action necessary, to enter into and perform this
Agreement and the person executing this Agreement on its
behalf is duly authorized and empowered to execute and deliver
this Agreement;
(b) it is registered as a transfer agent pursuant to Section 17A
of the Securities Exchange Act of 1934, as amended (the "1934
Act"), or is exempt from such registration;
(c) the arrangements provided for in this Agreement will be
disclosed to the Plan Representatives;
(d) it is registered as a broker-dealer under the 1934 Act or any
applicable state securities laws, or, including as a result of
entering into and performing the services set forth in this
Agreement, or is exempt from such registration; and
(e) this Agreement, when executed and delivered, shall constitute
the valid, legal and binding obligation of Plan Provider,
enforceable in accordance with its terms.
Distributor further represents, warrants and covenants, that:
(a) it has full power and authority under applicable law,
and has taken all action necessary, to enter into and
perform this Agreement and the person executing this
Agreement on its behalf is duly authorized and
empowered to execute and deliver this Agreement;
(b) it is registered as a broker-dealer under the 1934
Act and any applicable state securities laws;
(c) the Funds' advisor(s) are registered as an investment
adviser under the Investment Advisers Act of 1940,
the Funds are registered as investment companies
under the Investment Company Act of 1940 and Fund
Shares are registered under the Securities Act of
1933; and
-6-
<PAGE> 7
(d) this Agreement, when executed and delivered, shall
constitute the valid, legal and binding obligation of
Distributor, enforceable in accordance with its
terms.
16. COMPLETE AGREEMENT
This Agreement contains the full and complete understanding of the
parties and supersedes all prior representations, promises,
statements, arrangements, agreements, warranties and understandings
between the parties with respect to the subject matter hereof, whether
oral or written, express or implied.
17. MODIFICATION
This Agreement may be modified or amended, and the terms of this
Agreement may be waived, only by a writing signed by each of the
parties.
18. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same Agreement.
19. ASSIGNMENT
This Agreement shall not be assigned by a party hereto, without the
prior written consent of the other parties hereto, except that a party
may assign this Agreement to an affiliate having the same ultimate
ownership as the assigning party without such consent.
20. SURVIVAL
The provisions of Sections 5, 10, and 12 shall survive termination of
this Agreement.
21. NON-EXCLUSIVITY
Each of the parties acknowledges and agrees that this Agreement and
the arrangement described herein are intended to be non-exclusive and
that each of the parties is free to enter into similar agreements and
arrangements with other entities.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the undersigned have executed this
Agreement by their duly authorized officers as of this ______ day of
______________________, 19_____.
----------------------------------------
(PLAN PROVIDER)
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
FUND MANAGEMENT COMPANY
(DISTRIBUTOR)
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
-8-
<PAGE> 9
EXHIBIT A
AIM Equity Funds, Inc. (Institutional Classes)
- ----------------------------------------------
AIM Charter Fund
AIM Constellation Fund
AIM Weingarten Fund
AIM Investment Securities Funds
- -------------------------------
Limited Maturity Treasury Portfolio (Institutional Shares)
<PAGE> 1
EXHIBIT 15(e)(2)
EXHIBIT D
SERVICE AGREEMENT FOR
CERTAIN RETIREMENT PLANS
(THE AIM FAMILY OF FUNDS(R))
This Agreement is entered into as of the_____ of __________________,
199___, between _________________________________________________________ (the
"Plan Provider") and A I M Distributors, Inc. (the "Distributor").
RECITAL
-------
Plan Provider acts as a trustee and/or servicing agent for defined
contribution plans and/or deferred compensation plans (the "Plans") and invests
and reinvests such Plans' assets as specified by an investment adviser, sponsor
or administrative committee of the Plan (a "Plan Representative") generally
upon the direction of Plan beneficiaries (the "Participants").
Plan Provider and Distributor desire to facilitate the purchase and
redemption of shares (the "Shares") of the funds listed on Exhibit A hereto
(the "Fund" or "Funds"), registered investment companies distributed by
Distributor, on behalf of the Plans, through one or more accounts (not to
exceed one per Plan) in each Fund (individually an "Account" and collectively
the "Accounts"), subject to the terms and conditions of this Agreement.
Distributor shall, on behalf of the Funds, pay to Plan Provider a fee in
accordance with Exhibit A hereto.
AGREEMENT
---------
1. PRICING INFORMATION
Each Fund or its designee will furnish Plan Provider on each business
day that the New York Stock Exchange is open for business ("Business
Day"), with (i) net asset value information as of the close of trading
(currently 4:15 p.m. Eastern Time) on the New York Stock Exchange or
as at such later times at which a Fund's net asset value is calculated
as specified in such Fund's prospectus ("Close of Trading"), (ii)
dividend and capital gains information as it becomes available, and
(iii) in the case of income Funds, the daily accrual or interest rate
factor (mil rate). The Funds shall use their best efforts to provide
such information to Plan Provider by 6:00 p.m. Central Time on the
same Business Day.
2. ORDERS AND SETTLEMENT
Plan Provider will calculate order allocations among designated
investment media and transmit to Distributor orders to purchase or
redeem Shares for specified Accounts. Plan Provider agrees that
orders for net purchases or net redemptions of Shares derived from
instructions received in proper form by Plan Provider from Plan
Representatives prior to the Close of Trading on any given Business
Day will be processed that same evening and transmitted to Distributor
or its designee by 9:00 a.m. Central Time on the following Business
Day. Plan Provider agrees that payment for net purchases of Shares
attributable to all orders executed for the Accounts on a given
Business Day will be wired by Plan Provider or its designee no later
than 3:00 p.m. Central Time to a custodial account designated by
Distributor. Distributor agrees that payment for net redemptions of
Shares attributable to all orders executed for the Accounts on a given
Business Day will be wired
<PAGE> 2
by Distributor on the next Business Day after such redemption orders
are transmitted to Distributor or its designee no later than the close
of business on the next Business Day to an account designated by Plan
Provider.
Subject to Plan Provider's compliance with the foregoing, Plan
Provider will be considered agent for the Funds and the Business Day
on which instructions are received in proper form by Plan Provider
from Participants or Plan Representatives by the Close of Trading will
be the date as of which Shares will be purchased and redeemed as a
result of such instructions. Plan Provider will time and date stamp
instructions received from Participants or Plan Representatives and
will make such instructions and other records relating to the services
performed hereunder (the "Services") available for audit by
Distributor's auditors upon request. Instructions received in proper
form by Plan Provider from Participants or Plan Representatives after
the Close of Trading on any given Business Day shall be treated as if
received on the next following Business Day. Dividends and capital
gains distributions will be automatically reinvested on payable date
at net asset value in accordance with each Fund's then current
prospectus.
3. PARTICIPANT RECORD KEEPING
Record keeping and other services to Plan Participants shall be the
responsibility of the record keeper for the Plans and shall not be the
responsibility of the Distributor or its transfer agent. Distributor
will recognize each Plan as a single shareholder and as an unallocated
account in the Funds, and will not maintain separate accounts for Plan
participants.
4. ACCOUNT INFORMATION
Distributor will provide Plan Provider (a) daily confirmations of
Account activity within five Business Days after each day on which a
purchase or redemption of Shares is effected for the particular
Account, (b) if requested by Plan Provider, quarterly statements
detailing activity in each Account within fifteen Business Days after
the end of each quarter, and (c) such other reports as may be
reasonably requested by Plan Provider.
5. MAINTENANCE OF RECORDS
Each party shall maintain and preserve all records as required by law
to be maintained and preserved in connection with providing the
Services and in making Shares available to the Plans. Upon the
request of Distributor, the Plan Provider shall provide copies of all
records relating to the Funds as may reasonably be requested to enable
the Funds or their representatives to comply with any request of a
governmental body or self-regulatory organization.
6. COMPLIANCE WITH LAWS
At all times Plan Provider shall comply with all laws, rules and
regulations applicable to it by virtue of entering into this
Agreement, including but not limited to those applicable to a transfer
agent under the Federal securities laws, including, without
limitation, all prospectus delivery requirements. The parties agree
that Plan Provider may satisfy prospectus delivery
-2-
<PAGE> 3
requirements by sub-contracting with Plan Representatives. At all
times, Distributor and the Funds shall comply with all laws, rules and
regulations applicable to them by virtue of entering into this
Agreement. The Plan Provider and Plan Representatives, and not the
Distributor shall take such action as may be necessary so that the
transactions contemplated by this Service Agreement shall not be
"Prohibited Transactions" under section 406 of the Employee Retirement
Income Security Act of 1974, or section 4975 of the Internal Revenue
Code.
