<PAGE> 1
As filed with the Securities and Exchange Commission on February 27, 1998
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. 54 X
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 54 X
---- ---
(Check appropriate box or boxes.)
AIM EQUITY FUNDS, INC.
----------------------
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 100, Houston, TX 77046
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
--------------
Charles T. Bauer
11 Greenway Plaza, Suite 100, Houston, TX 77046
------------------------------------------------
(Name and Address of Agent for Service)
Copy to:
Lisa A. Moss, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed Public As soon as practicable after the
Offering: effective date of this Amendment.
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
- -----
X on February 27, 1998, pursuant to paragraph (b)
- -----
60 days after filing pursuant to paragraph (a)(1)
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on (date) pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of rule 485.
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(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.
Title of Securities Being Registered: Common Stock
<PAGE> 3
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
<TABLE>
<CAPTION>
N-1A
ITEM NO. PROSPECTUS LOCATION
- -------- -------------------
I. AIM AGGRESSIVE GROWTH FUND
PART A - PROSPECTUS
<S> <C>
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
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . Management; General Information
Item 5a. Management's Discussion of Fund Performance . . . . . . . . . . [included in annual report]
Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . Summary; How to Purchase Shares;
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 Purchase Shares; How to Redeem Shares
Item 9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal Matters
II. AIM BLUE CHIP FUND
PART A - PROSPECTUS
<S> <C>
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
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . Management; General Information
Item 5a. Management's Discussion of Fund Performance . . . . . . . . . . . [included in annual report]
Item 6. Capital Stock and Other Securities Summary; . . . . . . . . . . Organization of the Company;
How to Purchase Shares; Dividends, Distributions
and Tax Matters; General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . . . . How to Purchase Shares; Terms and
Conditions of Purchase of the AIM Funds;
Exchange Privilege; Management; Special Plans;
Determination of Net Asset Value
Item 8. Redemption or Repurchase . . . . . . . . . . . . How to Purchase Shares; How to Redeem Shares
Item 9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
III. AIM CAPITAL DEVELOPMENT FUND
PART A - PROSPECTUS
<S> <C>
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
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . Management; General Information
Item 5a. Management's Discussion of Fund Performance. . . . . . . . . . . . [included in annual report]
Item 6. Capital Stock and Other Securities . . . . . . . . . . . Summary; Organization of the Company;
How to Purchase Shares; Dividends, Distributions
and Tax Matters; General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . . . . . . . . How to Purchase Shares;
Terms and Conditions of
Purchase of the AIM Funds;
Exchange Privilege; Management, Special Plans;
Determination of Net Asset Value
Item 8. Redemption or Repurchase . . . . . . . . . . . How to Purchase Shares; How to Redeem Shares
Item 9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
IV. RETAIL CLASSES
AIM CHARTER FUND
AIM WEINGARTEN FUND
AIM CONSTELLATION FUND
PART A - PROSPECTUS
<S> <C>
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
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . Management; General Information
Item 5a. Management's Discussion of Fund Performance . . . . . . . . . . . [included in annual report]
Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . . . . . . . Summary; Dividends,
How to Purchase Shares; 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; Management; Special Plans;
Determination of Net Asset Value
Item 8. Redemption or Repurchase . . . . . . . . . . . . How to Purchase Shares; How to Redeem Shares
Item 9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
V. RETAIL CLASSES STATEMENT OF ADDITIONAL INFORMATION LOCATION
--------------------------------------------
AIM BLUE CHIP FUND
AIM CHARTER FUND
AIM WEINGARTEN FUND
AIM CONSTELLATION FUND
AIM AGGRESSIVE GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND
PART B - STATEMENT OF ADDITIONAL INFORMATION
<S> <C>
Item 10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table of Contents
Item 12. General Information and History . . . . . . . . . . . . . . Introduction; General Information
About the Funds
Item 13. Investment Objectives and Policies . . . . . . . . . . . . . . . . . Investment Objectives and
Policies; 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;
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;
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
VI. INSTITUTIONAL CLASSES PROSPECTUS LOCATION
-------------------
AIM CHARTER FUND
AIM WEINGARTEN FUND
AIM CONSTELLATION FUND
PART A - PROSPECTUS
<S> <C>
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; General Information
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . Management; General Information
Item 6. Capital Stock and Other Securities . . . . . . . . . . Summary; Dividends and Distributions;
Federal Taxes; General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . . . Purchase of Shares; Determination
of Net Asset Value; Management
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . . . . . Redemption of Shares
Item 9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
VII. INSTITUTIONAL CLASSES STATEMENT OF ADDITIONAL INFORMATION LOCATION
--------------------------------------------
AIM CHARTER FUND
AIM WEINGARTEN FUND
AIM CONSTELLATION FUND
PART B - STATEMENT OF ADDITIONAL INFORMATION
<S> <C>
Item 10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table of Contents
Item 12. General Information and History . . . . . . . . . . . . . . Introduction; General Information
About the Funds
Item 13. Investment Objectives and Policies . . . . . . . . . . . . . . . . . . Investment Program and
Restrictions
Item 14. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management
Item 15. Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management - Principal
Holders of Securities
Item 16. Investment Advisory and Other Services . . . . . . . . . . . . . . Management; Purchases and
Redemptions - The Distribution Agreement
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 - The Distribution Agreement
Item 22. Calculation of Performance Data . . . . . . . . . . . . . . . . . . . . . . . . Performance
Item 23. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Statements
</TABLE>
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.
<PAGE> 7
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
RETAIL CLASS OF AIM EQUITY FUNDS, INC.
AIM AGGRESSIVE GROWTH FUND
(Growth)
PROSPECTUS
FEBRUARY 27, 1998
This Prospectus contains information about the AIM AGGRESSIVE GROWTH FUND
("AGGRESSIVE GROWTH" or the "Fund"), one of six 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
February 27, 1998, 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 100, Houston, Texas 77046-1173 or by calling
(800) 347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
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 NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE> 8
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
SUMMARY.................................. 2 Introduction to The AIM Family of
THE FUND................................. 4 Funds............................... A-1
Table of Fees and Expenses............. 4 How to Purchase Shares................. A-1
Financial Highlights................... 5 Terms and Conditions of Purchase of the
Performance............................ 6 AIM Funds........................... A-2
Investment Program..................... 6 Special Plans.......................... A-9
Management............................. 9 Exchange Privilege..................... A-11
Organization of the Company............ 11 How to Redeem Shares................... A-13
Closure of the Fund to New Investors... 12 Determination of Net Asset Value....... A-17
Legal Matters.......................... 12 Dividends, Distributions and Tax
INVESTOR'S GUIDE TO THE AIM FAMILY OF Matters............................. A-18
FUNDS--Registered Trademark--.......... A-1 General Information.................... A-20
APPLICATION INSTRUCTIONS................. B-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 six series comprising six 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 five other investment
portfolios, AIM BLUE CHIP FUND ("BLUE CHIP"), AIM CAPITAL DEVELOPMENT FUND
("CAPITAL DEVELOPMENT"), AIM CHARTER FUND ("CHARTER"), AIM CONSTELLATION FUND
("CONSTELLATION") and AIM WEINGARTEN FUND ("WEINGARTEN") 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 BLUE CHIP, CAPITAL
DEVELOPMENT, CHARTER, CONSTELLATION, or WEINGARTEN call (800) 347-4246. 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 dated as of February
28, 1997 (the "Master Advisory Agreement"). AIM, together with its subsidiaries,
manages or advises over 50 investment company portfolios (including the Fund)
encompassing a broad range of investment objectives. Under 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 February 28, 1997 (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 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."
2
<PAGE> 9
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 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, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 10
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 are based on the average net assets of the
Fund for its 1997 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>
<S> <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 load(1).................................... None
Redemption fees........................................... None
Exchange fee.............................................. None
Annual Fund Operating Expenses (Retail Class) (as a
percentage of average net assets)
Management fee............................................ .63%
12b-1 fees(2)............................................. .25%
Other expenses:
Transfer agent fees and costs.......................... .13%
Other.................................................. .05%
----
Total other expenses................................... .18%
----
Total fund operating expenses............................. 1.06%
====
</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 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..................................................... $65
3 years.................................................... $87
5 years.................................................... $110
10 years.................................................... $177
</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> 11
- --------------------------------------------------------------------------------
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,
1997, 1996, 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 five 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, --------------------------
1997 1996 1995 1994 1993 1992(a) 1991 1990
---------- ---------- ---------- -------- ----------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 44.93 $ 40.13 $ 28.37 $ 23.85 $ 18.52 $ 16.06 $ 11.85 $13.30
Income from investment
operations:
Net investment income
(loss)...................... (0.26) (0.32) (0.04) (0.05) (0.02) (0.03) (0.04) 0.08
Net gains (losses) on
securities (both realized
and unrealized)............. 7.60 6.09 11.80 4.57 5.35 3.41 7.29 (0.95)
---------- ---------- ---------- -------- -------- ------- ------- ------
Total from investment
operations.................. 7.34 5.77 11.76 4.52 5.33 3.38 7.25 (0.87)
---------- ---------- ---------- -------- -------- ------- ------- ------
Less distributions:
Dividends from net investment
income...................... -- -- -- -- -- -- -- (0.09)
Distributions from net
realized gains.............. (2.30) (0.97) -- -- -- (0.92) (3.04) (0.49)
---------- ---------- ---------- -------- -------- ------- ------- ------
Total distributions........... (2.30) (0.97) -- -- -- (0.92) (3.04) (0.58)
---------- ---------- ---------- -------- -------- ------- ------- ------
Net asset value, end of
period........................ $ 49.97 $ 44.93 $ 40.13 $ 28.37 $ 23.85 $ 18.52 $ 16.06 $11.85
========== ========== ========== ======== ======== ======= ======= ======
Total return(b)................ 17.35% 14.77% 41.45% 18.96% 28.78% 21.34% 63.90% (6.50)%
========== ========== ========== ======== ======== ======= ======= ======
Ratios/supplemental data:
Net assets, end of period
(000s omitted).............. $3,864,257 $2,750,564 $2,245,554 $687,238 $217,256 $38,238 $16,218 $9,234
========== ========== ========== ======== ======== ======= ======= ======
Ratio of expenses to average
net assets(c)............... 1.06%(d)(e) 1.11% 1.08% 1.07% 1.00%(g) 1.25% 1.25% 1.25%
========== ========== ========== ======== ======== ======= ======= ======
Ratio of net investment income
(loss) to average net
assets(f)................... (0.65)%(d) (0.76)% (0.19)% (0.26)% (0.24)%(g) (0.59)% (0.31)% 0.62%
========== ========== ========== ======== ======== ======= ======= ======
Portfolio turnover rate....... 73% 79% 52% 75% 61% 164% 165% 137%
========== ========== ========== ======== ======== ======= ======= ======
Average broker commission rate
paid(h)..................... $ 0.0540 $ 0.0545 N/A N/A N/A N/A N/A N/A
========== ========== ========== ======== ======== ======= ======= ======
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1989 1988 1987
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of
period........................ $ 11.07 $ 9.86 $ 12.10
Income from investment
operations:
Net investment income
(loss)...................... 0.03 0.05 --
Net gains (losses) on
securities (both realized
and unrealized)............. 2.28 1.21 (1.38)
------- ------- -------
Total from investment
operations.................. 2.31 1.26 (1.38)
------- ------- -------
Less distributions:
Dividends from net investment
income...................... (0.03) (0.05) --
Distributions from net
realized gains.............. (0.05) -- (0.86)
------- ------- -------
Total distributions........... (0.08) (0.05) (0.86)
------- ------- -------
Net asset value, end of
period........................ $ 13.30 $ 11.07 $ 9.86
======= ======= =======
Total return(b)................ 20.89% 12.77% (11.52)%
======= ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted).............. $11,712 $12,793 $13,991
======= ======= =======
Ratio of expenses to average
net assets(c)............... 1.25% 1.22% 1.20%
======= ======= =======
Ratio of net investment income
(loss) to average net
assets(f)................... 0.24% 0.38% 0.01%
======= ======= =======
Portfolio turnover rate....... 69% 56% 118%
======= ======= =======
Average broker commission rate
paid(h)..................... N/A N/A N/A
======= ======= =======
</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) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.15%, 1.09%, 1.17% (annualized), and 1.65%, for 1995-92, respectively.
(d) Ratios are based on average net assets of $3,037,859,800.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been 1.05%.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.26)%, (0.28)%, (0.41)% (annualized), and (0.99)%, for
1995-92, respectively.
(g) Annualized.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
5
<PAGE> 12
- --------------------------------------------------------------------------------
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.
Additional performance information is contained in the Statement of Additional
Information and in the Company's Annual Report to Shareholders, both of which
are available upon request without charge.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
The Company has six series, each of which is a separate investment
portfolio -- BLUE CHIP, CAPITAL DEVELOPMENT, CHARTER, WEINGARTEN, AGGRESSIVE
GROWTH and CONSTELLATION. BLUE CHIP, CAPITAL DEVELOPMENT, CHARTER, WEINGARTEN
and CONSTELLATION are offered to investors pursuant to separate prospectuses.
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> 13
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:
TEMPORARY DEFENSIVE MEASURES. A portion of the Fund's assets may be held, from
time to time, in cash, repurchase agreements, commercial paper, U.S. government
obligations, taxable municipal securities, investment grade (high quality)
corporate bonds or other debt securities, when such positions are deemed
advisable in light of economic or market conditions or for daily cash management
purposes. In addition, the Fund may invest, for temporary defensive purposes,
all or a substantial portion of its assets in the securities described above. To
the extent that the Fund invests to a significant degree in these instruments,
its ability to achieve its investment objective may be adversely affected.
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. Repurchase
agreements are considered to be loans by the Fund under the 1940 Act.
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 may purchase and sell futures contracts and may purchase related
options in order to hedge the value of its portfolio against changes in market
conditions. 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.
There are risks associated with investments in stock index futures contracts
and options on such contracts. During certain market conditions, purchases and
sales of futures contracts may not completely offset a decline or rise in the
value of a Fund's portfolio. In the futures markets, it may not always be
possible to execute a buy or sell order at the desired price, or to close out an
open position due to market conditions, limits on open positions and/or daily
price fluctuations. Changes in the market value of a Fund's portfolio may differ
substantially from the changes anticipated by the Fund when hedged positions
were established, and unanticipated price movements in a futures contract may
result in a loss substantially greater than a Fund's initial investment in such
contract. Successful use of futures contracts and related options is dependent
upon AIM's ability to predict correctly movements in the direction of the
applicable markets. No assurance can be given that AIM's judgment in this
respect will be correct.
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 volume, 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.
7
<PAGE> 14
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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund may invest in other
investment companies to the extent permitted by the Investment Company Act of
1940, and rules and regulations thereunder, and, if applicable, exemptive orders
granted by the SEC.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. The Fund may
purchase securities on a "when-issued" basis, that is, delivery of and payment
for the securities is not fixed at the date of purchase, but is set after the
securities are issued (normally within forty-five days after the date of the
transaction). The Fund also may purchase or sell securities on a delayed
delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery securities are fixed at the time the buyer
enters into the commitment. The Fund will only make commitments to purchase
when-issued or delayed delivery securities with the intention of actually
acquiring such securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. For further information regarding
securities issued on a when-issued or delayed delivery basis see the caption
"Investment Objectives and Policies" in the Statement of Additional Information.
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.
FOREIGN SECURITIES. The Fund may invest up to 25% of its total assets in
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 Depositary Receipts ("ADRs"), European Depositary
Receipts ("EDRs") and other securities representing underlying securities of
foreign issuers 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 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.
8
<PAGE> 15
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. 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 Board of 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.
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. In addition, the Fund has adopted a non-fundamental policy stating that
the Fund will not purchase additional securities when any borrowings from banks
exceed 5% of the Fund's 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.
Except as otherwise noted, 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
9
<PAGE> 16
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. Information concerning the Board of Directors may
be found in the Statement of Additional Information. Certain directors and
officers of the Company are affiliated with AIM and A I M Management Group Inc.
("AIM Management"), the parent corporation of AIM. AIM Management is a holding
company engaged in the financial services business and is an indirect wholly
owned subsidiary of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an
independent investment management group engaged in institutional investment
management and retail mutual fund businesses in the United States, Europe and
the Pacific Region.
For a discussion of AIM Management and its subsidiaries' Year 2000 Compliance
Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR. AIM, 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, serves as the investment advisor to the Fund pursuant to the Master
Advisory Agreement. AIM was organized in 1976, and, together with its
subsidiaries, advises or manages over 50 investment company portfolios
(including the Fund) encompassing a broad range of investment objectives. 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 February 28, 1997, 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 subsidiaries 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, 1997, AIM received total
advisory fees of $19,244,957 which represented 0.63% of the Fund's average daily
net assets.
AIM received reimbursement of administrative services costs for the fiscal
year ended October 31, 1997, which represented 0.003% of the Fund's average 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 Fund.
DISTRIBUTOR. The Company has entered into a Master Distribution Agreement,
dated as of August 2, 1997, on behalf of Class A shares 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 100, Houston,
TX 77046-1173. The Distribution Agreement provides that AIM Distributors has the
exclusive right to distribute shares 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
10
<PAGE> 17
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 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 approximately 135 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, Kenneth A. Zschappel and Charles D. Scavone are primarily
responsible for the day-to-day management of AGGRESSIVE GROWTH. Mr. Kippes is
Vice President of A I M Capital Management, Inc. ("AIM Capital"), a wholly owned
subsidiary of AIM, and has been responsible for the Fund since 1992. He has been
associated with AIM and/or its subsidiaries since he began working as an
investment professional in 1989. Mr. Zschappel is Assistant Vice President of
AIM Capital and has been responsible for the Fund since 1996. He has been
associated with AIM and/or its subsidiaries since he began working as an
investment professional in 1990. Mr. Scavone is Vice President of AIM Capital
and has been responsible for the Fund since 1996. He has been associated with
AIM and/or its subsidiaries since 1996 and has been an investment professional
since 1991. Prior to 1991, he was Associate Portfolio Manager for Van Kampen
American Capital Asset Management, Inc. from 1994 to 1996. From 1991 to 1994, he
worked in the investments department at Texas Commerce Investment Management
Company, with his last position being Equity Research Analyst/Assistant
Portfolio Manager.
- --------------------------------------------------------------------------------
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 six separate portfolios: CHARTER,
CONSTELLATION and WEINGARTEN, each of which has retail classes of shares
consisting of Class A, Class B and Class C shares and an Institutional Class;
AGGRESSIVE GROWTH, which has a retail class of shares consisting of Class A
shares; and BLUE CHIP and CAPITAL DEVELOPMENT, each of which has retail classes
of shares consisting of Class A, Class B and Class C shares. The Company's
common stock is classified into nineteen different classes. Each class
represents an interest in one of six portfolios. 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.
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, such as those associated with the shareholder servicing
of their shares, 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 re-
11
<PAGE> 18
quired. 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 June 5, 1997.
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.
LEGAL MATTERS
Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, Philadelphia,
Pennsylvania, serves as counsel to the Company.
On October 25, 1996 a shareholder of the Fund filed a lawsuit in United States
District Court, Southern District of Texas, against the Company, AIM, AIM
Distributors and Aggressive Growth as a nominal defendant. The action was
instituted under Section 36(b) of the Investment Company Act of 1940 and seeks
to recover damages allegedly suffered by the Fund in connection with fees paid
for marketing and shareholder services after the Fund was closed to new
investors.
12
<PAGE> 19
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND(*) AIM GLOBAL UTILITIES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND(*) AIM GROWTH FUND
AIM ADVISOR LARGE CAP VALUE FUND(*) AIM HIGH INCOME MUNICIPAL FUND
AIM ADVISOR MULTIFLEX FUND(*) AIM HIGH YIELD FUND
AIM ADVISOR REAL ESTATE FUND(*) AIM INCOME FUND
AIM AGGRESSIVE GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ASIAN GROWTH FUND AIM INTERNATIONAL EQUITY FUND
AIM BALANCED FUND AIM LIMITED MATURITY TREASURY FUND
AIM BLUE CHIP FUND AIM MONEY MARKET FUND(**)
AIM CAPITAL DEVELOPMENT FUND AIM MUNICIPAL BOND FUND
AIM CHARTER FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CONSTELLATION FUND AIM TAX-EXEMPT CASH FUND(**)
AIM EUROPEAN DEVELOPMENT FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND
AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND
</TABLE>
(*) Class B Shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM
REAL ESTATE FUND will not be available until on or about March 3, 1998.
(**) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Salary Reduction ("SARSEP") accounts, Savings Incentive Match
Plans for Employee IRA ("SIMPLE IRA") accounts, 403(b) plans or 457 (state
deferred compensation) plans (except that the minimum initial investment for
salary deferrals for such plans is $25), or for investment of dividends and
distributions of any of the AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
MCF-02/98
A-1
<PAGE> 20
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION--SM--: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for detail.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE
FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH
FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may
be purchased at their respective net asset value plus a sales charge as
indicated below, except that Class A shares of AIM TAX-EXEMPT CASH FUND and AIM
Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a sales charge and
Class B shares (the "Class B shares") and Class C shares ("Class C shares") of
the Multiple Class Funds are sold at net asset value subject to a contingent
deferred sales charge payable upon certain redemptions. These contingent
deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A, Class B or
Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class
Fund are described below under "Special Information Relating to Multiple Class
Funds." For information on purchasing any of the AIM Funds and to receive a
prospectus, please call (800) 347-4246. As described below, the sales charge
otherwise applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
MCF-02/98
A-2
<PAGE> 21
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM
INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND,
AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM
INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
MCF-02/98
A-3
<PAGE> 22
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM
TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million of such
purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of
the next $17 million of such purchases, plus 0.25% of amounts in excess of $20
million of such purchases. See "Contingent Deferred Sales Charge Program for
Large Purchases." AIM Distributors may make payments to dealers and institutions
who are dealers of record for purchases of $1 million or more of Class A shares
(or shares which normally involve payment of initial sales charges), and which
are sold at net asset value and are not subject to a contingent deferred sales
charge, in an amount up to 0.10% of such purchases of Class A shares of AIM
LIMITED MATURITY TREASURY FUND, and in an amount up to 0.25% of such purchases
of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
are not paid on sales to investors exempt from the CDSC, including shareholders
of record on April 30, 1995 who purchase additional shares in any of the Funds
on or after May 1, 1995, and in circumstances where AIM Distributors grants an
exemption on particular transactions.
MCF-02/98
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<PAGE> 23
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES are sold subject to the initial sales charges described
above and are subject to the other fees and expenses described herein.
Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares an investor owns may be exchanged at net
asset value for Class A shares of another Multiple Class Fund or shares of
another AIM Fund which is not a Multiple Class Fund, subject to the terms
and conditions described under the caption "Exchange Privilege -- Terms and
Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class C shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class C shares redeemed
within one year from the date such shares were purchased are subject to a
1.00% contingent deferred sales charge. No contingent deferred sales charge
will be imposed if Class C shares are redeemed after one year from the date
such shares were purchased. Redemptions of Class C shares and associated
charges are further described under the caption "How to Redeem
Shares -- Multiple Distribution System."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
MCF-02/98
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<PAGE> 24
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH
FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the
amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of such funds will remain constant at $1.00 per share.
However, there is no assurance that each Money Market Fund can maintain a $1.00
net asset value per share. In order to earn dividends with respect to AIM MONEY
MARKET FUND on the same day that a purchase is made, purchase payments in the
form of federal funds must be received by the Transfer Agent before 12:00 noon
Eastern Time on that day. Purchases made by payments in any other form, or
payments in the form of federal funds received after such time but prior to NYSE
Close, will begin to earn dividends on the next business day following the date
of purchase. The Money Market Funds generally will not issue share certificates
but will record investor holdings in noncertificate form and regularly advise
the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class
B and Class C shares of the Multiple Class Funds will not be taken into account
in determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), a Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by vir-
MCF-02/98
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<PAGE> 25
tue of the foregoing definition, to the reduced sales charge. No person or
entity may distribute shares of the AIM Funds without payment of the applicable
sales charge other than to persons or entities who qualify for a reduction in
the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) within the following 13 consecutive months. By marking the LOI section on
the account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND
and (ii) Class B and Class C shares of the Multiple Class Funds) at the time of
the proposed purchase. Rights of Accumulation are also available to holders of
the Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve
Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the
Multiple Class Funds) owned by such purchaser, calculated at their then current
public offering price. If a purchaser so qualifies for a reduced sales charge,
the reduced sales charge applies to the total amount of money then being
invested by such purchaser and not just to the portion that exceeds the
breakpoint above which a reduced sales charge applies. For example, if a
purchaser already owns qualifying shares of any AIM Fund with a value of $20,000
and wishes to invest an additional $20,000 in a fund with a maximum initial
sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to
the full $20,000 purchase and not just to the $15,000 in excess of the $25,000
breakpoint. To qualify for obtaining the discount applicable to a particular
purchase, the purchaser or his dealer must furnish AFS with a list of the
account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends,
MCF-02/98
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<PAGE> 26
Distributions and Tax Matters"); (b) exchanges of shares of certain other funds
(see "Exchange Privilege"); (c) use of the reinstatement privilege (see "How to
Redeem Shares"); or (d) a merger, consolidation or acquisition of assets of a
fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; and (i) employees of
Triformis Inc.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any Class A shares of
AIM LIMITED MATURITY TREASURY FUND sold at net asset value to an employee
benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
MCF-02/98
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<PAGE> 27
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan each
withdrawal is made from the shareholder's bank account in the amount specified
by the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and
MCF-02/98
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<PAGE> 28
Tax Matters -- Dividends and Distributions" for a description of payment dates
for these options. In order to qualify to have dividends and distributions of
one AIM Fund invested in shares of another AIM Fund, the following conditions
must be satisfied: (a) the shareholder must have an account balance in the
dividend paying fund of at least $5,000; (b) the account must be held in the
name of the shareholder (i.e., the account may not be held in nominee name); and
(c) the shareholder must have requested and completed an authorization relating
to the reinvestment of dividends into another AIM Fund. An authorization may be
given on the account application or on an authorization form available from AIM
Distributors. An AIM Fund will waive the $5,000 minimum account value
requirement if the shareholder has an account in the fund selected to receive
the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
MCF-02/98
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<PAGE> 29
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. 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. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "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; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
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 Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
---------- -----------------
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INCOME AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL UTILITIES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A --------------
AIM ADVISOR MULTIFLEX AIM GROWTH FUND -- CLASS A AIM MONEY MARKET FUND
FUND -- CLASS A AIM HIGH INCOME MUNICIPAL -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE FUND -- CLASS A AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM ASIAN GROWTH FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM MUNICIPAL BOND
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM EUROPEAN DEVELOPMENT OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM WEINGARTEN FUND -- CLASS A
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH
FUND; (ii) LOWER LOAD FUND SHARE PURCHASES OF $1,000,000 OR MORE AND AIM Cash
Reserve Shares of AIM MONEY MARKET FUND and AIM TAX-EXEMPT CASH FUND PURCHASES
MAY BE EXCHANGED FOR LOAD FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH
WILL THEN BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR
PURPOSES OF CALCULATING THE CONTINGENT DEFERRED SALES CHARGE ON THE LOAD FUND
SHARES ACQUIRED, THE 18-MONTH PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH
EXCHANGE; (iii) Class A shares may be exchanged for Class A shares, (iv) Class B
shares may be exchanged only for Class B shares; (v) Class C shares may only be
exchanged for Class C shares; and (vi) AIM Cash Reserve Shares of AIM MONEY
MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET FUND or
for Class B or Class C shares.
MCF-02/98
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<PAGE> 30
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 FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds..........
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds.......... 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 Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise, Of-
apply if No Load shares were fering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
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, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A, Class B, or Class C 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 Internal Revenue Service ("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 business 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. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
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.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received
MCF-02/98
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<PAGE> 31
after NYSE Close will result in the redemption of shares at their net asset
value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), 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 business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
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.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
MCF-02/98
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<PAGE> 32
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from individual retirement accounts,
custodial accounts maintained pursuant to Code Section 403(b), deferred
compensation plans qualified under Code Section 457 and plans qualified under
Code Section 401 (collectively, "Retirement Plans"), (3) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class B or Class C shares at the time the shareholder elects to participate
in the Systematic Withdrawal Plan, (4) effected pursuant to the right of a
Multiple Class Fund 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 prospectus of such Multiple Class Fund, (5)
effected by AIM of its investment in Class B or Class C shares and (6) of Class
C shares where such investor's dealer of record, due to the nature of the
investor's account, notifies AIM Distributors prior to the time of investment
that the dealer waives the payment otherwise payable to the dealer described in
the fifth paragraph under the caption "Terms and Conditions of Purchase of the
AIM Funds -- All Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting 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 in a particular AIM Fund;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors 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 or Class C shares of one or more Multiple Class
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.
MCF-02/98
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<PAGE> 33
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge 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. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund or AIM Cash Reserve Shares of AIM MONEY MARKET FUND which were acquired
through an exchange of shares which previously were subject to the 1% contingent
deferred sales charge will be credited with the period of time such exchanged
shares were held, and (ii) shares of any Load Fund which are subject to the 1%
contingent deferred sales charge and which were acquired through an exchange of
shares of a Lower Load Fund or a No Load Fund which previously were not subject
to the 1% contingent deferred sales charge will not be credited with the period
of time such exchanged shares were held. The charge will be waived in the
following circumstances: (1) redemptions of shares by employee benefit plans
("Plans") qualified under Sections 401 or 457 of 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 shares are being redeemed in
connection with employee terminations or withdrawals, and (a) the total amount
invested in a Plan 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 death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (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; (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 AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59-1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information; and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be gen-
MCF-02/98
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<PAGE> 34
uine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND). After completing the appropriate authorization form,
shareholders may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND
and the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does
not apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner; (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions; and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed
MCF-02/98
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<PAGE> 35
the surety coverage amount indicated on the medallion. For information regarding
whether a particular institution or organization qualifies as an "eligible
guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in Class A
shares of any AIM Fund at the net asset value next computed after receipt by the
Transfer Agent of the funds to be reinvested; provided, however, if the
redemption was made from Class A shares of either AIM LIMITED MATURITY TREASURY
FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be subject
to the difference in sales charge between the shares redeemed and the shares the
proceeds are reinvested in. The shareholder must ask the Transfer Agent for such
privilege at the time of reinvestment. A realized gain on the redemption is
taxable, and reinvestment may alter any capital gains payable. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in (or exchanged for) shares of another AIM Fund
at a reduced sales charge within 90 days of the payment of the sales charge, the
shareholder's basis in the fund shares redeemed may not include the amount of
the sales charge paid, thereby reducing the loss or increasing the gain
recognized from the redemption; however, the shareholder's basis in the fund
shares purchased will include the sales charge. Each AIM Fund may amend, suspend
or cease offering this privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation. This privilege may only be
exercised once each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE. The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and 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 fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 or Trustees of the
applicable AIM Fund.
MCF-02/98
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<PAGE> 36
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
</TABLE>
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 an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares are expected to be lower than those
for Class A shares or AIM Cash Reserve Shares because of higher distribution
fees paid by Class B and Class C shares. Dividends on all shares may also be
affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such
MCF-02/98
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<PAGE> 37
payment. Any dividend and distribution election remains in effect until the
Transfer Agent receives a revised written election by the shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are 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.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM HIGH INCOME MUNICIPAL FUND, AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT
CASH FUND, and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt Funds") which are
exempt from federal tax. Dividends paid by a fund (other than capital gain
distributions) may qualify for the federal 70% dividends received deduction for
corporate shareholders to the extent of the qualifying dividends received by the
fund on domestic common or preferred stock. It is not likely that dividends
received from AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE
FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE FUND will
qualify for this dividends received deduction. Shortly after the end of each
year, shareholders will receive information regarding the amount and federal
income tax treatment of all distributions paid during the year. Certain
dividends declared in October, November or December of a calendar year are
taxable to shareholders as though received on December 31 of that year if paid
to shareholders during January of the following calendar year. No gain or loss
will be recognized by shareholders upon the automatic conversion of Class B
shares of a Multiple Class Fund into Class A shares of such Fund. With respect
to tax-exempt shareholders, distributions from the Funds will not be subject to
federal income taxation to the extent permitted under the applicable tax-
exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of interest on certain indebtedness of the shareholder,
and may have other collateral federal income tax consequences. The Tax-Exempt
Funds may invest in Municipal Securities the interest on which will constitute
an item of tax preference and which therefore could give rise to a federal
alternative minimum tax liability for shareholders, and may invest up to 20% of
their net assets in such securities and
MCF-02/98
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<PAGE> 38
other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
FUND -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to shareholders credits for
foreign taxes paid. If the fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders, and should note that if
such losses exceed other income during a taxable year, the fund would not be
able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as
Sub-Custodian for retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, LLP,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
legal matters.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. 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.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish between the year 2000 from the year 1900.
This defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers provide the AIM Funds
and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
MCF-02/98
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<PAGE> 39
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. 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.
MCF-02/98
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<PAGE> 40
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-02/98
B-1
<PAGE> 41
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-02/98
B-2
<PAGE> 42
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Principal Underwriter
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
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
Houston, TX 77002
For more complete information about any other Fund in The AIM Family of Funds,
including charges and expenses, please call (800) 347-4246 or write to A I M
Distributors, Inc. and request a free prospectus. Please read the prospectus
carefully before you invest or send money.
AGRO-PRO-1
<PAGE> 43
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
RETAIL CLASSES OF AIM EQUITY FUNDS, INC.
AIM BLUE CHIP FUND
(Growth)
PROSPECTUS
FEBRUARY 27, 1998
This Prospectus contains information about the AIM BLUE CHIP FUND ("BLUE CHIP"
or the "Fund"), one of six 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 with an investment objective of long-term
growth of capital. Current income is a secondary objective. The Fund seeks to
achieve its investment objectives by investing primarily in common stocks,
convertible securities and bonds of Blue Chip companies (i.e., companies which
possess leading market characteristics and certain financial characteristics).
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
February 27, 1998, has been filed with the United States Securities and Exchange
Commission ("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 100, Houston, Texas 77046-1173 or by calling
(800) 347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
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 NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE> 44
<TABLE>
- ----------------------------------------------------------------------------------------------------------
TABLE OF CONTENTS
<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 Funds........................... A-2
Financial Highlights................... 6 Special Plans.......................... A-9
Performance............................ 8 Exchange Privilege..................... A-11
Investment Program..................... 8 How to Redeem Shares................... A-13
Management............................. 12 Determination of Net Asset Value....... A-17
Organization of the Company............ 14 Dividends, Distributions and Tax
INVESTOR'S GUIDE TO THE AIM FAMILY OF Matters............................. A-18
FUNDS--Registered Trademark--.......... A-1 General Information.................... A-20
Introduction to The AIM Family of APPLICATION INSTRUCTIONS................. B-1
Funds............................... A-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
AIM Equity Funds, Inc. (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 Fund is a series of the Company comprising a
separate investment portfolio that acquired the investment portfolio of Baird
Blue Chip Fund, Inc. (the "BBC Fund"), a registered, diversified, management
investment company, on June 3, 1996 in a transaction involving a reorganization
of the BBC Fund (the "Reorganization"). Currently, the Company offers six series
comprising six separate investment portfolios, each of which pursues unique
investment objectives. This Prospectus relates to Class A, Class B and Class C
shares of BLUE CHIP. The Fund's primary investment objective is long-term growth
of capital. Current income is a secondary objective. The Fund seeks to achieve
its investment objectives by investing primarily in common stocks, convertible
securities and bonds of Blue Chip companies (which AIM defines as companies
which possess leading market characteristics and certain financial
characteristics). While current income is a secondary objective, most of the
stocks in the Fund's portfolio are expected to pay dividends. 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 Fund may invest in futures, options and foreign securities.
Investments in these instruments involve certain risks, which are described in
detail under "Investment Program -- Certain Investment Strategies and Policies."
The Company also offers other classes of shares in five other investment
portfolios, AIM AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH"), AIM CAPITAL
DEVELOPMENT FUND ("CAPITAL DEVELOPMENT"), AIM CHARTER FUND ("CHARTER"), AIM
CONSTELLATION FUND ("CONSTELLATION") and AIM WEINGARTEN FUND ("WEINGARTEN")
(collectively, with BLUE CHIP, the "Funds"), each of which pursues unique
investment objectives. All of such other Funds (except AGGRESSIVE GROWTH) offer
multiple classes of shares to different types of investors. The shares of the
other Funds of the Company have different sales charges and expenses, which may
affect performance. To obtain information about AGGRESSIVE GROWTH, CAPITAL
DEVELOPMENT, CHARTER, CONSTELLATION or WEINGARTEN call (800) 347-4246. See
"General Information."
The assets of each Fund are invested in a separate portfolio. Each class of a
Fund shares 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 dated as of February
28, 1997, (the "Master Advisory Agreement"). AIM, together with its
subsidiaries, manages or advises over 50 investment company portfolios
(including the Fund) encompassing a broad range of investment objectives. Under
the Master Advisory Agreement, AIM receives a fee for its services based on the
Fund's average daily net assets. Under a Master Administrative Services
Agreement dated as of February 28, 1997, (the "Master Administrative Services
Agreement") between the Company and AIM, 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, as amended, 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 Fund.
The total advisory fees paid by the Fund are higher than those paid by many
other investment companies of all sizes and investment objectives.
2
<PAGE> 45
PURCHASING SHARES. Investors may select Class A, Class B or Class C shares of
the Fund 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 -- Shares are offered 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.
CLASS B SHARES -- 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 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.
CLASS C SHARES -- Shares are offered at net asset value without an initial
sales charge, and are subject to a contingent deferred sales charge of 1% on
certain redemptions made within one year from the date such shares were
purchased. Class C shares are subject to higher expenses than Class A shares.
Initial investments in any 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
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."
SUITABILITY FOR INVESTORS. An investor in Class A, Class B or Class C shares
of the Fund 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 or Class C shares 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 or Class C 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 Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Class A, Class B and
Class C 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. Class A shareholders of the Fund may redeem all or a portion
of their shares at the 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."
Class B shareholders of the Fund 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."
Class C shareholders of the Fund may redeem all or a portion of their shares
at net asset value on any business day, less a 1% contingent deferred sales
charge for redemptions made within one year from the date such shares were
purchased. See "How to Redeem Shares -- Multiple Distribution System."
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, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 46
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 for Class A, and Class B shares set forth in the table are based on
the average net assets of the 1997 fiscal year. The fees and expenses for Class
C shares set forth in the table below are based on estimated average net assets
of Class C shares for the period.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares (as a
percentage of offering price).......................... 5.50%(1) None None
Maximum sales load imposed on reinvested dividends and
distributions.......................................... None None None
Deferred sales load (as a percentage of original purchase
price or redemption proceeds, whichever is lower)...... None(2) 5.00% 1.00%
Redemption fees........................................... None None None
Exchange fee.............................................. None None None
Annual Fund Operating Expenses (as a percentage of average
net assets) (after fee waivers)
Management fee (after fee waivers)3....................... .70% .70% .70%
12b-1 fees4............................................... .35% 1.00% 1.00%
Other Expenses:
Transfer Agent fees and costs.......................... .16% .30% .30%
All other expenses..................................... .10% .10% .10%
----- ----- -----
Total fund operating expenses (after fee waivers)........... 1.31% 2.10% 2.10%
===== ===== =====
</TABLE>
- ---------------
1 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 "Terms and Conditions of Purchase of the AIM Funds -- Sales
Charges and Dealer Concessions" below for more information about applicable
sales charges.
2 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 after such purchases were made. See the
Investor's Guide, under the caption "How to Redeem Shares -- Contingent
Deferred Sales Charge Program for Large Purchases."
3 AIM has agreed to waive fees for two years ending June 3, 1998 to the extent
necessary to keep the expense ratio for Class A shares at 1.31%. Without such
waiver the Management fee for each class would be 0.72% per annum, and total
fund operating expenses for Class A shares would be 1.33% and for Class B
shares and Class C shares would be 2.11%.
4 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, AIM estimates 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 in
Class A shares of the Fund, assuming (a) a 5% annual return and (b) redemption
at the end of each time period:
<TABLE>
<S> <C>
1 year..................................................... $68
3 years.................................................... $94
5 years.................................................... $123
10 years.................................................... $204
</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 purchase.
An investor would pay the following expenses on a $1,000 investment in Class B
shares of the Fund, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<S> <C>
1 year..................................................... $ 71
3 years.................................................... $ 96
5 years.................................................... $133
10 years.................................................... $223
</TABLE>
4
<PAGE> 47
An investor would pay the following expenses on the same $1,000 investment in
Class B shares of the Fund, assuming no redemption at the end of each time
period:
<TABLE>
<S> <C>
1 year..................................................... $ 21
3 years.................................................... $ 66
5 years.................................................... $113
10 years.................................................... $223
</TABLE>
An investor would pay the following expenses on a $1,000 investment in Class C
shares of the Fund, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<S> <C>
1 year...................................................... $ 31
3 years..................................................... $ 66
</TABLE>
An investor would pay the following expenses on the same $1,000 investment in
Class C shares of the Fund, assuming no redemption at the end of each time
period:
<TABLE>
<S> <C>
1 year...................................................... $ 21
3 years..................................................... $ 66
</TABLE>
THE CLASS A SHARES EXAMPLE IS BASED UPON RESTATED EXPENSES FOR THE CURRENT
FISCAL YEAR, AND THE CLASS B AND CLASS C SHARES EXAMPLE IS BASED ON ESTIMATED
EXPENSES FOR THE CURRENT FISCAL YEAR. THE ABOVE EXAMPLES SHOULD NOT BE
CONSIDERED REPRESENTATIVE OF THE 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, THE 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> 48
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Shown below for the periods indicated are per share data, ratios and
supplemental data of the Fund. The data for the Class A shares for the fiscal
year ended October 31, 1997, the one month period ended October 31, 1996, and
the period ended September 30, 1996, and the data for the Class B shares for the
fiscal year ended October 31, 1997 and the period October 1, 1996 (date sales
commenced for Class B shares) through October 31, 1996, and the data for the
Class C shares for the period August 4, 1997 (date sales commenced) through
October 31, 1997 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. The
data for the eight years ended September 30, 1995, has been audited by Price
Waterhouse LLP, independent accountants. The Financial Highlights should be read
in conjunction with the financial statements and notes thereto also included in
the Statement of Additional Information. On June 3, 1996, the Fund acquired the
investment portfolio of the BBC Fund in connection with the Reorganization. All
historical financial information contained in this prospectus for periods prior
to June 3, 1996 relating to Class A shares of Blue Chip is that of the BBC Fund,
which was advised during that period by Robert W. Baird & Co. Incorporated.
(PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OCTOBER 31, SEPTEMBER 30,
---------------------- --------------------------------------------------------------------
1997 1996 1996(a) 1995 1994 1993 1992 1991 1990
CLASS A: -------- -------- -------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 26.08 $ 25.56 $ 23.83 $ 19.22 $ 18.89 $ 18.24 $ 16.77 $ 13.60 $ 13.82
Income from investment operations:
Net investment income............. 0.17(b) -- 0.33 0.14 0.15 0.19 0.20 0.23 0.25
Net gains (losses) on securities
(both realized and unrealized).. 6.93 0.52 4.61 5.05 1.24 0.63 1.48 3.19 (0.20)
-------- -------- -------- ------- ------- ------- ------- ------- -------
Total from investment operations.. 7.10 0.52 4.94 5.19 1.39 0.82 1.68 3.42 0.05
-------- -------- -------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment
income.......................... (0.05) -- (0.21) (0.12) (0.21) (0.17) (0.21) (0.25) (0.27)
Distributions from net realized
gains........................... (2.17) -- (3.00) (0.46) (0.85) -- -- -- --
-------- -------- -------- ------- ------- ------- ------- ------- -------
Total distributions............... (2.22) -- (3.21) (0.58) (1.06) (0.17) (0.21) (0.25) (0.27)
-------- -------- -------- ------- ------- ------- ------- ------- -------
Net asset value, end of period..... $ 30.96 $ 26.08 $ 25.56 $ 23.83 $ 19.22 $ 18.89 $ 18.24 $ 16.77 $ 13.60
======== ======== ======== ======= ======= ======= ======= ======= =======
Total return(c).................... 29.68% 2.04% 22.39% 27.84% 7.69% 4.54% 10.10% 25.52% 0.34%
======== ======== ======== ======= ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted)........................ $498,178 $120,448 $106,415 $71,324 $60,115 $65,112 $61,601 $46,958 $31,706
======== ======== ======== ======= ======= ======= ======= ======= =======
Ratio of expenses to average net
assets(d)....................... 1.31%(e)(f) 1.30%(g) 1.26% 1.3% 1.4% 1.3% 1.4% 1.5% 1.6%
======== ======== ======== ======= ======= ======= ======= ======= =======
Ratio of net investment income to
average net assets(h)........... 0.50%(e) 0.12%(g) 0.53% 0.7% 0.8% 1.0% 1.2% 1.6% 2.0%
======== ======== ======== ======= ======= ======= ======= ======= =======
Portfolio turnover rate........... 43% 10% 58% 17% 13% 25% 5% 9% 12%
======== ======== ======== ======= ======= ======= ======= ======= =======
Average brokerage commission rate
paid(i)........................... $ 0.0619 $ 0.0665 $ 0.0696 N/A N/A N/A N/A N/A N/A
======== ======== ======== ======= ======= ======= ======= ======= =======
<CAPTION>
SEPTEMBER 30,
-----------------
1989 1988
CLASS A: ------- -------
<S> <C> <C>
Net asset value, beginning of
period............................ $ 11.48 $ 13.10
Income from investment operations:
Net investment income............. 0.24 0.12
Net gains (losses) on securities
(both realized and unrealized).. 2.25 (1.68)
------- -------
Total from investment operations.. 2.49 (1.56)
------- -------
Less distributions:
Dividends from net investment
income.......................... (0.15) (0.02)
Distributions from net realized
gains........................... -- (0.04)
------- -------
Total distributions............... (0.15) (0.06)
------- -------
Net asset value, end of period..... $ 13.82 $ 11.48
======= =======
Total return(c).................... 21.98% (11.81)%
======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted)........................ $21,170 $18,681
======= =======
Ratio of expenses to average net
assets(d)....................... 1.7% 2.2%
======= =======
Ratio of net investment income to
average net assets(h)........... 1.9% 3.3%
======= =======
Portfolio turnover rate........... 15% 15%
======= =======
Average brokerage commission rate
paid(i)........................... N/A N/A
======= =======
</TABLE>
- ---------------
(a) The Fund changed investment advisors on June 3, 1996.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.32%, 1.37% (annualized) and 1.28% for the periods 1997-1996, and September
30, 1996, respectively.
(e) Ratios are based on average net assets of $322,318,404.
(f) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(g) Annualized.
(h) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 0.49%, 0.05% (annualized) and 0.51% for the periods
1997-1996 and September 30, 1996, respectively.
(i) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
6
<PAGE> 49
<TABLE>
<CAPTION>
PERIOD OCTOBER 1,
YEAR ENDED 1996 THROUGH
OCTOBER 31, OCTOBER 31,
1997 1996
CLASS B: ----------- -----------------
<S> <C> <C>
Net asset value, beginning of period $ 26.07 $ 25.56
- ------------------------------------------------------------ -------- --------
Income from investment operations:
Net investment income (loss) (0.03)(a) (0.01)
- ------------------------------------------------------------ -------- --------
Net gains on securities (both realized and unrealized) 6.92 0.52
- ------------------------------------------------------------ -------- --------
Total from investment operations 6.89 0.51
- ------------------------------------------------------------ -------- --------
Less distributions:
Dividends from net investment income (0.03) --
- ------------------------------------------------------------ -------- --------
Distributions from net realized gains (2.17) --
- ------------------------------------------------------------ -------- --------
Total distributions (2.20) --
- ------------------------------------------------------------ -------- --------
Net asset value, end of period $ 30.76 $ 26.07
- ------------------------------------------------------------ -------- --------
Total return(b) 28.81% 2.00%
- ------------------------------------------------------------ -------- --------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $264,337 $ 8,101
- ------------------------------------------------------------ -------- --------
Ratio of expenses to average net assets(c) 2.10%(d)(e) 2.01%(f)
- ------------------------------------------------------------ -------- --------
Ratio of net investment income (loss) to average net
assets(g) (0.28)%(d) (0.58)%(f)
- ------------------------------------------------------------ -------- --------
Portfolio turnover rate 43% 10%
- ------------------------------------------------------------ -------- --------
Average brokerage commission rate paid(h) $ 0.0619 $ 0.0665
- ------------------------------------------------------------ -------- --------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one
year, total returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of
expenses to average net assets prior to fee waivers and/or
expense reimbursements were 2.12% and 2.08% (annualized) for
the periods 1997-1996, respectively.
(d) Ratios are based on average net assets of $126,850,228.
(e) Ratio includes expenses paid indirectly. Excluding expenses
paid indirectly, the ratio of expenses to average net assets
would have been 2.09%.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of
net investment income (loss) to average net assets prior to
fee waivers and/or expense reimbursements were (0.31)% and
(0.65)% (annualized) for the periods 1997-1996,
respectively.
(h) The average commission rate paid is the total brokerage
commissions paid on applicable purchases and sales of
securities for the period divided by the total number of
related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and
thereafter.
</TABLE>
<TABLE>
<CAPTION>
PERIOD AUGUST 4,
1997 THROUGH
OCTOBER 31,
1997
CLASS C: ----------------
<S> <C>
Net asset value, beginning of period $ 31.72
- ------------------------------------------------------------ --------
Income from investment operations:
Net investment income (loss) (0.01)(a)
- ------------------------------------------------------------ --------
Net gains (losses) on securities (both realized and
unrealized) (0.96)
- ------------------------------------------------------------ --------
Total from investment operations (0.97)
- ------------------------------------------------------------ --------
Less distributions:
Dividends from net investment income --
- ------------------------------------------------------------ --------
Distributions from net realized gains --
- ------------------------------------------------------------ --------
Total distributions --
- ------------------------------------------------------------ --------
Net asset value, end of period $ 30.75
- ------------------------------------------------------------ --------
Total return(b) (3.06)%
- ------------------------------------------------------------ --------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 3,947
- ------------------------------------------------------------ --------
Ratio of expenses to average net assets(c) 2.10%(d)(e)
- ------------------------------------------------------------ --------
Ratio of net investment income (loss) to average net
assets(f) (0.28)%(d)
- ------------------------------------------------------------ --------
Portfolio turnover rate 43%
- ------------------------------------------------------------ --------
Average brokerage commission rate paid(g) $ 0.0619
- ------------------------------------------------------------ --------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one
year, total returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratio of
expenses to average net assets prior to fee waivers and/or
expense reimbursements was 2.12% (annualized).
(d) Ratios are annualized and based on average net assets of
$1,985,899.
(e) Ratio includes expenses paid indirectly. Excluding expenses
paid indirectly, the ratio of expenses to average net assets
would have remained the same.
(f) After fee waivers and/or expense reimbursements. Ratio of
net investment income (loss) to average net assets prior to
fee waivers and/or expense reimbursements was (0.31)%
(annualized).
(g) The average commission rate paid is the total brokerage
commissions paid on applicable purchases and sales of
securities for the period divided by the total number of
related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and
thereafter.
</TABLE>
7
<PAGE> 50
- --------------------------------------------------------------------------------
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.
Standardized total return for Class A shares of the Fund reflects the
deduction of the maximum initial sales charge at the time of purchase.
Standardized total return for Class B shares of the Fund reflects the deduction
of the maximum applicable contingent deferred sales charge on a redemption of
shares held for the period. Standardized total return for Class C shares of the
Fund reflects the deduction of a 1% contingent deferred sales charge, if
applicable, on a redemption of shares held for the period.
Total return shows the overall 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 or its affiliates 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 AIM's 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.
Additional performance information is contained in the Statement of Additional
Information and in the Company's Annual Report to Shareholders, both of which
are available upon request without charge.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
The Company has six series, each of which is a separate investment
portfolio -- AGGRESSIVE GROWTH, BLUE CHIP, CAPITAL DEVELOPMENT, CHARTER,
CONSTELLATION and WEINGARTEN. AGGRESSIVE GROWTH, CAPITAL DEVELOPMENT, CHARTER,
CONSTELLATION and WEINGARTEN are offered to investors pursuant to separate
prospectuses.
Blue Chip's primary investment objective is to provide long-term growth of
capital. Current income is a secondary objective. It is anticipated that the
major portion of Blue Chip's portfolio will ordinarily be invested in common
stocks, convertible securities and bonds of Blue Chip companies (i.e., companies
with leading market positions and which possess strong financial
characteristics, as described below). While current income is a secondary
objective, most of the stocks in the Fund's portfolio are expected to pay
dividends. 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.
Blue Chip will invest primarily (at least 65% of its total assets) in the
common stocks of Blue Chip companies as determined by AIM. These companies will
have the potential for above-average growth in earnings or be well established
in their respective industries. The Fund will generally invest in large and
medium sized companies (i.e., companies which fall in the largest 85% of market
capitalization of publicly traded companies listed in the United States) which
possess the following characteristics:
- MARKET CHARACTERISTICS
Blue Chip companies are those which occupy (or in AIM's judgment have the
potential to occupy) leading market positions that are expected to be
maintained or enhanced over time. Strong market positions, particularly in
growing industries, can give a company pricing flexibility as well as the
potential for strong unit sales. These factors can in turn lead to higher
earnings growth and greater share price appreciation. Market leaders can be
identified within an industry as those companies which have:
-- superior growth prospects compared with other companies in the same
industry;
-- possession of proprietary technology with the potential to bring about
major changes within an industry; and/or
-- leading sales within an industry, or the potential to become a market
leader.
8
<PAGE> 51
- FINANCIAL CHARACTERISTICS
A Blue Chip company possesses at least one of the following attributes:
-- faster earnings growth than its competitors and the market in general;
-- higher profit margins relative to its competitors;
-- strong cash flow relative to its competitors; and/or
-- a balance sheet with relatively low debt and a high return on equity
relative to its competitors.
The Fund will diversify among industries and therefore will not invest 25% or
more of its total assets in any one industry. Under normal market conditions,
Blue Chip's portfolio will be diversified among industries in a manner similar
to the industry diversification of broad market indices.
When AIM believes securities other than common stocks offer opportunity for
long-term growth of capital and income, the Fund may invest in United States
government securities, corporate bonds and debentures and convertible preferred
stocks and debt securities. The Fund will invest only in debt securities (other
than convertible debt securities) which are rated as "Investment Grade" by
either Standard & Poor's ("S&P") or Moody's Investors Service ("Moody's"). Debt
securities in the lowest investment grade (e.g., rated BBB by S&P or Baa by
Moody's) have speculative characteristics and changes in economic conditions and
other circumstances are more likely to lead to a weakened capacity on the part
of the issuer to make principal and interest payments than is the case with
higher grade bonds. The Fund will limit its investments in convertible
securities to those in which the underlying common stock is a suitable
investment for the Fund without regard to debt rating category, but will not
invest more than 10% of its total assets in convertible securities. The Fund may
invest in United States government securities and corporate bonds and debentures
when AIM believes interest rates on such investments may decline thereby
potentially increasing the market value of such securities or to meet the
additional investment objective of producing current income. Under normal market
conditions, the Fund expects at all times to have at least 80% of its total
assets invested in securities which AIM believes offer opportunity for long-term
growth of capital or income.
The Fund may invest up to 25% of total assets in securities of issuers
domiciled in foreign countries and engage in the purchase and sale of put and
call options in an amount up to 25% of its net assets. For the risks involved in
investing in foreign securities, see "Risk Factors Regarding Foreign Securities"
below. The Fund may invest up to 10% of its total assets in securities of other
investment companies.
The investment objectives of the Fund are fundamental policies of the Fund and
cannot be changed without the consent of the holders of a majority of the Fund's
outstanding shares. 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:
TEMPORARY DEFENSIVE MEASURES. The Fund has adopted a temporary defensive
policy which permits it to invest without limitation in short-term instruments,
such as Treasury bills and other U.S. Government and governmental agency
securities, taxable municipal securities, bank obligations, commercial paper and
repurchase agreements with a maturity of one year or less, as a temporary
defensive measure during abnormal market or economic conditions when the Fund's
investment adviser deems it appropriate. The Fund may also invest in short-term
instruments as a reserve for expenses or anticipated redemptions, as necessary,
to the extent permitted by its fundamental and non-fundamental investment
policies. To the extent that the Fund invests to a significant degree in these
instruments, its ability to achieve its investment objectives may be adversely
affected.
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. Repurchase
agreements are not included in the Fund's restrictions on lending. Repurchase
agreements are considered to be loans by the Fund under the 1940 Act.
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, in order to hedge the value of its portfolio against changes in market
conditions. Generally, the Fund may elect to close a position in a futures
contract by taking an opposite position which will operate to termi-
9
<PAGE> 52
nate 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.
OPTION CONTRACTS. The Fund may write (sell) covered call options, purchase put
options and may engage in strategies employing combinations of covered put and
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 Funds may also purchase and write
options in combination with each other to adjust the risk and return
characteristics of certain portfolio security positions. This technique is
commonly referred to as a "collar."
All covered call options must remain covered as long as the option is open. A
call option is "covered" if the Fund owns the underlying security covered by the
call. If an option expires unexercised, the writer realizes a gain in the amount
of the premium received. If the option is exercised, a gain or loss will be
recognized from the sale or purchase of the underlying security depending upon
the relationship between the market price and strike price of the security.
Prior to its expiration, an option may be closed out by means of a purchase of
an offsetting option.
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 volume, 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 use of 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 use of 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund may invest in other
investment companies to the extent permitted by the Investment Company Act of
1940, and rules and regulations thereunder, and, if applicable, exemptive orders
granted by the SEC.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. The Fund may
purchase securities on a "when-issued" basis, that is, delivery of and payment
for the securities is not fixed at the date of purchase, but is set after the
securities are issued (normally within forty-five days after the date of the
transaction). The Fund also may purchase or sell securities on a delayed
delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery securities are fixed at the time the buyer
enters into the commitment. The Fund will only make commitments to purchase
when-issued or delayed delivery securities with the intention of actually
acquiring such securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable.
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"). 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, taking into account such
factors as: (1) the frequency of trades and quotes for the security; (2) the
number of dealers wishing to purchase or sell the security and the number of
other potential purchasers; (3) dealer undertakings to make a market in the
security; and (4) the nature of the security and the nature of the marketplace
trades. 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. Investing in Rule 144A securities could have the effect of
increasing the level of Fund illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities.
FOREIGN SECURITIES. The Fund may invest up to 25% of its total assets in
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 Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs") and other securities representing underlying securities of foreign
issuers are treated as foreign securities. These securities will be marketable
equity securities (including common and preferred stock, depositary receipts for
stock and fixed income or equity securities exchangeable for or convertible into
stock) of foreign companies which generally are listed on a recognized
securities exchange or traded in an over-the-counter market.
10
<PAGE> 53
FOREIGN EXCHANGE TRANSACTIONS. The Fund has authority to deal in foreign
exchange between currencies of the different countries in which it will invest
for the settlement of transactions.
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 the 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 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.
Emerging Markets. Foreign securities purchased by the Fund 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.
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. 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 Board of 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.
Reference is made to the Statement of Additional Information for additional
descriptions of the Fund's investment policies and the risks associated with the
permitted investments of the Fund.
The investment 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 up to 10% of the value of its total assets, including
the proceeds of such borrowing, and may secure such borrowings by pledging up to
20% of the value of its total assets. In addition, the Fund has adopted a
non-fundamental policy stating that the Fund will not purchase additional
securities when any borrowings from banks exceed 5% of the Fund's total assets.
Except as otherwise noted, the foregoing investment restriction is a matter 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.
11
<PAGE> 54
- --------------------------------------------------------------------------------
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 Service 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. Information concerning the
Board of Directors of the Company may be found in the Statement of Additional
Information. Certain directors and officers of the Company are affiliated with
AIM and A I M Management Group Inc. ("AIM Management"), the parent corporation
of AIM. AIM Management is a holding company engaged in the financial services
business and is an indirect wholly owned subsidiary of AMVESCAP PLC. AMVESCAP
PLC and its subsidiaries are an independent investment management group engaged
in institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific Region.
For a discussion of AIM Management and its subsidiaries' Year 2000 Compliance
Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR. AIM, 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, serves as the investment advisor to the Fund pursuant to the Master
Advisory Agreement. AIM was organized in 1976, and, together with its
subsidiaries, advises or manages over 50 investment company portfolios
(including the Fund) encompassing a broad range of instrument objectives. 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 Investment Company
Act of 1940 (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 the Master Administrative Services
Agreement 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
Agreement, the Fund reimburses AIM for expenses incurred by AIM or its
subsidiaries 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 entitled to receive an
investment advisory fee. For the fiscal year ended October 31, 1997, AIM
received total advisory fees (net of fee waivers) of $3,154,473 which
represented 0.70% of the Fund's average daily net assets. AIM received
reimbursement of administrative services costs for the fiscal year ended October
31, 1997, which represented 0.02% of the Fund's average 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 Fund.
DISTRIBUTOR. The Company has entered into a Master Distribution Agreement,
dated as of August 2, 1997 on behalf of Class A and Class C shares of the Fund,
and has entered into a Master Distribution Agreement, dated as of February 28,
1997, on behalf of Class B shares of the Fund (individually referred to as the
"Distribution Agreement" or collectively as the "Distribution Agreements") 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 100, Houston, TX 77046-1173. Certain
directors and officers of the Company are affiliated with AIM Distributors.
The Distribution Agreements provide that AIM Distributors has the exclusive
right to distribute shares of the Fund through affiliated broker-dealers and
through other broker-dealers 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 the Fund 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
the Fund's average daily net assets attributable to Class B shares resulting
from the sales efforts of AIM Distributors. In the event the Class B shares
Distribution Agreement is terminated, AIM Distributors would con-
12
<PAGE> 55
tinue 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 and C Plan. The Company has adopted a Master
Distribution Plan applicable to Class A and Class C shares of the Fund (the
"Class A and C Plan") pursuant to Rule 12b-1 under the 1940 Act, to compensate
AIM Distributors for the purpose of financing any activity that is intended to
result in the sale of Class A and Class C shares of the Fund.
Under the Class A and C Plan, the Company may compensate AIM Distributors an
aggregate amount of 0.35% of the average daily net assets of Class A shares of
the Fund on an annualized basis and an aggregate amount of 1.00% of the average
daily net assets of Class C shares of the Fund on an annualized basis.
The Class A and C Plan is designed to compensate AIM Distributors, on a
quarterly basis, for certain promotional and other sales-related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C shares of the Fund. In
addition, certain banks who have entered into a Bank Shareholder Service
Agreement and who sells shares of the Fund on an agency basis, may receive
payments pursuant to the Class A and C 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 and
C 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 and C 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 and C Plan.
Of the aggregate amount payable under the Class A and C Plan, payments to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 0.25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions are characterized as a
service fee, and 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 and C Plan. The Class A and
C Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Company with respect to the
Fund. The Class A and C Plan does not obligate the Fund to reimburse AIM
Distributors for the actual expenses AIM Distributors may incur in fulfilling
its obligations under the Class A and C Plan on behalf of the Fund. Thus, under
the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Fund will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc.
Class B Plan. The Company has also adopted a master distribution plan
applicable to Class B shares of the Fund (the "Class B Plan"). Under the Class B
Plan, the Fund pays distribution expenses at an annual rate of 1.00% of the
average daily net assets attributable to its Class B shares. Of such amount the
Fund pays a service fee of 0.25% of the average daily net assets attributable to
its 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 the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Activities that may be financed under the Class A and C 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 the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the 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
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
Under the Plans, 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.
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 majority of the outstanding shares of the applicable class.
13
<PAGE> 56
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 Fund pursuant to the Plans. AIM Distributors does not
act as principal, but rather as agent, for the Fund in making such payments. The
Fund 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 approximately 135 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.
Jonathan C. Schoolar, Joel E. Dobberpuhl and Monika H. Degan are primarily
responsible for the day-to-day management of Blue Chip. Mr. Schoolar is Senior
Vice President of A I M Capital Management, Inc. ("AIM Capital"), a wholly owned
subsidiary of AIM, Vice President of AIM and Senior Vice President of the
Company and has been responsible for the Fund since 1996. He has been associated
with AIM and/or its subsidiaries since 1986 and has been an investment
professional since 1983. Mr. Dobberpuhl is Vice President of AIM Capital and has
been responsible for the Fund since 1996. He has been associated with AIM and/or
its subsidiaries since 1990 and has been an investment professional since 1989.
Ms. Degan has been responsible for the Fund since 1997. She has been associated
with AIM and/or its subsidiaries since 1995 and has been an investment
professional since 1991. Prior to 1995, Ms. Degan was Senior Financial Analyst
for Shell Oil Co. Pension Trust from 1991 to 1995.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE COMPANY
The Company was organized in 1988 as a Maryland corporation, and is registered
with the Commission as a diversified, open-end, series, management investment
company. The Company currently consists of six separate portfolios: CHARTER,
CONSTELLATION and WEINGARTEN, each of which has retail classes of shares
consisting of Class A, Class B and Class C shares and an Institutional Class;
AGGRESSIVE GROWTH, which has a retail class of shares consisting of Class A
shares; and BLUE CHIP and CAPITAL DEVELOPMENT, each of which has retail classes
of shares consisting of Class A, Class B and Class C shares. The Company's
common stock is classified into nineteen different classes. Each class
represents an interest in one of six portfolios. The Fund acquired the
investment portfolio of the BBC Fund on June 3, 1996 in the Reorganization.
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, such as those associated with shareholder servicing of
their shares, is subject to differing sales loads, conversion features and
exchange privileges, and has exclusive voting rights on matters pertaining to
the distribution plan for that class.
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 of a Fund, 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.
A Fund shareholder is entitled to such dividends payable out of the net assets
of 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 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. As of February 2, 1998, Merrill Lynch Pierce
Fenner & Smith was the owner of record of 28.22% of the outstanding Class C
shares of Blue Chip. As long as Merrill Lynch Pierce Fenner & Smith owns over
25% of such shares, it may be presumed to be in "control," as defined in the
1940 Act.
14
<PAGE> 57
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND(*) AIM GLOBAL UTILITIES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND(*) AIM GROWTH FUND
AIM ADVISOR LARGE CAP VALUE FUND(*) AIM HIGH INCOME MUNICIPAL FUND
AIM ADVISOR MULTIFLEX FUND(*) AIM HIGH YIELD FUND
AIM ADVISOR REAL ESTATE FUND(*) AIM INCOME FUND
AIM AGGRESSIVE GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ASIAN GROWTH FUND AIM INTERNATIONAL EQUITY FUND
AIM BALANCED FUND AIM LIMITED MATURITY TREASURY FUND
AIM BLUE CHIP FUND AIM MONEY MARKET FUND(**)
AIM CAPITAL DEVELOPMENT FUND AIM MUNICIPAL BOND FUND
AIM CHARTER FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CONSTELLATION FUND AIM TAX-EXEMPT CASH FUND(**)
AIM EUROPEAN DEVELOPMENT FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND
AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND
</TABLE>
(*) Class B Shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM
REAL ESTATE FUND will not be available until on or about March 3, 1998.
(**) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Salary Reduction ("SARSEP") accounts, Savings Incentive Match
Plans for Employee IRA ("SIMPLE IRA") accounts, 403(b) plans or 457 (state
deferred compensation) plans (except that the minimum initial investment for
salary deferrals for such plans is $25), or for investment of dividends and
distributions of any of the AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
MCF-02/98
A-1
<PAGE> 58
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION--SM--: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for detail.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE
FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH
FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may
be purchased at their respective net asset value plus a sales charge as
indicated below, except that Class A shares of AIM TAX-EXEMPT CASH FUND and AIM
Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a sales charge and
Class B shares (the "Class B shares") and Class C shares ("Class C shares") of
the Multiple Class Funds are sold at net asset value subject to a contingent
deferred sales charge payable upon certain redemptions. These contingent
deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A, Class B or
Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class
Fund are described below under "Special Information Relating to Multiple Class
Funds." For information on purchasing any of the AIM Funds and to receive a
prospectus, please call (800) 347-4246. As described below, the sales charge
otherwise applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
MCF-02/98
A-2
<PAGE> 59
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM
INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND,
AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM
INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
MCF-02/98
A-3
<PAGE> 60
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM
TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million of such
purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of
the next $17 million of such purchases, plus 0.25% of amounts in excess of $20
million of such purchases. See "Contingent Deferred Sales Charge Program for
Large Purchases." AIM Distributors may make payments to dealers and institutions
who are dealers of record for purchases of $1 million or more of Class A shares
(or shares which normally involve payment of initial sales charges), and which
are sold at net asset value and are not subject to a contingent deferred sales
charge, in an amount up to 0.10% of such purchases of Class A shares of AIM
LIMITED MATURITY TREASURY FUND, and in an amount up to 0.25% of such purchases
of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
are not paid on sales to investors exempt from the CDSC, including shareholders
of record on April 30, 1995 who purchase additional shares in any of the Funds
on or after May 1, 1995, and in circumstances where AIM Distributors grants an
exemption on particular transactions.
MCF-02/98
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<PAGE> 61
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES are sold subject to the initial sales charges described
above and are subject to the other fees and expenses described herein.
Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares an investor owns may be exchanged at net
asset value for Class A shares of another Multiple Class Fund or shares of
another AIM Fund which is not a Multiple Class Fund, subject to the terms
and conditions described under the caption "Exchange Privilege -- Terms and
Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class C shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class C shares redeemed
within one year from the date such shares were purchased are subject to a
1.00% contingent deferred sales charge. No contingent deferred sales charge
will be imposed if Class C shares are redeemed after one year from the date
such shares were purchased. Redemptions of Class C shares and associated
charges are further described under the caption "How to Redeem
Shares -- Multiple Distribution System."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
MCF-02/98
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<PAGE> 62
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH
FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the
amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of such funds will remain constant at $1.00 per share.
However, there is no assurance that each Money Market Fund can maintain a $1.00
net asset value per share. In order to earn dividends with respect to AIM MONEY
MARKET FUND on the same day that a purchase is made, purchase payments in the
form of federal funds must be received by the Transfer Agent before 12:00 noon
Eastern Time on that day. Purchases made by payments in any other form, or
payments in the form of federal funds received after such time but prior to NYSE
Close, will begin to earn dividends on the next business day following the date
of purchase. The Money Market Funds generally will not issue share certificates
but will record investor holdings in noncertificate form and regularly advise
the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class
B and Class C shares of the Multiple Class Funds will not be taken into account
in determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), a Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by vir-
MCF-02/98
A-6
<PAGE> 63
tue of the foregoing definition, to the reduced sales charge. No person or
entity may distribute shares of the AIM Funds without payment of the applicable
sales charge other than to persons or entities who qualify for a reduction in
the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) within the following 13 consecutive months. By marking the LOI section on
the account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND
and (ii) Class B and Class C shares of the Multiple Class Funds) at the time of
the proposed purchase. Rights of Accumulation are also available to holders of
the Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve
Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the
Multiple Class Funds) owned by such purchaser, calculated at their then current
public offering price. If a purchaser so qualifies for a reduced sales charge,
the reduced sales charge applies to the total amount of money then being
invested by such purchaser and not just to the portion that exceeds the
breakpoint above which a reduced sales charge applies. For example, if a
purchaser already owns qualifying shares of any AIM Fund with a value of $20,000
and wishes to invest an additional $20,000 in a fund with a maximum initial
sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to
the full $20,000 purchase and not just to the $15,000 in excess of the $25,000
breakpoint. To qualify for obtaining the discount applicable to a particular
purchase, the purchaser or his dealer must furnish AFS with a list of the
account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends,
MCF-02/98
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<PAGE> 64
Distributions and Tax Matters"); (b) exchanges of shares of certain other funds
(see "Exchange Privilege"); (c) use of the reinstatement privilege (see "How to
Redeem Shares"); or (d) a merger, consolidation or acquisition of assets of a
fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; and (i) employees of
Triformis Inc.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any Class A shares of
AIM LIMITED MATURITY TREASURY FUND sold at net asset value to an employee
benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
MCF-02/98
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<PAGE> 65
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan each
withdrawal is made from the shareholder's bank account in the amount specified
by the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and
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Tax Matters -- Dividends and Distributions" for a description of payment dates
for these options. In order to qualify to have dividends and distributions of
one AIM Fund invested in shares of another AIM Fund, the following conditions
must be satisfied: (a) the shareholder must have an account balance in the
dividend paying fund of at least $5,000; (b) the account must be held in the
name of the shareholder (i.e., the account may not be held in nominee name); and
(c) the shareholder must have requested and completed an authorization relating
to the reinvestment of dividends into another AIM Fund. An authorization may be
given on the account application or on an authorization form available from AIM
Distributors. An AIM Fund will waive the $5,000 minimum account value
requirement if the shareholder has an account in the fund selected to receive
the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
MCF-02/98
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- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. 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. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "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; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
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 Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
---------- -----------------
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INCOME AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL UTILITIES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A --------------
AIM ADVISOR MULTIFLEX AIM GROWTH FUND -- CLASS A AIM MONEY MARKET FUND
FUND -- CLASS A AIM HIGH INCOME MUNICIPAL -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE FUND -- CLASS A AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM ASIAN GROWTH FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM MUNICIPAL BOND
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM EUROPEAN DEVELOPMENT OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM WEINGARTEN FUND -- CLASS A
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH
FUND; (ii) LOWER LOAD FUND SHARE PURCHASES OF $1,000,000 OR MORE AND AIM Cash
Reserve Shares of AIM MONEY MARKET FUND and AIM TAX-EXEMPT CASH FUND PURCHASES
MAY BE EXCHANGED FOR LOAD FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH
WILL THEN BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR
PURPOSES OF CALCULATING THE CONTINGENT DEFERRED SALES CHARGE ON THE LOAD FUND
SHARES ACQUIRED, THE 18-MONTH PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH
EXCHANGE; (iii) Class A shares may be exchanged for Class A shares, (iv) Class B
shares may be exchanged only for Class B shares; (v) Class C shares may only be
exchanged for Class C shares; and (vi) AIM Cash Reserve Shares of AIM MONEY
MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET FUND or
for Class B or Class C shares.
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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 FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds..........
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds.......... 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 Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise, Of-
apply if No Load shares were fering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
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, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A, Class B, or Class C 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 Internal Revenue Service ("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 business 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. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
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.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received
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<PAGE> 69
after NYSE Close will result in the redemption of shares at their net asset
value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), 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 business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
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.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
MCF-02/98
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<PAGE> 70
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from individual retirement accounts,
custodial accounts maintained pursuant to Code Section 403(b), deferred
compensation plans qualified under Code Section 457 and plans qualified under
Code Section 401 (collectively, "Retirement Plans"), (3) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class B or Class C shares at the time the shareholder elects to participate
in the Systematic Withdrawal Plan, (4) effected pursuant to the right of a
Multiple Class Fund 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 prospectus of such Multiple Class Fund, (5)
effected by AIM of its investment in Class B or Class C shares and (6) of Class
C shares where such investor's dealer of record, due to the nature of the
investor's account, notifies AIM Distributors prior to the time of investment
that the dealer waives the payment otherwise payable to the dealer described in
the fifth paragraph under the caption "Terms and Conditions of Purchase of the
AIM Funds -- All Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting 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 in a particular AIM Fund;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors 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 or Class C shares of one or more Multiple Class
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.
MCF-02/98
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<PAGE> 71
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge 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. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund or AIM Cash Reserve Shares of AIM MONEY MARKET FUND which were acquired
through an exchange of shares which previously were subject to the 1% contingent
deferred sales charge will be credited with the period of time such exchanged
shares were held, and (ii) shares of any Load Fund which are subject to the 1%
contingent deferred sales charge and which were acquired through an exchange of
shares of a Lower Load Fund or a No Load Fund which previously were not subject
to the 1% contingent deferred sales charge will not be credited with the period
of time such exchanged shares were held. The charge will be waived in the
following circumstances: (1) redemptions of shares by employee benefit plans
("Plans") qualified under Sections 401 or 457 of 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 shares are being redeemed in
connection with employee terminations or withdrawals, and (a) the total amount
invested in a Plan 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 death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (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; (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 AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59-1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information; and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be gen-
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uine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND). After completing the appropriate authorization form,
shareholders may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND
and the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does
not apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner; (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions; and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed
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the surety coverage amount indicated on the medallion. For information regarding
whether a particular institution or organization qualifies as an "eligible
guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in Class A
shares of any AIM Fund at the net asset value next computed after receipt by the
Transfer Agent of the funds to be reinvested; provided, however, if the
redemption was made from Class A shares of either AIM LIMITED MATURITY TREASURY
FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be subject
to the difference in sales charge between the shares redeemed and the shares the
proceeds are reinvested in. The shareholder must ask the Transfer Agent for such
privilege at the time of reinvestment. A realized gain on the redemption is
taxable, and reinvestment may alter any capital gains payable. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in (or exchanged for) shares of another AIM Fund
at a reduced sales charge within 90 days of the payment of the sales charge, the
shareholder's basis in the fund shares redeemed may not include the amount of
the sales charge paid, thereby reducing the loss or increasing the gain
recognized from the redemption; however, the shareholder's basis in the fund
shares purchased will include the sales charge. Each AIM Fund may amend, suspend
or cease offering this privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation. This privilege may only be
exercised once each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE. The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and 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 fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 or Trustees of the
applicable AIM Fund.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
</TABLE>
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 an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares are expected to be lower than those
for Class A shares or AIM Cash Reserve Shares because of higher distribution
fees paid by Class B and Class C shares. Dividends on all shares may also be
affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such
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payment. Any dividend and distribution election remains in effect until the
Transfer Agent receives a revised written election by the shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are 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.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM HIGH INCOME MUNICIPAL FUND, AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT
CASH FUND, and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt Funds") which are
exempt from federal tax. Dividends paid by a fund (other than capital gain
distributions) may qualify for the federal 70% dividends received deduction for
corporate shareholders to the extent of the qualifying dividends received by the
fund on domestic common or preferred stock. It is not likely that dividends
received from AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE
FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE FUND will
qualify for this dividends received deduction. Shortly after the end of each
year, shareholders will receive information regarding the amount and federal
income tax treatment of all distributions paid during the year. Certain
dividends declared in October, November or December of a calendar year are
taxable to shareholders as though received on December 31 of that year if paid
to shareholders during January of the following calendar year. No gain or loss
will be recognized by shareholders upon the automatic conversion of Class B
shares of a Multiple Class Fund into Class A shares of such Fund. With respect
to tax-exempt shareholders, distributions from the Funds will not be subject to
federal income taxation to the extent permitted under the applicable tax-
exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of interest on certain indebtedness of the shareholder,
and may have other collateral federal income tax consequences. The Tax-Exempt
Funds may invest in Municipal Securities the interest on which will constitute
an item of tax preference and which therefore could give rise to a federal
alternative minimum tax liability for shareholders, and may invest up to 20% of
their net assets in such securities and
MCF-02/98
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other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
FUND -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to shareholders credits for
foreign taxes paid. If the fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders, and should note that if
such losses exceed other income during a taxable year, the fund would not be
able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as
Sub-Custodian for retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, LLP,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
legal matters.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. 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.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish between the year 2000 from the year 1900.
This defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers provide the AIM Funds
and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
MCF-02/98
A-20
<PAGE> 77
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. 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.
MCF-02/98
A-21
<PAGE> 78
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-02/98
B-1
<PAGE> 79
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-02/98
B-2
<PAGE> 80
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Principal Underwriter
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
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
Houston, TX 77002
For more complete information about any other Fund in The AIM Family of Funds,
including charges and expenses, please call (800) 347-4246 or write to the
address shown above and request a free prospectus. Please read the prospectus
carefully before you invest or send money.
BCH-PRO-1
<PAGE> 81
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
RETAIL CLASSES OF AIM EQUITY FUNDS, INC.
AIM CAPITAL DEVELOPMENT FUND
(Growth)
PROSPECTUS
FEBRUARY 27, 1998
This Prospectus contains information about the AIM CAPITAL DEVELOPMENT FUND
("CAPITAL DEVELOPMENT" or the "Fund"), one of six 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 with an investment objective of long-term
capital appreciation. The Fund seeks to achieve its investment objective by
investing primarily in common stocks, convertible securities and bonds.
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
February 27, 1998, has been filed with the United States Securities and Exchange
Commission ("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 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
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 NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE> 82
- --------------------------------------------------------------------------------
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 Funds............................ A-2
Financial Highlights................ 6 Special Plans.......................... A-9
Performance......................... 7 Exchange Privilege..................... A-11
Investment Program.................. 7 How to Redeem Shares................... A-13
Management.......................... 10 Determination of Net Asset Value....... A-17
Organization of the Company......... 13 Dividends, Distributions and Tax
INVESTOR'S GUIDE TO THE AIM FAMILY OF Matters.............................. A-18
OF FUNDS--Registered Trademark--.... A-1 General Information.................... A-20
Introduction to The AIM Family of APPLICATION INSTRUCTIONS................. B-1
Funds............................ A-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
AIM Equity Funds, Inc. (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 Fund is a series of the Company comprising a
separate investment portfolio that commenced business operations on June 17,
1996. Currently, the Company offers six series comprising six separate
investment portfolios, each of which pursues unique investment objectives. This
Prospectus relates to Class A, Class B and Class C shares of CAPITAL
DEVELOPMENT. The Fund's investment objective is long-term capital appreciation.
The Fund seeks to achieve its investment objective by investing primarily in
common stocks, convertible securities and bonds. 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 Fund may invest
in futures, options and foreign securities. Investments in these instruments
involve certain risks, which are described in detail under "Investment
Program -- Certain Investment Strategies and Policies."
The Company also offers other classes of shares in five other investment
portfolios, AIM AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH"), AIM BLUE CHIP FUND
("BLUE CHIP"), AIM CHARTER FUND ("CHARTER"), AIM CONSTELLATION FUND
("CONSTELLATION") and AIM WEINGARTEN FUND ("WEINGARTEN"), (collectively, with
CAPITAL DEVELOPMENT, the "Funds") each of which pursues unique investment
objectives. All such other Funds (except AGGRESSIVE GROWTH) offer multiple
classes of shares to different types of investors. The shares of the other Funds
of the Company have different sales charges and expenses, which may affect
performance. To obtain information about AGGRESSIVE GROWTH, BLUE CHIP, CHARTER,
CONSTELLATION or WEINGARTEN call (800) 347-4246. See "General Information."
The assets of each Fund are invested in a separate portfolio. Each class of a
Fund shares 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 dated as of February
28, 1997 (the "Master Advisory Agreement"). AIM, together with its subsidiaries,
manages or advises over 50 investment company portfolios (including the Fund)
encompassing a broad range of investment objectives. Under the Master Advisory
Agreement, AIM receives a fee for its services based on the Fund's average daily
net assets. Under a Master Administrative Services Agreement dated as of
February 28, 1997, as amended (the "Master Administrative Services Agreement")
between the Company and AIM, 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, as amended, 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 Fund.
The total advisory fees paid by the Fund are higher than those paid by many
other investment companies of all sizes and investment objectives.
PURCHASING SHARES. Investors may select Class A, Class B or Class C shares of
the Fund 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 -- Shares are offered 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.
2
<PAGE> 83
CLASS B SHARES -- 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 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.
CLASS C SHARES -- Shares are offered at net asset value without an initial
sales charge, and are subject to a contingent deferred sales charge of 1% on
certain redemptions made within one year from the date such shares were
purchased. Class C shares are subject to higher expenses than Class A shares.
Initial investments in any 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
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."
SUITABILITY FOR INVESTORS. An investor in Class A, Class B or Class C shares
of the Fund 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 or Class C shares 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 or Class C 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 Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Class A, Class B and
Class C 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. Class A shareholders of the Fund may redeem all or a portion
of their shares at the 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."
Class B shareholders of the Fund 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."
Class C shareholders of the Fund may redeem all or a portion of their shares
at net asset value on any business day, less a 1% contingent deferred sales
charge for redemptions made within one year from the date such shares were
purchased. See "How to Redeem Shares -- Multiple Distribution System."
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, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 84
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 for Class A and Class B shares set forth in the table are based on
the average net assets of the 1997 fiscal year. The fees and expenses for Class
C shares set forth in the table below are based on estimated average net assets
of Class C shares for the period.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares (as a
percentage of offering price).......................... 5.50%(1) None None
Maximum sales load imposed on reinvested dividends and
distributions.......................................... None None None
Deferred sales load (as a percentage of original purchase
price or redemption proceeds, whichever is lower)...... None(2) 5.00% 1.00%
Redemption fees........................................... None None None
Exchange fee.............................................. None None None
Annual Fund Operating Expenses (as a percentage of average
net assets)
Management fees (after fee waivers)(3).................... .66% .66% .66%
12b-1 fees(4)............................................. .35% 1.00% 1.00%
Other Expenses:
Transfer agent fees and costs.......................... .22 .30 .30
Other.................................................. .10 .13 .13
---- ---- ----
Total expenses......................................... .32 .43 .43
---- ---- ----
Total fund operating expenses (after fee waivers)......... 1.33% 2.09% 2.09%
==== ==== ====
</TABLE>
- ---------------
(1) The rules of the SEC require the maximum sales charge to be reflected in the
table even though certain investors may qualify for reduced sales charges.
See the discussion of "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions" below for more information
about applicable sales charges.
(2) 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 after such purchases were made. See the
Investor's Guide, under the caption "How to Redeem Shares -- Contingent
Deferred Sales Charge Program for Large Purchases."
(3) AIM has agreed to waive fees for one year ending August 12, 1998 to the
extent necessary to keep the expense ratio for Class A shares at 1.34%.
Without such waiver, the Management fee for each class would be 0.71% per
annum, and total fund operating expenses for Class A shares would be 1.38%
and for Class B shares and Class C shares would be 2.14%.
(4) 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, AIM estimates 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 in
Class A shares of the Fund, assuming (a) a 5% annual return and (b) redemption
at the end of each time period:
<TABLE>
<S> <C>
1 year..................................................... $ 68
3 years.................................................... $ 95
5 years.................................................... $124
10 years.................................................... $206
</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 purchase.
An investor would pay the following expenses on a $1,000 investment in Class B
shares of the Fund, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<S> <C>
1 year..................................................... $ 71
3 years.................................................... $ 95
5 years.................................................... $132
10 years.................................................... $223
</TABLE>
4
<PAGE> 85
An investor would pay the following expenses on the same $1,000 investment in
Class B shares of the Fund, assuming no redemption at the end of each time
period:
<TABLE>
<S> <C>
1 year..................................................... $ 21
3 years.................................................... $ 65
5 years.................................................... $112
10 years.................................................... $223
</TABLE>
An investor would pay the following expenses on a $1,000 investment in Class C
shares of the Fund, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<S> <C>
1 year...................................................... $31
3 years..................................................... $65
</TABLE>
An investor would pay the following expenses on the same $1,000 investment in
Class C shares of the Fund, assuming no redemption at the end of each time
period:
<TABLE>
<S> <C>
1 year...................................................... $21
3 years..................................................... $65
</TABLE>
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF THE 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, THE 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> 86
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Shown below for the periods indicated are per share data, ratios and
supplemental data of the Fund. The data for the Class A shares for the fiscal
year ended October 31, 1997, and the period June 17, 1996 (date operations
commenced) through October 31, 1996, and the data for the Class B shares for the
fiscal year ended October 31, 1997, and the period October 1, 1996 (date sales
commenced) through October 31, 1996, and the data for the Class C shares for the
period August 4, 1997 (date sales commenced) through October 31, 1997 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.
(PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------------- ------------------------------- ----------------
PERIOD PERIOD PERIOD
FISCAL YEAR JUNE 17, 1996 FISCAL YEAR OCTOBER 1, 1996 AUGUST 4, 1997
ENDED THROUGH ENDED THROUGH THROUGH
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996 1997
----------- ------------- ----------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period............... $ 11.09 $ 10.00 $ 11.08 $ 11.26 $ 13.48
-------- -------- -------- ------- -------
Income from investment
operations:
Net investment income
(loss)............. (0.10) (0.01)(a) (0.20) (0.01)(a) (0.06)
-------- -------- -------- ------- -------
Net gains (losses) on
securities (both
realized and
unrealized)........ 3.58 1.10 3.58 (0.17) 1.03
-------- -------- -------- ------- -------
Total from
investment
operations.... 3.48 1.09 3.38 (0.18) 0.97
Net asset value, end of
period.................. $ 14.57 $ 11.09 $ 14.46 $ 11.08 $ 14.45
-------- -------- -------- ------- -------
Total return(b)........... 31.38% 10.90% 30.51% (1.60)% 7.20%
======== ======== ======== ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted).......... $577,685 $251,253 $297,623 $22,435 $12,195
======== ======== ======== ======= =======
Ratio of expenses to
average net assets(c)... 1.33%(d)(e) 1.35%(f) 2.09%(d)(e) 1.89%(f) 2.14%(d)(e)(f)
======== ======== ======== ======= =======
Ratio of net investment
income (loss) to average
net assets(g)........... (0.83)%(d) (0.29)%(f) (1.59)%(d) (0.83)%(f) (1.64)%(d)(f)
======== ======== ======== ======= =======
Portfolio turnover rate... 41% 13% 41% 13% 41%
======== ======== ======== ======= =======
Average brokerage
commission rate(h)...... $ 0.0534 $ 0.0550 $ 0.0534 $0.0550 $0.0534
======== ======== ======== ======= =======
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one
year, total returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of
expenses to average net assets prior to fee waivers and/or
expense reimbursements for the periods 1997 and 1996 are
1.38% and 1.60% (annualized) for Class A shares, 2.14% and
2.28% (annualized) for Class B shares and 2.19% (annualized)
for Class C shares (for 1997 only).
(d) Ratios are based on average net assets of $377,577,393 for
Class A shares, $132,588,760 for Class B shares, and
$5,217,273 for Class C shares.
(e) Excluding indirectly paid expenses, the ratios of expenses
to average net assets would have been 1.33% for Class A,
2.09% for Class B shares and 2.14% for Class C shares.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of
net investment income (loss) prior to fee waivers and/or
expense reimbursements for the periods 1997 and 1996 are
(0.88%) and (0.54%) (annualized) for Class A shares, (1.64%)
and (1.22)% (annualized) for Class B shares and (1.69%)
(annualized) for Class C shares (for 1997 only).
(h) The average commission rate paid is the total brokerage
commissions paid on applicable purchases and sales of
securities for the period divided by the total number of
related shares purchased and sold.
</TABLE>
6
<PAGE> 87
- --------------------------------------------------------------------------------
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.
Standardized total return for Class A shares of the Fund reflects the
deduction of the maximum initial sales charge at the time of purchase.
Standardized total return for Class B shares of the Fund reflects the deduction
of the maximum applicable contingent deferred sales charge on a redemption of
shares held for the period. Standardized total return for Class C shares of the
Fund reflects the deduction of a 1% contingent deferred sales charge, if
applicable, on a redemption of shares held for the period.
Total return shows the overall 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 or its affiliates 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 AIM's 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.
Additional performance information is contained in the Statement of Additional
Information and in the Company's Annual Report to Shareholders, both of which
are available upon request without charge.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
The Company has six series, each of which is a separate investment
portfolio -- AGGRESSIVE GROWTH, BLUE CHIP, CAPITAL DEVELOPMENT, CHARTER,
CONSTELLATION and WEINGARTEN. AGGRESSIVE GROWTH, BLUE CHIP, CHARTER,
CONSTELLATION and WEINGARTEN are offered to investors pursuant to separate
prospectuses.
The investment objective of the Fund is long-term capital appreciation.
Production of income is incidental to this objective. The Fund's principal
investments are in common stocks, convertible securities and bonds. There can,
of course, be no assurance that the Fund will in fact achieve its objective
since all investments are inherently subject to market risks.
The Fund will invest primarily in securities of small and medium-sized
companies (i.e., companies which fall in the smallest 85% by market
capitalization of publicly traded companies in the United States). Among factors
that AIM may consider when selecting investments in a company for the Fund are
(i) the growth prospects for a company's products, (ii) the economic outlook for
its industry, (iii) a company's new product development, (iv) its operating
management capabilities, (v) the relationship between the price of the security
and its estimated fundamental value, (vi) relevant market, economic and
political environments and (vii) financial characteristics such as balance sheet
analysis and return on assets. The Fund may invest in issuers making initial
public offerings of their securities if AIM determines that the issuer has good
prospects for growth.
The Fund may invest up to 25% of its total assets in the securities of issuers
domiciled in foreign countries and engage in the purchase and sale of put and
call options in an amount up to 25% of its net assets. For the risk involved in
investing in foreign securities, see "Risk Factors Regarding Foreign Securities"
below. The Fund may also invest up to 10% of its total assets in securities of
other registered investment companies.
The investment objective of the Fund is a fundamental policy of the Fund and
cannot be changed without the consent of the holders of a majority of the Fund's
outstanding shares. 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.
7
<PAGE> 88
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:
TEMPORARY DEFENSIVE MEASURES. The Fund has adopted a temporary defensive
policy which permits it to invest without limitation in short-term instruments,
such as Treasury bills and other U.S. Government and governmental agency
securities, taxable municipal securities, bank obligations, commercial paper and
repurchase agreements with a maturity of one year or less, as a temporary
defensive measure during abnormal market or economic conditions when the Fund's
investment adviser deems it appropriate. The Fund may also invest in short-term
investments as a reserve for expenses or anticipated redemptions, as necessary,
to the extent permitted by its fundamental and non-fundamental investment
policies. To the extent that the Fund invests to a significant degree in these
instruments, its ability to achieve its investment objectives may be adversely
affected.
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. Repurchase
agreements are not included in the Fund's restrictions on lending. Repurchase
agreements are considered to be loans by the Fund under the 1940 Act.
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, in order to hedge the value of its portfolio against changes in market
conditions. 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.
OPTION CONTRACTS. The Fund may write (sell) covered call options, purchase put
options and engage in strategies employing combinations of covered call and put
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 Funds may also purchase and write options in
combination with each other to adjust the risk and return characteristics of
certain portfolio security positions. This technique is commonly referred to as
a "collar."
All covered call options must remain covered as long as the option is open. A
call option is "covered" if the Fund owns the underlying security covered by the
call. If an option expires unexercised, the writer realizes a gain in the amount
of the premium received. If the option is exercised, a gain or loss will be
recognized from the sale or purchase of the underlying security depending upon
the relationship between the market price and strike price of the security.
Prior to its expiration, an option may be closed out by means of a purchase of
an offsetting option.
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 volume, 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 use of options involving
securities comprising no more than 25% of the value of the Fund's net assets.
The Fund's policies with respect to the use of 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.
CONVERTIBLE SECURITIES. The Fund does not intend to invest more than 5% of its
net assets in convertible securities.
SHORT SALES "AGAINST THE BOX". The Fund may enter into short sales
transactions. The Fund will make short sales of securities only when the Fund
owns an equal amount of such securities or securities convertible into or
exchangeable for, without payment of any further consideration, securities of
the same issue as, and equal in amount to, the securities sold short. Such short
sales will be
8
<PAGE> 89
used 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 the Fund's net
assets be deposited or pledged as collateral for such sales at any time.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. The Fund may
purchase securities on a "when-issued" basis, that is, delivery of and payment
for the securities is not fixed at the date of purchase, but is set after the
securities are issued (normally within forty-five days after the date of the
transaction). The Fund also may purchase or sell securities on a delayed
delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery securities are fixed at the time the buyer
enters into the commitment. The Fund will only make commitments to purchase
when-issued or delayed delivery securities with the intention of actually
acquiring such securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund may invest in other
investment companies to the extent permitted by the Investment Company Act of
1940, and rules and regulations thereunder, and, if applicable, exemptive orders
granted by the SEC.
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"). 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, taking into account such
factors as: (1) the frequency of trades and quotes for the security; (2) the
number of dealers wishing to purchase or sell the security and the number of
other potential purchasers; (3) dealer undertakings to make a market in the
security; and (4) the nature of the security and the nature of the marketplace
trades. 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. Investing in Rule 144A securities could have the effect of
increasing the level of Fund illiquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities.
FOREIGN SECURITIES. The Fund may invest up to 25% of its total assets in
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 Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs") and other securities representing underlying securities of foreign
issuers are treated as foreign securities. These securities will be marketable
equity securities (including common and preferred stock, depositary receipts for
stock and fixed income or equity securities exchangeable for or convertible into
stock) of foreign companies which generally are listed on a recognized
securities exchange or traded in an over-the-counter market.
FOREIGN EXCHANGE TRANSACTIONS. The Fund has authority to deal in foreign
exchange between currencies of the different countries in which it will invest
either for the settlement of transactions or 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 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
9
<PAGE> 90
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 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.
Emerging Markets. Foreign securities purchased by the Fund 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.
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.
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 Board of 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.
Reference is made to the Statement of Additional Information for additional
descriptions of the Fund's investment policies and the risks associated with the
permitted investments of the Fund.
The investment 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. In addition, the Fund has adopted a non-fundamental policy stating that
the Fund will not purchase additional securities when any borrowings exceed 5%
of the Fund's total assets.
Except as otherwise noted, the foregoing investment restriction is a matter 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 Service 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. Information concerning the
Board of Directors of the Company may be found in the Statement of Additional
Information. Certain directors and officers of the Company are affiliated with
AIM and A I M Management Group Inc. ("AIM Management"), the parent corporation
of AIM. AIM Management is a holding company engaged in the financial services
business and is an indirect wholly owned subsidiary of AMVESCAP PLC. AMVESCAP
PLC and its subsidiaries are an independent investment management group engaged
in institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific Region.
For a discussion of AIM Management and its subsidiaries' Year 2000 Compliance
Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR. AIM, 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, serves as the investment advisor to the Fund pursuant to the Master
Advisory Agreement. AIM was organized in 1976, and, together with its
subsidiaries, advises or manages
10
<PAGE> 91
over 50 investment company portfolios (including the Fund) encompassing a broad
range of investment objectives. 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 Investment Company
Act of 1940 (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.
The Master Advisory Agreement provides that the Fund will pay or cause to be
paid all expenses of the Fund not assumed by AIM, 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 investment company
organizations, the cost of printing copies of prospectuses and statements of
additional information distributed to the Fund's shareholders and all other
charges and costs of the Fund's operations unless otherwise explicitly provided.
ADMINISTRATOR. The Company has entered into the Master Administrative Services
Agreement 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
Agreement, the Fund reimburses AIM for expenses incurred by AIM or its
subsidiaries 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 entitled to receive an
investment advisory fee. For the fiscal year ended October 31, 1997, AIM
received total advisory fees (net of fee waivers) of $3,371,800 which
represented 0.66% of the Fund's average daily net assets.
AIM received reimbursement of administrative services costs for the fiscal
year ended October 31, 1997, which represented 0.01% of the Fund's average 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 Fund.
DISTRIBUTOR. The Company has entered into a Master Distribution Agreement,
dated as of August 2, 1997, on behalf of Class A and Class C shares of the Fund,
and has entered into a Master Distribution Agreement, dated February 28, 1997,
on behalf of Class B shares of the Fund (individually referred to as the
"Distribution Agreement" or collectively as the "Distribution Agreements") with
AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of
AIM, pursuant to which AIM Distributors acts as the distributor of the shares of
the Fund. The address of AIM Distributors is 11 Greenway Plaza, Suite 100,
Houston, TX 77046-1173. Certain directors and officers of the Company are
affiliated with AIM Distributors.
The Distribution Agreements provide that AIM Distributors has the exclusive
right to distribute shares of the Fund through affiliated broker-dealers and
through other broker-dealers 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 the Fund 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
the Fund's average daily net assets attributable to Class B shares resulting
from 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 and C Plan. The Company has adopted a Master
Distribution Plan applicable to Class A and Class C shares of the Fund (the
"Class A and C Plan") pursuant to Rule 12b-1 under the 1940 Act, to compensate
AIM Distributors for the purpose of financing any activity that is intended to
result in the sale of Class A and Class C shares of the Fund.
11
<PAGE> 92
Under the Class A and C Plan, the Company may compensate AIM Distributors an
aggregate amount of 0.35% of the average daily net assets of Class A shares of
the Fund on an annualized basis and an aggregate amount of 1.00% of the average
daily net assets of Class C shares of the Fund on an annualized basis.
The Class A and C Plan is designed to compensate AIM Distributors, on a
quarterly basis, for certain promotional and other sales-related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C shares of the Fund. In
addition, certain banks who have entered into a Bank Shareholder Service
Agreement and who sells shares of a Fund on an agency basis, may receive
payments pursuant to the Class A and C 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 and
C 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 and C 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 Class A or Class C
shares of the Fund that are held in such institution's customers' accounts which
were purchased on or after a prescribed date set forth in the Class A and C
Plan.
Of the aggregate amount payable under the Class A and C Plan, payments to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 0.25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions are characterized as a
service fee. Payments to dealers and other financial institutions in excess of
such amount and payments to AIM Distributors are characterized as an asset-
based sales charge. The Class A and C Plan also imposes a cap on the total
amount of sales charges, including asset-based sales charges, that may be paid
by the Company with respect to the Fund. The Class A and C Plan does not
obligate the Fund to reimburse AIM Distributors for the actual expenses AIM
Distributors may incur in fulfilling its obligations under the Class A and C
Plan on behalf of the Fund. Thus, under the Class A and C Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
Class B Plan. The Company has also adopted a master distribution plan
applicable to Class B shares of the Fund (the "Class B Plan"). Under the Class B
Plan, the Fund pays distribution expenses at an annual rate of 1.00% of the
average daily net assets attributable to its Class B shares. Of such amount the
Fund pays a service fee of 0.25% of the average daily net assets attributable to
its 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 the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Activities that may be financed under the Class A and C 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 the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the 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
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
Under the Plans, 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.
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 majority of the outstanding shares of the applicable class.
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 Fund pursuant to the Plans. AIM Distributors does not
act as principal, but rather as agent, for the Fund in making such payments. The
Fund 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.
12
<PAGE> 93
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 approximately 135 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.
Edgar M. Larsen, Kenneth A. Zschappel and Paul J. Rasplicka are primarily
responsible for the day-to-day management of Capital Development. Mr. Larsen is
a Vice President of A I M Capital Management, Inc. ("AIM Capital"), a wholly
owned subsidiary of AIM, and has been responsible for the Fund since 1996. Mr.
Larsen has been associated with AIM and/or its subsidiaries since 1996 and began
his investment career in 1966. Prior to 1996, Mr. Larsen was Senior Vice
President of John Hancock Advisers, Inc. in Houston and the portfolio manager of
that firm's emerging growth fund. Mr. Zschappel is an Assistant Vice President
of AIM Capital and has been responsible for the Fund since 1996. Mr. Zschappel
has been associated with AIM and/or its subsidiaries since he began working as
an investment professional in 1990. Mr. Rasplicka has been responsible for the
Fund since 1998. Mr. Rasplicka has been associated with AIM and/or its
subsidiaries since 1998 and began his investment career in 1982. Prior to 1998,
Mr. Rasplicka was a portfolio manager for INVESCO Trust Company, an affiliate of
AIM from 1994 to 1998, and a Vice President of Chase Investment Counsel from
1992 to 1994.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE COMPANY
The Company was organized in 1988 as a Maryland corporation, and is registered
with the Commission as a diversified, open-end, series, management investment
company. The Company currently consists of six separate portfolios: CHARTER,
CONSTELLATION and WEINGARTEN, each of which has retail classes of shares
consisting of Class A, Class B and Class C shares and an Institutional Class;
AGGRESSIVE GROWTH, which has a retail class of shares consisting of Class A
shares; and BLUE CHIP and CAPITAL DEVELOPMENT, each of which has retail classes
of shares consisting of Class A, Class B and Class C shares. The Company's
common stock is classified into nineteen different classes. Each class
represents an interest in one of six portfolios. The Company entered into an
Agreement and Plan of Reorganization with Baird Capital Development Fund, Inc.
pursuant to which Capital Development on August 12, 1996 acquired substantially
all of the assets of Baird Capital Development Fund, Inc. in consideration for
the Company issuing to shareholders of Baird Capital Development Fund, Inc.
Class A shares of CAPITAL DEVELOPMENT having an aggregate net asset value equal
to the value of the assets acquired by CAPITAL DEVELOPMENT.
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, such as those associated with the shareholder servicing
of their shares, is subject to differing sales loads, conversion features and
exchange privileges, and has exclusive voting rights on matters pertaining to
the distribution plan for that class.
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 of a Fund, 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.
A Fund shareholder is entitled to such dividends payable out of the net assets
of 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 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. As of February 2, 1998, Merrill Lynch Pierce
Fenner & Smith owned beneficially (for its clients) and of record 32.42% of the
outstanding Class C shares of Capital Development. As long as Merrill Lynch
Pierce Fenner & Smith owns over 25% of such shares, it may be presumed to be in
"control" as defined in the 1940 Act.
13
<PAGE> 94
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND(*) AIM GLOBAL UTILITIES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND(*) AIM GROWTH FUND
AIM ADVISOR LARGE CAP VALUE FUND(*) AIM HIGH INCOME MUNICIPAL FUND
AIM ADVISOR MULTIFLEX FUND(*) AIM HIGH YIELD FUND
AIM ADVISOR REAL ESTATE FUND(*) AIM INCOME FUND
AIM AGGRESSIVE GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ASIAN GROWTH FUND AIM INTERNATIONAL EQUITY FUND
AIM BALANCED FUND AIM LIMITED MATURITY TREASURY FUND
AIM BLUE CHIP FUND AIM MONEY MARKET FUND(**)
AIM CAPITAL DEVELOPMENT FUND AIM MUNICIPAL BOND FUND
AIM CHARTER FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CONSTELLATION FUND AIM TAX-EXEMPT CASH FUND(**)
AIM EUROPEAN DEVELOPMENT FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND
AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND
</TABLE>
(*) Class B Shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM
REAL ESTATE FUND will not be available until on or about March 3, 1998.
(**) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Salary Reduction ("SARSEP") accounts, Savings Incentive Match
Plans for Employee IRA ("SIMPLE IRA") accounts, 403(b) plans or 457 (state
deferred compensation) plans (except that the minimum initial investment for
salary deferrals for such plans is $25), or for investment of dividends and
distributions of any of the AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
MCF-02/98
A-1
<PAGE> 95
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION--SM--: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for detail.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE
FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH
FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may
be purchased at their respective net asset value plus a sales charge as
indicated below, except that Class A shares of AIM TAX-EXEMPT CASH FUND and AIM
Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a sales charge and
Class B shares (the "Class B shares") and Class C shares ("Class C shares") of
the Multiple Class Funds are sold at net asset value subject to a contingent
deferred sales charge payable upon certain redemptions. These contingent
deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A, Class B or
Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class
Fund are described below under "Special Information Relating to Multiple Class
Funds." For information on purchasing any of the AIM Funds and to receive a
prospectus, please call (800) 347-4246. As described below, the sales charge
otherwise applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
MCF-02/98
A-2
<PAGE> 96
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM
INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND,
AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM
INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
MCF-02/98
A-3
<PAGE> 97
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM
TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million of such
purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of
the next $17 million of such purchases, plus 0.25% of amounts in excess of $20
million of such purchases. See "Contingent Deferred Sales Charge Program for
Large Purchases." AIM Distributors may make payments to dealers and institutions
who are dealers of record for purchases of $1 million or more of Class A shares
(or shares which normally involve payment of initial sales charges), and which
are sold at net asset value and are not subject to a contingent deferred sales
charge, in an amount up to 0.10% of such purchases of Class A shares of AIM
LIMITED MATURITY TREASURY FUND, and in an amount up to 0.25% of such purchases
of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
are not paid on sales to investors exempt from the CDSC, including shareholders
of record on April 30, 1995 who purchase additional shares in any of the Funds
on or after May 1, 1995, and in circumstances where AIM Distributors grants an
exemption on particular transactions.
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TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES are sold subject to the initial sales charges described
above and are subject to the other fees and expenses described herein.
Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares an investor owns may be exchanged at net
asset value for Class A shares of another Multiple Class Fund or shares of
another AIM Fund which is not a Multiple Class Fund, subject to the terms
and conditions described under the caption "Exchange Privilege -- Terms and
Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class C shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class C shares redeemed
within one year from the date such shares were purchased are subject to a
1.00% contingent deferred sales charge. No contingent deferred sales charge
will be imposed if Class C shares are redeemed after one year from the date
such shares were purchased. Redemptions of Class C shares and associated
charges are further described under the caption "How to Redeem
Shares -- Multiple Distribution System."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
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SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH
FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the
amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of such funds will remain constant at $1.00 per share.
However, there is no assurance that each Money Market Fund can maintain a $1.00
net asset value per share. In order to earn dividends with respect to AIM MONEY
MARKET FUND on the same day that a purchase is made, purchase payments in the
form of federal funds must be received by the Transfer Agent before 12:00 noon
Eastern Time on that day. Purchases made by payments in any other form, or
payments in the form of federal funds received after such time but prior to NYSE
Close, will begin to earn dividends on the next business day following the date
of purchase. The Money Market Funds generally will not issue share certificates
but will record investor holdings in noncertificate form and regularly advise
the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class
B and Class C shares of the Multiple Class Funds will not be taken into account
in determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), a Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by vir-
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tue of the foregoing definition, to the reduced sales charge. No person or
entity may distribute shares of the AIM Funds without payment of the applicable
sales charge other than to persons or entities who qualify for a reduction in
the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) within the following 13 consecutive months. By marking the LOI section on
the account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND
and (ii) Class B and Class C shares of the Multiple Class Funds) at the time of
the proposed purchase. Rights of Accumulation are also available to holders of
the Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve
Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the
Multiple Class Funds) owned by such purchaser, calculated at their then current
public offering price. If a purchaser so qualifies for a reduced sales charge,
the reduced sales charge applies to the total amount of money then being
invested by such purchaser and not just to the portion that exceeds the
breakpoint above which a reduced sales charge applies. For example, if a
purchaser already owns qualifying shares of any AIM Fund with a value of $20,000
and wishes to invest an additional $20,000 in a fund with a maximum initial
sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to
the full $20,000 purchase and not just to the $15,000 in excess of the $25,000
breakpoint. To qualify for obtaining the discount applicable to a particular
purchase, the purchaser or his dealer must furnish AFS with a list of the
account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends,
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Distributions and Tax Matters"); (b) exchanges of shares of certain other funds
(see "Exchange Privilege"); (c) use of the reinstatement privilege (see "How to
Redeem Shares"); or (d) a merger, consolidation or acquisition of assets of a
fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; and (i) employees of
Triformis Inc.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any Class A shares of
AIM LIMITED MATURITY TREASURY FUND sold at net asset value to an employee
benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
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FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan each
withdrawal is made from the shareholder's bank account in the amount specified
by the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and
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Tax Matters -- Dividends and Distributions" for a description of payment dates
for these options. In order to qualify to have dividends and distributions of
one AIM Fund invested in shares of another AIM Fund, the following conditions
must be satisfied: (a) the shareholder must have an account balance in the
dividend paying fund of at least $5,000; (b) the account must be held in the
name of the shareholder (i.e., the account may not be held in nominee name); and
(c) the shareholder must have requested and completed an authorization relating
to the reinvestment of dividends into another AIM Fund. An authorization may be
given on the account application or on an authorization form available from AIM
Distributors. An AIM Fund will waive the $5,000 minimum account value
requirement if the shareholder has an account in the fund selected to receive
the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
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- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. 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. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "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; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
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 Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
---------- -----------------
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INCOME AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL UTILITIES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A --------------
AIM ADVISOR MULTIFLEX AIM GROWTH FUND -- CLASS A AIM MONEY MARKET FUND
FUND -- CLASS A AIM HIGH INCOME MUNICIPAL -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE FUND -- CLASS A AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM ASIAN GROWTH FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM MUNICIPAL BOND
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM EUROPEAN DEVELOPMENT OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM WEINGARTEN FUND -- CLASS A
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH
FUND; (ii) LOWER LOAD FUND SHARE PURCHASES OF $1,000,000 OR MORE AND AIM Cash
Reserve Shares of AIM MONEY MARKET FUND and AIM TAX-EXEMPT CASH FUND PURCHASES
MAY BE EXCHANGED FOR LOAD FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH
WILL THEN BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR
PURPOSES OF CALCULATING THE CONTINGENT DEFERRED SALES CHARGE ON THE LOAD FUND
SHARES ACQUIRED, THE 18-MONTH PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH
EXCHANGE; (iii) Class A shares may be exchanged for Class A shares, (iv) Class B
shares may be exchanged only for Class B shares; (v) Class C shares may only be
exchanged for Class C shares; and (vi) AIM Cash Reserve Shares of AIM MONEY
MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET FUND or
for Class B or Class C shares.
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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 FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds..........
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds.......... 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 Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise, Of-
apply if No Load shares were fering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
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, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A, Class B, or Class C 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 Internal Revenue Service ("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 business 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. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
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.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received
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<PAGE> 106
after NYSE Close will result in the redemption of shares at their net asset
value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), 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 business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
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.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
MCF-02/98
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<PAGE> 107
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from individual retirement accounts,
custodial accounts maintained pursuant to Code Section 403(b), deferred
compensation plans qualified under Code Section 457 and plans qualified under
Code Section 401 (collectively, "Retirement Plans"), (3) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class B or Class C shares at the time the shareholder elects to participate
in the Systematic Withdrawal Plan, (4) effected pursuant to the right of a
Multiple Class Fund 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 prospectus of such Multiple Class Fund, (5)
effected by AIM of its investment in Class B or Class C shares and (6) of Class
C shares where such investor's dealer of record, due to the nature of the
investor's account, notifies AIM Distributors prior to the time of investment
that the dealer waives the payment otherwise payable to the dealer described in
the fifth paragraph under the caption "Terms and Conditions of Purchase of the
AIM Funds -- All Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting 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 in a particular AIM Fund;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors 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 or Class C shares of one or more Multiple Class
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.
MCF-02/98
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<PAGE> 108
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge 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. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund or AIM Cash Reserve Shares of AIM MONEY MARKET FUND which were acquired
through an exchange of shares which previously were subject to the 1% contingent
deferred sales charge will be credited with the period of time such exchanged
shares were held, and (ii) shares of any Load Fund which are subject to the 1%
contingent deferred sales charge and which were acquired through an exchange of
shares of a Lower Load Fund or a No Load Fund which previously were not subject
to the 1% contingent deferred sales charge will not be credited with the period
of time such exchanged shares were held. The charge will be waived in the
following circumstances: (1) redemptions of shares by employee benefit plans
("Plans") qualified under Sections 401 or 457 of 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 shares are being redeemed in
connection with employee terminations or withdrawals, and (a) the total amount
invested in a Plan 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 death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (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; (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 AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59-1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information; and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be gen-
MCF-02/98
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uine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND). After completing the appropriate authorization form,
shareholders may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND
and the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does
not apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner; (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions; and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed
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the surety coverage amount indicated on the medallion. For information regarding
whether a particular institution or organization qualifies as an "eligible
guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in Class A
shares of any AIM Fund at the net asset value next computed after receipt by the
Transfer Agent of the funds to be reinvested; provided, however, if the
redemption was made from Class A shares of either AIM LIMITED MATURITY TREASURY
FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be subject
to the difference in sales charge between the shares redeemed and the shares the
proceeds are reinvested in. The shareholder must ask the Transfer Agent for such
privilege at the time of reinvestment. A realized gain on the redemption is
taxable, and reinvestment may alter any capital gains payable. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in (or exchanged for) shares of another AIM Fund
at a reduced sales charge within 90 days of the payment of the sales charge, the
shareholder's basis in the fund shares redeemed may not include the amount of
the sales charge paid, thereby reducing the loss or increasing the gain
recognized from the redemption; however, the shareholder's basis in the fund
shares purchased will include the sales charge. Each AIM Fund may amend, suspend
or cease offering this privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation. This privilege may only be
exercised once each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE. The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and 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 fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 or Trustees of the
applicable AIM Fund.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
</TABLE>
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 an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares are expected to be lower than those
for Class A shares or AIM Cash Reserve Shares because of higher distribution
fees paid by Class B and Class C shares. Dividends on all shares may also be
affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such
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payment. Any dividend and distribution election remains in effect until the
Transfer Agent receives a revised written election by the shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are 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.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM HIGH INCOME MUNICIPAL FUND, AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT
CASH FUND, and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt Funds") which are
exempt from federal tax. Dividends paid by a fund (other than capital gain
distributions) may qualify for the federal 70% dividends received deduction for
corporate shareholders to the extent of the qualifying dividends received by the
fund on domestic common or preferred stock. It is not likely that dividends
received from AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE
FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE FUND will
qualify for this dividends received deduction. Shortly after the end of each
year, shareholders will receive information regarding the amount and federal
income tax treatment of all distributions paid during the year. Certain
dividends declared in October, November or December of a calendar year are
taxable to shareholders as though received on December 31 of that year if paid
to shareholders during January of the following calendar year. No gain or loss
will be recognized by shareholders upon the automatic conversion of Class B
shares of a Multiple Class Fund into Class A shares of such Fund. With respect
to tax-exempt shareholders, distributions from the Funds will not be subject to
federal income taxation to the extent permitted under the applicable tax-
exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of interest on certain indebtedness of the shareholder,
and may have other collateral federal income tax consequences. The Tax-Exempt
Funds may invest in Municipal Securities the interest on which will constitute
an item of tax preference and which therefore could give rise to a federal
alternative minimum tax liability for shareholders, and may invest up to 20% of
their net assets in such securities and
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other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
FUND -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to shareholders credits for
foreign taxes paid. If the fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders, and should note that if
such losses exceed other income during a taxable year, the fund would not be
able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as
Sub-Custodian for retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, LLP,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
legal matters.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. 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.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish between the year 2000 from the year 1900.
This defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers provide the AIM Funds
and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
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OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. 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.
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APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-02/98
B-1
<PAGE> 116
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-02/98
B-2
<PAGE> 117
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Principal Underwriter
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
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
Houston, TX 77002
For more complete information about any other Fund in The AIM Family of Funds,
including charges and expenses, please call (800) 347-4246 or write to the
address shown above and request a free prospectus. Please read the prospectus
carefully before you invest or send money.
CDV-PRO-1
<PAGE> 118
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
RETAIL CLASSES OF AIM EQUITY FUNDS, INC.
AIM CHARTER FUND
(Growth and Income)
AIM WEINGARTEN FUND
(Growth)
AIM CONSTELLATION FUND
(Capital Appreciation)
PROSPECTUS
FEBRUARY 27, 1998
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-end,
series, management investment company.
AIM CHARTER FUND ("CHARTER") 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 ("WEINGARTEN") 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 ("CONSTELLATION") 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
February 27, 1998, 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 100, Houston, Texas 77046-1173 or by calling
(800) 347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Funds. Additional information about the Funds
may also be obtained from http://www.aimfunds.com.
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 NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE> 119
- --------------------------------------------------------------------------------
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
Table of Fees and Expenses........ 4 of the AIM Funds............... A-2
Financial Highlights.............. 6 Special Plans.................... A-9
Performance....................... 13 Exchange Privilege............... A-11
Investment Programs............... 13 How to Redeem Shares............. A-13
Management........................ 17 Determination of Net Asset Value. A-17
Organization of the Company....... 20 Dividends, Distributions and Tax
INVESTOR'S GUIDE TO THE AIM FAMILY Matters........................ A-18
OF FUNDS--Registered Trademark--..A-1 General Information.............. A-20
Introduction to The AIM Family 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 six series comprising six separate investment portfolios, each of
which pursues unique investment objectives. This Prospectus relates to Class A,
Class B and Class C shares of CHARTER, CONSTELLATION and WEINGARTEN (the "Retail
Class" or "Retail Classes"). The Company also offers other classes of shares in
three other investment portfolios, AIM AGGRESSIVE GROWTH FUND ("AGGRESSIVE
GROWTH"), AIM BLUE CHIP FUND ("BLUE CHIP") and AIM CAPITAL DEVELOPMENT FUND
("CAPITAL DEVELOPMENT") each of which pursues unique investment objectives. All
such other Funds (except AGGRESSIVE GROWTH) offer multiple classes of shares to
different types of investors. The shares of the other Funds of the Company have
different sales charges and expenses, which may affect performance. To obtain
information about AGGRESSIVE GROWTH, BLUE CHIP and CAPITAL DEVELOPMENT call
(800) 347-4246. 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, together with
its subsidiaries, advises or manages over 50 investment company portfolios
encompassing a broad range of investment objectives. Under the Master Investment
Advisory Agreement dated February 28, 1997 (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 February 28, 1997 (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 February 28, 1997 (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, Class B or Class C 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 -- Shares are offered at net asset value plus any applicable
initial sales charge.
CLASS B SHARES -- 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> 120
CLASS C SHARES -- Shares are offered at net asset value without an initial
sales charge and are subject to a contingent deferred sales charge of 1% on
certain redemptions made within one year from the date such shares were
purchased. Class C shares are subject to higher expenses than Class A shares.
Initial investments in any 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, Class B or Class C shares
of CHARTER, CONSTELLATION 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 or Class
C shares 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 or Class C 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, Class B and
Class C 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."
Class B shareholders of the Funds 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."
Class C shareholders of the Funds may redeem all or a portion of their shares
at net asset value on any business day, less a 1% contingent deferred sales
charge for redemptions made within one year from the date such shares were
purchased. 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 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, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 121
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 the Class A and Class B shares of CHARTER
and WEINGARTEN and the Class A shares of CONSTELLATION set forth in the table
are based on the actual average net assets of each Fund for its 1997 fiscal
year. The fees and expenses for the Class B shares of CONSTELLATION and the
Class C shares of CHARTER, WEINGARTEN and CONSTELLATION 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 C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <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 None 5.50% None None 5.50% None None
Maximum sales load imposed on
reinvested dividends and
distributions............... None None None None None None None None None
Deferred sales load (as a
percentage of original
purchase price or redemption
proceeds, whichever is
lower)...................... None(1) 5.00% 1.00% None(1) 5.00% 1.00% None(1) 5.00% 1.00%
Redemption fees................ None None None None None None None None None
Exchange fee................... None None None None None None None None None
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management fee (after fee
waiver)..................... .62%* .62%* .62%* .60%* .60%* .60%* .61%* .61%* .61%*
12b-1 fees(2).................. .30% 1.00% 1.00% .30% 1.00% 1.00% .30% 1.00% 1.00%
Other expenses:
Transfer agent fees and
costs..................... .13% .18% .18% .14% .23% .23% .17% .23% .23%
Other....................... .04% .05% .05% .03% .04% .04% .03% .03% .03%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total other expenses........ .17% .23% .23% .17% .27% .27% .20% .26% .26%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total fund operating
expenses.................... 1.09% 1.85% 1.85% 1.07% 1.87% 1.87% 1.11% 1.87% 1.87%
==== ==== ==== ==== ==== ==== ==== ==== ====
</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) 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.
* CHARTER'S, 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%, 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> 122
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>
<CAPTION>
CHARTER WEINGARTEN CONSTELLATION
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
1 year.......................................... $ 66 $ 65 $ 66
3 years......................................... $ 88 $ 87 $ 88
5 years......................................... $112 $111 $113
10 years......................................... $181 $178 $183
</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 the Funds, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
CHARTER WEINGARTEN CONSTELLATION
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
1 year...................................... $ 69 $ 69 $ 69
3 years..................................... $ 88 $ 88 $ 89
5 years..................................... $120 $121 --
10 years..................................... $197 $198 --
</TABLE>
An investor would pay the following expenses on the same $1,000 investment in
Class B shares of the Funds, assuming no redemption at the end of each time
period:
<TABLE>
<CAPTION>
CHARTER WEINGARTEN CONSTELLATION
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
1 year...................................... $ 19 $ 19 $ 19
3 years..................................... $ 58 $ 59 $ 59
5 years..................................... $100 $101 --
10 years..................................... $197 $198 --
</TABLE>
An investor would pay the following expenses on a $1,000 investment in Class C
shares of the Funds, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
CHARTER WEINGARTEN CONSTELLATION
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
1 year...................................... $29 $29 $29
3 years..................................... $58 $59 $59
</TABLE>
An investor would pay the following expenses on the same $1,000 investment in
Class C shares of the Funds, assuming no redemption at the end of each time
period:
<TABLE>
<CAPTION>
CHARTER WEINGARTEN CONSTELLATION
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
1 year...................................... $19 $19 $19
3 years..................................... $58 $59 $59
</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> 123
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Shown below for the periods indicated are per share data, ratios and
supplemental data (collectively, "data") for the Class A, Class B and Class C
shares of each of the Funds. The data with respect to Class A shares of CHARTER
for the fiscal years ended October 31, 1997, 1996, 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 six years ended October 31, 1993,
has been audited by Tait, Weller & Baker, independent auditors. The data with
respect to Class A shares of WEINGARTEN and CONSTELLATION for each of the years
in the nine year period ended October 31, 1997 the ten months ended October 31,
1988 and the year 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 and
the fiscal years ended October 31, 1997 and 1996 has been audited by KPMG Peat
Marwick LLP, independent auditors, whose unqualified report thereon appears in
the Statement of Additional Information. Class B shares of CONSTELLATION
commenced sales on November 3, 1997. The data with respect to Class C shares of
CHARTER, WEINGARTEN and CONSTELLATION for the period August 4, 1997 date sales
commenced through October 31, 1997 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,
--------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 11.19 $ 10.63 $ 8.90 $ 9.46 $ 8.36 $ 8.42
Income from investment operations:
Net investment income.................. 0.10 0.19 0.15 0.21 0.17 0.18
Net gains (losses) on securities (both
realized and unrealized)............. 2.91 1.43 2.11 (0.45) 1.22 0.16
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations....... 3.01 1.62 2.26 (0.24) 1.39 0.34
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income... (0.12) (0.16) (0.20) (0.16) (0.29) (0.17)
Distributions from net realized
gains................................ (0.67) (0.90) (0.33) (0.16) -- (0.23)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions.................... (0.79) (1.06) (0.53) (0.32) (0.29) (0.40)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 13.41 $ 11.19 $ 10.63 $ 8.90 $ 9.46 $ 8.36
========== ========== ========== ========== ========== ==========
Total return(a)......................... 28.57% 16.70% 27.03% (2.55)% 16.92% 4.17%
========== ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s
omitted)............................. $3,466,912 $2,647,208 $1,974,417 $1,579,074 $1,690,482 $1,256,151
========== ========== ========== ========== ========== ==========
Ratio of expenses to average net
assets............................... 1.09%(b)(c) 1.12% 1.17% 1.17% 1.17% 1.17%
========== ========== ========== ========== ========== ==========
Ratio of net investment income to
average net assets................... 0.79%(b) 1.81% 1.55% 2.32% 1.89% 2.14%
========== ========== ========== ========== ========== ==========
Portfolio turnover rate................ 170% 164% 161% 126% 144% 95%
========== ========== ========== ========== ========== ==========
Average broker commission rate(d)...... $ 0.0615 $ 0.0638 N/A N/A N/A N/A
========== ========== ========== ========== ========== ==========
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------
1991 1990 1989 1988
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 6.55 $ 6.97 $ 5.40 $ 6.61
Income from investment operations:
Net investment income.................. 0.18 0.18 0.21 0.15
Net gains (losses) on securities (both
realized and unrealized)............. 2.15 0.08 1.55 0.16
-------- -------- ------- -------
Total from investment operations....... 2.33 0.26 1.76 0.31
-------- -------- ------- -------
Less distributions:
Dividends from net investment income... (0.15) (0.26) (0.19) (0.12)
Distributions from net realized
gains................................ (0.31) (0.42) -- (1.40)
-------- -------- ------- -------
Total distributions.................... (0.46) (0.68) (0.19) (1.52)
-------- -------- ------- -------
Net asset value, end of period.......... $ 8.42 $ 6.55 $ 6.97 $ 5.40
======== ======== ======= =======
Total return(a)......................... 37.65% 3.86% 33.68% 5.90%
======== ======== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted)............................. $443,546 $102,499 $70,997 $65,799
======== ======== ======= =======
Ratio of expenses to average net
assets............................... 1.29% 1.35% 1.35% 1.46%
======== ======== ======= =======
Ratio of net investment income to
average net assets................... 2.14% 2.51% 3.73% 2.83%
======== ======== ======= =======
Portfolio turnover rate................ 144% 215% 131% 247%
======== ======== ======= =======
Average broker commission rate(d)...... N/A N/A N/A N/A
======== ======== ======= =======
</TABLE>
- ---------------
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $3,153,317,435. After fee waivers.
Prior to fee waivers, the ratios of expenses to average net assets and net
investment income to average net assets are 1.10% and 0.78%, respectively,
would have remained the same.
(c) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have remained the same.
(d) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
6
<PAGE> 124
AIM CHARTER FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
PERIOD
JUNE 26,
YEAR ENDED 1995
OCTOBER 31, THROUGH
-------------------------- OCTOBER 31,
1997 1996 1995
---------- -------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $ 11.18 $ 10.62 $ 9.81
---------- -------- -------
Income from investment operations:
Net investment income...................................... 0.01 0.10 0.03
Net gains (losses) on securities (both realized and
unrealized).............................................. 2.89 1.45 0.80
---------- -------- -------
Total from investment operations........................... 2.90 1.55 0.83
---------- -------- -------
Less distributions:
Dividends from net investment income....................... (0.04) (0.09) (0.02)
Distributions from net realized gains...................... (0.67) (0.90) --
---------- -------- -------
Total distributions........................................ (0.71) (0.99) (0.02)
---------- -------- -------
Net asset value, end of period.............................. $ 13.37 $ 11.18 $ 10.62
========== ======== =======
Total return(a)............................................. 27.54% 15.90% 8.48%
========== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)................... $1,056,094 $515,672 $67,592
========== ======== =======
Ratio of expenses to average net assets.................... 1.85%(b)(c) 1.94% 1.98%(d)
========== ======== =======
Ratio of net investment income to average net assets....... 0.03%(b) 0.99% 0.74%(d)
========== ======== =======
Portfolio turnover rate.................................... 170% 164% 161%
========== ======== =======
Average broker commission rate(e).......................... $ 0.0615 $ 0.0638 N/A
========== ======== =======
</TABLE>
- ---------------
(a) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b) Ratios are based on average net assets of $804,618,145. After fee waivers.
Prior to fee waivers, the ratios of expenses to average net assets and net
investment income to average net assets are 1.86% and 0.02%, respectively.
(c) Ratio includes indirectly paid expenses. Excluding indirectly paid
expenses, the ratio of expenses to average net assets would have remained
the same.
(d) Annualized.
(e) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
AIM CHARTER FUND -- CLASS C SHARES
<TABLE>
<CAPTION>
PERIOD
AUGUST 4,
1997
THROUGH
OCTOBER 31,
1997
-----------
<S> <C>
Net asset value, beginning of period $ 13.86
- ------------------------------------------------------------ -------
Income from investment operations:
Net investment income --
- ------------------------------------------------------------ -------
Net gains (losses) on securities (both realized and
unrealized) (0.45)
- ------------------------------------------------------------ -------
Total from investment operations (0.45)
- ------------------------------------------------------------ -------
Less distributions:
Dividends from net investment income --
- ------------------------------------------------------------ -------
Distributions from net realized gains (0.02)
- ------------------------------------------------------------ -------
Total distributions (0.02)
- ------------------------------------------------------------ -------
Net asset value, end of period $ 13.39
- ------------------------------------------------------------ -------
Total return(a) (3.24)%
- ------------------------------------------------------------ -------
Ratios/supplement data:
Net assets, end of period (000s omitted) $ 5,669
- ------------------------------------------------------------ -------
Ratio of expenses to average net assets 1.82%(b)(c)
- ------------------------------------------------------------ -------
Ratio of net investment income to average net assets 0.06%(b)
- ------------------------------------------------------------ -------
Portfolio turnover rate 170%
- ------------------------------------------------------------ -------
Average brokerage commission rate paid(d) $0.0615
- ------------------------------------------------------------ -------
</TABLE>
(a) Does not deduct sales charge and total returns for periods less than one
year are not annualized.
(b) Ratios are annualized and based on average net assets of $2,493,136. After
fee waivers. Prior to fee waivers, the ratios of expenses to average net
assets and net investment income to average net assets are 1.83% and 0.04%,
respectively.
(c) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have remained the same.
(d) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
7
<PAGE> 125
AIM WEINGARTEN FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period......................... $ 20.19 $ 20.33 $ 17.82 $ 17.62 $ 16.68 $ 15.76 $ 11.15
Income from investment
operations:
Net investment income.......... 0.01 0.06 -- 0.07 0.10 0.10 0.11
Net gains (losses) on
securities (both realized and
unrealized).................. 4.82 2.51 4.36 0.57 0.93 0.98 4.80
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations................... 4.83 2.57 4.36 0.64 1.03 1.08 4.91
---------- ---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment
income....................... (0.06) -- (0.07) (0.11) (0.09) (0.07) (0.09)
Distributions from net realized
gains........................ (2.24) (2.71) (1.78) (0.33) -- (0.09) (0.21)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total distributions............ (2.30) (2.71) (1.85) (0.44) (0.09) (0.16) (0.30)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period......................... $ 22.72 $ 20.19 $ 20.33 $ 17.82 $ 17.62 $ 16.68 $ 15.76
========== ========== ========== ========== ========== ========== ==========
Total return(c)................. 26.83% 14.81% 28.20% 3.76% 6.17% 6.85% 44.88%
========== ========== ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s
omitted)..................... $5,810,582 $4,977,493 $4,564,730 $3,965,858 $4,999,983 $5,198,835 $2,534,331
========== ========== ========== ========== ========== ========== ==========
Ratio of expenses to average
net assets(d)................ 1.07%(e)(f) 1.12% 1.17% 1.21% 1.13% 1.13% 1.18%
========== ========== ========== ========== ========== ========== ==========
Ratio of net investment income
to average net assets(h)..... 0.07%(e) 0.33% (0.02)% 0.45% 0.62% 0.60% 0.72%
========== ========== ========== ========== ========== ========== ==========
Portfolio turnover rate........ 128% 159% 139% 136% 109% 37% 46%
========== ========== ========== ========== ========== ========== ==========
Average brokerage commission
rate(i)...................... $ 0.0618 $ 0.0615 N/A N/A N/A N/A N/A
========== ========== ========== ========== ========== ========== ==========
Borrowings for the period:
Amount of debt outstanding at
end of period................ -- -- -- -- -- -- --
Average amount of debt
outstanding during the
period(j).................... -- -- $ 593,789 -- -- -- --
Average number of shares
outstanding during the period
(000s omitted)(j)............ 262,563 248,189 229,272 249,351 314,490 246,273 102,353
Average amount of debt per
share during the period...... -- -- $ 0.0026 -- -- -- --
<CAPTION>
PERIOD
JANUARY 1, YEAR
1988 THROUGH ENDED
YEAR ENDED OCTOBER 31, OCTOBER 31, DECEMBER
---------------------- ------------- 31,
1990 1989 1988(a) 1987(b)
-------- ---------- ------------ --------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period......................... $ 12.32 $ 9.23 $ 8.36 $ 8.82
Income from investment
operations:
Net investment income.......... 0.09 0.10 0.07 0.07
Net gains (losses) on
securities (both realized and
unrealized).................. (0.56) 3.10 0.80 0.83
-------- ---------- ---------- --------
Total from investment
operations................... (0.47) 3.20 0.87 0.90
-------- ---------- ---------- --------
Less distributions:
Dividends from net investment
income....................... (0.06) (0.11) -- (0.09)
Distributions from net realized
gains........................ (0.64) -- -- (1.27)
-------- ---------- ---------- --------
Total distributions............ (0.70) (0.11) -- (1.36)
-------- ---------- ---------- --------
Net asset value, end of
period......................... $ 11.15 $ 12.32 $ 9.23 $ 8.36
======== ========== ========== ========
Total return(c)................. (4.03)% 35.13% 10.41% 9.75%
======== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted)..................... $632,522 $ 393,320 $ 297,284 $286,453
======== ========== ========== ========
Ratio of expenses to average
net assets(d)................ 1.25% 1.19% 1.08%(g) 0.95%
======== ========== ========== ========
Ratio of net investment income
to average net assets(h)..... 0.75% 0.96% 0.90%(g) 0.66%
======== ========== ========== ========
Portfolio turnover rate........ 79% 87% 93% 108%
======== ========== ========== ========
Average brokerage commission
rate(i)...................... N/A N/A N/A N/A
======== ========== ========== ========
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(j).................... $485,359 $1,082,551 $ 228,587 $509,259
Average number of shares
outstanding during the period
(000s omitted)(j)............ 44,770 31,275 33,031 25,825
Average amount of debt per
share during the period...... $ 0.011 $ 0.035 $ 0.007 $ 0.020
</TABLE>
- ---------------
(a) The Fund changed investment advisors on September 30, 1988.
(b) 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.
(c) Does not deduct sales charges and, for periods less than one year, total
returns are not annualized.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to waiver of fees and/or expense reimbursements
were 1.11%, 1.15%, 1.19%, 1.24%, and 1.17% for the periods 1997-1993,
respectively.
(e) Ratios are based on average net assets of $5,466,375,838.
(f) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(g) Annualized.
(h) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to waiver of fees and/or expense
reimbursements were 0.03%, 0.30%, (0.04)%, 0.42%, and 0.58% for the periods
1997-1993, respectively.
(i) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(j) Averages computed on a daily basis.
8
<PAGE> 126
AIM WEINGARTEN FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
PERIOD
JUNE 26,
1995
YEAR ENDED OCTOBER 31, THROUGH
---------------------- OCTOBER 31,
1997 1996 1995
---- ---- -----------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $ 19.98 $ 20.28 $ 18.56
Income from investment operations:
Net investment income (loss)............................... (0.15)(a) (0.05)(a) (0.03)
Net gains (losses) on securities (both realized and
unrealized).............................................. 4.75 2.46 1.75
-------- -------- -------
Total from investment operations........................... 4.60 2.41 1.72
-------- -------- -------
Less distributions:
Distributions from net realized gains...................... (2.24) (2.71) --
-------- -------- -------
Net asset value, end of period............................. $ 22.34 $ 19.98 $ 20.28
======== ======== =======
Total return(b)............................................. 25.78% 13.95% 9.27%
======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)................... $486,105 $267,459 $42,238
======== ======== =======
Ratio of expenses to average net assets(c)................. 1.87%(d)(e) 1.95% 1.91%(f)
======== ======== =======
Ratio of net investment income (loss) to average net
assets(g)................................................ (0.73)%(d) (0.50)% (0.76)%(f)
======== ======== =======
Portfolio turnover rate.................................... 128% 159% 139%
======== ======== =======
Average broker commission rate(h).......................... $ 0.0618 $ 0.0615 N/A
======== ======== =======
Borrowings for the period:
Amount of debt outstanding at end of period (000s
omitted)................................................. -- --
Average amount of debt outstanding during the period (000s
omitted)(i).............................................. -- $ 3
Average number of shares outstanding during the period
(000s omitted)(i)........................................ 18,505 7,956 1,036
Average amount of debt per share during the period......... -- $0.0029
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and for periods less than
one year, total returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to waiver of fees and/or expense reimbursements
were 1.91%, 1.98% and 1.94% (annualized) for the periods 1997-1995,
respectively.
(d) Ratios are based on average net assets of $383,198,900.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been 1.86%.
(f) Annualized.
(g) After waiver of fees and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to waiver of fees and/or expense
reimbursements were (0.77)%, (0.53)% and (0.79)% (annualized) for the
periods 1997-1995, respectively.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(i) Averages computed on a daily basis.
9
<PAGE> 127
AIM WEINGARTEN FUND -- CLASS C SHARES
<TABLE>
<CAPTION>
PERIOD
AUGUST 4, 1997
THROUGH
OCTOBER 31,
1997
--------------
<S> <C>
Net asset value, beginning of period........................ $ 22.83
Income from investment operations:
Net investment income.................................... (0.04)(a)
Net gains (losses) on securities (both realized and
unrealized)............................................ (0.45)
Total from investment operations..................... (0.49)
Net asset value, end of period.............................. $ 22.34
Total return(b)............................................. (2.15)%
Ratios/supplement data:
Net assets, end of period (000s omitted).................... $ 2,326
Ratio of expenses to average net assets(c).................. 1.84%(d)(e)
Ratio of net investment income (loss) to average net
assets(i).................................................. (0.70)%
Portfolio turnover rate..................................... 128%
Average brokerage commission rate paid(a)................... $0.0618
Borrowings for the period:
Amount of debt outstanding at end of period (000's
omitted)(h)................................................ --
Average amount of debt outstanding during the period (000's
omitted)................................................... --
Average number of shares outstanding during the period
(000's omitted)(h)......................................... 41,282
Average amount of debt per share during the period.......... --
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and periods for less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.88% (annualized).
(d) Ratios are annualized and based on average net assets of $958,881.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(f) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements was (0.74)% (annualized).
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(h) Averages computed on a daily basis.
10
<PAGE> 128
AIM CONSTELLATION FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------
1997 1996 1995 1994 1993 1992
---------- ----------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period......................... $ 25.48 $ 23.69 $ 18.31 $ 17.04 $ 13.25 $ 11.72
Income from investment
operations:
Net investment income (loss)... (0.11) (0.06) (0.05) (0.02) (0.04) (0.04)
Net gains (losses) on
securities (both realized and
unrealized).................. 4.75 2.60 5.95 1.29 3.83 1.76
---------- ----------- ---------- ---------- ---------- --------
Total from investment
operations................... 4.64 2.54 5.90 1.27 3.79 1.72
---------- ----------- ---------- ---------- ---------- --------
Less distributions:
Dividends from net investment
income....................... -- -- -- -- -- --
Distributions from net realized
gains........................ (0.89) (0.75) (0.52) -- -- (0.19)
---------- ----------- ---------- ---------- ---------- --------
Total distributions............ (0.89) (0.75) (0.52) -- -- (0.19)
---------- ----------- ---------- ---------- ---------- --------
Net asset value, end of
period......................... $ 29.23 $ 25.48 $ 23.69 $ 18.31 $ 17.04 $ 13.25
========== =========== ========== ========== ========== ========
Total return(c)................. 18.86% 11.26% 33.43% 7.45% 28.60% 14.82%
========== =========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted)..................... $14,319,441 $11,255,506 $7,000,350 $3,726,029 $2,756,497 $966,472
========== =========== ========== ========== ========== ========
Ratio of expenses to average
net assets(d)................ 1.11%(e)(f) 1.14% 1.16% 1.20% 1.22% 1.21%
========== =========== ========== ========== ========== ========
Ratio of net investment income
(loss) to average net
assets(h).................... (0.40)%(e) (0.27)% (0.32)% (0.15)% (0.31)% (0.42)%
========== =========== ========== ========== ========== ========
Portfolio turnover rate........ 67% 58% 45% 79% 70% 62%
========== =========== ========== ========== ========== ========
Average broker commission
rate(i)...................... $ 0.0576 $ 0.0596 N/A N/A N/A N/A
========== =========== ========== ========== ========== ========
Borrowings for the period:
Amount of debt outstanding at
end of period (000s
omitted)..................... -- -- -- -- -- --
Average amount of debt
outstanding during the
period(j).................... -- -- -- -- -- --
Average number of shares
outstanding during the period
(000s omitted)(j)............ -- 381,030 244,731 182,897 124,101 55,902
Average amount of debt per
share during the period...... -- -- -- -- -- --
<CAPTION>
PERIOD
JANUARY 1,
1988 THROUGH YEAR
YEAR ENDED OCTOBER 31, OCTOBER 31 ENDED
--------------------------------- ------------ DECEMBER 31,
1991 1990 1989 1988(a) 1987(b)
--------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period......................... $ 6.59 $ 9.40 $ 7.34 $ 6.35 $ 10.58
Income from investment
operations:
Net investment income (loss)... (0.03) (0.03) 0.01 (0.03) (0.05)
Net gains (losses) on
securities (both realized and
unrealized).................. 5.16 (1.23) 2.46 1.02 0.36
--------- --------- --------- ---------- ----------
Total from investment
operations................... 5.13 (1.26) 2.47 0.99 0.31
--------- --------- --------- ---------- ----------
Less distributions:
Dividends from net investment
income....................... -- (0.01) -- -- --
Distributions from net realized
gains........................ -- (1.54) (0.41) -- (4.54)
--------- --------- --------- ---------- ----------
Total distributions............ -- (1.55) (0.41) -- (4.54)
--------- --------- --------- ---------- ----------
Net asset value, end of
period......................... $ 11.72 $ 6.59 $ 9.40 $ 7.34 $ 6.35
========= ========= ========= ========== ==========
Total return(c)................. 77.85% (16.17)% 35.50% 15.59% 2.85%
========= ========= ========= ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s
omitted)..................... $ 342,835 $ 83,304 $ 74,731 $ 78,272 $ 71,418
========= ========= ========= ========== ==========
Ratio of expenses to average
net assets(d)................ 1.35% 1.37% 1.36% 1.30(g) 1.11%
========= ========= ========= ========== ==========
Ratio of net investment income
(loss) to average net
assets(h).................... (0.41)% (0.44)% 0.07% (0.57)%(g) (0.41)%
========= ========= ========= ========== ==========
Portfolio turnover rate........ 109% 192% 149% 131% 135%
========= ========= ========= ========== ==========
Average broker commission
rate(i)...................... N/A N/A N/A N/A N/A
========= ========= ========= ========== ==========
Borrowings for the period:
Amount of debt outstanding at
end of period (000s
omitted)..................... -- -- $ 9,610 $ 5,266 $ 109
Average amount of debt
outstanding during the
period(j).................... -- $2,344,356 $2,608,721 $2,147,733 $2,365,545
Average number of shares
outstanding during the period
(000s omitted)(j)............ 21,205 11,397 10,050 10,845 9,668
Average amount of debt per
share during the period...... -- $ 0.21 $ 0.26 $ 0.20 $ 0.24
</TABLE>
- ---------------
(a) The Fund changed investment advisors on September 30, 1988.
(b) 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.
(c) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers, 1.13%, 1.16%, 1.18% and 1.21% for
the periods 1997-1994, respectively.
(e) Ratios are based on average net assets of $12,953,471,546.
(f) Ratio includes indirectly paid expenses. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(g) Annualized.
(h) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers (0.42)%, (0.29)%,
(0.34)% and (0.16)% for the years 1997-1994, respectively.
(i) The average commission rate paid is the total brokerage commission paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(j) Averages computed on a daily basis.
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<PAGE> 129
AIM CONSTELLATION FUND -- CLASS C SHARES
<TABLE>
<CAPTION>
PERIOD
AUGUST 4,
1997 THROUGH
OCTOBER 31,
1997
------------
<S> <C>
Net asset value, beginning of period........................ $ 30.32
Income from investment operations:
Net investment income (loss)............................. (0.04)
Net gains (losses) on securities (both realized and
unrealized)............................................. (1.10)
Total from investment operations...................... (1.14)
Net asset value, end of period.............................. $ 29.18
Total return(a)............................................. (3.76)%
Ratios/supplement data:
Net assets, end of period (000s omitted).................... $21,508
Ratio of expenses to average net assets(b).................. 1.84%(c)(d)
Ratio of net investment income (loss) to average net
assets(e).................................................. (1.12)%(c)
Portfolio turnover rate..................................... 67%
Average brokerage commission rate paid(f)................... $0.0576
</TABLE>
- ---------------
(a) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.86% (annualized).
(c) Ratios are annualized and based on average net assets of $10,863,777.
(d) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been 1.83%
annualized.
(e) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements was (1.15)% (annualized).
(f) The average commission rate is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
12
<PAGE> 130
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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. 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 a Fund reflects the deduction of the maximum
applicable contingent deferred sales charge on a redemption of shares held for
the period. Standardized total return for Class C shares of a Fund reflects the
deduction of a 1% contingent deferred sales charge, if applicable, 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.
Additional performance information is contained in the Statement of Additional
Information and in the Company's Annual Report to Shareholders, both of which
are available upon request without charge.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAMS
The Company has six series, each of which is a separate investment portfolio.
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.
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 generally investing at least
65% of its net assets in stocks of companies believed by management to have the
potential for above average growth in revenues and earnings. CHARTER generally
will also invest at least 80% of its net assets in securities which pay income
to CHARTER.
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 Objectives and
Policies" in the Statement of Additional Information.
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<PAGE> 131
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.
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:
TEMPORARY DEFENSIVE MEASURES. A portion of each Fund's assets may be held,
from time to time, in cash, repurchase agreements, commercial paper, U.S.
government obligations, taxable municipal securities, investment grade (high
quality) corporate bonds or other debt securities, when such positions are
deemed advisable in light of economic or market conditions or for daily cash
management purposes. In addition, each of the Funds may invest, for temporary
defensive purposes, all or a substantial portion of their assets in the
securities described above. To the extent that a Fund invests to a significant
degree in these instruments, its ability to achieve its investment objective may
be adversely affected.
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. Repurchase
agreements are considered to be loans by the Fund under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. Consistent with Charter's policy on borrowings,
Charter may invest in reverse repurchase agreements with banks, which involve
the sale of securities held by the Fund, with an agreement that the Fund will
repurchase the securities at an agreed upon price and date. The Fund may employ
reverse repurchase agreements (i) for temporary emergency purposes, such as to
meet unanticipated net redemptions so as to avoid liquidating other portfolio
securities during unfavorable market conditions; (ii) to cover short-term cash
requirements resulting from the timing of trade settlements; or (iii) to take
advantage of market situations where the interest income to be earned from the
investment of the proceeds of the transaction is greater than the interest
expense of the transaction. At the time it enters into a reverse repurchase
agreement, the Fund will segregate liquid securities having a dollar value equal
to the repurchase price. Reverse repurchase agreements are considered borrowings
by the Fund under the 1940 Act.
U.S. GOVERNMENT SECURITIES. CHARTER may invest in U.S. Government securities,
including, but not limited to, U.S. Treasury obligations, such as Treasury Bills
(maturities of one year or less) or Treasury Notes (maturities of less than
three years). The market value of U.S. Government securities will fluctuate with
changes in interest rate levels. Thus, if interest rates increase from the time
the security was purchased, the market value of the security will decrease.
Conversely, if interest rates decrease, the market value of the security will
increase.
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 may purchase and sell futures contracts in
order to hedge the value of its portfolio against changes in market conditions.
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.
There are risks associated with investments in stock index futures contracts.
During certain market conditions, purchases and sales of futures contracts may
not completely offset a decline or rise in the value of a Fund's portfolio. In
the futures markets, it may not always be possible to execute a buy or sell
order at the desired price, or to close out an open position due to market
conditions, limits on open positions and/or daily price fluctuations. Changes in
the market value of a Fund's portfolio may differ substantially from the changes
anticipated by the Fund when hedged positions were established, and
unanticipated price movements in a futures contract may result in a loss
substantially greater than a Fund's initial investment in such contract.
Successful use of futures contracts is depen-
14
<PAGE> 132
dent upon AIM's ability to predict correctly movements in the direction of the
applicable markets. No assurance can be given that AIM's judgment in this
respect will be correct.
WRITING COVERED CALL OPTION AND PURCHASING PUT OPTION CONTRACTS. CHARTER,
WEINGARTEN and CONSTELLATION may write (sell) covered call options. The purpose
of put and covered call option 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.
CHARTER, 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). 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. A call option is "covered" if a Fund
owns or has the right to acquire the underlying security subject to 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.
CHARTER and WEINGARTEN may also purchase puts. By purchasing a put option, a
Fund obtains the right (but not the obligation) to sell the option's underlying
security at a fixed strike price.
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 volume, 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 CHARTER, WEINGARTEN and CONSTELLATION permit the
writing of covered 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 or the purchase of put 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.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. Each Fund may
purchase securities on a "when-issued" basis, that is, delivery of and payment
for the securities is not fixed at the date of purchase, but is set after the
securities are issued (normally within forty-five days after the date of the
transaction). Each Fund also may purchase or sell securities on a delayed
delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery securities are fixed at the time the buyer
enters into the commitment. A Fund will only make commitments to purchase
when-issued or delayed delivery securities with the intention of actually
acquiring such securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. For further information regarding
securities issued on a when-issued or delayed delivery basis see the caption
"Investment Objectives and Policies" in the Statement of Additional Information.
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.
INVESTMENT IN UNSEASONED ISSUERS. CHARTER may purchase securities in
unseasoned issuers. Securities in such issuers may provide opportunities for
long term capital growth. Greater risks are associated with investments in
securities of unseasoned issuers than in the securities of more established
companies because unseasoned issuers have only a brief operating history and may
have more limited markets and financial resources.
INVESTMENT IN OTHER INVESTMENT COMPANIES. Each of the Funds may invest in
other investment companies to the extent permitted by the Investment Company Act
of 1940, and rules and regulations thereunder, and, if applicable, exemptive
orders granted by the SEC.
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 Deposi-
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<PAGE> 133
tary Receipts ("ADRs"), European Depositary Receipts ("EDRs") 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 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 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.
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 Board of 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.
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. In addition, the Funds have adopted a
non-fundamental policy stating that no Fund will purchase additional securities
when any borrowings from banks exceed 5% of the Fund's total assets.
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. 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.
Any investment gains made by CONSTELLATION with the borrowed
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<PAGE> 134
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.
Except where otherwise noted, 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 Company's Board of Directors. Information
concerning the Board of Directors may be found in the Statement of Additional
Information. Certain directors and officers of the Company are affiliated with
AIM and A I M Management Group Inc. ("AIM Management"), the parent corporation
of AIM. AIM Management is a holding company engaged in the financial services
business and is an indirect wholly owned subsidiary of AMVESCAP PLC. AMVESCAP
PLC and its subsidiaries are an independent investment management group engaged
in institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific Region.
For a discussion of AIM Management and its subsidiaries' Year 2000 Compliance
Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR. AIM, 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, serves as the investment advisor to each Fund pursuant to the Master
Advisory Agreement. AIM was organized in 1976, and, together with its
subsidiaries, advises or manages over 50 investment company portfolios
(including the Funds) encompassing a broad range of investment objectives. 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 February 28, 1997 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 its
services under the Master Administrative Services Agreements, the Funds
reimburse AIM for expenses incurred by AIM or its subsidiaries in connection
with such services.
SUB-ADVISOR. AIM Capital, 11 Greenway Plaza, Suite 100, 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. 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.
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<PAGE> 135
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, 1997 which represented 0.62%, 0.60% and 0.61%, respectively,
of each of such Fund's average daily net assets. For the fiscal year ended
October 31, 1997, with respect to CHARTER, CONSTELLATION and WEINGARTEN, AIM
voluntarily waived 0.01%, 0.03% and 0.02%, respectively, of each such Fund's
advisory fee. Had there been no fee waivers during the year, advisory fees would
have been 0.63%, 0.63% and 0.63%, respectively, of 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
CHARTER, WEINGARTEN and CONSTELLATION for the fiscal year ended October 31, 1997
which represented 0.003%, 0.003% and 0.002%, 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, 1997, stated as a percentage of average
net assets of each of Retail Class of CHARTER, WEINGARTEN and CONSTELLATION were
1.09%, 1.07% and 1.11%, respectively.
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 a Master Distribution Agreement,
dated August 2, 1997 on behalf of Class A and Class C shares of the Funds, and
has entered into a Master Distribution Agreement, dated February 28, 1997, on
behalf of Class B shares of the Funds (individually referred to as the
"Distribution Agreement" or collectively as 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, Class B and Class C shares of the
Funds. 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 the Funds 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 and C Plan. The Company has adopted a Master
Distribution Plan applicable to Class A and Class C shares of each Fund (the
"Class A and C Plan") pursuant to Rule 12b-1 under the 1940 Act, to compensate
AIM Distributors for the purpose of financing any activity that is intended to
result in the sale of Class A and Class C shares of each Fund.