7. REPRESENTATIONS WITH RESPECT TO THE DISTRIBUTOR AND THE FUNDS
Plan Provider and its agents shall not make representations concerning
a Fund or Shares except those contained in the then current prospectus
of such Fund, in current sales literature furnished by Distributor to
Plan Provider, in publicly available databases, such as those
databases created by Standard & Poor's Corporation and Morningstar,
and in current sales literature created by Plan Provider and submitted
to and approved in writing by Distributor prior to its use.
8. EXPENSES
(a) Each party shall bear all expenses incidental to the
performance of its obligations under this Agreement.
(b) Each Fund shall pay the cost of registration of its shares
with the Securities and Exchange Commission and in states
where required. Each Fund shall distribute or cause to be
distributed to Plan Provider its proxy material, periodic Fund
reports to shareholders and other material as such Fund may
require to be sent to shareholders. The cost of preparing and
printing this material shall be paid by the applicable Fund or
Distributor, and the cost of distributing such items shall be
borne by Plan Provider or the Plan(s) Representatives.
9. RELATIONSHIP OF PARTIES
Except to the extent provided in Section 2, it is understood and
agreed that all Services performed hereunder by Plan Provider shall be
as an independent contractor and not as an employee or agent of
Distributor or any of the Funds, and none of the parties shall hold
itself out as an agent of any other party with the authority to bind
such party.
10. USE OF NAMES
Plan Provider and its affiliates will not, without the prior written
approval of Distributor, make public references to A I M Management
Group Inc. or any of its subsidiaries, or to the Funds. For purposes
of this provision, the public does not include Plan Providers'
representatives who are actively engaged in promoting the Funds. Any
brochure or other communication to the public that mentions the Funds
shall be submitted to the compliance officer of Distributor, or its
affiliates, for his written approval prior to use by Plan Provider or
its affiliates. Plan Provider shall provide copies to Distributor's
or its affiliates' compliance officer of any of Plan Provider's
regulatory filings that include any reference to A I M Management
Group Inc. or its subsidiaries or the Funds. If Plan Provider or its
affiliates
-3-
<PAGE> 4
should make unauthorized references or representations, Plan Provider
agrees to indemnify and hold harmless the Funds, A I M Management
Group Inc. and its subsidiaries from any claims, losses, expenses or
liability arising in any way out of or connected in any way with such
references or representations.
11. TERMINATION
(a) This Agreement may be terminated with respect to any Fund at
any time without payment of any penalty by the vote of a
majority of the directors of such Fund who are "disinterested
directors", as that term is defined in the Investment Company
Act of 1940, as amended (the "1940 Act"), or by a vote of a
majority of the Fund's outstanding shares, on sixty (60) days'
written notice. It will be terminated by any act which
terminates either the Fund's distribution agreement with the
Distributor, or any related agreement thereunder, and in any
event, it shall terminate automatically in the event of its
assignment as that term is defined in the 1940 Act.
(b) Either party may terminate this Agreement upon sixty (60)
days' prior written notice to the other party.
12. INDEMNIFICATION
(a) Plan Provider agrees to indemnify and hold harmless the
Distributor, its affiliates, the Funds, the Funds' investment
advisers, and each of their directors, officers, employees,
agents and each person, if any, who controls them within the
meaning of the Securities Act of 1933, as amended (the
"Securities Act"), (the "Distributor Indemnitees") against any
losses, claims, damages, liabilities or expenses to which a
Distributor Indemnitee may become subject insofar as those
losses, claims, damages, liabilities or expenses or actions in
respect thereof, arise out of or are based upon (i) Plan
Provider's negligence or willful misconduct in performing the
Services, (ii) any breach by Plan Provider of any material
provision of this Agreement, or (iii) any breach by Plan
Provider of a representation, warranty or covenant made in
this Agreement; and Plan Provider will reimburse the
Distributor Indemnitee for any legal or other expenses
reasonably incurred, as incurred, by them in connection with
investigating or defending such loss, claim or action. This
indemnity agreement will be in addition to any liability which
Plan Provider may otherwise have.
(b) Distributor agrees to indemnify and hold harmless Plan
Provider and its affiliates, and each of its directors,
officers, employees, agents and each person, if any, who
controls Plan Provider within the meaning of the Securities
Act (the "Plan Provider Indemnitees") against any losses,
claims, damages, liabilities or expenses to which a Plan
Provider Indemnitee may become subject insofar as such losses,
claims, damages, liabilities or expenses (or actions in
respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact
contained in the Registration Statement or Prospectus of a
Fund, or the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to
make statements therein not misleading, (ii) any breach by
Distributor of any material provision of this Agreement, (iii)
Distributor's negligence
-4-
<PAGE> 5
or willful misconduct in carrying out its duties and
responsibilities under this Agreement, or (iv) any breach by
Distributor of a representation, warranty or covenant made in
this Agreement; and Distributor will reimburse the Plan
Provider Indemnitees for any legal or other expenses
reasonably incurred, as incurred, by them, in connection with
investigating or defending any such loss, claim or action.
This indemnity agreement will be in addition to any liability
which Distributor may otherwise have.
(c) If any third party threatens to commence or commences any
action for which one party (the "Indemnifying Party") may be
required to indemnify another person hereunder (the
"Indemnified Party"), the Indemnified Party shall promptly
give notice thereof to the Indemnifying Party. The
Indemnifying Party shall be entitled, at its own expense and
without limiting its obligations to indemnify the Indemnified
Party, to assume control of the defense of such action with
counsel selected by the Indemnifying Party which counsel shall
be reasonably satisfactory to the Indemnified Party. If the
Indemnifying Party assumes the control of the defense, the
Indemnified Party may participate in the defense of such claim
at its own expense. Without the prior written consent of the
Indemnified Party, which consent shall not be withheld
unreasonably, the Indemnifying Party may not settle or
compromise the liability of the Indemnified Party in such
action or consent to or permit the entry of any judgment in
respect thereof unless in connection with such settlement,
compromise or consent each Indemnified Party receives from
such claimant an unconditional release from all liability in
respect of such claim.
13. NOTICE
Each notice required by this Agreement shall be given in writing and
delivered personally or mailed by certified mail or courier service to
the other party at the following address or such other address as each
party may give notice to the other.
If to Plan Provider, to:
_____________________________________________
_____________________________________________
_____________________________________________
_____________________________________________
If to Distributor or any Fund, to:
Michael J. Cemo, President
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
-5-
<PAGE> 6
and
J. Abbott Sprague, President
Fund Management Company
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
with a copy to the General Counsel of Distributor.
14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Texas applicable to agreements fully
executed and to be performed therein.
15. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each party represents that it is free to enter into this Agreement and
that by doing so it will not breach or otherwise impair any other
agreement or understanding with any other person, corporation or other
entity. Plan Provider further represents, warrants, and covenants
that:
(a) it has full power and authority under applicable law, and has
taken all action necessary, to enter into and perform this
Agreement and the person executing this Agreement on its
behalf is duly authorized and empowered to execute and deliver
this Agreement;
(b) it is registered as a transfer agent pursuant to Section 17A
of the Securities Exchange Act of 1934, as amended (the "1934
Act"), or is exempt from such registration;
(c) the arrangements provided for in this Agreement will be
disclosed to the Plan Representatives;
(d) it is registered as a broker-dealer under the 1934 Act or any
applicable state securities laws, or, including as a result of
entering into and performing the services set forth in this
Agreement, is exempt from such registration; and
(e) this Agreement, when executed and delivered, shall constitute
the valid, legal and binding obligation of Plan Provider,
enforceable in accordance with its terms.
Distributor further represents, warrants and covenants, that:
(a) it has full power and authority under applicable law,
and has taken all action necessary, to enter into and
perform this Agreement and the person executing this
Agreement on its behalf is duly authorized and
empowered to execute and deliver this Agreement;
-6-
<PAGE> 7
(b) it is registered as a broker-dealer under the 1934
Act and any applicable state securities laws;
(c) the Funds' advisor(s) are registered as an investment
adviser under the Investment Advisers Act of 1940,
the Funds are registered as investment companies
under the Investment Company Act of 1940 and Fund
Shares are registered under the Securities Act of
1933; and
(d) this Agreement, when executed and delivered, shall
constitute the valid, legal and binding obligation of
Distributor, enforceable in accordance with its
terms.
16. COMPLETE AGREEMENT
This Agreement contains the full and complete understanding of the
parties and supersedes all prior representations, promises,
statements, arrangements, agreements, warranties and understandings
between the parties with respect to the subject matter hereof, whether
oral or written, express or implied.
17. MODIFICATION
This Agreement may be modified or amended, and the terms of this
Agreement may be waived, only by a writing signed by each of the
parties.
18. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same Agreement.
19. ASSIGNMENT
This Agreement shall not be assigned by a party hereto, without the
prior written consent of the other parties hereto, except that a party
may assign this Agreement to an affiliate having the same ultimate
ownership as the assigning party without such consent.
20. SURVIVAL
The provisions of Sections 5, 10, and 12 shall survive termination of
this Agreement.
-7-
<PAGE> 8
21. NON-EXCLUSIVITY
Each of the parties acknowledges and agrees that this Agreement and
the arrangement described herein are intended to be non-exclusive and
that each of the parties is free to enter into similar agreements and
arrangements with other entities.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by
their duly authorized officers as of this ______ day of ______________________,
19_____.
_____________________________________________
(PLAN PROVIDER)
By: _________________________________________
Print Name: _________________________________
Title: ______________________________________
A I M DISTRIBUTORS, INC.
(DISTRIBUTOR)
By: _________________________________________
Print Name: _________________________________
Title: ______________________________________
-8-
<PAGE> 9
EXHIBIT A
For the term of this Agreement, Distributor, or its affiliates, shall
pay Plan Provider the following amounts for each of the following Funds with
respect to the average daily net asset value of the Plans' balances for the
prior quarter:
<TABLE>
<CAPTION>
FUND ANNUAL FEE
- ---- ----------
<S> <C>
AIM Equity Funds, Inc. (Class A Shares Only)
- --------------------------------------------
AIM Aggressive Growth Fund* .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Weingarten Fund .25%
AIM Funds Group (Class A Shares Only)
- -------------------------------------
AIM Balanced Fund .25%
AIM Global Utilities Fund .25%
AIM Growth Fund .25%
AIM High Yield Fund .25%
AIM Income Fund .25%
AIM Intermediate Government Fund .25%
AIM Municipal Bond Fund .25%
AIM Value Fund .25%
AIM International Funds, Inc. (Class A Shares Only)
- ---------------------------------------------------
AIM Global Aggressive Growth Fund .25%
AIM Global Growth Fund .25%
AIM Global Income Fund .25%
AIM International Equity Fund .25%
AIM Investment Securities Funds
- -------------------------------
Limited Maturity Treasury Portfolio (AIM
Limited Maturity Treasury Shares) .15%
</TABLE>
Distributor or its affiliates shall calculate the amount of quarterly
payment and shall deliver to Plan Provider a quarterly statement showing the
calculation of the quarterly amounts payable to Plan provider. Payment to Plan
Provider shall occur within 30 days following the end of each quarter. All
parties agree that the payments referred to herein are for record keeping and
administrative services only and are not for legal, investment advisory or
distribution services.
* AIM Aggressive Growth Fund is currently closed to new investors.
<PAGE> 1
EXHIBIT 15(f)
EXHIBIT E
[LOGO APPEARS HERE] A I M DISTRIBUTORS, INC.
A I M Distributors, Inc. SHAREHOLDER SERVICE AGREEMENT
(BROKERS FOR BANK TRUST DEPARTMENTS)
_________________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by
<PAGE> 2
Shareholder Service Agreement Page 2
(Brokers for Bank Trust Departments)
us relating to shares of the Funds owned by our clients. AIM
Distributors, on behalf of the Funds, agrees to pay all out-of-pocket
expenses actually incurred by us in connection with the transfer by us
of such proxy statements and reports to our clients as required under
applicable laws or regulations.
3. We agree to transfer to AIM Distributors in a timely manner as set forth
in the applicable prospectus, federal funds in an amount equal to the
amount of all purchase orders placed by us and accepted by AIM
Distributors. In the event that AIM Distributors fails to receive such
federal funds on such date (other than through the fault of AIM
Distributors), we shall indemnify the applicable Fund and AIM
Distributors against any expense (including overdraft charges) incurred
by the applicable Fund and/or AIM Distributors as a result of the
failure to receive such federal funds.
4. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
5. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
6. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
7. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
8. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
9. All communications to AIM Distributors shall be duly given if mailed to
<PAGE> 3
Shareholder Service Agreement Page 3
(Brokers for Bank Trust Departments)
A I M Distributors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
10. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation
by us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not constitute a waiver of AIM Distributors's right to terminate
at a later date for any such cause. This Agreement may be terminated
with respect to any Fund at any time by the vote of a majority of the
directors or trustees of such Fund who are disinterested directors or by
a vote of a majority of the Fund's outstanding shares, on not less than
60 days' written notice to us at our principal place of business. This
Agreement will be terminated by any act which terminates a Fund's
Distribution Agreement with AIM Distributors, the Selected Dealer
Agreement between us and AIM Distributors or a Fund's Distribution Plan,
and in any event, shall terminate automatically in the event of its
assignment by us, the term "assignment" for this purpose having the
meaning defined in Section 2(a)(4) of the 1940 Act.
11. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which shall constitute the same
instrument. This Agreement shall not relieve us or AIM Distributors
from any obligations either may have under any other agreements between
us.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 4
Shareholder Service Agreement Page 4
(Brokers for Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
------------------------------------
(Firm Name)
------------------------------------
(Address)
------------------------------------
City/State/Zip/County
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Dated:
------------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Dated:
-----------------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 5
Shareholder Service Agreement Page 5
(Brokers for Bank Trust Departments)
SCHEDULE A
Funds Fees
- ----- ----
AIM Equity Funds, Inc.
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
* AIM Aggressive Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM Investment Securities Funds
Limited Maturity Treasury Portfolio
AIM Tax-Exempt Funds, Inc.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio
__________________________________
*Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 6
[LOGO APPEARS HERE] A I M DISTRIBUTORS, INC.
A I M Distributors, Inc. SHAREHOLDER SERVICE AGREEMENT
(BANK TRUST DEPARTMENTS)
_________________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by
<PAGE> 7
Shareholder Service Agreement Page 2
(Bank Trust Departments)
us relating to shares of the Funds owned by our clients. AIM
Distributors, on behalf of the Funds, agrees to pay all out-of-pocket
expenses actually incurred by us in connection with the transfer by us
of such proxy statements and reports to our clients as required under
applicable laws or regulations.
3. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
4. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
5. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
6. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
7. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
8. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
9. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this
<PAGE> 8
Shareholder Service Agreement Page 3
(Bank Trust Departments)
Agreement. AIM Distributors may also terminate this Agreement for cause
on violation by us of any of the provisions of this Agreement, said
termination to become effective on the date of mailing notice to us of
such termination. AIM Distributors's failure to terminate for any cause
shall not constitute a waiver of AIM Distributors's right to terminate
at a later date for any such cause. This Agreement may be terminated
with respect to any Fund at any time by the vote of a majority of the
directors or trustees of such Fund who are disinterested directors or by
a vote of a majority of the Fund's outstanding shares, on not less than
60 days' written notice to us at our principal place of business. This
Agreement will be terminated by any act which terminates a Fund's
Distribution Agreement with AIM Distributors, the Agreement for Purchase
of Shares of The AIM Family of Funds(R) between us and AIM Distributors
or a Fund's Distribution Plan, and in any event, it shall terminate
automatically in the event of its assignment by us, the term
"assignment" for this purpose having the meaning defined in Section
2(a)(4) of the 1940 Act.
10. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
11. This Agreement and the Agreement for Purchase of Shares of The AIM
Family of Funds(R) through Bank Trust Departments constitute the entire
agreement between us and AIM Distributors and supersede all prior oral
or written agreements between the parties hereto. This Agreement may be
executed in counterparts, each of which shall be deemed an original but
all of which shall constitute the same instrument.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 9
Shareholder Service Agreement Page 4
(Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-----------------------------------------
(Firm Name)
-----------------------------------------
(Address)
-----------------------------------------
City/State/Zip/County
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Dated:
----------------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Dated:
----------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 10
Shareholder Service Agreement Page 5
(Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Equity Funds, Inc.
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
* AIM Aggressive Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM Investment Securities Funds
Limited Maturity Treasury Portfolio
AIM Tax-Exempt Funds, Inc.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio
</TABLE>
- ----------------------------------
*Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 1
EXHIBIT 18(a)(1)
AMENDED MULTIPLE CLASS PLAN
OF
A I M EQUITY FUNDS, INC.
(AS LAST AMENDED DECEMBER 4, 1995)
SECTION 1. This Multiple Class Plan (the "Plan") adopted in accordance
with Rule 18f-3 promulgated under the Investment Company Act of 1940 (the "1940
Act") shall govern the terms and conditions under which AIM Equity Funds, Inc.
(the "Company") may issue separate classes of shares representing interests in
the Company's series of Portfolios (the "Portfolios") listed on Appendix A. To
the extent that a subject matter herein is covered by the Company's Articles of
Incorporation or Bylaws, the Articles of Incorporation and/or Bylaws will
control in the event of any inconsistencies with the descriptions herein.