Under the Class A and C Plan, the Company may compensate AIM Distributors an
aggregate amount of 0.30% of the average daily net assets of Class A shares of
each Fund on an annualized basis and an aggregate amount of 1.00% of the average
daily net assets of Class C shares of each Fund on an annualized basis.
The Class A and C Plan is designed to compensate AIM Distributors, on a
quarterly basis, for certain promotional and other sales-related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C 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 and Class C shares of each Fund
and who provide continuing personal services to their customers who own Class A
and Class C shares of the Fund. The service fees payable to selected
institutions are calculated at the annual rate of 0.25% of the average daily net
asset value of those Fund shares that are held in such institution's customers'
accounts which were purchased on or after a prescribed date set forth in the
Plan.
Of the aggregate amount payable under the Class A and C Plan, payments to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 0.25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A and C Plan. The Class A and C
Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Company with respect to the
Fund. The Class A and C Plan does not obligate the Fund to reimburse AIM
Distributors for the actual expenses AIM Distributors may incur in fulfilling
its obligations under the Class A and C Plan on behalf of the Fund. Thus, under
the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Fund will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc.
18
<PAGE> 136
Class B Plan. The Company has also adopted a master distribution plan
applicable to Class B shares of the Fund (the "Class B Plan"). Under the Class B
Plan, each Fund pays distribution expenses at an annual rate of 1.00% of the
average daily net assets attributable to such Fund's Class B shares. Of such
amount each Fund 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 and C 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 approximately 135 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 Brant H. DeMuth 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. He has been associated
with AIM and/or its subsidiaries and has been an investment professional since
1987. Mr. DeMuth has been responsible for the Fund since 1998. He has been
associated with AIM and/or its subsidiaries since 1996 and has been an
investment professional since 1987. Prior to 1996, he served as a portfolio
manager for Colorado Public Employee's Retirement Association.
Jonathan C. Schoolar, Monika H. Degan and David P. Barnard are primarily
responsible for the day-to-day management of WEINGARTEN. Mr. Schoolar is Senior
Vice President 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 subsidiaries since 1986 and has been an
investment professional since 1983. Ms. Degan has been responsible for the Fund
since 1998. She has been associated with AIM and/or its subsidiaries since 1995
and has been an investment professional since 1991. Prior to 1995, Ms. Degan was
a Senior Financial Analyst for Shell Oil Co. Pension Trust. Mr. Barnard is Vice
President of AIM Capital and has been responsible for the Fund since 1986. He
has been associated with AIM and/or its subsidiaries since 1982 and has been an
investment professional since 1974.
Robert M. Kippes, Kenneth A. Zschappel, Charles D. Scavone, and David P.
Barnard are primarily responsible for the day-to-day management of
CONSTELLATION. Mr. Kippes is Vice President of AIM Capital and has been
responsible for the Fund since 1993. He has been associated with AIM and/or its
subsidiaries since he began working as an investment professional in 1989. Mr.
Zschappel is Assistant Vice President of AIM Capital and has been responsible
for the Fund since 1996. He has been associated with AIM and/or its subsidiaries
since he began working as an investment professional in 1990. Mr. Scavone is
Vice President of AIM Capital and he has been responsible for the Fund since
1996. He has been associated with AIM and/or its subsidiaries since 1996 and has
been an investment professional since 1991. Prior to 1996, he was Associate
Portfolio Manager for Van Kampen American Capital Asset Manage-
19
<PAGE> 137
ment, Inc. from 1994 to 1996. From 1991 to 1994, he worked in the investments
department at Texas Commerce Investment Management Company, with his last
position being Equity Research Analyst/Assistant Portfolio Manager. Mr. Barnard
is Vice President of AIM Capital and has been responsible for the Fund since
1990. He has been associated with AIM and/or its subsidiaries since 1982 and an
investment professional since 1974.
- --------------------------------------------------------------------------------
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 consists of six separate portfolios: CHARTER, CONSTELLATION and
WEINGARTEN, each of which has retail classes of shares consisting of Class A,
Class B and Class C shares and an Institutional Class; AGGRESSIVE GROWTH, which
has a retail class of shares consisting of Class A shares; and BLUE CHIP and
CAPITAL DEVELOPMENT, each of which has retail classes of shares consisting of
Class A, Class B and Class C shares. The Company's common stock is classified
into nineteen different classes. Each class represents an interest in one of six
portfolios.
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, such as those associated with the shareholder servicing
of their shares, 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. As of February 2, 1998, Merrill Lynch Pierce
Fenner & Smith owned beneficially (for its clients) and of record 31.18% of the
outstanding Class C shares of Constellation. As long as Merrill Lynch Pierce
Fenner & Smith owns over 25% of such shares, it may be presumed to be in
"control" as defined in the 1940 Act.
20
<PAGE> 138
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND(*) AIM GLOBAL UTILITIES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND(*) AIM GROWTH FUND
AIM ADVISOR LARGE CAP VALUE FUND(*) AIM HIGH INCOME MUNICIPAL FUND
AIM ADVISOR MULTIFLEX FUND(*) AIM HIGH YIELD FUND
AIM ADVISOR REAL ESTATE FUND(*) AIM INCOME FUND
AIM AGGRESSIVE GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ASIAN GROWTH FUND AIM INTERNATIONAL EQUITY FUND
AIM BALANCED FUND AIM LIMITED MATURITY TREASURY FUND
AIM BLUE CHIP FUND AIM MONEY MARKET FUND(**)
AIM CAPITAL DEVELOPMENT FUND AIM MUNICIPAL BOND FUND
AIM CHARTER FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CONSTELLATION FUND AIM TAX-EXEMPT CASH FUND(**)
AIM EUROPEAN DEVELOPMENT FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND
AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND
</TABLE>
(*) Class B Shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM
REAL ESTATE FUND will not be available until on or about March 3, 1998.
(**) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Salary Reduction ("SARSEP") accounts, Savings Incentive Match
Plans for Employee IRA ("SIMPLE IRA") accounts, 403(b) plans or 457 (state
deferred compensation) plans (except that the minimum initial investment for
salary deferrals for such plans is $25), or for investment of dividends and
distributions of any of the AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
MCF-02/98
A-1
<PAGE> 139
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION--SM--: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for detail.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE
FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH
FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may
be purchased at their respective net asset value plus a sales charge as
indicated below, except that Class A shares of AIM TAX-EXEMPT CASH FUND and AIM
Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a sales charge and
Class B shares (the "Class B shares") and Class C shares ("Class C shares") of
the Multiple Class Funds are sold at net asset value subject to a contingent
deferred sales charge payable upon certain redemptions. These contingent
deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A, Class B or
Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class
Fund are described below under "Special Information Relating to Multiple Class
Funds." For information on purchasing any of the AIM Funds and to receive a
prospectus, please call (800) 347-4246. As described below, the sales charge
otherwise applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
MCF-02/98
A-2
<PAGE> 140
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM
INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND,
AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM
INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
MCF-02/98
A-3
<PAGE> 141
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM
TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million of such
purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of
the next $17 million of such purchases, plus 0.25% of amounts in excess of $20
million of such purchases. See "Contingent Deferred Sales Charge Program for
Large Purchases." AIM Distributors may make payments to dealers and institutions
who are dealers of record for purchases of $1 million or more of Class A shares
(or shares which normally involve payment of initial sales charges), and which
are sold at net asset value and are not subject to a contingent deferred sales
charge, in an amount up to 0.10% of such purchases of Class A shares of AIM
LIMITED MATURITY TREASURY FUND, and in an amount up to 0.25% of such purchases
of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
are not paid on sales to investors exempt from the CDSC, including shareholders
of record on April 30, 1995 who purchase additional shares in any of the Funds
on or after May 1, 1995, and in circumstances where AIM Distributors grants an
exemption on particular transactions.
MCF-02/98
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TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES are sold subject to the initial sales charges described
above and are subject to the other fees and expenses described herein.
Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares an investor owns may be exchanged at net
asset value for Class A shares of another Multiple Class Fund or shares of
another AIM Fund which is not a Multiple Class Fund, subject to the terms
and conditions described under the caption "Exchange Privilege -- Terms and
Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class C shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class C shares redeemed
within one year from the date such shares were purchased are subject to a
1.00% contingent deferred sales charge. No contingent deferred sales charge
will be imposed if Class C shares are redeemed after one year from the date
such shares were purchased. Redemptions of Class C shares and associated
charges are further described under the caption "How to Redeem
Shares -- Multiple Distribution System."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
MCF-02/98
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SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH
FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the
amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of such funds will remain constant at $1.00 per share.
However, there is no assurance that each Money Market Fund can maintain a $1.00
net asset value per share. In order to earn dividends with respect to AIM MONEY
MARKET FUND on the same day that a purchase is made, purchase payments in the
form of federal funds must be received by the Transfer Agent before 12:00 noon
Eastern Time on that day. Purchases made by payments in any other form, or
payments in the form of federal funds received after such time but prior to NYSE
Close, will begin to earn dividends on the next business day following the date
of purchase. The Money Market Funds generally will not issue share certificates
but will record investor holdings in noncertificate form and regularly advise
the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class
B and Class C shares of the Multiple Class Funds will not be taken into account
in determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), a Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by vir-
MCF-02/98
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<PAGE> 144
tue of the foregoing definition, to the reduced sales charge. No person or
entity may distribute shares of the AIM Funds without payment of the applicable
sales charge other than to persons or entities who qualify for a reduction in
the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) within the following 13 consecutive months. By marking the LOI section on
the account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND
and (ii) Class B and Class C shares of the Multiple Class Funds) at the time of
the proposed purchase. Rights of Accumulation are also available to holders of
the Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve
Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the
Multiple Class Funds) owned by such purchaser, calculated at their then current
public offering price. If a purchaser so qualifies for a reduced sales charge,
the reduced sales charge applies to the total amount of money then being
invested by such purchaser and not just to the portion that exceeds the
breakpoint above which a reduced sales charge applies. For example, if a
purchaser already owns qualifying shares of any AIM Fund with a value of $20,000
and wishes to invest an additional $20,000 in a fund with a maximum initial
sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to
the full $20,000 purchase and not just to the $15,000 in excess of the $25,000
breakpoint. To qualify for obtaining the discount applicable to a particular
purchase, the purchaser or his dealer must furnish AFS with a list of the
account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends,
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<PAGE> 145
Distributions and Tax Matters"); (b) exchanges of shares of certain other funds
(see "Exchange Privilege"); (c) use of the reinstatement privilege (see "How to
Redeem Shares"); or (d) a merger, consolidation or acquisition of assets of a
fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; and (i) employees of
Triformis Inc.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any Class A shares of
AIM LIMITED MATURITY TREASURY FUND sold at net asset value to an employee
benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
MCF-02/98
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FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan each
withdrawal is made from the shareholder's bank account in the amount specified
by the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and
MCF-02/98
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Tax Matters -- Dividends and Distributions" for a description of payment dates
for these options. In order to qualify to have dividends and distributions of
one AIM Fund invested in shares of another AIM Fund, the following conditions
must be satisfied: (a) the shareholder must have an account balance in the
dividend paying fund of at least $5,000; (b) the account must be held in the
name of the shareholder (i.e., the account may not be held in nominee name); and
(c) the shareholder must have requested and completed an authorization relating
to the reinvestment of dividends into another AIM Fund. An authorization may be
given on the account application or on an authorization form available from AIM
Distributors. An AIM Fund will waive the $5,000 minimum account value
requirement if the shareholder has an account in the fund selected to receive
the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
MCF-02/98
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- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. 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. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "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; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
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 Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
---------- -----------------
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INCOME AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL UTILITIES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A --------------
AIM ADVISOR MULTIFLEX AIM GROWTH FUND -- CLASS A AIM MONEY MARKET FUND
FUND -- CLASS A AIM HIGH INCOME MUNICIPAL -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE FUND -- CLASS A AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM ASIAN GROWTH FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM MUNICIPAL BOND
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM EUROPEAN DEVELOPMENT OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM WEINGARTEN FUND -- CLASS A
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH
FUND; (ii) LOWER LOAD FUND SHARE PURCHASES OF $1,000,000 OR MORE AND AIM Cash
Reserve Shares of AIM MONEY MARKET FUND and AIM TAX-EXEMPT CASH FUND PURCHASES
MAY BE EXCHANGED FOR LOAD FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH
WILL THEN BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR
PURPOSES OF CALCULATING THE CONTINGENT DEFERRED SALES CHARGE ON THE LOAD FUND
SHARES ACQUIRED, THE 18-MONTH PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH
EXCHANGE; (iii) Class A shares may be exchanged for Class A shares, (iv) Class B
shares may be exchanged only for Class B shares; (v) Class C shares may only be
exchanged for Class C shares; and (vi) AIM Cash Reserve Shares of AIM MONEY
MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET FUND or
for Class B or Class C shares.
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<PAGE> 149
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 FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds..........
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds.......... 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 Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise, Of-
apply if No Load shares were fering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
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, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A, Class B, or Class C 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 Internal Revenue Service ("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 business 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. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
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.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received
MCF-02/98
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<PAGE> 150
after NYSE Close will result in the redemption of shares at their net asset
value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), 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 business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
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.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
MCF-02/98
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<PAGE> 151
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from individual retirement accounts,
custodial accounts maintained pursuant to Code Section 403(b), deferred
compensation plans qualified under Code Section 457 and plans qualified under
Code Section 401 (collectively, "Retirement Plans"), (3) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class B or Class C shares at the time the shareholder elects to participate
in the Systematic Withdrawal Plan, (4) effected pursuant to the right of a
Multiple Class Fund 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 prospectus of such Multiple Class Fund, (5)
effected by AIM of its investment in Class B or Class C shares and (6) of Class
C shares where such investor's dealer of record, due to the nature of the
investor's account, notifies AIM Distributors prior to the time of investment
that the dealer waives the payment otherwise payable to the dealer described in
the fifth paragraph under the caption "Terms and Conditions of Purchase of the
AIM Funds -- All Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting 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 in a particular AIM Fund;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors 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 or Class C shares of one or more Multiple Class
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.
MCF-02/98
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<PAGE> 152
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge 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. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund or AIM Cash Reserve Shares of AIM MONEY MARKET FUND which were acquired
through an exchange of shares which previously were subject to the 1% contingent
deferred sales charge will be credited with the period of time such exchanged
shares were held, and (ii) shares of any Load Fund which are subject to the 1%
contingent deferred sales charge and which were acquired through an exchange of
shares of a Lower Load Fund or a No Load Fund which previously were not subject
to the 1% contingent deferred sales charge will not be credited with the period
of time such exchanged shares were held. The charge will be waived in the
following circumstances: (1) redemptions of shares by employee benefit plans
("Plans") qualified under Sections 401 or 457 of 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 shares are being redeemed in
connection with employee terminations or withdrawals, and (a) the total amount
invested in a Plan 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 death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (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; (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 AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59-1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information; and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be gen-
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uine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND). After completing the appropriate authorization form,
shareholders may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND
and the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does
not apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner; (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions; and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed
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the surety coverage amount indicated on the medallion. For information regarding
whether a particular institution or organization qualifies as an "eligible
guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in Class A
shares of any AIM Fund at the net asset value next computed after receipt by the
Transfer Agent of the funds to be reinvested; provided, however, if the
redemption was made from Class A shares of either AIM LIMITED MATURITY TREASURY
FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be subject
to the difference in sales charge between the shares redeemed and the shares the
proceeds are reinvested in. The shareholder must ask the Transfer Agent for such
privilege at the time of reinvestment. A realized gain on the redemption is
taxable, and reinvestment may alter any capital gains payable. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in (or exchanged for) shares of another AIM Fund
at a reduced sales charge within 90 days of the payment of the sales charge, the
shareholder's basis in the fund shares redeemed may not include the amount of
the sales charge paid, thereby reducing the loss or increasing the gain
recognized from the redemption; however, the shareholder's basis in the fund
shares purchased will include the sales charge. Each AIM Fund may amend, suspend
or cease offering this privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation. This privilege may only be
exercised once each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
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DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE. The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and 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 fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 or Trustees of the
applicable AIM Fund.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
</TABLE>
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 an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares are expected to be lower than those
for Class A shares or AIM Cash Reserve Shares because of higher distribution
fees paid by Class B and Class C shares. Dividends on all shares may also be
affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such
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payment. Any dividend and distribution election remains in effect until the
Transfer Agent receives a revised written election by the shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are 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.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM HIGH INCOME MUNICIPAL FUND, AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT
CASH FUND, and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt Funds") which are
exempt from federal tax. Dividends paid by a fund (other than capital gain
distributions) may qualify for the federal 70% dividends received deduction for
corporate shareholders to the extent of the qualifying dividends received by the
fund on domestic common or preferred stock. It is not likely that dividends
received from AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE
FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE FUND will
qualify for this dividends received deduction. Shortly after the end of each
year, shareholders will receive information regarding the amount and federal
income tax treatment of all distributions paid during the year. Certain
dividends declared in October, November or December of a calendar year are
taxable to shareholders as though received on December 31 of that year if paid
to shareholders during January of the following calendar year. No gain or loss
will be recognized by shareholders upon the automatic conversion of Class B
shares of a Multiple Class Fund into Class A shares of such Fund. With respect
to tax-exempt shareholders, distributions from the Funds will not be subject to
federal income taxation to the extent permitted under the applicable tax-
exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of interest on certain indebtedness of the shareholder,
and may have other collateral federal income tax consequences. The Tax-Exempt
Funds may invest in Municipal Securities the interest on which will constitute
an item of tax preference and which therefore could give rise to a federal
alternative minimum tax liability for shareholders, and may invest up to 20% of
their net assets in such securities and
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other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
FUND -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to shareholders credits for
foreign taxes paid. If the fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders, and should note that if
such losses exceed other income during a taxable year, the fund would not be
able to pay ordinary income dividends.
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GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as
Sub-Custodian for retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, LLP,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
legal matters.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. 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.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish between the year 2000 from the year 1900.
This defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers provide the AIM Funds
and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
MCF-02/98
A-20
<PAGE> 158
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. 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.
MCF-02/98
A-21
<PAGE> 159
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-02/98
B-1
<PAGE> 160
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-02/98
B-2
<PAGE> 161
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Investment Sub-Advisor
A I M Capital Management, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Principal Underwriter
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
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
Houston, TX 77002
For more complete information about any other Fund in The AIM Family of Funds,
including charges and expenses, please call (800) 347-4246 or write to A I M
Distributors, Inc. and request a free prospectus. Please read the prospectus
carefully before you invest or send money.
AEF-PRO-1
<PAGE> 162
STATEMENT OF
ADDITIONAL INFORMATION
RETAIL CLASSES OF
AIM BLUE CHIP FUND
AIM CHARTER FUND
AIM WEINGARTEN FUND
AIM CONSTELLATION FUND
AIM AGGRESSIVE GROWTH FUND
AIM CAPITAL DEVELOPMENT FUND
(SERIES PORTFOLIOS OF
AIM EQUITY FUNDS, INC.)
11 GREENWAY PLAZA
SUITE 100
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 (800) 347-4246.
---------------
STATEMENT OF ADDITIONAL INFORMATION DATED FEBRUARY 27, 1998
RELATING TO THE AIM AGGRESSIVE GROWTH FUND PROSPECTUS,
THE AIM BLUE CHIP FUND PROSPECTUS, AND THE AIM CAPITAL DEVELOPMENT
FUND PROSPECTUS EACH DATED FEBRUARY 27, 1998 AND TO
THE AIM CHARTER FUND, AIM WEINGARTEN FUND AND AIM CONSTELLATION
FUND PROSPECTUS DATED FEBRUARY 27, 1998
<PAGE> 163
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...........................................................................3
Historical Portfolio Results...............................................................3
PORTFOLIO TRANSACTIONS AND BROKERAGE................................................................6
General Brokerage Policy...................................................................6
Allocation of Portfolio Transactions.......................................................7
Section 28(e) Standards....................................................................7
Brokerage Commissions Paid.................................................................8
Portfolio Turnover.........................................................................9
INVESTMENT OBJECTIVES AND POLICIES..................................................................9
Foreign Securities........................................................................10
Foreign Exchange Transactions.............................................................11
Rule 144A Securities......................................................................11
Lending of Portfolio Securities...........................................................11
Repurchase Agreements.....................................................................12
Reverse Repurchase Agreements.............................................................12
Special Situations........................................................................12
Short Sales...............................................................................13
Warrants .................................................................................13
Options .................................................................................13
Combined Option Positions.................................................................14
Futures Contracts.........................................................................14
Stock Index Futures Contracts....................................................14
Foreign Currency Futures Contracts...............................................15
Options on Futures Contracts..............................................................15
Risks as to Futures Contracts and Related Options.........................................15
Securities Issued on a When-Issued or Delayed Delivery Basis..............................16
Investment in Unseasoned Issuers..........................................................16
INVESTMENT RESTRICTIONS............................................................................17
Blue Chip.................................................................................17
Charter .................................................................................17
Weingarten................................................................................18
Constellation.............................................................................19
Aggressive Growth.........................................................................20
Capital Development.......................................................................21
MANAGEMENT.........................................................................................22
Directors and Officers....................................................................22
Remuneration of Directors........................................................25
AIM Funds Retirement Plan for Eligible Directors/Trustees........................26
Deferred Compensation Agreements.................................................27
</TABLE>
i
<PAGE> 164
<TABLE>
<S> <C>
Investment Advisory, Administrative Services and Sub-Advisory Agreements..................28
DISTRIBUTION PLANS................................................................................31
The Class A and C Plan....................................................................31
The Class B Plan..........................................................................32
Both Plans................................................................................32
THE DISTRIBUTOR....................................................................................36
HOW TO PURCHASE AND REDEEM SHARES..................................................................38
NET ASSET VALUE DETERMINATION......................................................................39
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS...........................................................40
Reinvestment of Dividends and Distributions...............................................40
Tax Matters...............................................................................40
Qualification as a Regulated Investment Company...........................................40
Determination of Taxable Income of a Regulated Investment Company.........................41
Excise Tax on Regulated Investment Companies..............................................41
Fund Distributions........................................................................42
Sale or Redemption of Shares..............................................................44
Foreign Shareholders......................................................................44
Effect of Future Legislation; Local Tax Considerations....................................45
MISCELLANEOUS INFORMATION..........................................................................45
Shareholder Inquiries.....................................................................45
Audit Reports.............................................................................45
Legal Matters.............................................................................45
Custodian and Transfer Agent..............................................................45
Principal Holders of Securities...........................................................46
Other Information.........................................................................52
APPENDIX ..........................................................................................53
Description of Commercial Paper Ratings...................................................53
Description of Corporate Bond Ratings.....................................................53
FINANCIAL STATEMENTS...............................................................................FS
</TABLE>
ii
<PAGE> 165
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 February 27, 1998 (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 dated February 27, 1998. The information for the Retail
Class of AIM Blue Chip Fund ("Blue Chip") is contained in a separate prospectus
dated February 27, 1998. The information for the Retail Class of AIM Capital
Development Fund ("Capital Development") is contained in a separate prospectus
dated February 27, 1998. 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 (800)
347-4246. 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 six separate portfolios: Aggressive
Growth, Blue Chip, Capital Development, Charter, Constellation, and Weingarten
(each a "Fund" and collectively, the "Funds"). Charter, Weingarten and
Constellation each have four separate classes: Class A, Class B and Class C and
an Institutional Class. Aggressive Growth has Class A shares only. Blue Chip and
Capital Development each have three classes of shares: Class A, Class B and
Class C shares. Class A shares (sold with a front-end sales charge) and Class B
and Class C shares (each 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. Blue Chip
acquired the investment portfolio of Baird Blue Chip Fund, Inc. (the "BBC
Fund"), a registered management investment company, on June 3, 1996, in a
corporate reorganization. All historical financial information contained in this
Statement of Additional Information for periods prior to June 3, 1996, relating
to Blue Chip is that of the BBC Fund. Capital Development acquired substantially
all of the assets of Baird Capital Development Fund, Inc., a registered
management investment company, on August 12, 1996 in a corporate reorganization.
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%
1
<PAGE> 166
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 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 sales charge or Class B or Class C
contingent deferred sales charge into account. Excluding sales charges from a
total return calculation produces a higher total return figure.
2
<PAGE> 167
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.
HISTORICAL PORTFOLIO RESULTS
Total returns for Class A shares of Blue Chip, Capital Development,
Charter, Weingarten, Aggressive Growth and Constellation for the one, five, ten,
fifteen and twenty (or since inception, if shorter) periods ended October 31,
1997 (which include the maximum sales charge of 5.50% and reinvestment of all
dividends and distributions), were as follows:
<TABLE>
<CAPTION>
CLASS A AVERAGE ANNUAL RETURNS
ONE FIVE TEN FIFTEEN TWENTY SINCE
YEAR YEARS YEARS YEARS YEARS INCEPTION*
---- ----- ----- ----- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
BLUE CHIP 22.54% 16.74% 14.97% N/A N/A 13.20%
CAPITAL DEVELOPMENT 24.11% N/A N/A N/A N/A 26.25%
CHARTER 21.52% 15.45% 15.78% 15.18% 17.57% 13.92%
WEINGARTEN 19.83% 14.21% 15.97% 17.16% 20.04% 15.00%
CONSTELLATION 12.34% 18.17% 20.75% 18.59% 20.78% 18.65%
AGGRESSIVE GROWTH 10.91% 26.44% 22.36% N/A N/A 16.65%
</TABLE>
<TABLE>
<CAPTION>
CLASS A CUMULATIVE RETURNS
ONE FIVE TEN FIFTEEN TWENTY SINCE
YEAR YEARS YEARS YEARS YEARS INCEPTION*
---- ----- ----- ----- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
BLUE CHIP 22.54% 116.87% 303.67% N/A N/A 278.61%
CAPITAL DEVELOPMENT 24.11% N/A N/A N/A N/A 37.71%
CHARTER 21.52% 105.14% 332.92% 732.52% 2448.46% 4244.21%
WEINGARTEN 19.83% 94.35% 340.19% 975.94% 3759.64% 5177.71%
CONSTELLATION 12.34% 130.43% 559.22% 1189.89% 4263.54% 3857.33%
AGGRESSIVE GROWTH 10.91% 223.16% 652.46% N/A N/A 699.53%
</TABLE>
* The inception dates for the Class A shares of the Funds are February 4,
1987, June 17, 1996, November 26, 1968, June 17, 1969, April 30, 1976
and May 1, 1984, respectively.
Blue Chip acquired the investment portfolio of the BBC Fund on June 3,
1996. The performance data set forth above for Blue Chip includes performance
data of the BBC Fund for periods prior to June 3, 1996. The performance data is
not necessarily indicative of the future performance of Blue Chip.
3
<PAGE> 168
During the 10-year period ended October 31, 1997, 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 $4,329,
$4,402, $6,592 and $7,525, respectively, assuming all distributions were
reinvested.
During the 15-year period ended October 31, 1997, a hypothetical $1,000
investment at the beginning of such period in Class A shares of Charter,
Weingarten and Constellation would have been worth $8,325, $10,759 and $12,899,
respectively, assuming all dividends were reinvested.
During the 20-year period ended October 31, 1997 a hypothetical $1,000
investment at the beginning of such period in Class A shares of Charter,
Constellation and Weingarten would have been worth $25,485, $43,635 and $38,596,
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.
Charter and Weingarten's total returns for Class B shares for the
period ended October 31, 1997 and the period June 26, 1995 (inception date for
Class B shares of Charter and Weingarten) through October 31, 1997 (which
include the maximum contingent deferred sales charge of 5% and reinvestment of
all dividends and distributions), and Blue Chip and Capital Development's total
returns for Class B shares for the period ended October 31, 1997 and the period
October 1, 1996 (inception date for Class B shares) through October 31, 1997
(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
<TABLE>
<CAPTION>
Since
One Year Inception*
-------- ----------
<S> <C> <C>
BLUE CHIP 23.81% 23.82%
CAPITAL DEVELOPMENT 25.51% 21.46%
CHARTER 22.54% 21.30%
WEINGARTEN 20.78% 20.06%
</TABLE>
CLASS B CUMULATIVE RETURNS
<TABLE>
<CAPTION>
Since
One Year Inception*
-------- ----------
<S> <C> <C>
BLUE CHIP 23.81% 26.02%
CAPITAL DEVELOPMENT 25.51% 23.42%
CHARTER 22.54% 57.35%
WEINGARTEN 20.78% 53.61%
</TABLE>
* The inception dates for the Class B shares of the Funds are October 1,
1996, October 1, 1996, June 26, 1995 and June 26, 1995, respectively.
Total returns are not available for Class B shares of Constellation as
the effective date of the Class B shares was November 3, 1997.
Total returns for Class C shares of Blue Chip, Capital Development,
Charter, Constellation and Weingarten, for the period August 2, 1997 (inception
date for Class C shares) through October 31, 1997 were as follows:
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CLASS C AVERAGE ANNUAL RETURNS
<TABLE>
<CAPTION>
Since
One Year Inception*
-------- ----------
<S> <C> <C>
BLUE CHIP N/A (4.03)%
CAPITAL DEVELOPMENT N/A 6.20%
CHARTER N/A (4.20)%
CONSTELLATION N/A (4.72)%
WEINGARTEN N/A (3.12)%
</TABLE>
CLASS C CUMULATIVE RETURNS
<TABLE>
<CAPTION>
Since
One Year Inception*
-------- ----------
<S> <C> <C>
BLUE CHIP N/A (4.03)%
CAPITAL DEVELOPMENT N/A 6.20%
CHARTER N/A (4.20)%
CONSTELLATION N/A (4.72)%
WEINGARTEN N/A (3.12)%
</TABLE>
* The inception date for the Class C shares of the Funds is August 4,
1997.
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 and other
materials to the performance of comparative benchmarks such as the Consumer
Price Index ("CPI"), the Standard & Poor's 500 Stock Index, and fixed-price
investments such as bank certificates of deposit and/or savings accounts.
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.
Standard & Poor's 500 Stock Index is a group of unmanaged securities widely
regarded by investors as representative of the stock market in general.
Comparisons 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. Class A shares of Charter, Weingarten and
Constellation are not insured and their value will vary with market conditions.
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.
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<PAGE> 170
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.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
A I M Advisors, Inc. ("AIM") makes decisions to buy and sell securities
for each Fund, selects broker-dealers, effects the Funds' investment portfolio
transactions, allocates brokerage fees in such transactions, and where
applicable, negotiates commissions and spreads on transactions. AIM's primary
consideration in effecting a security transaction is to obtain the most
favorable execution of the order, which includes the best price on the security
and a low commission rate. While AIM seeks reasonably competitive commission
rates, the Funds may not pay the lowest commission or spread available. See
"Section 28(e) Standards" below.
Some of the securities in which the Funds invest are traded in
over-the-counter markets. In such transactions, a Fund deals directly with
dealers who make markets in the securities involved, except when better prices
are available elsewhere. Portfolio transactions placed through dealers who are
primary market makers are effected at net prices without commissions, but which
include compensation in the form of a mark up or mark down.
Traditionally, commission rates have not been negotiated on stock
markets outside the United States. Although in recent years many overseas stock
markets have adopted a system of negotiated rates, a number of markets maintain
an established schedule of minimum commission rates.
AIM may determine target levels of commission business with various
brokers on behalf of its clients (including the Funds) over a certain time
period. The target levels will be based upon the following factors, among
others: (1) the execution services provided by the broker; (2) the research
services provided by the broker; and (3) the broker's interest in mutual funds
in general and in the Funds and other mutual funds advised by AIM or A I M
Capital Management, Inc. (collectively, the "AIM Funds") in particular,
including sales of the Funds and of the other AIM Funds. In connection with (3)
above, the Funds' trades may be executed directly by dealers that sell shares of
the AIM Funds or by other broker-dealers with which such dealers have clearing
arrangements. AIM will not use a specific formula in connection with any of
these considerations to determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of a
Fund any commissions, fees, brokerage or similar payments paid by the Fund on
portfolio transactions. Normally, the only fees which AIM can recapture are the
soliciting dealer fees on the tender of a Fund's portfolio securities in a
tender or exchange offer.
The Funds may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of a Fund, provided the conditions of an exemptive order received by
the Funds from the SEC are met. In addition, a Fund may purchase or sell a
security from or to another AIM Fund provided the Funds follow procedures
adopted by the Board of Directors/Trustees of the various AIM Funds, including
the Company. These inter-fund transactions do not generate brokerage commissions
but may result in custodial fees or taxes or other related expenses.
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<PAGE> 171
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some
of these accounts may have investment objectives similar to the Funds.
Occasionally, identical securities will be appropriate for investment by one of
the Funds and by another Fund or one or more of these investment accounts.
However, the position of each account in the same securities and the length of
time that each account may hold its investment in the same securities may vary.
The timing and amount of purchase by each account will also be determined by its
cash position. If the purchase or sale of securities is consistent with the
investment policies of the Fund(s) and one or more of these accounts, and is
considered at or about the same time, AIM will fairly allocate transactions in
such securities among the Fund(s) and these accounts. AIM may combine such
transactions, in accordance with applicable laws and regulations, to obtain the
most favorable execution. Simultaneous transactions could, however, adversely
affect a Fund's ability to obtain or dispose of the full amount of a security
which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to a Fund. In making such allocations,
AIM considers the investment objectives and policies of its advisory clients,
the relative size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, the size of investment commitments
generally held, and the judgments of the persons responsible for recommending
the investment.
SECTION 28(E) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM,
under certain circumstances, lawfully may cause an account to pay a higher
commission than the lowest available. Under Section 28(e), AIM must make a good
faith determination that the commissions paid are "reasonable in relation to the
value of the brokerage and research services provided ... viewed in terms of
either that particular transaction or [AIM's] overall responsibilities with
respect to the accounts as to which it exercises investment discretion." The
services provided by the broker also must lawfully and appropriately assist AIM
in the performance of its investment decision-making responsibilities.
Accordingly, in recognition of research services provided to it, a Fund may pay
a broker higher commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Company's directors with respect to
the performance, investment activities, and fees and expenses of other mutual
funds. Brokerdealers may communicate such information electronically, orally or
in written form. Research services may also include the providing of custody
services, as well as the providing of equipment used to communicate research
information, the providing of specialized consultations with AIM personnel with
respect to computerized systems and data furnished to AIM as a component of
other research services, the arranging of meetings with management of companies,
and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the
broker-dealers used by AIM tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, the research provides
AIM with a diverse perspective on financial markets. Research services provided
to AIM by broker-dealers are available for the benefit of all accounts managed
or advised by AIM or by its affiliates. Some broker-dealers may indicate that
the provision of research services is dependent upon the generation of certain
specified levels of commissions and underwriting concessions by AIM's clients,
including the Funds.
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<PAGE> 172
However, the Funds are not under any obligation to deal with any broker-dealer
in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the
broker-dealer providing them. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM believes
that the research services are beneficial in supplementing AIM's research and
analysis and that they improve the quality of AIM's investment advice. The
advisory fee paid by the Funds is not reduced because AIM receives such
services. However, to the extent that AIM would have purchased research services
had they not been provided by broker-dealers, the expenses to AIM could be
considered to have been reduced accordingly.
BROKERAGE COMMISSIONS PAID
For the fiscal years ended October 31, 1997, 1996 and 1995, Charter
paid brokerage commissions of $12,073,633, $9,213,125 and $14,960,600,
respectively. For the fiscal year ended October 31, 1997, AIM allocated certain
of Charter's brokerage transactions to certain broker-dealers that provided AIM
with certain research, statistical and other information. Such transactions
amounted to $756,761,085 and the related brokerage commissions were $692,584.
For the fiscal years ended October 31, 1997, 1996 and 1995, Weingarten
paid brokerage commissions of $17,413,682, $21,795,437 and $21,766,760,
respectively. For the fiscal year ended October 31, 1997, AIM allocated certain
of Weingarten's brokerage transactions to certain broker-dealers that provided
AIM with certain research, statistical and other information. Such transactions
amounted to $1,134,767,539 and the related brokerage commissions were
$1,144,152.
For the fiscal years ended October 31, 1997, 1996 and 1995,
Constellation paid brokerage commissions of $16,928,988, $13,032,299 and
$15,359,510, respectively. For the fiscal year ended October 31, 1997 AIM
allocated certain of Constellation's brokerage transactions to certain
broker-dealers that provided AIM with certain research, statistical and other
information. Such transactions amounted to $1,340,675,363 and the related
brokerage commissions were $1,611,545.
For the fiscal years ended October 31, 1997, 1996 and 1995, Aggressive
Growth paid brokerage commissions of $4,026,523, $3,244,570 and $9,917,185,
respectively. For the fiscal year ended October 31, 1997, AIM allocated 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 $325,627,524 and the related brokerage commissions were
$542,531.
For the fiscal years ended October 31, 1997, the fiscal period 1996 and
September 30, 1996, Blue Chip paid brokerage commissions of $858,396, $121,246
and $39,153, respectively. For the fiscal year ended October 31, 1997, AIM
allocated certain of Blue Chip's brokerage transactions to certain
broker-dealers that provide AIM with certain research, statistical and other
information. Such transactions amounted to $34,748,160 and the related brokerage
commissions were $32,887.
Brokerage commissions paid by the BBC Fund during the fiscal year ended
September 30, 1995, to brokers, other than its investment adviser Robert W.
Baird & Co. Incorporated ("Baird"), totaled $45,867. All of such brokers
provided research services to Baird. During such year, the BBC Fund did not pay
brokerage commissions to Baird.
For the fiscal years ended October 31, 1997 and the fiscal period 1996,
Capital Development paid brokerage commissions of $628,188 and $219,931. For the
fiscal year ended October 31, 1997, AIM allocated certain of Capital
Development's brokerage transactions to certain broker-dealers that provide AIM
with certain research, statistical and other information. Such transactions
amounted to $28,747,604 and the related brokerage commissions were $61,112.
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<PAGE> 173
PORTFOLIO TURNOVER
The portfolio turnover rate of Aggressive Growth, Capital Development,
Charter, Constellation, Weingarten and Blue Chip 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 short-term 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 Funds may invest, see the Appendix to this Statement of
Additional Information.
COMMON STOCKS -- The Funds will invest in common stocks. Common stocks
represent the residual ownership interest in the issuer and are entitled to the
income and increase in the value of the assets and business of the entity after
all of its obligations and preferred stocks are satisfied. Common stocks
generally have voting rights. Common stocks fluctuate in price in response to
many factors including historical and prospective earnings of the issuer, the
value of its assets, general economic conditions, interest rates, investor
perceptions and market liquidity.
PREFERRED STOCKS -- The Funds may invest in preferred stocks. Preferred
stock has a preference over common stock in liquidation (and generally dividends
as well) but is subordinated to the liabilities of the issuer in all respects.
As a general rule the market value of preferred stock with a fixed dividend rate
and no conversion element varies inversely with interest rates and perceived
credit risk, while the market price of convertible preferred stock generally
also reflects some element of conversion value. Because preferred stock is
junior to debt securities and other obligations of the issuer, deterioration in
the credit quality of the issuer will cause greater changes in the value of a
preferred stock than in a more senior debt security with similar stated yield
characteristics. Unlike interest payments on debt securities, preferred stock
dividends are payable only if declared by the issuer's board of directors.
Preferred stock also may be subject to optional or mandatory redemption
provisions.
CONVERTIBLE SECURITIES -- The Funds may invest in convertible
securities. A convertible security is a bond, debenture, note, preferred stock
or other security that may be converted into or exchanged for a prescribed
amount of common stock or other equity security of the same or a different
issuer within a particular period of time at a specified price or formula. A
convertible security entitles the holder to receive interest paid or accrued on
debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to nonconvertible income securities in
that they ordinarily provide a stable stream of income with generally higher
yields than those of common stocks of the same or similar issuers. Convertible
securities rank senior to common stock in a corporation's capital structure but
are usually subordinated to comparable nonconvertible securities. Convertible
securities may be subject to redemption at the option of the issuer at a price
established in the convertible security's governing instrument. Although each
Fund will only purchase convertible securities that AIM considers to have
adequate protection parameters, including an adequate capacity to pay interest
and repay principal in a timely manner, it invests without regard to corporate
bond ratings. Capital Development does not intend to invest more than 5% of its
net assets in convertible securities.
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<PAGE> 174
CORPORATE DEBT SECURITIES -- The Funds may invest in corporate debt
securities. Corporations issue debt securities of various types, including bonds
and debentures (which are long-term), notes (which may be short- or long-term),
bankers acceptances (indirectly secured borrowings to facilitate commercial
transactions) and commercial paper (short-term unsecured notes). These
securities typically provide for periodic payments of interest, at a rate which
may be fixed or adjustable, with payment of principal upon maturity and are
generally not secured by assets of the issuer or otherwise guaranteed. The
values of fixed rate income securities tend to vary inversely with changes in
interest rates, with longer-term securities generally being more volatile than
shorter-term securities. Corporate securities frequently are subject to call
provisions that entitle the issuer to repurchase such securities at a
predetermined price prior to their stated maturity. In the event that a security
is called during a period of declining interest rates, the Fund may be required
to reinvest the proceeds in securities having a lower yield. In addition, in the
event that a security was purchased at a premium over the call price, a Fund
will experience a capital loss if the security is called. Adjustable rate
corporate debt securities may have interest rate caps and floors.
Blue Chip will not invest in non-convertible corporate debt securities
rated below investment grade by Standard and Poor's Ratings Services ("S&P") and
Moody's Investors Service ("Moody's") or in unrated non-convertible corporate
debt securities believed by the Fund's investment adviser to be below investment
grade quality. Securities rated in the four highest long-term rating categories
by S&P and Moody's are considered to be "investment grade." S&P's fourth highest
long-term rating category is "BBB", with BBB being the lowest investment grade
rating. Moody's fourth highest long-term rating category is "Baa", with Baa3
being the lowest investment grade rating. Publications of S&P indicate that it
assigns securities to the "BBB" rating category when such securities are
"regarded as having an adequate capacity to pay interest and repay principal.
Such securities normally exhibit adequate protection parameters, but adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay," whereas securities rated AAA by S&P are regarded as
having "capacity to pay interest and repay principal [that] is extremely
strong." Publications of Moody's indicate that it assigns securities to the "Baa
rating category when such securities are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well," whereas securities rated Aaa by
Moody's "are judged to be of the best quality" and "carry the smallest degree of
investment risk."
U.S. GOVERNMENT SECURITIES -- The Funds may invest in securities issued
or guaranteed by the United States government or its agencies or
instrumentalities. These include Treasury securities (bills, notes, bonds and
other debt securities) which differ only in their interest rates, maturities and
times of issuance. U.S. Government agency and instrumentality securities include
securities which are supported by the full faith and credit of the U.S.,
securities that are supported by the right of the agency to borrow from the U.S.
Treasury, securities that are supported by the discretionary authority of the
U.S. Government to purchase certain obligations of the agency or instrumentality
and securities that are supported only by the credit of such agencies. While the
U.S. Government may provide financial support to such U.S. government-sponsored
agencies or instrumentalities, no assurance can be given that it always will do
so. The U.S. government, its' agencies and instrumentalities do not guarantee
the market value of their securities and consequently the values of such
securities fluctuate.
FOREIGN SECURITIES
Each of Aggressive Growth, Blue Chip and Capital Development may invest
up to 25% of its total assets in foreign securities. Each of Charter, Weingarten
and Constellation may invest up to 20% of its total assets in foreign
securities. For purposes of computing such limitation American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs") 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,
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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.
FOREIGN EXCHANGE TRANSACTIONS
Purchases and sales of foreign securities are usually made with foreign
currencies, and consequently the Funds may from time to time hold cash balances
in the form of foreign currencies and multinational currency units. Such foreign
currencies and multinational currency units will usually be acquired on a spot
(i.e. cash) basis at the spot rate prevailing in foreign exchange markets and
will result in currency conversion costs to the Funds. The Funds attempt to
purchase and sell foreign currencies on as favorable a basis as practicable;
however, some price spread on foreign exchange transactions (to cover service
charges) may be incurred, particularly when the Funds change investments from
one country to another, or when U.S. dollars are used to purchase foreign
securities. Certain countries could adopt policies which would prevent the Funds
from transferring cash out of such countries, and the Funds may be affected
either favorably or unfavorably by fluctuations in relative exchange rates while
the Funds hold foreign currencies.
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.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Funds may each make
secured loans of portfolio securities amounting to not more than 33-1/3% of its
total assets. None of the Funds currently intend to engage in this investment
practice. 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
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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 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. 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.
REVERSE REPURCHASE AGREEMENTS
Consistent with Charter's policy on borrowings, Charter may invest in
reverse repurchase agreements with banks, which involve the sale of securities
held by the Fund, with an agreement that the Fund will repurchase the securities
at an agreed upon price and date. The Fund may employ reverse repurchase
agreements (i) for temporary emergency purposes, such as to meet unanticipated
net redemptions so as to avoid liquidating other portfolio securities during
unfavorable market conditions; (ii) to cover short-term cash requirements
resulting from the timing of trade settlements; or (iii) to take advantage of
market situations where the interest income to be earned from the investment of
the proceeds of the transaction is greater than the interest expense of the
transaction. At the time it enters into a reverse repurchase agreement, the Fund
will segregate liquid securities having a dollar value equal to the repurchase
price. Reverse repurchase agreements are considered borrowings by the Fund under
the 1940 Act.
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
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unseasoned companies and special situations often involve much greater risk than
is inherent in ordinary investment securities.
SHORT SALES
Although Blue Chip, Weingarten, Constellation and Aggressive Growth do
not currently intend to do so, they and Capital Development may each enter into
short sales transactions. None of Blue Chip, Weingarten, Constellation,
Aggressive Growth or Capital Development 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 for, without payment of any further consideration, 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 Blue Chip, Weingarten, Constellation, Aggressive Growth and
Capital Development 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 the
respective Fund's net assets (10% of the value of total assets of Aggressive
Growth) 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.
OPTIONS
Each of the Funds 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. A call option is "covered" if the
Fund owns or has the right to acquire the underlying security subject to the
call. 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.
Charter, Capital Development, Blue Chip and Weingarten may purchase put
options. A put purchased by the Fund constitutes a hedge against a decline in
the price of a security owned by the Fund. It may be sold at a profit or loss
depending upon changes in the price of the underlying security. It may be
exercised at a profit provided that the amount of the decline in the price of
the underlying security below the exercise price during the option period
exceeds the option premium, or it may expire without value. A call constitutes a
hedge against an increase in the price of a security which the Fund has sold
short, it may be sold at a profit or loss depending upon changes in the price of
the underlying security, it may be exercised at a profit provided that the
amount of the increase in the price of the underlying security over the exercise
price during the option period exceeds the option premium, or it may expire
without value. The maximum loss exposure involved in
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the purchase of an option is the cost of the option contract. Capital
Development and Blue Chip may engage in strategies employing combinations of
covered put and call options.
The Funds do not intend to engage in such transactions for speculative
purposes and will engage in such transactions only for hedging purposes.
COMBINED OPTION POSITIONS
Each Fund, for hedging purposes, may purchase and write options in
combination with each other to adjust the risk and return characteristics of the
Fund's overall position. For example, the Fund may purchase a put option and
write a covered call option on the same underlying instrument, in order to
construct a combined position. This technique, called a "collar," enables the
Fund to offset the cost of purchasing a put option with the premium received
from writing the call option. However, by selling the call option, the Fund
gives up the ability for potentially unlimited profit from the stock
appreciation. Another possible combined position would involve writing a covered
call option at one strike price and buying a call option at a higher price, in
order to reduce the risk of the written covered call option in the event of a
substantial price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult to
open and close out.
FUTURES CONTRACTS
Each of the Funds may purchase and sell futures contracts in order to
hedge the value of its portfolio against changes in market conditions. In cases
of purchases of futures contracts, an amount of liquid assets, 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
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 contracts 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 or
Capital Development, other currency) amount times
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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 Standard & Poor'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 in
order to hedge the value of its portfolio against changes in market conditions.
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 and Capital Development only, futures
contracts may also be used to hedge the risk of changes in the exchange rate of
foreign currencies.
OPTIONS ON FUTURES CONTRACTS
Blue Chip, Aggressive Growth and Capital Development 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.
Blue Chip, Aggressive Growth and Capital Development will purchase put
options on futures contracts to hedge against the risk of falling prices for
their respective portfolio securities. Blue Chip, Aggressive Growth and Capital
Development 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 option compared to either the
price of the futures contract upon which it is 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
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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 on 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 Blue Chip, Aggressive
Growth and Capital Development, 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 Blue Chip, Aggressive Growth and Capital Development, 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.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS
Investment in securities on a when-issued or delayed delivery basis may
increase a Fund's exposure to market fluctuation and may increase the
possibility that the Fund will incur short-term gains subject to federal
taxation or short-term losses if the Fund must engage in portfolio transactions
in order to honor a when-issued or delayed delivery commitment. In a delayed
delivery transaction, the Fund relies on the other party to complete the
transaction. If the transaction is not completed, the Fund may miss a price or
yield considered to be advantageous. A Fund will employ techniques designed to
reduce such risks. If a Fund purchases a when-issued security, the Fund's
custodian bank will segregate cash or other liquid assets in an amount equal to
the when-issued commitment. If the market value of such assets declines,
additional cash or securities will be segregated on a daily basis so that the
market value of the segregated assets will equal the amount of the Fund's
when-issued commitments. To the extent cash and securities are segregated, they
will not be available for new investments or to meet redemptions. Securities
purchased on a delayed delivery basis may require a similar segregation of cash
or other liquid assets.
INVESTMENT IN UNSEASONED ISSUERS
Charter may purchase securities in unseasoned issuers. Securities in
such issuers may provide opportunities for long term capital growth. Greater
risks are associated with investments in securities of unseasoned issuers than
in the securities of more established companies because unseasoned issuers have
only a brief operating history and may have more limited markets and financial
resources. As a result, securities of unseasoned issuers tend to be more
volatile than securities of more established companies.
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INVESTMENT RESTRICTIONS
The following 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.
BLUE CHIP
Blue Chip may not:
(a) issue bonds, debentures or senior equity securities;
(b) concentrate its investments; that is, invest 25% or more
of the value of its assets in issuers which conduct their business
operations in the same industry;
(c) invest in real estate, except that this restriction does
not preclude investments in real estate investment trusts;
(d) write, purchase, or sell puts, calls, straddles, spreads
or combinations thereof (other than covered put and call options), or
sell securities short (except against the box collateralized by not
more than 10% of its net assets) or deal in commodities;
(e) make loans, except that the purchase of a portion of an
issue of publicly distributed bonds, debentures or other debt
securities, or purchasing short-term obligations, 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;
(f) purchase securities on margin, except that the Fund may
obtain such short term credits as may be necessary for the clearance of
purchases or sales of securities;
(g) 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; or
(h) act as an underwriter of securities of other issuers.
In addition, Blue Chip may not (a) with respect to 75% of the Fund's
total assets, 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) or purchase more than 10% of the
outstanding securities of any one issuer or more than 10% of any class of
securities of an issuer; (b) deal in forward contracts; or (c) purchase
additional securities when any borrowings from banks exceed 5% of the Fund's
total assets. 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.
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
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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 issuers, except that the Fund may
purchase securities of other investment companies to the extent permitted by
applicable law or exemptive order.
(b) concentrate its investments; that is, invest 25% or more of the
value of its assets in any particular industry;
(c) 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);
(d) buy or sell physical commodities or physical commodity contracts,
including physical commodities futures contracts, or deal in oil, gas, or other
mineral exploration or development programs;
(e) 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;
(f) purchase securities on margin or sell short;
(g) 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;
(h) invest in companies for the purpose of exercising control or
management, except that the Fund may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order;
(i) act as an underwriter of securities of other issuers;
(j) 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; or
(k) 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.
In addition, Charter may not (a) write covered call options in excess
of 25% of the value of the Fund's net assets, (b) purchase put options in excess
of 25% of the value of the Fund's net assets, (c) engage in the writing and sale
of put options and the writing, sale or purchase of uncovered call options,
straddles, spreads or combinations thereof, (d) issue senior securities, except
to the extent permitted by applicable law or exemptive order, or (e) purchase
additional securities when any borrowings from banks exceed 5% of the Fund's
total assets. These 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.
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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, except
that the Fund may purchase securities of other investment companies to the
extent permitted by applicable law or exemptive order;
(g) buy or sell physical commodities or physical commodity contracts,
including physical commodities futures contracts;
(h) invest 25% or more of the value of its total assets in securities
of issuers all of which conduct their principal business activities in the same
industry; or
(i) 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) 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); (b) purchase
more than 10% of the outstanding securities of any one issuer or more than 10%
of any class of securities of an issuer; (c) deal in forward contracts; (d)
write covered call options in excess of 25% of the value of the Fund's net
assets; (e) purchase put options in excess of 25% of the value of the Fund's net
assets; (f) engage in the writing and sale of put options and the writing, sale
or purchase of uncovered call options, straddles, spreads or combinations
thereof; or (g) purchase additional securities when any borrowings from banks
exceed 5% of the Fund's total assets. 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, except that the Fund may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order;
(b) engage in the underwriting of securities of other issuers;
(c) purchase and sell real estate or commodities or commodity
contracts;
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(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; or
(f) invest 25% or more 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 issue senior securities, except to the extent
permitted by applicable law or exemptive order; or
(b) the Fund may not purchase additional securities when any borrowings
from banks exceed 5% of the Fund's total assets.
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.
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 and except that the Fund may purchase securities of other
investment companies to the extent permitted by applicable law or exemptive
order);
(b) concentrate 25% or more 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;
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(d) act as a securities underwriter under the 1933 Act;
(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); or
(g) buy or sell commodities, commodity contracts or real estate.
Aggressive Growth does not intend (a) to invest for the purposes of
influencing management or exercising control; or (b) to purchase additional
securities when any borrowings from banks exceed 5% of the Fund's total assets.
The investment policies stated in this paragraph 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.
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.
CAPITAL DEVELOPMENT
Capital Development may not:
(a) with respect to 75% of the total assets of the Fund, 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,
except that the Fund may purchase securities of other investment companies to
the extent permitted by applicable law or exemptive order;
(b) concentrate its investments; that is, invest 25% or more of the
value of its total assets in issuers who conduct their business operations in
the same industry;
(c) buy or sell commodities or commodity contracts or purchase or sell
real estate or other interests in real estate including real estate limited
partnership interests, except that this restriction does not preclude
investments in marketable securities of companies engaged in real estate
activities or in master limited partnership interests that are traded on a
national securities exchange;
(d) make loans, except that the purchase of a portion of an issue of
publicly distributed bonds, debentures or other debt securities, or purchasing
short-term obligations, 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;
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(e) purchase securities on margin, except that the Fund may obtain such
short term credits as may be necessary for the clearance of purchases or sales
of securities, or sell securities short (except against the box and
collateralized by not more than 10% of its net assets);
(f) 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) provided
that no borrowing may exceed one-third of the value of its total assets,
including the proceeds of such borrowings, and may secure such borrowings by
pledging up to one-third of the value of its total assets;
(g) act as an underwriter of securities of other issuers; or
(h) issue bonds, debentures, or senior equity securities.
In addition, Capital Development may not (a) deal in forward contracts
(other than foreign exchange transactions for hedging purposes); or (b) purchase
additional securities when any borrowings from banks exceed 5% of the Fund's
total assets. 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.
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
100, Houston, TX 77046-1173. All of the Company's executive officers hold
similar offices with some or all of the other AIM Funds.
<TABLE>
<CAPTION>
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- --------------- ----------------------------------------
<S> <C> <C>
*CHARLES T. BAUER (78) Director and Chairman of the Board of Directors, A I M
Chairman Management Group Inc.; A I M Advisors, Inc., A I M
Capital Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc., and Fund Management
Company; and Vice Chairman and Director,
AMVESCAP PLC.
BRUCE L. CROCKETT (53) Director Director, ACE Limited (insurance company).
906 Frome Lane Formerly, Director, President and Chief Executive
McLean, VA 22102 Officer, COMSAT Corporation; and Chairman, Board
of Governors of INTELSAT (international communi-
cations company).
</TABLE>
- -------------------
* A director who is an "interested person" of the Company as defined in
the 1940 Act.
22
<PAGE> 187
<TABLE>
<CAPTION>
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- --------------- ----------------------------------------
<S> <C> <C>
OWEN DALY II (73) Director Director, Cortland Trust Inc. (investment company).
Six Blythewood Road Formerly, Director, CF & I Steel Corp., Monumental
Baltimore, MD 21210 Life Insurance Company and Monumental General
Insurance Company; and Chairman of the Board of
Equitable Bancorporation.
JACK FIELDS (45) Director Chief Executive Officer, Texana Global, Inc.
8810 Will Clayton Parkway Formerly, Member of the U.S. House of
Jetero Plaza, Suite E Representatives.
Humble, Texas 77398
**CARL FRISCHLING (61) Director Partner, Kramer, Levin, Naftalis & Frankel (law firm).
919 Third Avenue Director, ERD Waste, Inc. (waste management
New York, NY 10022 company), Aegis Consumer Finance (auto leasing
company) and Lazard Funds, Inc. (investment
companies). Formerly Partner, Reid & Priest (law
firm); and prior thereto, Partner, Spengler Carlson
Gubar Brodsky & Frischling (law firm).
*ROBERT H. GRAHAM (51) Director and Director, President and Chief Executive Officer, A I M
President Management Group Inc.; Director and President,
A I M Advisors, Inc.; Director and Senior Vice President,
A I M Capital Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc., and Fund Management Company;
Director, AMVESCAP PLC; and Chairman of the Board of
Directors of AIM Funds Group Canada, Inc.
JOHN F. KROEGER (73) Director Director, Flag Investors International Fund, Inc., Flag
37 Pippins Way Investors Emerging Growth Fund, Inc., Flag
Morristown, NJ 07960 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 (55) Director Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
</TABLE>
- -------------------
** A director who is an "interested person" of A I M Advisors, Inc. and
the Company as defined in the 1940 Act.
* A director who is an "interested person" of the Company as defined in
the 1940 Act.
23
<PAGE> 188
<TABLE>
<CAPTION>
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- --------------- ----------------------------------------
<S> <C> <C>
IAN W. ROBINSON (74) Director Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management Services,
Tequesta, FL 33469 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.
LOUIS S. SKLAR (58) Director Executive Vice President, Development and
Transco Tower, 50th Floor Operations, Hines Interests Limited Partnership (real
2800 Post Oak Blvd. estate development).
Houston, TX 77056
***JOHN J. ARTHUR (53) Senior Vice Director, Senior Vice President and Treasurer, A I M
President and Advisors, Inc.; and Vice President and Treasurer,
Treasurer A I M Management Group Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc., and Fund Management
Company.
GARY T. CRUM (50) Senior Vice Director and President, A I M Capital Management,
President Inc.; Director and Senior Vice President, A I M
Management Group Inc. and A I M Advisors, Inc.;
and Director, A I M Distributors, Inc. and AMVESCAP
PLC.
***CAROL F. RELIHAN (43) Senior Vice Director, Senior Vice President, General Counsel
President and Secretary, A I M Advisors, Inc.; Vice President,
and Secretary General Counsel and Secretary, A I M Management
Group Inc.; Director, Vice President and General Counsel,
Fund Management Company; General Counsel and Vice
President, A I M Fund Services, Inc.; and Vice President,
A I M Capital Management, Inc., A I M Distributors, Inc.
JONATHAN C. SCHOOLAR (36) Senior Vice Senior Vice President, A I M Capital Management
President Inc.; and Vice President, A I M Advisors, Inc.
MELVILLE B. COX (54) Vice President Vice President and Chief Compliance Officer, A I M
Advisors, Inc., A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc., and
Fund Management Company.
DANA R. SUTTON (39) Vice President Vice President and Fund Controller, A I M Advisors,
and Assistant Inc.; and Assistant Vice President and Assistant
Treasurer Treasurer, Fund Management Company.
</TABLE>
- -------------------
*** Mr. Arthur and Ms. Relihan are married to each other.
24
<PAGE> 189
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. Crockett, Daly, Fields,
Frischling, Kroeger (Chairman), Pennock, Robinson and Sklar. 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), Fields, Frischling, Kroeger, Pennock, Robinson and Sklar. 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, Fields, Kroeger, Pennock (Chairman), Robinson 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. Each director who
is not also an officer of the Company is compensated for his or her services
according to a fee schedule which recognizes the fact that such director also
serves as a director or trustee of other AIM Funds. Each such director receives
a fee, allocated among the AIM Funds for which he or she serves as a director or
trustee, which consists of an annual retainer component and a meeting fee
component.
25
<PAGE> 190
Set forth below is information regarding compensation paid or accrued for each
director of the Company:
<TABLE>
<CAPTION>
RETIREMENT
Aggregate BENEFITS TOTAL
COMPENSATION ACCRUED COMPENSATION
FROM THE BY ALL AIM FROM ALL
DIRECTOR COMPANY(1) FUNDS(2) AIM FUNDS(3)
-------- ------------ ---------- -------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
Bruce L. Crockett 21,879 67,774 84,000
Owen Daly II 21,879 103,542 84,000
Jack Fields 14,595 0 71,000
Carl Frischling 21,879 96,520 84,000(4)
Robert H. Graham 0 0 0
John F. Kroeger 21,879 94,132 82,500
Lewis F. Pennock 21,879 55,777 84,000
Ian Robinson 21,879 85,912 84,000
Louis S. Sklar 21,602 84,370 83,500
</TABLE>
(1) The total amount of compensation deferred by all Directors of the Company
during the fiscal year ended October 31, 1997, including interest earned
thereon, was $94,952.
(2) During the fiscal year ended October 31, 1997, the total amount of expenses
allocated to the Company in respect of such retirement benefits was
$163,466. Data reflects compensation for the calendar year ended December
31, 1997.
(3) Each Director serves as director or trustee of a total of 11 registered
investment companies advised by AIM (comprised of over 50 portfolios). Data
reflects total compensation for the calendar year ended December 31, 1997.
(4) See also page 28 regarding fees earned by Mr. Frischling's law firm.
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 "Applicable
AIM Funds"). Each eligible director is entitled to receive an annual benefit
from the Applicable 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 Applicable AIM Funds for such director during
the twelve-month period immediately preceding the director's retirement
26
<PAGE> 191
(including amounts deferred under a separate agreement between the Applicable
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
Applicable 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 Applicable AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming a specified level of
compensation and years of service classifications. The estimated credited years
of service for Messrs. Crockett, Daly, Fields, Frischling, Kroeger, Pennock,
Robinson and Sklar are 10, 10, 0, 20, 19, 16, 10 and 8 years, respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
Number of
Years of Annual Compensation
Service With Paid By All AIM Funds
the AIM Funds $80,000
------------- ---------------------
<S> <C>
10 $60,000
9 $54,000
8 $48,000
7 $42,000
6 $36,000
5 $30,000
</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 their deferral accounts 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 five
(5) or ten (10) years (depending on the Agreement) 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.
27
<PAGE> 192
The Company paid the law firm of Kramer, Levin, Naftalis & Frankel
$4,723, $4,956, $12,872, $15,778, $11,454 and $34,413 in legal fees for services
provided to Blue Chip, Capital Development, Charter, Weingarten, Aggressive
Growth and Constellation, respectively, during the fiscal year ended October 31,
1997. Mr. Carl Frischling, a director of the Company, is a 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"), a holding company that has been engaged in the financial services
business since 1976. The address of AIM is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046. AIM was organized in 1976, and, together with its
subsidiaries, advises or manages over 50 investment company portfolios
encompassing a broad range of investment objectives. AIM Management, an indirect
wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR,
United Kingdom. AMVESCAP PLC and its subsidiaries are an independent investment
management group engaged in institutional investment management and retail
mutual fund business in the United States, Europe and the Pacific Region.
Certain of the directors and officers of AIM are also executive officers of the
Company and their affiliations are shown under "Directors and Officers". A I M
Capital Management, Inc. ("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 and the Company have adopted a Code of Ethics which requires
investment personnel and certain other employees (a) to pre-clear personal
securities transactions subject to the Code of Ethics, (b) to file reports or
duplicate confirmations 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 of Ethics. The Code of Ethics also prohibits investment personnel and all
other AIM 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 of Ethics). Sanctions for violations of the
Code of Ethics may include censure, monetary penalties, suspension or
termination of employment.
The Funds have entered into a Master Investment Advisory Agreement
dated as of February 28, 1997 (the "Master Advisory Agreement") and a Master
Administrative Services Agreement dated as of February 28, 1997 (the "Master
Administrative Services Agreement") with AIM. In addition, AIM has entered into
a Master Sub-Advisory Agreement dated as of February 28, 1997 (the "Master
Sub-Advisory Agreement") with AIM Capital with respect to Charter, Weingarten
and Constellation. 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 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
28
<PAGE> 193
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 February 28, 1997, and will continue in effect until
February 28, 1999, 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. 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 60 days' written notice
without penalty. Each agreement terminates automatically in the event of its
assignment.
AIM may from time to time waive or reduce its fee. Fee waivers or
reductions, other than those set forth in the Master Advisory Agreement, may be
rescinded, however, at any time without further notice to investors, provided
however, that the discontinuance of each fee waiver described below will be
approved by the Board of Directors of AIM. AIM has agreed to waive fees for two
years ending June 3, 1998 to the extent necessary to keep the expense ratio for
Class A shares of Blue Chip at 1.31%. AIM has agreed to waive fees for two years
ending August 12, 1998, to the extent necessary to keep the expense ratio for
Class A shares of Capital Development at 1.34%.
AIM has initiated a voluntary reduction of advisory fees for Charter,
Constellation and Weingarten at net asset levels higher than those currently
incorporated in the advisory fee schedule. Accordingly, 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. With respect to Blue Chip and Capital
Development, AIM is entitled to receive a fee calculated at an annual rate of
0.75% of the first $350 million of such Fund's average daily net assets, plus
0.625% of such Fund's average daily net assets in excess of $350 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.
29
<PAGE> 194
Each Fund paid to AIM the following advisory fees net of any expense
limitations (fee waivers) for the years ended October 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Blue Chip.............................. $ 3,154,473 $ 256,773* N/A
Capital Development.................... 3,371,80 280,248** N/A
Charter................................ 24,725,606 16,529,891 $10,890,335
Weingarten............................. 35,300,671 29,960,379 25,448,131
Constellation.......................... 80,116,284 57,614,412 31,042,229
Aggressive Growth...................... 19,244,957 16,492,564 6,974,263
</TABLE>
* For the period from June 3, 1996 (date of acquisition) through
September 30, 1996 it was $188,544, and for the period October 1, 1996
through October 31, 1996 it was $68,229.
** For the period from June 17, 1996 (date operations commenced) through
October 31, 1996.
For the fiscal year ended October 31, 1997, 1996 and 1995, AIM waived
advisory fees for each Fund as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Blue Chip.............................. $ 100,380 $ 26,433* N/A
Capital Development.................... 262,189 144,946** N/A
Charter................................ 498,463 156,975 $ 0
Weingarten............................. 2,187,021 1,458,804 843,494
Constellation.......................... 2,805,955 1,869,383 761,655
Aggressive Growth...................... 0 0 788,943
</TABLE>
* For the period from June 3, 1996 (date of acquisition) through
September 30, 1996 it was $19,409, and for the period October 1, 1996
through October 31, 1996 it was $7,024.
** For the period from June 17, 1996 (date operations commenced) through
October 31, 1996.
Prior to June 3, 1996, the investment advisor to Blue Chip was Baird.
Baird was also the Fund's distributor. Baird is an indirect partially-owned
subsidiary of, and controlled by, The Northwestern Mutual Life Insurance
Company. The BBC Fund and Baird entered into an investment advisory agreement
pursuant to which Baird furnished continuous investment advisory services to the
BBC Fund. That investment advisory agreement was terminated in connection with
the reorganization of the BBC Fund. For the period October 1, 1995 through June
3, 1996 and during the fiscal year ended September 30, 1995, the BBC Fund paid
Baird fees of $370,615 and $469,802, respectively.
AIM, in turn, paid the following sub-advisory fees to AIM Capital, as
sub-advisor for Charter, Constellation and Weingarten, for the years ended
October 31, 1977, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Charter................................ $ 12,362,803 $ 8,264,946 $ 5,445,168
Weingarten............................. 17,650,335 14,980,190 12,724,066
Constellation.......................... 40,058,142 28,807,206 15,521,115
</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
30
<PAGE> 195
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 February 28,
1997, and will continue in effect until February 28, 1999, 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 Fund
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 Fund for a fee per account serviced. The Transfer Agency and Service
Agreement provides that AFS will receive a per account fee plus out-of-pocket
expenses to process orders for purchases, redemptions and exchanges of shares,
prepare and transmit payments for dividends and distributions declared by the
Fund, maintain shareholder accounts and provide shareholders with information
regarding the Fund and their accounts. The Transfer Agency and Service Agreement
became effective on November 1, 1994.
The Funds paid AIM the following amounts as reimbursement of
administrative services costs for the years ended October 31, 1997, 1996 and
1995:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C>
Blue Chip........................... $ 73,653 $ 20,545* N/A
Capital Development................. 74,810 19,841** N/A
Charter............................. 127,908 114,489 $ 109,054
Weingarten.......................... 163,243 132,643 182,595
Constellation....................... 251,513 212,800 173,257
Aggressive Growth................... 97,609 97,857 71,528
</TABLE>
* For the period from June 3, 1996 (date of acquisition) through
September 30, 1996 it was $16,236 and for the period October 1, 1996
through October 31, 1996 it was $4,309.
** For the period from June 17, 1996 (date operations commenced) through
October 31, 1996.
Prior to June 3, 1996, FMI served as the administrator to the BBC Fund.
Pursuant to the administration agreement between FMI and the BBC Fund, FMI
prepared and maintained the books, accounts and other documents required by the
1940 Act, determined the fund's net asset value, responded to shareholder
inquiries, prepared the fund's financial statements and excise tax returns,
prepared reports and filings with the Securities and Exchange Commission,
furnished statistical and research data, clerical, accounting and bookkeeping
services and stationery and office supplies, and maintained the fund's financial
accounts and records and generally assisted in all aspects of the fund's
operations other than portfolio management. This administration agreement
terminated in connection with the corporate reorganization of the BBC Fund.
During the fiscal years ended September 30, 1995, the BBC Fund paid FMI fees of
$46,743.
THE DISTRIBUTION PLANS
THE CLASS A AND C PLAN. The Company has adopted a Master Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act relating to the Class A and Class
C shares of the Funds (the "Class A and C Plan"). The Class A and C Plan
provides that the Class A shares pay 0.35% per annum of their daily average net
assets in the case of Blue Chip and Capital Development, 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. Under the
Class A and C Plan, Class C shares of Blue Chip, Capital Development, Charter,
Constellation and Weingarten pay compensation to AIM Distributors at an annual
rate
31
<PAGE> 196
of 1.00% of the average daily net assets attributable to Class C shares. Of such
amount, Blue Chip, Capital Development, Charter, Constellation and Weingarten
pay a service fee of 0.25% of the average daily net assets attributable to Class
C shares to selected dealers and other institutions which furnish continuing
personal shareholder services to their customers who purchase and own Class C
shares. Activities appropriate for financing under the Class A and C Plan
include, but are not limited to, the following: printing of prospectuses and
statements of additional information and reports for other than existing
shareholders; overhead; preparation and distribution of advertising material and
sales literature; expenses of organizing and conducting sales seminars;
supplemental payments to dealers and other institutions such as asset-based
sales charges or as payments of service fees under shareholder service
arrangements; and costs of administering the Class A and C Plan.
THE CLASS 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
Blue Chip, Capital Development, Charter, Weingarten and Constellation (the
"Class B Plan", and collectively with the Class A and C Plan, the "Plans").
Under the Class B Plan, Blue Chip, Capital Development, Charter, Weingarten and
Constellation 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, Weingarten and Constellation 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
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.
32
<PAGE> 197
The Company may also enter into Variable Group Annuity Contractholder
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
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 as deemed necessary; generally, facilitating communications with
Contractholders 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, 1997, with respect to Class A
shares, Blue Chip, Capital Development, Charter, Weingarten, Aggressive Growth
and Constellation paid AIM Distributors under the Class A and C Plan $1,128,115,
$1,321,521, $9,459,952, $16,399,127, $7,594,650 and $38,860,415, respectively,
or an amount equal to 0.35%, 0.35%, 0.30%, 0.30%, 0.25% and 0.30%, respectively,
of the Fund's Class A shares average daily net assets.
For the fiscal year ended October 31, 1997, with respect to Class B
shares, Blue Chip, Capital Development, Charter and Weingarten paid AIM
Distributors under the Class B Plan $1,268,502, $1,325,888, $8,046,181 and
$3,831,989, respectively, or an amount equal to 1.00%, 1.00%, 1.00% and 1.00%,
respectively, of the Fund's Class B shares average daily net assets.
For the period August 2, 1997 through October 31, 1997, with respect to
Class C shares, Blue Chip, Capital Development, Constellation, Charter and
Weingarten paid AIM Distributors under the Class A and C Plan $4,842, $12,721,
$26,490, $6,079 and $2,338, respectively, or an amount equal to 1.00%, 1.00%,
1.00%, 1.00% and 1.00%, respectively, of the Fund's Class C shares average daily
net assets on an annualized basis.
33
<PAGE> 198
An estimate by category of actual fees paid by the following Funds
under the Class A and C Plan during the year ended October 31, 1997 were
allocated as follows:
<TABLE>
<CAPTION>
AGGRESSIVE CAPITAL
GROWTH BLUE CHIP DEVELOPMENT CHARTER CONSTELLATION WEINGARTEN
----------- --------- ----------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Advertising $ 217,359 $ 167,557 $ 209,983 $ 1,090,516 $ 4,241,794 $ 1,554,174
Printing and mailing 19,431 14,800 19,083 99,280 387,650 142,106
prospectuses, semi-
annual reports and
annual reports
(other than to current
shareholders)
Seminars 59,312 46,404 54,900 296,907 1,156,713 424,344
Compensation to 0 0 0 80,108 0 1,093,207
Underwriters to partially
offset other marketing
expenses
Compensation to 7,298,548 899,353 1,037,555 7,893,141 33,074,257 13,185,297
Dealers including
finder's fees
Compensation to 0 0 0 0 0 0
Sales Personnel
Annual Report Total 7,594,650 1,128,114 1,321,521 9,459,952 38,860,414 16,399,128
</TABLE>
An estimate by category of actual fees paid by the following Funds under the
Class B Plan during the year ended October 31, 1996 were allocated as follows:
<TABLE>
<CAPTION>
CAPITAL
BLUE CHIP DEVELOPMENT CHARTER WEINGARTEN
--------- ----------- ------- ----------
<S> <C> <C> <C> <C>
CLASS B
Advertising $ 196,571 $ 214,298 $ 816,931 $ 359,666
Printing and mailing 17,338 19,292 73,741 32,616
prospectuses, semi-
annual reports and
annual reports
(other than to current
shareholders)
Seminars 52,539 57,711 221,297 99,005
Compensation to 951,377 994,416 6,034,636 2,873,992
Underwriters to partially
offset upfront dealer
commissions and other
marketing costs
Compensation to Dealers 50,677 40,171 899,576 466,710
Compensation to 0 0 0 0
Sales Personnel
Annual Report Total 1,268,502 1,325,888 8,046,181 3,831,989
</TABLE>
34
<PAGE> 199
An estimate by category of actual fees paid by the following Funds under the
Class A and C Plan during the period August 2, 1997 (inception date) through
October 31, 1997 were allocated as follows:
<TABLE>
<CAPTION>
CAPITAL
BLUE CHIP DEVELOPMENT CHARTER CONSTELLATION WEINGARTEN
--------- ----------- ------- ------------- ----------
<S> <C> <C> <C> <C> <C>
CLASS C
Advertising $ 840 $ 2,352 $ 962 $ 4,889 $ 477
Printing and mailing 83 195 71 396 28
prospectuses, semi-
annual reports and
annual reports
(other than to current
shareholders)
Seminars 202 503 393 1,059 0
Compensation to 3,632 9,541 4,559 19,867 1,754
Underwriters to partially
offset other marketing
expenses
Compensation to 86 130 94 279 79
Dealers including
finder's fees
Compensation to 0 0 0 0 0
Sales Personnel
Annual Report Totals 4,843 12,721 6,079 26,490 2,338
</TABLE>
No fees were paid by the Class B shares of Constellation during the
fiscal year ended October 31, 1997, as operations commenced on November 3, 1997.
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.
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, 1998, 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.
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<PAGE> 200
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 and C Plan is amended in a manner
which the Board of Directors determines would materially increase the charges
paid by holders of Class A shares under the Class A and C 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 and C Plan and the Class
B Plan are: (i) the Class A and C Plan allows payment to AIM Distributors or to
dealers or financial institutions of up to .35% of average daily net assets of
Blue Chip and Capital Development Class A shares, .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 Blue Chip, Capital Development, Charter, Weingarten, and
Constellation'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 and Class C shares of Blue Chip, Capital Development,
Charter, Constellation and Weingarten was approved by the Board of Directors on
June 11, 1997. 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 February 28, 1997, and the Board of Directors approved Amendment
No. 1, adding Constellation to the Master Distribution Agreement, on September
19, 1997. Both such Master Distribution Agreements are hereinafter collectively,
referred to as the "Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing 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,
Weingarten, Blue Chip and Capital Development and Class C shares of Blue Chip,
Capital Development, Charter, Constellation 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
36
<PAGE> 201
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, Weingarten,
Constellation, Blue Chip or Capital Development, 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.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the AIM Funds at the time of such sales. Payments
with respect to Class C shares will equal 1.00% of the purchase price of the
Class C shares sold by the dealer or institution, and will consist of a sales
commission of 0.75% of the purchase price of the Class C shares sold plus an
advance of the first year service fee of 0.25% with respect to such shares. AIM
Distributors will retain all payments received by it relating to Class C shares
for the first year after they are purchased. The portion of the payments to AIM
Distributors under the Class A and C Plan attributable to Class C shares which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of on-going sales commissions to dealers
plus financing costs, if any. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record.