SECTION 2. Rights and Obligations. Except as set forth herein, all
classes of shares issued in respect of a Portfolio have identical voting,
dividend, liquidation and other rights, preferences, powers, restrictions,
limitations, qualifications, designations, and terms and conditions. The only
differences among the various classes of shares relate solely to the following
factors: (a) each class may be subject to different class expenses as discussed
under Section 4 of this Plan; (b) each class may bear different identifying
designations; (c) each class will have exclusive voting rights with respect to
any such class (except as set forth in Section 7 below); (d) each class may
have different exchange privileges; and (e) certain classes may provide for the
conversion of such class into another class.
SECTION 3. Classes of Shares and Designation Thereof. Each Portfolio
may offer any or all of the following classes of shares:
(a) Class A Shares. "Class A" Shares will be sold at net asset
value plus a front-end sales load. The sales load will be subject to
reductions for larger purchases under a combined purchase privilege, a
right of accumulation, or a letter of intent. Purchases of $1 million
or more will not be subject to a sales charge but may be assessed a
Contingent Deferred Sales Charge ("CDSC") of 1% if shares are redeemed
prior to 18 months from the date of purchase. The front-end sales load
will be subject to certain other deductions permitted by Section 22(d)
of the 1940 Act.
Class A Shares also will be subject to a Rule 12b-1
distribution and service fee at a combined annual rate of up to 0.35%
of the daily net assets attributable to the Class A Shares. Of such
amount, up to 0.25% of the average daily net assets attributable to
the Class A Shares is payable as service fees to A I M Distributors,
Inc., the distributor of the Company's Class A and Class B shares (the
"Distributor") and/or certain financial intermediaries having
agreements with the Distributor for the provision of continuing
shareholder services.
The current "Amended Master Distribution Plan of AIM Equity
Funds, Inc. (Retail Classes, Front-End Sales Charges)" shall be
applicable to the Class A Shares.
(b) Class B Shares. "Class B" Shares will be sold to
investors at net asset value without the imposition of a front-end
sales load. However, an investor's proceeds from a redemption of Class
B Shares made within six (6) years after their purchase (the "CDSC
-1-
<PAGE> 2
Period") generally will be subject to a CDSC payable to the
Distributor. The CDSC Period and CDSC schedule are forth in Appendix
B hereto. No CDSC will be imposed on (1) redemptions of Class B Shares
following six years from the date on which such shares were purchased;
(2) shares derived from reinvestment of dividends and distributions
attributable to Class B Shares; or (3) amounts representing an
increase in the value of the shareholder's account resulting from
capital appreciation above the amount paid for shares purchased during
the CDSC Period. In determining whether a CDSC is applicable, it will
be assumed that a redemption is made, first, of any shares in the
shareholder's Portfolio account that are not subject to a CDSC;
second, of shares derived from reinvestment of dividends and
distributions; third, of shares held for more than six years following
the date on which the purchase was made; and fourth, of shares held
for a period less than six years following the date on which the
purchase was made. The provisions of the CDSC Period and the CDSC
schedule may not be changed without the consent of the Distributor and
the Company's Board of Directors, including a majority of the
directors who are not interested persons of the Company, with respect
to Class B Shareholders.
Class B Shares also will be subject to a Rule 12b-1 distribution fee
and service fee at a combined annual rate of up to 1% of the daily net
assets attributable to the Class B Shares. Of this amount, 0.75% of
the average daily net assets attributable to the Class B Shares is
payable to the Distributor, and up to 0.25% of the average daily net
assets attributable to the Class B Shares is payable as service fees
to the Distributor and/or certain financial intermediaries having
agreements with the Distributor for the provision of continuing
shareholder services to customers of such financial intermediaries who
own Class B Shares.
(c) Institutional Class. The "Institutional Class" will be
sold at net asset value and may be offered to one or more of the
following categories of investors: (1) unaffiliated benefit plans such
as qualified retirement plans, other than individual retirement
accounts and self-employed retirement plans, with total assets in
excess of $10 million or such other amounts as a Portfolio may
establish and with such other characteristics as a Portfolio may
establish, provided that any such unaffiliated benefit plans will have
a separate trustee who is vested with investment discretion as to plan
assets, will have limitations on the ability of plan beneficiaries to
access their plan investments without incurring adverse tax
consequences, and will not include self-directed plans; (2) tax-exempt
retirement plans of AIM Advisors, Inc., ("Advisor") or the Distributor
or their affiliates, consisting of qualified defined contribution
plans maintained pursuant to Section 401(a) of the Internal Revenue
Code of 1986 (the "Code"), as amended, under which assets will be held
in trust by a trustee and as to which employees will have limited
pre-retirement access to assets; (3) banks and insurance companies
that are not affiliated with the Advisor purchasing for their own
account; (4) investment companies not affiliated with the Advisor or
the Distributor; (5) endowment funds or non-profit organizations that
are not affiliated with the Advisor; and (6) corporations, foundations
and financial institutions.
The Institutional Class is currently distributed by Fund
Management Company ("FMC").
(d) Contingent Deferred Sales Charges. The CDSC applicable to
Class A Shares sold without a sales charge involving purchases of $1
million or more and to Class B Shares
-2-
<PAGE> 3
will be assessed on an amount equal to the lesser of the then current
market value (excluding reinvested dividends and capital gains
distributions) or the original cost of the shares being redeemed and
may be waived under the circumstances listed on Appendix C, attached
hereto.
SECTION 4. Allocation of Expenses.
(a) Class Expenses. Each class of shares shall be subject to
different class expenses consisting of (1) Rule 12b-1 plan
distribution and service fees, if applicable to a particular class,
(2) transfer agency and other recordkeeping costs to the extent
allocated to a particular class, (3) Securities and Exchange
Commission ("SEC") and blue sky registration fees incurred separately
by a particular class, (4) litigation or other legal expenses relating
solely to a particular class, (5) printing and postage expenses
related to the preparation and distribution of class specific
materials such as shareholder reports, prospectuses and proxies to
shareholders of a particular class, (6) expenses of administrative
personnel and services as required to support the shareholders of a
particular class, (7) audit or accounting fees or expenses relating
solely to a particular class, (8) director fees and expenses incurred
as a result of issues relating solely to a particular class, and (9)
any other expenses subsequently identified that should be properly
allocated to a particular class, which shall be approved by the Board
of Directors (collectively, "Class Expenses").
(b) Other Expenses. Except for the Class Expenses discussed
above (which will be allocated to the appropriate class), all expenses
incurred by each Portfolio will be allocated to each class of shares
on the basis of the net asset value of each class to the net asset
value of the Company or the Portfolio, as the case may be.
(c) Waivers and Reimbursements of Expenses. The Distributor,
FMC, the Advisor, and any provider of services to the Portfolios may
waive or reimburse the expenses of a particular class or classes,
provided, however, that such waiver shall not result in
cross-subsidization between classes.
SECTION 5. Allocation of Income. The Portfolios will allocate income
and realized and unrealized capital gains and losses based on the relative net
assets of each class of shares.
SECTION 6. Exchange Privileges. Class A Shares of a Portfolio will be
exchangeable for Class A Shares of any other Portfolio and for other retail
shares of other investment companies advised by the Advisor (collectively, the
"AIM Funds") which are subject to a front-end load that offer an exchange
privilege, subject to such conditions as may be imposed from time to time and
as disclosed on Appendix D. Class B Shares of each Portfolio will be
exchangeable only for Class B Shares of other Portfolios and Class B Shares of
AIM Funds that offer an exchange privilege, subject to such conditions as may
be imposed from time to time and also as disclosed in Appendix D.
SECTION 7. Conversions. All Class B Shares of the Portfolios, other
than those purchased through the reinvestment of dividends and distributions,
shall convert automatically to Class A Shares eight (8) years after the end of
the calendar month in which a shareholder's order to purchase such shares was
accepted. For purposes of conversion to Class A Shares, shares
-3-
<PAGE> 4
purchased through the reinvestment of dividends and other distributions will be
considered held in a separate sub-account. Each time any Class B Shares in a
shareholder's account convert to Class A Shares, a proportionate number of the
Class B Shares in the sub-account also will convert to Class A Shares.
Class B Shares will convert to Class A Shares on the basis of the
relative net asset value of the two classes, without the imposition of any
sales load, fee, or other charge. After conversion, the converted shares will
be subject to an asset-based sales charge and/or service fee (as those terms
are defined in Article III, Section 26 of the National Association Securities
Dealers, Inc. Rules of Fair Practice), if any, that in the aggregate are lower
than the asset-based sales charge and service fee to which they were subject
prior to the conversion.
In no event will a class of shares have a conversion feature that
automatically would convert shares of such class into shares of a class with a
distribution arrangement that could be viewed as less favorable to the
shareholder from the point of view of overall cost.
The implementation of this conversion feature is subject to the
continuing availability of a ruling of the Internal Revenue Service, or of an
opinion of counsel or tax advisor, stating that the conversion of one class of
shares to another does not constitute a taxable event under federal income tax
law. The conversion feature may be suspended if such a ruling or opinion is
not available.
If a Portfolio implements any amendment to a Rule 12b-1 Plan (or, if
presented to shareholders, adopts or implements any amendment of a non-Rule
12b-1 shareholder services plan) that the Board of Directors determines would
materially increase the charges that may be borne by the Class A Shareholders
under such plan, the Class B Shares will stop converting to the Class A Shares
unless the Class B Shares, voting separately, approve the amendment or
adoption. The Board of Directors shall have sole discretion in determining
whether such amendment or adoption is submitted to a vote of the Class B
Shareholders. Should such amendment or adoption not be submitted to a vote of
the Class B Shareholders or, if submitted, should the Class B Shareholders fail
to approve such amendment or adoption, the Board of Directors shall take such
action as is necessary to: (1) create a new class (the "New Class A Shares")
which shall be identical in all material respects to the Class A Shares as they
existed prior to the implementation of the amendment or adoption; and (2)
ensure that the existing Class B Shares will be exchanged or converted into New
Class A Shares no later than the date such Class B Shares were scheduled to
convert to Class A Shares. If deemed advisable by the Board of Directors to
implement the foregoing, and at the sole discretion of the Board of Directors,
such action may include the exchange of all Class B Shares for a new class (the
"New Class B Shares"), identical in all respects to the Class B Shares except
that the New Class B Shares will automatically convert into the New Class A
Shares. Such exchanges or conversions shall be effected in a manner that the
Board of Directors reasonably believes will not be subject to federal taxation.
SECTION 8. This Plan shall not take effect until a majority of the
directors of the Company, including a majority of the directors who are not
interested persons of the Company, shall find that the Plan, as proposed and
including the expense allocations, is in the best interests of each class
individually and the Company as a whole.
-4-
<PAGE> 5
SECTION 9. This Plan may not be amended to materially change the
provisions of this Plan unless such amendment is approved in the manner
specified in Section 8 above.
-5-
<PAGE> 6
APPENDIX A TO
MULTIPLE CLASS PLAN
OF
AIM EQUITY FUNDS, INC.
AIM Charter Fund
Class A Shares
Class B Shares
Institutional Class of Shares
AIM Weingarten Fund
Class A Shares
Class B Shares
Institutional Class of Shares
AIM Aggressive Growth Fund
Class A Shares
AIM Constellation Fund
Class A Shares
Institutional Class of Shares
AIM Blue Chip Fund
Class A Shares
AIM Capital Development Fund
Class A Shares
-6-
<PAGE> 7
APPENDIX B TO
MULTIPLE CLASS PLAN
OF
AIM EQUITY FUNDS, INC.
CDSC SCHEDULE AND CDSC PERIOD
Class B Shares may be redeemed on any business day at the net asset
value per share next determined following receipt of the redemption order, less
the applicable contingent deferred sales charge shown in the tables below.
<TABLE>
<CAPTION>
Contingent Deferred
Year Sales Charge As
Since % of Dollar Amount
Purchase Made Subject to Charge
------------- -------------------
<S> <C>
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and Following None
</TABLE>
-7-
<PAGE> 8
APPENDIX C TO
MULTIPLE CLASS PLAN
OF
AIM EQUITY FUNDS, INC.
CDSC WAIVERS
CLASS A SHARES. Purchases of $1 million or more that are redeemed
within 18 months of the date of purchase are subject to a 1% CDSC except in
the following circumstances:
(1) Redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Internal Revenue Code (the "Code"),
or Plans created under Section 403(b) of the Code and sponsored by nonprofit
organizations as defined under Section 501(c)(3) of the Code, where (a) the
initial amount invested by a Plan in one or more of the AIM Funds is at least
$1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest at
least $1,000,000 in one or more of the AIM Funds, or (c) the shares being
redeemed were purchased by an employer-sponsored Plan with at least 100
eligible employees; provided, however, that Plans created under Section 403(b)
of the Code which are sponsored by public educational institutions shall
qualify under (a), (b) or (c) above 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;
(2) Redemptions of shares following the registered shareholder's (or
in the case of joint accounts, all registered joint owners') death or
disability, as defined in Section 72(m)(7) of the Code;
(3) Redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; and
(4) Redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies the Distributor prior to the time of
investment that the dealer waives its commission.
Additionally, a CDSC will not be imposed on shares derived from
reinvestment of dividends and distributions attributable to these shares or in
connection with exchanges among Class A Shares purchases of $1 million or more
of the Portfolios or of the AIM Funds. See also Appendix D - Exchange
Privilege.
CLASS B SHARES. Class B shares are subject to the CDSC as described in
the then current prospectuses of the Portfolios except in the following
circumstances:
(1) Redemptions of shares following the registered shareholder's (or
in the case of joint accounts, all registered owners') death or disability, as
defined in Section 72(m)(7) of the Code. The redemption must be made with one
year following death or initial determination of disability and must be of
Class B shares held at the time of death or initial determination of
disability. The Distributor must be notified of such death or disability at the
time of the redemption request and must be provided with satisfactory evidence
of such death or disability;
-8-
<PAGE> 9
(2) Redemptions in connection with certain distributions from
individual retirement accounts, custodial accounts maintained pursuant to Code
Section 401 (collectively, "Retirement Plans"), provided these 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 which does not exceed 12% annually of the
participant's or beneficiary's account value; (ii) in kind transfers of assets
where the participant or beneficiary notifies the Distributor of such transfer
no later than the time such transfer occurs; (iii) tax-free rollovers or
transfers of assets to another Retirement Plan invested in Class B shares of
one or more AIM Funds; (iv) tax-free returns of excess contributions or returns
of excess deferral amounts; and (v) distributions upon the death or disability
(as defined in the Code) of the participant or beneficiary;
(3) Redemptions pursuant to a Systematic Withdrawal Plan("SWP"),
provided that amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B Shares at the
time the shareholder elects to participate in the SWP;
(4) Redemptions effected pursuant to the right of a Portfolio to
liquidate a shareholder's account if the aggregate net asset value of shares
held in the account is less than the designated minimum account size described
in the then current prospectus of the Portfolio; and
(5) Redemptions by the Advisor of its investment in Class B shares.
Additionally, a CDSC will not be imposed in connection with exchanges
among Class B shares of the Portfolios or of The AIM Funds. For purposes of
determining a shareholder's holding period of Class B Shares in the calculation
of the applicable contingent deferred sales charge, the period of time during
which Class B shares were held prior to an exchange will be added to the
holding period of Class B Shares acquired in an exchange.
-9-
<PAGE> 10
APPENDIX D TO
MULTIPLE CLASS PLAN
OF
AIM EQUITY FUNDS, INC.
EXCHANGE PRIVILEGE
SECTION 1. TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the
AIM Funds discussed herein may participate in an exchange privilege as
described below.
Shares of any AIM Fund may be exchanged for shares of any other AIM
Fund, except that (i) Load Fund (as that term is defined below under the
caption "Load Funds") share purchases of $1 million or more which are subject
to a CDSC may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH
FUND; (ii) Lower Load Fund share purchases of $1 million or more and No Load
Fund purchases may be exchanged for Load Fund shares in amounts of $1 million
or more which will then be subject to a CDSC; however, for purposes of
calculating the CDSC on the Load Fund shares acquired, the 18-month period
shall be computed commencing on the date of such exchange; (iii) Load, Lower
Load and No Load Fund Shares may not be exchanged for Class B shares; (iv)
Class B shares may be exchanged only for Class B shares; and (v) Class C shares
of AIM MONEY MARKET FUND may not be exchanged for Class A shares of AIM MONEY
MARKET FUND or for Class B shares. For shares initially purchased prior to
November 20, 1995, these exchange conditions will apply effective January 16,
1996.
The exchange 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.