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 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 or periods ended October 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
SALES AMOUNT SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Blue Chip $ 7,418,585 $ 1,139,512 $ 1,000,546 $ 144,343 N/A N/A
Capital Development 7,852,157 1,212,125 6,850,693 926,213 N/A N/A
Charter 13,683,388 2,129,799 16,469,061 2,705,618 $ 9,068,400 $ 1,316,019
Weingarten 9,534,039 1,521,630 13,202,260 2,259,328 11,992,225 1,767,515
Constellation 68,714,717 10,566,898 105,245,937 19,558,836 88,958,038 13,097,651
Aggressive Growth . 42,392,109 5,850,410 11,683,056 2,111,788 57,745,243 8,232,597
</TABLE>
The following chart reflects the contigent deferred sales charges paid
by Class A shareholders of Blue Chip, Charter, Constellation and Weingarten for
the fiscal years ended October 31, 1997, 1996 and 1995 and for the Class A
shareholders of Capital Development for the fiscal years ended October 31, 1997
and for the period June 17, 1996 (date operations commenced) through October 31,
1996, and by Class B shareholders of Charter and Weingarten for the fiscal years
ended October 31, 1997 and 1996 and for the period June 26, 1995 (inception date
of Class B shares) through October 31, 1995 and by Class B shareholders of Blue
Chip and Capital Development for the fiscal year ended October 31, 1997 and for
the period October 1, 1996
37
<PAGE> 202
(inception date of Class B shares) through October 31, 1996, and for the Class C
shareholders of all Funds for the period August 4, 1997 (inception date for
Class C shares) through October 31, 1997.
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Blue Chip $ 50,289 N/A N/A
Capital Development $ 14,049 $ 733 N/A
Charter $ 62,653 $ 32,497 $55
Weingarten $ 38,015 $ 34,185 $60
Constellation $253,473 N/A N/A
</TABLE>
Shares of the BBC Fund were sold at a public offering price which
included a sales charge. The BBC Fund waived its sales charge in connection with
sales to specified types of investors and on purchases of $1,000,000 or more,
but imposed a contingent deferred sales charge upon the redemption of certain
shares so purchased, which contingent deferred sales charge was paid to Baird.
During the fiscal year ended September 30, 1995, Baird received approximately
$126,853 in front-end sales commissions in connection with the sales of BBC Fund
shares, all of which it retained. During the fiscal year ended September 30,
1995, Baird received $346 in deferred sales commissions in connection with sales
of BBC Fund shares, all of which it retained.
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." AIM intends to redeem
all shares of the Funds in cash. 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, Extension 5001 (in Houston) or (800)
347-4246 (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
38
<PAGE> 203
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.
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 the close
of trading of the New York Stock Exchange ("NYSE") (generally 4:00 p.m. Eastern
Time), on each business day of the Fund. In the event the NYSE closes early
(i.e., before 4:00 p.m. Eastern Time) on a particular day, the net asset value
of a Fund share is determined as of the close of the NYSE 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 on the NYSE 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
(except those listed below) 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. Distribution and service fees and
transfer agency fees (to the extent different rates are charged to different
classes) 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.
A security listed or traded on an exchange (except convertible bonds)
is valued at its last sales price on the exchange where the security is
principally traded or, lacking any sales on a particular day, the security is
valued at the 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 lacking a last sale, at
the mean between the last bid and asked price on that day; option contracts are
valued at the mean between the closing bid and asked prices on the exchange
where the contracts are principally traded. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an independent
pricing service. Prices provided by an independent 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 or are
questionable 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 sixty (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 NYSE. 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 NYSE. Occasionally, events affecting the
values of such securities and such exchange rates may occur between the times at
which they are determined and the close of the NYSE which 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
39
<PAGE> 204
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.
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 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").
In addition to satisfying the requirements 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.
40
<PAGE> 205
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.
DETERMINATION OF TAXABLE INCOME OF A REGULATED INVESTMENT COMPANY
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. 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.
Other hedging transactions that may be engaged in by certain of the
Funds (such as short sales "against the box") may be subject to special tax
treatment as "constructive sales" under section 1259 of the Code if a Fund holds
certain "appreciated financial positions" (defined generally as any interest
(including a futures or forward contract, short sale or option) with respect to
stock, certain debt instruments, or partnership interests if there would be a
gain were such interest sold, assigned, or otherwise terminated at its fair
market value). Upon entering into a constructive sales transaction with respect
to an appreciated financial position, a Fund will be deemed to have
constructively sold such appreciated financial position and will recognize gain
as if such position were sold, assigned, or otherwise terminated at its fair
market value on the date of such constructive sale (and will take into account
any gain for the taxable year which includes such date) unless the closed
transaction exception applies.
Because application of the rules governing Section 1256 contracts and
constructive sales may affect the character of gains or losses and/or accelerate
the recognition of gains or losses from the affected investment positions, the
amount which must be distributed to shareholders and which will be taxed to
shareholders as ordinary income or long-term capital gain may be increased as
compared to a fund that did not engage in transactions involving Section 1256
contracts or constructive sales.
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.
41
<PAGE> 206
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. Under the Taxpayer Relief Act of 1997, the Internal Revenue
Service is authorized to issue regulations that will enable shareholders to
determine the tax rates applicable to such capital gain distributions.
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 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
42
<PAGE> 207
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.
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. For taxable
years beginning after 1997, however, certain small corporations are wholly
exempt from the AMT.
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 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
in accordance with the guidance that has been provided by the Internal Revenue
Service.
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."
43
<PAGE> 208
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 thirty (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. Under the Taxpayer Relief Act of 1997, the
Internal Revenue Service is authorized to issue appropriate regulations that
will enable shareholders to determine the tax rates applicable to such
recognized long-term capital gain. 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 that in some cases may be 19.6% 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 distributions of long-term capital gain)
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.
44
<PAGE> 209
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, 700 Louisiana, NationsBank Building, Houston, Texas 77002, has served as
the auditors for Aggressive Growth, Blue Chip, Capital Development, Charter,
Constellation and Weingarten for the fiscal year ended October 31, 1996. Price
Waterhouse LLP served as the auditors for Baird Blue Chip Fund, Inc., the
predecessor of Blue Chip, for fiscal years ended September 30, 1995.
LEGAL MATTERS
Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street,
Philadelphia, Pennsylvania, serves as counsel to the Company.
On October 25, 1996 a shareholder of Aggressive Growth filed a lawsuit
in United States District Court, Southern District of Texas, against the
Company, AIM, AIM Distributors, the directors and certain officers of Aggressive
Growth, and the portfolio managers of Aggressive Growth. The action was
instituted under Section 36(b) of the Investment Company Act of 1940 and seeks
to recover damages allegedly suffered by Aggressive Growth in connection with
fees paid for marketing and shareholder services after Aggressive Growth was
closed to new investors.
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., a wholly owned
subsidiary of AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173 (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. The Funds
pay the Custodian and the Transfer Agent such compensation as may be agreed upon
from time to time.
45
<PAGE> 210
Chase Bank of Texas, N.A., 712 Main, Houston, Texas 77002, 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), First
Data Investor Service Group (formerly The Shareholder Services Group, Inc.) 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).
PRINCIPAL HOLDERS OF SECURITIES
BLUE CHIP
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, Class B and Class C shares
of Blue Chip as of February 2, 1998, and the amount of the outstanding shares
held of record and beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY *BENEFICIALLY
- ---------------- -------------- -------------
<S> <C> <C>
RETAIL CLASS A SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 7.35%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
RETAIL CLASS B SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 11.88%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
RETAIL CLASS C SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 28.22%**
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</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.
46
<PAGE> 211
CHARTER
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, Class B and Class C shares
of Charter as of February 2, 1998, and the Institutional Class of Charter as of
February 2, 1998, and the amount of the outstanding shares held of record and
beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- ---------------- ------------ -------------
<S> <C> <C>
RETAIL CLASS A SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 11.39%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
Great-West Life and Annuity Insurance Co. 7.27% - 0 -
401(k) Unit Valuations
Attn: Rod Switzer 2T2
8515 E. Orchard
Englewood, CO 80111
RETAIL CLASS B SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 9.34%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
RETAIL CLASS C SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 22.25%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</TABLE>
- ----------------
* The Funds have no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
47
<PAGE> 212
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- ---------------- ------------ -------------
<S> <C> <C>
INSTITUTIONAL CLASS
Commonwealth of Massachusetts 94.81%** - 0 -
One Ashburton Place
12th Floor
Boston, MA 02108
</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 Class A, Class B and Class C shares
of Weingarten as of February 2, 1998, and the Institutional Class of Weingarten
as of February 2, 1998, and the amount of the outstanding shares held of record
and beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- ---------------- ------------ -------------
<S> <C> <C>
RETAIL CLASS A SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 17.55%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
Great-West Life and Annuity 5.14% - 0 -
Insurance Co.
401(K) Unit Valuations
Attn: Rod Switzer 2T2
8515 E. Orchard
Englewood, CO 80111
RETAIL CLASS B SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 10.98%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</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.
48
<PAGE> 213
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- ---------------- ------------ -------------
<S> <C> <C>
RETAIL CLASS C SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 22.35%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
INSTITUTIONAL CLASS
Commonwealth of Massachusetts 87.17%** - 0 -
One Ashburton Place
12th Floor
Boston, MA 02108
Nationwide Ohio Variable Account - 0 - 5.14%
P. O. Box 182029
Columbus, OH 43218
Peoples Two Ten Company 5.28% - 0 -
Attn: Trust Operations, 7th Floor
C/O Summit Bank
P. O. Box 821
Hackensack, NJ 07602
</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.
49
<PAGE> 214
CONSTELLATION
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, Class B and Class C shares
of Constellation as of February 2, 1998, and of the Institutional Class of
Constellation as of February 2, 1998, and the amount of the outstanding shares
held of record and beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- ---------------- ------------ -------------
<S> <C> <C>
RETAIL CLASS A SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 14.18%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
RETAIL CLASS B SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 8.78%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
RETAIL CLASS C SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 31.18%**
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
INSTITUTIONAL CLASS
Nationwide Ohio Variable Account 60.12%** - 0 -
P.O. Box 182029
Columbus, Ohio 43218
Commonwealth of Massachusetts 29.27%** - 0 -
One Ashburton Place
12th Floor
Boston, MA 02108
</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.
50
<PAGE> 215
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 February 2, 1998, and the amount of the outstanding shares held of record
and beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* Beneficially
- ---------------- ------------ --------------
<S> <C> <C>
RETAIL CLASS A SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 18.20%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</TABLE>
CAPITAL DEVELOPMENT
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, Class B and Class C shares
of Capital Development as of February 2, 1998, and the amount of the outstanding
shares held of record and beneficially owned by such holders are set forth
below:
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS 0WNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- ---------------- ------------ -------------
<S> <C> <C>
RETAIL CLASS A SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 16.00%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
RETAIL CLASS B SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 19.68%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</TABLE>
- -----------------
* The Funds have no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
51
<PAGE> 216
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- ---------------- ------------ -------------
<S> <C> <C>
RETAIL CLASS C SHARES
Merrill Lynch Pierce Fenner & Smith - 0 - 32.42%**
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</TABLE>
As of February 2, 1998, the directors/trustees and officers of the
Company as a group owned beneficially less than 1% of the outstanding shares of
each class of Blue Chip, Charter, Weingarten, Constellation, Aggressive Growth
and Capital Development.
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 1933 Act 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.
- --------
* The Funds have no knowledge as to whether all or any portion of the
shares owned or 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.
52
<PAGE> 217
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER RATINGS
STANDARD & POOR'S
Commercial paper rated by Standard & Poor's 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. 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.
53
<PAGE> 218
FINANCIAL STATEMENTS
FS
<PAGE> 219
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 AIM Aggressive Growth Fund (a portfolio of
AIM Equity Funds, Inc.), including the schedule of
investments, as of October 31, 1997, 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 four-year period
then ended, the ten month period ended October 31, 1993
and the year ended December 31, 1992. 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, 1997, 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, 1997, 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 four-year period then ended,
the ten month period ended October 31, 1993 and the year
ended December 31, 1992, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
FS-1
<PAGE> 220
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-95.19%
AEROSPACE/DEFENSE-0.41%
BE Aerospace, Inc.(a) 355,000 $ 9,984,375
- ---------------------------------------------------------------
Precision Castparts Corp. 100,000 5,881,250
- ---------------------------------------------------------------
15,865,625
- ---------------------------------------------------------------
AIR FREIGHT-0.70%
Air Express International Corp. 150,000 4,593,750
- ---------------------------------------------------------------
Airborne Freight Corp. 200,000 12,675,000
- ---------------------------------------------------------------
Expeditors International of
Washington, Inc. 262,500 9,646,875
- ---------------------------------------------------------------
26,915,625
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.45%
Borg-Warner Automotive, Inc. 150,000 8,175,000
- ---------------------------------------------------------------
Danaher Corp. 70,000 3,836,875
- ---------------------------------------------------------------
Keystone Automotive Industries,
Inc.(a) 250,000 5,531,250
- ---------------------------------------------------------------
17,543,125
- ---------------------------------------------------------------
BANKS (REGIONAL)-0.65%
Bank United Corp.-Class A 175,000 7,350,000
- ---------------------------------------------------------------
First Savings Bank of Washington
Bancorp, Inc. 250,000 5,937,500
- ---------------------------------------------------------------
Imperial Bancorp(a) 150,000 6,543,750
- ---------------------------------------------------------------
Provident Bankshares Corp. 100,000 5,400,000
- ---------------------------------------------------------------
25,231,250
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-0.22%
First Republic Bank(a) 300,000 8,475,000
- ---------------------------------------------------------------
BIOTECHNOLOGY-0.36%
Curative Technologies, Inc.(a) 225,000 6,778,125
- ---------------------------------------------------------------
Kos Pharmaceuticals, Inc.(a) 200,000 7,150,000
- ---------------------------------------------------------------
13,928,125
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-1.15%
Chancellor Media Corp.(a) 200,000 10,975,000
- ---------------------------------------------------------------
Heftel Broadcasting Corp.(a) 316,700 21,060,550
- ---------------------------------------------------------------
Jacor Communications, Inc.(a) 300,000 12,562,500
- ---------------------------------------------------------------
44,598,050
- ---------------------------------------------------------------
BUILDING MATERIALS-0.24%
Apogee Enterprises, Inc. 200,000 4,775,000
- ---------------------------------------------------------------
TJ International, Inc. 200,000 4,600,000
- ---------------------------------------------------------------
9,375,000
- ---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.19%
Cambrex Corp. 150,000 7,190,625
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.93%
ADC Telecommunications, Inc.(a) 552,200 $ 18,291,625
- ---------------------------------------------------------------
Audiovox Corp.-Class A(a) 243,400 2,205,812
- ---------------------------------------------------------------
Boston Technology, Inc.(a) 250,000 6,781,250
- ---------------------------------------------------------------
Brightpoint, Inc.(a)(b) 700,106 23,103,498
- ---------------------------------------------------------------
Coherent Communications Systems
Corp.(a) 500,000 15,125,000
- ---------------------------------------------------------------
Comverse Technology, Inc.(a) 150,000 6,187,500
- ---------------------------------------------------------------
Davox Corp.(a) 250,000 8,937,500
- ---------------------------------------------------------------
Digital Microwave Corp.(a) 225,000 8,100,000
- ---------------------------------------------------------------
Discreet Logic, Inc.(a)(Canada) 350,000 6,846,875
- ---------------------------------------------------------------
Glenayre Technologies, Inc.(a) 250,000 3,250,000
- ---------------------------------------------------------------
Innova Corp.(a) 200,000 4,300,000
- ---------------------------------------------------------------
MasTec, Inc.(a) 200,000 6,487,500
- ---------------------------------------------------------------
NACT Telecommunications, Inc.(a) 225,000 3,065,625
- ---------------------------------------------------------------
P-COM, Inc.(a) 300,000 6,037,500
- ---------------------------------------------------------------
Premisys Communications, Inc.(a) 200,000 5,450,000
- ---------------------------------------------------------------
REMEC, Inc.(a) 250,000 6,343,750
- ---------------------------------------------------------------
Teledata Communication
Ltd.(a)(Israel) 170,100 5,273,100
- ---------------------------------------------------------------
TESSCO Technologies, Inc.(a)(b) 350,000 7,525,000
- ---------------------------------------------------------------
Tollgrade Communications,
Inc.(a)(b) 350,000 8,618,750
- ---------------------------------------------------------------
151,930,285
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-1.25%
Citrix Systems, Inc.(a) 250,000 18,359,375
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 725,000 21,523,437
- ---------------------------------------------------------------
Data General Corp.(a) 325,000 6,256,250
- ---------------------------------------------------------------
National Instruments Corp.(a) 50,000 2,275,000
- ---------------------------------------------------------------
48,414,062
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-0.43%
International Network Services(a) 100,000 2,200,000
- ---------------------------------------------------------------
MMC Networks, Inc.(a) 80,000 1,750,000
- ---------------------------------------------------------------
Premiere Technologies, Inc.(a) 375,000 12,750,000
- ---------------------------------------------------------------
16,700,000
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.33%
Creative Technology
Limited(a)(Singapore) 200,000 5,087,500
- ---------------------------------------------------------------
Encad, Inc.(a) 125,000 4,062,500
- ---------------------------------------------------------------
MicroTouch Systems, Inc.(a)(b) 525,000 12,665,625
- ---------------------------------------------------------------
Network Appliance, Inc.(a) 150,000 7,537,500
- ---------------------------------------------------------------
QLogic Corp.(a) 100,000 3,250,000
- ---------------------------------------------------------------
SanDisk Corp.(a) 294,300 7,026,412
- ---------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 221
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (PERIPHERALS)-(CONTINUED)
STB Systems, Inc.(a)(b) 400,000 $ 11,750,000
- ---------------------------------------------------------------
51,379,537
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-8.47%
Accelr8 Technology Corp.(a) 130,000 2,583,750
- ---------------------------------------------------------------
Advanced Fibre Communications,
Inc.(a) 250,000 7,265,625
- ---------------------------------------------------------------
Analysts International Corp. 200,000 9,025,000
- ---------------------------------------------------------------
Applied Voice Technology, Inc.(a) 200,000 5,200,000
- ---------------------------------------------------------------
Aspect Development, Inc.(a) 400,000 18,700,000
- ---------------------------------------------------------------
Avant! Corp.(a) 275,000 7,218,750
- ---------------------------------------------------------------
Axent Technologies, Inc.(a) 375,000 8,765,625
- ---------------------------------------------------------------
CBT Group PLC-ADR(a)(Ireland) 150,000 11,512,500
- ---------------------------------------------------------------
Check Point Software Technologies
Ltd.(a)(Israel) 250,000 10,656,250
- ---------------------------------------------------------------
Computer Task Group, Inc. 200,000 5,650,000
- ---------------------------------------------------------------
CyberMedia, Inc.(a) 200,000 5,950,000
- ---------------------------------------------------------------
DAOU Systems, Inc.(a) 250,000 6,593,750
- ---------------------------------------------------------------
Documentum, Inc.(a) 100,000 2,987,500
- ---------------------------------------------------------------
DSP Group, Inc.(a) 400,000 14,175,000
- ---------------------------------------------------------------
Engineering Animation, Inc.(a)(b) 310,100 13,683,162
- ---------------------------------------------------------------
HBO & Co. 250,000 10,875,000
- ---------------------------------------------------------------
IDX Systems Corp.(a) 300,000 10,125,000
- ---------------------------------------------------------------
Integrated Systems, Inc.(a) 200,000 3,525,000
- ---------------------------------------------------------------
Jack Henry & Associates 225,000 5,793,750
- ---------------------------------------------------------------
JDA Software Group, Inc.(a) 200,000 6,250,000
- ---------------------------------------------------------------
Legato Systems, Inc.(a) 250,000 10,687,500
- ---------------------------------------------------------------
Lycos, Inc.(a) 100,000 2,612,500
- ---------------------------------------------------------------
Midway Games Inc.(a) 300,000 6,281,250
- ---------------------------------------------------------------
Network General Corp.(a) 582,700 11,799,675
- ---------------------------------------------------------------
NOVA Corp.(a) 253,000 6,799,375
- ---------------------------------------------------------------
Peerless Systems Corp.(a) 500,000 6,500,000
- ---------------------------------------------------------------
PeopleSoft, Inc.(a) 100,000 6,287,500
- ---------------------------------------------------------------
Quadramed Corp.(a) 100,000 2,350,000
- ---------------------------------------------------------------
Quickturn Design Systems, Inc.(a) 380,200 4,990,125
- ---------------------------------------------------------------
RadiSys Corp.(a) 150,000 6,975,000
- ---------------------------------------------------------------
RWD Technologies, Inc.(a) 66,600 1,498,500
- ---------------------------------------------------------------
Sapient Corp.(a) 150,000 7,987,500
- ---------------------------------------------------------------
Security Dynamics Technologies,
Inc.(a) 300,000 10,162,500
- ---------------------------------------------------------------
Simulation Sciences, Inc.(a) 250,000 4,562,500
- ---------------------------------------------------------------
Sterling Commerce, Inc.(a) 100,160 3,324,060
- ---------------------------------------------------------------
Sterling Software, Inc.(a) 100,000 3,412,500
- ---------------------------------------------------------------
Technology Solutions Co.(a) 187,500 5,906,250
- ---------------------------------------------------------------
Tecnomatix Technologies Ltd.(a)
(Israel) 200,000 6,175,000
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
3Dfx Interactive, Inc.(a) 125,000 $ 2,125,000
- ---------------------------------------------------------------
Transaction Systems Architects,
Inc.-Class A(a) 200,000 7,825,000
- ---------------------------------------------------------------
Vantive Corp.(a) 150,000 3,787,500
- ---------------------------------------------------------------
Veritas Software Corp.(a) 375,000 15,609,375
- ---------------------------------------------------------------
Viasoft, Inc.(a) 166,500 6,826,500
- ---------------------------------------------------------------
Whittman-Hart, Inc.(a) 100,000 2,900,000
- ---------------------------------------------------------------
Wind River Systems(a) 150,000 5,756,250
- ---------------------------------------------------------------
Xpedite Systems, Inc.(a) 100,000 2,462,500
- ---------------------------------------------------------------
Yahoo! Inc.(a) 116,250 5,096,835
- ---------------------------------------------------------------
327,236,357
- ---------------------------------------------------------------
CONSTRUCTION (CEMENT & AGGREGATES)-0.03%
Transcoastal Marine Services(a) 50,000 1,243,750
- ---------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES &
GIFTS)-0.55%
Action Performance Companies,
Inc.(a) 400,000 10,250,000
- ---------------------------------------------------------------
Blyth Industries, Inc.(a) 441,300 10,977,337
- ---------------------------------------------------------------
21,227,337
- ---------------------------------------------------------------
CONSUMER FINANCE-1.33%
AmeriCredit Corp.(a) 300,000 8,718,750
- ---------------------------------------------------------------
Delta Financial Corp.(a) 100,900 1,841,425
- ---------------------------------------------------------------
FIRSTPLUS Financial Group, Inc.(a) 450,000 24,750,000
- ---------------------------------------------------------------
IMC Mortgage Co.(a) 600,000 10,425,000
- ---------------------------------------------------------------
Money Store, Inc. (The) 200,000 5,675,000
- ---------------------------------------------------------------
51,410,175
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.10%
Patterson Dental Co.(a) 100,000 4,000,000
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-3.87%
Avid Technology, Inc.(a) 300,000 8,568,750
- ---------------------------------------------------------------
Black Box Corp.(a) 300,000 12,300,000
- ---------------------------------------------------------------
Chicago Miniature Lamp, Inc.(a) 250,000 8,000,000
- ---------------------------------------------------------------
Cohu, Inc. 95,000 3,556,562
- ---------------------------------------------------------------
Cyberoptics Corp.(a)(b) 300,000 8,250,000
- ---------------------------------------------------------------
Electro Scientific Industries,
Inc.(a) 100,000 4,850,000
- ---------------------------------------------------------------
HADCO Corp.(a) 150,000 8,306,250
- ---------------------------------------------------------------
Kemet Corp.(a) 350,000 7,612,500
- ---------------------------------------------------------------
Littelfuse, Inc.(a) 150,000 4,593,750
- ---------------------------------------------------------------
Pinnacle Systems, Inc.(a) 300,000 8,100,000
- ---------------------------------------------------------------
RF Monolithics, Inc.(a) 200,000 2,700,000
- ---------------------------------------------------------------
Robbins & Myers, Inc. 200,000 7,575,000
- ---------------------------------------------------------------
Sanmina Corp.(a) 225,000 16,818,750
- ---------------------------------------------------------------
Sawtek Inc.(a) 210,000 7,140,000
- ---------------------------------------------------------------
</TABLE>
FS-3
<PAGE> 222
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT-(CONTINUED)
SCI Systems, Inc.(a) 300,000 $ 13,200,000
- ---------------------------------------------------------------
Symbol Technologies, Inc. 300,000 11,925,000
- ---------------------------------------------------------------
Technitrol, Inc. 250,000 7,718,750
- ---------------------------------------------------------------
Uniphase Corp.(a) 125,000 8,390,625
- ---------------------------------------------------------------
149,605,937
- ---------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.99%
Anicom, Inc.(a) 400,000 6,200,000
- ---------------------------------------------------------------
Benchmarq Microelectronics,
Inc.(a)(b) 425,000 8,818,750
- ---------------------------------------------------------------
Computer Products, Inc.(a) 600,000 16,350,000
- ---------------------------------------------------------------
Kent Electronics Corp.(a) 200,000 6,987,500
- ---------------------------------------------------------------
38,356,250
- ---------------------------------------------------------------
ELECTRONICS
(INSTRUMENTATION)-1.04%
Aavid Thermal Technologies(a) 100,000 2,975,000
- ---------------------------------------------------------------
Alpha Industries, Inc.(a) 184,700 2,932,112
- ---------------------------------------------------------------
CellStar Corp.(a) 675,000 22,907,812
- ---------------------------------------------------------------
Thermo Optek Corp.(a) 350,000 5,928,125
- ---------------------------------------------------------------
ThermoQuest Corp.(a) 300,000 5,362,500
- ---------------------------------------------------------------
40,105,549
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-5.45%
Alliance Semiconductor Corp.(a) 300,000 2,250,000
- ---------------------------------------------------------------
ANADIGICS, Inc.(a) 300,000 11,100,000
- ---------------------------------------------------------------
ASE Test Ltd.(a)(Taiwan) 94,300 5,162,925
- ---------------------------------------------------------------
ATMI Inc.(a) 150,000 4,031,250
- ---------------------------------------------------------------
Burr-Brown Corp.(a) 350,000 10,587,500
- ---------------------------------------------------------------
Cypress Semiconductor Corp.(a) 550,000 6,187,500
- ---------------------------------------------------------------
Dallas Semiconductor Corp. 300,000 14,662,500
- ---------------------------------------------------------------
Flextronics International Ltd.(a) 500,000 19,000,000
- ---------------------------------------------------------------
General Scanning, Inc.(a) 150,000 3,871,875
- ---------------------------------------------------------------
Integrated Circuit Systems,
Inc.(a) 125,400 4,294,950
- ---------------------------------------------------------------
Integrated Device Technology,
Inc.(a) 450,000 5,203,125
- ---------------------------------------------------------------
International Rectifier Corp.(a) 185,100 2,533,556
- ---------------------------------------------------------------
Lattice Semiconductor Corp.(a) 175,000 8,760,938
- ---------------------------------------------------------------
Level One Communications, Inc.(a) 225,000 10,125,000
- ---------------------------------------------------------------
Micrel, Inc.(a) 200,000 7,175,000
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 350,000 9,231,250
- ---------------------------------------------------------------
Semtech Corp.(a) 150,000 6,984,375
- ---------------------------------------------------------------
Sipex Corp.(a)(b) 1,000,000 32,875,000
- ---------------------------------------------------------------
3Dlabs Inc., Ltd.(a) 400,000 8,500,000
- ---------------------------------------------------------------
Tower Semiconductor Ltd. (Israel) 250,000 2,937,500
- ---------------------------------------------------------------
Unitrode Corp.(a) 400,000 10,725,000
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 350,000 15,181,250
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-(CONTINUED)
VLSI Technology, Inc.(a) 300,000 $ 8,887,500
- ---------------------------------------------------------------
210,267,994
- ---------------------------------------------------------------
ENTERTAINMENT-0.30%
Cinar Films Inc.-Class
B(a)(Canada) 60,500 2,351,938
- ---------------------------------------------------------------
N2K Inc.(a) 350,000 9,209,374
- ---------------------------------------------------------------
11,561,312
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-1.59%
BMC Industries, Inc. 350,000 11,265,625
- ---------------------------------------------------------------
Credence Systems Corp.(a) 400,000 11,800,000
- ---------------------------------------------------------------
DuPont Photomasks, Inc.(a) 150,000 6,450,000
- ---------------------------------------------------------------
Electroglas, Inc.(a) 300,000 5,700,000
- ---------------------------------------------------------------
Integrated Process Equipment
Corp.(a) 200,000 4,437,500
- ---------------------------------------------------------------
Photronics, Inc.(a) 250,000 10,718,750
- ---------------------------------------------------------------
Silicon Valley Group, Inc.(a) 250,000 7,187,500
- ---------------------------------------------------------------
Speedfam International, Inc.(a) 100,000 3,712,500
- ---------------------------------------------------------------
61,271,875
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-0.63%
Amresco, Inc.(a) 350,000 10,981,250
- ---------------------------------------------------------------
Ocwen Financial Corp.(a) 150,000 8,240,625
- ---------------------------------------------------------------
United Companies Financial Corp. 200,000 5,062,500
- ---------------------------------------------------------------
24,284,375
- ---------------------------------------------------------------
FOOTWEAR-0.31%
Stride Rite Corp. 250,000 2,937,500
- ---------------------------------------------------------------
Wolverine World Wide, Inc. 400,000 8,800,000
- ---------------------------------------------------------------
11,737,500
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-2.01%
Alpharma, Inc.-Class A 495,834 10,939,338
- ---------------------------------------------------------------
Biovail Corp.
International(a)(Canada) 400,000 11,550,000
- ---------------------------------------------------------------
Columbia Laboratories, Inc.(a) 500,000 8,000,000
- ---------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 207,000 10,013,625
- ---------------------------------------------------------------
Jones Medical Industries, Inc. 250,000 7,531,250
- ---------------------------------------------------------------
Medicis Pharmaceutical Corp.(a) 405,000 19,490,625
- ---------------------------------------------------------------
Parexel International Corp.(a) 100,000 3,612,500
- ---------------------------------------------------------------
VIVUS, Inc.(a) 250,000 6,593,750
- ---------------------------------------------------------------
77,731,088
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-1.60%
Health Management Associates,
Inc.-Class A(a) 1,106,493 26,970,766
- ---------------------------------------------------------------
Quorum Health Group, Inc.(a) 450,000 10,912,500
- ---------------------------------------------------------------
Tenet Healthcare Corp.(a) 200,000 6,112,500
- ---------------------------------------------------------------
</TABLE>
FS-4
<PAGE> 223
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (HOSPITAL MANAGEMENT)-(CONTINUED)
Universal Health Services,
Inc.-Class B(a) 400,000 $ 17,625,000
- ---------------------------------------------------------------
61,620,766
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-1.62%
Assisted Living Concepts, Inc.(a) 335,000 6,867,500
- ---------------------------------------------------------------
Atria Communities, Inc.(a) 250,000 4,156,250
- ---------------------------------------------------------------
CareMatrix Corp.(a) 400,000 10,900,000
- ---------------------------------------------------------------
Health Care and Retirement
Corp.(a) 325,000 12,289,062
- ---------------------------------------------------------------
HEALTHSOUTH Corp.(a) 750,000 19,171,875
- ---------------------------------------------------------------
Sunrise Assisted Living, Inc.(a) 244,800 9,088,200
- ---------------------------------------------------------------
62,472,887
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.97%
American Oncology Resources,
Inc.(a) 500,000 7,312,500
- ---------------------------------------------------------------
Concentra Managed Care, Inc.(a) 578,600 18,876,825
- ---------------------------------------------------------------
Express Scripts, Inc.-Class A(a) 125,000 7,046,875
- ---------------------------------------------------------------
PhyCor, Inc.(a) 187,500 4,324,218
- ---------------------------------------------------------------
37,560,418
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-3.20%
ADAC Laboratories 250,000 4,875,000
- ---------------------------------------------------------------
Arterial Vascular Engineering,
Inc.(a) 300,000 15,937,500
- ---------------------------------------------------------------
Coopers Companies, Inc.(a) 100,000 3,581,250
- ---------------------------------------------------------------
Dentsply International, Inc. 300,000 8,512,500
- ---------------------------------------------------------------
Healthdyne Technologies(a) 300,000 6,000,000
- ---------------------------------------------------------------
Henry Schein, Inc.(a) 200,000 6,575,000
- ---------------------------------------------------------------
MiniMed, Inc.(a) 150,000 5,850,000
- ---------------------------------------------------------------
Physician Sales & Service, Inc.(a) 500,000 12,250,000
- ---------------------------------------------------------------
ResMed, Inc.(a) 275,000 7,700,000
- ---------------------------------------------------------------
Respironics, Inc.(a) 350,000 9,843,750
- ---------------------------------------------------------------
Safeskin Corp.(a) 250,000 11,343,750
- ---------------------------------------------------------------
Sullivan Dental Products, Inc. 300,000 7,012,500
- ---------------------------------------------------------------
Sybron International Corp.(a) 600,000 24,075,000
- ---------------------------------------------------------------
123,556,250
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-3.08%
Access Health, Inc.(a) 200,000 6,950,000
- ---------------------------------------------------------------
American HomePatient, Inc.(a) 337,350 8,686,763
- ---------------------------------------------------------------
BioReliance Corp.(a) 150,000 3,337,500
- ---------------------------------------------------------------
Boron, LePore & Associates,
Inc.(a) 200,000 4,875,000
- ---------------------------------------------------------------
First Commonwealth, Inc.(a) 162,500 2,356,250
- ---------------------------------------------------------------
FPA Medical Management, Inc.(a) 500,000 12,062,500
- ---------------------------------------------------------------
Lincare Holdings, Inc.(a) 150,000 8,043,750
- ---------------------------------------------------------------
NCS HealthCare, Inc.-Class A(a) 125,000 2,921,875
- ---------------------------------------------------------------
Omnicare, Inc. 500,000 13,906,250
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-(CONTINUED)
Orthodontic Centers of America,
Inc.(a) 625,000 $ 10,820,312
- ---------------------------------------------------------------
Pediatrix Medical Group, Inc.(a) 200,000 8,450,000
- ---------------------------------------------------------------
Renal Care Group, Inc.(a) 174,050 5,830,675
- ---------------------------------------------------------------
Renal Treatment Centers, Inc.(a) 150,000 4,978,125
- ---------------------------------------------------------------
Superior Consultant Holdings
Corp.(a) 285,000 8,835,000
- ---------------------------------------------------------------
Total Renal Care Holdings, Inc.(a) 250,000 7,703,125
- ---------------------------------------------------------------
Transition Systems, Inc.(a) 450,000 9,112,500
- ---------------------------------------------------------------
118,869,625
- ---------------------------------------------------------------
HOME BUILDING-0.20%
American Homestar Corp.(a) 350,000 7,875,000
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.23%
Ethan Allen Interiors, Inc. 250,000 8,859,375
- ---------------------------------------------------------------
HOUSEWARES-1.05%
Central Garden and Pet Co.(a) 350,000 9,187,500
- ---------------------------------------------------------------
Day Runner, Inc.(a) 173,400 6,990,187
- ---------------------------------------------------------------
Helen of Troy Ltd.(a) 1,200,000 19,950,000
- ---------------------------------------------------------------
Windmere-Durable Holdings Inc. 200,000 4,525,000
- ---------------------------------------------------------------
40,652,687
- ---------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.31%
John Alden Financial Corp. 175,000 4,801,562
- ---------------------------------------------------------------
Penn Treaty American Corp.(a) 225,000 7,228,125
- ---------------------------------------------------------------
12,029,687
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-1.67%
CapMAC Holdings, Inc. 125,000 3,750,000
- ---------------------------------------------------------------
CMAC Investment Corp. 300,000 16,406,250
- ---------------------------------------------------------------
Executive Risk Inc. 185,000 12,186,875
- ---------------------------------------------------------------
Frontier Insurance Group, Inc. 200,000 6,737,500
- ---------------------------------------------------------------
HCC Insurance Holdings, Inc. 650,000 15,193,750
- ---------------------------------------------------------------
Vesta Insurance Group, Inc. 178,500 10,375,313
- ---------------------------------------------------------------
64,649,688
- ---------------------------------------------------------------
INVESTMENTS-0.26%
Sirrom Capital Corp. 200,000 10,075,000
- ---------------------------------------------------------------
IRON & STEEL-0.45%
Northwest Pipe Co.(a) 170,000 4,122,500
- ---------------------------------------------------------------
NS Group, Inc.(a)(b) 500,000 13,375,000
- ---------------------------------------------------------------
17,497,500
- ---------------------------------------------------------------
LAND DEVELOPMENT-0.28%
Fairfield Communities, Inc.(a) 250,000 10,984,375
- ---------------------------------------------------------------
LEISURE & RECREATION-0.29%
North Face, Inc.(The)(a) 350,000 8,268,750
- ---------------------------------------------------------------
</TABLE>
FS-5
<PAGE> 224
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
LEISURE & RECREATION-(CONTINUED)
Penske Motorsports, Inc.(a) 100,000 $ 2,962,500
- ---------------------------------------------------------------
11,231,250
- ---------------------------------------------------------------
LODGING (HOTELS)-0.39%
Prime Hospitality Corp.(a) 450,000 9,168,750
- ---------------------------------------------------------------
Suburban Lodges of America,
Inc.(a) 80,000 1,980,000
- ---------------------------------------------------------------
Wyndham Hotel Corp.(a) 83,300 3,743,294
- ---------------------------------------------------------------
14,892,044
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.67%
Applied Power, Inc.-Class A 125,000 7,734,375
- ---------------------------------------------------------------
DT Industries, Inc. 300,000 9,000,000
- ---------------------------------------------------------------
Gardner Denver Machinery Inc.(a) 250,000 8,968,750
- ---------------------------------------------------------------
25,703,125
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-1.34%
AMETEK, Inc. 200,000 4,712,500
- ---------------------------------------------------------------
Coflexip S.A.-ADR (France) 140,100 7,705,500
- ---------------------------------------------------------------
Halter Marine Group, Inc.(a) 350,000 18,309,375
- ---------------------------------------------------------------
Rock of Ages Corp.(a) 150,000 2,850,000
- ---------------------------------------------------------------
US Filter Corp.(a) 450,000 18,056,250
- ---------------------------------------------------------------
51,633,625
- ---------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-0.05%
ESC Medical Systems
Ltd.(a)(Israel) 47,850 1,878,113
- ---------------------------------------------------------------
NATURAL GAS-0.06%
Edge Petroleum Corp.(a) 160,000 2,340,000
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-1.09%
Boise Cascade Office Products
Corp.(a) 400,000 7,600,000
- ---------------------------------------------------------------
Daisytek International Corp.(a)(b) 250,000 9,531,250
- ---------------------------------------------------------------
Danka Business Systems PLC-ADR
(United Kingdom) 250,000 9,250,000
- ---------------------------------------------------------------
Herman Miller, Inc. 250,000 12,218,750
- ---------------------------------------------------------------
Mail-Well, Inc.(a) 100,000 3,462,500
- ---------------------------------------------------------------
42,062,500
- ---------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-9.16%
Camco International, Inc. 225,000 16,256,250
- ---------------------------------------------------------------
CE Franklin Ltd.(a) 365,900 4,939,650
- ---------------------------------------------------------------
Cliffs Drilling Co.(a) 225,000 16,354,688
- ---------------------------------------------------------------
Core Laboratories N.V.(a)
(Netherlands) 200,000 8,000,000
- ---------------------------------------------------------------
EVI, Inc.(a) 450,000 28,884,375
- ---------------------------------------------------------------
Friede Goldman International
Inc.(a) 150,000 5,971,875
- ---------------------------------------------------------------
Global Industries Ltd.(a) 800,000 16,100,000
- ---------------------------------------------------------------
Gulf Island Fabrication, Inc.(a) 161,200 5,239,000
- ---------------------------------------------------------------
Key Energy Group, Inc.(a) 125,000 3,921,875
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED)
Lone Star Technologies, Inc.(a) 250,000 $ 9,546,875
- ---------------------------------------------------------------
Marine Drilling Companies, Inc.(a) 350,000 10,368,750
- ---------------------------------------------------------------
Maverick Tube Corp.(a)(b) 455,000 16,038,750
- ---------------------------------------------------------------
Mitcham Industries, Inc.(a) 200,000 5,225,000
- ---------------------------------------------------------------
National-Oilwell, Inc.(a) 400,749 30,682,346
- ---------------------------------------------------------------
Newpark Resources, Inc.(a) 300,000 12,450,000
- ---------------------------------------------------------------
Oceaneering International, Inc.(a) 150,000 3,721,875
- ---------------------------------------------------------------
Patterson Energy, Inc.(a) 550,000 30,800,000
- ---------------------------------------------------------------
Pool Energy Services Co.(a) 200,000 6,787,500
- ---------------------------------------------------------------
Precision Drilling
Corp.(a)(Canada) 500,000 15,375,000
- ---------------------------------------------------------------
Pride International, Inc.(a) 400,000 13,200,000
- ---------------------------------------------------------------
Trico Marine Services, Inc.(a) 300,000 11,025,000
- ---------------------------------------------------------------
Tubos de Acero de Mexico
S.A.(a)(Mexico) 200,000 4,037,500
- ---------------------------------------------------------------
Tuboscope Vetco International
Corp.(a) 420,000 13,335,000
- ---------------------------------------------------------------
UNIFAB International, Inc.(a) 55,000 1,760,000
- ---------------------------------------------------------------
UTI Energy Corp.(a) 450,000 20,081,250
- ---------------------------------------------------------------
Varco International, Inc.(a) 250,000 15,234,375
- ---------------------------------------------------------------
Veritas DGC, Inc.(a) 500,000 20,468,750
- ---------------------------------------------------------------
Willbros Group, Inc.(a) 425,000 8,287,500
- ---------------------------------------------------------------
354,093,184
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-1.36%
Basin Exploration, Inc.(a) 141,000 2,784,750
- ---------------------------------------------------------------
Cabot Oil and Gas Corp.-Class A 255,800 6,139,200
- ---------------------------------------------------------------
Comstock Resources, Inc.(a) 150,000 2,512,500
- ---------------------------------------------------------------
Devon Energy Corp. 250,000 11,187,500
- ---------------------------------------------------------------
KCS Energy, Inc. 200,000 5,262,500
- ---------------------------------------------------------------
St. Mary Land & Exploration Co. 200,000 8,150,000
- ---------------------------------------------------------------
Stolt Comex Seaway, S.A.(a)(United
Kingdom) 100,000 6,000,000
- ---------------------------------------------------------------
Tom Brown, Inc.(a) 150,000 3,712,500
- ---------------------------------------------------------------
Vintage Petroleum, Inc. 300,000 6,862,500
- ---------------------------------------------------------------
52,611,450
- ---------------------------------------------------------------
PERSONAL CARE-0.67%
Rexall Sundown, Inc.(a) 800,000 17,500,000
- ---------------------------------------------------------------
Twinlab Corp.(a) 450,000 8,550,000
- ---------------------------------------------------------------
26,050,000
- ---------------------------------------------------------------
PUBLISHING-0.18%
Meredith Corp. 200,000 6,812,500
- ---------------------------------------------------------------
RAILROADS-0.17%
MotivePower Industries, Inc.(a) 250,000 6,656,250
- ---------------------------------------------------------------
RESTAURANTS-2.84%
Apple South, Inc. 799,962 14,899,293
- ---------------------------------------------------------------
</TABLE>
FS-6
<PAGE> 225
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RESTAURANTS-(CONTINUED)
Applebee's International, Inc. 250,000 $ 5,546,875
- ---------------------------------------------------------------
Cheesecake Factory (The)(a) 250,000 7,875,000
- ---------------------------------------------------------------
CKE Restaurants, Inc. 300,000 11,981,250
- ---------------------------------------------------------------
Dave & Buster's, Inc.(a) 450,000 11,812,500
- ---------------------------------------------------------------
Foodmaker, Inc.(a) 500,000 8,218,750
- ---------------------------------------------------------------
Landry's Seafood Restaurants,
Inc.(a) 375,000 10,500,000
- ---------------------------------------------------------------
Logan's Roadhouse, Inc.(a)(b) 452,000 8,079,500
- ---------------------------------------------------------------
Papa John's International, Inc.(a) 200,000 5,912,500
- ---------------------------------------------------------------
Rainforest Cafe, Inc.(a) 275,000 9,384,375
- ---------------------------------------------------------------
Showbiz Pizza Time, Inc.(a) 340,000 7,225,000
- ---------------------------------------------------------------
Sonic Corp.(a) 321,300 8,273,475
- ---------------------------------------------------------------
Starbucks Corp.(a) 6,000 198,000
- ---------------------------------------------------------------
109,906,518
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.26%
Eagle Hardware & Garden, Inc.(a) 600,000 10,200,000
- ---------------------------------------------------------------
RETAIL (COMPUTERS &
ELECTRONICS)-1.78%
Best Buy Co., Inc.(a) 250,000 6,984,375
- ---------------------------------------------------------------
CHS Electronics, Inc.(a) 675,000 16,495,313
- ---------------------------------------------------------------
CompUSA, Inc.(a) 600,000 19,650,000
- ---------------------------------------------------------------
MicroAge, Inc.(a) 350,000 7,700,000
- ---------------------------------------------------------------
Tech Data Corp.(a) 400,000 17,800,000
- ---------------------------------------------------------------
68,629,688
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.15%
Fred Meyer, Inc.(a) 200,000 5,712,500
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-1.48%
Ames Department Stores, Inc.(a) 500,000 7,781,250
- ---------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 285,900 11,578,950
- ---------------------------------------------------------------
Family Dollar Stores, Inc. 250,000 5,875,000
- ---------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 500,000 19,375,000
- ---------------------------------------------------------------
99 Cents Only Stores(a) 144,100 5,412,757
- ---------------------------------------------------------------
Stein Mart, Inc.(a) 250,000 7,312,500
- ---------------------------------------------------------------
57,335,457
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.71%
Quality Food Centers, Inc.(a) 350,000 16,668,750
- ---------------------------------------------------------------
Whole Foods Market, Inc.(a) 275,000 10,793,750
- ---------------------------------------------------------------
27,462,500
- ---------------------------------------------------------------
RETAIL (HOME SHOPPING)-0.53%
CDW Computer Centers, Inc.(a) 200,000 12,400,000
- ---------------------------------------------------------------
Micro Warehouse, Inc.(a) 550,000 8,250,000
- ---------------------------------------------------------------
20,650,000
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-3.13%
Finish Line, Inc. (The)-Class A(a) 600,000 $ 10,125,000
- ---------------------------------------------------------------
Garden Ridge Corp.(a) 741,000 9,910,875
- ---------------------------------------------------------------
Genesco Inc.(a) 700,000 8,881,250
- ---------------------------------------------------------------
Hollywood Entertainment Corp.(a) 400,000 4,900,000
- ---------------------------------------------------------------
Inacom Corp.(a) 375,000 11,554,688
- ---------------------------------------------------------------
Linens 'N Things, Inc.(a) 200,000 7,187,500
- ---------------------------------------------------------------
Michaels Stores, Inc.(a) 400,000 12,025,000
- ---------------------------------------------------------------
O'Reilly Automotive, Inc.(a) 250,000 6,093,750
- ---------------------------------------------------------------
Party City Corp.(a) 175,000 4,812,500
- ---------------------------------------------------------------
Petco Animal Supplies, Inc.(a) 450,000 13,837,500
- ---------------------------------------------------------------
Pier 1 Imports, Inc. 450,000 8,212,500
- ---------------------------------------------------------------
Trans World Entertainment Corp.(a) 250,000 7,000,000
- ---------------------------------------------------------------
Williams-Sonoma, Inc.(a) 225,000 9,028,125
- ---------------------------------------------------------------
Zale Corp.(a) 300,000 7,575,000
- ---------------------------------------------------------------
121,143,688
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.71%
American Eagle Outfitters, Inc.(a) 46,700 1,354,300
- ---------------------------------------------------------------
Buckle, Inc. (The)(a) 340,000 9,180,000
- ---------------------------------------------------------------
Pacific Sunwear of California(a) 412,500 11,395,313
- ---------------------------------------------------------------
Paul Harris Stores, Inc.(a) 300,000 5,512,500
- ---------------------------------------------------------------
27,442,113
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.36%
TCF Financial Corp. 100,000 5,687,500
- ---------------------------------------------------------------
Webster Financial Corp. 135,000 8,319,375
- ---------------------------------------------------------------
14,006,875
- ---------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-1.06%
Abacus Direct Corp.(a) 275,000 10,106,250
- ---------------------------------------------------------------
Catalina Marketing Corp.(a) 200,000 9,137,500
- ---------------------------------------------------------------
CKS Group, Inc.(a) 250,000 9,062,500
- ---------------------------------------------------------------
Market Facts, Inc. 200,000 4,050,000
- ---------------------------------------------------------------
Metris Companies Inc. 200,000 8,450,000
- ---------------------------------------------------------------
40,806,250
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-2.55%
ABR Information Services, Inc.(a) 250,000 5,875,000
- ---------------------------------------------------------------
Caribiner International, Inc.(a) 200,000 8,912,500
- ---------------------------------------------------------------
Cerner Corp.(a) 500,000 12,125,000
- ---------------------------------------------------------------
Children's Comprehensive Services,
Inc.(a)(b) 436,100 7,870,243
- ---------------------------------------------------------------
Computer Learning Centers, Inc.(a) 100,000 4,525,000
- ---------------------------------------------------------------
Equity Corp. International(a) 450,000 9,168,750
- ---------------------------------------------------------------
G & K Services, Inc.-Class A 150,000 5,400,000
- ---------------------------------------------------------------
IntelliQuest Information Group,
Inc.(a)(b) 525,000 8,925,000
- ---------------------------------------------------------------
</TABLE>
FS-7
<PAGE> 226
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (COMMERCIAL & CONSUMER)-(CONTINUED)
MSC Industrial Direct Co.,
Inc.-Class A(a) 125,000 $ 5,203,125
- ---------------------------------------------------------------
Rental Service Corp.(a) 100,000 2,675,000
- ---------------------------------------------------------------
Stewart Enterprises, Inc.- Class A 400,000 16,600,000
- ---------------------------------------------------------------
Strayer Education, Inc. 153,900 7,348,725
- ---------------------------------------------------------------
Wilmar Industries, Inc.(a) 150,000 3,937,500
- ---------------------------------------------------------------
98,565,843
- ---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-1.46%
Cambridge Technology Partners,
Inc.(a) 300,000 10,950,000
- ---------------------------------------------------------------
Compucom Systems, Inc.(a) 600,000 5,662,500
- ---------------------------------------------------------------
Insight Enterprises, Inc.(a)(b) 525,000 20,540,625
- ---------------------------------------------------------------
SunGard Data Systems Inc.(a) 600,000 14,175,000
- ---------------------------------------------------------------
Sykes Enterprises, Inc.(a) 200,000 4,975,000
- ---------------------------------------------------------------
56,303,125
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-2.66%
Affiliated Computer Services,
Inc.(a) 700,000 17,587,500
- ---------------------------------------------------------------
Computer Data Systems, Inc. 119,300 4,936,038
- ---------------------------------------------------------------
Computer Horizons Corp.(a) 150,000 4,556,250
- ---------------------------------------------------------------
CSG Systems International, Inc.(a) 339,400 13,300,238
- ---------------------------------------------------------------
Envoy Corp.(a) 300,000 8,400,000
- ---------------------------------------------------------------
Fair, Issac and Co., Inc. 100,000 4,343,750
- ---------------------------------------------------------------
4Front Software International,
Inc.(a) 46,400 461,100
- ---------------------------------------------------------------
Hyperion Software Corp.(a) 300,000 11,437,500
- ---------------------------------------------------------------
MedQuist, Inc.(a) 300,000 7,312,500
- ---------------------------------------------------------------
PMT Services, Inc.(a) 600,000 9,675,000
- ---------------------------------------------------------------
Saville Systems Ireland
PLC-ADR(a)(Ireland) 350,000 20,912,500
- ---------------------------------------------------------------
102,922,376
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-1.11%
Alternative Resources Corp.(a) 250,000 6,187,500
- ---------------------------------------------------------------
Norrell Corp. 225,000 6,553,125
- ---------------------------------------------------------------
RemedyTemp, Inc.- Class A(a) 165,000 3,795,000
- ---------------------------------------------------------------
Robert Half International, Inc.(a) 375,000 15,351,563
- ---------------------------------------------------------------
Romac International, Inc.(a) 400,000 8,000,000
- ---------------------------------------------------------------
Vincam Group, Inc. (The)(a) 100,000 3,137,500
- ---------------------------------------------------------------
43,024,688
- ---------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.09%
Cornell Corrections, Inc.(a) 200,000 3,600,000
- ---------------------------------------------------------------
SPECIALTY PRINTING-0.40%
Consolidated Graphics, Inc.(a) 200,000 10,375,000
- ---------------------------------------------------------------
World Color Press, Inc.(a) 200,000 5,062,500
- ---------------------------------------------------------------
15,437,500
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.52%
Electromagnetic Sciences, Inc.(a) 250,000 $ 4,734,375
- ---------------------------------------------------------------
Powerwave Technologies, Inc.(a) 200,000 6,175,000
- ---------------------------------------------------------------
World Access, Inc.(a) 350,000 9,275,000
- ---------------------------------------------------------------
20,184,375
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.02%
ACC Corp. 200,000 7,925,000
- ---------------------------------------------------------------
Billing Information Concepts(a) 450,000 17,662,500
- ---------------------------------------------------------------
Tel-Save Holdings, Inc.(a) 39,700 853,550
- ---------------------------------------------------------------
USLD Communications Corp.(a) 650,000 12,878,125
- ---------------------------------------------------------------
39,319,175
- ---------------------------------------------------------------
TEXTILES (APPAREL)-0.96%
Ashworth, Inc.(a) 450,000 4,471,875
- ---------------------------------------------------------------
Nautica Enterprises, Inc.(a) 350,000 9,318,750
- ---------------------------------------------------------------
Quicksilver, Inc.(a) 200,000 6,150,000
- ---------------------------------------------------------------
St. John Knits, Inc. 300,000 12,056,250
- ---------------------------------------------------------------
Tommy Hilfiger Corp.(a) 125,000 4,945,313
- ---------------------------------------------------------------
36,942,188
- ---------------------------------------------------------------
TEXTILES (HOME FURNISHINGS)-0.41%
Mohawk Industries, Inc.(a) 250,000 7,687,500
- ---------------------------------------------------------------
WestPoint Stevens, Inc.(a) 200,000 8,200,000
- ---------------------------------------------------------------
15,887,500
- ---------------------------------------------------------------
TOBACCO-0.14%
Schweitzer-Mauduit International,
Inc. 125,000 5,265,625
- ---------------------------------------------------------------
TRUCKING-0.84%
Heartland Express, Inc.(a) 150,000 4,125,000
- ---------------------------------------------------------------
Hub Group, Inc.(a) 200,000 6,100,000
- ---------------------------------------------------------------
M.S. Carriers, Inc.(a) 150,000 3,801,563
- ---------------------------------------------------------------
Swift Transportation Co., Inc.(a) 300,000 9,600,000
- ---------------------------------------------------------------
US Xpress Enterprises, Inc.(a) 200,000 4,400,000
- ---------------------------------------------------------------
Werner Enerprises, Inc. 175,000 4,243,750
- ---------------------------------------------------------------
32,270,313
- ---------------------------------------------------------------
TRUCKS & PARTS-0.08%
Wabash National Corp. 100,000 2,987,500
- ---------------------------------------------------------------
WASTE MANAGEMENT-1.61%
Allied Waste Industries, Inc.(a) 500,000 10,187,500
- ---------------------------------------------------------------
American Disposal Services,
Inc.(a) 400,000 14,100,000
- ---------------------------------------------------------------
ITEQ, Inc.(a)(b) 650,000 8,125,000
- ---------------------------------------------------------------
KTI, Inc.(a) 300,000 4,350,000
- ---------------------------------------------------------------
</TABLE>
FS-8
<PAGE> 227
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WASTE MANAGEMENT-(CONTINUED)
Philip Services Corp.(a)(Canada) 400,000 $ 7,000,000
- ---------------------------------------------------------------
USA Waste Services, Inc.(a) 497,500 18,407,500
- ---------------------------------------------------------------
62,170,000
- ---------------------------------------------------------------
Total Common Stocks 3,678,428,904
- ---------------------------------------------------------------
PREFERRED STOCK -0.23%
HOTELS-0.23%
Royal Caribbean Cruises Ltd.-$3.63
Conv. Pfd. 115,000 8,740,000
- ---------------------------------------------------------------
CONVERTIBLE CORPORATE NOTES-0.25%
ADVERTISING/BROADCASTING-0.05%
Jacor Communications Inc., Conv.
Sr. LYON, 5.50%, 06/12/11(c) $3,200,000 $ 1,959,776
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-0.20%
Pier 1 Imports, Inc., Conv. Sub.
Notes, 5.75%, 10/01/03 $4,800,000 $ 7,789,968
- ---------------------------------------------------------------
Total Convertible Corporate
Notes 9,749,744
- ---------------------------------------------------------------
U.S. TREASURY SECURITIES-2.15%
U.S. TREASURY BILLS-2.15%
5.093%, 01/02/98(d)(e) 83,780,000 83,111,435
- ---------------------------------------------------------------
REPURCHASE AGREEMENT-1.93%(f)
HSBC Securities, Inc., 5.65%,
11/03/97(g) 74,585,705 74,585,705
- ---------------------------------------------------------------
TOTAL INVESTMENTS-99.75% 3,854,615,788
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.25% 9,641,521
- ---------------------------------------------------------------
NET ASSETS-100.00% $3,864,257,309
===============================================================
</TABLE>
Investment Abbreviations:
ADR -- American Depository Receipt
Conv. -- Convertible
LYON -- Liquid Yield Option Notes
Pfd. -- Preferred
Sr. -- Senior
Sub. -- Subordinated
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Affiliated issuers are those in which the Fund's holdings of an issuer
represent 5% or more of the outstanding voting securities of the issuer. The
Fund has never owned enough of the outstanding voting securities of any
issuer to have control (as defined in the Investment Co. Act of 1940) of
that issuer. The aggregate market value of affiliated issuers as of 10/31/97
was $175,116,278 which represented 4.53% of the Fund's net assets.
(c) Zero coupon bond. Interest rate shown represents the rate of original issue
discount.
(d) U.S. Treasury bills are traded on 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.
(e) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See note 7.
(f) 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, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(g) Joint repurchase agreement entered into 10/31/97 with a maturing value of
$350,164,792. Collateralized by $355,329,000, U.S. Government obligations,
7.00% to 9.875% due 11/15/15-10/01/27 with an aggregate market value at
10/31/97 of $359,463,470.
See Notes to Financial Statements.
FS-9
<PAGE> 228
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$2,754,595,749) $3,854,615,788
- --------------------------------------------------------
Receivables for:
Investments sold 14,238,069
- --------------------------------------------------------
Capital stock sold 29,386,400
- --------------------------------------------------------
Dividends and interest 344,855
- --------------------------------------------------------
Variation margin 1,776,500
- --------------------------------------------------------
Investment for deferred compensation
plan 34,679
- --------------------------------------------------------
Other assets 101,226
- --------------------------------------------------------
Total assets 3,900,497,517
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 25,526,261
- --------------------------------------------------------
Capital stock reacquired 7,082,703
- --------------------------------------------------------
Deferred compensation 34,679
- --------------------------------------------------------
Accrued advisory fees 2,187,579
- --------------------------------------------------------
Accrued administrative services fees 10,746
- --------------------------------------------------------
Accrued distribution fees 864,455
- --------------------------------------------------------
Accrued directors' fees 7,521
- --------------------------------------------------------
Accrued transfer agent fees 345,281
- --------------------------------------------------------
Accrued operating expenses 180,983
- --------------------------------------------------------
Total liabilities 36,240,208
- --------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $3,864,257,309
========================================================
Capital stock, $.001 par value per
share:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 77,337,382
========================================================
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE $ 49.97
========================================================
OFFERING PRICE PER SHARE:
(Net asset value of $49.97 divided by
94.50%) $ 52.88
========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 8,960,543
- --------------------------------------------------------
Dividends (net of $63,501 foreign
withholding tax) 3,185,128
- --------------------------------------------------------
Total investment income 12,145,671
- --------------------------------------------------------
EXPENSES:
Advisory fees 19,244,957
- --------------------------------------------------------
Administrative services fees 97,609
- --------------------------------------------------------
Custodian fees 258,042
- --------------------------------------------------------
Directors' fees 24,698
- --------------------------------------------------------
Distribution fees 7,594,650
- --------------------------------------------------------
Transfer agent fees 4,007,067
- --------------------------------------------------------
Other 846,694
- --------------------------------------------------------
Total expenses 32,073,717
- --------------------------------------------------------
Less: Expenses paid indirectly (187,716)
- --------------------------------------------------------
Net expenses 31,886,001
- --------------------------------------------------------
Net investment income (loss) (19,740,330)
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES AND FUTURES
CONTRACTS:
Net realized gain on sales of:
Investment securities 120,020,005
- --------------------------------------------------------
Futures contracts 23,220,678
- --------------------------------------------------------
143,240,683
- --------------------------------------------------------
Net unrealized appreciation
(depreciation) of:
Investment securities 445,142,391
- --------------------------------------------------------
Futures contracts (9,323,940)
- --------------------------------------------------------
435,818,451
========================================================
Net gain on investment
securities and futures
contracts 579,059,134
- --------------------------------------------------------
Net increase in net assets resulting from
operations $ 559,318,804
========================================================
</TABLE>
See Notes to Financial Statements.
FS-10
<PAGE> 229
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (19,740,330) $ (19,703,976)
- ---------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities and
futures contracts 143,240,683 141,538,687
- ---------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and
futures contracts 435,818,451 211,197,677
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 559,318,804 333,032,388
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities (138,552,707) (54,512,548)
- ---------------------------------------------------------------------------------------------
Net increase from capital stock transactions 692,927,269 226,490,173
- ---------------------------------------------------------------------------------------------
Net increase in net assets 1,113,693,366 505,010,013
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,750,563,943 2,245,553,930
- ---------------------------------------------------------------------------------------------
End of period $3,864,257,309 $2,750,563,943
=============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $2,631,139,285 $1,957,915,109
- ---------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (81,400) (44,163)
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities and futures contracts 138,417,475 133,729,499
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
futures contracts 1,094,781,949 658,963,498
- ---------------------------------------------------------------------------------------------
$3,864,257,309 $2,750,563,943
=============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
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 six diversified
portfolios: AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital
Development Fund, AIM Charter Fund, AIM Constellation Fund and AIM Weingarten
Fund. 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. The Fund has
temporarily discontinued public sales of its shares to new investors. 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.
Information presented in these financial statements pertains only to the Fund.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations--A security listed or traded on an exchange (except
convertible bonds) is valued at its last 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 (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market quotations are not readily
available or are questionable are valued at fair value as determined in good
faith by or under the supervision of the 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
FS-11
<PAGE> 230
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 recorded 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, 1997,
$19,703,093 was reclassified from undistributed net investment income (loss)
to paid in capital as a result of net operating tax loss. Net assets were
unaffected by the reclassification 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 Transactions--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 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.
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.
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, 1997, AIM was
reimbursed $97,609 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, 1997,
AFS was paid $979,015 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 to 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 assets-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, 1997, the Fund paid AIM Distributors $7,594,650 as compensation
under the Plan.
AIM Distributors received commissions of $5,850,410 from sales of shares of
the Fund's capital stock during the year ended October 31, 1997. 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. During the year ended
October 31, 1997, AIM Distributors received $72,147 in contingent deferred sales
charges imposed on redemptions of the Fund's 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, 1997, the Fund paid legal fees of $11,454
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the year ended
October 31, 1997, the Fund's
FS-12
<PAGE> 231
expenses were reduced by $13,018. The Fund also received reductions in transfer
agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of
$39,453 and $135,245, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in reductions of the Fund's total
expenses of $187,716 during the year ended October 31, 1997.
NOTE 4-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 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lesser of i) $325,000,000 or ii) the limit set by
its prospectus for borrowings. During the year ended October 31, 1997, the Fund
did not borrow under the line of credit agreement. The funds which are party to
the line of credit are charged a commitment fee of 0.05% on the unused balance
of the committed line. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the year ended October 31, 1997 were $2,666,279,948
and $2,089,513,535, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 1,177,189,380
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (79,723,571)
- -----------------------------------------------------------
Net unrealized appreciation of investment
securities $ 1,097,465,809
===========================================================
</TABLE>
Cost of investment for tax purposes is $2,757,149,979.
NOTE 7-FUTURES CONTRACTS
On October 31, 1997, $3,288,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for futures contracts.
Open futures contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NO. OF MONTH/ APPRECIATION
CONTRACT CONTRACTS COMMITMENT (DEPRECIATION)
-------- ---------- ---------- --------------
<S> <C> <C> <C>
S&P 500 Index 170 Dec. 97 $(5,238,090)
</TABLE>
FS-13
<PAGE> 232
NOTE 8-CAPITAL STOCK
Changes in capital stock outstanding during the years ended October 31, 1997 and
1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Sold 41,558,826 $ 1,826,781,148 30,538,437 $ 1,334,476,880
- --------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends 3,068,800 127,938,198 1,291,013 49,897,557
- --------------------------------------------------------------------------------------------------------------------------
Reacquired (28,514,602) (1,261,792,077) (26,568,998) (1,157,884,264)
- --------------------------------------------------------------------------------------------------------------------------
16,113,024 $ 692,927,269 5,260,452 $ 226,490,173
==========================================================================================================================
</TABLE>
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during each of the years in the four-year period ended October 31,
1997, the ten month period ended October 31, 1993 and the year ended December
31, 1992.
<TABLE>
<CAPTION>
OCTOBER 31,
--------------------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993 1992(a)
---------- ---------- ---------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 44.93 $ 40.13 $ 28.37 $ 23.85 $ 18.52 $ 16.06
- ------------------------------------------------ ---------- ---------- ---------- -------- -------- -------
Income from investment operations:
Net investment income (loss) (0.26) (0.32) (0.04) (0.05) (0.02) (0.03)
- ------------------------------------------------ ---------- ---------- ---------- -------- -------- -------
Net gains (losses) on securities (both
realized and unrealized) 7.60 6.09 11.80 4.57 5.35 3.41
- ------------------------------------------------ ---------- ---------- ---------- -------- -------- -------
Total from investment operations 7.34 5.77 11.76 4.52 5.33 3.38
- ------------------------------------------------ ---------- ---------- ---------- -------- -------- -------
Less distributions:
Dividends from net investment income -- -- -- -- -- --
- ------------------------------------------------ ---------- ---------- ---------- -------- -------- -------
Distributions from net realized gains (2.30) (0.97) -- -- -- (0.92)
- ------------------------------------------------ ---------- ---------- ---------- -------- -------- -------
Total distributions (2.30) (0.97) -- -- -- (0.92)
- ------------------------------------------------ ---------- ---------- ---------- -------- -------- -------
Net asset value, end of period $ 49.97 $ 44.93 $ 40.13 $ 28.37 $ 23.85 $ 18.52
================================================ ========== ========== ========== ======== ======== =======
Total return(b) 17.35% 14.77% 41.45% 18.96% 28.78% 21.34%
================================================ ========== ========== ========== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,864,257 $2,750,564 $2,245,554 $687,238 $217,256 $38,238
================================================ ========== ========== ========== ======== ======== =======
Ratio of expenses to average net assets(c) 1.06%(d)(e) 1.11% 1.08% 1.07% 1.00%(g) 1.25%
================================================ ========== ========== ========== ======== ======== =======
Ratio of net investment income (loss) to average
net assets(f) (0.65)%(d) (0.76)% (0.19)% (0.26)% (0.24)%(g) (0.59)%
================================================ ========== ========== ========== ======== ======== =======
Portfolio turnover rate 73% 79% 52% 75% 61% 164%
================================================ ========== ========== ========== ======== ======== =======
Average broker commission rate paid(h) $ 0.0540 $ 0.0545 N/A N/A N/A N/A
================================================ ========== ========== ========== ======== ======== =======
</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) Prior to fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.15%, 1.09%, 1.17% (annualized), and 1.65%, for 1995-92, respectively.
(d) Ratios are based on average net assets of $3,037,859,800.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been 1.05%.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or and expense
reimbursements were (0.26)%, (0.28)%, (0.41)% (annualized), and (0.99)%,
for 1995-92, respectively.
(g) Annualized.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
NOTE 10-LEGAL PROCEEDINGS
A claim, Saltzberg v. AIM Equity Funds, Inc., et al., was filed in Southern
District Court in Texas in October 1996 against AIM and certain other
subsidiaries of AIM Management. The claim was instituted under section 36(b) of
the Investment Company Act of 1940 and seeks to recover damages allegedly
suffered by the Fund in connection with fees paid for marketing and shareholder
services after the Fund was closed to new investors. AIM Management is
investigating whether there is any basis at all for this claim and intends to
defend it vigorously.
NOTE 11-FUND REOPENING AND CLOSING
The Fund was reopened to new investors on June 4, 1997 and subsequently closed
to new investors effective as of the close of business June 5, 1997.
FS-14
<PAGE> 233
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Blue Chip Fund:
We have audited the accompanying statements of assets and
liabilities of AIM Blue Chip Fund (a portfolio of AIM
Equity Funds, Inc.), including the schedule of
investments, as of October 31, 1997, the related statement
of operations for the year then ended, the statement of
changes in net assets and financial highlights for the
year ended October 31, 1997, the one month period ended
October 31, 1996, and the year ended September 30, 1996.
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.
The financial highlights for each of the years in the
three year period ended September 30, 1995 were audited by
other auditors whose report thereon, dated October 25,
1995, expressed an unqualified opinion on those financial
highlights.
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, 1997, 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 Blue
Chip Fund as of October 31, 1997, the results of its
operations for the year then ended, the changes in its net
assets and financial highlights for the year ended October
31, 1997, the one-month ended October 31, 1996, and the
year ended September 30, 1996 in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
FS-15
<PAGE> 234
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-92.62%
AIR FREIGHT-0.48%
Federal Express Corp.(a) 55,000 $ 3,671,250
- --------------------------------------------------------------
AIRLINES-0.50%
Delta Air Lines, Inc. 38,000 3,828,500
- --------------------------------------------------------------
ALUMINUM-0.52%
Aluminum Company of America 55,000 4,015,000
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-1.48%
Fifth Third Bancorp 56,700 3,635,888
- --------------------------------------------------------------
NationsBank Corp. 64,000 3,832,000
- --------------------------------------------------------------
Norwest Corp. 120,000 3,847,500
- --------------------------------------------------------------
11,315,388
- --------------------------------------------------------------
BANKS (MONEY CENTER)-2.10%
Chase Manhattan Corp. 80,000 9,230,000
- --------------------------------------------------------------
Citicorp 55,000 6,878,438
- --------------------------------------------------------------
16,108,438
- --------------------------------------------------------------
BANKS (REGIONAL)-0.65%
State Street Corp. 90,000 5,017,500
- --------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-1.49%
Coca-Cola Co. (The) 170,000 9,605,000
- --------------------------------------------------------------
PepsiCo, Inc. 50,000 1,840,625
- --------------------------------------------------------------
11,445,625
- --------------------------------------------------------------
CHEMICALS-1.27%
Du Pont (E.I.) de Nemours & Co. 100,000 5,687,500
- --------------------------------------------------------------
Monsanto Co. 95,000 4,061,250
- --------------------------------------------------------------
9,748,750
- --------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.44%
Goodrich (B.F.) Co. 75,000 3,342,188
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-1.84%
Lucent Technologies, Inc. 70,000 5,770,625
- --------------------------------------------------------------
Motorola, Inc. 55,000 3,396,250
- --------------------------------------------------------------
Northern Telecom Ltd. (Canada) 55,000 4,932,813
- --------------------------------------------------------------
14,099,688
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-3.69%
Compaq Computer Corp.(a) 118,000 7,522,500
- --------------------------------------------------------------
Dell Computer Corp.(a) 81,600 6,538,200
- --------------------------------------------------------------
Hewlett-Packard Co. 60,000 3,701,250
- --------------------------------------------------------------
International Business Machines
Corp. 55,000 5,393,438
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-(CONTINUED)
Sun Microsystems, Inc.(a) 150,000 $ 5,137,500
- --------------------------------------------------------------
28,292,888
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-0.86%
Cisco Systems, Inc.(a) 80,000 6,562,500
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-1.98%
Computer Associates International,
Inc. 55,000 4,100,938
- --------------------------------------------------------------
Microsoft Corp.(a) 85,000 11,050,000
- --------------------------------------------------------------
15,150,938
- --------------------------------------------------------------
CONSUMER FINANCE-1.13%
Household International, Inc. 35,000 3,963,750
- --------------------------------------------------------------
SLM Holding Corp. 33,300 4,674,488
- --------------------------------------------------------------
8,638,238
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.77%
Cardinal Health, Inc. 80,000 5,940,000
- --------------------------------------------------------------
ELECTRIC COMPANIES-2.61%
Allegheny Energy, Inc. 185,000 5,226,250
- --------------------------------------------------------------
American Electric Power Co. 120,000 5,670,000
- --------------------------------------------------------------
CINergy Corp. 140,000 4,620,000
- --------------------------------------------------------------
Edison International 175,000 4,484,375
- --------------------------------------------------------------
20,000,625
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.14%
Emerson Electric Co. 71,000 3,723,063
- --------------------------------------------------------------
General Electric Co. 160,000 10,330,000
- --------------------------------------------------------------
Honeywell, Inc. 34,000 2,314,125
- --------------------------------------------------------------
16,367,188
- --------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.37%
Perkin-Elmer Corp. 45,000 2,812,500
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-2.31%
Altera Corp.(a) 70,000 3,106,250
- --------------------------------------------------------------
Intel Corp. 95,000 7,315,000
- --------------------------------------------------------------
Texas Instruments, Inc. 68,000 7,254,750
- --------------------------------------------------------------
17,676,000
- --------------------------------------------------------------
ENTERTAINMENT-0.80%
Walt Disney Co. (The) 75,000 6,168,750
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTORS)-0.77%
Applied Materials, Inc.(a) 176,000 5,874,000
- --------------------------------------------------------------
</TABLE>
FS-16
<PAGE> 235
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCIAL (DIVERSIFIED)-3.51%
Federal Home Loan Mortgage Corp. 110,000 $ 4,166,250
- --------------------------------------------------------------
Federal National Mortgage Association 125,000 6,054,688
- --------------------------------------------------------------
MGIC Investment Corp. 135,000 8,142,187
- --------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 175,000 8,575,000
- --------------------------------------------------------------
26,938,125
- --------------------------------------------------------------
FOODS-1.45%
ConAgra, Inc. 210,000 6,326,250
- --------------------------------------------------------------
Sara Lee Corp. 93,000 4,754,625
- --------------------------------------------------------------
11,080,875
- --------------------------------------------------------------
FOOTWEAR-0.57%
Adidas A.G. (Germany) 30,000 4,345,807
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-4.08%
Abbott Laboratories 65,000 3,985,313
- --------------------------------------------------------------
American Home Products Corp. 110,000 8,153,750
- --------------------------------------------------------------
Bristol-Myers Squibb Co. 60,000 5,265,000
- --------------------------------------------------------------
Johnson & Johnson 105,000 6,024,375
- --------------------------------------------------------------
Warner-Lambert Co. 55,000 7,875,313
- --------------------------------------------------------------
31,303,751
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-3.75%
Lilly (Eli) & Co. 125,000 8,359,375
- --------------------------------------------------------------
Merck & Co., Inc. 110,000 9,817,500
- --------------------------------------------------------------
Pfizer, Inc. 150,000 10,612,500
- --------------------------------------------------------------
28,789,375
- --------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.75%
HEALTHSOUTH Corp.(a) 225,000 5,751,562
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-2.24%
Baxter International Inc. 75,000 3,468,750
- --------------------------------------------------------------
Boston Scientific Corp.(a) 60,000 2,730,000
- --------------------------------------------------------------
Guidant Corp. 90,000 5,175,000
- --------------------------------------------------------------
Medtronic, Inc. 85,000 3,697,500
- --------------------------------------------------------------
Sybron International Corp.(a) 51,600 2,070,450
- --------------------------------------------------------------
17,141,700
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-2.02%
Colgate-Palmolive Co. 80,000 5,180,000
- --------------------------------------------------------------
Kimberly-Clark Corp. 80,000 4,155,000
- --------------------------------------------------------------
Procter & Gamble Co. (The) 90,000 6,120,000
- --------------------------------------------------------------
15,455,000
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.15%
Conseco Inc. 110,000 4,798,750
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-(CONTINUED)
Torchmark Corp. 100,000 $ 3,987,500
- --------------------------------------------------------------
8,786,250
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-2.82%
American International Group, Inc. 80,000 8,165,000
- --------------------------------------------------------------
CIGNA Corp. 35,000 5,433,750
- --------------------------------------------------------------
Travelers Group, Inc. 115,000 8,050,000
- --------------------------------------------------------------
21,648,750
- --------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-1.68%
Allstate Corp. 105,000 8,708,437
- --------------------------------------------------------------
Progressive Corp. 40,000 4,170,000
- --------------------------------------------------------------
12,878,437
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-1.01%
Merrill Lynch & Co., Inc. 115,000 7,776,875
- --------------------------------------------------------------
INVESTMENT MANAGEMENT-1.00%
Franklin Resources, Inc. 85,000 7,639,375
- --------------------------------------------------------------
LODGING (HOTELS)-1.61%
Carnival Corp.-Class A 170,000 8,245,000
- --------------------------------------------------------------
ITT Corp.(a) 55,000 4,107,812
- --------------------------------------------------------------
12,352,812
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-1.80%
Caterpillar Inc. 55,000 2,818,750
- --------------------------------------------------------------
Deere & Co. 105,000 5,525,625
- --------------------------------------------------------------
Ingersoll-Rand Co. 139,500 5,431,781
- --------------------------------------------------------------
13,776,156
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-3.48%
Corning Inc. 85,000 3,835,625
- --------------------------------------------------------------
Thermo Electron Corp.(a) 210,000 7,835,625
- --------------------------------------------------------------
Tyco International Ltd. 230,000 8,682,500
- --------------------------------------------------------------
United Technologies Corp. 90,000 6,300,000
- --------------------------------------------------------------
26,653,750
- --------------------------------------------------------------
NATURAL GAS-0.98%
El Paso Natural Gas Co. 125,000 7,492,187
- --------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.20%
Danka Business Systems PLC-ADR
(United Kingdom) 40,700 1,505,900
- --------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-3.19%
Exxon Corp. 150,000 9,215,625
- --------------------------------------------------------------
Royal Dutch Petroleum Co.-ADR-New
York shares (Netherlands) 160,000 8,420,000
- --------------------------------------------------------------
</TABLE>
FS-17
<PAGE> 236
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL (INTERNATIONAL INTEGRATED)-(CONTINUED)
Texaco, Inc. 120,000 $ 6,832,500
- --------------------------------------------------------------
24,468,125
- --------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-1.78%
Halliburton Co. 90,000 5,366,250
- --------------------------------------------------------------
Schlumberger Ltd. 95,000 8,312,500
- --------------------------------------------------------------
13,678,750
- --------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.52%
Apache Corp. 95,000 3,990,000
- --------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.90%
Bowater, Inc. 85,000 3,554,062
- --------------------------------------------------------------
Mead Corp. 55,000 3,327,500
- --------------------------------------------------------------
6,881,562
- --------------------------------------------------------------
PERSONAL CARE-1.09%
Avon Products, Inc. 60,000 3,930,000
- --------------------------------------------------------------
Gillette Co. 50,000 4,453,125
- --------------------------------------------------------------
8,383,125
- --------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.98%
Xerox Corp. 95,000 7,534,687
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-0.45%
CalEnergy, Inc.(a) 100,000 3,425,000
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.61%
New York Times Co.-Class A 85,000 4,653,750
- --------------------------------------------------------------
RAILROADS-0.42%
Canadian National Railway Co.