An exchange is permitted only in the following circumstances:
(a) if the funds offer more than one class of shares, the exchange
must be between the same class of shares (e.g., Class A and Class B
shares of a Multiple Class Fund cannot be exchanged for each other),
except that Class C shares of AIM MONEY MARKET FUND may be exchanged
for Class A shares of another Multiple Class Fund;
(b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired
through such exchange;
(c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides;
(d) the exchange must be made between accounts having identical
registrations and addresses;
(e) the full amount of the purchase price for the shares being
exchanged must have already been received by the fund;
(f) the account from which shares have been exchanged must be coded as
having a certified taxpayer identification number on file or, in the
alternative, an appropriate IRS Form W-8 (certificate of foreign
status) or Form W-9 (certifying exempt status) must have been received
by the fund;
(g) newly acquired shares (through either an initial or subsequent
investment) are held in an account for at least ten days, and all
other shares are held in an account for at least one day, prior to the
exchange; and
(h) certificates representing shares must be returned before shares
can be exchanged.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES
BUT IS PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND
MAY BE MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT
ANY TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
-10-
<PAGE> 11
The shares discussed below under the caption "Load Funds," are sold at
a public offering price that includes a maximum sales charge of 5.50% or 4.75%
of the public offering price of such shares; shares of certain of the AIM
Funds, referred to herein as the "Lower Load Funds," are sold at a public
offering price that includes a maximum sales charge of 1.00% of the public
offering price of such shares; and shares of certain other funds, including the
Class C shares of AIM MONEY MARKET FUND, referred to herein as the "No Load
Funds," are sold at net asset value, without payment of a sales charge.
Multiple Class Funds as discussed herein are those funds which offer Class A,
Class B and/or Class C shares. Class B shares are offered at net asset value
and are subject to a CDSC at a maximum rate of 5% for a period of six years.
<TABLE>
<CAPTION>
LOAD FUNDS*: LOWER LOAD FUNDS:
------------ ---------- ------
<S> <C> <C>
AIM AGGRESSIVE GROWTH FUND AIM GROWTH FUND AIM LIMITED MATURITY
AIM BALANCED FUND AIM HIGH YIELD FUND TREASURY SHARES
AIM CHARTER FUND AIM INCOME FUND AIM TAX-FREE INTERMEDIATE
AIM CONSTELLATION FUND AIM INTERNATIONAL EQUITY FUND SHARES
AIM GLOBAL AGGRESSIVE AIM MONEY MARKET FUND
GROWTH FUND AIM MUNICIPAL BOND FUND NO LOAD FUNDS:
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT BOND FUND --------------
AIM GLOBAL INCOME FUND OF CONNECTICUT* AIM MONEY MARKET FUND --
AIM GLOBAL UTILITIES FUND AIM VALUE FUND CLASS C
AIM INTERMEDIATE GOVERNMENT AIM WEINGARTEN FUND AIM TAX-EXEMPT CASH FUND
FUND
</TABLE>
* ALL CLASS A SHARES, EXCEPT FOR AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING
MADE, SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING
PRICE OR AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET
FORTH IN THE TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS
LOWER LOAD NO LOAD FUNDS:
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B
----- --------------- ----- ----- -------
<S> <C> <C> <C> <C>
Load Funds Net Asset Value Net Asset Value Net Asset Value Not Applicable
Lower Load Funds Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable
held for at least 30 days; or if
shares were acquired upon
exchange of any Load Fund; or if
shares were acquired upon
exchange from any Lower Load
Fund and such shares were held
for at least 30 days. (No
exchange privilege is available
for the first 30 days following
the purchase of the Lower Load
Fund shares.)
No Load Funds Offering Price if No Load shares Net Asset Net Asset Value Not Applicable
were directly purchased. Net Value if No
Asset Value if No Load shares Load shares
were acquired upon exchange of were acquired
shares of any Load Fund or any upon exchange
Lower Load Fund; Net Asset Value of shares of
if No Load shares were acquired any Load Fund
upon exchange of Lower Load Fund or any Lower
shares and were held for at Load Fund;
least 30 days following the otherwise,
purchase of the Lower Load Fund Offering
shares. (No exchange privilege Price.
is available for the first 30
days following the acquisition
of the Lower Load Fund shares.)
</TABLE>
-11-
<PAGE> 12
<TABLE>
<S> <C> <C> <C> <C>
Multiple Class
Funds:
Class B Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING
TABLE IS REVISED AS FOLLOWS:
<TABLE>
<S> <C> <C> <C> <C>
Load Funds Net Asset Value Net Asset Value Net Asset Value Not Applicable
Lower Load Funds Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable
acquired upon exchange of any
Load Fund. Otherwise,
difference in sales charge will
apply.
No Load Funds Offering Price if No Load shares Net Asset Net Asset Value Not Applicable
were directly purchased. Net Value if No
Asset Value if No Load shares Load shares
were acquired upon exchange of were acquired
shares of any Load Fund. upon exchange
Difference in sales charge will of shares of
apply if No Load shares were any Load Fund
acquired upon exchange of Lower or any Lower
Load Fund shares. Load Fund;
otherwise,
Offering
Price.
Multiple Class
Funds:
Class B Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
Shares to be exchanged are redeemed at their net asset value as
determined at the close of business on the day that an exchange request in
proper form (described below) is received by A I M Fund Services, Inc. in its
Houston, Texas office, provided that such request is received prior to 4:15
p.m. Eastern Time. Exchange requests received after this time will result in
the redemption of shares at their net asset value as determined at the close of
business on the next business day. 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 by AIM Distributors, 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. Shares purchased by check may
not be exchanged until it is determined that the check has cleared, which may
take up to ten days from the date that the check is received.
In the event of unusual market conditions, AIM Distributors reserves
the right to reject any exchange request, if, in the judgment of AIM
Distributors, the number of requests or the total value of the shares that are
the subject of the exchange places a material burden on a fund. For example,
the number of exchanges by investment managers making market timing exchanges
may be limited.
SECTION 2. FEES. There is no fee for exchanges among the AIM Funds.
A service fee of $5 per transaction will, however, be charged by AIM
Distributors on accounts of market timing investment firms to help to defray
the costs of maintaining an automated exchange service. This service fee will
be charged against the market timing account from which shares are being
exchanged.
SECTION 3. EXCHANGES OF CLASS A SHARES. In the event shares of any
AIM Fund (other than Class B shares of the Multiple Class Funds) sold at net
asset value are subject to a CDSC of 1% for 18 months from the date of
purchase, and subsequently are exchanged for shares of any other AIM Fund, for
purposes of determining a shareholder's holding period:
(i) Load Fund Shares of any fund which were acquired
through an exchange of shares which previously were
subject to the 1% CDSC will be credited with the
period of time such exchanged shares were held, and
-12-
<PAGE> 13
(ii) Load Fund Shares of the Funds which are subject to
the 1% CDSC and which were acquired through an
exchange of shares of a Lower Load Fund or a No Load
Fund (as those terms are defined in Appendix D
hereto) which previously were not subject to the 1%
CDSC will not be credited with the period such
exchanged shares were held.
In determining whether a CDSC is payable, and the amount of any such charge,
shares not subject to a CDSC are redeemed first (including shares purchased by
reinvested dividends and capital gains distributions and amounts representing
increases from capital appreciation) and then other shares are redeemed in the
order of purchase.
SECTION 4. EXCHANGES OF CLASS B SHARES. A CDSC will not be imposed
in connection with exchanges among Class B shares of Multiple Class Funds. For
purposes of determining a shareholder's holding period of Class B shares in the
calculation of the applicable CDSC, the period of time during which Class B
shares were held prior to an exchange will be added to the holding period of
Class B shares acquired in an exchange.
SECTION 5. EXCHANGES OF CLASS C SHARES. Class C shares of AIM MONEY
MARKET FUND may be exchanged only for Class A shares of AIM Equity Funds, Inc.
-13-
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM CHARTER FUND
CLASS A SHARES FOR THE OCTOBER 31, 1995 ANNUAL REPORT.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 001
<NAME> AIM CHARTER FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 1,774,220,816
<INVESTMENTS-AT-VALUE> 2,058,544,400
<RECEIVABLES> 98,716,229
<ASSETS-OTHER> 73,648
<OTHER-ITEMS-ASSETS> 13,493
<TOTAL-ASSETS> 2,157,347,770
<PAYABLE-FOR-SECURITIES> 82,514,084
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,286,848
<TOTAL-LIABILITIES> 89,800,932
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,412,092,780
<SHARES-COMMON-STOCK> 194,565,560
<SHARES-COMMON-PRIOR> 179,800,262
<ACCUMULATED-NII-CURRENT> 102,563
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 176,462,351
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 284,323,584
<NET-ASSETS> 2,067,546,838
<DIVIDEND-INCOME> 31,720,012
<INTEREST-INCOME> 15,080,737
<OTHER-INCOME> 0
<EXPENSES-NET> 19,820,497
<NET-INVESTMENT-INCOME> 26,980,252
<REALIZED-GAINS-CURRENT> 179,125,169
<APPREC-INCREASE-CURRENT> 200,981,202
<NET-CHANGE-FROM-OPS> 407,086,623
<EQUALIZATION> (273,602)
<DISTRIBUTIONS-OF-INCOME> (35,181,253)
<DISTRIBUTIONS-OF-GAINS> (58,046,703)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 47,472,771
<NUMBER-OF-SHARES-REDEEMED> (43,101,277)
<SHARES-REINVESTED> 10,423,804
<NET-CHANGE-IN-ASSETS> 466,633,050
<ACCUMULATED-NII-PRIOR> 8,577,166
<ACCUMULATED-GAINS-PRIOR> 55,383,885
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,890,335
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19,820,497
<AVERAGE-NET-ASSETS> 1,669,053,423
<PER-SHARE-NAV-BEGIN> 8.90
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> 2.11
<PER-SHARE-DIVIDEND> (0.20)
<PER-SHARE-DISTRIBUTIONS> (0.33)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.63
<EXPENSE-RATIO> 1.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM CHARTER FUND
CLASS B SHARES FOR THE OCTOBER 31, 1995 ANNUAL REPORT.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 002
<NAME> AIM CHARTER FUND CLASS B SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 1,774,220,816
<INVESTMENTS-AT-VALUE> 2,058,544,400
<RECEIVABLES> 98,716,229
<ASSETS-OTHER> 73,648
<OTHER-ITEMS-ASSETS> 13,493
<TOTAL-ASSETS> 2,157,347,770
<PAYABLE-FOR-SECURITIES> 82,514,084
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,286,848
<TOTAL-LIABILITIES> 89,800,932
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,412,092,780
<SHARES-COMMON-STOCK> 194,565,560
<SHARES-COMMON-PRIOR> 179,800,262
<ACCUMULATED-NII-CURRENT> 102,563
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 176,462,351
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 284,323,584
<NET-ASSETS> 2,067,546,838
<DIVIDEND-INCOME> 31,720,012
<INTEREST-INCOME> 15,080,737
<OTHER-INCOME> 0
<EXPENSES-NET> 19,820,497
<NET-INVESTMENT-INCOME> 26,980,252
<REALIZED-GAINS-CURRENT> 179,125,169
<APPREC-INCREASE-CURRENT> 200,981,202
<NET-CHANGE-FROM-OPS> 407,086,623
<EQUALIZATION> (273,602)
<DISTRIBUTIONS-OF-INCOME> (35,181,253)
<DISTRIBUTIONS-OF-GAINS> (58,046,703)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 47,472,771
<NUMBER-OF-SHARES-REDEEMED> (43,101,277)
<SHARES-REINVESTED> 10,423,804
<NET-CHANGE-IN-ASSETS> 466,633,050
<ACCUMULATED-NII-PRIOR> 8,577,166
<ACCUMULATED-GAINS-PRIOR> 55,383,885
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,890,335
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19,820,497
<AVERAGE-NET-ASSETS> 26,935,502
<PER-SHARE-NAV-BEGIN> 9.81
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.80
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.62
<EXPENSE-RATIO> 1.98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM WEINGARTEN
FUND CLASS A SHARES FOR THE OCTOBER 31, 1995 ANNUAL REPORT.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 003
<NAME> AIM WEINGARTEN FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 3,692,990,886
<INVESTMENTS-AT-VALUE> 4,645,252,077
<RECEIVABLES> 91,516,931
<ASSETS-OTHER> 18,855,785
<OTHER-ITEMS-ASSETS> 171,094
<TOTAL-ASSETS> 4,755,795,887
<PAYABLE-FOR-SECURITIES> 79,969,614
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,527,524
<TOTAL-LIABILITIES> 94,497,138
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,070,552,699
<SHARES-COMMON-STOCK> 229,299,266
<SHARES-COMMON-PRIOR> 224,771,370
<ACCUMULATED-NII-CURRENT> 25,028,873
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 613,833,040
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 951,884,137
<NET-ASSETS> 4,661,298,749
<DIVIDEND-INCOME> 38,215,389
<INTEREST-INCOME> 8,497,302
<OTHER-INCOME> 1,324
<EXPENSES-NET> 47,973,471
<NET-INVESTMENT-INCOME> (1,259,456)
<REALIZED-GAINS-CURRENT> 620,641,509
<APPREC-INCREASE-CURRENT> 411,202,260
<NET-CHANGE-FROM-OPS> 1,030,584,313
<EQUALIZATION> 573,141
<DISTRIBUTIONS-OF-INCOME> (15,133,444)
<DISTRIBUTIONS-OF-GAINS> (391,405,173)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34,774,491
<NUMBER-OF-SHARES-REDEEMED> (54,905,916)
<SHARES-REINVESTED> 24,659,321
<NET-CHANGE-IN-ASSETS> 654,953,957
<ACCUMULATED-NII-PRIOR> 40,848,632
<ACCUMULATED-GAINS-PRIOR> 384,596,704
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 26,291,625
<INTEREST-EXPENSE> 38,934
<GROSS-EXPENSE> 48,778,031
<AVERAGE-NET-ASSETS> 4,072,429,878
<PER-SHARE-NAV-BEGIN> 17.82
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 4.36
<PER-SHARE-DIVIDEND> (0.07)
<PER-SHARE-DISTRIBUTIONS> (1.78)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.33
<EXPENSE-RATIO> 1.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM WEINGARTEN
FUND CLASS B SHARES FOR THE OCTOBER 31, 1995 ANNUAL REPORT.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 004
<NAME> AIM WEINGARTEN FUND CLASS B SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 3,692,990,886
<INVESTMENTS-AT-VALUE> 4,645,252,077
<RECEIVABLES> 91,516,931
<ASSETS-OTHER> 18,855,785
<OTHER-ITEMS-ASSETS> 171,094
<TOTAL-ASSETS> 4,755,795,887
<PAYABLE-FOR-SECURITIES> 79,969,614
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,527,524
<TOTAL-LIABILITIES> 94,497,138
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,070,552,699
<SHARES-COMMON-STOCK> 229,299,266
<SHARES-COMMON-PRIOR> 224,771,370
<ACCUMULATED-NII-CURRENT> 25,028,873
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 613,833,040
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 951,884,137
<NET-ASSETS> 4,661,298,749
<DIVIDEND-INCOME> 38,215,389
<INTEREST-INCOME> 8,497,302
<OTHER-INCOME> 1,324
<EXPENSES-NET> 47,973,471
<NET-INVESTMENT-INCOME> (1,259,456)
<REALIZED-GAINS-CURRENT> 620,641,509
<APPREC-INCREASE-CURRENT> 411,202,260
<NET-CHANGE-FROM-OPS> 1,030,584,313
<EQUALIZATION> 573,141
<DISTRIBUTIONS-OF-INCOME> (15,133,444)
<DISTRIBUTIONS-OF-GAINS> (391,405,173)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34,774,491
<NUMBER-OF-SHARES-REDEEMED> (54,905,916)
<SHARES-REINVESTED> 24,659,321
<NET-CHANGE-IN-ASSETS> 654,953,957
<ACCUMULATED-NII-PRIOR> 40,848,632
<ACCUMULATED-GAINS-PRIOR> 384,596,704
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 26,291,625
<INTEREST-EXPENSE> 38,934
<GROSS-EXPENSE> 48,778,031
<AVERAGE-NET-ASSETS> 19,567,695
<PER-SHARE-NAV-BEGIN> 18.56
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 1.75
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.28
<EXPENSE-RATIO> 1.91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM CONSTELLATION
FUND CLASS A SHARES FOR THE OCTOBER 31, 1995 ANNUAL REPORT.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 005
<NAME> AIM CONSTELLATION FUND RETAIL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 5,084,052,318
<INVESTMENTS-AT-VALUE> 7,164,004,151
<RECEIVABLES> 79,412,043
<ASSETS-OTHER> 135,997
<OTHER-ITEMS-ASSETS> 13,495,706
<TOTAL-ASSETS> 7,257,047,897
<PAYABLE-FOR-SECURITIES> 57,630,332
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 60,149,508
<TOTAL-LIABILITIES> 117,779,840
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,527,511,692
<SHARES-COMMON-STOCK> 301,259,751
<SHARES-COMMON-PRIOR> 205,620,420
<ACCUMULATED-NII-CURRENT> (54,010)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 231,637,155
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,078,913,469