(Canada) 60,000 3,236,250
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.83%
Home Depot, Inc. 115,000 6,396,875
- --------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.14%
CompUSA, Inc.(a) 140,000 4,585,000
- --------------------------------------------------------------
Ingram Micro, Inc.-Class A(a) 140,000 4,173,750
- --------------------------------------------------------------
8,758,750
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.53%
Kohl's Corp.(a) 60,000 4,027,500
- --------------------------------------------------------------
RETAIL (DRUG STORES)-1.53%
CVS Corp. 85,000 5,211,562
- --------------------------------------------------------------
Rite Aid Corp. 110,000 6,531,250
- --------------------------------------------------------------
11,742,812
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.32%
Kroger Co.(a) 150,000 4,893,750
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-(CONTINUED)
Safeway, Inc.(a) 90,000 $ 5,231,250
- --------------------------------------------------------------
10,125,000
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-1.54%
Costco Companies, Inc.(a) 160,000 6,160,000
- --------------------------------------------------------------
Wal-Mart Stores, Inc. 160,000 5,620,000
- --------------------------------------------------------------
11,780,000
- --------------------------------------------------------------
RETAIL (SPECIALTY)-0.38%
Toys "R" Us, Inc.(a) 85,000 2,895,312
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.54%
TJX Companies, Inc. (The) 140,000 4,147,500
- --------------------------------------------------------------
SAVINGS & LOAN COMPANIES-1.61%
Ahmanson (H.F.) & Co. 105,000 6,195,000
- --------------------------------------------------------------
Washington Mutual, Inc. 90,000 6,159,375
- --------------------------------------------------------------
12,354,375
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.50%
Interpublic Group of Companies, Inc. 80,000 3,800,000
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-2.16%
HFS, Inc.(a) 105,000 7,402,500
- --------------------------------------------------------------
Service Corp. International 300,000 9,131,250
- --------------------------------------------------------------
16,533,750
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-2.33%
Equifax, Inc. 250,000 7,765,625
- --------------------------------------------------------------
First Data Corp. 165,000 4,795,312
- --------------------------------------------------------------
Fiserv, Inc.(a) 119,000 5,325,250
- --------------------------------------------------------------
17,886,187
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.32%
WorldCom, Inc.(a) 300,000 10,087,500
- --------------------------------------------------------------
TELEPHONE-2.41%
BellSouth Corp. 130,000 6,150,625
- --------------------------------------------------------------
Cincinnati Bell, Inc. 210,000 5,670,000
- --------------------------------------------------------------
SBC Communications, Inc. 105,000 6,680,625
- --------------------------------------------------------------
18,501,250
- --------------------------------------------------------------
TOBACCO-1.65%
Philip Morris Companies, Inc. 320,000 12,680,000
- --------------------------------------------------------------
WASTE MANAGEMENT-0.59%
Browning-Ferris Industries, Inc. 140,000 4,550,000
- --------------------------------------------------------------
Total Common Stocks 709,910,701
- --------------------------------------------------------------
</TABLE>
FS-18
<PAGE> 237
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY BILLS-4.61%(b)
5.093%, 01/02/98 $35,635,000(c) $ 35,350,632
- --------------------------------------------------------------
REPURCHASE AGREEMENT-2.03%(d)
SBC Warburg Inc., 5.65%,
11/03/97(e) 15,547,344 15,547,344
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.26% 760,808,677
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.74% 5,653,936
- --------------------------------------------------------------
NET ASSETS-100.00% $766,462,613
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) U. S. Treasury bills are traded on a discount. In such cases the interest
rate shown represents the rate of discount paid or received at the time of
purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 7.
(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 insure 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, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 10/31/97 with a maturing value of
$350,164,792. Collateralized by $355,329,000 U.S. Government obligations,
7.00% to 9.875% due 11/15/15 to 10/01/27 with an aggregate market value at
10/31/97 of $359,463,470.
See Notes to Financial Statements.
FS-19
<PAGE> 238
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$649,808,633) $760,808,677
- --------------------------------------------------------
Foreign currencies, at market value (cost
$8,858) 9,027
- --------------------------------------------------------
Receivables for:
Investments sold 82,523
- --------------------------------------------------------
Capital stock sold 8,460,104
- --------------------------------------------------------
Dividends and interest 436,117
- --------------------------------------------------------
Variation margin 783,750
- --------------------------------------------------------
Investment for deferred compensation plan 6,203
- --------------------------------------------------------
Other assets 64,526
- --------------------------------------------------------
Total assets 770,650,927
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,692,125
- --------------------------------------------------------
Capital stock reacquired 1,153,581
- --------------------------------------------------------
Deferred compensation 6,203
- --------------------------------------------------------
Accrued advisory fees 668,541
- --------------------------------------------------------
Accrued administrative service fees 7,205
- --------------------------------------------------------
Accrued directors' fees 3,732
- --------------------------------------------------------
Accrued distribution fees 377,470
- --------------------------------------------------------
Accrued transfer agent fees 178,284
- --------------------------------------------------------
Accrued operating expenses 101,173
- --------------------------------------------------------
Total liabilities 4,188,314
- --------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $766,462,613
========================================================
NET ASSETS:
Class A $498,178,315
========================================================
Class B $264,337,181
========================================================
Class C $ 3,947,117
========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 16,091,502
========================================================
Class B:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 8,594,415
========================================================
Class C:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 128,351
========================================================
CLASS A:
Net asset value and redemption price per
share $ 30.96
========================================================
OFFERING PRICE PER SHARE:
(Net asset value of $30.96 divided
by 94.50%) $ 32.76
========================================================
CLASS B:
Net asset value and offering price per
share $ 30.76
========================================================
CLASS C:
Net asset value and offering price per
share $ 30.75
========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $34,796 foreign
withholding tax) $ 5,144,832
- --------------------------------------------------------
Interest 2,993,589
- --------------------------------------------------------
Total investment income 8,138,421
- --------------------------------------------------------
EXPENSES:
Advisory fees 3,254,853
- --------------------------------------------------------
Custodian fees 69,458
- --------------------------------------------------------
Directors' fees 9,788
- --------------------------------------------------------
Distribution fees -- Class A 1,128,115
- --------------------------------------------------------
Distribution fees -- Class B 1,268,502
- --------------------------------------------------------
Distribution fees -- Class C 4,842
- --------------------------------------------------------
Transfer agent fees -- Class A 516,695
- --------------------------------------------------------
Transfer agent fees -- Class B 386,081
- --------------------------------------------------------
Transfer agent fees -- Class C 1,447
- --------------------------------------------------------
Administrative service fees 73,653
- --------------------------------------------------------
Other 272,781
- --------------------------------------------------------
Total expenses 6,986,215
- --------------------------------------------------------
Less: Fees waived by advisor (100,380)
- --------------------------------------------------------
Expenses paid indirectly (10,722)
- --------------------------------------------------------
Net expenses 6,875,113
- --------------------------------------------------------
Net investment income 1,263,308
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN
CURRENCIES AND FUTURES CONTRACTS:
Net realized gain on sales of:
Investment securities 11,511,488
- --------------------------------------------------------
Foreign currencies 8,772
- --------------------------------------------------------
Futures contracts 5,311,129
- --------------------------------------------------------
16,831,389
- --------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 83,738,179
- --------------------------------------------------------
Foreign currencies 157
- --------------------------------------------------------
Futures contracts (951,557)
- --------------------------------------------------------
82,786,779
- --------------------------------------------------------
Net gain on investment securities, foreign
currencies and futures contracts 99,618,168
- --------------------------------------------------------
Net increase in net assets resulting from
operations $100,881,476
========================================================
</TABLE>
See Notes to Financial Statements.
FS-20
<PAGE> 239
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 1997, the one month ended October 31, 1996 and
the year ended September 30, 1996
<TABLE>
<CAPTION>
ONE MONTH
ENDED
OCTOBER 31, OCTOBER 31, SEPTEMBER 30,
1997 1996 1996
------------ ------------ -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 1,263,308 $ 7,068 $ 413,986
- -----------------------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities,
foreign currencies and futures contracts 16,831,389 1,953,887 17,138,864
- -----------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities, foreign currencies and futures contracts 82,786,779 254,588 (1,172,983)
- -----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 100,881,476 2,215,543 16,379,867
- -----------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (271,127) -- (616,045)
- -----------------------------------------------------------------------------------------------------------
Class B (24,561) -- --
- -----------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (12,005,450) -- (8,878,928)
- -----------------------------------------------------------------------------------------------------------
Class B (1,655,534) -- --
- -----------------------------------------------------------------------------------------------------------
Capital stock transactions -- net:
Class A 314,611,429 11,821,515 28,205,736
- -----------------------------------------------------------------------------------------------------------
Class B 232,350,533 8,096,586 --
- -----------------------------------------------------------------------------------------------------------
Class C 4,027,493 -- --
- -----------------------------------------------------------------------------------------------------------
Net increase in net assets 637,914,259 22,133,644 35,090,630
- -----------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 128,548,354 106,414,710 71,324,080
- -----------------------------------------------------------------------------------------------------------
End of period $766,462,613 $128,548,354 $106,414,710
===========================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $638,472,344 $ 87,482,889 $ 67,564,788
- -----------------------------------------------------------------------------------------------------------
Undistributed net investment income 1,185,397 209,005 201,937
- -----------------------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities, foreign currencies and futures contracts 16,786,046 13,624,413 11,670,526
- -----------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 110,018,826 27,232,047 26,977,459
- -----------------------------------------------------------------------------------------------------------
$766,462,613 $128,548,354 $106,414,710
===========================================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Blue Chip 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 six diversified portfolios:
AIM Blue Chip Fund, AIM Aggressive Growth Fund, AIM Capital Development Fund,
AIM Charter Fund, AIM Constellation Fund, and AIM Weingarten Fund. The Fund
currently offers three different classes of shares: the Class A shares, Class B
shares and the Class C shares. Class C shares commenced sales on August 4, 1997.
Class A shares are sold with a front-end sales charge. Class B shares and Class
C shares are sold with a contingent deferred sales charge. 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. The Fund's investment objective is long-term growth of capital.
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. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
FS-21
<PAGE> 240
A. Security Valuations--A security listed or traded on an exchange (except
convertible bonds) is valued at its last 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 in the
case of 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
(including convertible bonds) are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the 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 market value as determined
in good faith by or under the supervision of the Board of Directors.
B. Foreign Currency Translation--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 foreign currency contract for the purchase or
sale of a security denominated in a foreign currency in order to "lock in"
the U.S. dollar price of that security. The Fund could be exposed to risk if
counterparties to the contracts are unable to meet the terms of their
contracts.
D. Securities Transactions, Investment Income and Distributions--Securities
transactions are recorded 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 paid annually. On October
31, 1997, undistributed net investment income was increased by $8,772 and
undistributed net realized gains decreased by $8,772 in order to comply with
the requirements of the American Institute of Certified Public Accountants
Statement of Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
E. 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.
F. 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 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.
G. Expenses--Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
which are attributable to more than one class are allocated between the
classes.
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 0.75% of
the first $350 million of the Fund's average daily net assets, plus 0.625% of
the fund's average daily net assets in excess of $350 million. AIM has agreed to
waive advisory fees for two years to the extent necessary to keep the annual
expense ratio for Class A shares at 1.31% for such period. During the year ended
October 31, 1997, AIM voluntarily waived advisory fees in the amounts of
$100,380.
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, 1997, AIM was
reimbursed $73,653 for such services.
FS-22
<PAGE> 241
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, 1997,
AFS was paid $497,304 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 of the Class
A, Class B and Class C shares of the Fund. The Company has adopted distribution
plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class
A shares (the "Class A Plan"), the Fund's Class B shares (the "Class B Plan")
and the Fund's Class C shares (the "Class C Plan") (collectively, the "Plans").
The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual
rate of 0.35% of the average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class C shares. The Plan is designed to compensate
AIM Distributors 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 Class A or Class C 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 assignees, its
rights to all or a 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 payable to AIM Distributors related to the Class B shares. During the
year ended October 31, 1997 for the Class A shares and Class B shares and the
period August 4, 1997 (date sales commenced) through October 31, 1997 the Class
C shares paid AIM Distributors $1,128,115, $1,268,502, and $4,842 respectively,
as compensation pursuant to the Plans.
AIM Distributors received commissions of $1,139,512 from sales of Class A
shares of the Fund during the year ended October 31, 1997. 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, 1997,
AIM Distributors received commissions of $50,289 in contingent deferred sales
charges imposed on redemption of Fund Shares. Certain officers and directors of
the Company are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 1997, the Fund paid legal fees of $4,723,
respectively, for services rendered by Kramer, Levin, Naftalis & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund which reduced the
Fund's expenses by $2,729 during the year ended October 31, 1997. The Fund also
received reductions in transfer agency fees from AFS (an affiliate of AIM) and
reductions in custodial fees of $5,443 and $2,550, respectively, under expense
offset arrangements. The effect of the above arrangements resulted in a
reduction of the Fund's total expenses of $10,722 during the year ended October
31, 1997.
NOTE 4-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 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lessor of (i) $325,000,000 or (ii) the limit set
by its prospectus for borrowings. During the year ended October 31, 1997, the
Fund did not borrow under the line of credit agreement. The funds which are
party to the line of credit are charged a commitment fee of 0.05% on the unused
balance of the committed line. The commitment fee is allocated among the funds
based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the year ended October 31, 1997 was $677,575,974 and
$167,965,875, respectively.
The amount of unrealized appreciation (depreciation) of investment securities on
a tax basis is as follows:
<TABLE>
<CAPTION>
<S> <C>
Aggregate unrealized appreciation
of investment securities $119,477,923
- -------------------------------------------------
Aggregate unrealized (depreciation)
of investment securities (8,899,599)
- -------------------------------------------------
Net unrealized appreciation of
investment securities $110,578,324
=================================================
</TABLE>
Costs of investments for tax purposes is $650,230,353.
FS-23
<PAGE> 242
NOTE 7-FUTURES CONTRACTS
On October 31, 1997, $1,451,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open futures
contracts. Open futures contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NO. OF MONTH/ APPRECIATION/
CONTRACT CONTRACTS COMMITMENT (DEPRECIATION)
-------- --------- ---------- --------------
<S> <C> <C> <C>
S&P 500 Index 75 Dec. '97 $ (981,375)
</TABLE>
NOTE 8-CAPITAL STOCK
Changes in capital stock outstanding during the year ended October 31, 1997,
the one month ended October 31, 1996 and the year ended September 30, 1996 were
as follows:
<TABLE>
<CAPTION>
OCTOBER 31, 1997 OCTOBER 31, 1996 SEPTEMBER 30, 1996
-------------------------- ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Sold:
Class A 16,335,583 $ 455,558,096 620,358 $16,142,093 1,504,902 $36,636,393
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 8,938,415 251,600,263 313,256 8,163,778 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Class C* 130,145 4,084,511 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 475,797 11,419,078 -- -- 178,537 4,200,245
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 59,879 1,437,104 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (5,338,702) (152,365,745) (165,098) (4,320,578) (513,296) (12,630,902)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (714,558) (20,686,834) (2,577) (67,192) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Class C* (1,794) (57,018) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
19,884,765 $ 550,989,455 765,939 $19,918,101 1,170,143 $28,205,736
=================================================================================================================================
</TABLE>
* Class C shares commenced sales on August 4, 1997.
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the year ended October 31, 1997, the one month ended October
31, 1996 and each of the years in the four-year period ended September 30, 1996,
for a share of Class B capital stock outstanding during the year ended October
31, 1997 and the period October 1, 1996 (date sales commenced) through October
31, 1996, and for a share of Class C capital stock outstanding during the period
August 4, 1997 (date sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
OCTOBER 31, SEPTEMBER 30,
-------------------------- ---------------------------------------------
1997 1996 1996(a) 1995 1994 1993
CLASS A: --------- --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 26.08 $ 25.56 $ 23.83 $ 19.22 $ 18.89 $ 18.24
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Income from investment operations:
Net investment income 0.17(b) -- 0.33 0.14 0.15 0.19
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Net gains on securities (both realized and
unrealized) 6.93 0.52 4.61 5.05 1.24 0.63
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Total from investment operations 7.10 0.52 4.94 5.19 1.39 0.82
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.05) -- (0.21) (0.12) (0.21) (0.17)
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Distributions from net realized gains (2.17) -- (3.00) (0.46) (0.85) --
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Total distributions (2.22) -- (3.21) (0.58) (1.06) (0.17)
- ------------------------------------------------ --------- --------- --------- -------- -------- --------
Net asset value, end of period $ 30.96 $ 26.08 $ 25.56 $ 23.83 $ 19.22 $ 18.89
================================================ ========= ========= ========= ======== ======== ========
Total return(c) 29.68% 2.04% 22.39% 27.84% 7.69% 4.54%
================================================ ========= ========= ========= ======== ======== ========
Ratios/supplement data:
Net assets, end of period (000s omitted) $ 498,178 $ 120,448 $ 106,415 $ 71,324 $ 60,115 $ 65,112
================================================ ========= ========= ========= ======== ======== ========
Ratio of expenses to average net assets(d) 1.31%(e)(f) 1.30%(g) 1.26% 1.3% 1.4% 1.3%
================================================ ========= ========= ========= ======== ======== ========
Ratio of net investment income to average net
assets(h) 0.50%(e) 0.12%(g) 0.53% 0.7% 0.8% 1.0%
================================================ ========= ========= ========= ======== ======== ========
Portfolio turnover rate 43% 10% 58% 17% 13% 25%
================================================ ========= ========= ========= ======== ======== ========
Average brokerage commission rate paid(i) $ 0.0619 $ 0.0665 $ 0.0696 N/A N/A N/A
================================================ ========= ========= ========= ======== ======== ========
</TABLE>
(a) The Fund changed investment advisors on June 3, 1996.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.32%, 1.37% (annualized) and 1.28% for the periods 1997-1996, and September
30, 1996, respectively.
(e) Ratios are based on average net assets of $322,318,404.
(f) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(g) Annualized.
(h) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 0.49%, 0.05% (annualized) and 0.51% for the periods
1997-1996 and September 30, 1996, respectively.
(i) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-24
<PAGE> 243
<TABLE>
<CAPTION>
1997 1996
CLASS B: -------- --------
<S> <C> <C>
Net asset value, beginning of period $ 26.07 $ 25.56
- ------------------------------------------------------------ -------- --------
Income from investment operations:
Net investment income (0.03)(a) (0.01)
- ------------------------------------------------------------ -------- --------
Net gains on securities (both realized and unrealized) 6.92 0.52
- ------------------------------------------------------------ -------- --------
Total from investment operations 6.89 0.51
- ------------------------------------------------------------ -------- --------
Less distributions:
Dividends from net investment income (0.03) --
- ------------------------------------------------------------ -------- --------
Distributions from net realized gains (2.17) --
- ------------------------------------------------------------ -------- --------
Total distributions (2.20) --
- ------------------------------------------------------------ ======== ========
Net asset value, end of period $ 30.76 $ 26.07
============================================================ ======== ========
Total return(b) 28.81% 2.00%
============================================================ ======== ========
Ratios/supplement data:
Net assets, end of period (000s omitted) $264,337 $ 8,101
============================================================ ======== ========
Ratio of expenses to average net assets(c) 2.09%(d)(e) 2.01%(f)
============================================================ ======== ========
Ratio of net investment income (loss) to average net
assets(g) (0.28)%(d) (0.58)%(f)
============================================================ ======== ========
Portfolio turnover rate 43% 10%
============================================================ ======== ========
Average brokerage commission rate paid(h) $ 0.0619 $ 0.0665
============================================================ ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.12% and 2.08% (annualized) for the periods 1997-1996, respectively.
(d) Ratios are based on average net assets of $126,850,228.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have been
2.10%.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.31)% and (0.65)% (annualized) for the periods
1997-1996, respectively.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<TABLE>
<CAPTION>
1997
CLASS C: ----------
<S> <C>
Net asset value, beginning of period $ 31.72
- ------------------------------------------------------------ --------
Income from investment operations:
Net investment income (0.01)(a)
- ------------------------------------------------------------ --------
Net gains (losses) on securities (both realized and
unrealized) (0.96)
- ------------------------------------------------------------ --------
Total from investment operations (0.97)
- ------------------------------------------------------------ --------
Less distributions:
Dividends from net investment income --
- ------------------------------------------------------------ --------
Distributions from net realized gains --
- ------------------------------------------------------------ --------
Total distributions --
============================================================ ========
Net asset value, end of period $ 30.75
============================================================ ========
Total return(b) (3.06)%
============================================================ ========
Ratios/supplement data:
Net assets, end of period (000s omitted) $ 3,947
============================================================ ========
Ratio of expenses to average net assets(c) 2.09%(d)(e)
============================================================ ========
Ratio of net investment income (loss) to average net
assets(f) (0.28)%(d)
============================================================ ========
Portfolio turnover rate 43%
============================================================ ========
Average brokerage commission rate paid(g) $ 0.0619
============================================================ ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one
year, total returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratio of
expenses to average net assets prior to fee waivers and/or
expense reimbursements was 2.12% (annualized).
(d) Ratios are annualized and based on average net assets of
$1,985,899.
(e) Ratio includes expenses paid indirectly. Excluding expenses
paid indirectly, the ratio of expenses to average net assets
would have remained the same.
(f) After fee waivers and/or expense reimbursements. Ratio of
net investment income (loss) to average net assets prior to
fee waivers and/or expense reimbursements was (0.31)%
annualized).
(g) The average commission rate paid is the total brokerage
commissions paid on applicable purchases and sales of
securities for the period divided by the total number of
related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and
thereafter.
FS-25
<PAGE> 244
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
AIM Capital Development Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Capital Development Fund (a series
portfolio of AIM Equity Funds, Inc.), including the
schedule of investments, as of October 31, 1997, the
related statement of operations for the year ended October
31, 1997 and the statement of changes in net assets and
financial highlights for the year or period ended October
31, 1997 and the period June 17, 1996 (date operations
commenced) through October 31, 1996. 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 audit.
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, 1997, 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 the AIM
Capital Development Fund as of October 31, 1997, the
results of its operations for the year ended October 31,
1997 and the changes in its net assets and the financial
highlights for the year or period ended October 31, 1997
and the period June 17, 1996 (date operations commenced)
through October 31, 1996, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
FS-26
<PAGE> 245
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-90.05%
AEROSPACE/DEFENSE-0.37%
Aviation Sales Co.(a) 25,000 $ 859,375
- --------------------------------------------------------------
Gulfstream Aerospace Corp.(a) 50,000 1,450,000
- --------------------------------------------------------------
InVision Technologies, Inc.(a) 50,000 525,000
- --------------------------------------------------------------
O'Gara Co.(a) 25,000 425,000
- --------------------------------------------------------------
3,259,375
- --------------------------------------------------------------
AIR FREIGHT-0.63%
AirNet Systems, Inc.(a) 70,000 1,435,000
- --------------------------------------------------------------
Eagle USA Airfreight, Inc.(a) 120,000 3,630,000
- --------------------------------------------------------------
Kitty Hawk, Inc.(a) 25,000 509,375
- --------------------------------------------------------------
5,574,375
- --------------------------------------------------------------
AIRLINES-0.23%
China Eastern Airlines Corp.
Ltd.-ADR (a)(Hong Kong) 35,000 796,250
- --------------------------------------------------------------
China Southern Airlines Co.
Ltd.-ADR (a)(China) 45,000 933,750
- --------------------------------------------------------------
Ryanair Holdings PLC-ADR (a)(Ireland) 12,200 305,000
- --------------------------------------------------------------
2,035,000
- --------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.36%
Aftermarket Technology Corp.(a) 134,300 2,719,575
- --------------------------------------------------------------
Keystone Automotive Industries, Inc.(a) 20,500 453,562
- --------------------------------------------------------------
3,173,137
- --------------------------------------------------------------
BANKS (REGIONAL)-0.55%
AmSouth Bancorporation 9,000 432,563
- --------------------------------------------------------------
Banknorth Group, Inc. 16,000 968,000
- --------------------------------------------------------------
Cullen/Frost Bankers, Inc. 8,000 404,000
- --------------------------------------------------------------
Hibernia Corp.-Class A 30,000 534,375
- --------------------------------------------------------------
Marshall & Ilsley Corp. 35,000 1,815,625
- --------------------------------------------------------------
Southwest Bancorp. of Texas, Inc.(a) 25,000 750,000
- --------------------------------------------------------------
4,904,563
- --------------------------------------------------------------
BIOTECHNOLOGY-0.30%
Genzyme Corp.(a) 50,000 1,368,750
- --------------------------------------------------------------
Kos Pharmaceuticals, Inc.(a) 35,000 1,251,250
- --------------------------------------------------------------
2,620,000
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-1.75%
Chancellor Media Corp.(a) 39,091 2,145,119
- --------------------------------------------------------------
Cox Radio, Inc.-Class A(a) 85,000 2,895,313
- --------------------------------------------------------------
Emmis Broadcasting Corp.-Class A(a) 20,000 885,000
- --------------------------------------------------------------
Hearst-Argyle Television Inc.(a) 24,870 708,795
- --------------------------------------------------------------
Heftel Broadcasting Corp.(a) 39,300 2,613,450
- --------------------------------------------------------------
Jacor Communications, Inc.(a) 15,000 628,125
- --------------------------------------------------------------
Metro Networks, Inc.(a) 55,000 1,705,000
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-(CONTINUED)
Univision Communications, Inc.(a) 64,000 $ 3,968,000
- --------------------------------------------------------------
15,548,802
- --------------------------------------------------------------
BUILDING MATERIALS-0.37%
Diamond Home Services, Inc.(a) 100,000 850,000
- --------------------------------------------------------------
Pameco Corp.(a) 85,000 1,445,000
- --------------------------------------------------------------
White Cap Industries, Inc.(a) 50,000 950,000
- --------------------------------------------------------------
3,245,000
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.75%
Andrew Corp.(a) 60,000 1,391,250
- --------------------------------------------------------------
Cidco, Inc.(a) 45,000 838,125
- --------------------------------------------------------------
Coherent Communications Systems
Corp.(a) 80,000 2,420,000
- --------------------------------------------------------------
Corsair Communications, Inc.(a) 17,200 399,900
- --------------------------------------------------------------
Digital Lightwave, Inc.(a) 60,000 1,095,000
- --------------------------------------------------------------
DSC Communications Corp.(a) 180,000 4,387,500
- --------------------------------------------------------------
Innova Corp.(a) 75,000 1,612,500
- --------------------------------------------------------------
IWL Communications, Inc.(a) 50,000 562,500
- --------------------------------------------------------------
MAS Technology Ltd.-ADR(a)
(New Zealand) 150,000 2,306,250
- --------------------------------------------------------------
Metromedia Fiber Network, Inc.(a) 114,500 2,748,000
- --------------------------------------------------------------
NACT Telecommunications, Inc.(a) 50,000 681,250
- --------------------------------------------------------------
NEXTLINK Communications,
Inc.-Class A(a) 60,000 1,357,500
- --------------------------------------------------------------
P-COM, Inc.(a) 70,000 1,408,750
- --------------------------------------------------------------
PairGain Technologies, Inc.(a) 80,000 2,260,000
- --------------------------------------------------------------
SBS Technologies, Inc.(a) 75,000 2,175,000
- --------------------------------------------------------------
Scientific-Atlanta, Inc. 160,000 2,970,000
- --------------------------------------------------------------
Stanford Telecommunications, Inc.(a) 40,000 970,000
- --------------------------------------------------------------
Tekelec(a) 25,000 1,046,875
- --------------------------------------------------------------
Tollgrade Communications, Inc.(a) 70,000 1,723,750
- --------------------------------------------------------------
Verilink Corp.(a) 125,000 953,125
- --------------------------------------------------------------
33,307,275
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-0.75%
Bell & Howell Co.(a) 90,000 2,480,625
- --------------------------------------------------------------
Concord EFS, Inc.(a) 5,000 148,438
- --------------------------------------------------------------
Gateway 2000, Inc.(a) 38,400 1,101,600
- --------------------------------------------------------------
IDX Systems Corp.(a) 14,600 492,750
- --------------------------------------------------------------
Micron Electronics, Inc.(a) 60,000 832,500
- --------------------------------------------------------------
National Instruments Corp.(a) 30,000 1,365,000
- --------------------------------------------------------------
Stratasys, Inc.(a) 15,000 230,625
- --------------------------------------------------------------
6,651,538
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-0.56%
Bay Networks, Inc.(a) 30,000 948,750
- --------------------------------------------------------------
Cabletron Systems, Inc.(a) 50,000 1,450,000
- --------------------------------------------------------------
FORE Systems, Inc.(a) 25,000 406,250
- --------------------------------------------------------------
</TABLE>
FS-27
<PAGE> 246
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (NETWORKING)-(CONTINUED)
MMC Networks, Inc.(a) 50,500 $ 1,104,688
- --------------------------------------------------------------
Premiere Technologies, Inc.(a) 30,000 1,020,000
- --------------------------------------------------------------
4,929,688
- --------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.41%
DSP Communications, Inc.(a) 50,000 925,000
- --------------------------------------------------------------
NeoMagic Corp.(a) 10,000 146,250
- --------------------------------------------------------------
Printronix, Inc.(a) 140,000 2,555,000
- --------------------------------------------------------------
3,626,250
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-9.95%
Activision, Inc.(a) 100,000 1,462,500
- --------------------------------------------------------------
Adobe Systems, Inc. 25,000 1,193,750
- --------------------------------------------------------------
Advanced Fibre Communications, Inc.(a) 60,000 1,743,750
- --------------------------------------------------------------
American Software, Inc.-Class A(a) 60,000 705,000
- --------------------------------------------------------------
ANSYS, Inc.(a) 50,000 462,500
- --------------------------------------------------------------
Aris Corp.(a) 10,000 236,250
- --------------------------------------------------------------
Aspen Technologies, Inc.(a) 40,000 1,505,000
- --------------------------------------------------------------
Autodesk, Inc. 10,000 370,000
- --------------------------------------------------------------
Avant! Corp.(a) 25,000 656,250
- --------------------------------------------------------------
Best Software, Inc.(a) 225,000 2,334,375
- --------------------------------------------------------------
BMC Software, Inc.(a) 40,000 2,415,000
- --------------------------------------------------------------
Box Hill Systems Corp.(a) 60,600 939,300
- --------------------------------------------------------------
Broderbund Software, Inc.(a) 165,000 4,785,000
- --------------------------------------------------------------
C/NET, Inc.(a) 15,000 361,875
- --------------------------------------------------------------
Cadence Design Systems, Inc.(a) 21,220 1,129,965
- --------------------------------------------------------------
Check Point Software Technologies
Ltd. (a)(Israel) 25,000 1,065,625
- --------------------------------------------------------------
Claremont Technology Group,
Inc.(a) 25,000 553,125
- --------------------------------------------------------------
Compuware Corp.(a) 35,000 2,314,375
- --------------------------------------------------------------
Concord Communications, Inc.(a) 55,000 976,250
- --------------------------------------------------------------
CyberMedia, Inc.(a) 20,000 595,000
- --------------------------------------------------------------
DAOU Systems, Inc.(a) 45,000 1,186,875
- --------------------------------------------------------------
Dassault Systemes S.A.-ADR (France) 20,000 600,000
- --------------------------------------------------------------
Dendrite International, Inc.(a) 87,500 1,695,312
- --------------------------------------------------------------
Dr. Solomon's Group PLC-ADR(a)
(United Kingdom) 35,000 1,071,875
- --------------------------------------------------------------
Electronic Arts, Inc.(a) 35,000 1,185,625
- --------------------------------------------------------------
FARO Technologies, Inc.(a) 90,000 1,226,250
- --------------------------------------------------------------
Geoworks(a) 35,000 446,250
- --------------------------------------------------------------
Great Plains Software, Inc.(a) 60,000 1,432,500
- --------------------------------------------------------------
HBO & Co. 80,000 3,480,000
- --------------------------------------------------------------
HPR, Inc.(a) 90,000 2,160,000
- --------------------------------------------------------------
Infinity Financial Technology, Inc.(a) 75,000 1,153,125
- --------------------------------------------------------------
Intuit, Inc.(a) 65,000 2,120,625
- --------------------------------------------------------------
J.D. Edwards & Co.(a) 45,400 1,543,600
- --------------------------------------------------------------
JDA Software Group, Inc.(a) 45,000 1,406,250
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Kofax Image Products, Inc.(a) 150,000 $ 1,509,375
- --------------------------------------------------------------
Mastech Corp.(a) 100,000 3,312,500
- --------------------------------------------------------------
McAfee Associates, Inc.(a) 15,000 746,250
- --------------------------------------------------------------
Mechanical Dynamics, Inc.(a) 15,000 127,500
- --------------------------------------------------------------
Medical Manager Corp.(a) 390,000 6,825,000
- --------------------------------------------------------------
Memco Software Ltd. (a)(Israel) 67,700 1,709,425
- --------------------------------------------------------------
Mercury Interactive Corp.(a) 85,000 1,912,500
- --------------------------------------------------------------
MicroProse, Inc.(a) 50,000 325,000
- --------------------------------------------------------------
Midway Games Inc.(a) 75,000 1,570,312
- --------------------------------------------------------------
Netscape Communications Corp.(a) 80,000 2,630,000
- --------------------------------------------------------------
Network General Corp.(a) 220,000 4,455,000
- --------------------------------------------------------------
Network Solutions, Inc.-Class A(a) 40,300 765,700
- --------------------------------------------------------------
Omtool, Ltd.(a) 125,300 1,581,913
- --------------------------------------------------------------
Parametric Technology Co.(a) 32,500 1,434,063
- --------------------------------------------------------------
Peerless Systems Corp.(a) 10,000 130,000
- --------------------------------------------------------------
Platinum Technology, Inc.(a) 180,000 4,365,000
- --------------------------------------------------------------
QAD Inc.(a) 50,000 706,250
- --------------------------------------------------------------
Radiant Systems, Inc.(a) 10,000 181,250
- --------------------------------------------------------------
Security Dynamics Technologies, Inc.(a) 10,000 338,750
- --------------------------------------------------------------
Siebel Systems, Inc.(a) 20,083 810,865
- --------------------------------------------------------------
Simulation Sciences, Inc.(a) 30,000 547,500
- --------------------------------------------------------------
Sterling Commerce, Inc.(a) 37,500 1,244,531
- --------------------------------------------------------------
Sybase, Inc.(a) 25,000 407,813
- --------------------------------------------------------------
Technology Modeling Associates, Inc.(a) 53,500 749,000
- --------------------------------------------------------------
Transaction Systems Architects,
Inc.-Class A(a) 5,000 195,625
- --------------------------------------------------------------
Trusted Information Systems, Inc.(a) 75,000 703,125
- --------------------------------------------------------------
Vantive Corp.(a) 65,000 1,641,250
- --------------------------------------------------------------
Viewlogic Systems, Inc.(a) 40,000 970,000
- --------------------------------------------------------------
88,408,674
- --------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.48%
Blyth Industries, Inc.(a) 110,000 2,736,250
- --------------------------------------------------------------
Lancaster Colony Corp. 15,000 742,500
- --------------------------------------------------------------
Little Switzerland, Inc.(a) 100,000 650,000
- --------------------------------------------------------------
TAG Heuer International S.A.-ADR
(a)(Switzerland) 10,000 115,000
- --------------------------------------------------------------
4,243,750
- --------------------------------------------------------------
CONSUMER FINANCE-0.17%
Green Tree Financial Corp. 25,000 1,053,125
- --------------------------------------------------------------
Investors Financial Services Corp. 10,000 440,000
- --------------------------------------------------------------
1,493,125
- --------------------------------------------------------------
CONTAINERS (METAL & GLASS)-0.77%
Peak International Ltd.(a) 85,000 1,912,500
- --------------------------------------------------------------
Silgan Holdings, Inc.(a) 140,000 4,935,000
- --------------------------------------------------------------
6,847,500
- --------------------------------------------------------------
</TABLE>
FS-28
<PAGE> 247
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DISTRIBUTORS (FOOD & HEALTH)-1.12%
AmeriSource Health Corp.-Class A(a) 25,000 $ 1,484,375
- --------------------------------------------------------------
McKesson Corp. 28,000 3,004,750
- --------------------------------------------------------------
Owens & Minor, Inc. Holding Co. 30,000 420,000
- --------------------------------------------------------------
ProSource, Inc.(a) 50,000 368,750
- --------------------------------------------------------------
Rykoff-Sexton, Inc. 130,000 2,795,000
- --------------------------------------------------------------
Suburban Ostomy Supply Co., Inc.(a) 175,000 1,903,125
- --------------------------------------------------------------
9,976,000
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.37%
Black Box Corp.(a) 20,000 820,000
- --------------------------------------------------------------
Checkpoint Systems, Inc.(a) 50,000 800,000
- --------------------------------------------------------------
Harman International Industries, Inc. 10,000 540,000
- --------------------------------------------------------------
Itron, Inc.(a) 45,000 922,500
- --------------------------------------------------------------
Sawtek Inc.(a) 5,000 170,000
- --------------------------------------------------------------
3,252,500
- --------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.53%
Power-One, Inc.(a) 140,000 2,607,500
- --------------------------------------------------------------
Stoneridge, Inc.(a) 126,300 2,052,375
- --------------------------------------------------------------
4,659,875
- --------------------------------------------------------------
ELECTRONICS (DEFENSE)-0.01%
Tracor, Inc.(a) 3,900 104,325
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-0.89%
ASM Lithography Holding N.V.(a)
(Netherlands) 5,000 366,250
- --------------------------------------------------------------
Alliance Semiconductor Corp.(a) 25,000 187,500
- --------------------------------------------------------------
Altera Corp.(a) 35,000 1,553,125
- --------------------------------------------------------------
Apex PC Solutions, Inc.(a) 10,000 257,500
- --------------------------------------------------------------
Cypress Semiconductor Corp.(a) 55,000 618,750
- --------------------------------------------------------------
Galileo Technology Ltd.(a) (Israel) 35,000 1,203,125
- --------------------------------------------------------------
General Scanning, Inc.(a) 15,000 387,187
- --------------------------------------------------------------
General Semiconductor, Inc.(a) 10,000 113,750
- --------------------------------------------------------------
Integrated Device Technology, Inc.(a) 40,000 462,500
- --------------------------------------------------------------
Oak Technology, Inc.(a) 30,000 288,750
- --------------------------------------------------------------
SDL, Inc.(a) 20,000 360,000
- --------------------------------------------------------------
3Dlabs Inc., Ltd.(a) 25,000 531,250
- --------------------------------------------------------------
Xilinx, Inc.(a) 45,000 1,535,625
- --------------------------------------------------------------
7,865,312
- --------------------------------------------------------------
ENTERTAINMENT-0.19%
Alliance Communications
Corp.-Class B(a) (Canada) 60,000 738,750
- --------------------------------------------------------------
N2K Inc.(a) 37,500 986,718
- --------------------------------------------------------------
1,725,468
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-1.10%
Aehr Test Systems(a) 70,000 945,000
- --------------------------------------------------------------
Asyst Technologies, Inc.(a) 10,000 290,938
- --------------------------------------------------------------
Credence Systems Corp.(a) 30,000 885,000
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-(CONTINUED)
DuPont Photomasks, Inc.(a) 55,000 $ 2,365,000
- --------------------------------------------------------------
KLA-Tencor Corp.(a) 10,000 439,375
- --------------------------------------------------------------
PRI Automation, Inc.(a) 15,000 573,750
- --------------------------------------------------------------
Speedfam International, Inc.(a) 95,000 3,526,875
- --------------------------------------------------------------
Teradyne, Inc.(a) 20,000 748,750
- --------------------------------------------------------------
9,774,688
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.13%
American Capital Strategies, Ltd.(a) 35,100 631,800
- --------------------------------------------------------------
Hamilton Bancorp, Inc.(a) 75,000 2,287,500
- --------------------------------------------------------------
Insignia Financial Group, Inc.-
Class A(a) 45,000 973,125
- --------------------------------------------------------------
MGIC Investment Corp. 20,000 1,206,250
- --------------------------------------------------------------
Mutual Risk Management Ltd. (Bermuda) 30,000 778,125
- --------------------------------------------------------------
SEI Corp. 90,000 3,830,625
- --------------------------------------------------------------
SunAmerica, Inc. 8,400 301,875
- --------------------------------------------------------------
10,009,300
- --------------------------------------------------------------
FOODS-0.66%
American Italian Pasta Co.-Class
A(a) 170,000 3,570,000
- --------------------------------------------------------------
Weider Nutrition International,
Inc. 200,000 2,312,500
- --------------------------------------------------------------
5,882,500
- --------------------------------------------------------------
FOOTWEAR-0.29%
Samsonite Corp.(a) 55,000 2,550,625
- --------------------------------------------------------------
GAMING, LOTTERY & PARI-MUTUEL COMPANIES-0.91%
Circus Circus Enterprises(a) 100,000 2,225,000
- --------------------------------------------------------------
International Game Technology 135,000 3,450,937
- --------------------------------------------------------------
Sodak Gaming, Inc.(a) 225,000 2,418,750
- --------------------------------------------------------------
8,094,687
- --------------------------------------------------------------
HARDWARE & TOOLS-0.21%
Acorn Products, Inc.(a) 125,000 1,843,750
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-0.21%
Allergan, Inc. 10,000 329,375
- --------------------------------------------------------------
IVAX Corp. 200,000 1,512,500
- --------------------------------------------------------------
1,841,875
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-2.52%
Algos Pharmaceutical Corp.(a) 20,000 495,000
- --------------------------------------------------------------
BioChem Pharma, Inc.(a) (Canada) 30,000 751,875
- --------------------------------------------------------------
Collagenex Pharmaceuticals, Inc.(a) 20,000 240,000
- --------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 66,000 3,192,750
- --------------------------------------------------------------
Elan Corp. PLC-ADR(a) (Ireland) 15,000 748,125
- --------------------------------------------------------------
Forest Laboratories, Inc.(a) 155,000 7,168,750
- --------------------------------------------------------------
Gilead Sciences, Inc.(a) 8,000 273,000
- --------------------------------------------------------------
Guilford Pharmaceuticals, Inc.(a) 10,000 243,750
- --------------------------------------------------------------
Human Genome Sciences, Inc.(a) 15,000 615,000
- --------------------------------------------------------------
Jones Medical Industries, Inc. 35,000 1,054,375
- --------------------------------------------------------------
</TABLE>
FS-29
<PAGE> 248
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-GENERIC & OTHER)-(CONTINUED)
Martek Biosciences Corp.(a) 20,000 $ 222,500
- --------------------------------------------------------------
North American Vaccine, Inc.(a) 60,000 1,507,500
- --------------------------------------------------------------
OSI Pharmaceuticals, Inc.(a) 50,000 475,000
- --------------------------------------------------------------
Teva Pharmaceutical Industries
Ltd.-ADR (Israel) 33,000 1,542,750
- --------------------------------------------------------------
Warner Chilcott Laboratories-SP
ADR (a)(Ireland) 135,000 1,906,875
- --------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 60,000 1,905,000
- --------------------------------------------------------------
22,342,250
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-0.08%
Applied Analytical Industries, Inc.(a) 40,000 670,000
- --------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.06%
Health Management Associates,
Inc.-Class A(a) 22,500 548,438
- --------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.61%
Capital Senior Living Corp.(a) 100,500 1,683,375
- --------------------------------------------------------------
Horizon Health Corp.(a) 25,500 596,063
- --------------------------------------------------------------
Integrated Health Services, Inc. 40,000 1,270,000
- --------------------------------------------------------------
National Surgery Centers, Inc.(a) 12,500 312,500
- --------------------------------------------------------------
NovaCare, Inc.(a) 20,000 261,250
- --------------------------------------------------------------
Sunrise Assisted Living, Inc.(a) 35,000 1,299,375
- --------------------------------------------------------------
5,422,563
- --------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-1.12%
Alternative Living Services, Inc.(a) 85,000 2,082,500
- --------------------------------------------------------------
American Oncology Resources, Inc.(a) 30,000 438,750
- --------------------------------------------------------------
Concentra Managed Care, Inc.(a) 40,000 1,305,000
- --------------------------------------------------------------
Express Scripts, Inc.-Class A(a) 13,000 732,875
- --------------------------------------------------------------
HealthCare COMPARE Corp.(a) 20,000 1,075,000
- --------------------------------------------------------------
HealthPlan Services Corp. 55,000 1,158,437
- --------------------------------------------------------------
MedPartners, Inc.(a) 65,715 1,671,625
- --------------------------------------------------------------
Monarch Dental Corp.(a) 63,000 1,141,875
- --------------------------------------------------------------
PacifiCare Health Systems, Inc.-
Class B(a) 5,000 323,750
- --------------------------------------------------------------
9,929,812
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-2.82%
ADAC Laboratories 25,000 487,500
- --------------------------------------------------------------
Bard (C.R.), Inc. 55,000 1,526,250
- --------------------------------------------------------------
Biomet, Inc. 65,000 1,620,937
- --------------------------------------------------------------
Dentsply International, Inc. 70,000 1,986,250
- --------------------------------------------------------------
Endovascular Technologies, Inc.(a) 25,000 462,500
- --------------------------------------------------------------
Gulf South Medical Supply, Inc.(a) 11,000 363,000
- --------------------------------------------------------------
Marquette Medical Systems-Class A(a) 55,000 1,416,250
- --------------------------------------------------------------
Maxxim Medical, Inc.(a) 25,000 559,375
- --------------------------------------------------------------
MiniMed, Inc.(a) 70,000 2,730,000
- --------------------------------------------------------------
Nitinol Medical Technologies, Inc.(a) 80,000 1,120,000
- --------------------------------------------------------------
Protocol Systems Inc.(a) 25,000 265,625
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-(CONTINUED)
SangStat Medical Corp.(a) 25,000 $ 778,125
- --------------------------------------------------------------
Schick Technologies, Inc.(a) 25,000 537,500
- --------------------------------------------------------------
Sofamor Danek Group, Inc.(a) 30,000 2,066,250
- --------------------------------------------------------------
Steris Corp.(a) 85,000 3,378,750
- --------------------------------------------------------------
Stryker Corp. 19,000 706,563
- --------------------------------------------------------------
Sullivan Dental Products, Inc. 25,000 584,375
- --------------------------------------------------------------
Sulzer Medica (a)(Switzerland) 26,900 719,575
- --------------------------------------------------------------
Sybron International Corp.(a) 85,000 3,410,625
- --------------------------------------------------------------
Trex Medical Corp.(a) 25,000 321,875
- --------------------------------------------------------------
25,041,325
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-2.59%
Advance ParadigM, Inc.(a) 140,000 3,570,000
- --------------------------------------------------------------
AmeriPath, Inc.(a) 110,000 1,815,000
- --------------------------------------------------------------
BioReliance Corp.(a) 42,500 945,625
- --------------------------------------------------------------
Boron, LePore & Associates, Inc.(a) 16,500 402,188
- --------------------------------------------------------------
Cohr, Inc.(a) 150,000 1,575,000
- --------------------------------------------------------------
Covance, Inc.(a) 40,000 707,500
- --------------------------------------------------------------
First Commonwealth, Inc.(a) 15,000 217,500
- --------------------------------------------------------------
FPA Medical Management, Inc.(a) 42,000 1,013,250
- --------------------------------------------------------------
Intensiva Healthcare Corp.(a) 70,000 533,750
- --------------------------------------------------------------
Medical Resources, Inc.(a) 75,000 1,359,375
- --------------------------------------------------------------
Ocular Sciences, Inc.(a) 131,100 2,884,200
- --------------------------------------------------------------
Prime Medical Services, Inc.(a) 60,000 795,000
- --------------------------------------------------------------
Summit Holding Southeast Inc.(a) 235,000 4,230,000
- --------------------------------------------------------------
Superior Consultant Holdings
Corp.(a) 25,000 775,000
- --------------------------------------------------------------
Ventana Medical Systems, Inc.(a) 140,000 2,170,000
- --------------------------------------------------------------
22,993,388
- --------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.22%
Kimball International, Inc.-Class B 30,000 1,230,000
- --------------------------------------------------------------
Service Experts, Inc.(a) 29,900 747,500
- --------------------------------------------------------------
1,977,500
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.20%
Dial Corp. 105,000 1,771,875
- --------------------------------------------------------------
HOUSEWARES-0.38%
Central Garden and Pet Co.(a) 80,000 2,100,000
- --------------------------------------------------------------
Helen of Troy Ltd.(a) 20,000 332,500
- --------------------------------------------------------------
Home Products International, Inc.(a) 80,000 955,000
- --------------------------------------------------------------
3,387,500
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.95%
AmerUs Life Holdings, Inc.-Class A 42,400 1,317,050
- --------------------------------------------------------------
Nationwide Financial Services,
Inc.-Class A 140,000 4,261,250
- --------------------------------------------------------------
Penncorp Financial Group, Inc. 20,000 651,250
- --------------------------------------------------------------
UNUM Corp. 10,400 507,000
- --------------------------------------------------------------
</TABLE>
FS-30
<PAGE> 249
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (LIFE/HEALTH)-(CONTINUED)
Western National Corp. 60,000 $ 1,728,750
- --------------------------------------------------------------
8,465,300
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.18%
Ace, Ltd. 4,000 371,750
- --------------------------------------------------------------
Horace Mann Educators Corp. 8,000 450,000
- --------------------------------------------------------------
PAULA Financial(a) 29,900 754,975
- --------------------------------------------------------------
1,576,725
- --------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-2.14%
Amerin Corp.(a) 200,000 4,575,000
- --------------------------------------------------------------
Capital Re Corp. 10,000 589,375
- --------------------------------------------------------------
CapMAC Holdings, Inc. 30,000 900,000
- --------------------------------------------------------------
CMAC Investment Corp. 13,000 710,937
- --------------------------------------------------------------
Everest Re Holdings, Inc. 56,000 2,107,000
- --------------------------------------------------------------
Executive Risk Inc. 5,000 329,375
- --------------------------------------------------------------
Exel Ltd. 11,200 676,900
- --------------------------------------------------------------
HCC Insurance Holdings, Inc. 50,000 1,168,750
- --------------------------------------------------------------
NAC Re Corp. 8,000 356,000
- --------------------------------------------------------------
Penn-America Group, Inc. 80,000 1,475,000
- --------------------------------------------------------------
Progressive Corp. 25,000 2,606,250
- --------------------------------------------------------------
TIG Holdings, Inc. 25,000 846,875
- --------------------------------------------------------------
Transatlantic Holdings, Inc. 10,000 691,875
- --------------------------------------------------------------
UnionAmerica Holdings PLC-ADR
(United Kingdom) 27,000 536,625
- --------------------------------------------------------------
Vesta Insurance Group, Inc. 10,000 581,250
- --------------------------------------------------------------
W. R. Berkley Corp. 20,000 822,500
- --------------------------------------------------------------
18,973,712
- --------------------------------------------------------------
INVESTMENT MANAGEMENT-0.13%
ARM Financial Group, Inc.-Class A 51,400 1,111,525
- --------------------------------------------------------------
INVESTMENTS-0.13%
Security Capital Group Inc.-Class B(a) 36,700 1,174,400
- --------------------------------------------------------------
IRON & STEEL-0.09%
Ispat International N.V.-New York
Registered Shares(a) (Netherlands) 33,200 840,375
- --------------------------------------------------------------
LAND DEVELOPMENT-0.38%
LaSalle Partners, Inc.(a) 35,000 1,279,687
- --------------------------------------------------------------
Silverleaf Resorts, Inc.(a) 95,000 2,066,250
- --------------------------------------------------------------
3,345,937
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-1.37%
Coastcast Corp.(a) 20,000 292,500
- --------------------------------------------------------------
Coleman Co., Inc.(a) 50,000 746,875
- --------------------------------------------------------------
Florida Panthers Holdings, Inc.(a) 15,000 301,875
- --------------------------------------------------------------
Galoob Toys, Inc.(a) 210,000 2,769,375
- --------------------------------------------------------------
GTECH Holdings Corp.(a) 25,000 806,250
- --------------------------------------------------------------
Hasbro, Inc. 30,000 870,000
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-(CONTINUED)
K2, Inc. 18,000 $ 455,625
- --------------------------------------------------------------
Oakley, Inc.(a) 95,000 938,125
- --------------------------------------------------------------
The North Face, Inc.(a) 145,000 3,425,625
- --------------------------------------------------------------
Toy Biz, Inc.(a) 110,000 969,375
- --------------------------------------------------------------
Travis Boats & Motors, Inc.(a) 30,000 573,750
- --------------------------------------------------------------
12,149,375
- --------------------------------------------------------------
LODGING-HOTELS-0.58%
Four Seasons Hotels, Inc. (Canada) 38,000 1,256,375
- --------------------------------------------------------------
Vail Resorts Inc.(a) 125,000 3,476,562
- --------------------------------------------------------------
Wyndham Hotel Corp.(a) 10,000 449,375
- --------------------------------------------------------------
5,182,312
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.65%
CTB International Corp.(a) 200,000 3,425,000
- --------------------------------------------------------------
Greenfield Industries 15,000 568,125
- --------------------------------------------------------------
OmniQuip International, Inc. 40,000 670,000
- --------------------------------------------------------------
Pfeiffer Vacuum Technology
A.G.-ADR(a) (Germany) 15,000 487,500
- --------------------------------------------------------------
Thermo Fibergen Inc. 45,000 410,625
- --------------------------------------------------------------
Thermo Fibergen Inc.-Rights(a) 45,000 154,688
- --------------------------------------------------------------
5,715,938
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.21%
Daniel Industries 30,000 603,750
- --------------------------------------------------------------
Figgie International Inc.-Class A(a) 30,000 401,250
- --------------------------------------------------------------
Industrial Distribution Group, Inc.(a) 45,100 873,813
- --------------------------------------------------------------
1,878,813
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-1.43%
Amor Holdings, Inc.(a) 50,000 550,000
- --------------------------------------------------------------
Big Dog Holdings, Inc.(a) 125,000 1,765,625
- --------------------------------------------------------------
Cognex Corp.(a) 105,000 2,808,750
- --------------------------------------------------------------
DONCASTERS PLC-ADR(a) (United Kingdom) 25,000 673,438
- --------------------------------------------------------------
First Years, Inc. (The) 118,000 2,950,000
- --------------------------------------------------------------
Novel Denim Holdings Ltd.(a) (Hong
Kong) 27,500 556,875
- --------------------------------------------------------------
Regal-Beloit Corp. 20,000 537,500
- --------------------------------------------------------------
Rock of Ages Corp.(a) 30,000 570,000
- --------------------------------------------------------------
Tefron Ltd.(a) (Israel) 120,000 2,302,500
- --------------------------------------------------------------
12,714,688
- --------------------------------------------------------------
METAL FABRICATORS-0.71%
Metals USA(a) 400,000 5,900,000
- --------------------------------------------------------------
Shaw Group, Inc.(a) 20,000 417,500
- --------------------------------------------------------------
6,317,500
- --------------------------------------------------------------
NATURAL GAS-0.16%
NGC Corp. 75,000 1,425,000
- --------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.84%
Boise Cascade Office Products Corp.(a) 9,700 184,300
- --------------------------------------------------------------
</TABLE>
FS-31
<PAGE> 250
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OFFICE EQUIPMENT & SUPPLIES-(CONTINUED)
Daisytek International Corp.(a) 95,000 $ 3,621,875
- --------------------------------------------------------------
Danka Business Systems PLC-ADR
(United Kingdom) 30,000 1,110,000
- --------------------------------------------------------------
U.S. Office Products Co.(a) 70,000 2,187,500
- --------------------------------------------------------------
Wallace Computer Services, Inc. 9,400 361,313
- --------------------------------------------------------------
7,464,988
- --------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-9.53%
Atwood Oceanics, Inc.(a) 65,000 7,198,750
- --------------------------------------------------------------
Baker Hughes, Inc. 80,000 3,675,000
- --------------------------------------------------------------
BJ Services Co.(a) 20,000 1,695,000
- --------------------------------------------------------------
Cal Dive International, Inc.(a) 121,000 3,781,250
- --------------------------------------------------------------
Camco International, Inc. 8,000 578,000
- --------------------------------------------------------------
Computalog Ltd.(a) (Canada) 25,000 514,062
- --------------------------------------------------------------
Cooper Cameron Corp.(a) 21,000 1,517,250
- --------------------------------------------------------------
Diamond Offshore Drilling, Inc. 40,000 2,490,000
- --------------------------------------------------------------
Dril-Quip, Inc.(a) 8,900 319,288
- --------------------------------------------------------------
ENSCO International, Inc. 105,000 4,416,562
- --------------------------------------------------------------
EVI, Inc.(a) 89,802 5,764,165
- --------------------------------------------------------------
Falcon Drilling Company, Inc.(a) 56,000 2,037,000
- --------------------------------------------------------------
Fred. Olsen Energy A.S.A.(a)
(Norway) 47,100 1,188,064
- --------------------------------------------------------------
Grey Wolf, Inc.(a) 110,000 907,500
- --------------------------------------------------------------
Gulfmark Offshore Inc.(a) 67,000 2,437,125
- --------------------------------------------------------------
Hanover Compressor Co.(a) 70,000 1,513,750
- --------------------------------------------------------------
Hvide Marine, Inc.-Class A(a) 205,000 6,765,000
- --------------------------------------------------------------
Input/Output, Inc.(a) 30,000 804,375
- --------------------------------------------------------------
National-Oilwell, Inc.(a) 43,000 3,292,188
- --------------------------------------------------------------
Noble Drilling Corp.(a) 105,000 3,734,063
- --------------------------------------------------------------
Oceaneering International, Inc.(a) 30,000 744,375
- --------------------------------------------------------------
Offshore Logistics, Inc.(a) 25,000 525,000
- --------------------------------------------------------------
Parker Drilling Co.(a) 80,000 1,185,000
- --------------------------------------------------------------
Petroleum Geo-Services ASA-ADR(a)
(Netherlands) 18,300 1,267,275
- --------------------------------------------------------------
Precision Drilling Corp.(a) (Canada) 20,000 615,000
- --------------------------------------------------------------
Pride International, Inc.(a) 90,000 2,970,000
- --------------------------------------------------------------
Reading & Bates Corp.(a) 50,000 2,118,750
- --------------------------------------------------------------
Rowan Companies, Inc.(a) 15,000 583,125
- --------------------------------------------------------------
Santa Fe International Corp. 15,200 747,650
- --------------------------------------------------------------
SEACOR Holdings Inc.(a) 12,000 781,500
- --------------------------------------------------------------
Smith International, Inc.(a) 20,000 1,525,000
- --------------------------------------------------------------
Tidewater, Inc. 6,000 394,125
- --------------------------------------------------------------
Transocean Offshore Inc. 30,000 1,620,000
- --------------------------------------------------------------
Trico Marine Services, Inc.(a) 130,000 4,777,500
- --------------------------------------------------------------
Tuboscope Vetco International
Corp.(a) 130,000 4,127,500
- --------------------------------------------------------------
UNIFAB International, Inc.(a) 67,200 2,150,400
- --------------------------------------------------------------
Veritas DGC, Inc.(a) 19,000 777,813
- --------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED)
Weatherford Enterra, Inc.(a) 60,000 $ 3,063,750
- --------------------------------------------------------------
84,602,155
- --------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-2.71%
Anadarko Petroleum Corp. 4,000 293,000
- --------------------------------------------------------------
Apache Corp. 5,000 210,000
- --------------------------------------------------------------
Benton Oil & Gas Co.(a) 185,000 3,723,125
- --------------------------------------------------------------
Cabot Oil & Gas Corp.-Class A 70,000 1,680,000
- --------------------------------------------------------------
Cross Timbers Oil Co. 35,000 934,062
- --------------------------------------------------------------
Devon Energy Corp. 5,000 223,750
- --------------------------------------------------------------
Eagle Geophysical, Inc.(a) 100,000 1,750,000
- --------------------------------------------------------------
Houston Exploration Co. (The)(a) 80,000 1,940,000
- --------------------------------------------------------------
Louis Dreyfus Natural Gas Corp.(a) 15,000 331,875
- --------------------------------------------------------------
Newfield Exploration Co.(a) 5,000 135,625
- --------------------------------------------------------------
Noble Affiliates, Inc. 20,000 821,250
- --------------------------------------------------------------
Nuevo Energy Co.(a) 40,000 1,657,500
- --------------------------------------------------------------
Ocean Energy, Inc.(a) 25,000 1,543,750
- --------------------------------------------------------------
Petsec Energy Ltd.-ADR(a)
(Australia) 15,000 337,500
- --------------------------------------------------------------
Pogo Producing Co. 25,000 904,687
- --------------------------------------------------------------
Santa Fe Energy Resources, Inc.(a) 40,400 527,725
- --------------------------------------------------------------
Stolt Comex Seaway, S.A.(a)
(United Kingdom) 95,000 5,700,000
- --------------------------------------------------------------
Titan Exploration, Inc.(a) 80,000 1,010,000
- --------------------------------------------------------------
United Meridian Corp.(a) 10,000 339,375
- --------------------------------------------------------------
24,063,224
- --------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-0.28%
Gulf Indonesia Resources Ltd.(a)
(Indonesia) 60,000 1,260,000
- --------------------------------------------------------------
Rutherford-Moran Oil Corp.(a) 50,000 1,225,000
- --------------------------------------------------------------
2,485,000
- --------------------------------------------------------------
PERSONAL CARE-0.78%
Estee Lauder Companies-Class A 14,500 644,344
- --------------------------------------------------------------
French Fragrances, Inc.(a) 27,900 298,181
- --------------------------------------------------------------
Perrigo Co.(a) 72,600 1,116,225
- --------------------------------------------------------------
Rexall Sundown, Inc.(a) 70,000 1,531,250
- --------------------------------------------------------------
Twinlab Corp.(a) 175,000 3,325,000
- --------------------------------------------------------------
6,915,000
- --------------------------------------------------------------
PUBLISHING-0.30%
CMP Media Inc.-Class A(a) 75,000 1,387,500
- --------------------------------------------------------------
Petersen Companies, Inc.
(The)-Class A(a) 65,000 1,283,750
- --------------------------------------------------------------
2,671,250
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST-0.54%
CCA Prison Realty Trust 50,000 1,725,000
- --------------------------------------------------------------
Equity Office Properties Trust 23,000 702,937
- --------------------------------------------------------------
Great Lakes REIT, Inc. 50,000 937,500
- --------------------------------------------------------------
Kilroy Realty Corp. 40,000 1,060,000
- --------------------------------------------------------------
</TABLE>
FS-32
<PAGE> 251
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT TRUST-(CONTINUED)
SL Green Realty Corp.(a) 15,200 $ 380,950
- --------------------------------------------------------------
4,806,387
- --------------------------------------------------------------
RESTAURANTS-0.97%
Apple South, Inc. 30,000 558,750
- --------------------------------------------------------------
Brinker International, Inc.(a) 50,000 700,000
- --------------------------------------------------------------
Cracker Barrel Old Country Store,
Inc. 8,000 236,000
- --------------------------------------------------------------
Landry's Seafood Restaurants, Inc.(a) 20,000 560,000
- --------------------------------------------------------------
Logan's Roadhouse, Inc.(a) 40,000 715,000
- --------------------------------------------------------------
NPC International Inc.(a) 25,000 353,125
- --------------------------------------------------------------
Outback Steakhouse, Inc.(a) 10,000 270,625
- --------------------------------------------------------------
Ryan's Family Steak Houses, Inc.(a) 40,000 345,000
- --------------------------------------------------------------
Showbiz Pizza Time, Inc.(a) 85,000 1,806,250
- --------------------------------------------------------------
Starbucks Corp.(a) 45,000 1,485,000
- --------------------------------------------------------------
Wendy's International, Inc. 75,000 1,575,000
- --------------------------------------------------------------
8,604,750
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.11%
Eagle Hardware & Garden, Inc.(a) 60,000 1,020,000
- --------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-0.37%
CompUSA, Inc.(a) 33,000 1,080,750
- --------------------------------------------------------------
Ingram Micro, Inc.-Class A(a) 30,300 903,317
- --------------------------------------------------------------
Tech Data Corp.(a) 30,000 1,335,000
- --------------------------------------------------------------
3,319,067
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.28%
Neiman Marcus Group, Inc. (The)(a) 40,000 1,327,500
- --------------------------------------------------------------
Nordstrom, Inc. 15,000 918,750
- --------------------------------------------------------------
Proffitt's, Inc.(a) 8,400 240,975
- --------------------------------------------------------------
2,487,225
- --------------------------------------------------------------
RETAIL (DISCOUNTERS)-1.16%
Dollar Tree Stores, Inc.(a) 19,500 789,750
- --------------------------------------------------------------
Family Dollar Stores, Inc. 172,500 4,053,750
- --------------------------------------------------------------
Fred's, Inc. 50,000 1,112,500
- --------------------------------------------------------------
Mac Frugals Bargains Close-Outs,
Inc.(a) 60,000 2,040,000
- --------------------------------------------------------------
Men's Wearhouse, Inc.(a) 60,000 2,325,000
- --------------------------------------------------------------
10,321,000
- --------------------------------------------------------------
RETAIL (DRUG STORES)-0.15%
Rite Aid Corp. 22,000 1,306,250
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.31%
Dominick's Supermarkets, Inc.(a) 50,000 1,825,000
- --------------------------------------------------------------
Whole Foods Market, Inc.(a) 80,000 3,140,000
- --------------------------------------------------------------
Wild Oats Markets Inc.(a) 190,000 6,697,500
- --------------------------------------------------------------
11,662,500
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.04%
Costco Companies, Inc.(a) 10,000 385,000
- --------------------------------------------------------------
RETAIL (HOME SHOPPING)-0.07%
Damark International, Inc.-Class A(a) 50,000 $ 581,250
- --------------------------------------------------------------
RETAIL (SPECIALTY)-6.44%
Bed, Bath & Beyond Inc.(a) 35,000 1,111,250
- --------------------------------------------------------------
Borders Group, Inc.(a) 2,400 62,250
- --------------------------------------------------------------
Brookstone, Inc.(a) 35,000 423,281
- --------------------------------------------------------------
Casey's General Stores, Inc. 50,000 1,206,250
- --------------------------------------------------------------
Coldwater Creek Inc.(a) 75,000 2,175,000
- --------------------------------------------------------------
Cole National Corp.-Class A(a) 50,000 2,118,750
- --------------------------------------------------------------
Corporate Express, Inc.(a) 105,000 1,542,188
- --------------------------------------------------------------
Cross-Continent Auto Retailers,
Inc.(a) 50,000 493,750
- --------------------------------------------------------------
Diedrich Coffee, Inc.(a) 75,000 215,625
- --------------------------------------------------------------
Finish Line, Inc. (The)-Class A(a) 100,000 1,687,500
- --------------------------------------------------------------
Friedman's, Inc.-Class A(a) 35,000 623,438
- --------------------------------------------------------------
Garden Ridge Corp.(a) 50,000 668,750
- --------------------------------------------------------------
General Nutrition Companies,
Inc.(a) 155,000 4,882,500
- --------------------------------------------------------------
Genesco Inc.(a) 50,000 634,375
- --------------------------------------------------------------
Gymboree Corp.(a) 20,000 485,000
- --------------------------------------------------------------
Hibbett Sporting Goods, Inc.(a) 40,000 1,110,000
- --------------------------------------------------------------
Hot Topic, Inc.(a) 90,000 1,518,750
- --------------------------------------------------------------
Just for Feet, Inc.(a) 235,000 3,480,938
- --------------------------------------------------------------
Linens 'N Things, Inc.(a) 145,000 5,210,938
- --------------------------------------------------------------
Lithia Motors, Inc.-Class A(a) 100,000 1,737,500
- --------------------------------------------------------------
OfficeMax, Inc.(a) 40,000 535,000
- --------------------------------------------------------------
Pep Boys-Manny, Moe & Jack 80,000 2,015,000
- --------------------------------------------------------------
Petco Animal Supplies, Inc.(a) 22,000 676,500
- --------------------------------------------------------------
PETsMART, Inc.(a) 425,000 3,240,625
- --------------------------------------------------------------
Pier 1 Imports, Inc. 105,000 1,916,250
- --------------------------------------------------------------
Polo Ralph Lauren Corp.(a) 140,000 3,640,000
- --------------------------------------------------------------
RDO Equipment Co.-Class A(a) 50,000 1,084,375
- --------------------------------------------------------------
Sports Authority, Inc. (The)(a) 150,000 2,840,625
- --------------------------------------------------------------
Staples, Inc.(a) 10,000 262,500
- --------------------------------------------------------------
Sunglass Hut International,
Inc.(a) 150,000 1,200,000
- --------------------------------------------------------------
Tiffany & Co. 30,000 1,185,000
- --------------------------------------------------------------
U.S.A. Floral Products, Inc.(a) 80,000 1,400,000
- --------------------------------------------------------------
United Auto Group, Inc.(a) 50,000 1,018,750
- --------------------------------------------------------------
Viking Office Products, Inc.(a) 80,000 1,915,000
- --------------------------------------------------------------
West Marine, Inc.(a) 35,000 735,000
- --------------------------------------------------------------
Williams-Sonoma, Inc.(a) 25,000 1,003,125
- --------------------------------------------------------------
Zale Corp.(a) 45,000 1,136,250
- --------------------------------------------------------------
57,192,033
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-1.51%
Abercrombie & Fitch Co.-Class A(a) 115,000 2,990,000
- --------------------------------------------------------------
American Eagle Outfitters, Inc.(a) 10,000 290,000
- --------------------------------------------------------------
dELiA*s Inc.(a) 60,000 1,245,000
- --------------------------------------------------------------
Gadzooks, Inc.(a) 60,000 1,492,500
- --------------------------------------------------------------
</TABLE>
FS-33
<PAGE> 252
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-(CONTINUED)
Stage Stores, Inc.(a) 185,000 $ 6,752,500
- --------------------------------------------------------------
Talbots, Inc. 25,000 600,000
- --------------------------------------------------------------
13,370,000
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-2.01%
Abacus Direct Corp.(a) 70,000 2,572,500
- --------------------------------------------------------------
Castle Dental Centers, Inc.(a) 50,000 543,750
- --------------------------------------------------------------
Cognizant Corp. 13,000 509,437
- --------------------------------------------------------------
Eagle River Interactive, Inc.(a) 50,000 459,375
- --------------------------------------------------------------
Forrester Research, Inc.(a) 11,800 304,588
- --------------------------------------------------------------
Getty Communications PLC-ADR(a)
(United Kingdom) 30,000 442,500
- --------------------------------------------------------------
Hagler Bailly, Inc.(a) 35,000 708,750
- --------------------------------------------------------------
Information Resources, Inc.(a) 10,400 171,600
- --------------------------------------------------------------
JLK Direct Distribution Inc.-Class
A(a) 15,700 469,038
- --------------------------------------------------------------
Lamar Advertising Co.(a) 160,000 5,420,000
- --------------------------------------------------------------
Metromail Corp.(a) 70,000 1,386,875
- --------------------------------------------------------------
Snyder Communications, Inc.(a) 65,000 1,917,500
- --------------------------------------------------------------
Universal Outdoor Holdings,
Inc.(a) 70,000 2,957,500
- --------------------------------------------------------------
17,863,413
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-4.60%
Advantage Learning Systems,
Inc.(a) 32,500 820,625
- --------------------------------------------------------------
American Residential Services,
Inc.(a) 80,800 1,181,700
- --------------------------------------------------------------
Avis Rent A Car, Inc.(a) 90,400 2,480,350
- --------------------------------------------------------------
BA Merchant Services, Inc.-Class
A(a) 205,000 3,062,188
- --------------------------------------------------------------
C.H. Robinson Worldwide, Inc.(a) 100,000 2,200,000
- --------------------------------------------------------------
Cerner Corp.(a) 150,000 3,637,500
- --------------------------------------------------------------
Children's Comprehensive Services,
Inc.(a) 22,500 406,055
- --------------------------------------------------------------
CorporateFamily Solutions, Inc.(a) 50,000 743,750
- --------------------------------------------------------------
Equity Corp. International(a) 85,000 1,731,875
- --------------------------------------------------------------
First Aviation Services, Inc.(a) 60,000 465,000
- --------------------------------------------------------------
G & K Services, Inc.-Class A 28,500 1,026,000
- --------------------------------------------------------------
Galileo International, Inc. 51,200 1,286,400
- --------------------------------------------------------------
Hertz Corp.-Class A 41,100 1,420,519
- --------------------------------------------------------------
INSpire Insurance Solutions,
Inc.(a) 75,000 1,387,500
- --------------------------------------------------------------
MemberWorks, Inc.(a) 40,000 700,000
- --------------------------------------------------------------
Metzler Group, Inc.(a) 80,000 3,090,000
- --------------------------------------------------------------
National Research Corp.(a) 18,200 368,550
- --------------------------------------------------------------
PalEx, Inc.(a) 25,000 331,250
- --------------------------------------------------------------
Pegasus Systems, Inc.(a) 50,000 775,000
- --------------------------------------------------------------
Pierce Leahy Corp.(a) 40,000 1,120,000
- --------------------------------------------------------------
Pittston Brink's Group 35,000 1,264,375
- --------------------------------------------------------------
Protection One, Inc.(a) 225,000 4,050,000
- --------------------------------------------------------------
Rental Service Corp.(a) 49,000 1,310,750
- --------------------------------------------------------------
Sotheby's Holdings, Inc.-Class A 55,000 1,031,250
- --------------------------------------------------------------
Sylvan Learning Systems, Inc.(a) 5,000 210,625
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-(CONTINUED)
Travel Services International, Inc.(a) 51,000 $ 1,141,125
- --------------------------------------------------------------
U.S. Rentals, Inc.(a) 110,000 2,681,250
- --------------------------------------------------------------
Vivid Technologies, Inc.(a) 60,000 817,500
- --------------------------------------------------------------
Warrantech Corp.(a) 10,000 120,000
- --------------------------------------------------------------
40,861,137
- --------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.86%
Shared Medical Systems Corp. 8,000 438,000
- --------------------------------------------------------------
SunGard Data Systems Inc.(a) 305,000 7,205,625
- --------------------------------------------------------------
7,643,625
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-2.36%
BDM International Inc.(a) 45,000 995,625
- --------------------------------------------------------------
BISYS Group, Inc.(a) 90,000 2,801,250
- --------------------------------------------------------------
CCC Information Services Group(a) 215,000 4,004,375
- --------------------------------------------------------------
DST Systems, Inc.(a) 34,000 1,200,625
- --------------------------------------------------------------
Hyperion Software Corp.(a) 96,500 3,679,062
- --------------------------------------------------------------
Lason Holdings, Inc.(a) 66,400 1,713,950
- --------------------------------------------------------------
Learning Tree International, Inc.(a) 100,000 3,475,000
- --------------------------------------------------------------
May & Speh, Inc.(a) 25,000 315,625
- --------------------------------------------------------------
Medaphis Corp.(a) 50,000 303,125
- --------------------------------------------------------------
MedQuist, Inc.(a) 30,000 731,250
- --------------------------------------------------------------
Saville Systems Ireland PLC-ADR(a)
(Ireland) 20,000 1,195,000
- --------------------------------------------------------------
Transaction Network Services,
Inc.(a) 30,000 498,750
- --------------------------------------------------------------
20,913,637
- --------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.56%
Administaff, Inc.(a) 40,000 865,000
- --------------------------------------------------------------
COREStaff, Inc.(a) 35,000 866,250
- --------------------------------------------------------------
Hall, Kinion & Associates, Inc.(a) 19,800 309,375
- --------------------------------------------------------------
Norrell Corp. 53,900 1,569,836
- --------------------------------------------------------------
Syntel, Inc.(a) 95,000 1,330,000
- --------------------------------------------------------------
4,940,461
- --------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.23%
Corrections Corp. of America(a) 30,000 915,000
- --------------------------------------------------------------
MAXIMUS, Inc.(a) 39,000 1,092,000
- --------------------------------------------------------------
2,007,000
- --------------------------------------------------------------
SPECIALTY PRINTING-0.21%
Deluxe Corp. 40,000 1,310,000
- --------------------------------------------------------------
Gartner Group, Inc.(a) 20,000 565,000
- --------------------------------------------------------------
1,875,000
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.59%
Aerial Communications Inc.(a) 125,000 1,062,500
- --------------------------------------------------------------
International Telecommunication
Data Systems, Inc.(a) 30,000 795,000
- --------------------------------------------------------------
LCC International, Inc.-Class A(a) 170,000 3,187,500
- --------------------------------------------------------------
</TABLE>
FS-34
<PAGE> 253
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-(CONTINUED)
Powerwave Technologies, Inc.(a) 5,000 $ 154,375
- --------------------------------------------------------------
5,199,375
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.40%
ACC Corp.(a) 40,000 1,585,000
- --------------------------------------------------------------
Billing Information Concepts(a) 15,000 588,750
- --------------------------------------------------------------
CIENA Corp.(a) 10,000 550,000
- --------------------------------------------------------------
TresCom International, Inc.(a) 50,000 500,000
- --------------------------------------------------------------
USLD Communications Corp.(a) 15,000 297,188
- --------------------------------------------------------------
3,520,938
- --------------------------------------------------------------
TELEPHONE-0.21%
GeoTel Communications Corp.(a) 14,700 251,738
- --------------------------------------------------------------
McLeod, Inc.-Class A(a) 6,500 241,313
- --------------------------------------------------------------
SmarTalk Teleservices Inc.(a) 65,000 1,401,562
- --------------------------------------------------------------
1,894,613
- --------------------------------------------------------------
TEXTILES (APPAREL)-0.35%
Ashworth, Inc.(a) 45,000 447,187
- --------------------------------------------------------------
Nautica Enterprises, Inc.(a) 50,000 1,331,250
- --------------------------------------------------------------
Tommy Hilfiger Corp.(a) 32,500 1,285,781
- --------------------------------------------------------------
3,064,218
- --------------------------------------------------------------
TOBACCO-0.41%
800-JR CIGAR, Inc.(a) 45,000 1,406,250
- --------------------------------------------------------------
Consolidated Cigar Holdings, Inc.(a) 20,000 785,000
- --------------------------------------------------------------
General Cigar Holdings, Inc.(a) 50,000 1,446,875
- --------------------------------------------------------------
3,638,125
- --------------------------------------------------------------
TRUCKING-0.09%
Jevic Transportation, Inc.(a) 45,000 $ 798,750
- --------------------------------------------------------------
WASTE MANAGEMENT-1.05%
Casella Waste Systems, Inc.(a) 136,000 3,009,000
- --------------------------------------------------------------
ITEQ, Inc.(a) 93,000 1,162,500
- --------------------------------------------------------------
Philip Services Corp.(a) (Canada) 45,000 787,500
- --------------------------------------------------------------
Tetra Technologies, Inc.(a) 30,000 691,875
- --------------------------------------------------------------
USA Waste Services, Inc.(a) 40,000 1,480,000
- --------------------------------------------------------------
Waste Industries, Inc.(a) 42,500 897,812
- --------------------------------------------------------------
Waterlink, Inc.(a) 76,000 1,296,750
- --------------------------------------------------------------
9,325,437
- --------------------------------------------------------------
Total Common Stocks 799,208,016
- --------------------------------------------------------------
U.S. TREASURY BILLS-3.89%
U.S. Treasury Bills, 5.093%,
01/02/1998(b)(c) $34,805,000 $ 34,527,256
- --------------------------------------------------------------
REPURCHASE AGREEMENT-5.72%(d)
SBC Warburg Inc., 5.65%,
11/03/1997(e) 50,776,404 50,776,404
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.66% 884,511,676
- --------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.34% 2,992,143
- --------------------------------------------------------------
NET ASSETS-100.00% $887,503,819
==============================================================
</TABLE>
Abbreviations:
ADR-American Depository Receipt
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) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 7.