<NET-ASSETS> 7,139,268,057
<DIVIDEND-INCOME> 14,062,451
<INTEREST-INCOME> 27,896,762
<OTHER-INCOME> 0
<EXPENSES-NET> 57,976,193
<NET-INVESTMENT-INCOME> (16,016,980)
<REALIZED-GAINS-CURRENT> 237,427,697
<APPREC-INCREASE-CURRENT> 1,307,034,097
<NET-CHANGE-FROM-OPS> 1,528,444,814
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (109,041,894)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 219,051,778
<NUMBER-OF-SHARES-REDEEMED> (129,479,070)
<SHARES-REINVESTED> 6,066,623
<NET-CHANGE-IN-ASSETS> 3,373,392,770
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 103,578,171
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31,803,884
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 58,737,848
<AVERAGE-NET-ASSETS> 4,968,568,278
<PER-SHARE-NAV-BEGIN> 18.31
<PER-SHARE-NII> (0.05)
<PER-SHARE-GAIN-APPREC> 5.95
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.52)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.69
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM AGGRESSIVE
GROWTH FUND FOR THE OCTOBER 31, 1995 ANNUAL REPORT.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 006
<NAME> AIM AGGRESSIVE GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 1,831,391,083
<INVESTMENTS-AT-VALUE> 2,271,532,362
<RECEIVABLES> 11,373,677
<ASSETS-OTHER> 163,005
<OTHER-ITEMS-ASSETS> 14,909
<TOTAL-ASSETS> 2,283,083,953
<PAYABLE-FOR-SECURITIES> 27,426,798
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,103,225
<TOTAL-LIABILITIES> 37,530,023
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,692,826,332
<SHARES-COMMON-STOCK> 55,963,906
<SHARES-COMMON-PRIOR> 24,220,446
<ACCUMULATED-NII-CURRENT> (16,714)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 49,014,585
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 447,765,821
<NET-ASSETS> 2,245,553,930
<DIVIDEND-INCOME> 9,289,821
<INTEREST-INCOME> 1,512,937
<OTHER-INCOME> 0
<EXPENSES-NET> 13,121,032
<NET-INVESTMENT-INCOME> (2,318,274)
<REALIZED-GAINS-CURRENT> 52,290,438
<APPREC-INCREASE-CURRENT> 314,756,271
<NET-CHANGE-FROM-OPS> 364,728,435
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 53,971,580
<NUMBER-OF-SHARES-REDEEMED> (22,228,120)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,558,316,203
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (3,280,447)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,763,206
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13,909,975
<AVERAGE-NET-ASSETS> 1,209,574,872
<PER-SHARE-NAV-BEGIN> 28.37
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 11.80
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 40.13
<EXPENSE-RATIO> 1.08
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM CHARTER FUND
INSTITUTIONAL CLASS FOR THE OCTOBER 31, 1995 ANNUAL REPORT.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 007
<NAME> AIM CHARTER FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 1,774,220,816
<INVESTMENTS-AT-VALUE> 2,058,544,400
<RECEIVABLES> 98,716,229
<ASSETS-OTHER> 73,648
<OTHER-ITEMS-ASSETS> 13,493
<TOTAL-ASSETS> 2,157,347,770
<PAYABLE-FOR-SECURITIES> 82,514,084
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,286,848
<TOTAL-LIABILITIES> 89,800,932
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,412,092,780
<SHARES-COMMON-STOCK> 194,565,560
<SHARES-COMMON-PRIOR> 179,800,262
<ACCUMULATED-NII-CURRENT> 102,563
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 176,462,351
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 284,323,584
<NET-ASSETS> 2,067,546,838
<DIVIDEND-INCOME> 31,720,012
<INTEREST-INCOME> 15,080,737
<OTHER-INCOME> 0
<EXPENSES-NET> 19,820,497
<NET-INVESTMENT-INCOME> 26,980,252
<REALIZED-GAINS-CURRENT> 179,125,169
<APPREC-INCREASE-CURRENT> 200,981,202
<NET-CHANGE-FROM-OPS> 407,086,623
<EQUALIZATION> (273,602)
<DISTRIBUTIONS-OF-INCOME> (35,181,253)
<DISTRIBUTIONS-OF-GAINS> (58,046,703)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 47,472,771
<NUMBER-OF-SHARES-REDEEMED> (43,101,277)
<SHARES-REINVESTED> 10,423,804
<NET-CHANGE-IN-ASSETS> 466,633,050
<ACCUMULATED-NII-PRIOR> 8,577,166
<ACCUMULATED-GAINS-PRIOR> 55,383,885
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,890,335
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19,820,497
<AVERAGE-NET-ASSETS> 21,840,593
<PER-SHARE-NAV-BEGIN> 8.93
<PER-SHARE-NII> 0.23
<PER-SHARE-GAIN-APPREC> 2.07
<PER-SHARE-DIVIDEND> (0.24)
<PER-SHARE-DISTRIBUTIONS> (0.33)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.66
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM WEINGARTEN
FUND INSTITUTIONAL CLASS FOR THE OCTOBER 31, 1995 ANNUAL REPORT.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 008
<NAME> AIM WEINGARTEN FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 3,692,990,886
<INVESTMENTS-AT-VALUE> 4,645,252,077
<RECEIVABLES> 91,516,931
<ASSETS-OTHER> 18,855,785
<OTHER-ITEMS-ASSETS> 171,094
<TOTAL-ASSETS> 4,755,795,887
<PAYABLE-FOR-SECURITIES> 79,969,614
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,527,524
<TOTAL-LIABILITIES> 94,497,138
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,070,552,699
<SHARES-COMMON-STOCK> 229,299,266
<SHARES-COMMON-PRIOR> 224,771,370
<ACCUMULATED-NII-CURRENT> 25,028,873
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 613,833,040
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 951,884,137
<NET-ASSETS> 4,661,298,749
<DIVIDEND-INCOME> 38,215,389
<INTEREST-INCOME> 8,497,302
<OTHER-INCOME> 1,324
<EXPENSES-NET> 47,973,471
<NET-INVESTMENT-INCOME> (1,259,456)
<REALIZED-GAINS-CURRENT> 620,641,509
<APPREC-INCREASE-CURRENT> 411,202,260
<NET-CHANGE-FROM-OPS> 1,030,584,313
<EQUALIZATION> 573,141
<DISTRIBUTIONS-OF-INCOME> (15,133,444)
<DISTRIBUTIONS-OF-GAINS> (391,405,173)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34,774,491
<NUMBER-OF-SHARES-REDEEMED> (54,905,916)
<SHARES-REINVESTED> 24,659,321
<NET-CHANGE-IN-ASSETS> 654,953,957
<ACCUMULATED-NII-PRIOR> 40,848,632
<ACCUMULATED-GAINS-PRIOR> 384,596,704
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 26,291,625
<INTEREST-EXPENSE> 38,934
<GROSS-EXPENSE> 48,778,031
<AVERAGE-NET-ASSETS> 45,368,533
<PER-SHARE-NAV-BEGIN> 17.94
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 4.35
<PER-SHARE-DIVIDEND> (0.13)
<PER-SHARE-DISTRIBUTIONS> (1.78)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.48
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM
CONSTELLATION FUND INSTITUTIONAL CLASS FOR THE OCTOBER 31, 1995 ANNUAL REPORT.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 009
<NAME> AIM CONSTELLATION FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 5,084,052,318
<INVESTMENTS-AT-VALUE> 7,164,004,151
<RECEIVABLES> 79,412,043
<ASSETS-OTHER> 135,997
<OTHER-ITEMS-ASSETS> 13,495,706
<TOTAL-ASSETS> 7,257,047,897
<PAYABLE-FOR-SECURITIES> 57,630,332
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 60,149,508
<TOTAL-LIABILITIES> 117,779,840
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,527,511,692
<SHARES-COMMON-STOCK> 301,259,751
<SHARES-COMMON-PRIOR> 205,620,420
<ACCUMULATED-NII-CURRENT> (54,010)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 231,637,155
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,078,913,469
<NET-ASSETS> 7,139,268,057
<DIVIDEND-INCOME> 14,062,451
<INTEREST-INCOME> 27,896,762
<OTHER-INCOME> 0
<EXPENSES-NET> 57,976,193
<NET-INVESTMENT-INCOME> (16,016,980)
<REALIZED-GAINS-CURRENT> 237,427,697
<APPREC-INCREASE-CURRENT> 1,307,034,097
<NET-CHANGE-FROM-OPS> 1,528,444,814
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (109,041,894)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 219,051,778
<NUMBER-OF-SHARES-REDEEMED> (129,479,070)
<SHARES-REINVESTED> 6,066,623
<NET-CHANGE-IN-ASSETS> 3,373,392,770
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 103,578,171
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31,803,884
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 58,737,848
<AVERAGE-NET-ASSETS> 78,053,151
<PER-SHARE-NAV-BEGIN> 18.49
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 6.06
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.52)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 24.05
<EXPENSE-RATIO> 0.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