(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 sale price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 10/31/97 with a maturing value of
$350,164,792. Collateralized by $355,329,000 U.S. Government obligations,
7.00% to 9.8755% due 11/15/15 to 10/01/27 with an aggregate market value at
10/31/97 of $359,463,470.
See Notes to Financial Statements.
FS-35
<PAGE> 254
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$692,268,731) $884,511,676
- -----------------------------------------------------------
Receivables for:
Capital stock sold 22,983,394
- -----------------------------------------------------------
Dividends and interest 36,451
- -----------------------------------------------------------
Variation margin 744,625
- -----------------------------------------------------------
Investment for deferred compensation plan 6,353
- -----------------------------------------------------------
Other assets 46,684
- -----------------------------------------------------------
Total assets 908,329,183
- -----------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 18,162,308
- -----------------------------------------------------------
Capital stock reacquired 1,449,994
- -----------------------------------------------------------
Deferred compensation 6,353
- -----------------------------------------------------------
Accrued advisory fees 498,908
- -----------------------------------------------------------
Accrued administrative service fees 5,565
- -----------------------------------------------------------
Accrued directors' fees 4,066
- -----------------------------------------------------------
Accrued distribution fees 422,317
- -----------------------------------------------------------
Accrued transfer agent fees 174,020
- -----------------------------------------------------------
Accrued operating expenses 101,833
- -----------------------------------------------------------
Total liabilities 20,825,364
- -----------------------------------------------------------
Net assets applicable to shares outstanding $887,503,819
===========================================================
NET ASSETS:
Class A $577,685,308
===========================================================
Class B $297,623,358
===========================================================
Class C $ 12,195,153
===========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- -----------------------------------------------------------
Outstanding 39,659,317
===========================================================
Class B:
Authorized 750,000,000
- -----------------------------------------------------------
Outstanding 20,589,603
===========================================================
Class C:
Authorized 750,000,000
- -----------------------------------------------------------
Outstanding 843,780
===========================================================
CLASS A:
Net asset value and redemption price per
share $ 14.57
===========================================================
Offering price per share:
(Net assets value of $14.57
divided by 94.50%) $ 15.42
===========================================================
CLASS B:
Net asset value and offering price per
share $ 14.46
===========================================================
CLASS C:
Net asset value and offering price per
share $ 14.45
===========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $6,162 foreign withholding
tax) $ 980,386
- -----------------------------------------------------------
Interest 1,528,919
- -----------------------------------------------------------
Total investment income 2,509,305
- -----------------------------------------------------------
EXPENSES:
Advisory fees 3,633,989
- -----------------------------------------------------------
Administrative service fees 74,810
- -----------------------------------------------------------
Custodian fees 88,465
- -----------------------------------------------------------
Directors' fees 10,902
- -----------------------------------------------------------
Distribution fees-Class A 1,321,521
- -----------------------------------------------------------
Distribution fees-Class B 1,325,888
- -----------------------------------------------------------
Distribution fees-Class C 12,721
- -----------------------------------------------------------
Transfer agent fees-Class A 820,991
- -----------------------------------------------------------
Transfer agent fees-Class B 403,404
- -----------------------------------------------------------
Transfer agent fees-Class C 2,741
- -----------------------------------------------------------
Other 378,182
- -----------------------------------------------------------
Total expenses 8,073,614
- -----------------------------------------------------------
Less: Fees waived by advisor (262,189)
- -----------------------------------------------------------
Expenses paid indirectly (45,969)
- -----------------------------------------------------------
Net expenses 7,765,456
- -----------------------------------------------------------
Net investment income (loss) (5,256,151)
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FUTURES CONTRACTS, AND SECURITIES SOLD
SHORT:
Net realized gain (loss) on sales of:
Investment securities (6,200,075)
- -----------------------------------------------------------
Foreign currencies (2,308)
- -----------------------------------------------------------
Securities sold short (3,470)
- -----------------------------------------------------------
(6,205,853)
- -----------------------------------------------------------
Net unrealized appreciation of:
Investment securities 158,822,640
- -----------------------------------------------------------
Futures contracts 315,275
- -----------------------------------------------------------
159,137,915
- -----------------------------------------------------------
Net gain on investment securities,
foreign currencies, futures contracts
and securities sold short 152,932,062
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $147,675,911
===========================================================
</TABLE>
See Notes to Financial Statements.
FS-36
<PAGE> 255
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED OCTOBER 31, 1997 AND THE PERIOD JUNE 17, 1996 (DATE
OPERATIONS COMMENCED) THROUGH OCTOBER 31, 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (5,256,151) $ (167,630)
- ------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities, foreign currencies, futures contracts and
securities sold short (6,205,853) (5,381,138)
- ------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and
futures contracts 159,137,915 33,420,305
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 147,675,911 27,871,537
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A 218,214,845 222,946,738
- ------------------------------------------------------------------------------------------
Class B 235,598,112 22,869,334
- ------------------------------------------------------------------------------------------
Class C 12,327,342 --
- ------------------------------------------------------------------------------------------
Net increase in net assets 613,816,210 273,687,609
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 273,687,609 --
- ------------------------------------------------------------------------------------------
End of period $887,503,819 $273,687,609
==========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $706,543,586 $245,649,966
- ------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (10,996) (1,524)
- ------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities, foreign currencies, futures
contracts and securities sold short (11,586,991) (5,381,138)
- ------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
futures contracts 192,558,220 33,420,305
- ------------------------------------------------------------------------------------------
$887,503,819 $273,687,609
==========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Capital Development 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 six diversified
portfolios: AIM Capital Development Fund, AIM Aggressive Growth Fund, AIM Blue
Chip Fund, AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund. The
Fund currently offers three different classes of shares: the Class A shares, the
Class B shares, and the Class C shares. Class A shares are sold with a front-end
sales charge. Class B shares and Class C shares are sold with a contingent
deferred sales charge. Class C shares commenced sales August 4, 1997. Matters
affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The Fund's investment objective
is long-term capital appreciation.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations--A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the 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. Debt obligations (including convertible bonds) are valued on the
basis of prices provided by an independent pricing service. Prices provided
by the pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market quotations are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the 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
FS-37
<PAGE> 256
trade date basis. Realized gains or losses on sales are computed on the basis
specific identification of the securities sold. Interest income is recorded as
earned from settlement date and is recorded on the accrual basis. Dividend
income, dividend expense on short sales and distributions to shareholders are
recorded on the ex-dividend date. On October 31, 1997, 5,246,679 was
reclassified from undistributed net investment income (loss) to paid in
capital as a result of net operation tax loss. Net assets were unaffected by
the reclassification discussed above.
C. 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 value of the contracts may not correlate with changes in
the value of the securities being hedged.
D. Accounting for Securities Sold Short--When the Fund sells common stock short,
an amount equal to the proceeds of the sales is recorded as an asset. This
asset is offset by a liability (representing the borrowed security) recorded
on the books of the Fund at the market value of the common stock determined
each day in accordance with the procedures for security valuations discussed
in "A" above. The Fund's risk is that the value of the security will increase
rather than decline and thus an unrealized loss will be recorded. When the
Fund closes out a short position by delivering the stock sold short, the Fund
will realize a gain or loss and the liability related to such short position
will be eliminated. The Fund will attempt to hedge against market risk by
entering into short sales of securities that it currently owns or has the
right to acquire through the conversion or exchange of other securities that
it owns. Such short sales may protect the Fund against the risk of losses in
the value of its portfolio securities because any unrealized losses with
respect to such securities may be wholly or partially offset by a
corresponding gain in the short position. However, any potential gains in
such portfolio may be wholly or partially offset by a corresponding loss in
the short position.
E. Federal Income Taxes--The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements. The Fund has a capital loss carryforward of
$9,504,404 (which may be carried forward to offset future taxable gains, if
any) which expires, if not previously utilized, in the year 2005.
F. Expenses--Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
are allocated among the classes.
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 0.75% of
the first $350 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $350 million. AIM has agreed to
waive advisory fees paid by the Fund to AIM to the extent necessary to keep the
annual expense ratio for Class A shares at 1.34% for two years commencing August
12, 1996. During the year ended October 31, 1997, AIM waived fees of $262,189.
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, 1997, AIM was
reimbursed $74,810 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 Fund. During the year ended October 31, 1997, AFS was paid
$676,298 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 of the Class
A, Class B and Class C shares of the Fund. The Company has adopted distribution
plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class
A shares (the "Class A Plan"), the Fund's Class B shares (the "Class B Plan"),
and the Fund's Class C shares (the "Class C Plan") (collectively, the "Plans").
The Fund, pursuant to the Class A and Class C Plans, pays AIM Distributors
compensation at the annual rate of 0.35% of the average daily net assets of
Class A shares and 1.00% of the average daily net assets of Class C shares. The
Class A and C Plans are designed to compensate AIM Distributors 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
Class A or Class C 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 of the Class B shares. Of this amount, the Fund pays 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 assignees, its rights to all or a portion of (a) compensation
received by AIM Distributors from the Fund
FS-38
<PAGE> 257
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
payable to AIM Distributors related to the Class B shares. During the year ended
October 31, 1997, the Class A shares and Class B shares, and the period August
4, 1997 through October 31, 1997 the Class C shares paid AIM Distributors
$1,321,521, $1,325,888 and $12,721, respectively, as compensation pursuant to
the Plans.
AIM Distributors received commissions of $1,212,125 from Class A capital stock
transactions during the year ended October 31, 1997. 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 capital stock. During the year ended October 31,
1997, AIM Distributors received $14,049 in contingent deferred sales charges
imposed on redemptions of capital stock. Certain officers and directors of the
Company are officers and directors of AIM, AIM Distributors and AFS.
During the year ended October 31, 1997 the Fund paid legal fees of $4,956 for
services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the year ended
October 31, 1997, the Fund's expenses were reduced by $3,096. The Fund also
received reductions in transfer agency fees from AFS (an affiliate of AIM) and
reductions in custodian fees of $6,455 and $36,418, respectively, under expense
offset arrangements. The effect of the above arrangements resulted in reductions
of the Fund's total expenses of $45,969 during the year ended October 31, 1997.
NOTE 4-DIRECTOR'S 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.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lesser of i) $325,000,000 or ii) the limit set by
its prospectus for borrowings. During the year ended October 31, 1997, the Fund
did not borrow under the line of credit agreement. The funds which are party to
the line of credit are charged a commitment fee of 0.05% on the unused balance
of the committed line. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
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, 1997 was
$606,671,871 and $199,600,375, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1997, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $210,972,026
- ------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (20,432,991)
- ------------------------------------------------------
Net unrealized appreciation of
investment securities $190,539,035
======================================================
</TABLE>
Cost of investments for tax purposes is $693,972,641.
NOTE 7-FUTURES CONTRACTS
On October 31, 1997, $356,000 principal amount of U.S. Treasury obligations were
pledged as collateral to cover margin requirements for futures contracts. Open
contracts were as follows:
<TABLE>
<CAPTION>
NO. OF MONTH/ UNREALIZED
CONTRACT CONTRACTS COMMITMENT APPRECIATION
-------- --------- ---------- ------------
<S> <C> <C> <C>
Russell 2000 Index 161 Dec. 97 $315,275
</TABLE>
NOTE 8-CAPITAL STOCK
Changes in the capital stock outstanding during the year ended October 31, 1997
and the period June 17, 1996 (date operations commenced) through October 31,
1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 33,846,855 $430,979,375 24,923,432 $246,810,746
- -----------------------------------------------------------------------------
Class B* 20,627,807 261,084,351 2,026,599 22,898,153
- -----------------------------------------------------------------------------
Class C** 850,531 12,426,338 -- --
- -----------------------------------------------------------------------------
Reacquired:
Class A (16,847,317) (212,764,530) (2,263,653) (23,864,008)
- -----------------------------------------------------------------------------
Class B* (2,062,227) (25,486,239) (2,576) (28,819)
- -----------------------------------------------------------------------------
Class C** (6,751) (98,996) -- --
- -----------------------------------------------------------------------------
36,408,898 $466,140,299 24,683,802 $245,816,072
=============================================================================
</TABLE>
* Class B shares commenced sales on October 1, 1996.
** Class C shares commenced sales on August 4, 1997.
FS-39
<PAGE> 258
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the year ended October 31, 1997 and the period June 17, 1996
(date operations commenced) through October 31, 1996, for a share of Class B
capital stock outstanding during the year ended October 31, 1997 and the period
October 1, 1996 (date sales commenced) through October 31, 1996, and for a share
of Class C capital stock outstanding during the period August 4, 1997 (date
sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------------------- --------------------- --------
1997 1996 1997 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.09 $ 10.00 $ 11.08 $ 11.26 $ 13.48
- ---------------------------------------------------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.10) (0.01)(a) (0.20) (0.01)(a) (0.06)
- ---------------------------------------------------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized
and unrealized) 3.58 1.10 3.58 (0.17) 1.03
- ---------------------------------------------------- -------- -------- -------- -------- --------
Total from investment operations 3.48 1.09 3.38 (0.18) 0.97
- ---------------------------------------------------- -------- -------- -------- -------- --------
Net asset value, end of period $ 14.57 $ 11.09 $ 14.46 $ 11.08 $ 14.45
==================================================== ======== ======== ======== ======== ========
Total return(b) 31.38% 10.90% 30.51% (1.60)% 7.20%
==================================================== ======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $577,685 $251,253 $297,623 $ 22,435 $ 12,195
==================================================== ======== ======== ======== ======== ========
Ratio of expenses to average net assets(c) 1.32%(d)(e) 1.35%(f) 2.08%(d)(e) 1.89%(f) 2.14%(d)(e)(f)
==================================================== ======== ======== ======== ======== ========
Ratio of net investment income (loss) to average net
assets(g) (0.83)%(d) (0.29)%(f) (1.59)%(d) (0.83)%(f) (1.64)%(d)(f)(g)
==================================================== ======== ======== ======== ======== ========
Portfolio turnover rate 41% 13% 41% 13% 41%
==================================================== ======== ======== ======== ======== ========
Average brokerage commission rate(h) $ 0.0534 $ 0.0550 $ 0.0534 $ 0.0550 $ 0.0534
==================================================== ======== ======== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one
year, total returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of
expenses to average net assets prior to fee waivers and/or
expense reimbursements for the periods 1997 and 1996 are
1.61% and 1.60% (annualized) for Class A shares, 2.37% and
2.28% (annualized) for Class B shares and 2.42% (annualized)
for Class C shares (for 1997 only).
(d) Ratios are based on average net assets of $377,577,393 for
Class A shares, $132,588,760 for Class B shares, and
$5,217,273 for Class C shares.
(e) Excluding indirectly paid expenses, the ratios of expenses
to average net assets would have been 1.33% for Class A,
2.09% for Class B shares and 2.17% for Class C shares.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of
net investment income (loss) prior to fee waivers and/or
expense reimbursements for the periods 1997 and 1996 are
(1.12)% and (0.54)% (annualized) for Class A shares, (1.88)%
and (1.22)% (annualized) for Class B shares and (1.93%)
(annualized) for Class C shares (for 1997 only).
(h) The average commission rate paid is the total brokerage
commissions paid on applicable purchases and sales of
securities for the period divided by the total number of
related shares purchased and sold.
FS-40
<PAGE> 259
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, 1997, 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 or periods in the
four-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. The financial highlights
for the year ended October 31, 1993 were audited by other
auditors whose report thereon, dated November 12, 1993
expressed an unqualified opinion on those financial
highlights.
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, 1997, 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, 1997, 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 or periods in the four-year period then ended, in
conformity with generally accepted accounting principles
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
FS-41
<PAGE> 260
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-79.22%
AUTO PARTS & EQUIPMENT-0.47%
Lear Corp.(a) 450,000 $ 21,628,125
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.32%
Wells Fargo & Co. 50,000 14,568,750
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-4.73%
BankAmerica Corp. 450,000 32,175,000
- ---------------------------------------------------------------
Chase Manhattan Corp. 1,000,000 115,375,000
- ---------------------------------------------------------------
Citicorp 550,000 68,784,375
- ---------------------------------------------------------------
216,334,375
- ---------------------------------------------------------------
BANKS (REGIONAL)-0.58%
Marshall & Ilsley Corp. 250,000 12,968,750
- ---------------------------------------------------------------
Uniao de Bancos Brasileiros
S.A.-GDR (Brazil)(a) 500,000 13,625,000
- ---------------------------------------------------------------
26,593,750
- ---------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-0.49%
Coca-Cola Co. 400,000 22,600,000
- ---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.25%
Lubrizol Corp. (The) 300,000 11,550,000
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.31%
ADC Telecommunications, Inc.(a) 700,000 23,187,500
- ---------------------------------------------------------------
Comverse Technology, Inc.(a) 270,000 11,137,500
- ---------------------------------------------------------------
DSC Communications Corp.(a) 400,000 9,750,000
- ---------------------------------------------------------------
ECI Telecommunications Ltd.
Designs (Israel) 400,000 11,050,000
- ---------------------------------------------------------------
Lucent Technologies, Inc. 200,000 16,487,500
- ---------------------------------------------------------------
Nokia Oy A.B.-Class A-ADR
(Finland) 300,000 26,475,000
- ---------------------------------------------------------------
Northern Telecom Ltd. (Canada) 150,000 13,453,125
- ---------------------------------------------------------------
Telefonaktiebolaget LM
Ericsson-ADR (Sweden) 350,000 15,487,500
- ---------------------------------------------------------------
Tellabs, Inc.(a) 450,000 24,300,000
- ---------------------------------------------------------------
151,328,125
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-3.10%
Compaq Computer Corp.(a)(b) 660,500 42,106,875
- ---------------------------------------------------------------
Dell Computer Corp.(a)(b) 200,000 16,025,000
- ---------------------------------------------------------------
Hewlett-Packard Co. 200,000 12,337,500
- ---------------------------------------------------------------
International Business Machines
Corp. 550,000 53,934,375
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a) 500,000 17,125,000
- ---------------------------------------------------------------
141,528,750
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.64%
3Com Corp.(a) 300,000 12,431,250
- ---------------------------------------------------------------
Bay Networks, Inc.(a)(b) 1,200,000 37,950,000
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-(CONTINUED)
Cisco Systems, Inc.(a) 300,000 $ 24,609,375
- ---------------------------------------------------------------
74,990,625
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-3.73%
America Online, Inc.(a) 300,000 23,100,000
- ---------------------------------------------------------------
Computer Associates
International, Inc.(b) 700,000 52,193,750
- ---------------------------------------------------------------
Compuware Corp.(a) 200,000 13,225,000
- ---------------------------------------------------------------
HBO & Co.(b) 400,000 17,400,000
- ---------------------------------------------------------------
Microsoft Corp.(a) 300,000 39,000,000
- ---------------------------------------------------------------
Sterling Commerce, Inc.(a) 450,000 14,934,375
- ---------------------------------------------------------------
Sybase, Inc.(a) 650,000 10,603,125
- ---------------------------------------------------------------
170,456,250
- ---------------------------------------------------------------
CONSUMER FINANCE-1.55%
Household International, Inc. 300,000 33,975,000
- ---------------------------------------------------------------
MBNA Corp. 600,000 15,787,500
- ---------------------------------------------------------------
SLM Holding Corp. 150,000 21,056,250
- ---------------------------------------------------------------
70,818,750
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD &
HEALTH)-1.14%
AmeriSource Health Corp.-Class
A(a) 125,000 7,421,875
- ---------------------------------------------------------------
Bergen Brunswig Corp.-Class A 400,000 16,025,000
- ---------------------------------------------------------------
Cardinal Health, Inc. 250,000 18,562,500
- ---------------------------------------------------------------
Sysco Corp. 250,000 10,000,000
- ---------------------------------------------------------------
52,009,375
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.80%
General Electric Co. 500,000 32,281,250
- ---------------------------------------------------------------
Philips Electronics N.V.-ADR-New
York Shares (Netherlands) 500,000 39,187,500
- ---------------------------------------------------------------
Westinghouse Electric Corp. 400,000 10,575,000
- ---------------------------------------------------------------
82,043,750
- ---------------------------------------------------------------
ELECTRONICS (COMPONENT
DISTRIBUTORS)-0.27%
Kent Electronics Corp.(a) 350,000 12,228,125
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-1.50%
Intel Corp.(b) 450,000 34,650,000
- ---------------------------------------------------------------
National Semiconductor Corp.(a) 350,000 12,600,000
- ---------------------------------------------------------------
Texas Instruments, Inc. 200,000 21,337,500
- ---------------------------------------------------------------
68,587,500
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-5.41%
American Express Co. 500,000 39,000,000
- ---------------------------------------------------------------
American General Corp. 250,000 12,750,000
- ---------------------------------------------------------------
Federal Home Loan Mortgage Corp. 1,250,000 47,343,750
- ---------------------------------------------------------------
Federal National Mortgage
Association 1,000,000 48,437,500
- ---------------------------------------------------------------
MBIA, Inc. 400,000 23,900,000
</TABLE>
FS-42
<PAGE> 261
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCIAL (DIVERSIFIED)-(CONTINUED)
MGIC Investment Corp. 200,000 $ 12,062,500
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 1,300,000 63,700,000
- ---------------------------------------------------------------
247,193,750
- ---------------------------------------------------------------
FOODS-0.28%
Sara Lee Corp. 250,000 12,781,250
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-5.05%
Abbott Laboratories 200,000 12,262,500
- ---------------------------------------------------------------
American Home Products Corp. 1,000,000 74,125,000
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 650,000 57,037,500
- ---------------------------------------------------------------
Johnson & Johnson 400,000 22,950,000
- ---------------------------------------------------------------
Warner-Lambert Co. 450,000 64,434,375
- ---------------------------------------------------------------
230,809,375
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.52%
Dura Pharmaceuticals, Inc.(a) 300,000 14,512,500
- ---------------------------------------------------------------
Teva Pharmaceutical Industries
Ltd.-ADR (Israel) 200,000 9,350,000
- ---------------------------------------------------------------
23,862,500
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-4.22%
Lilly (Eli) & Co. 250,000 16,718,750
- ---------------------------------------------------------------
Merck & Co., Inc. 500,000 44,625,000
- ---------------------------------------------------------------
Pfizer, Inc. 850,000 60,137,500
- ---------------------------------------------------------------
SmithKline Beecham PLC-ADR
(United Kingdom) 1,500,000 71,437,500
- ---------------------------------------------------------------
192,918,750
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.59%
Health Management Associates,
Inc.-Class A(a) 100,000 2,437,500
- ---------------------------------------------------------------
Tenet Healthcare Corp.(a) 800,000 24,450,000
- ---------------------------------------------------------------
26,887,500
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.31%
HEALTHSOUTH Corp.(a) 550,000 14,059,375
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.89%
MedPartners, Inc.(a) 1,600,000 40,700,000
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-1.76%
Arterial Vascular Engineering,
Inc.(a) 350,000 18,593,750
- ---------------------------------------------------------------
Baxter International Inc. 300,000 13,875,000
- ---------------------------------------------------------------
Boston Scientific Corp.(a) 325,000 14,787,500
- ---------------------------------------------------------------
Henry Schein, Inc.(a) 350,000 11,506,250
- ---------------------------------------------------------------
Medtronic, Inc. 500,000 21,750,000
- ---------------------------------------------------------------
80,512,500
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.69%
Covance, Inc.(a) 365,000 6,455,938
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-(CONTINUED)
Omnicare, Inc. 900,000 $ 25,031,250
- ---------------------------------------------------------------
31,487,188
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.20%
Leggett & Platt, Inc. 213,900 8,930,325
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.78%
Colgate-Palmolive Co. 300,000 19,425,000
- ---------------------------------------------------------------
Procter & Gamble Co. (The) 240,000 16,320,000
- ---------------------------------------------------------------
35,745,000
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.51%
Provident Companies, Inc. 700,000 23,362,500
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-2.18%
Ace, Ltd. 200,000 18,587,500
- ---------------------------------------------------------------
American International Group,
Inc. 450,000 45,928,125
- ---------------------------------------------------------------
Travelers Group, Inc. 500,000 35,000,000
- ---------------------------------------------------------------
99,515,625
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-1.77%
Allstate Corp. 800,000 66,350,000
- ---------------------------------------------------------------
Travelers Property Casualty
Corp.-Class A 400,000 14,450,000
- ---------------------------------------------------------------
80,800,000
- ---------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-1.04%
Merrill Lynch & Co., Inc. 700,000 47,337,500
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-0.49%
Franklin Resources, Inc. 250,000 22,468,750
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-1.85%
Brunswick Corp. 2,500,000 84,375,000
- ---------------------------------------------------------------
LODGING-HOTELS-1.20%
Carnival Corp.-Class A 342,500 16,611,250
- ---------------------------------------------------------------
ITT Corp. 200,000 14,937,500
- ---------------------------------------------------------------
Patriot American Hospitality,
Inc. 700,000 23,100,000
- ---------------------------------------------------------------
54,648,750
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.29%
Deere & Co. 250,000 13,156,250
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.45%
Eaton Corp. 250,000 24,156,250
- ---------------------------------------------------------------
Hillenbrand Industries, Inc. 300,000 12,825,000
- ---------------------------------------------------------------
Tyco International Ltd. 400,000 15,100,000
- ---------------------------------------------------------------
United Technologies Corp. 200,000 14,000,000
- ---------------------------------------------------------------
66,081,250
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.29%
Diebold, Inc. 300,000 13,218,750
- ---------------------------------------------------------------
</TABLE>
FS-43
<PAGE> 262
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NATURAL GAS-0.52%
El Paso Natural Gas Co. 400,000 $ 23,975,000
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.80%
Boise Cascade Office Products
Corp.(a) 400,000 7,600,000
- ---------------------------------------------------------------
Wallace Computer Services, Inc. 750,000 28,828,125
- ---------------------------------------------------------------
36,428,125
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-1.82%
BJ Services Co.(a) 300,000 25,425,000
- ---------------------------------------------------------------
Halliburton Co. 400,000 23,850,000
- ---------------------------------------------------------------
Hvide Marine, Inc.-Class A(a) 500,000 16,500,000
- ---------------------------------------------------------------
Petroleum Geo-Services ASA-ADR
(Norway)(a) 250,000 17,312,500
- ---------------------------------------------------------------
83,087,500
- ---------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-1.11%
Exxon Corp. 400,000 24,575,000
- ---------------------------------------------------------------
Royal Dutch Petroleum Co.-ADR-New
York Shares (Netherlands) 500,000 26,312,500
- ---------------------------------------------------------------
50,887,500
- ---------------------------------------------------------------
OIL & GAS (REFINING & MARKETING)-0.51%
Tosco Corp. 700,000 23,100,000
- ---------------------------------------------------------------
OIL & GAS (SERVICES)-0.29%
YPF Sociedad Anonima-ADR
(Argentina) 410,300 13,129,600
- ---------------------------------------------------------------
PERSONAL CARE-1.09%
Avon Products, Inc.(b) 350,000 22,925,000
- ---------------------------------------------------------------
Gillette Co. 300,000 26,718,750
- ---------------------------------------------------------------
49,643,750
- ---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.96%
Xerox Corp. 555,000 44,018,438
- ---------------------------------------------------------------
POWER PRODUCERS
(INDEPENDENT)-0.19%
CalEnergy, Inc.(a) 250,000 8,562,500
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUST-1.38%
Cali Realty Corp. 425,000 17,212,500
- ---------------------------------------------------------------
Crescent Real Estate Equities,
Inc. 400,000 14,400,000
- ---------------------------------------------------------------
Starwood Lodging Trust 300,000 17,943,750
- ---------------------------------------------------------------
Vornado Realty Trust 300,000 13,387,500
- ---------------------------------------------------------------
62,943,750
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-0.79%
CompUSA, Inc.(a)(b) 1,100,000 36,025,000
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-1.97%
Carson Pirie Scott & Co.(a) 250,000 12,046,875
- ---------------------------------------------------------------
Federated Department Stores,
Inc.(a) 400,000 17,600,000
- ---------------------------------------------------------------
J.C. Penney Co., Inc. 400,000 23,475,000
- ---------------------------------------------------------------
Kohl's Corp.(a) 250,000 16,781,250
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-(CONTINUED)
Proffitt's, Inc.(a) 700,000 $ 20,081,250
- ---------------------------------------------------------------
89,984,375
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.22%
Consolidated Stores Corp.(a) 250,000 9,968,750
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.37%
Walgreen Co. 600,000 16,875,000
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.17%
Blue Square-Israel Ltd.-ADR
(Israel)(a) 660,000 7,672,500
- ---------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-0.38%
Costco Companies, Inc.(a) 450,000 17,325,000
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-0.71%
Corporate Express, Inc.(a) 1,000,000 14,687,500
- ---------------------------------------------------------------
Polo Ralph Lauren Corp.(a) 600,000 15,600,000
- ---------------------------------------------------------------
Staples, Inc.(a) 85,000 2,231,250
- ---------------------------------------------------------------
32,518,750
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.16%
Stage Stores, Inc.(a) 200,000 7,300,000
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.90%
Washington Mutual, Inc. 600,000 41,062,500
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-3.27%
American Residential Services,
Inc.(a) 425,000 6,215,625
- ---------------------------------------------------------------
CUC International, Inc.(a) 800,000 23,600,000
- ---------------------------------------------------------------
HFS, Inc.(a) 600,000 42,300,000
- ---------------------------------------------------------------
Service Corp. International 2,000,000 60,875,000
- ---------------------------------------------------------------
Stewart Enterprises, Inc.-Class A 400,000 16,600,000
- ---------------------------------------------------------------
149,590,625
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.02%
Ceridian Corp.(a) 400,000 15,625,000
- ---------------------------------------------------------------
Equifax, Inc. 500,000 15,531,250
- ---------------------------------------------------------------
Fiserv, Inc.(a) 350,000 15,662,500
- ---------------------------------------------------------------
46,818,750
- ---------------------------------------------------------------
TELEPHONE-1.86%
Cincinnati Bell, Inc. 2,200,000 59,400,000
- ---------------------------------------------------------------
SBC Communications, Inc. 400,000 25,450,000
- ---------------------------------------------------------------
84,850,000
- ---------------------------------------------------------------
TOBACCO-1.95%
Philip Morris Companies, Inc. 2,250,000 89,156,250
- ---------------------------------------------------------------
TRUCKS & PARTS-0.13%
Cummins Engine Co., Inc. 100,000 6,093,749
- ---------------------------------------------------------------
Total Common Stocks 3,619,135,550
- ---------------------------------------------------------------
</TABLE>
FS-44
<PAGE> 263
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS-8.00%
AUTOMOBILES-0.31%
Volkswagen International Finance
N.V. (Germany), Conv. Gtd.
Notes, 3.00%, 01/24/02 $12,000,000 $ 14,130,000
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.55%
Mark IV Industries, Conv. Sub.
Notes, 4.75%, 11/01/04(c)
(acquired 10/23/97-10/24/97;
cost $14,997,500) 15,000,000 14,460,900
- ---------------------------------------------------------------
Tower Automotive Inc., Conv. Sub.
Notes, 5.00%, 08/01/04(c)
(acquired 07/24/97; cost
$10,591,433) 10,450,000 10,821,184
- ---------------------------------------------------------------
25,282,084
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.03%
EMC Corp., Conv. Sub. Notes,
3.25%, 03/15/02 20,000,000 27,757,000
- ---------------------------------------------------------------
Quantum Corp., Conv. Sub. Notes,
5.00%, 03/01/03 7,000,000 19,396,860
- ---------------------------------------------------------------
47,153,860
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.23%
Veritas Software Corp., Conv.
Sub. Notes, 5.25%, 11/01/04(c)
(acquired 10/09/97; cost
$10,500,000) 10,500,000 10,368,750
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.32%
SCI Systems, Inc., Conv. Sub.
Notes, 5.00%, 05/01/06 8,000,000 14,769,840
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-0.53%
Altera Corp., Conv. Sub. Notes,
5.75%, 06/15/02 5,000,000 8,750,550
- ---------------------------------------------------------------
Analog Devices, Conv. Sub. Notes,
3.50%, 12/01/00 10,000,000 15,307,400
- ---------------------------------------------------------------
24,057,950
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.25%
NCS Healthcare Inc., Conv. Sub.
Notes, 5.75%, 08/15/04(c)
(acquired 08/07/97-08/08/97;
cost $12,058,245) 12,000,000 11,546,760
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-1.00%
Loews Corp., Conv. Sub. Notes,
3.125%, 09/15/07 40,000,000 45,646,000
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.50%
Thermo Electron Corp., Conv. Sub.
Deb., 4.25%, 01/01/03(c)
(acquired 06/20/97-06/27/97;
cost $23,144,315) 20,000,000 22,621,800
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.52%
U.S. Filter Corp., Conv. Sub.
Notes, 4.50%, 12/15/01 20,000,000 23,641,600
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.65%
Danka Business Systems PLC, Conv.
Sub. Notes, 6.75%, 04/01/02
(United Kingdom) $22,500,000 $ 29,817,675
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.41%
Nabors Industries, Inc., Conv.
Sub. Notes, 5.00%, 05/15/06 8,000,000 18,872,400
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.14%
Home Depot, Inc., Conv. Sub.
Notes, 3.25%, 10/01/01 5,000,000 6,465,800
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-0.14%
Staples Inc., Conv. Sub. Deb.,
4.50%, 10/01/00(c) (acquired
10/23/97-10/24/97; cost
$6,725,000) 5,000,000 6,361,800
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.56%
Career Horizons, Inc., Conv.
Bonds, 7.00%, 11/01/02 10,000,000 25,409,400
- ---------------------------------------------------------------
WASTE MANAGEMENT-0.86%
Sanifill, Inc., Conv. Sub. Deb.,
5.00%, 03/01/06 18,000,000 25,648,920
- ---------------------------------------------------------------
United Waste Systems, Inc., Conv.
Sub. Notes, 4.50%, 06/01/01 10,250,000 13,820,280
- ---------------------------------------------------------------
39,469,200
- ---------------------------------------------------------------
Total Convertible Corporate
Bonds 365,614,919
- ---------------------------------------------------------------
SHARES
CONVERTIBLE PREFERRED STOCKS-6.72%
FINANCIAL (DIVERSIFIED)-0.56%
AES Trust I-$2.69 Conv. Pfd 250,000 16,000,000
- ---------------------------------------------------------------
AES Trust II-$2.75 Conv. Pfd.,(c)
(acquired 10/24/97; cost
$10,000,000) 200,000 9,525,000
- ---------------------------------------------------------------
25,525,000
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.74%
Medpartners Inc.-$1.44 Conv. Pfd. 1,400,000 33,950,000
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.16%
Conseco Inc.-$4.278 Conv. PRIDES 350,000 53,200,000
- ---------------------------------------------------------------
LODGING-HOTELS-0.50%
Host Marriott Corp., $3.375 Conv.
Pfd. 350,000 22,881,250
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.44%
EVI, Inc., $2.50 Conv. Pfd. 400,000 20,150,000
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.36%
TJX Companies., Inc.-Series E,
$7.00 Conv. Pfd. 50,000 16,250,000
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.40%
Automatic Common Exchange
Security Trust II-$1.55 Conv.
Pfd. 350,000 9,887,500
- ---------------------------------------------------------------
</TABLE>
FS-45
<PAGE> 264
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (COMMERCIAL & CONSUMER)-(CONTINUED)
Hvide Capital Trust-$3.25 Conv.
Pfd.(c) (acquired
10/11/96-05/02/97; cost
$8,701,548) 123,000 $ 8,270,520
- ---------------------------------------------------------------
18,158,020
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-2.56%
WorldCom, Inc.-$2.68 Dep. Conv.
Pfd. 1,000,000 117,000,000
- ---------------------------------------------------------------
Total Convertible Preferred
Stocks 307,114,270
- ---------------------------------------------------------------
PRINCIPAL
AMOUNT
U.S. TREASURY NOTES-6.19%
8.875%, 02/15/99 $25,000,000 $ 26,000,750
- ---------------------------------------------------------------
9.125%, 05/15/99(d) 70,000,000 73,541,300
- ---------------------------------------------------------------
8.50%, 02/15/00 20,000,000 21,195,200
- ---------------------------------------------------------------
U.S. TREASURY NOTES-(CONTINUED)
8.875%, 05/15/00(d) $20,000,000 $ 21,508,400
- ---------------------------------------------------------------
8.75%, 08/15/00(d) 20,000,000 21,553,400
- ---------------------------------------------------------------
11.75%, 02/15/01(d) 80,000,000 94,303,200
- ---------------------------------------------------------------
13.125%, 05/15/01 20,000,000 24,682,600
- ---------------------------------------------------------------
Total U.S. Treasury Notes 282,784,850
- ---------------------------------------------------------------
REPURCHASE AGREEMENT(e)-0.28%
Sanwa Securities (USA) L.P.,
5.73%, 11/03/97(f) 12,899,236 12,899,236
- ---------------------------------------------------------------
TOTAL INVESTMENTS-100.41% 4,587,548,825
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-(0.41)% (18,682,659)
- ---------------------------------------------------------------
NET ASSETS-100.00% $4,568,866,166
===============================================================
</TABLE>
Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debentures
Dep. - Depository
GDR - Global Depository Receipt
Gtd. - Guaranteed
Pfd. - Preferred
PRIDES - Preferred Redemption Increase Dividend Equity Security
Sub. - Subordinated
Notes to Schedule of Investments:
(a)Non-income producing security
(b)A portion of these securities are subject to call options written. See note
8.
(c)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 the procedures established by the Board of Directors. The aggregate
market value of these securities at 10/31/97 was $93,976,714, which
represented 2.06% of the Fund's net assets.
(d)A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See note 7.
(e)Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value 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, private
accounts and certain non-registered investment companies managed by the
investment advisor.
(f)Joint repurchase agreement entered into 10/31/97 with a maturing value of
$200,095,500. Collateralized by $201,314,000 U.S. Government obligations, 0%
to 8.875% due 11/03/97 to 08/15/27 with an aggregate market value at 10/31/97
of $204,000,545.
See Notes to Financial Statements.
FS-46
<PAGE> 265
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$3,678,855,389) $4,587,548,825
- ------------------------------------------------------------
Receivable for:
Investments sold 46,111,494
- ------------------------------------------------------------
Capital stock sold 20,097,839
- ------------------------------------------------------------
Dividends and interest 14,817,418
- ------------------------------------------------------------
Variation margin 1,040,625
- ------------------------------------------------------------
Investment for deferred compensation plan 44,514
- ------------------------------------------------------------
Other assets 133,382
- ------------------------------------------------------------
Total assets 4,669,794,097
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 82,481,133
- ------------------------------------------------------------
Capital stock reacquired 10,912,732
- ------------------------------------------------------------
Options written 2,272,031
- ------------------------------------------------------------
Deferred compensation 44,514
- ------------------------------------------------------------
Accrued advisory fees 2,492,536
- ------------------------------------------------------------
Accrued administrative services fees 9,821
- ------------------------------------------------------------
Accrued distribution fees 1,858,913
- ------------------------------------------------------------
Accrued transfer agent fees 549,487
- ------------------------------------------------------------
Accrued operating expenses 306,764
- ------------------------------------------------------------
Total liabilities 100,927,931
- ------------------------------------------------------------
Net assets applicable to shares outstanding $4,568,866,166
============================================================
NET ASSETS:
Class A $3,466,912,125
============================================================
Class B $1,056,094,084
============================================================
Class C $ 5,668,794
============================================================
Institutional Class $ 40,191,163
============================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 258,500,666
============================================================
Class B:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 78,995,187
============================================================
Class C:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 423,413
============================================================
Institutional Class:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 2,981,340
============================================================
Class A:
Net asset value and redemption price per
share $ 13.41
============================================================
Offering price per share:
(Net asset value of $13.41 divided by
94.50%) $ 14.19
============================================================
Class B:
Net asset value and offering price per
share $ 13.37
============================================================
Class C:
Net asset value and offering price per
share $ 13.39
============================================================
Institutional Class:
Net asset value, offering and redemption
price per share $ 13.48
============================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $363,901 foreign
withholding tax) $ 54,637,403
- -----------------------------------------------------------
Interest 20,413,876
- -----------------------------------------------------------
Total investment income 75,051,279
- -----------------------------------------------------------
EXPENSES:
Advisory fees 25,224,069
- -----------------------------------------------------------
Administrative services fees 127,908
- -----------------------------------------------------------
Custodian fees 335,709
- -----------------------------------------------------------
Directors' fees 32,960
- -----------------------------------------------------------
Distribution fees-Class A 9,459,952
- -----------------------------------------------------------
Distribution fees-Class B 8,046,181
- -----------------------------------------------------------
Distribution fees-Class C 6,079
- -----------------------------------------------------------
Transfer agent fees-Class A 4,142,179
- -----------------------------------------------------------
Transfer agent fees-Class B 1,472,206
- -----------------------------------------------------------
Transfer agent fees-Class C 1,330
- -----------------------------------------------------------
Transfer agent fees-Institutional Class 17,500
- -----------------------------------------------------------
Other 1,185,816
- -----------------------------------------------------------
Total expenses 50,051,889
- -----------------------------------------------------------
Less: Fees waived by advisor (498,463)
- -----------------------------------------------------------
Expenses paid indirectly (218,302)
- -----------------------------------------------------------
Net expenses 49,335,124
- -----------------------------------------------------------
Net investment income 25,716,155
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FUTURES AND OPTION CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 479,170,082
- -----------------------------------------------------------
Foreign currencies 8,764
- -----------------------------------------------------------
Futures contracts (2,590,423)
- -----------------------------------------------------------
Option contracts (4,682,882)
- -----------------------------------------------------------
471,905,541
- -----------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 452,544,247
- -----------------------------------------------------------
Foreign currencies (1,823)
- -----------------------------------------------------------
Futures contracts (2,280,695)
- -----------------------------------------------------------
Option contracts 3,564,452
- -----------------------------------------------------------
453,826,181
- -----------------------------------------------------------
Net gain on investment securities, foreign
currencies, futures and option transactions 925,731,722
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $951,447,877
===========================================================
</TABLE>
See Notes to Financial Statements.
FS-47
<PAGE> 266
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 25,716,155 $ 45,400,910
- ----------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities,
foreign currencies, futures, and option contracts 471,905,541 187,738,534
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies, futures and option contracts 453,826,181 171,775,447
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 951,447,877 404,914,891
- ----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (29,364,689) (34,698,850)
- ----------------------------------------------------------------------------------------------
Class B (2,392,475) (2,262,959)
- ----------------------------------------------------------------------------------------------
Institutional Class (438,502) (506,177)
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (162,219,599) (170,497,932)
- ----------------------------------------------------------------------------------------------
Class B (34,439,480) (8,672,692)
- ----------------------------------------------------------------------------------------------
Class C (2,594) --
- ----------------------------------------------------------------------------------------------
Institutional Class (1,797,486) (2,168,635)
- ----------------------------------------------------------------------------------------------
Net equalization credits:
Class A 292,768 511,762
- ----------------------------------------------------------------------------------------------
Class B 189,770 219,669
- ----------------------------------------------------------------------------------------------
Institutional Class 6,698 1,194
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 247,700,247 518,654,491
- ----------------------------------------------------------------------------------------------
Class B 397,291,935 417,063,105
- ----------------------------------------------------------------------------------------------
Class C 5,872,568 --
- ----------------------------------------------------------------------------------------------
Institutional Class 4,247,713 2,366,710
- ----------------------------------------------------------------------------------------------
Net increase in net assets 1,376,394,751 1,124,924,577
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,192,471,415 2,067,546,838
- ----------------------------------------------------------------------------------------------
End of period $4,568,866,166 $3,192,471,415
===============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $3,199,855,109 $2,544,742,646
- ----------------------------------------------------------------------------------------------
Undistributed net investment income 2,895,981 8,877,492
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities, foreign currencies, futures and option
contracts 456,189,864 182,752,246
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 909,925,212 456,099,031
- ----------------------------------------------------------------------------------------------
$4,568,866,166 $3,192,471,415
==============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-48
<PAGE> 267
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
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 six diversified portfolios:
AIM Charter Fund, AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital
Development Fund, AIM Constellation Fund and AIM Weingarten Fund. The Fund
currently offers four different classes of shares: Class A shares, Class B
shares, Class C 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 Fund's investment objective is to provide growth
of capital, with current income as a secondary objective.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations-A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the 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. Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices are
not provided by any of the above methods are valued 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 or are
questionable 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, 1997
$8,764 was reclassified from undistributed net realized gains to
undistributed net investment income as a result of differing book/tax
treatment of foreign currency transactions. Net assets of the Fund were
unaffected as a result of this reclassification.
C. Bond Premiums-It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
D. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed
to shareholders. Therefore, no provision for federal income taxes is
recorded in the financial statements.
E. Expenses-Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
are allocated among the classes.
F. 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.
G. 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.
H. 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 currency contract for the purchase
or sale of a security
FS-49
<PAGE> 268
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.
I. 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 the contracts may not correlate
with changes in the value of the securities being hedged.
J. 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 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 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.
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. Under the voluntary waiver, 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. The
waiver is entirely voluntary but approval is required by the Board of Directors
for any decision by AIM to discontinue the waiver. During the year ended October
31, 1997, AIM waived fees of $498,463. 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.
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, 1997, AIM was
reimbursed $127,908 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, Class B shares and Class C Shares.
During the year ended October 31, 1997, AFS was paid $3,129,677 for such
services.
The Fund, pursuant to another transfer agency and service agreement, has
agreed to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for
providing transfer agent and shareholder services to the Institutional Class.
During the year ended October 31, 1997, the Fund paid AIFS $3,178 for such
services with respect to the Institutional Class. On September 19, 1997, the
Board of Directors of the Fund approved the appointment of AFS as transfer agent
of the Institutional Class to be effective in late 1997 or early 1998.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor of the Class
A, Class B and Class C shares of the Fund. The Company has adopted distribution
plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class
A shares (the "Class A Plan"), the Fund's Class B shares (the "Class B Plan"),
and the Fund's Class C shares (the "Class C Plan") (collectively, the "Plans").
The Fund, pursuant to the
FS-50
<PAGE> 269
Class A and Class C Plans, pays AIM Distributors compensation at the annual rate
of 0.30% of the average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class C shares. The Class A and C Plans are designed
to compensate AIM Distributors 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 Class A or Class C 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,
1997, the Class A and Class B, and the period August 4, 1997 through October 31,
1997 Class C shares paid AIM Distributors $9,459,952, $8,046,181, and $6,079,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $2,129,799 from sales of Class A
shares of the Fund during the year ended October 31, 1997. 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, 1997,
AIM Distributors received commissions of $62,653 in contingent deferred sales
charges imposed on redemptions of Fund 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, 1997, the Fund paid legal fees of $12,872
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the year ended
October 31, 1997, the Fund's expenses were reduced by $15,778 for this service.
The Fund also received reductions in transfer agency fees from AFS (an affiliate
of AIM) and reductions in custodian fees of $51,566 and $150,958, respectively,
under expense offset arrangements. The effect of the above arrangements resulted
in reductions of the Fund's total expenses of $218,302 during the year ended
October 31, 1997.
NOTE 4-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 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lesser of i) $325,000,000 or ii) the limit set by
its prospectus for borrowings. During the year ended October 31, 1997, the Fund
did not borrow under the line of credit agreement. The funds which are party to
the line of credit are charged a commitment fee of 0.05% on the unused balance
of the committed line. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
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, 1997 was
$7,160,060,290 and $6,696,104,946, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1997, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 955,676,275
- -----------------------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (53,296,715)
- -----------------------------------------------------------------------------
Net unrealized appreciation of investment
securities $ 902,379,560
=============================================================================
</TABLE>
Cost of investments for tax purposes is: $3,685,169,265.
NOTE 7-FUTURES CONTRACTS
On October 31, 1997, $900,000 principal amount of U.S. Treasury obligations were
pledged as collateral to cover margin requirements for futures contracts. Open
contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NO. OF MONTH/ APPRECIATION
CONTRACT CONTRACTS COMMITMENT (DEPRECIATION)
-------- --------- ---------- ------------
<S> <C> <C> <C>
Russell 2000 Index 200 Dec. 97/Buy $(2,007,675)
Russell 2000 Index 25 Mar. 98/Buy (325,000)
-----------
$(2,332,675)
===========
</TABLE>
FS-51
<PAGE> 270
NOTE 8-OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended October 31, 1997 are
summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
-------------------------
NUMBER
OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Beginning of Period -- --
- ---------------------------------------------------------------------------------------
Written 40,155 $ 9,469,083
- ---------------------------------------------------------------------------------------
Closed (11,850) (2,734,038)
- ---------------------------------------------------------------------------------------
Exercised (2,000) (898,562)
- ---------------------------------------------------------------------------------------
Expired -- --
- ---------------------------------------------------------------------------------------
End of period 26,305 $ 5,836,483
=======================================================================================
</TABLE>
Open call option contracts written at October 31, 1997 were as follows:
<TABLE>
<CAPTION>
OCTOBER 31,
NUMBER 1997 UNREALIZED
CONTRACT STRIKE OF PREMIUM MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
----- -------- ------ --------- -------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Avon Products, Inc. Nov. 97 $ 75 3,500 $ 765,410 $ 54,688 $ 710,722
- ---------------------------------------------------------------------------------------------------------------------------------
Bay Networks, Inc. Nov. 97 40 2,000 145,995 31,250 114,745
- ---------------------------------------------------------------------------------------------------------------------------------
Bay Networks, Inc. Nov. 97 42.5 3,000 703,476 37,500 665,976
- ---------------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp. Nov. 97 65 605 300,675 207,968 92,707
- ---------------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp. Nov. 97 75 1,000 174,014 71,875 102,139
- ---------------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp. Nov. 97 85 2,500 495,082 46,875 448,207
- ---------------------------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc. Dec. 97 80 2,500 1,179,960 640,625 539,335
- ---------------------------------------------------------------------------------------------------------------------------------
CompUSA, Inc. Nov. 97 35 500 73,498 40,625 32,873
- ---------------------------------------------------------------------------------------------------------------------------------
CompUSA, Inc. Nov. 97 40 4,000 440,265 75,000 365,265
- ---------------------------------------------------------------------------------------------------------------------------------
Dell Computer Corp. Nov. 97 85 2,000 868,971 750,000 118,971
- ---------------------------------------------------------------------------------------------------------------------------------
HBO & Co. Nov. 97 50 2,700 264,591 84,375 180,216
- ---------------------------------------------------------------------------------------------------------------------------------
Intel Corp. Nov. 97 85 2,000 424,546 231,250 193,296
- ---------------------------------------------------------------------------------------------------------------------------------
$5,836,483 $ 2,272,031 $ 3,564,452
=================================================================================================================================
</TABLE>
NOTE 9-CAPITAL STOCK
Changes in the capital stock outstanding for the years ended October 31, 1997
and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
--------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sold
- ------------------------------------------------------------------------------------------------------------------------
Class A 64,563,425 $ 804,527,781 71,824,128 $ 752,853,277
- ------------------------------------------------------------------------------------------------------------------------
Class B 37,105,082 454,511,843 41,436,800 435,348,846
- ------------------------------------------------------------------------------------------------------------------------
Class C* 437,883 6,069,012 -- --
- ------------------------------------------------------------------------------------------------------------------------
Institutional Class 600,091 7,589,130 448,911 4,759,971
- ------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
- ------------------------------------------------------------------------------------------------------------------------
Class A 16,507,011 181,612,880 19,521,139 192,994,968
- ------------------------------------------------------------------------------------------------------------------------
Class B 3,210,439 35,080,359 1,039,513 10,333,913
- ------------------------------------------------------------------------------------------------------------------------
Class C* 159 2,155 -- --
- ------------------------------------------------------------------------------------------------------------------------
Institutional Class 193,613 2,149,460 252,209 2,504,537
- ------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (59,039,148) (738,440,414) (40,679,494) (427,193,754)
- ------------------------------------------------------------------------------------------------------------------------
Class B (7,456,466) (92,300,267) (2,705,793) (28,619,654)
- ------------------------------------------------------------------------------------------------------------------------
Class C* (14,629) (198,599) -- --
- ------------------------------------------------------------------------------------------------------------------------
Institutional Class (445,517) (5,490,877) (464,310) (4,897,798)
- ------------------------------------------------------------------------------------------------------------------------
55,661,943 $ 655,112,463 90,673,103 $ 938,084,306
========================================================================================================================
</TABLE>
* Class C commenced sales on August 4, 1997.
FS-52
<PAGE> 271
NOTE 10-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share outstanding during
each of the years in the five-year period ended October 31, 1997, for a Class B
share outstanding during each of the years in the two-year period ended October
31, 1997 and the period June 26, 1995 (date sales commenced) through October 31,
1995, and for a Class C share outstanding during the period August 4, 1997 (date
sales commenced) through October 31, 1997.
CLASS A:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.19 $ 10.63 $ 8.90 $ 9.46 $ 8.36
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.10 0.19 0.15 0.21 0.17
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Net gains (losses) on securities (both realized and
unrealized) 2.91 1.43 2.11 (0.45) 1.22
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Total from investment operations 3.01 1.62 2.26 (0.24) 1.39
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (0.12) (0.16) (0.20) (0.16) (0.29)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Distributions from net realized gains (0.67) (0.90) (0.33) (0.16) --
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Total distributions (0.79) (1.06) (0.53) (0.32) (0.29)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 13.41 $ 11.19 $ 10.63 $ 8.90 $ 9.46
============================================================ ========== ========== ========== ========== ==========
Total return(a) 28.57% 16.70% 27.03% (2.55)% 16.92%
============================================================ ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $3,466,912 $2,647,208 $1,974,417 $1,579,074 $1,690,482
============================================================ ========== ========== ========== ========== ==========
Ratio of expenses to average net assets 1.09%(b)(c) 1.12% 1.17% 1.17% 1.17%
============================================================ ========== ========== ========== ========== ==========
Ratio of net investment income to average net assets 0.79%(b) 1.81% 1.55% 2.32% 1.89%
============================================================ ========== ========== ========== ========== ==========
Portfolio turnover rate 170% 164% 161% 126% 144%
============================================================ ========== ========== ========== ========== ==========
Average brokerage commission rate(d) $ 0.0615 $ 0.0638 N/A N/A N/A
============================================================ ========== ========== ========== ========== ==========
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $3,153,317,435. After fee waivers.
Prior to fee waivers, the ratios of expenses to average net assets and net
investment income to average net assets are 1.10% and 0.78%, respectively.
(c) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratios of expenses to average net assets would have remained the same.
(d) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
CLASS B:
<TABLE>
<CAPTION>
1997 1996 1995
---------- -------- -------
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.18 $ 10.62 $ 9.81
- ------------------------------------------------------------ ---------- -------- -------
Income from investment operations:
Net investment income 0.01 0.10 0.03
- ------------------------------------------------------------ ---------- -------- -------
Net gains on securities (both realized and unrealized) 2.89 1.45 0.80
- ------------------------------------------------------------ ---------- -------- -------
Total from investment operations 2.90 1.55 0.83
- ------------------------------------------------------------ ---------- -------- -------
Less distributions:
Dividends from net investment income (0.04) (0.09) (0.02)
- ------------------------------------------------------------ ---------- -------- -------
Distributions from net realized gains (0.67) (0.90) --
- ------------------------------------------------------------ ---------- -------- -------
Total distributions (0.71) (0.99) (0.02)
============================================================ ========== ======== =======
Net asset value, end of period $ 13.37 $ 11.18 $ 10.62
============================================================ ========== ======== =======
Total return(a) 27.54% 15.90% 8.48%
============================================================ ========== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,056,094 $515,672 $67,592
============================================================ ========== ======== =======
Ratio of expenses to average net assets 1.85%(b)(c) 1.94% 1.98%(d)
============================================================ ========== ======== =======
Ratio of net investment income to average net assets 0.03%(b) 0.99% 0.74%(d)
============================================================ ========== ======== =======
Portfolio turnover rate 170% 164% 161%
============================================================ ========== ======== =======
Average brokerage commission rate(e) $ 0.0615 $ 0.0638 N/A
============================================================ ========== ======== =======
</TABLE>
(a) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b) Ratios are based on average net assets of $804,618,145. After fee waivers.
Prior to fee waivers, the ratios of expenses to average net assets and net
investment income to average net assets are 1.86% and 0.02%, respectively.
(c) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratios of expenses to average net assets would have remained the same.
(d) Annualized.
(e) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-53
<PAGE> 272
NOTE 10-FINANCIAL HIGHLIGHTS-continued
CLASS C:
<TABLE>
<CAPTION>
1997
-------
<S> <C>
Net asset value, beginning of period $ 13.86
- ------------------------------------------------------------ -------
Income from investment operations:
Net investment income --
- ------------------------------------------------------------ -------
Net gains on securities (both realized and unrealized) (0.45)
- ------------------------------------------------------------ -------
Total from investment operations (0.45)
- ------------------------------------------------------------ -------
Less distributions:
Dividends from net investment income --
- ------------------------------------------------------------ -------
Distributions from net realized gains (0.02)
- ------------------------------------------------------------ -------
Total distributions (0.02)
- ------------------------------------------------------------ -------
Net asset value, end of period $ 13.39
============================================================ =======
Total return(a) (3.24)%
============================================================ =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 5,669
============================================================ =======
Ratio of expenses to average net assets 1.82%(b)(c)
============================================================ =======
Ratio of net investment income to average net assets 0.06%(b)
============================================================ =======
Portfolio turnover rate 170%
============================================================ =======
Average brokerage commission rate(d) $0.0615
============================================================ =======
</TABLE>
(a) Does not deduct sales charge and total returns for periods less than one
year are not annualized.
(b) Ratios are annualized and based on average net assets of $2,493,136. After
fee waivers. Prior to fee waivers, the ratios of expenses to average net
assets and net investment income to average net assets are 1.83% and 0.04%,
respectively.
(c) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratios of expenses to average net assets would have remained the same.
(d) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-54
<PAGE> 273
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, 1997, 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 or periods in the
five-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, 1997, 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, 1997, 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 or periods in the five-year period
then ended, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
FS-55
<PAGE> 274
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-89.37%
AEROSPACE/DEFENSE-0.35%
BE Aerospace, Inc.(a) 750,000 $ 21,093,750
- ---------------------------------------------------------------
Precision Castparts Corp. 500,000 29,406,250
- ---------------------------------------------------------------
50,500,000
- ---------------------------------------------------------------
AIR FREIGHT-0.39%
AirNet Systems, Inc.(a) 560,000 11,480,000
- ---------------------------------------------------------------
CNF Transportation Inc. 1,000,000 44,625,000
- ---------------------------------------------------------------
56,105,000
- ---------------------------------------------------------------
AIRLINES-0.11%
Southwest Airlines Co. 500,000 16,312,500
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.12%
Mark IV Industries, Inc. 689,062 16,709,754
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.28%
BankBoston Corp. 500,000 40,531,250
- ---------------------------------------------------------------
BANKS (REGIONAL)-0.30%
AmSouth Bancorporation 750,000 36,046,875
- ---------------------------------------------------------------
North Fork Bancorporation, Inc. 250,000 7,359,375
- ---------------------------------------------------------------
43,406,250
- ---------------------------------------------------------------
BIOTECHNOLOGY-0.08%
Curative Technologies, Inc.(a) 365,100 10,998,638
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-0.62%
Chancellor Media Corp.(a) 140,001 7,682,555
- ---------------------------------------------------------------
Clear Channel Communications,
Inc.(a) 750,000 49,500,000
- ---------------------------------------------------------------
Jacor Communications, Inc.(a) 786,700 32,943,062
- ---------------------------------------------------------------
90,125,617
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.32%
ADC Telecommunications, Inc.(a) 3,000,000 99,375,000
- ---------------------------------------------------------------
Brightpoint, Inc.(a) 750,000 24,750,000
- ---------------------------------------------------------------
Comverse Technology, Inc.(a) 100,000 4,125,000
- ---------------------------------------------------------------
Digital Microwave Corp.(a) 35,000 1,260,000
- ---------------------------------------------------------------
DSC Communications Corp.(a) 2,800,000 68,250,000
- ---------------------------------------------------------------
Glenayre Technologies, Inc.(a) 1,000,000 13,000,000
- ---------------------------------------------------------------
Lucent Technologies, Inc. 500,000 41,218,750
- ---------------------------------------------------------------
MasTec, Inc.(a) 500,000 16,218,750
- ---------------------------------------------------------------
Motorola, Inc. 600,000 37,050,000
- ---------------------------------------------------------------
PairGain Technologies, Inc.(a)(b) 1,500,000 42,375,000
- ---------------------------------------------------------------
REMEC, Inc.(a) 250,000 6,343,750
- ---------------------------------------------------------------
Scientific-Atlanta, Inc. 1,750,000 32,484,375
- ---------------------------------------------------------------
Tellabs, Inc.(a) 1,800,000 97,200,000
- ---------------------------------------------------------------
483,650,625
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-3.34%
Citrix Systems, Inc.(a) 250,000 $ 18,359,374
- ---------------------------------------------------------------
Comdisco, Inc. 1,250,000 39,453,125
- ---------------------------------------------------------------
Compaq Computer Corp.(a) 1,743,000 111,116,250
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 2,500,000 74,218,750
- ---------------------------------------------------------------
Data General Corp.(a) 250,000 4,812,500
- ---------------------------------------------------------------
Dell Computer Corp.(a) 1,500,000 120,187,500
- ---------------------------------------------------------------
IDX Systems Corp.(a) 756,900 25,545,375
- ---------------------------------------------------------------
Micron Electronics, Inc.(a) 1,050,000 14,568,750
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a) 2,250,000 77,062,500
- ---------------------------------------------------------------
485,324,124
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.31%
Bay Networks, Inc.(a) 3,000,000 94,875,000
- ---------------------------------------------------------------
Cisco Systems, Inc.(a) 650,000 53,320,313
- ---------------------------------------------------------------
3Com Corp.(a) 1,000,000 41,437,500
- ---------------------------------------------------------------
189,632,813
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-2.23%
Adaptec, Inc.(a) 2,000,000 96,875,000
- ---------------------------------------------------------------
EMC Corp.(a) 1,672,000 93,632,000
- ---------------------------------------------------------------
Iomega Corp.(a) 1,500,000 40,218,750
- ---------------------------------------------------------------
Lexmark International Group,
Inc.(a) 400,000 12,225,000
- ---------------------------------------------------------------
MicroTouch Systems, Inc.(a) 250,000 6,031,250
- ---------------------------------------------------------------
Quantum Corp.(a) 1,000,000 31,625,000
- ---------------------------------------------------------------
Smart Modular Technologies,
Inc.(a) 150,000 7,462,500
- ---------------------------------------------------------------
Storage Technology Corp.(a) 600,000 35,212,500
- ---------------------------------------------------------------
323,282,000
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-7.71%
America Online, Inc.(a) 200,000 15,400,000
- ---------------------------------------------------------------
Applied Voice Technology, Inc.(a) 250,000 6,500,000
- ---------------------------------------------------------------
Aspect Development, Inc.(a) 325,000 15,193,750
- ---------------------------------------------------------------
Autodesk, Inc. 500,000 18,500,000
- ---------------------------------------------------------------
Avant! Corp.(a) 750,000 19,687,500
- ---------------------------------------------------------------
BMC Software, Inc.(a) 1,750,000 105,656,250
- ---------------------------------------------------------------
Cadence Design Systems, Inc.(a) 1,750,000 93,187,500
- ---------------------------------------------------------------
Computer Associates
International, Inc. 1,000,000 74,562,500
- ---------------------------------------------------------------
Compuware Corp.(a) 2,014,200 133,188,975
- ---------------------------------------------------------------
Electronic Arts, Inc.(a) 1,000,000 33,875,000
- ---------------------------------------------------------------
Electronics for Imaging, Inc.(a) 300,000 14,025,000
- ---------------------------------------------------------------
HBO & Co. 2,500,000 108,750,000
- ---------------------------------------------------------------
McAfee Associates, Inc.(a) 200,000 9,950,000
- ---------------------------------------------------------------
Microsoft Corp.(a) 824,200 107,146,000
- ---------------------------------------------------------------
Oracle Corp.(a) 2,000,000 71,562,500
- ---------------------------------------------------------------
Parametric Technology Co.(a) 1,600,000 70,600,000
- ---------------------------------------------------------------
</TABLE>
FS-56
<PAGE> 275
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Security Dynamics
Technologies, Inc.(a) 1,000,000 $ 33,875,000
- ---------------------------------------------------------------
Sterling Commerce, Inc.(a) 2,000,000 66,375,000
- ---------------------------------------------------------------
Sterling Software, Inc.(a) 500,000 17,062,500
- ---------------------------------------------------------------
Sybase, Inc.(a) 517,500 8,441,719
- ---------------------------------------------------------------
Symantec Corp.(a) 1,000,000 21,875,000
- ---------------------------------------------------------------
Synopsys, Inc.(a) 1,500,000 58,312,500
- ---------------------------------------------------------------
Wind River Systems(a) 450,000 17,268,750
- ---------------------------------------------------------------
1,120,995,444
- ---------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.16%
Action Performance Companies,
Inc.(a) 400,000 10,250,000
- ---------------------------------------------------------------
Blyth Industries, Inc.(a) 525,000 13,059,375
- ---------------------------------------------------------------
23,309,375
- ---------------------------------------------------------------
CONSUMER FINANCE-3.60%
Aames Financial Corp.(b) 900,000 13,162,500
- ---------------------------------------------------------------
Capital One Financial Corp. 750,000 34,218,750
- ---------------------------------------------------------------
ContiFinancial Corp.(a) 500,000 14,218,750
- ---------------------------------------------------------------
FIRSTPLUS Financial Group, Inc.(a) 500,000 27,500,000
- ---------------------------------------------------------------
Green Tree Financial Corp. 2,500,000 105,312,500
- ---------------------------------------------------------------
Household International, Inc. 1,000,000 113,250,000
- ---------------------------------------------------------------
IMC Mortgage Co.(a)(b) 1,500,000 26,062,500
- ---------------------------------------------------------------
MBNA Corp. 3,000,000 78,937,500
- ---------------------------------------------------------------
Money Store, Inc. 1,000,000 28,375,000
- ---------------------------------------------------------------
Providian Financial Corp. 500,000 18,500,000
- ---------------------------------------------------------------
SLM Holding Corp. 450,000 63,168,750
- ---------------------------------------------------------------
522,706,250
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.81%
Cardinal Health, Inc. 1,000,000 74,250,000
- ---------------------------------------------------------------
McKesson Corp. 400,000 42,925,000
- ---------------------------------------------------------------
117,175,000
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.85%
American Power Conversion
Corp.(a) 1,000,000 27,250,000
- ---------------------------------------------------------------
Avid Technology, Inc.(a) 500,000 14,281,250
- ---------------------------------------------------------------
AVX Corp. 1,000,000 28,250,000
- ---------------------------------------------------------------
Berg Electronics Corp.(a) 1,000,000 23,375,000
- ---------------------------------------------------------------
Black Box Corp.(a) 500,000 20,500,000
- ---------------------------------------------------------------
Hadco Corp.(a) 500,000 27,687,500
- ---------------------------------------------------------------
Kemet Corp.(a) 1,000,000 21,750,000
- ---------------------------------------------------------------
Molex, Inc.-Class A 292,968 10,272,191
- ---------------------------------------------------------------
Sanmina Corp.(a) 700,000 52,325,000
- ---------------------------------------------------------------
Sawtek Inc.(a) 400,000 13,600,000
- ---------------------------------------------------------------
SCI Systems, Inc.(a) 2,250,000 99,000,000
- ---------------------------------------------------------------
Solectron Corp.(a) 1,000,000 39,250,000
- ---------------------------------------------------------------
Symbol Technologies, Inc. 900,000 35,775,000
- ---------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 17,100 409,331
- ---------------------------------------------------------------
413,725,272
- ---------------------------------------------------------------
ELECTRONIC (COMPONENT DISTRIBUTORS)-0.75%
Arrow Electronics, Inc.(a) 1,300,000 $ 36,887,500
- ---------------------------------------------------------------
Avnet, Inc. 750,000 47,203,125
- ---------------------------------------------------------------
Computer Products, Inc.(a) 250,000 6,812,500
- ---------------------------------------------------------------
Kent Electronics Corp.(a) 500,000 17,468,750
- ---------------------------------------------------------------
108,371,875
- ---------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.73%
Methode Electronics, Inc.-Class A 1,050,000 20,737,500
- ---------------------------------------------------------------
Perkin-Elmer Corp. 894,800 55,925,000
- ---------------------------------------------------------------
Tektronix, Inc. 500,000 29,562,500
- ---------------------------------------------------------------
106,225,000
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-6.43%
Altera Corp.(a) 1,600,000 71,000,000
- ---------------------------------------------------------------
Anadagics, Inc.(a) 321,600 11,899,200
- ---------------------------------------------------------------
Analog Devices, Inc.(a) 1,750,000 53,484,375
- ---------------------------------------------------------------
Atmel Corp.(a) 2,000,000 51,750,000
- ---------------------------------------------------------------
Burr-Brown Corp.(a) 750,000 22,687,500
- ---------------------------------------------------------------
Dallas Semiconductor Corp.(a) 800,000 39,100,000
- ---------------------------------------------------------------
Intel Corp. 1,000,000 77,000,000
- ---------------------------------------------------------------
Lattice Semiconductor Corp.(a) 400,000 20,025,000
- ---------------------------------------------------------------
Linear Technology Corp. 1,500,000 94,312,500
- ---------------------------------------------------------------
Maxim Integrated Products,
Inc.(a) 1,525,000 101,031,250
- ---------------------------------------------------------------
Microchip Technology, Inc.(a) 2,499,975 99,686,503
- ---------------------------------------------------------------
National Semiconductor Corp.(a) 2,500,000 90,000,000
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 500,000 13,187,500
- ---------------------------------------------------------------
Sipex Corp.(a) 100,000 3,287,500
- ---------------------------------------------------------------
Texas Instruments, Inc. 1,000,000 106,687,500
- ---------------------------------------------------------------
Unitrode Corp.(a) 300,000 8,043,750
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 475,000 20,603,124
- ---------------------------------------------------------------
Xilinx, Inc.(a) 1,500,000 51,187,500
- ---------------------------------------------------------------
934,973,202
- ---------------------------------------------------------------
ENTERTAINMENT-0.16%
Regal Cinemas, Inc.(a) 1,000,000 23,000,000
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTORS)-2.70%
Applied Materials, Inc.(a) 3,000,000 100,125,000
- ---------------------------------------------------------------
BMC Industries, Inc. 500,000 16,093,750
- ---------------------------------------------------------------
KLA-Tencor Corp.(a) 2,511,700 110,357,819
- ---------------------------------------------------------------
Lam Research Corp.(a) 1,400,000 50,575,000
- ---------------------------------------------------------------
Novellus Systems, Inc.(a) 1,000,000 44,500,000
- ---------------------------------------------------------------
Teradyne, Inc.(a) 1,887,900 70,678,256
- ---------------------------------------------------------------
392,329,825
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.09%
MGIC Investment Corp. 2,000,000 120,625,000
- ---------------------------------------------------------------
SunAmerica, Inc. 1,050,000 37,734,375
- ---------------------------------------------------------------
158,359,375
- ---------------------------------------------------------------
</TABLE>
FS-57
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<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOOTWEAR-0.15%
Wolverine World Wide, Inc. 1,000,000 $ 22,000,000
- ---------------------------------------------------------------
GAMING, LOTTERY & PARI-MUTUEL COMPANIES-0.28%
International Game Technology 750,000 19,171,875
- ---------------------------------------------------------------
MGM Grand, Inc.(a) 500,000 21,937,500
- ---------------------------------------------------------------
41,109,375
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.29%
Alpharma, Inc. 254,967 5,625,209
- ---------------------------------------------------------------
Columbia Laboratories, Inc.(a) 500,000 8,000,000
- ---------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 900,000 43,537,500
- ---------------------------------------------------------------
Forest Laboratories, Inc.(a) 600,000 27,750,000
- ---------------------------------------------------------------
Jones Medical Industries, Inc. 1,000,050 30,126,507
- ---------------------------------------------------------------
Mylan Laboratories, Inc.(a) 1,000,000 21,937,500
- ---------------------------------------------------------------
Parexel International Corp.(a) 350,000 12,643,750
- ---------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 1,200,000 38,100,000
- ---------------------------------------------------------------
187,720,466
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-2.40%
Health Management Associates,
Inc.-Class A(a) 5,186,530 126,421,680
- ---------------------------------------------------------------
Quorum Health Group, Inc.(a) 1,800,000 43,650,000
- ---------------------------------------------------------------
Tenet Healthcare Corp.(a) 3,913,800 119,615,513
- ---------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 1,350,000 59,484,375
- ---------------------------------------------------------------
349,171,568
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-1.83%
Beverly Enterprises, Inc.(a) 2,000,000 29,875,000
- ---------------------------------------------------------------
Health Care and Retirement
Corp.(a)(b) 1,815,000 68,629,688
- ---------------------------------------------------------------
HEALTHSOUTH Corp.(a) 5,200,000 132,925,000
- ---------------------------------------------------------------
Vencor, Inc.(a) 1,250,000 33,750,000
- ---------------------------------------------------------------
265,179,688
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-1.71%
American Oncology Resources,
Inc.(a) 250,000 3,656,250
- ---------------------------------------------------------------
Concentra Managed Care, Inc.(a) 430,000 14,028,750
- ---------------------------------------------------------------
Express Scripts, Inc.-Class A(a)(b) 700,000 39,462,500
- ---------------------------------------------------------------
HealthCare COMPARE Corp.(a) 600,000 32,250,000
- ---------------------------------------------------------------
Humana, Inc.(a) 1,235,000 25,935,000
- ---------------------------------------------------------------
Oxford Health Plans, Inc.(a) 911,900 23,538,419
- ---------------------------------------------------------------
PhyCor, Inc.(a) 2,050,000 47,278,125
- ---------------------------------------------------------------
United Healthcare Corp. 602,300 27,894,019
- ---------------------------------------------------------------
Wellpoint Health Networks, Inc.(a) 752,000 34,404,000
- ---------------------------------------------------------------
248,447,063
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-2.28%
Arterial Vascular Engineering,
Inc.(a) 263,100 13,977,187
- ---------------------------------------------------------------
Biomet, Inc. 875,000 21,820,313
- ---------------------------------------------------------------
Dentsply International, Inc. 820,200 23,273,175
- ---------------------------------------------------------------
Guidant Corp. 800,000 46,000,000
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-(CONTINUED)
Medtronic, Inc. 900,000 $ 39,150,000
- ---------------------------------------------------------------
Physician Sales & Service, Inc.(a) 850,000 20,825,000
- ---------------------------------------------------------------
Quintiles Transnational Corp.(a) 605,000 43,862,500
- ---------------------------------------------------------------
Sofamor Danek Group, Inc.(a) 220,100 15,159,388
- ---------------------------------------------------------------
Stryker Corp. 400,000 14,875,000
- ---------------------------------------------------------------
Sullivan Dental Products, Inc. 500,000 11,687,500
- ---------------------------------------------------------------
Sybron International Corp.(a) 2,000,000 80,250,000
- ---------------------------------------------------------------
330,880,063
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-1.90%
American HomePatient, Inc.(a)(b) 750,000 19,312,500
- ---------------------------------------------------------------
Covance, Inc.(a) 2,000,000 35,375,000
- ---------------------------------------------------------------
FPA Medical Management, Inc.(a) 1,500,000 36,187,500
- ---------------------------------------------------------------
Lincare Holdings, Inc.(a) 1,000,000 53,625,000
- ---------------------------------------------------------------
Omnicare, Inc. 3,450,000 95,953,125
- ---------------------------------------------------------------
Orthodontic Centers of America,
Inc.(a) 524,200 9,075,213
- ---------------------------------------------------------------
Total Renal Care Holdings,
Inc.(a) 833,333 25,677,083
- ---------------------------------------------------------------
Transition Systems, Inc.(a) 33,300 674,325
- ---------------------------------------------------------------
275,879,746
- ---------------------------------------------------------------
HOMEBUILDING-0.24%
Clayton Homes, Inc. 1,750,000 28,765,625
- ---------------------------------------------------------------
Oakwood Homes Corp. 250,000 6,578,125
- ---------------------------------------------------------------
35,343,750
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.29%
Leggett & Platt, Inc. 1,000,000 41,750,000
- ---------------------------------------------------------------
HOUSEWARES-0.11%
Central Garden and Pet Co.(a) 485,500 12,744,375
- ---------------------------------------------------------------
Helen of Troy Ltd.(a) 185,000 3,075,625
- ---------------------------------------------------------------
15,820,000
- ---------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-0.36%
CapMAC Holdings, Inc. 424,800 12,744,000
- ---------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 750,000 28,218,750
- ---------------------------------------------------------------
Frontier Insurance Group, Inc. 100,000 3,368,750
- ---------------------------------------------------------------
HCC Insurance Holdings, Inc. 343,100 8,019,963
- ---------------------------------------------------------------
52,351,463
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-0.34%
T. Rowe Price Associates 750,000 49,687,500
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.67%
Callaway Golf Co. 450,000 14,512,500
- ---------------------------------------------------------------
GTECH Holdings Corp.(a) 750,000 24,187,500
- ---------------------------------------------------------------
Harley-Davidson, Inc. 1,400,000 38,850,000
- ---------------------------------------------------------------
North Face, Inc. (The)(a) 330,000 7,796,250
- ---------------------------------------------------------------
Speedway Motorsports, Inc.(a) 511,200 12,236,850
- ---------------------------------------------------------------
97,583,100
- ---------------------------------------------------------------
</TABLE>
FS-58
<PAGE> 277
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
LODGING-HOTELS-0.56%
Choice Hotels International,
Inc.(a) 1,000,000 $ 17,562,500
- ---------------------------------------------------------------
Doubletree Corp.(a) 702,800 29,254,050
- ---------------------------------------------------------------
Promus Hotel Corp.(a) 650,000 25,512,500
- ---------------------------------------------------------------
Sun International Hotels Ltd.(a) 157,600 5,673,600
- ---------------------------------------------------------------
Sunburst Hospitality Corp.(a) 333,333 3,375,000
- ---------------------------------------------------------------
81,377,650
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.94%
AMETEK, Inc. 300,000 7,068,750
- ---------------------------------------------------------------
Hillenbrand Industries, Inc. 750,000 32,062,500
- ---------------------------------------------------------------
Pentair, Inc. 500,000 19,312,500
- ---------------------------------------------------------------
Thermo Electron Corp.(a) 1,250,000 46,640,625
- ---------------------------------------------------------------
Tyco International Ltd. 823,964 31,104,641
- ---------------------------------------------------------------
136,189,016
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.76%
Cognex Corp.(a) 1,000,000 26,750,000
- ---------------------------------------------------------------
Diebold, Inc. 700,000 30,843,750
- ---------------------------------------------------------------
US Filter Corp.(a) 1,300,000 52,162,500
- ---------------------------------------------------------------
109,756,250
- ---------------------------------------------------------------
NATURAL GAS-0.01%
Edge Petroleum Corp.(a) 77,600 1,134,900
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.18%
Herman Miller, Inc. 350,000 17,106,250
- ---------------------------------------------------------------
HON INDUSTRIES, Inc. 181,900 9,390,587
- ---------------------------------------------------------------
26,496,837
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-7.52%
BJ Services Co.(a) 1,000,000 84,750,000
- ---------------------------------------------------------------
Baker Hughes, Inc. 1,000,000 45,937,500
- ---------------------------------------------------------------
Camco International, Inc. 963,700 69,627,325
- ---------------------------------------------------------------
Cooper Cameron Corp.(a) 1,000,000 72,250,000
- ---------------------------------------------------------------
Diamond Offshore Drilling, Inc. 900,000 56,025,000
- ---------------------------------------------------------------
ENSCO International, Inc. 1,000,000 42,062,500
- ---------------------------------------------------------------
EVI, Inc.(a) 600,000 38,512,500
- ---------------------------------------------------------------
Falcon Drilling Company, Inc.(a) 1,500,000 54,562,500
- ---------------------------------------------------------------
Global Industries Ltd.(a) 1,954,200 39,328,275
- ---------------------------------------------------------------
Global Marine, Inc.(a) 700,000 21,787,500
- ---------------------------------------------------------------
Halliburton Co. 750,000 44,718,750
- ---------------------------------------------------------------
Input/Output, Inc.(a) 1,400,000 37,537,500
- ---------------------------------------------------------------
Lone Star Technologies, Inc.(a) 700,000 26,731,250
- ---------------------------------------------------------------
Marine Drilling Companies,
Inc.(a)(b) 1,500,000 44,437,500
- ---------------------------------------------------------------
Nabors Industries, Inc.(a) 1,500,000 61,687,500
- ---------------------------------------------------------------
National-Oilwell, Inc.(a) 200,000 15,312,500
- ---------------------------------------------------------------
Noble Drilling Corp.(a) 1,000,000 35,562,500
- ---------------------------------------------------------------
Pride International, Inc.(a) 1,608,100 53,067,300
- ---------------------------------------------------------------
Rowan Companies, Inc.(a) 1,000,000 38,875,000
- ---------------------------------------------------------------
Santa Fe International Corp. 394,200 19,389,713
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED)
Smith International, Inc.(a) 1,000,000 $ 76,250,000
- ---------------------------------------------------------------
Varco International, Inc.(a)(b) 1,500,000 91,406,250
- ---------------------------------------------------------------
Veritas DGC, Inc.(a) 600,000 24,562,500
- ---------------------------------------------------------------
1,094,381,363
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.75%
Apache Corp.(a) 750,000 31,500,000
- ---------------------------------------------------------------
Burlington Resources, Inc. 750,000 36,703,125
- ---------------------------------------------------------------
Pioneer Natural Resources Co. 350,000 14,021,875
- ---------------------------------------------------------------
St. Mary Land & Exploration
Co. 100,000 4,075,000
- ---------------------------------------------------------------
Santa Fe Energy Resources, Inc.(a) 1,750,000 22,859,375
- ---------------------------------------------------------------
109,159,375
- ---------------------------------------------------------------
PERSONAL CARE-0.47%
Perrigo Co.(a) 1,977,400 30,402,524
- ---------------------------------------------------------------
Rexall Sundown, Inc.(a) 1,755,000 38,390,625
- ---------------------------------------------------------------
68,793,149
- ---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.27%
Xerox Corp. 500,000 39,656,250
- ---------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-0.30%
AES Corp.(a) 1,100,000 43,587,500
- ---------------------------------------------------------------
RESTAURANTS-1.39%
Apple South, Inc.(b) 2,000,000 37,250,000
- ---------------------------------------------------------------
Applebee's International, Inc.(b) 1,700,000 37,718,750
- ---------------------------------------------------------------
Brinker International, Inc.(a) 1,000,000 14,000,000
- ---------------------------------------------------------------
CKE Restaurants, Inc. 947,900 37,856,756
- ---------------------------------------------------------------
Cracker Barrel Old Country
Store, Inc. 1,125,000 33,187,500
- ---------------------------------------------------------------
Foodmaker, Inc.(a) 250,000 4,109,375
- ---------------------------------------------------------------
Outback Steakhouse, Inc.(a) 500,000 13,531,250
- ---------------------------------------------------------------
Starbucks Corp.(a) 750,000 24,750,000
- ---------------------------------------------------------------
202,403,631
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.32%
Eagle Hardware & Garden, Inc.(a) 750,000 12,750,000
- ---------------------------------------------------------------
Fastenal Co. 350,000 17,150,000
- ---------------------------------------------------------------
Home Depot, Inc. 300,000 16,687,500
- ---------------------------------------------------------------
46,587,500
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.94%
Best Buy Company, Inc.(a) 1,000,000 27,937,500
- ---------------------------------------------------------------
CHS Electronics, Inc.(a) 1,500,000 36,656,250
- ---------------------------------------------------------------
CompUSA, Inc.(a) 3,000,000 98,250,000
- ---------------------------------------------------------------
Ingram Micro, Inc.-Class A(a) 1,350,000 40,246,875
- ---------------------------------------------------------------
Tech Data Corp.(a) 1,775,000 78,987,500
- ---------------------------------------------------------------
282,078,125
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.74%
Fred Meyer, Inc.(a) 1,000,000 28,562,500
- ---------------------------------------------------------------
Kohl's Corp.(a) 500,000 33,562,500
- ---------------------------------------------------------------
</TABLE>
FS-59
<PAGE> 278
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (DEPARTMENT STORES)-(CONTINUED)
Nordstrom, Inc. 750,000 $ 45,937,500
- ---------------------------------------------------------------
108,062,500
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-1.71%
Consolidated Stores Corp.(a) 2,500,000 99,687,500
- ---------------------------------------------------------------
Dollar General Corp. 625,082 20,666,773
- ---------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 1,040,400 42,136,200
- ---------------------------------------------------------------
Men's Wearhouse, Inc.(The)(a)(b) 1,500,050 58,126,938
- ---------------------------------------------------------------
Ross Stores, Inc. 734,000 27,433,250
- ---------------------------------------------------------------
248,050,661
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.62%
CVS Corp. 200,000 12,262,500
- ---------------------------------------------------------------
Rite Aid Corp. 1,300,020 77,188,688
- ---------------------------------------------------------------
89,451,188
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-2.26%
American Stores Co. 3,000,000 77,062,500
- ---------------------------------------------------------------
Kroger Co.(a) 2,700,000 88,087,500
- ---------------------------------------------------------------
Quality Food Centers, Inc.(a) 1,000,000 47,625,000
- ---------------------------------------------------------------
Safeway, Inc.(a) 2,000,000 116,250,000
- ---------------------------------------------------------------
329,025,000
- ---------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.56%
Costco Companies, Inc.(a) 500,000 19,250,000
- ---------------------------------------------------------------
Dayton Hudson Corp. 1,000,000 62,812,500
- ---------------------------------------------------------------
82,062,500
- ---------------------------------------------------------------
RETAIL (HOME SHOPPING)-0.71%
CDW Computer Centers, Inc.(a)(b) 1,200,000 74,400,000
- ---------------------------------------------------------------
Micro Warehouse, Inc.(a)(b) 1,925,200 28,878,000
- ---------------------------------------------------------------
103,278,000
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-3.54%
AutoZone, Inc.(a) 518,700 15,334,069
- ---------------------------------------------------------------
Bed Bath & Beyond, Inc.(a) 1,250,000 39,687,500
- ---------------------------------------------------------------
Finish Line, Inc. (The)-Class
A(a) 250,000 4,218,750
- ---------------------------------------------------------------
General Nutrition Companies,
Inc.(a) 1,000,000 31,500,000
- ---------------------------------------------------------------
Hollywood Entertainment Corp.(a) 1,500,000 18,375,000
- ---------------------------------------------------------------
Inacom Corp.(a) 580,000 17,871,250
- ---------------------------------------------------------------
Michaels Stores, Inc.(a) 1,250,000 37,578,125
- ---------------------------------------------------------------
Office Depot, Inc.(a) 2,175,000 44,859,375
- ---------------------------------------------------------------
Petco Animal Supplies, Inc.(a)(b) 850,000 26,137,500
- ---------------------------------------------------------------
Polo Ralph Lauren Corp.(a) 800,000 20,800,000
- ---------------------------------------------------------------
Staples, Inc.(a) 3,500,000 91,875,000
- ---------------------------------------------------------------
Tiffany & Co. 1,000,000 39,500,000
- ---------------------------------------------------------------
Toys "R" Us, Inc.(a) 750,000 25,546,875
- ---------------------------------------------------------------
Viking Office Products, Inc.(a) 3,000,000 71,812,500
- ---------------------------------------------------------------
Williams-Sonoma, Inc.(a) 750,000 30,093,750
- ---------------------------------------------------------------
515,189,694
- ---------------------------------------------------------------
(SPECIALTY-APPAREL)-0.56%
Gap, Inc. 775,000 $ 41,220,312
- ---------------------------------------------------------------
TJX Companies, Inc. (The) 1,350,000 39,993,750
- ---------------------------------------------------------------
81,214,062
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.22%
Dime Bancorp, Inc. 250,000 6,000,000
- ---------------------------------------------------------------
TCF Financial Corp. 457,000 25,991,875
- ---------------------------------------------------------------
31,991,875
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.24%
Omnicom Group, Inc. 500,000 35,312,500
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.75%
Cerner Corp.(a)(b) 1,750,000 42,437,500
- ---------------------------------------------------------------
Cintas Corp. 100,000 7,225,000
- ---------------------------------------------------------------
Equity Corp. International(a) 400,000 8,150,000
- ---------------------------------------------------------------
HFS, Inc.(a) 500,000 35,250,000
- ---------------------------------------------------------------
Service Corp. International 3,500,000 106,531,250
- ---------------------------------------------------------------
Stewart Enterprises, Inc.-
Class A 1,300,000 53,950,000
- ---------------------------------------------------------------
253,543,750
- ---------------------------------------------------------------
SERVICES (COMPUTER & SYSTEMS)-0.45%
Cambridge Technology Partners,
Inc.(a) 470,400 17,169,600
- ---------------------------------------------------------------
Shared Medical Systems Corp. 410,000 22,447,500
- ---------------------------------------------------------------
SunGard Data Systems Inc.(a) 1,060,000 25,042,500
- ---------------------------------------------------------------
64,659,600
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-2.00%
Affiliated Computer Services,
Inc.(a) 1,000,000 25,125,000
- ---------------------------------------------------------------
BDM International Inc.(a) 361,500 7,998,188
- ---------------------------------------------------------------
BISYS Group, Inc. (The)(a) 463,200 14,417,100
- ---------------------------------------------------------------
CSG Systems International, Inc.(a) 703,100 27,552,731
- ---------------------------------------------------------------
DST Systems, Inc.(a) 1,000,000 35,312,500
- ---------------------------------------------------------------
Equifax, Inc. 500,000 15,531,250
- ---------------------------------------------------------------
First Data Corp. 400,000 11,625,000
- ---------------------------------------------------------------
Fiserv, Inc.(a) 1,250,000 55,937,500
- ---------------------------------------------------------------
National Data Corp. 750,000 27,703,125
- ---------------------------------------------------------------
Paychex, Inc. 1,300,000 49,562,500
- ---------------------------------------------------------------
PMT Services, Inc.(a) 1,250,000 20,156,250
- ---------------------------------------------------------------
290,921,144
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.20%
AccuStaff, Inc.(a) 1,000,000 28,562,500
- ---------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.21%
Corrections Corp. of America(a) 1,000,000 30,500,000
- ---------------------------------------------------------------
SPECIALTY PRINTING-0.38%
Gartner Group, Inc.(a) 1,150,000 32,487,500
- ---------------------------------------------------------------
Valassis Communications, Inc.(a) 750,000 22,125,000
- ---------------------------------------------------------------
54,612,500
- ---------------------------------------------------------------
</TABLE>
FS-60
<PAGE> 279
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-1.04%
Billing Information Concepts(a)(b) 780,000 $ 30,615,000
- ---------------------------------------------------------------
CIENA Corp.(a) 1,050,000 57,750,000
- ---------------------------------------------------------------
LCI International, Inc.(a) 2,000,000 51,750,000
- ---------------------------------------------------------------
USLD Communications Corp.(a) 570,300 11,299,068
- ---------------------------------------------------------------
151,414,068
- ---------------------------------------------------------------
TELEPHONE-0.23%
Cincinnati Bell, Inc. 1,250,000 33,750,000
- ---------------------------------------------------------------
TEXTILES (APPAREL)-1.75%
Jones Apparel Group, Inc.(a) 1,500,000 76,312,500
- ---------------------------------------------------------------
Liz Claiborne, Inc. 1,250,000 63,359,375
- ---------------------------------------------------------------
Nautica Enterprises, Inc.(a) 1,300,000 34,612,500
- ---------------------------------------------------------------
St. John Knits, Inc. 500,000 20,093,750
- ---------------------------------------------------------------
Tommy Hilfiger Corp.(a) 1,500,000 59,343,750
- ---------------------------------------------------------------
253,721,875
- ---------------------------------------------------------------
TEXTILES (SPECIALTY)-0.26%
Unifi, Inc. 1,000,000 38,437,500
- ---------------------------------------------------------------
TRUCKERS-0.11%
Caliber System, Inc. 300,200 15,647,925
- ---------------------------------------------------------------
TRUCKS & PARTS-0.07%
Wabash National Corp. 340,200 10,163,475
- ---------------------------------------------------------------
WASTE MANAGEMENT-1.06%
American Disposal Services,
Inc.(a) 500,000 17,625,000
- ---------------------------------------------------------------
Thermo Instrument Systems,
Inc.(a) 908,400 32,759,175
- ---------------------------------------------------------------
USA Waste Services, Inc.(a) 2,807,500 103,877,500
- ---------------------------------------------------------------
154,261,675
- ---------------------------------------------------------------
Total Domestic Common
Stocks 12,986,108,509
- ---------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS-0.08%
FINANCIAL (DIVERSIFIED)-0.08%
MGIC Investment Corp.-$3.12
Conv. Pfd. 116,500 11,883,000
- ---------------------------------------------------------------
CONVERTIBLE BONDS & PRINCIPAL
NOTES-0.37% AMOUNT
BROADCASTING (TELEVISION, RADIO & CABLE)-0.06%
Jacor Communications Inc.,
Conv. Sr. LYON, 5.50%,
06/12/11(b)(c) $ 14,450,000 8,849,614
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.17%
EMC Corp., Conv. Sub. Notes,
3.25%, 03/15/02 17,500,000 24,287,375
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-0.06%
Sandoz Capital BVI Ltd.
(Switzerland),
Sr. Conv. Deb., 2.00%,
10/06/02(d) (Acquired
11/04/96-11/13/96;
Cost $6,240,625) 5,540,000 8,143,800
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.08%
Loews Corp., Conv. Sub. Notes,
3.125%, 09/15/07 10,500,000 11,982,075
- ---------------------------------------------------------------
Total Convertible Bonds &
Notes 53,262,864
- ---------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-5.07%
CANADA-1.67%
Biovail Corporation
International (Health
Care-Drugs-Generic & Other)(a) 250,000 $ 7,218,750
- ---------------------------------------------------------------
CanWest Global Communications
Corp. (Broadcasting-Television,
Radio & Cable) 2,250,000 43,031,250
- ---------------------------------------------------------------
Newbridge Networks Corp.
(Computers-Networking)(a) 2,000,000 106,000,000
- ---------------------------------------------------------------
Newcourt Credit Group, Inc.
(Finance-Diversified) 257,800 8,974,663
- ---------------------------------------------------------------
Northern Telecom Ltd.
(Communications Equipment) 350,000 31,390,625
- ---------------------------------------------------------------
Precision Drilling Corp. (Oil &
Gas-Drilling & Equipment)(a) 1,500,000 46,125,000
- ---------------------------------------------------------------
242,740,288
- ---------------------------------------------------------------
FINLAND-0.70%
Nokia Oy A.B.-Class A-ADR
(Telecommunications-
Cellular/Wireless) 999,950 88,245,588
- ---------------------------------------------------------------
Nokia Oy A.B.-Class A
(Telecommunications-
Cellular/Wireless) 152,650 13,337,418
- ---------------------------------------------------------------
101,583,006
- ---------------------------------------------------------------
GERMANY-0.10%
Adidas A.G. (Footwear) 100,000 14,486,022
- ---------------------------------------------------------------
IRELAND-0.63%
CBT Group PLC-ADR
(Computers-Software &
Services)(a) 49,400 3,791,450
- ---------------------------------------------------------------
Elan Corp. PLC-ADR (Health
Care-Drugs-Generic & Other)(a) 1,750,000 87,281,250
- ---------------------------------------------------------------
91,072,700
- ---------------------------------------------------------------
ISRAEL-0.41%
ECI Telecommunications Ltd.
Designs (Communications
Equipment) 750,000 20,718,750
- ---------------------------------------------------------------
Tecnomatix Technologies Ltd.
(Computers-Software &
Services)(a)(b) 479,500 14,804,563
- ---------------------------------------------------------------
Teva Pharmaceutical Industries
Ltd.-ADR (Health
Care-Drugs-Generic & Other) 500,000 23,375,000
- ---------------------------------------------------------------
58,898,313
- ---------------------------------------------------------------
ITALY-0.05%
Telecom Italia Mobile S.p.A.
(Telecommunications-
Cellular/Wireless) 1,074,000 3,964,855
- ---------------------------------------------------------------
Telecom Italia S.p.A.
(Telephone) 596,666 3,732,246
- ---------------------------------------------------------------
7,697,101
- ---------------------------------------------------------------
</TABLE>
FS-61
<PAGE> 280
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NETHERLANDS-0.20%
ASM Lithography Holding N.V.
(Electronics-Semiconductors)(a) 300,000 $ 21,975,000
- ---------------------------------------------------------------
Verenigde Nederlandse
Uitgeversbedrijven Verenigd
Bezit (Publishing) 328,500 7,783,157
- ---------------------------------------------------------------
29,758,157
- ---------------------------------------------------------------
NORWAY-0.09%
Petroleum Geo-Services ASA-ADR
(Oil & Gas-Drilling &
Equipment)(a) 187,300 12,970,525
- ---------------------------------------------------------------
SWEDEN-0.52%
Telefonaktiebolaget LM
Ericsson-ADR (Communications
Equipment) 1,707,500 75,556,875
- ---------------------------------------------------------------
TAIWAN-0.10%
ASE Test Ltd.-ADR (Electronics-
Semiconductors)(a) 82,200 4,500,450
- ---------------------------------------------------------------
Taiwan Semiconductor
Manufacturing Co. Ltd.-ADR
(Electronics-Semiconductors)(a) 500,000 9,906,250
- ---------------------------------------------------------------
14,406,700
- ---------------------------------------------------------------
UNITED KINGDOM-0.60%
Danka Business Systems PLC-ADR
(Office Equipment & Supplies) 2,200,000 81,400,000
- ---------------------------------------------------------------
UNITED KINGDOM-(CONTINUED)
Granada Group PLC (Leisure
Time-Products) 390,000 $ 5,378,530
- ---------------------------------------------------------------
86,778,530
- ---------------------------------------------------------------
Total Foreign Stocks &
Other Equity Interests 735,948,217
- ---------------------------------------------------------------
U.S. TREASURY BILLS-2.43%(e)
5.093%, 01/02/98 $355,185,000(f) $ 352,350,624
- ---------------------------------------------------------------
COMMERCIAL PAPER-0.21%
Citibank, NA CP Trust, 5.715%,
12/26/97(g) 30,000,000 30,000,000
- ---------------------------------------------------------------
REPURCHASE AGREEMENT-1.67%(h)
Goldman Sachs & Co.(i) 242,843,032 242,843,032
- ---------------------------------------------------------------
TOTAL INVESTMENTS-99.20% 14,412,396,246
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.80% 116,662,726
- ---------------------------------------------------------------
NET ASSETS-100.00% $14,529,058,972
===============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Affiliated issuers are those in which the Fund's holdings of an Issuer
represent 5% or more of the outstanding voting securities of the issuer. The
Fund has never owned enough of the outstanding voting securities of any
issuer to have control (as defined in the Investment Company Act of 1940) of
that issuer. The aggregate market value of these securities as of 10/31/97
was $664,603,803 which represented 4.57% of the Fund's net assets.
(c) Zero coupon bond. The interest rate shown represents the rate of original
issue discount.
(d) 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 this security has been determined in
accordance with procedures established by the Board of Directors. The market
value of this security at 10/31/97 represented 0.06% of the Fund's net
assets.
(e) 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.
(f) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 8.
(g) Variable rate trust certificates representing an interest in a trust
(comprised of eligible debt obligations) entitling the Portfolio to receive
variable rate interest. The Fund has the right, upon seven calendar days'
notice to the trustee, to put its certificates to the trust at par value
plus accrued interest. Because variable rate trust certificates involve a
trust and a third party put feature, they involve complexities and potential
risks that may not be present where the debt obligation is owned directly.
Rate shown is the rate in effect on 10/31/97.
(h) 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, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(i) Joint repurchase agreement entered into 10/31/97 with a maturing value of
$500,239,583. Collateralized by $500,000,000 U.S. Government obligations,
5.63% to 9.50% due 02/01/00 to 08/01/36 with an aggregate market value at
10/31/97 of $510,000,000.
Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debentures
LYON - Liquid Yield Option Notes
Pfd. - Preferred
Sr. - Senior
Sub. - Subordinated
See Notes to Financial Statements.
FS-62
<PAGE> 281
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$10,410,065,063) $14,412,396,246
- ------------------------------------------------------------
Foreign currencies, at market value (cost
$43,837) 45,707
- ------------------------------------------------------------
Receivables for:
Investments sold 100,404,112
- ------------------------------------------------------------
Capital stock sold 106,931,262
- ------------------------------------------------------------
Dividends and interest 1,922,668
- ------------------------------------------------------------
Variation margin 7,210,500
- ------------------------------------------------------------
Investment for deferred compensation plan 100,105
- ------------------------------------------------------------
Other assets 55,235
- ------------------------------------------------------------
Total assets 14,629,065,835
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 56,413,158
- ------------------------------------------------------------
Capital stock reacquired 27,338,316
- ------------------------------------------------------------
Deferred compensation 100,105
- ------------------------------------------------------------
Accrued advisory fees 7,883,834
- ------------------------------------------------------------
Accrued administrative service fees 18,472
- ------------------------------------------------------------
Accrued directors' fees 24,640
- ------------------------------------------------------------
Accrued distribution fees 3,864,856
- ------------------------------------------------------------
Accrued transfer agent fees 2,384,261
- ------------------------------------------------------------
Accrued operating expenses 1,979,221
- ------------------------------------------------------------
Total liabilities 100,006,863
- ------------------------------------------------------------
Net assets applicable to shares outstanding $14,529,058,972
============================================================
NET ASSETS:
Class A $14,319,441,125
============================================================
Class C $ 21,508,420
============================================================
Institutional Class $ 188,109,427
============================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 489,907,670
============================================================
Class C:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 737,163
============================================================
Institutional Class:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 6,269,599
============================================================
CLASS A:
Net asset value and redemption price per
share $ 29.23
============================================================
Offering price per share:
(Net asset value of $29.23
divided by 94.50%) $ 30.93
============================================================
CLASS C:
Net asset value and offering price per
share $ 29.18
============================================================
INSTITUTIONAL CLASS:
Net asset value, offering and redemption
price per share $ 30.00
============================================================
<CAPTION>
STATEMENT OF OPERATIONS
For the year ended October 31, 1997
<S> <C>
INVESTMENT INCOME:
Dividends (net of $582,223 foreign
withholding tax) $ 32,008,695
- ------------------------------------------------------------
Interest 61,609,664
- ------------------------------------------------------------
Total investment income 93,618,359
- ------------------------------------------------------------
EXPENSES:
Advisory fees 82,922,239
- ------------------------------------------------------------
Administrative service fees 251,513
- ------------------------------------------------------------
Custodian fees 808,078
- ------------------------------------------------------------
Directors' fees 91,513
- ------------------------------------------------------------
Distribution fees-Class A 38,860,415
- ------------------------------------------------------------
Distribution fees-Class C 26,490
- ------------------------------------------------------------
Transfer agent fees-Class A 21,499,897
- ------------------------------------------------------------
Transfer agent fees-Class C 5,881
- ------------------------------------------------------------
Transfer agent fees-Institutional Class 24,455
- ------------------------------------------------------------
Other 3,850,511
- ------------------------------------------------------------
Total expenses 148,340,992
- ------------------------------------------------------------
Less: Fees waived by advisor (2,805,955)
- ------------------------------------------------------------
Expenses paid indirectly (290,066)
- ------------------------------------------------------------
Net expenses 145,244,971
- ------------------------------------------------------------
Net investment income (loss) (51,626,612)
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND FUTURES CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 851,008,605
- ------------------------------------------------------------
Foreign currencies (275,168)
- ------------------------------------------------------------
Futures contracts 195,426,592
- ------------------------------------------------------------
1,046,160,029
- ------------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 1,270,975,830
- ------------------------------------------------------------
Foreign currencies 1,294
- ------------------------------------------------------------
Futures contracts (36,703,480)
- ------------------------------------------------------------
1,234,273,644
- ------------------------------------------------------------
Net gain on investment securities,
foreign currencies and futures
contracts 2,280,433,673
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $2,228,807,061
============================================================
</TABLE>
See Notes to Financial Statements.
FS-63
<PAGE> 282
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (51,626,612) $ (25,042,610)
- -----------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities,
foreign currencies and futures contracts 1,046,160,029 394,119,929
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies and futures contracts 1,234,273,644 672,745,646
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,228,807,061 1,041,822,965
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (401,536,883) (233,242,373)
- -----------------------------------------------------------------------------------------------
Institutional Class (10,336,039) (4,789,469)
- -----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 1,280,740,251 3,470,281,071
- -----------------------------------------------------------------------------------------------
Class C 22,611,449 --
- -----------------------------------------------------------------------------------------------
Institutional Class (139,767,829) 135,200,711
- -----------------------------------------------------------------------------------------------
Net increase in net assets 2,980,518,010 4,409,272,905
- -----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 11,548,540,962 7,139,268,057
- -----------------------------------------------------------------------------------------------
End of period $14,529,058,972 $11,548,540,962
===============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 9,520,633,579 $ 8,408,805,783
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (270,243) (124,538)
- -----------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities, foreign currencies and futures contracts 1,022,762,877 388,200,602
- -----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 3,985,932,759 2,751,659,115
- -----------------------------------------------------------------------------------------------
$14,529,058,972 $11,548,540,962
===============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
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 six diversified portfolios:
AIM Constellation Fund, AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM
Capital Development Fund, AIM Charter Fund and AIM Weingarten Fund. The Fund
currently offers three different classes of shares: the Class A shares, the
Class C shares and the Institutional Class. Class C shares commenced sales on
August 4, 1997. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is to seek capital appreciation.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations--A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the 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 (including convertible bonds) are valued on the
basis of prices provided by an independent pricing service. Prices provided
by the pricing service may be determined without exclusive reliance on
quoted prices, and
FS-64
<PAGE> 283
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market quotations are not readily
available or are questionable are valued at fair value as determined in
good faith by or under the supervision of the 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 would not be reflected in
the computation of the Fund's net asset value. If events materially
affecting the value of such securities occur during such period, then these
securities will be valued at their fair market 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, 1997,
$275,168 was reclassified from undistributed net realized gains to
undistributed net investment income (loss) as a result of differing
book/tax treatments on foreign currency transactions. In addition,
$51,756,075 was reclassified from undistributed net investment income
(loss) to paid-in capital as a result of a net operating tax loss. The
reclassifications were made in order to comply with the requirements of the
American Institute of Certified Public Accountants Statement of Position
93-2. 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--Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated
between the classes.
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 foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract 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 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 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 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. Under the voluntary waiver, 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, 1997, AIM waived fees of $2,805,955. The waiver is entirely
voluntary but approval is required by the Board of Directors for 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.
FS-65
<PAGE> 284
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, 1997, AIM was
reimbursed $251,513 for such services.
The Fund, pursuant to a transfer agent 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 C shares. During the
year ended October 31, 1997, AFS was reimbursed $10,499,779 for such services.
The Fund, pursuant to a transfer agent and service agreement, has agreed to
pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing
transfer agent and shareholder services to the Fund. During the year ended
October 31, 1997, the Portfolio paid AIFS $24,455 for such services. On
September 19, 1997, the Board of Directors of the Fund approved the appointment
of AFS as transfer agent of the Fund to be effective in late 1997 or early 1998.
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 C shares and a master distribution agreement with Fund
Management Company ("FMC") to serve as the distributor for the Institutional
Class. The Company has adopted distribution plans pursuant to Rule 12b-1 under
the 1940 Act with respect to the Fund's Class A shares (the "Class A Plan") and
the Fund's Class C shares (the "Class C Plan") (collectively, the "Plan"). The
Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual
rate of 0.30% of the average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class C shares. The Plan is designed to compensate
AIM Distributors 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 Class A or Class C shares of the Fund. 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 and Class C shares.
During the year ended October 31, 1997 for the Class A shares and the period
August 4, 1997 (date sales commenced) through October 31, 1997, the Class C
shares, paid AIM Distributors $38,860,415 and $26,490, respectively as
compensation under the Plan.
AIM Distributors received commissions of $10,566,898 from sales of the Class A
shares of the Fund during the year ended October 31, 1997. 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, 1997,
AIM Distributors received commissions of $253,473 in contingent deferred sales
charges imposed on the redemptions of Fund 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, 1997, the Fund paid legal fees of $34,413
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund which reduced Fund
expenses by $49,686 during the year ended October 31, 1997. The Fund also
received reductions in transfer agency fees from AFS (an affiliate of AIM) and
reductions in custodian fees of $70,375 and $170,005, respectively, under
expense offset arrangements. The effect of the above arrangements resulted in a
reduction of the Fund's total expenses of $290,066 during the year ended October
31, 1997.
NOTE 4-DIRECTOR'S 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.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lessor of (i) $325,000,000 or (ii) the limit set
by its prospectus for borrowings. During the year ended October 31, 1997, the
Fund did not borrow under the line of credit agreement. The funds which are
party to the line of credit are charged a commitment fee of 0.05% on the unused
balance of the committed line. The commitment fee is allocated among the funds
based on their respective average net assets for the period.
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, 1997 was
$9,490,517,179 and $8,083,184,229, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1997, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $4,320,251,644
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (333,338,001)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $3,986,913,643
==========================================================
</TABLE>
Cost of investments for tax purposes is $10,425,482,603.
FS-66
<PAGE> 285
NOTE 7-CAPITAL STOCK
Changes in the capital stock outstanding for the years ended October 31, 1997
and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 211,624,665 $ 5,717,830,615 282,903,859 $ 6,791,107,589
- -----------------------------------------------------------------------------------------------------------------------------
Class C* 745,655 22,872,597 -- --
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Class 5,274,034 141,917,489 7,711,696 189,568,037
- -----------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 15,529,296 381,406,093 10,007,849 218,670,843
- -----------------------------------------------------------------------------------------------------------------------------
Class C* -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Class 387,258 9,720,186 200,095 4,444,113
- -----------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (178,999,514) (4,818,496,457) (146,642,433) (3,539,497,361)
- -----------------------------------------------------------------------------------------------------------------------------
Class C* (8,492) (261,148) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Class (10,657,023) (291,405,504) (2,422,264) (58,811,439)
- -----------------------------------------------------------------------------------------------------------------------------
43,895,879 $ 1,163,583,871 151,758,802 $ 3,605,481,782
=============================================================================================================================
</TABLE>
*Class C Shares commenced sales on August 4, 1997.
NOTE 8-OPEN FUTURES CONTRACTS
On October 31, 1997, $13,341,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open future
contracts. Open futures contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF MONTH/ APPRECIATION
CONTRACT CONTRACTS COMMITMENT (DEPRECIATION)
-------- --------- ---------- --------------
<S> <C> <C> <C>
S&P 500 Index............................................... 690 Dec. '97 $(16,400,635)
</TABLE>
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during each of the years in the five-year period ended October 31,
1997 and for a share of Class C capital stock outstanding during the period
August 4, 1997 (date sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
CLASS A: ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.48 $ 23.69 $ 18.31 $ 17.04 $ 13.25
- ------------------------------------------------------ ----------- ----------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) (0.11) (0.06) (0.05) (0.02) (0.04)
- ------------------------------------------------------ ----------- ----------- ---------- ---------- ----------
Net gains on securities (both realized
and unrealized) 4.75 2.60 5.95 1.29 3.83
- ------------------------------------------------------ ----------- ----------- ---------- ---------- ----------
Total from investment operations 4.64 2.54 5.90 1.27 3.79
- ------------------------------------------------------ ----------- ----------- ---------- ---------- ----------
Less distributions:
Distributions from net realized gains (0.89) (0.75) (0.52) -- --
- ------------------------------------------------------ ----------- ----------- ---------- ---------- ----------
Total distributions (0.89) (0.75) (0.52) -- --
- ------------------------------------------------------ ----------- ----------- ---------- ---------- ----------
Net asset value, end of period $ 29.23 $ 25.48 $ 23.69 $ 18.31 $ 17.04
====================================================== =========== =========== ========== ========== ==========
Total return(a) 18.86% 11.26% 33.43% 7.45% 28.60%
====================================================== =========== =========== ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $14,319,441 $11,255,506 $7,000,350 $3,726,029 $2,756,497
====================================================== =========== =========== ========== ========== ==========
Ratio of expenses to average net assets(b) 1.11%(c)(d) 1.14% 1.16% 1.20% 1.22%
====================================================== =========== =========== ========== ========== ==========
Ratio of net investment income (loss) to average net
assets(e) (0.40)%(c) (0.27)% (0.32)% (0.15)% (0.31)%
====================================================== =========== =========== ========== ========== ==========
Portfolio turnover rate 67% 58% 45% 79% 70%
====================================================== =========== =========== ========== ========== ==========
Average brokerage commission rate paid(f) $ 0.0576 $ 0.0596 N/A N/A N/A
====================================================== =========== =========== ========== ========== ==========
</TABLE>
(a) Does not deduct sales charges.
(b) After fee waivers and/or expense reimbursements. Ratios of
expenses to average net assets prior to fee waivers and/or
expense reimbursements were 1.13%, 1.16%, 1.18% and 1.21%
for the periods 1997-1994, respectively.
(c) Ratios are based on average net assets of $12,953,471,546.
(d) Ratio includes expenses paid indirectly. Excluding expenses
paid indirectly, the ratio of expenses to average net assets
would have remained the same.
(e) After fee waivers and/or expense reimbursements. Ratios of
net investment income (loss) to average net assets prior to
fee waivers and/or expense reimbursement were (0.42)%,
(0.29)%, (0.34)% and (0.16)% for the periods 1997-1994,
respectively.
(f) The average commission rate paid is the total brokerage
commissions paid on applicable purchases and sales of
securities for the period divided by the total number of
related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and
thereafter.
FS-67
<PAGE> 286
<TABLE>
<CAPTION>
1997
CLASS C: ----------
<S> <C>
Net asset value, beginning of period $ 30.32
- ------------------------------------------------------------ --------
Income from investment operations:
Net investment income (loss) (0.04)
- ------------------------------------------------------------ --------
Net gains (losses) on securities (both realized and
unrealized) (1.10)
- ------------------------------------------------------------ --------
Total from investment operations (1.14)
============================================================ ========
Net asset value, end of period $ 29.18
============================================================ ========
Total return(a) (3.76)%
============================================================ ========
Ratios/supplement data:
Net assets, end of period (000s omitted) $ 21,508
============================================================ ========
Ratio of expenses to average net assets(b) 1.83%(c)(d)
============================================================ ========
Ratio of net investment income (loss) to average net
assets(e) (1.12)%(c)
============================================================ ========
Portfolio turnover rate 67%
============================================================ ========
Average brokerage commission rate paid(f) $ 0.0576
============================================================ ========
</TABLE>
(a) Does not deduct sales charges and for periods less than one year,
total returns are not annualized.
(b) After fee waivers and/or expense reimbursements. Ratio of expenses
to average net assets prior to fee waivers and/or expense
reimbursements was 1.86% (annualized).
(c) Ratios are annualized and based on average net assets of
$10,863,777.
(d) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have
been 1.84% (annualized).
(e) After fee waivers and/or expense reimbursements. Ratio of net
investment income (loss) to average net assets prior to fee waivers
and/or expense reimbursements was (1.15)% (annualized).
(f) The average commission rate paid is the total brokerage commissions
paid on applicable purchases and sales of securities for the period
divided by the total number of related shares purchased and sold,
which is required to be disclosed for fiscal years beginning
September 1, 1995 and thereafter.
FS-68
<PAGE> 287
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, 1997, 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 or periods in the
five-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, 1997, 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, 1997, 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 or periods in the five-year period then
ended.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
FS-69
<PAGE> 288
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-84.72%
AEROSPACE/DEFENSE-0.06%
Coltec Industries, Inc.(a) 183,600 $ 3,672,000
- ---------------------------------------------------------------
AGRICULTURAL PRODUCTS-0.70%
DIMON, Inc. 675,000 17,507,813
- ---------------------------------------------------------------
Universal Corp. 700,000 26,906,250
- ---------------------------------------------------------------
44,414,063
- ---------------------------------------------------------------
AIR FREIGHT-0.26%
CNF Transportation Inc. 375,000 16,734,375
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.13%
Federal-Mogul Corp. 11,300 478,131
- ---------------------------------------------------------------
MascoTech, Inc. 416,400 7,911,600
- ---------------------------------------------------------------
8,389,731
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-1.05%
First Union Corp. 700,000 34,343,750
- ---------------------------------------------------------------
NationsBank Corp. 550,000 32,931,250
- ---------------------------------------------------------------
67,275,000
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-2.62%
BankAmerica Corp. 650,000 46,475,000
- ---------------------------------------------------------------
Chase Manhattan Corp. 800,000 92,300,000
- ---------------------------------------------------------------
Citicorp 225,000 28,139,063
- ---------------------------------------------------------------
166,914,063
- ---------------------------------------------------------------
BANKS (REGIONAL)-0.06%
North Fork Bancorporation, Inc. 121,500 3,576,656
- ---------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-0.29%
PepsiCo, Inc. 500,000 18,406,250
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-0.44%
Chancellor Media Corp.(a) 200,000 10,975,000
- ---------------------------------------------------------------
Jacor Communications, Inc.(a) 400,000 16,750,000
- ---------------------------------------------------------------
27,725,000
- ---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.46%
Crompton & Knowles Corp. 400,000 10,100,000
- ---------------------------------------------------------------
Cytec Industries Inc.(a) 25,000 1,218,750
- ---------------------------------------------------------------
Millennium Chemicals Inc. 750,000 17,625,000
- ---------------------------------------------------------------
28,943,750
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-1.37%
Lucent Technologies, Inc.(b) 600,000 49,462,500
- ---------------------------------------------------------------
Tellabs, Inc.(a) 700,000 37,800,000
- ---------------------------------------------------------------
87,262,500
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-2.81%
Compaq Computer Corp. 1,000,000 $ 63,750,000
- ---------------------------------------------------------------
Dell Computer Corp.(a) 300,000 24,037,500
- ---------------------------------------------------------------
Digital Equipment Corp.(a) 350,000 17,521,875
- ---------------------------------------------------------------
International Business Machines
Corp. 750,000 73,546,875
- ---------------------------------------------------------------
178,856,250
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-0.97%
Bay Networks, Inc.(a) 1,000,000 31,625,000
- ---------------------------------------------------------------
Cisco Systems, Inc.(a) 365,100 29,949,609
- ---------------------------------------------------------------
61,574,609
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.89%
Adaptec, Inc.(a) 700,000 33,906,250
- ---------------------------------------------------------------
EMC Corp.(a) 400,000 22,400,000
- ---------------------------------------------------------------
56,306,250
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-3.68%
America Online, Inc.(a) 100,000 7,700,000
- ---------------------------------------------------------------
BMC Software, Inc.(a) 290,000 17,508,750
- ---------------------------------------------------------------
Cadence Design Systems, Inc.(a) 300,000 15,975,000
- ---------------------------------------------------------------
Computer Associates
International, Inc. 550,000 41,009,375
- ---------------------------------------------------------------
Computer Sciences Corp.(a) 161,400 11,449,313
- ---------------------------------------------------------------
Compuware Corp.(a) 500,000 33,062,500
- ---------------------------------------------------------------
HBO & Co. 600,000 26,100,000
- ---------------------------------------------------------------
Microsoft Corp.(a) 500,000 65,000,000
- ---------------------------------------------------------------
Unisys Corp.(a) 1,200,000 15,975,000
- ---------------------------------------------------------------
233,779,938
- ---------------------------------------------------------------
CONSUMER FINANCE-2.87%
ContiFinancial Corp.(a) 333,200 9,475,375
- ---------------------------------------------------------------
FIRSTPLUS Financial Group,
Inc.(a) 600,000 33,000,000
- ---------------------------------------------------------------
Green Tree Financial Corp. 725,000 30,540,625
- ---------------------------------------------------------------
Household International, Inc. 300,000 33,975,000
- ---------------------------------------------------------------
Money Store, Inc. 435,200 12,348,800
- ---------------------------------------------------------------
SLM Holding Corp. 450,000 63,168,750
- ---------------------------------------------------------------
182,508,550
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-1.14%
AmeriSource Health Corp.-Class A(a) 575,000 34,140,625
- ---------------------------------------------------------------
Cardinal Health, Inc. 250,000 18,562,500
- ---------------------------------------------------------------
Sysco Corp. 500,000 20,000,000
- ---------------------------------------------------------------
72,703,125
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.57%
American Power Conversion
Corp.(a) 600,000 16,350,000
- ---------------------------------------------------------------
General Electric Co. 1,224,400 79,050,325
- ---------------------------------------------------------------
Honeywell, Inc. 200,000 13,612,500
- ---------------------------------------------------------------
</TABLE>
FS-70
<PAGE> 289
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT-(CONTINUED)
SCI Systems, Inc.(a) 185,200 $ 8,148,800
- ---------------------------------------------------------------
Solectron Corp.(a) 560,400 21,995,700
- ---------------------------------------------------------------
Symbol Technologies, Inc. 610,300 24,259,425
- ---------------------------------------------------------------
163,416,750
- ---------------------------------------------------------------
ELECTRONICS
(INSTRUMENTATION)-0.83%
Perkin-Elmer Corp. 300,000 18,750,000
- ---------------------------------------------------------------
Waters Corp.(a) 775,000 34,100,000
- ---------------------------------------------------------------
52,850,000
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-2.76%
Analog Devices, Inc.(a) 425,000 12,989,063
- ---------------------------------------------------------------
Intel Corp. 625,000 48,125,000
- ---------------------------------------------------------------
Linear Technology Corp. 300,000 18,862,500
- ---------------------------------------------------------------
Maxim Integrated Products,
Inc.(a) 275,000 18,218,750
- ---------------------------------------------------------------
National Semiconductor Corp.(a) 550,000 19,800,000
- ---------------------------------------------------------------
Texas Instruments, Inc. 400,000 42,675,000
- ---------------------------------------------------------------
VLSI Technology, Inc.(a) 500,000 14,812,500
- ---------------------------------------------------------------
175,482,813
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-1.10%
Applied Materials, Inc.(a) 1,000,000 33,375,000
- ---------------------------------------------------------------
KLA-Tencor Corp.(a) 350,000 15,378,125
- ---------------------------------------------------------------
Teradyne, Inc.(a) 570,900 21,373,069
- ---------------------------------------------------------------
70,126,194
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-2.80%
American Express Co. 400,000 31,200,000
- ---------------------------------------------------------------
Amresco, Inc.(a) 500,000 15,687,500
- ---------------------------------------------------------------
Federal Home Loan Mortgage Corp. 875,000 33,140,625
- ---------------------------------------------------------------
Federal National Mortgage
Association 775,000 37,539,063
- ---------------------------------------------------------------
MBIA, Inc. 348,400 20,816,900
- ---------------------------------------------------------------
MGIC Investment Corp. 400,000 24,125,000
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover &
Co. 280,900 13,764,100
- ---------------------------------------------------------------
SunAmerica, Inc. 50,100 1,800,469
- ---------------------------------------------------------------
178,073,657
- ---------------------------------------------------------------
FOODS-0.85%
ConAgra, Inc. 450,000 13,556,250
- ---------------------------------------------------------------
Dean Foods Co. 529,300 25,042,506
- ---------------------------------------------------------------
Sara Lee Corp. 300,000 15,337,500
- ---------------------------------------------------------------
53,936,256
- ---------------------------------------------------------------
FOOTWEAR-0.17%
Wolverine World Wide, Inc. 500,000 11,000,000
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-3.35%
Abbott Laboratories 326,100 19,994,006
- ---------------------------------------------------------------
American Home Products Corp. 500,000 37,062,500
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 594,000 52,123,500
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-(CONTINUED)
Johnson & Johnson 711,300 $ 40,810,838
- ---------------------------------------------------------------
Warner-Lambert Co. 441,700 63,245,919
- ---------------------------------------------------------------
213,236,763
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.68%
Dura Pharmaceuticals, Inc.(a) 395,800 19,146,825
- ---------------------------------------------------------------
ICN Pharmaceuticals, Inc. 900,000 43,312,500
- ---------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 1,400,000 44,450,000
- ---------------------------------------------------------------
106,909,325
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-2.46%
Lilly (Eli) & Co. 450,000 30,093,750
- ---------------------------------------------------------------
Merck & Co., Inc. 750,000 66,937,500
- ---------------------------------------------------------------
Pfizer, Inc. 366,500 25,929,875
- ---------------------------------------------------------------
Schering-Plough Corp. 600,000 33,637,500
- ---------------------------------------------------------------
156,598,625
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.74%
Quorum Health Group, Inc.(a) 937,500 22,734,375
- ---------------------------------------------------------------
Tenet Healthcare Corp.(a) 386,300 11,806,294
- ---------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 290,600 12,804,563
- ---------------------------------------------------------------
47,345,232
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM
CARE)-0.82%
Health Care and Retirement
Corp.(a) 222,350 8,407,609
- ---------------------------------------------------------------
HEALTHSOUTH Corp.(a) 1,200,000 30,675,000
- ---------------------------------------------------------------
NovaCare, Inc.(a) 1,000,000 13,062,500
- ---------------------------------------------------------------
52,145,109
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.29%
MedPartners, Inc.(a) 725,000 18,442,188
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-3.25%
Arterial Vascular Engineering,
Inc.(a) 350,000 18,593,750
- ---------------------------------------------------------------
Baxter International Inc. 643,700 29,771,125
- ---------------------------------------------------------------
Becton, Dickinson & Co. 1,000,000 46,062,500
- ---------------------------------------------------------------
Boston Scientific Corp.(a) 250,000 11,375,000
- ---------------------------------------------------------------
DePuy, Inc.(a) 577,800 14,806,125
- ---------------------------------------------------------------
Guidant Corp. 400,000 23,000,000
- ---------------------------------------------------------------
Stryker Corp. 875,000 32,539,063
- ---------------------------------------------------------------
Sybron International Corp.(a) 757,500 30,394,688
- ---------------------------------------------------------------
206,542,251
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.07%
Physician Support Systems,
Inc.(a) 309,200 4,753,950
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE &
APPLIANCES-0.41%
Furniture Brands International,
Inc.(a) 559,900 9,378,325
- ---------------------------------------------------------------
Maytag Corp. 502,700 16,777,613
- ---------------------------------------------------------------
26,155,938
- ---------------------------------------------------------------
</TABLE>
FS-71
<PAGE> 290
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.72%
Dial Corp. 1,000,000 $ 16,875,000
- ---------------------------------------------------------------
Procter & Gamble Co. (The) 430,000 29,240,000
- ---------------------------------------------------------------
46,115,000
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.45%
AFLAC Inc. 224,700 11,431,613
- ---------------------------------------------------------------
Conseco Inc. 425,000 18,540,625
- ---------------------------------------------------------------
Equitable Companies, Inc. 800,000 32,950,000
- ---------------------------------------------------------------
Nationwide Financial Services, Inc.-
Class A 600,000 18,262,500
- ---------------------------------------------------------------
Torchmark Corp. 271,600 10,830,050
- ---------------------------------------------------------------
92,014,788
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-1.74%
Ace, Ltd. 400,000 37,175,000
- ---------------------------------------------------------------
Allmerica Financial Corp. 50,800 2,381,250
- ---------------------------------------------------------------
American International Group,
Inc. 352,600 35,987,238
- ---------------------------------------------------------------
Travelers Group, Inc. 500,000 35,000,000
- ---------------------------------------------------------------
110,543,488
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-1.91%
Allstate Corp. 565,300 46,884,569
- ---------------------------------------------------------------
Everest Re Holdings, Inc. 925,000 34,803,125
- ---------------------------------------------------------------
Exel Ltd. 353,800 21,382,788
- ---------------------------------------------------------------
Fremont General Corp. 400,000 18,650,000
- ---------------------------------------------------------------
121,720,482
- ---------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-0.53%
Merrill Lynch & Co., Inc. 213,000 14,404,125
- ---------------------------------------------------------------
Salomon, Inc. 250,000 19,421,875
- ---------------------------------------------------------------
33,826,000
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-1.07%
Franklin Resources, Inc. 388,800 34,943,400
- ---------------------------------------------------------------
T. Rowe Price Associates 500,000 33,125,000
- ---------------------------------------------------------------
68,068,400
- ---------------------------------------------------------------
LODGING-HOTELS-1.92%
Carnival Corp.-Class A 800,000 38,800,000
- ---------------------------------------------------------------
Doubletree Corp.(a) 203,600 8,474,850
- ---------------------------------------------------------------
Host Marriott Corp.(a) 208,500 4,352,438
- ---------------------------------------------------------------
ITT Corp. 350,000 26,140,625
- ---------------------------------------------------------------
Marriott International, Inc. 250,000 17,437,500
- ---------------------------------------------------------------
Patriot American Hospitality,
Inc. 630,000 20,790,000
- ---------------------------------------------------------------
Promus Hotel Corp.(a) 150,000 5,887,500
- ---------------------------------------------------------------
121,882,913
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-1.44%
Caterpillar Inc. 350,000 17,937,500
- ---------------------------------------------------------------
Deere & Co. 550,000 28,943,750
- ---------------------------------------------------------------
Dover Corp. 376,200 25,393,500
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-(CONTINUED)
Ingersoll-Rand Co. 501,150 $ 19,513,528
- ---------------------------------------------------------------
91,788,278
- ---------------------------------------------------------------
MANUFACTURING
(DIVERSIFIED)-2.37%
AlliedSignal Inc. 275,000 9,900,000
- ---------------------------------------------------------------
Carlisle Companies, Inc. 87,800 3,797,350
- ---------------------------------------------------------------
Crane Co. 161,500 6,712,344
- ---------------------------------------------------------------
Eaton Corp. 175,000 16,909,375
- ---------------------------------------------------------------
Thermo Electron Corp.(a) 1,250,000 46,640,625
- ---------------------------------------------------------------
Tyco International Ltd. 800,000 30,200,000
- ---------------------------------------------------------------
U.S. Industries, Inc. 577,500 15,520,313
- ---------------------------------------------------------------
United Technologies Corp. 300,000 21,000,000
- ---------------------------------------------------------------
150,680,007
- ---------------------------------------------------------------
MANUFACTURING
(SPECIALIZED)-0.50%
Diebold, Inc. 450,150 19,834,734
- ---------------------------------------------------------------
U.S. Filter Corp.(a) 300,000 12,037,500
- ---------------------------------------------------------------
31,872,234
- ---------------------------------------------------------------
NATURAL GAS-0.13%
Coastal Corp. 132,700 7,978,587
- ---------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-0.48%
Exxon Corp. 500,000 30,718,750
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-2.84%
BJ Services Co.(a) 275,000 23,306,250
- ---------------------------------------------------------------
Cooper Cameron Corp.(a) 190,600 13,770,850
- ---------------------------------------------------------------
Halliburton Co. 800,000 47,700,000
- ---------------------------------------------------------------
Nabors Industries, Inc.(a) 1,075,000 44,209,375
- ---------------------------------------------------------------
Newpark Resources, Inc.(a) 198,400 8,233,600
- ---------------------------------------------------------------
Santa Fe International Corp. 176,800 8,696,350
- ---------------------------------------------------------------
Schlumberger Ltd. 400,000 35,000,000
- ---------------------------------------------------------------
180,916,425
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.43%
Bowater, Inc. 650,000 27,178,125
- ---------------------------------------------------------------
PERSONAL CARE-1.17%
Avon Products, Inc. 597,000 39,103,500
- ---------------------------------------------------------------
Gillette Co. 400,000 35,625,000
- ---------------------------------------------------------------
74,728,500
- ---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.74%
Xerox Corp. 589,900 46,786,444
- ---------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-0.31%
AES Corp.(a) 500,000 19,812,500
- ---------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.53%
Gannett Co., Inc. 300,000 15,768,750
- ---------------------------------------------------------------
</TABLE>
FS-72
<PAGE> 291
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PUBLISHING (NEWSPAPERS)-(CONTINUED)
New York Times Co.-Class A 325,000 $ 17,793,750
- ---------------------------------------------------------------
33,562,500
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUST-0.52%
Starwood Lodging Trust 550,000 32,896,875
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.33%
Home Depot, Inc. 375,000 20,859,375
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.77%
CompUSA, Inc.(a) 981,200 32,134,300
- ---------------------------------------------------------------
Ingram Micro, Inc.-Class A(a) 1,200,000 35,775,000
- ---------------------------------------------------------------
Tech Data Corp.(a) 1,000,000 44,500,000
- ---------------------------------------------------------------
112,409,300
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-1.50%
Federated Department Stores,
Inc.(a) 375,000 16,500,000
- ---------------------------------------------------------------
Fred Meyer, Inc.(a) 1,000,000 28,562,500
- ---------------------------------------------------------------
J.C. Penney Co., Inc. 300,000 17,606,250
- ---------------------------------------------------------------
Proffitt's, Inc.(a) 1,150,000 32,990,625
- ---------------------------------------------------------------
95,659,375
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.87%
Consolidated Stores Corp.(a) 618,125 24,647,734
- ---------------------------------------------------------------
Family Dollar Stores, Inc. 466,200 10,955,700
- ---------------------------------------------------------------
Ross Stores, Inc. 525,000 19,621,875
- ---------------------------------------------------------------
55,225,309
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.70%
CVS Corp. 450,000 27,590,625
- ---------------------------------------------------------------
Rite Aid Corp. 290,000 17,218,750
- ---------------------------------------------------------------
44,809,375
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.49%
Kroger Co.(a) 1,125,000 36,703,125
- ---------------------------------------------------------------
Safeway, Inc.(a) 1,000,000 58,125,000
- ---------------------------------------------------------------
94,828,125
- ---------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-1.42%
Costco Companies, Inc.(a) 1,100,000 42,350,000
- ---------------------------------------------------------------
Dayton Hudson Corp. 425,000 26,695,313
- ---------------------------------------------------------------
Wal-Mart Stores, Inc. 601,800 21,138,225
- ---------------------------------------------------------------
90,183,538
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-1.18%
Barnes & Noble, Inc.(a) 138,600 3,542,962
- ---------------------------------------------------------------
Bed Bath & Beyond, Inc.(a) 475,000 15,081,250
- ---------------------------------------------------------------
Office Depot, Inc.(a) 1,370,700 28,270,687
- ---------------------------------------------------------------
Payless ShoeSource, Inc.(a) 217,500 12,125,625
- ---------------------------------------------------------------
Toys "R" Us, Inc.(a) 475,000 16,179,687
- ---------------------------------------------------------------
75,200,211
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.39%
Intimate Brands, Inc. 254,700 $ 5,444,212
- ---------------------------------------------------------------
TJX Companies, Inc. (The) 650,000 19,256,250
- ---------------------------------------------------------------
24,700,462
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-1.44%
Ahmanson (H.F.) & Co. 800,000 47,200,000
- ---------------------------------------------------------------
Charter One Financial, Inc. 246,885 14,350,190
- ---------------------------------------------------------------
Washington Mutual, Inc. 440,000 30,112,500
- ---------------------------------------------------------------
91,662,690
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.68%
Interpublic Group of Companies,
Inc. 412,500 19,593,750
- ---------------------------------------------------------------
Outdoor Systems, Inc.(a) 405,100 12,456,825
- ---------------------------------------------------------------
Universal Outdoor Holdings,
Inc.(a) 269,000 11,365,250
- ---------------------------------------------------------------
43,415,825
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-2.14%
HFS, Inc.(a) 725,000 51,112,500
- ---------------------------------------------------------------
Service Corp. International 2,795,700 85,094,118
- ---------------------------------------------------------------
136,206,618
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.64%
Equifax, Inc. 1,789,800 55,595,662
- ---------------------------------------------------------------
First Data Corp. 400,000 11,625,000
- ---------------------------------------------------------------
Fiserv, Inc.(a) 482,100 21,573,975
- ---------------------------------------------------------------
National Data Corp. 425,000 15,698,438
- ---------------------------------------------------------------
104,493,075
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.37%
AccuStaff, Inc.(a) 761,200 21,741,775
- ---------------------------------------------------------------
Kelly Services, Inc.-Class A 46,900 1,664,950
- ---------------------------------------------------------------
23,406,725
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.50%
CIENA Corp.(a) 375,000 20,625,000
- ---------------------------------------------------------------
MCI Communications Corp. 500,000 17,750,000
- ---------------------------------------------------------------
WorldCom, Inc.(a) 1,690,800 56,853,150
- ---------------------------------------------------------------
95,228,150
- ---------------------------------------------------------------
TELEPHONE-0.55%
Bell Atlantic Corp. 233,300 18,634,837
- ---------------------------------------------------------------
Cincinnati Bell, Inc. 600,000 16,200,000
- ---------------------------------------------------------------
34,834,837
- ---------------------------------------------------------------
TEXTILES (APPAREL)-0.16%
Jones Apparel Group, Inc.(a) 200,000 10,175,000
- ---------------------------------------------------------------
TOBACCO-0.53%
Philip Morris Companies, Inc. 849,900 33,677,288
- ---------------------------------------------------------------
TRUCKERS-0.33%
Caliber System, Inc. 400,000 20,850,000
- ---------------------------------------------------------------
</TABLE>
FS-73
<PAGE> 292
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WASTE MANAGEMENT-0.98%
Browning-Ferris Industries, Inc. 1,000,000 $ 32,500,000
- ---------------------------------------------------------------
USA Waste Services, Inc.(a) 800,000 29,600,000
- ---------------------------------------------------------------
62,100,000
- ---------------------------------------------------------------
Total Domestic Common Stocks 5,389,072,735
- ---------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS-1.38%
FINANCIAL (DIVERSIFIED)-1.06%
MGIC Investment Corp.-$3.12
Conv. Pfd. 400,000 40,800,000
- ---------------------------------------------------------------
SunAmerica, Inc.-Series E, $3.10
Dep. Conv. Pfd. 228,800 26,655,200
- ---------------------------------------------------------------
67,455,200
- ---------------------------------------------------------------
LODGING-HOTELS-0.32%
Host Marriott Corp., $3.375
Conv. Pfd. 310,800 20,318,550
- ---------------------------------------------------------------
Total Domestic Convertible
Preferred Stocks 87,773,750
- ---------------------------------------------------------------
DOMESTIC CONVERTIBLE BONDS & NOTES-0.74%
ELECTRICAL EQUIPMENT-0.64%
SCI Systems, Inc., Conv. Sub. Notes, 5.00%,
05/01/06
(acquired 10/31/96-12/06/96; cost
$27,581,905)(c)
$22,050,000 40,709,371
- ---------------------------------------------------------------
MANUFACTURING
(SPECIALIZED)-0.10%
U.S. Filter Corp., Conv. Sub.
Notes, 6.00%, 09/15/05 2,700,000 6,005,205
- ---------------------------------------------------------------
Total Domestic Convertible
Bonds & Notes 46,714,576
- ---------------------------------------------------------------
U.S. DOLLAR DENOMINATED FOREIGN
BONDS & NOTES-0.39%
SWITZERLAND-0.39%
Sandoz Capital BVI Ltd.
(Financial-Diversified),
Sr. Conv. Deb., 2.00%, 10/06/02
(acquired 11/01/96-11/05/96;
cost $18,721,100)(c) 17,000,000 24,990,000
- ---------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-8.99%
CANADA-1.25%
Newbridge Networks Corp.
(Computers-Networking)(a) 220,000 11,660,000
- ---------------------------------------------------------------
Northern Telecom Ltd.
(Communications Equipment) 325,000 29,148,438
- ---------------------------------------------------------------
Philip Services Corp. (Waste
Management)(a) 2,200,000 38,500,000
- ---------------------------------------------------------------
79,308,438
- ---------------------------------------------------------------
FINLAND-0.33%
Nokia Oy A.B.-Class A-ADR
(Communications Equipment) 240,000 21,180,000
- ---------------------------------------------------------------
FRANCE-1.81%
Banque Nationale de Paris
(Banks-Major Regional) 670,000 $ 29,619,035
- ---------------------------------------------------------------
Elf Aquitaine S.A. (Oil &
Gas-Refining & Marketing) 285,000 35,277,597
- ---------------------------------------------------------------
Renault S.A. (Automobiles)(a) 600,000 16,694,838
- ---------------------------------------------------------------
Societe Generale (Banks-Major
Regional) 245,000 33,554,370
- ---------------------------------------------------------------
115,145,840
- ---------------------------------------------------------------
GERMANY-0.32%
Adidas A.G. (Footwear) 78,800 11,414,985
- ---------------------------------------------------------------
VEBA A.G.
(Manufacturing-Diversified) 158,000 8,815,746
- ---------------------------------------------------------------
20,230,731
- ---------------------------------------------------------------
HONG KONG-0.46%
HSBC Holdings PLC (Banks-Major
Regional) 469,000 10,615,664
- ---------------------------------------------------------------
Sun Hung Kai Properties Ltd.
(Land Development) 2,505,000 18,467,955
- ---------------------------------------------------------------
29,083,619
- ---------------------------------------------------------------
IRELAND-0.26%
Elan Corp. PLC-ADR (Health
Care-Drugs-Generic & Other)(a) 326,600 16,289,175
- ---------------------------------------------------------------
ISRAEL-0.15%
Teva Pharmaceutical Industries
Ltd.-ADR (Health
Care-Drugs-Generic & Other) 200,000 9,350,000
- ---------------------------------------------------------------
ITALY-0.67%
Telecom Italia Mobile S.p.A.
(Telecommunications-
Cellular/Wireless) 6,000,000 22,150,030
- ---------------------------------------------------------------
Telecom Italia S.p.A.
(Telephone) 3,333,333 20,850,559
- ---------------------------------------------------------------
43,000,589
- ---------------------------------------------------------------
MEXICO-0.03%
Panamerican Beverages,
Inc.-Class A
(Beverages-Non-Alcoholic) 68,300 2,117,300
- ---------------------------------------------------------------
NETHERLANDS-1.77%
Akzo Nobel N.V.
(Chemicals-Diversified) 135,750 23,919,688
- ---------------------------------------------------------------
ASM Lithography Holding N.V.
(Electronics-Semiconductors)(a) 250,000 18,312,500
- ---------------------------------------------------------------
Philips Electronics N.V.-ADR-New
York Shares (Electrical
Equipment) 900,000 70,537,500
- ---------------------------------------------------------------
112,769,688
- ---------------------------------------------------------------
SINGAPORE-0.13%
Asia Pulp & Paper Co. Ltd.-ADR
(Paper & Forest Products) 745,700 8,482,338
- ---------------------------------------------------------------
SWEDEN-0.52%
Telefonaktiebolaget LM
Ericsson-ADR (Communications
Equipment) 750,000 33,187,500
- ---------------------------------------------------------------
</TABLE>
FS-74
<PAGE> 293
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWITZERLAND-0.33%
Novartis A.G. (Health
Care-Diversified) 13,300 $ 20,829,779
- ---------------------------------------------------------------
UNITED KINGDOM-0.96%
Granada Group PLC (Leisure
Time-Products) 1,330,000 18,342,168
- ---------------------------------------------------------------
SmithKline Beecham PLC-ADR
(Health Care-Drugs-Major
Pharmaceuticals) 900,000 42,862,500
- ---------------------------------------------------------------
61,204,668
- ---------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests 572,179,665
- ---------------------------------------------------------------
PRINCIPAL
AMOUNT
U.S. TREASURY BILLS-0.24%(d)
5.093%, 01/02/98 $ 15,645,000(e) 15,520,153
- ---------------------------------------------------------------
REPURCHASE AGREEMENTS-3.32%(f)
CIBC Wood Gundy Securities
Corp., 5.75%, 11/03/97 (g) $100,000,000 $ 100,000,000
- ---------------------------------------------------------------
Goldman, Sachs, & Co., 5.70%,
11/03/97(h) 111,011,779 111,011,779
- ---------------------------------------------------------------
Total Repurchase Agreements 211,011,779
- ---------------------------------------------------------------
TOTAL INVESTMENTS-99.78% 6,347,262,658
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.22% 13,874,661
- ---------------------------------------------------------------
TOTAL NET ASSETS-100.00% $6,361,137,319
===============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 7.
(c) 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 10/31/97 was $65,699,371 which
represented 1.03% of the Fund's net assets.
(d) 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.
(e) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 9.
(f) 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, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(g) Joint repurchase agreement entered into on 10/31/97 with maturing value of
$400,191,667. Collateralized by $400,695,000 U.S. Government obligations, 0%
to 7.75% due 11/12/97 to 07/30/07 with an aggregate market value at 10/31/97
of $408,000,188.
(h) Joint repurchase agreement entered into on 10/31/97 with maturing value of
$700,332,500. Collateralized by $691,835,000 U.S. Government obligations, 0%
to 8.50% due 10/15/98 to 05/15/07 with an aggregate market value at 10/31/97
of $714,757,792.
Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debentures
Pfd. - Preferred
Sr. - Senior
Sub. - Subordinated
See Notes to Financial Statements.
FS-75
<PAGE> 294
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$4,878,060,355) $6,347,262,658
- --------------------------------------------------------
Foreign currencies, at market value
(cost $24,034) 23,692
- --------------------------------------------------------
Receivables for:
Investments sold 32,071,207
- --------------------------------------------------------
Capital stock sold 12,718,493
- --------------------------------------------------------
Dividends and interest 3,624,232
- --------------------------------------------------------
Variation margins 324,000
- --------------------------------------------------------
Investment for deferred compensation
plan 80,090
- --------------------------------------------------------
Other assets 133,271
- --------------------------------------------------------
Total assets 6,396,237,643
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 19,092,775
- --------------------------------------------------------
Options written 600,000
- --------------------------------------------------------
Capital stock reacquired 8,360,129
- --------------------------------------------------------
Deferred compensation 80,090
- --------------------------------------------------------
Accrued advisory fees 3,355,000
- --------------------------------------------------------
Accrued administrative service fees 13,321
- --------------------------------------------------------
Accrued distribution fees 1,981,745
- --------------------------------------------------------
Accrued transfer agent fees 878,386
- --------------------------------------------------------
Accrued operating expenses 738,878
- --------------------------------------------------------
Total liabilities 35,100,324
- --------------------------------------------------------
Net assets applicable to shares
outstanding $6,361,137,319
========================================================
NET ASSETS:
Class A $5,810,582,232
========================================================
Class B $ 486,105,308
========================================================
Class C $ 2,326,193
========================================================
Institutional Class $ 62,123,586
========================================================
CAPITAL STOCK, $.001 PAR VALUE PER
SHARE:
CLASS A:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 255,794,618
========================================================
CLASS B:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 21,757,228
========================================================
CLASS C:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 104,104
========================================================
INSTITUTIONAL CLASS:
Authorized 200,000,000
- --------------------------------------------------------
Outstanding 2,695,286
========================================================
CLASS A:
Net asset value and redemption price
per share $ 22.72
========================================================
Offering price per share:
(Net asset value of
$22.72 divided by 94.50%) $ 24.04
========================================================
CLASS B:
Net asset value and offering price per
share $ 22.34
========================================================
CLASS C:
Net asset value and offering price per
share $ 22.34
========================================================
INSTITUTIONAL CLASS:
Net asset value, offering and
redemption price per share $ 23.05
========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $781,220 foreign
withholding tax) $ 53,208,013
- ----------------------------------------------------------
Interest 14,062,704
- ----------------------------------------------------------
Total investment income 67,270,717
- ----------------------------------------------------------
EXPENSES:
Advisory fees 37,487,692
- ----------------------------------------------------------
Administrative service fees 163,243
- ----------------------------------------------------------
Custodian fees 518,851
- ----------------------------------------------------------
Directors' fees 48,806
- ----------------------------------------------------------
Distribution fees-Class A 16,399,127
- ----------------------------------------------------------
Distribution fees-Class B 3,831,989
- ----------------------------------------------------------
Distribution fees-Class C 2,338
- ----------------------------------------------------------
Transfer agent fees-Class A 7,665,449
- ----------------------------------------------------------
Transfer agent fees-Class B 875,767
- ----------------------------------------------------------
Transfer agent fees-Class C 473
- ----------------------------------------------------------
Transfer agent fees-Institutional Class 5,963
- ----------------------------------------------------------
Other 1,473,922
- ----------------------------------------------------------
Total expenses 68,473,620
- ----------------------------------------------------------
Less: Fees waived by advisor (2,187,021)
- ----------------------------------------------------------
Expenses paid indirectly (116,775)
- ----------------------------------------------------------
Net expenses 66,169,824
- ----------------------------------------------------------
Net investment income 1,100,893
- ----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FUTURES AND OPTION
CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 917,642,460
- ----------------------------------------------------------
Foreign currencies (2,376,476)
- ----------------------------------------------------------
Futures contracts 12,648,342
- ----------------------------------------------------------
Options contracts 5,967,683
- ----------------------------------------------------------
933,882,009
- ----------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 434,974,571
- ----------------------------------------------------------
Foreign currencies 14,469
- ----------------------------------------------------------
Futures contracts (264,000)
- ----------------------------------------------------------
Options contracts 3,811,862
- ----------------------------------------------------------
438,536,902
- ----------------------------------------------------------
Net gain on investment securities,
foreign currencies, futures and option
contracts 1,372,418,911
- ----------------------------------------------------------
Net increase in net assets resulting from
operations $1,373,519,804
==========================================================
</TABLE>
See Notes to Financial Statements.
FS-76
<PAGE> 295
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,100,893 $ 14,147,587
- ----------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities,
foreign currencies, futures and options contracts 933,882,009 590,548,116
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies, futures and options contracts 438,536,902 79,138,554
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,373,519,804 683,834,257
- ----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (14,688,010) --
- ----------------------------------------------------------------------------------------------
Institutional Class (444,894) --
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (552,547,910) (606,609,217)
- ----------------------------------------------------------------------------------------------
Class B (32,151,485) (7,814,517)
- ----------------------------------------------------------------------------------------------
Institutional Class (6,655,833) (7,332,667)
- ----------------------------------------------------------------------------------------------
Net equalization credits (charges):
Class A 436,828 2,368,957
- ----------------------------------------------------------------------------------------------
Class B 62,469 992,175
- ----------------------------------------------------------------------------------------------
Class C -- --
- ----------------------------------------------------------------------------------------------
Institutional Class (91,147) 65,590
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 126,373,106 362,344,237
- ----------------------------------------------------------------------------------------------
Class B 166,861,272 210,825,508
- ----------------------------------------------------------------------------------------------
Class C 2,401,569 --
- ----------------------------------------------------------------------------------------------
Institutional Class (7,373,537) 5,462,015
- ----------------------------------------------------------------------------------------------
Net increase in net assets 1,055,702,232 644,136,338
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 5,305,435,087 4,661,298,749
- ----------------------------------------------------------------------------------------------
End of period $6,361,137,319 $5,305,435,087
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $3,937,446,869 $3,649,184,459
- ----------------------------------------------------------------------------------------------
Undistributed net investment income 28,516,289 44,516,626
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities, foreign currencies, futures and options
contracts 925,614,568 580,711,311
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 1,469,559,593 1,031,022,691
- ----------------------------------------------------------------------------------------------
$6,361,137,319 $5,305,435,087
==============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-77
<PAGE> 296
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Weingarten Fund (the "Fund") is a series 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 six diversified portfolios:
AIM Weingarten Fund, AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital
Development Fund, AIM Charter Fund and AIM Constellation Fund. The Fund
currently offers four different classes of shares: the Class A shares, Class B
shares, Class C shares and the Institutional Class. Class C shares commenced
sales on August 4, 1997. 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. The Fund's investment objective is
to seek growth of capital principally through investment in common stocks of
seasoned and better capitalized companies. 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. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations--A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the 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 in 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
(including convertible bonds) are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the 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 would not
be reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period,
then these securities will be valued at their fair market 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 foreign currency contract for the purchase or
sale of a security denominated in a foreign currency in order to "lock in"
the U.S. dollar price of that security. The Fund could be exposed to risk if
counterparties to the contracts are unable to meet the terms of their
contracts.
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 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 the change in the value of the contracts may not correlate with
changes in the value of 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
FS-78
<PAGE> 297
written. The current market value of a written option is 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 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.
F. Put options--The Fund may purchase put options. By purchasing a put option,
the Fund obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this right, a
Fund pays an option premium. The option's underlying instrument may be a
security, or a futures contract. Put options may be used by a Fund to hedge
securities it owns by locking in a minimum price at which the Fund can sell.
If security prices fall, the put option could be exercised to offset all or
a portion of the Fund's resulting losses. At the same time, because the
maximum the Fund has at risk is the cost of the option, purchasing put
options does not eliminate the potential for the Fund to profit from an
increase in the value of the securities hedged.
G. 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, 1997,
undistributed net investment income was decreased by $2,376,476 and
undistributed net realized gains increased by $2,376,476 in order to comply
with the requirements of the American Institute of Certified Public
Accountants Statement of Position 93-2. Net assets of the Fund were
unaffected by the reclassifications discussed above.
H. 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.
I. Expenses--Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
which are attributable to more than one class are allocated between the
classes.
J. 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 but approval is
required by the Board of Directors of the Company for any decision by AIM to
discontinue the waiver. During the year ended October 31, 1997, AIM waived fees
of $2,187,021. 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.
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, 1997, AIM was
reimbursed $163,243 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, Class B shares and Class C
shares. During the year ended October 31, 1997, AFS was reimbursed $4,656,522
for such services.
The Fund, pursuant to a transfer agent and service agreement, has agreed to
pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing
transfer agent and shareholder services to the
FS-79
<PAGE> 298
Fund. During the year ended October 31, 1997, the Portfolio paid AIFS $5,963 for
such services. On September 19, 1997, the Board of Directors of the Fund
approved the appointment of AFS as transfer agent of the Fund to be effective in
late 1997 or early 1998.
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, Class B and Class C shares and a master distribution agreement with
Fund Management Company ("FMC") to serve as the distributor for the
Institutional Class. The Company has adopted distribution plans pursuant to Rule
12b-1 under the 1940 Act with respect to the Fund's Class A shares (the "Class A
Plan"), the Fund's Class B shares (the "Class B Plan"), and the Fund's Class C
shares (the "Class C Plan") (collectively, the "Plans"). The Fund, pursuant to
the Plan, pays AIM Distributors compensation at the annual rate of 0.30% of the
average daily net assets of Class A shares and 1.00% of the average daily net
assets of Class C shares. The Plan is designed to compensate AIM Distributors
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 Class A or Class C 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,
1997 for the Class A shares and Class B shares and the period August 4, 1997
(date sales commenced) through October 31, 1997, the Class C shares paid AIM
Distributors $16,399,127, $3,831,989 and $2,338, respectively, as compensation
under the Plans.
AIM Distributors received commissions of $1,521,630 from sales of the Class A
shares of the Fund during the year ended October 31, 1997. 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, 1997,
AIM Distributors received commissions of $38,015 in contingent deferred sales
charges imposed on redemptions of Fund 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, 1997, the Fund paid legal fees of $15,778
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund which reduced the
Fund's expenses by $21,962 during the year ended October 31, 1997. The Fund also
received reductions in transfer agency fees from AFS (an affiliate of AIM) and
reductions in custodian fees of $77,032 and $17,781, respectively, under expense
offset arrangements. The effect of the above arrangements resulted in a
reduction of the Fund's total expenses of $116,775 during the year ended October
31, 1997.
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 is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lessor of (i) $325,000,000 or (ii) the limit set
by its prospectus for borrowings. During the year ended October 31, 1997, the
Fund did not borrow under the line of credit agreement. The funds which are
party to the line of credit are charged a commitment fee of 0.05% on the unused
balance of the committed line. The commitment fee is allocated among the funds
based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the year ended October 31, 1997 was $7,275,089,932 and
$7,776,089,044, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of October 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $1,533,476,526
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (75,979,727)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $1,457,496,799
==========================================================
</TABLE>
Cost of investments for tax purposes is $4,889,765,859.
FS-80
<PAGE> 299
NOTE 7-OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended October 31, 1997 are
summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
-------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ------------
<S> <C> <C>
Beginning of period 55,804 $ 22,601,072
- ---------------------------------------------------------------------------------------
Written 86,525 29,354,760
- ---------------------------------------------------------------------------------------
Closed (91,359) (35,943,337)
- ---------------------------------------------------------------------------------------
Exercised (38,470) (10,831,639)
- ---------------------------------------------------------------------------------------
Expired (9,500) (3,963,917)
- ---------------------------------------------------------------------------------------
End of period 3,000 $ 1,216,939
=======================================================================================
</TABLE>
Open call option contracts written at October 31, 1997 were as follows:
<TABLE>
<CAPTION>
OCTOBER 31,
CONTRACT STRIKE NUMBER OF PREMIUM 1997 UNREALIZED
MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
ISSUE -------- ------ --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Lucent Technologies, Inc. November 85 3,000 $1,216,939 $600,000 $616,939
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 8-PUT OPTIONS WRITTEN
Transactions in put options purchased during the year ended October 31, 1997 are
summarized as follows:
<TABLE>
<CAPTION>
PUT OPTION CONTRACTS
-------------------------
NUMBER OF PREMIUMS
CONTRACTS PAID
--------- -----------
<S> <C> <C>
Beginning of period -- --
- ---------------------------------------------------------------------------------------
Purchased 7,500 $ 1,053,750
- ---------------------------------------------------------------------------------------
Exercised (7,500) (1,053,750)
- ---------------------------------------------------------------------------------------
End of period 0 $ 0
=======================================================================================
</TABLE>
NOTE 9-OPEN FUTURES CONTRACTS
On October 31, 1997, $363,000 principal amount of U.S. Treasury obligations were
pledged as collateral to cover margin requirements for open futures contracts.
Open futures contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF MONTH/ APPRECIATION
CONTRACT CONTRACTS COMMITMENT (DEPRECIATION)
-------- --------- ---------- --------------
<S> <C> <C> <C>
S&P 400 Midcap Index 96 Dec. '97 $(264,000)
</TABLE>
NOTE 10-CAPITAL STOCK
Changes in the capital stock outstanding during the years ended October 31, 1997
and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 36,066,523 $748,100,033 34,550,539 $648,183,624
- ---------------------------------------------------------------------------------------------------------------------
Class B 9,401,446 192,004,936 12,381,545 231,706,372
- ---------------------------------------------------------------------------------------------------------------------
Class C* 117,736 2,708,502 -- --
- ---------------------------------------------------------------------------------------------------------------------
Institutional Class 377,655 7,900,669 516,716 9,877,153
- ---------------------------------------------------------------------------------------------------------------------
Issued as a reinvestment of dividends:
Class A 29,415,559 528,061,835 32,395,132 557,844,149
- ---------------------------------------------------------------------------------------------------------------------
Class B 1,715,350 30,687,644 425,933 7,326,082
- ---------------------------------------------------------------------------------------------------------------------
Class C* -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Institutional Class 313,585 5,650,803 338,803 5,871,449
- ---------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (56,267,501) (1,149,788,762) (44,929,759) (843,683,536)
- ---------------------------------------------------------------------------------------------------------------------
Class B (2,748,694) (55,831,308) (1,500,861) (28,206,946)
- ---------------------------------------------------------------------------------------------------------------------
Class C* (13,632) (306,933) -- --
- ---------------------------------------------------------------------------------------------------------------------
Institutional Class (951,830) (20,925,009) (552,275) (10,286,587)
- ---------------------------------------------------------------------------------------------------------------------
17,426,197 $288,262,410 33,625,773 $578,631,760
=====================================================================================================================
</TABLE>
* Class C shares commenced sales on August 4, 1997.
FS-81
<PAGE> 300
NOTE 11-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during each of the years in the five-year period ended October 31,
1997, for a share of Class B capital stock outstanding during each of the years
in the two-year period ended October 31, 1997 and the period June 26, 1995 (date
sales commenced) through October 31, 1995, and for a share of Class C capital
stock outstanding during the period August 4, 1997 (date sales commenced)
through October 31, 1997.
CLASS A:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.19 $ 20.33 $ 17.82 $ 17.62 $ 16.68
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.01 0.06 -- 0.07 0.10
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Net gains on securities (both realized and unrealized) 4.82 2.51 4.36 0.57 0.93
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Total from investment operations 4.83 2.57 4.36 0.64 1.03
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (0.06) -- (0.07) (0.11) (0.09)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Distributions from net realized gains (2.24) (2.71) (1.78) (0.33) --
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Total distributions (2.30) (2.71) (1.85) (0.44) (0.09)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 22.72 $ 20.19 $ 20.33 $ 17.82 $ 17.62
============================================================ ========== ========== ========== ========== ==========
Total return(a) 26.83% 14.81% 28.20% 3.76% 6.17%
============================================================ ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $5,810,582 $4,977,493 $4,564,730 $3,965,858 $4,999,983
============================================================ ========== ========== ========== ========== ==========
Ratio of expenses to average net assets(b) 1.07%(c)(d) 1.12% 1.17% 1.21% 1.13%
============================================================ ========== ========== ========== ========== ==========
Ratio of net investment income to average net assets(e) 0.07%(c) 0.33% (0.02)% 0.45% 0.62%
============================================================ ========== ========== ========== ========== ==========
Portfolio turnover rate 128% 159% 139% 136% 109%
============================================================ ========== ========== ========== ========== ==========
Average brokerage commission rate paid(f) $ 0.0618 $ 0.0615 N/A N/A N/A
============================================================ ========== ========== ========== ========== ==========
Borrowings for the period:
Amount of debt outstanding at end of period (000s omitted) -- -- -- -- --
============================================================ ========== ========== ========== ========== ==========
Average amount of debt outstanding during the period (000s
omitted)(g) -- -- $ 593 -- --
============================================================ ========== ========== ========== ========== ==========
Average number of shares outstanding during the period (000s
omitted)(g) 262,563 248,189 229,272 249,351 314,490
============================================================ ========== ========== ========== ========== ==========
Average amount of debt per share during the period -- -- $ .0026 -- --
============================================================ ========== ========== ========== ========== ==========
</TABLE>
(a) Does not deduct sales charges.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.11%, 1.15%, 1.19%, 1.24% and 1.17% for the periods 1997-1993,
respectively.
(c) Ratios are based on average net assets of $5,466,375,838.
(d) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were 0.03%, 0.30%, (0.04%), 0.42% and 0.58% for the periods
1997-1993, respectively.
(f) The average commission rate paid is the total brokerage commissions
paid on applicable purchases and sales of securities for the period divided
by the total number of related shares purchased and sold, which is required
to be disclosed for fiscal years beginning September 1, 1995 and thereafter.
(g) Averages computed on a daily basis.
FS-82
<PAGE> 301
CLASS B:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 19.98 $ 20.28 $ 18.56
- ------------------------------------------------------------ ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) (0.15)(a) (0.05)(a) (0.03)
- ------------------------------------------------------------ ---------- ---------- ----------
Net gains on securities (both realized and unrealized) 4.75 2.46 1.75
- ------------------------------------------------------------ ---------- ---------- ----------
Total from investment operations 4.60 2.41 1.72
- ------------------------------------------------------------ ---------- ---------- ----------
Less distributions:
Distributions from net realized gains (2.24) (2.71) --
- ------------------------------------------------------------ ---------- ---------- ----------
Net asset value, end of period $ 22.34 $ 19.98 $ 20.28
============================================================ ========== ========== ==========
Total return(b) 25.78% 13.95% 9.27%
============================================================ ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000's omitted) $ 486,105 $ 267,459 $ 42,238
============================================================ ========== ========== ==========
Ratio of expenses to average net assets(c) 1.87%(d)(e) 1.95% 1.91%(f)
============================================================ ========== ========== ==========
Ratio of net investment income (loss) to average net
assets(g) (0.73)%(d) (0.50)% (0.76)%(f)
============================================================ ========== ========== ==========
Portfolio turnover rate 128% 159% 139%
============================================================ ========== ========== ==========
Average brokerage commission rate paid(h) $ 0.0618 $ 0.0615 N/A
============================================================ ========== ========== ==========
Borrowings for the period:
Amount of debt outstanding at end of
period (000s omitted) -- -- --
============================================================ ========== ========== ==========
Average amount of debt outstanding during the
period (000s omitted)(i) -- -- $ 3
============================================================ ========== ========== ==========
Average number of shares outstanding during the
period (000s omitted)(i) 18,505 7,956 1,036
============================================================ ========== ========== ==========
Average amount of debt per share during the period -- -- $ 0.0029
============================================================ ========== ========== ==========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and for periods less than
one year, total returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.91%, 1.98% and 1.94% (annualized) for the periods 1997-1995,
respectively.
(d) Ratios are based on average net assets of $383,198,900.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have been
1.86%.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.77)%, (0.53)% and (0.79)% (annualized) for the
periods 1997-1995, respectively.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(i) Averages computed on a daily basis.
FS-83
<PAGE> 302
CLASS C:
<TABLE>
<CAPTION>
1997
-------
<S> <C>
Net asset value, beginning of period $ 22.83
- ------------------------------------------------------------ -------
Income from investment operations:
Net investment income (0.04)(a)
- ------------------------------------------------------------ -------
Net gains (losses) on securities (both realized and
unrealized) (0.45)
- ------------------------------------------------------------ -------
Total from investment operations (0.49)
============================================================ =======
Net asset value, end of period $ 22.34
============================================================ =======
Total return(b) (2.15)%
============================================================ =======
Ratios/supplement data:
Net assets, end of period (000s omitted) $ 2,326
============================================================ =======
Ratio of expenses to average net assets(c) 1.84%(d)(e)
============================================================ =======
Ratio of net investment income (loss) to average net
assets(f) (0.70)%(d)
============================================================ =======
Portfolio turnover rate 128%
============================================================ =======
Average brokerage commission rate paid(g) $0.0618
============================================================ =======
Borrowings for the period:
Amount of debt outstanding at end of period (000's omitted) --
============================================================ =======
Average amount of debt outstanding during the period (000's
omitted) --
============================================================ =======
Average number of shares outstanding during the period
(000's omitted)(h) 41,282
============================================================ =======
Average amount of debt per share during the period --
============================================================ =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and periods for less than one year,
total returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratio of
expenses to average net assets prior to fee waivers and/or
expense reimbursements was 1.88% (annualized).
(d) Ratios are annualized and based on average net assets of
$958,881.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would
have remained the same.
(f) After fee waivers and/or expense reimbursements. Ratio of net
investment income (loss) to average net assets prior to fee
waivers and/or expense reimbursements was (0.74)% (annualized).
(g) The average commission rate paid is the total brokerage
commissions paid on applicable purchases and sales of securities
for the period divided by the total number of related shares
purchased and sold, which is required to be disclosed for fiscal
years beginning September 1, 1995 and thereafter.
(h) Averages computed on a daily basis.
FS-84
<PAGE> 303
AIM EQUITY
FUNDS, INC.
Prospectus
- --------------------------------------------------------------------------------
INSTITUTIONAL AIM CHARTER FUND, AIM WEINGARTEN FUND and AIM
CLASSES CONSTELLATION FUND (collectively, the "Funds") are
three investment portfolios comprising series of AIM Equity
Funds, Inc. (the "Company"), an open-end, series, management
investment company. Each Fund offers different classes of
shares. The Company also offers shares of other investment
portfolios, AIM Aggressive Growth Fund ("Aggressive
Growth"), AIM Blue Chip Fund ("Blue Chip") and AIM Capital
Development Fund ("Capital Development"). Shares of
Aggressive Growth, Blue Chip, Capital Development and
other classes of the Funds are sold pursuant to separate
prospectuses. This Prospectus relates solely to the
Institutional Classes of the Funds.
AIM CHARTER AIM CHARTER FUND is a diversified portfolio which seeks to
FUND 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 AIM WEINGARTEN FUND is a diversified portfolio which seeks
FUND 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 AIM CONSTELLATION FUND is a diversified portfolio which
FUND seeks to provide capital appreciation through
investments in common stocks, with emphasis on medium-sized
and smaller emerging growth companies.
FEBRUARY 27, 1998 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
February 27, 1998, 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 or
by calling (800) 347-4246. The SEC maintains a Web site at
http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other
information regarding the Funds.
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 NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
[LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 659-1005
<PAGE> 304
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 six series comprising six 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, together with its affiliates, advises or manages over 50 investment company
portfolios encompassing a broad range of investment objectives. Under the Master
Advisory Agreement dated February 28, 1997, 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
February 28, 1997, 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 Fund Services, Inc. ("Transfer Agent" or "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 Institutional Classes of the Funds. Under the Master
Sub-Advisory Agreement (the "Master Sub-Advisory Agreement") dated as of
February 28, 1997, 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> 305
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, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 306
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 average net assets of each Fund for its 1997 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)................. .62% .60% .61%
Distribution fees................................. None None None
Other expenses.................................... .05% .04% .04%
---- ---- ----
Total fund operating expenses..................... .67% .64% .65%
==== ==== ====
</TABLE>
Charter's, 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%, 0.63% and 0.63%, and total expenses would
have been 0.68%, 0.68% and 0.67%, 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........................................... $ 7 $ 7 $ 7
3 years.......................................... $21 $20 $21
5 years.......................................... $37 $36 $36
10 years.......................................... $83 $80 $81
</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> 307
FINANCIAL HIGHLIGHTS
Shown below are the per share data, ratios and supplemental data
(collectively, "data") for the fiscal years ended October 31, 1997, 1996, 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, 1997, 1996, 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,
1997, 1996, 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, 1997, 1996, 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. The data with respect to the Institutional
Classes of Weingarten and Constellation have 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.
(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,
1997 1996 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.......................... $ 11.24 $ 10.66 $ 8.93 $ 9.48 $ 8.38 $ 8.42 $7.92
Income from investment operations:
Net investment income........... 0.16 0.24 0.23 0.25 0.19 0.20 0.05
Net gains (losses) on securities
(both realized and
unrealized)................... 2.91 1.44 2.07 (0.44) 1.23 0.16 0.45
------- ------- ------- ------- ------- ------ -----
Total from investment
operations.................... 3.07 1.68 2.30 (0.19) 1.42 0.36 0.50
------- ------- ------- ------- ------- ------ -----
Less distributions:
Dividends from net investment
income........................ (0.16) (0.20) (0.24) (0.20) (0.32) (0.17) --
Distributions from capital
gains......................... (0.67) (0.90) (0.33) (0.16) -- (0.23) --
------- ------- ------- ------- ------- ------ -----
Total distributions............. (0.83) (1.10) (0.57) (0.36) (0.32) (0.40) --
------- ------- ------- ------- ------- ------ -----
Net asset value, end of period.... $ 13.48 $ 11.24 $ 10.66 $ 8.93 $ 9.48 $ 8.38 $8.42
======= ======= ======= ======= ======= ====== =====
Total return(a)................... 29.05% 17.29% 27.45% (2.02)% 17.39% 4.53% 6.31%
======= ======= ======= ======= ======= ====== =====
Ratios/supplemental data:
Net assets, end of period (000s
omitted)...................... $40,191 $29,591 $25,538 $21,840 $24,196 $7,800 $ 775
======= ======= ======= ======= ======= ====== =====
Ratio of expenses to average net
assets(b)..................... 0.67%(c)(d) 0.69% 0.74% 0.73% 0.79% 0.87% 1.00%(e)
======= ======= ======= ======= ======= ====== =====
Ratio of net investment income
to average net assets......... 1.21%(c) 2.24% 1.98% 2.76% 2.26% 2.44% 2.43%(e)
======= ======= ======= ======= ======= ====== =====
Portfolio turnover rate......... 170% 164% 161% 126% 144% 95% 144%
======= ======= ======= ======= ======= ====== =====
Average broker commission
rate(f)....................... $0.0615 $0.0638 NA NA NA NA NA
======= ======= ======= ======= ======= ====== =====
</TABLE>
- ---------------
(a) For periods less than one year, total returns are not annualized.
(b) After reduction of advisory fees. The ratios of expenses and net investment
income to average net assets prior to the reduction of advisory fees were
0.68% and 1.20% for 1997 and 0.70% and 2.23% for 1996, respectively.
(c) Ratios are based on average net assets of $35,307,526.
(d) Ratios include indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have remained the same.
(e) Annualized.
(f) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
5
<PAGE> 308
AIM WEINGARTEN FUND
<TABLE>
<CAPTION>
OCTOBER 8, 1991
YEAR ENDED OCTOBER 31, THROUGH
----------------------------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 20.46 $ 20.48 $ 17.94 $ 17.69 $ 16.73 $ 15.77 $15.15
Income from investment
operations:
Net investment income........ 0.08 0.17 0.10 0.17 0.16 0.14 0.01
Net gains (losses) on
securities (both realized
and unrealized)............ 4.90 2.52 4.35 0.58 0.93 0.99 0.61
------- ------- ------- ------- ------- ------- ------
Total from investment
operations................. 4.98 2.69 4.45 0.75 1.09 1.13 0.62
------- ------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net investment
income..................... (0.15) -- (0.13) (0.17) (0.13) (0.08) --
Distributions from net
realized gains............. (2.24) (2.71) (1.78) (0.33) -- (0.09) --
------- ------- ------- ------- ------- ------- ------
Total distributions.......... (2.39) (2.71) (1.91) (0.50) (0.13) (0.17) --
------- ------- ------- ------- ------- ------- ------
Net asset value, end of
period....................... $ 23.05 $ 20.46 $ 20.48 $ 17.94 $ 17.69 $ 16.73 $15.77
======= ======= ======= ======= ======= ======= ======
Total return(a)................ 27.37% 15.34% 28.69% 4.37% 6.53% 7.16% 4.09%
======= ======= ======= ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period
(000s omitted)............. $62,124 $60,483 $54,332 $40,486 $39,821 $16,519 $3,926
======= ======= ======= ======= ======= ======= ======
Ratio of expenses to average
net assets(b).............. 0.64%(c)(d) 0.65% 0.70% 0.65% 0.78% 0.82% 0.90%(e)
======= ======= ======= ======= ======= ======= ======
Ratio of net investment
income to average net
assets(f).................. 0.50%(c) 0.80% 0.45% 1.00% 0.97% 0.91% 1.00%(e)
======= ======= ======= ======= ======= ======= ======
Portfolio turnover rate...... 128% 159% 139% 136% 109% 37% 46%
======= ======= ======= ======= ======= ======= ======
Average broker commission
rate(g).................... $0.0618 $0.0615 N/A N/A N/A N/A N/A
======= ======= ======= ======= ======= ======= ======
Borrowings for the period:
Amount of debt outstanding at
end of period (000s
omitted)................... -- -- -- -- -- -- --
Average amount of debt
outstanding during the
period (000s omitted)(h)... -- -- $ 6 -- -- -- --
Average number of shares
outstanding during the
period (000s omitted)(h)... 3,146 2,908 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 return is not annualized.
(b) After waiver of advisory fees. Ratios of expenses to average net assets
prior to waiver of advisory fees were 0.68%, 0.68%, 0.72%, 0.68%, and 0.81%
for the years 1997-1993, respectively.
(c) Ratios are based on average net assets of $66,222,553.
(d) Ratios include indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have remained the same.
(e) Annualized.
(f) After waiver of advisory fees. Ratios of net investment income to average
net assets prior to waiver of advisory fees were 0.46%, 0.77%, 0.43%, 0.98%,
and 0.94% for the years 1997-1993, respectively.
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(h) Averages computed on a daily basis.
6
<PAGE> 309
AIM CONSTELLATION FUND
<TABLE>
<CAPTION>
YEAR ENDED APRIL 8, 1992
OCTOBER 31, THROUGH
----------------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993 1992
-------- -------- -------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 26.01 $ 24.05 $ 18.49 $ 17.13 $ 13.27 $12.29
Income from investment
operations:
Net investment income
(loss)................... 0.02 0.04 0.02 0.03 -- (0.01)
Net gains (losses) on
securities (both realized
and unrealized).......... 4.86 2.67 6.06 1.33 3.86 0.99
-------- -------- -------- ------- ------- ------
Total from investment
operations............... 4.88 2.71 6.08 1.36 3.86 0.98
-------- -------- -------- ------- ------- ------
Less distributions:
Dividends from net
investment
income................... -- -- -- -- -- --
Distributions from net
realized gains........... (0.89) (0.75) (0.52) -- -- --
-------- -------- -------- ------- ------- ------
Total distributions......... (0.89) (0.75) (0.52) -- -- --
-------- -------- -------- ------- ------- ------
Net asset value, end of
period...................... $ 30.00 $ 26.01 $ 24.05 $ 18.49 $ 17.13 $13.27
======== ======== ======== ======= ======= ======
Total return(a)............... 19.42% 11.81% 34.09% 7.94% 29.09% 7.97%
======== ======== ======== ======= ======= ======
Ratios/supplemental data:
Net assets, end of period
(000s omitted)........... $188,109 $293,035 $138,918 $39,847 $12,338 $3,087
======== ======== ======== ======= ======= ======
Ratio of expenses to average
net assets(b)............ 0.65%(c)(d) 0.66% 0.66% 0.69% 0.87% 0.91%(e)
======== ======== ======== ======= ======= ======
Ratio of net investment
income (loss) to average
net assets(f)............ 0.06%(d) 0.21% 0.18% 0.36% 0.04% (0.12)%(e)
======== ======== ======== ======= ======= ======
Portfolio turnover rate..... 67% 58% 45% 79% 70% 62%
======== ======== ======== ======= ======= ======
Average broker commission
rate(g).................. $ 0.0576 $ 0.0596 N/A N/A N/A N/A
======== ======== ======== ======= ======= ======
</TABLE>
- ---------------
(a) For periods less than one year, total return is not annualized.
(b) Ratios of expenses to average net assets prior to waiver of advisory fees
and/or expense reimbursement were 0.67%, 0.67%, 0.68%, and 0.70%, for the
periods 1997-1994 respectively.
(c) Ratios are based on average net assets of $271,723,352.
(d) Ratios include indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have remained the same.
(e) Annualized.
(f) Ratios of net investment income prior to waiver of advisory fees and/or
expense reimbursement were 0.04%, 0.20%, 0.16%, and 0.35% for the periods
1997-1994, respectively.
7
<PAGE> 310
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.
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, U.S.
Government obligations or taxable municipal securities. In addition, a portion
of each Fund's assets may be held, from time to time, in cash, time deposits,
master notes, 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 generally investing at least 65% of its net assets in stocks of
companies believed by management to have the potential for above average growth
in revenues and earnings. Charter generally will also invest at least 80% of its
net assets in securities which pay income to Charter.
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 consis-
8
<PAGE> 311
tent 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 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. Repurchase
agreements are considered to be loans by the Portfolio under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. Consistent with Charter's policy on borrowings,
Charter may invest in reverse repurchase agreements with banks, which involve
the sale of securities held by the Fund, with an agreement that the Fund will
repurchase the securities at an agreed upon price and date. The Fund may employ
reverse repurchase agreements (i) for temporary emergency purposes, such as to
meet unanticipated net redemptions so as to avoid liquidating other portfolio
securities during unfavorable market conditions; (ii) to cover short-term cash
requirements resulting from the timing of trade settlements; or (iii) to take
advantage of market situations where the interest income to be earned from the
investment of the proceeds of the transaction is greater than the interest
expense of the transaction. At the time it enters into a reverse repurchase
agreement, the Fund will segregate liquid securities having a dollar value equal
to the repurchase price. Reverse repurchase agreements are considered borrowings
by the Fund under the 1940 Act.
U.S. GOVERNMENT SECURITIES. Charter Fund may invest in U.S. Government
securities, including, but not limited to, U.S. Treasury obligations, such as
Treasury Bills (maturities of one year or less) or Treasury Notes (maturities of
less than three years). The market value of U.S. Government securities will
fluctuate with changes in interest rate levels. Thus, if interest rates increase
from the time the security was purchased, the market value of the security will
decrease. Conversely, if interest rates decrease, the market value of the
security will increase.
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 may purchase and sell futures contracts in order to hedge the
value of its portfolio against changes in market conditions. 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.
There are risks associated with investments in stock index futures contracts.
During certain market conditions, purchases and sales of futures contracts may
not completely offset a decline or rise in the value of a Fund's portfolio. In
the futures markets, it may not always be possible to execute a buy or sell
order at the desired price, or to close out an open position due to market
conditions, limits on open positions and/or daily price fluctuations. Changes in
the market value of a Fund's portfolio may differ substantially from the changes
anticipated by the Fund when hedged positions were established, and
unanticipated price movements in a futures contract may result in a loss
substantially greater than a Fund's initial investment in such contract.
Successful use of futures contracts is dependent upon AIM's ability to predict
correctly movements in the direction of the applicable markets. No assurance can
be given that AIM's judgment in this respect will be correct.
WRITING COVERED CALL OPTION CONTRACTS. Charter, 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.
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Charter, 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.
Charter and Weingarten may also purchase puts. By purchasing a put option, a
Fund obtains the right (but not the obligation) to sell the option's underlying
security at a fixed strike price.
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 volume, 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 Charter, 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.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. Each Fund may
purchase securities on a "when-issued" basis, that is, delivery of and payment
for the securities is not fixed at the date of purchase, but is set after the
securities are issued (normally within forty-five days after the date of the
transaction). Each Fund also may purchase or sell securities on a delayed
delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery securities are fixed at the time the buyer
enters into the commitment. A Fund will only make commitments to purchase
when-issued or delayed delivery securities with the intention of actually
acquiring such securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. For further information regarding
securities issued on a when-issued or delayed delivery basis see the caption
"Investment Program and Restrictions" in the Statement of Additional
Information.
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.
INVESTMENT IN UNSEASONED ISSUERS. Charter may purchase securities in
unseasoned issuers. Securities in such issuers may provide opportunities for
long term capital growth. Greater risks are associated with investments in
securities of unseasoned issuers than in the securities of more established
companies because unseasoned issuers have only a brief operating history and may
have more limited markets and financial resources.
INVESTMENT IN OTHER INVESTMENT COMPANIES. Each of the Funds may invest in
other investment companies to the extent permitted by the Investment Company Act
of 1940, and rules and regulations thereunder, and, if applicable, exemptive
orders granted by the SEC.
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
Depositary Receipt ("ADRs"), European Depositary Receipts ("EDRs") 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 generally are listed on a recognized foreign
securities exchanges or traded in a foreign over-the-counter mar-
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ket. 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. 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 Board of 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.
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. In addition, the Fund has adopted a
non-fundamental policy stating that the Fund will not purchase additional
securities when any borrowings exceed 5% of the Fund's total assets.
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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 prior to the close of the New York Stock Exchange, which is
generally 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, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day are observed by the New York Stock Exchange.
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 100, 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.
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.
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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 prior to NYSE Close 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.
Shareholders may request a redemption by telephone. The Transfer Agent and FMC
will not be liable for any loss, expense or cost arising out of any telephone
redemption request effected in accordance with the authorization set forth in
the account application if they reasonably believe such request to be genuine,
but may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), and mailings
of confirmation promptly after the transaction.
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 each Fund intends to distribute substantially all of its net
investment income and net realized capital gains 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 and distributions
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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, as previously defined. 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. 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 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 selecting the type and quality of portfolio securities and is
affected by operating expenses of the Institutional Class and market conditions.
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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 AFS,
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. Information concerning the Board of Directors may be found in the
Statement of Additional Information. Certain directors and officers of the
Company are affiliated with AIM and A I M Management Group Inc. ("AIM
Management"), the parent corporation of AIM. AIM Management is a holding company
engaged in the financial services business and is an indirect wholly owned
subsidiary of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent
investment management group engaged in institutional investment management and
retail mutual fund businesses in the United States, Europe and the Pacific
Region.
For a discussion of AIM Management and its subsidiaries' Year 2000 Compliance
Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, serves as the
investment advisor to each Fund pursuant to the Master Advisory Agreement. AIM
was organized in 1976 and, through its affiliates, advises or manages over 50
investment company portfolios (including the Funds) encompassing a broad range
of investment objectives. 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. See "Summary -- Material Events." 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 AFS, 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173, a wholly owned subsidiary of AIM and a registered transfer
agent, AFS 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 100, 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
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the Company's Board of Directors. 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,
1997, which represented 0.62%, 0.60% and 0.61%, respectively, of each of such
Fund's average daily net assets. For the fiscal year ended October 31, 1997,
with respect to Charter, Constellation and Weingarten, AIM voluntarily waived
0.01%, 0.03% and 0.02%, respectively, of each such Fund's advisory fee. Had
there been no fee waivers during the year, advisory fees would have been 0.63%,
0.63% and 0.63%, respectively, of average daily net assets. AIM received
reimbursement of administrative services costs from Charter, Weingarten and
Constellation for the fiscal year ended October 31, 1997, which represented
0.003%, 0.003% and 0.002%, 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, 1997, stated as a percentage
of average net assets were 0.67%, 0.64% and 0.65%, 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 February
28, 1997, 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 100, 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. 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 approximately 135 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 Brant H. DeMuth and 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. He has been associated
with AIM and/or its subsidiaries and has been an investment professional since
1987. Mr. DeMuth has been responsible for the Fund since 1998. He has been
associated with AIM and/or its subsidiaries since 1996 and has been an
investment professional since 1987. Prior to 1996, he served as a portfolio
manager for the Colorado Public Employee Retirement Association.
Jonathan C. Schoolar, Monika H. Degan and David P. Barnard are primarily
responsible for the day-to-day management of Weingarten. Mr. Schoolar is Senior
Vice President 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 subsidiaries since 1986 and
16
<PAGE> 319
has been an investment professional since 1983. Ms. Degan has been responsible
for the Fund since 1998. She has been associated with AIM and/or its
subsidiaries since 1995 and has been an investment professional since 1991.
Prior to 1995, Ms. Degan was a Senior Financial Analyst for Shell Oil Co.
Pension Trust. Mr. Barnard is Vice President of AIM Capital and has been
responsible for the Fund since 1986. He has been associated with AIM and/or its
subsidiaries since 1982 and has been an investment professional since 1974.
Robert M. Kippes, Kenneth A. Zschappel, Charles D. Scavone, and David P.
Barnard 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.
He has been associated with AIM and/or its subsidiaries since he began working
as an investment professional in 1989. Mr. Zschappel is Assistant Vice President
of AIM Capital and has been responsible for the Fund since 1996. He has been
associated with AIM and/or its subsidiaries since he began working as an
investment professional in 1990. Mr. Scavone is Vice President of AIM Capital
and has been responsible for the Fund since 1996. He has been associated with
AIM and/or its subsidiaries since 1996 and has been an investment professional
since 1991. Prior to 1996, he was Associate Portfolio Manager for Van Kampen
American Capital Asset Management, Inc. from 1994 to 1996. From 1991 to 1994, he
worked in the investments department at Texas Commerce Investment Management
Company, with his last position being Equity Research Analyst/Assistant
Portfolio Manager. Mr. Barnard is Vice President of AIM Capital and has been
responsible for the Fund since 1990. He has been associated with AIM and/or its
subsidiaries since 1982 and an investment professional since 1974.
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 consists of six separate operating
portfolios: Charter, Constellation and Weingarten, each of which has retail
classes of shares consisting of Class A, Class B and Class C shares and an
Institutional Class; Aggressive Growth, which has a Retail Class of Class A
shares and Blue Chip and Capital Development, each of which have retail classes
of shares consisting of Class A, Class B and Class C shares. The Company's
common stock is classified into nineteen different classes. Each class
represents an interest in one of six portfolios.
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, such as those associated with the shareholder servicing
of their shares, 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. As of February 2, 1998, Commonwealth of
Massachusetts was the owner of record of 94.81% of the outstanding shares of the
Institutional Class of Charter. As long as Commonwealth of Massachusetts owns
over 25% of such shares, it may be presumed to be in "control" of the
Institutional Class of Charter, as defined in the 1940 Act. As of February 2,
1998, Commonwealth of Massachusetts was the owner of record of 87.17% of the
outstanding shares of the Institutional Class of Weingarten. As long as
Commonwealth of
17
<PAGE> 320
Massachusetts owns over 25% of such shares, it may be presumed to be in
"control" of the Institutional Class of Weingarten, as defined in the 1940 Act.
As of February 2, 1998, Commonwealth of Massachusetts was the owner of 29.27%
and Nationwide was the owner of 60.12% of the outstanding shares of the
Institutional Class of Constellation. As long as Commonwealth of Massachusetts
and Nationwide own over 25% of such shares, they may be presumed to be in
"control" of the Institutional Class of Constellation, as defined in the 1940
Act.
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 Fund Services, Inc., 11 Greenway Plaza, Suite 100, 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, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Company and passes upon the legality of
the shares offered pursuant to this Prospectus.
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning their account should be directed to FMC at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or may be made by calling
(800) 659-1005.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the AIM Funds, AIM Management and its subsidiaries
rely on both internal software systems as well as external software systems
provided by third parties. Many software systems in use today are unable to
distinguish between the year 2000 and the year 1900. This defect if not cured
will likely adversely affect the services that AIM Management, its subsidiaries
and other service providers provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
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.
18
<PAGE> 321
<TABLE>
<S> <C>
======================================= =================================================
PROSPECTUS
AIM EQUITY FUNDS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 659-1005 February 2, 1998
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173 AIM EQUITY FUNDS, INC.
(713) 626-1919 (INSTITUTIONAL CLASSES)
AIM CHARTER FUND
INVESTMENT SUB-ADVISOR AIM WEINGARTEN FUND
A I M CAPITAL MANAGEMENT, INC.
11 Greenway Plaza, Suite 100 AIM CONSTELLATION FUND
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 659-1005
TRANSFER AGENT
A I M FUND SERVICES, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 340-4246
AUDITORS
KPMG PEAT MARWICK LLP
700 Louisiana
Houston, Texas 77002
CUSTODIAN TABLE OF CONTENTS
STATE STREET BANK AND TRUST COMPANY PAGE
225 Franklin Street Summary..................................... 2
Boston, Massachusetts 02110 Table of Fees and Expenses.................. 4
Financial Highlights........................ 5
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY Suitability For Investors................... 8
INFORMATION OR TO MAKE ANY REPRESENTATIONS Investment Programs......................... 8
NOT CONTAINED IN THIS PROSPECTUS IN Purchase of Shares.......................... 12
CONNECTION WITH THE OFFERING MADE BY THIS Redemption of Shares........................ 13
PROSPECTUS, AND IF GIVEN OR MADE, SUCH Dividends and Distributions................. 13
INFORMATION OR REPRESENTATIONS MUST NOT BE Federal Taxes............................... 13
RELIED UPON AS HAVING BEEN AUTHORIZED BY Determination of Net Asset Value............ 14
THE FUNDS OR THE DISTRIBUTOR. THIS Performance................................. 14
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING Reports to Shareholders..................... 15
IN ANY JURISDICTION TO ANY PERSON TO WHOM Management.................................. 15
SUCH OFFERING MAY NOT LAWFULLY BE MADE. General Information......................... 17
========================================== ===============================================
</TABLE>
<PAGE> 322
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 100
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 100,
HOUSTON, TEXAS 77046-1173
OR BY CALLING (800) 659-1005
-------------------------
STATEMENT OF ADDITIONAL INFORMATION DATED FEBRUARY 27, 1998
RELATING TO PROSPECTUS DATED FEBRUARY 27, 1998
<PAGE> 323
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
Remuneration of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
AIM Funds Retirement Plan for Eligible Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . 7
Deferred Compensation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Investment Advisor, Sub-Advisor and Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PURCHASES AND REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Net Asset Value Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Suspension of Redemption Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Total Return Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Yield Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Historical Portfolio Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
INVESTMENT PROGRAM AND RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Investment Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Foreign Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Rule 144A Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Reverse Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Special Situations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Short Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Writing Covered Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Stock Index Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Risks as to Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Securities Issued on a When-Issued or Delayed Delivery Basis . . . . . . . . . . . . . . . . . . . . . . . . 26
Investment in Unseasoned Issuers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
General Brokerage Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Allocation of Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 28(e) Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Brokerage Commissions Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
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<TABLE>
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Reinvestment of Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Qualification as a Regulated Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Determination of Taxable Income of a Regulated Investment Company . . . . . . . . . . . . . . . . . . . . . 33
Excise Tax on Regulated Investment Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Fund Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Sale or Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Foreign Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Effect of Future Legislation; Local Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Description of Commercial Paper Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Description of Corporate Bond Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
</TABLE>
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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 February 27,
1998 (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 Fund ("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 100, 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 consists of six separate portfolios: Charter,
Constellation and Weingarten, each of which has retail classes of shares
consisting of Class A, Class B and Class C shares and an Institutional Class;
AIM Aggressive Growth Fund ("Aggressive Growth"), which has a Retail Class of
Class A shares; and AIM Blue Chip Fund ("Blue Chip") and AIM Capital
Development Fund ("Capital Development"), each of which has retail classes of
shares consisting of Class A, Class B and Class C 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.
Blue Chip acquired the investment portfolio of Baird Blue Chip Fund, Inc. (the
"BBC Fund") a registered management investment company, on June 3, 1996, in a
corporate reorganization. Capital Development acquired substantially all of
the assets of Baird Capital Development Fund, Inc., a registered management
investment company, on August 12, 1996 in a corporate reorganization.
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.
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<PAGE> 326
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 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
100, Houston, Texas 77046-1173. All of the Company's executive officers hold
similar offices with some or all of the other AIM Funds.
<TABLE>
<CAPTION>
Positions Held
Name, Address and Age with Registrant Principal Occupation During Past 5 Years
--------------------- --------------- ----------------------------------------
<S> <C> <C>
*CHARLES T. BAUER (78) Director and Chairman of the Board of Directors, A I M Management
Chairman Group Inc.; A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund
Services, Inc., and Fund Management Company; and Vice
Chairman and Director, AMVESCAP PLC.
BRUCE L. CROCKETT (53) Director Director, ACE Limited (insurance company). Formerly,
906 Frome Lane Director, President and Chief Executive Officer,
McLean, VA 22102 COMSAT Corporation; and Chairman, Board of Governors
of INTELSAT (international communications company).
OWEN DALY II (73) Director Director, Cortland Trust Inc. (investment company).
Six Blythewood Road Formerly, Director, CF & I Steel Corp., Monumental
Baltimore, MD 21210 Life Insurance Company and Monumental General
Insurance Company; and Chairman of the Board of
Equitable Bancorporation.
JACK FIELDS (45) Director Chief Executive Officer, Texana Global, Inc.
8810 Will Clayton Parkway Formerly, Member of the U.S. House of
Jetero Plaza, Suite E Representatives.
Humble, Texas 77398
</TABLE>
- ------------------------
* A director who is an "interested person" of A I M Advisors, Inc. and the
Company as defined in the 1940 Act.
2
<PAGE> 327
<TABLE>
<CAPTION>
Positions Held
Name, Address and Age with Registrant Principal Occupation During Past 5 Years
--------------------- --------------- ----------------------------------------
<S> <C> <C>
**CARL FRISCHLING (61) Director Partner, Kramer, Levin, Naftalis & Frankel (law firm).
919 Third Avenue Director, ERD Waste, Inc. (waste management company),
New York, NY 10022 Aegis Consumer Finance (auto leasing company) and
Lazard Funds, Inc. (investment companies). Formerly
Partner, Reid & Priest (law firm); and prior thereto,
Partner, Spengler Carlson Gubar Brodsky & Frischling
(law firm).
*ROBERT H. GRAHAM (51) Director and Director, President and Chief Executive Officer, A I M
President Management Group Inc.; Director and President, A I M
Advisors, Inc.; Director and Senior Vice President,
A I M Capital Management, Inc., A I M Distributors,
Inc., A I M Fund Services, Inc., and Fund Management
Company; Director, AMVESCAP PLC; and Chairman of the
Board of Directors of AIM Funds Group Canada, Inc.
JOHN F. KROEGER (73) Director Director, Flag Investors International Fund, Inc.,
37 Pippins Way Flag Investors Emerging Growth Fund, Inc., Flag
Morristown, NJ 07960 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 (55) Director Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
</TABLE>
- ------------------------
** A director who is an "interested person" of the Company as defined in
the 1940 Act.
* A director who is an "interested person" of A I M Advisors, Inc. and the
Company as defined in the 1940 Act.
3
<PAGE> 328
<TABLE>
<CAPTION>
Positions Held
Name, Address and Age with Registrant Principal Occupation During Past 5 Years
--------------------- --------------- ----------------------------------------
<S> <C> <C>
IAN W. ROBINSON (74) Director Formerly, Executive Vice President and Chief Financial
183 River Drive Officer, Bell Atlantic Management Services, Inc.
Tequesta, FL 33469 (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.
LOUIS S. SKLAR (58) Director Executive Vice President, Development and Operations,
Transco Tower, 50th Floor Hines Interests Limited Partnership (real
2800 Post Oak Blvd. estate development).
Houston, TX 77056
***JOHN J. ARTHUR (53) Senior Vice Director, Senior Vice President and Treasurer, A I M
President and Advisors, Inc.; and Vice President and Treasurer,
Treasurer A I M Management Group Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services,
Inc., and Fund Management Company.
GARY T. CRUM (50) Senior Vice Director and President, A I M Capital Management,
President Inc.; Director and Senior Vice President, A I M
Management Group Inc. and A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and AMVESCAP PLC.
***CAROL F. RELIHAN (43) Senior Vice Director, Senior Vice President, General Counsel and
President Secretary, A I M Advisors, Inc.; Vice President,
and Secretary General Counsel and Secretary, A I M Management Group
Inc.; Director, Vice President and General Counsel,
Fund Management Company; General Counsel and Vice
President, A I M Fund Services, Inc.; and Vice
President, A I M Capital Management, Inc., A I M
Distributors, Inc.
JONATHAN C. SCHOOLAR (36) Senior Vice Senior Vice President, A I M Capital Management Inc.;
President and Vice President, A I M Advisors, Inc.
MELVILLE B. COX (54) Vice President Vice President and Chief Compliance Officer, A I M
Advisors, Inc., A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc., and
Fund Management Company.
DANA R. SUTTON (39) Vice President and Vice President and Fund Controller, A I M Advisors,
Assistant Treasurer Inc.; and Assistant Vice President and Assistant
Treasurer, Fund Management Company.
</TABLE>
- ------------------------
*** Mr. Arthur and Ms. Relihan are married to each other.
4
<PAGE> 329
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. Crockett, Daly, Fields,
Frischling, Kroeger (Chairman), Pennock, Robinson and Sklar. 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), Fields, Frischling, Kroeger, Pennock, Robinson and Sklar. 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, Fields, Kroeger, Pennock (Chairman), Robinson 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. Each director who
is not also an officer of the Company is compensated for his or her services
according to a fee schedule which recognizes the fact that such director also
serves as a director or trustee of other AIM Funds. 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.
5
<PAGE> 330
Set forth below is information regarding compensation paid or accrued for
each director of the Company:
<TABLE>
<CAPTION>
RETIREMENT
AGGREGATE BENEFITS TOTAL
COMPENSATION ACCRUED COMPENSATION
FROM BY ALL AIM FROM ALL
DIRECTOR COMPANY(1) FUNDS(2) AIM FUNDS(3)
-------- ------------ ---------- ------------
<S> <C> <C> <C>
CHARLES T. BAUER $ 0 $ 0 $ 0
BRUCE L. CROCKETT 21,879 67,774 84,000
OWEN DALY II 21,879 103,542 84,000
JACK FIELDS 14,595 0 71,000
CARL FRISCHLING 21,879 96,520 84,000(4)
ROBERT H. GRAHAM 0 0 0
JOHN F. KROEGER 21,879 94,132 82,500
LEWIS F. PENNOCK 21,879 55,777 84,000
IAN W. ROBINSON 21,879 85,912 84,000
LOUIS S. SKLAR 21,602 84,370 83,500
</TABLE>
- ------------------------
(1) The total amount of compensation deferred by all Directors of the
Company during the fiscal year ended October 31, 1997, including
interest earned thereon, was $94,952.
(2) During the fiscal year ended October 31, 1997, the total amount of
expenses allocated to the Company in respect of such retirement
benefits was $163,466. Data reflects compensation for the calendar
year ended December 31, 1997.
(3) Each Director serves as a director or trustee of a total of 11
registered Investment Companies advised by AIM (comprised of over 50
portfolios). Data reflects total compensation for the calendar year
ended December 31, 1997.
(4) See also page 8 regarding fees earned by Mr. Frischling's law firm.
6
<PAGE> 331
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 "Applicable
AIM Funds"). Each eligible director is entitled to receive an annual benefit
from the Applicable 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 Applicable 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 ten (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 (10) 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 a specified level of
compensation and years of service classifications. The estimated credited
years of service for Messrs. Crockett, Daly, Fields, Frischling, Kroeger,
Pennock, Robinson and Sklar are 10, 10, 0, 10, 19, 16, 10, and 8 years,
respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
NUMBER OF YEARS AIM ANNUAL
OF SERVICE WITH RETAINER PAID
THE AIM FUNDS BY ALL AIM FUNDS
--------------- ----------------
<S> <C>
$80,000
10 $60,000
9 $54,000
8 $48,000
7 $42,000
6 $36,000
5 $30,000
</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
7
<PAGE> 332
deferring directors may select various AIM Funds in which all or part of their
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 five (5) to ten (10) years (depending
on the Agreement) 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 & Frankel
$12,872, $15,778 and $34,413 in legal fees for services provided to Charter,
Weingarten and Constellation, respectively, during the fiscal year ended
October 31, 1997. 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"), a holding company that has been
engaged in the financial services business since 1976. The address of AIM is
11 Greenway Plaza, Suite 100, Houston, Texas 77046. AIM was organized in 1976
and, through its affiliates, manages or advises over 50 investment company
portfolios encompassing a broad range of investment objectives. AIM Management
is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire Square,
London EC2M 4YR, United Kingdom. AMVESCAP PLC and its subsidiaries are an
independent investment management group engaged in institutional investment
management and retail mutual fund businesses in the United States, Europe and
the Pacific Region. 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 Management, Inc. ("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 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 (7) 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.
The Funds have entered into a Master Investment Advisory Agreement,
dated February 28, 1997, (the "Master Advisory Agreement") and a Master
Administrative Services Agreement, dated February 28, 1997, (the "Master
Administrative Services Agreement") with AIM, and AIM has entered into a Master
Sub-Advisory Agreement, dated as of February 28, 1997 (the "Master Sub-Advisory
Agreement"), with AIM Capital with respect to the Funds.
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
8
<PAGE> 333
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).
The Master Advisory Agreement and the Master Sub-Advisory Agreement
became effective on February 28, 1997 and will continue in effect until
February 28, 1999 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.
AIM may from time to time waive or reduce its fee. Fee waivers or
reductions, other than those set forth in the Master Advisory Agreement, may be
rescinded, however, at any time without further notice to investors, provided,
however, that the discontinuance of each fee waiver described below will be
approved by the Board of Directors of AIM.
AIM has initiated a voluntary reduction of advisory fees for Charter,
Constellation and Weingarten at net asset levels higher than those currently
incorporated in the advisory fee schedule. Accordingly, 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.
9
<PAGE> 334
Each Fund paid to AIM the following advisory fees net of any fee
waivers for the years ended October 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Charter . . . . . . . . . . $24,725,606 $16,529,891 $10,890,335
Weingarten . . . . . . . . . 35,300,671 29,960,379 25,448,131
Constellation . . . . . . . 80,116,284 57,614,412 31,042,229
</TABLE>
For the fiscal years ended October 31, 1997, 1996 and 1995, AIM
waived advisory fees for each Fund as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Charter . . . . . . . . . . $ 498,463 $ 156,975 -0-
Weingarten . . . . . . . . . 2,187,021 1,458,804 $843,494
Constellation . . . . . . . 2,805,955 1,869,383 761,655
</TABLE>
AIM, in turn, paid the following sub-advisory fees to AIM Capital, as
sub-advisor for each Fund, for the years ended October 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Charter . . . . . . . . . . $12,362,803 $ 8,264,946 $ 5,445,168
Weingarten . . . . . . . . . 17,650,335 14,980,190 12,724,066
Constellation . . . . . . . . 40,058,142 28,807,206 15,521,115
</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 February 28,
1997 and will continue in effect until February 28, 1999 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, 1997, 1996 and
1995:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Charter . . . . . . . . . . $127,908 $ 114,489 $ 109,054
Weingarten . . . . . . . . . 163,243 132,643 182,595
Constellation . . . . . . . 251,513 212,800 173,257
</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.
10
<PAGE> 335
In addition, the Transfer Agency and Service Agreement between the
Company and AIFS, which became effective July 1, 1995, provided that AIFS would
perform certain shareholder services for the Funds and would 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. On
September 19, 1997, the Board of Directors of the Funds approved the
appointment of A I M Fund Services, Inc. as transfer agent of the Funds,
effective December 29, 1997.
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. A I M Fund Services, Inc., a wholly
owned subsidiary of AIM, 11 Greenway Plaza, Suite 100, 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, 1997.
LEGAL MATTERS
Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street,
Philadelphia, Pennsylvania, serves as counsel to the Company.
On October 25, 1996 a shareholder of Aggressive Growth filed a
lawsuit in United States District Court, Southern District of Texas, against
the Company, A I M Advisors, Inc., A I M Distributors, Inc., and Aggressive
Growth as a nominal defendant. The action was instituted under Section 36(b)
of the Investment Company Act of 1940 and seeks to recover damages allegedly
suffered by Aggressive Growth in connection with fees paid for marketing and
shareholder services after Aggressive Growth was closed to new investors.
11
<PAGE> 336
PRINCIPAL HOLDERS OF SECURITIES
BLUE CHIP
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, Class B and Class C
shares of Blue Chip as of February 2, 1998, and the amount of the outstanding
shares held of record and beneficially owned by such holders are set forth
below:
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- --------------- ------------ -------------
<S> <C> <C>
RETAIL CLASS A SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 7.35%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
RETAIL CLASS B SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 11.88%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
RETAIL CLASS C SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 28.22%**
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</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> 337
CHARTER
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, Class B and Class C
shares of Charter as of February 2, 1998, and the Institutional Class of
Charter as of February 2, 1998, and the amount of the outstanding shares held
of record and beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- --------------- ------------ -------------
<S> <C> <C>
RETAIL CLASS A SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 11.39%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
Great-West Life and Annuity Insurance 7.27% -0-
401(k) Unit Valuations
Attn: Rod Switzer 2T2
8515 E. Orchard
Englewood, CO 80111
RETAIL CLASS B SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 9.34%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
RETAIL CLASS C SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 22.25%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</TABLE>
- -------------------
* The Funds have no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
13
<PAGE> 338
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- --------------- ------------ -------------
<S> <C> <C>
INSTITUTIONAL CLASS
- -------------------
Commonwealth of Massachusetts 94.81%** -0-
One Ashburton Place
12th Floor
Boston, MA 02108
</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 Class A, Class B and Class C
shares of Weingarten as of February 2, 1998, and the Institutional Class of
Weingarten as of February 2, 1998, and the amount of the outstanding shares
held of record and beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- --------------- ------------ -------------
<S> <C> <C>
RETAIL CLASS A SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 17.55%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
Great-West Life and Annuity Insurance 5.14% - 0 -
401(k) Unit Valuations
Attn: Rod Switzer 2T2
8515 E. Orchard
Englewood, CO 80111
</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.
14
<PAGE> 339
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- --------------- ------------ -------------
<S> <C> <C>
RETAIL CLASS B SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 10.98%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
RETAIL CLASS C SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 22.35%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</TABLE>
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- --------------- ------------ -------------
<S> <C> <C>
INSTITUTIONAL CLASS
- -------------------
Commonwealth of Massachusetts 87.17%** -0-
One Ashburton Place
12th Floor
Boston, MA 02108
Nationwide Ohio Variable Account - 0 - 5.14%
P. O. Box 182029
Columbus, OH 43218
Peoples Two Ten Company 5.28% -0-
Attn: Trust Operations, 7th Floor
C/O Summit Bank
P. O. Box 821
Hackensack, NJ 07602
</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.
15
<PAGE> 340
CONSTELLATION
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, Class B and Class C
shares of Constellation as of February 2, 1998, and of the Institutional Class
of Constellation as of February 2, 1998, and the amount of the outstanding
shares held of record and beneficially owned by such holders are set forth
below:
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- --------------- ------------ -------------
<S> <C> <C>
RETAIL CLASS A SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 14.18%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
RETAIL CLASS B SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 8.78%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
RETAIL CLASS C SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 31.18%**
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</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.
16
<PAGE> 341
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- --------------- ------------ -------------
<S> <C> <C>
INSTITUTIONAL CLASS
- -------------------
Nationwide Ohio Variable Account 60.12%** -0-
P.O. Box 182029
Columbus, Ohio 43218
Commonwealth of Massachusetts 29.27%** -0-
One Ashburton Place
12th Floor
Boston, MA 02108
</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 February 2, 1998, and the amount of the outstanding shares held
of record and beneficially owned by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- --------------- ------------ -------------
<S> <C> <C>
RETAIL CLASS A SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 18.20%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</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.
17
<PAGE> 342
CAPITAL DEVELOPMENT
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, Class B and Class C
shares of Capital Development as of February 2, 1998, and the amount of the
outstanding shares held of record and beneficially owned by such holders are
set forth below:
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- --------------- ------------ -------------
<S> <C> <C>
RETAIL CLASS A SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 16.00%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
RETAIL CLASS B SHARES
- ---------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 19.68%
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
REETAIL CLASS C SHARES
- ----------------------
Merrill Lynch Pierce Fenner & Smith - 0 - 32.42%**
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</TABLE>
As of February 2, 1998, 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 Blue Chip, Charter, Weingarten, Constellation, Aggressive
Growth and Capital Development.
- -------------------
* 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.
18
<PAGE> 343
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 ("NYSE") closes early (i.e., before 4:00 p.m. Eastern Time) on a
particular day, the net asset value of a Fund's share is determined as of the
close of the NYSE 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 NYSE 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. 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. Option contracts are valued at the mean of the
closing bid and asked prices on the exchange where the contracts are
principally traded. 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
NYSE. The values of such securities used in computing the net asset value of
the Fund's shares are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the NYSE.
Occasionally, events affecting the values of such securities and such exchange
rates may occur between the times at which they are determined and the close of
the NYSE which 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.
19
<PAGE> 344
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 NYSE is restricted, as
determined by applicable rules and regulations of the SEC, (b) the NYSE 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.
THE DISTRIBUTION AGREEMENT
The Company, on behalf of the Institutional Class of each Fund, has
entered into a Master Distribution Agreement, effective as of February 28,
1997, (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 100, 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
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 February 28, 1997 and
will continue in effect until February 28, 1999 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
20
<PAGE> 345
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.
Each Fund's performance may also be compared in advertising and
other materials to the performance of comparative benchmarks such as the
Consumer Price Index, the Standard & Poor's 500 Stock Index, and fixed-price
investments such as bank certificates of deposit and/or savings accounts.
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 29.05%
for the fiscal year ended October 31, 1997. The cumulative return of the
Institutional Class of Charter was 143.68% for the period of July 30, 1991
(date operations commenced) through October 31, 1997. The average return of
the Institutional Class of Weingarten was 27.37% for the fiscal year ended
October 31, 1997. The cumulative return of the Institutional Class of
Weingarten was 133.56% for the period of October 8, 1991 (date operations
commenced) through October 31, 1997. The average return of the Institutional
Class of Constellation was 19.42% for the fiscal year ended October 31, 1997.
The cumulative return of the Institutional Class of Constellation was 169.36%
for the period of April 8, 1992 (date operations commenced) through October 31,
1997.
21
<PAGE> 346
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.
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 Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") 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.
22
<PAGE> 347
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 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.
REVERSE REPURCHASE AGREEMENTS
Consistent with Charter's policy on borrowings, Charter may invest in
reverse repurchase agreements with banks, which involve the sale of securities
held by the Fund, with an agreement that the Fund will repurchase the
securities at an agreed upon price and date. The Fund may employ reverse
repurchase agreements (i) for temporary emergency purposes, such as to meet
unanticipated net redemptions so as to avoid liquidating other portfolio
securities during unfavorable market conditions; (ii) to cover short-term cash
requirements resulting from the timing of trade settlements; or (iii) to take
advantage of market situations where the interest income to be earned from the
investment of the proceeds of the transaction is greater than the interest
expense of the transaction. At the time it enters into a reverse repurchase
agreement, the Fund will segregate liquid securities having a dollar value
equal to the repurchase price. Reverse repurchase agreements are considered
borrowings by the Fund under the 1940 Act.
23
<PAGE> 348
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.
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.
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.
WRITING COVERED CALL OPTIONS
Charter, 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 Charter, 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, Charter, 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, Charter, Weingarten and
Constellation would seek to mitigate the effects of a price decline. By
writing covered call options, however, Charter, 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 Charter, Weingarten and Constellation
effect a closing purchase transaction.
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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 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 NYSE 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
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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 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.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS
Investment in securities on a when-issued or delayed delivery basis
may increase a Fund's exposure to market fluctuation and may increase the
possibility that the Fund will incur short-term gains subject to federal
taxation or short-term losses if the Fund must engage in portfolio transactions
in order to honor a when-issued or delayed delivery commitment. In a delayed
delivery transaction, the Fund relies on the other party to complete the
transaction. If the transaction is not completed, the Fund may miss a price or
yield considered to be advantageous. A Fund will employ techniques designed to
reduce such risks. If a Fund purchases a when-issued security, the Fund's
custodian bank will segregate cash or other liquid assets in an amount equal to
the when-issued commitment. If the market value of such assets declines,
additional cash or securities will be segregated on a daily basis so that the
market value of the segregated assets will equal the amount of the Fund's
when-issued commitments. To the extent cash and securities are segregated,
they will not be available for new investments or to meet redemptions.
Securities purchased on a delayed delivery basis may require a similar
segregation of cash or other liquid assets.
INVESTMENT IN UNSEASONED ISSUERS
Charter may purchase securities in unseasoned issues. Securities in
such issuers may provide opportunities for long term capital growth. Greater
risks are associated with investments in securities of unseasoned issuers than
in the securities of more established companies because unseasoned issuers have
only a brief operating history and may have more limited markets and financial
resources. As a result, securities of unseasoned issuers tend to be more
volatile than securities of more established companies.
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INVESTMENT RESTRICTIONS
The following 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, except that the Fund may purchase
securities of other investment companies to the extent permitted by applicable
law or exemptive order;
(b) concentrate its investments; that is, invest more than 25% of the
value of its assets in any particular industry;
(c) 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);
(d) buy or sell physical commodities or physical commodity contracts,
including physical commodities, futures contracts or deal in oil, gas, or other
mineral exploration or development programs;
(e) 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;
(f) purchase securities on margin or sell short;
(g) 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;
(h) invest in companies for the purpose of exercising control or
management, except that the Fund may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order;
(i) act as an underwriter of securities of other issuers;
(j) 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; or
(k) 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.
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.
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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,
except that the Fund may purchase securities of other investment companies to
the extent permitted by applicable law or exemptive order;
(g) buy or sell physical commodities or physical commodity contracts,
including physical commodities futures contracts;
(h) 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
(i) 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) 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); (b)
purchase more than 10% of the outstanding securities of any one issuer or more
than 10% of any class of securities of an issuer; or (c) deal in forward
contracts.
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, except that the Fund may purchase securities of other
investment companies to the extent permitted by applicable law or
exemptive order;
(b) engage in the underwriting of securities of other issuers;
(c) purchase and sell real estate or commodities or commodity
contracts;
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(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 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.
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.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
AIM makes decisions to buy and sell securities for each Fund, selects
broker-dealers, effects the Funds' investment portfolio transactions, allocates
brokerage fees in such transactions, and where applicable, negotiates
commissions and spreads on transactions. AIM's primary consideration in
effecting a security transaction is to obtain the most favorable execution of
the order, which includes the best price on the security and a low commission
rate. While AIM seeks reasonably competitive commission rates, the Funds may
not pay the lowest commission or spread available. See "Section 28(e)
Standards" below.
Some of the securities in which the Funds invest are traded in
over-the-counter markets. In such transactions, a Fund deals directly with
dealers who make markets in the securities involved, except when better prices
are available elsewhere. Portfolio transactions placed through dealers who are
primary market makers are effected at net prices without commissions, but which
include compensation in the form of a mark up or mark down.
Traditionally, commission rates have not been negotiated on stock
markets outside the United States. Although in recent years many overseas
stock markets have adopted a system of negotiated rates, a number of markets
maintain an established schedule of minimum commission rates.
AIM may determine target levels of commission business with various
brokers on behalf of its clients (including the Funds) over a certain time
period. The target levels will be based upon the following factors, among
others: (1) the execution services provided by the broker; (2) the research
services provided by the broker; and (3) the broker's interest in mutual funds
in general and in the Funds and other mutual funds advised by AIM or AIM
Capital (collectively, the "AIM Funds") in particular, including sales of the
Funds and of the other
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AIM Funds. In connection with (3) above, the Funds' trades may be executed
directly by dealers that sell shares of the AIM Funds or by other
broker-dealers with which such dealers have clearing arrangements. AIM will
not use a specific formula in connection with any of these considerations to
determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of a
Fund any commissions, fees, brokerage or similar payments paid by the Fund on
portfolio transactions. Normally, the only fees which AIM can recapture are
the soliciting dealer fees on the tender of a Fund's portfolio securities in a
tender or exchange offer.
The Funds may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of a Fund, provided the conditions of an exemptive order received by
the Funds from the SEC are met. In addition, a Fund may purchase or sell a
security from or to another AIM Fund provided the Funds follow procedures
adopted by the Board of Directors/Trustees of the various AIM Funds, including
the Company. These inter-fund transactions do not generate brokerage
commissions but may result in custodial fees or taxes or other related
expenses.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some
of these accounts may have investment objectives similar to the Funds.
Occasionally, identical securities will be appropriate for investment by one of
the Funds and by another Fund or one or more of these investment accounts.
However, the position of each account in the same securities and the length of
time that each account may hold its investment in the same securities may vary.
The timing and amount of purchase by each account will also be determined by
its cash position. If the purchase or sale of securities is consistent with
the investment policies of the Fund(s) and one or more of these accounts, and
is considered at or about the same time, AIM will fairly allocate transactions
in such securities among the Fund(s) and these accounts. AIM may combine such
transactions, in accordance with applicable laws and regulations, to obtain the
most favorable execution. Simultaneous transactions could, however, adversely
affect a Fund's ability to obtain or dispose of the full amount of a security
which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among
the various investment accounts advised by AIM could have an adverse effect on
the price or amount of securities available to a Fund. In making such
allocations, AIM considers the investment objectives and policies of its
advisory clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held, and the judgments of the persons
responsible for recommending the investment.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that
AIM, under certain circumstances, lawfully may cause an account to pay a higher
commission than the lowest available. Under Section 28(e), AIM must make a
good faith determination that the commissions paid are "reasonable in relation
to the value of the brokerage and research services provided ... viewed in
terms of either that particular transaction or [AIM's] overall responsibilities
with respect to the accounts as to which it exercises investment discretion."
The services provided by the broker also must lawfully and appropriately assist
AIM in the performance of its investment decision-making responsibilities.
Accordingly, in recognition of research services provided to it, a Fund may pay
a broker higher commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
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strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Company's directors with respect to
the performance, investment activities, and fees and expenses of other mutual
funds. Broker-dealers may communicate such information electronically, orally
or in written form. Research services may also include the providing of
custody services, as well as the providing of equipment used to communicate
research information, the providing of specialized consultations with AIM
personnel with respect to computerized systems and data furnished to AIM as a
component of other research services, the arranging of meetings with management
of companies, and the providing of access to consultants who supply research
information.
The outside research assistance is useful to AIM since the
broker-dealers used by AIM tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, the research provides
AIM with a diverse perspective on financial markets. Research services
provided to AIM by broker-dealers are available for the benefit of all accounts
managed or advised by AIM or by its affiliates. Some broker-dealers may
indicate that the provision of research services is dependent upon the
generation of certain specified levels of commissions and underwriting
concessions by AIM's clients, including the Funds. However, the Funds are not
under any obligation to deal with any broker-dealer in the execution of
transactions in portfolio securities.
In some cases, the research services are available only from the
broker-dealer providing them. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM believes
that the research services are beneficial in supplementing AIM's research and
analysis and that they improve the quality of AIM's investment advice. The
advisory fee paid by the Funds is not reduced because AIM receives such
services. However, to the extent that AIM would have purchased research
services had they not been provided by broker-dealers, the expenses to AIM
could be considered to have been reduced accordingly.
BROKERAGE COMMISSIONS PAID
For the fiscal years ended October 31, 1997, 1996 and 1995, Charter
paid brokerage commissions of $12,073,633, $9,213,125 and $14,960,600,
respectively. For the fiscal year ended October 31, 1997, AIM allocated certain
of Charter's brokerage transactions to certain broker-dealers that provided AIM
with certain research, statistical and other information. Such transactions
amounted to $756,761,085 and the related brokerage commissions were $692,584.
For the fiscal years ended October 31, 1997, 1996 and 1995, Weingarten
paid brokerage commissions of $17,413,682, $21,795,437 and $21,766,760,
respectively. For the fiscal year ended October 31, 1997, AIM allocated certain
of Weingarten's brokerage transactions to certain broker-dealers that provided
AIM with certain research, statistical and other information. Such transactions
amounted to $1,134,767,539 and the related brokerage commissions were
$1,144,152.
For the fiscal years ended October 31, 1997, 1996 and 1995,
Constellation paid brokerage commissions of $16,928,988, $13,032,299 and
$15,359,510, respectively. For the fiscal year ended October 31, 1997 AIM
allocated certain of Constellation's brokerage transactions to certain
broker-dealers that provided AIM with certain research, statistical and other
information. Such transactions amounted to $1,340,675,363 and the related
brokerage commissions were $1,611,545.
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.
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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.
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 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").
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
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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.
DETERMINATION OF TAXABLE INCOME OF A REGULATED INVESTMENT COMPANY
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. 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.
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 (taxable at 20%) 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.
Other hedging transactions that may be engaged in by certain of the
Funds (such as short sales "against the box") may be subject to special tax
treatment as "constructive sales" under section 1259 of the Code if a Fund
holds certain "appreciated financial positions" (defined generally as any
interest (including a futures or forward contract, short sale or option) with
respect to stock, certain debt instruments, or partnership interests if there
would be a gain were such interest sold, assigned, or otherwise terminated at
its fair market value). Upon entering into a constructive sales transaction
with respect to an appreciated financial position, a Fund will be deemed to
have constructively sold such appreciated financial position and will recognize
gain as if such position were sold, assigned, or otherwise terminated at its
fair market value on the date of such constructive sale (and will take into
account any gain for the taxable year which includes such date unless the
closed transaction exception applies).
Because application of the rules governing Section 1256 contracts and
constructive sales may affect the character of gains or losses and/or
accelerate the recognition of gains or losses from the affected investment
positions, the amount which must be distributed to shareholders and which will
be taxed to shareholders as ordinary income or long-term capital gain may be
increased as compared to a fund that did not engage in transactions involving
Section 1256 contracts or constructive sales.
33
<PAGE> 358
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. Under the Taxpayer Relief Act of 1997, the Internal
Revenue Service is authorized to issue regulations that will enable
shareholders to determine the tax rates applicable to such capital gain
distributions. 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
34
<PAGE> 359
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 taxpayers on the excess of
the taxpayer's alternative minimum taxable income ("AMTI") over an exemption
amount. 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. For taxable years beginning after 1997, however, certain small
corporations are wholly exempt from the AMT.
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
in accordance with the guidance that has been provided by the Internal Revenue
Service.
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
35
<PAGE> 360
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 than one year. Under the Taxpayer Relief Act of 1997, the Internal
Revenue Service is authorized to issue appropriate regulations that will enable
shareholders to determine the tax rates applicable to such recognized long-term
capital gain. 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 that in some cases may be 19.6% 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
36
<PAGE> 361
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 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.
37
<PAGE> 362
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.
38
<PAGE> 363
FINANCIAL STATEMENTS
FS
<PAGE> 364
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, 1997, 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 or periods in the
four-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. The financial highlights
for the year ended October 31, 1993 were audited by other
auditors whose report thereon, dated November 12, 1993
expressed an unqualified opinion on those financial
highlights.
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, 1997, 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, 1997, 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 or periods in the four-year period then ended, in
conformity with generally accepted accounting principles
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
FS-1
C H A R T E R
<PAGE> 365
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-79.22%
AUTO PARTS & EQUIPMENT-0.47%
Lear Corp.(a) 450,000 $ 21,628,125
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.32%
Wells Fargo & Co. 50,000 14,568,750
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-4.73%
BankAmerica Corp. 450,000 32,175,000
- ---------------------------------------------------------------
Chase Manhattan Corp. 1,000,000 115,375,000
- ---------------------------------------------------------------
Citicorp 550,000 68,784,375
- ---------------------------------------------------------------
216,334,375
- ---------------------------------------------------------------
BANKS (REGIONAL)-0.58%
Marshall & Ilsley Corp. 250,000 12,968,750
- ---------------------------------------------------------------
Uniao de Bancos Brasileiros
S.A.-GDR (Brazil)(a) 500,000 13,625,000
- ---------------------------------------------------------------
26,593,750
- ---------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-0.49%
Coca-Cola Co. 400,000 22,600,000
- ---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.25%
Lubrizol Corp. (The) 300,000 11,550,000
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.31%
ADC Telecommunications, Inc.(a) 700,000 23,187,500
- ---------------------------------------------------------------
Comverse Technology, Inc.(a) 270,000 11,137,500
- ---------------------------------------------------------------
DSC Communications Corp.(a) 400,000 9,750,000
- ---------------------------------------------------------------
ECI Telecommunications Ltd.
Designs (Israel) 400,000 11,050,000
- ---------------------------------------------------------------
Lucent Technologies, Inc. 200,000 16,487,500
- ---------------------------------------------------------------
Nokia Oy A.B.-Class A-ADR
(Finland) 300,000 26,475,000
- ---------------------------------------------------------------
Northern Telecom Ltd. (Canada) 150,000 13,453,125
- ---------------------------------------------------------------
Telefonaktiebolaget LM
Ericsson-ADR (Sweden) 350,000 15,487,500
- ---------------------------------------------------------------
Tellabs, Inc.(a) 450,000 24,300,000
- ---------------------------------------------------------------
151,328,125
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-3.10%
Compaq Computer Corp.(a)(b) 660,500 42,106,875
- ---------------------------------------------------------------
Dell Computer Corp.(a)(b) 200,000 16,025,000
- ---------------------------------------------------------------
Hewlett-Packard Co. 200,000 12,337,500
- ---------------------------------------------------------------
International Business Machines
Corp. 550,000 53,934,375
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a) 500,000 17,125,000
- ---------------------------------------------------------------
141,528,750
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.64%
3Com Corp.(a) 300,000 12,431,250
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-(CONTINUED)
Bay Networks, Inc.(a)(b) 1,200,000 $ 37,950,000
- ---------------------------------------------------------------
Cisco Systems, Inc.(a) 300,000 24,609,375
- ---------------------------------------------------------------
74,990,625
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-3.73%
America Online, Inc.(a) 300,000 23,100,000
- ---------------------------------------------------------------
Computer Associates
International, Inc.(b) 700,000 52,193,750
- ---------------------------------------------------------------
Compuware Corp.(a) 200,000 13,225,000
- ---------------------------------------------------------------
HBO & Co.(b) 400,000 17,400,000
- ---------------------------------------------------------------
Microsoft Corp.(a) 300,000 39,000,000
- ---------------------------------------------------------------
Sterling Commerce, Inc.(a) 450,000 14,934,375
- ---------------------------------------------------------------
Sybase, Inc.(a) 650,000 10,603,125
- ---------------------------------------------------------------
170,456,250
- ---------------------------------------------------------------
CONSUMER FINANCE-1.55%
Household International, Inc. 300,000 33,975,000
- ---------------------------------------------------------------
MBNA Corp. 600,000 15,787,500
- ---------------------------------------------------------------
SLM Holding Corp. 150,000 21,056,250
- ---------------------------------------------------------------
70,818,750
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD &
HEALTH)-1.14%
AmeriSource Health Corp.-Class
A(a) 125,000 7,421,875
- ---------------------------------------------------------------
Bergen Brunswig Corp.-Class A 400,000 16,025,000
- ---------------------------------------------------------------
Cardinal Health, Inc. 250,000 18,562,500
- ---------------------------------------------------------------
Sysco Corp. 250,000 10,000,000
- ---------------------------------------------------------------
52,009,375
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.80%
General Electric Co. 500,000 32,281,250
- ---------------------------------------------------------------
Philips Electronics N.V.-ADR-New
York Shares (Netherlands) 500,000 39,187,500
- ---------------------------------------------------------------
Westinghouse Electric Corp. 400,000 10,575,000
- ---------------------------------------------------------------
82,043,750
- ---------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.27%
Kent Electronics Corp.(a) 350,000 12,228,125
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-1.50%
Intel Corp.(b) 450,000 34,650,000
- ---------------------------------------------------------------
National Semiconductor Corp.(a) 350,000 12,600,000
- ---------------------------------------------------------------
Texas Instruments, Inc. 200,000 21,337,500
- ---------------------------------------------------------------
68,587,500
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-5.41%
American Express Co. 500,000 39,000,000
- ---------------------------------------------------------------
American General Corp. 250,000 12,750,000
- ---------------------------------------------------------------
Federal Home Loan Mortgage Corp. 1,250,000 47,343,750
- ---------------------------------------------------------------
</TABLE>
FS-2
C H A R T E R
<PAGE> 366
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCIAL (DIVERSIFIED)-(CONTINUED)
Federal National Mortgage
Association 1,000,000 $ 48,437,500
- ---------------------------------------------------------------
MBIA, Inc. 400,000 23,900,000
- ---------------------------------------------------------------
MGIC Investment Corp. 200,000 12,062,500
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 1,300,000 63,700,000
- ---------------------------------------------------------------
247,193,750
- ---------------------------------------------------------------
FOODS-0.28%
Sara Lee Corp. 250,000 12,781,250
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-5.05%
Abbott Laboratories 200,000 12,262,500
- ---------------------------------------------------------------
American Home Products Corp. 1,000,000 74,125,000
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 650,000 57,037,500
- ---------------------------------------------------------------
Johnson & Johnson 400,000 22,950,000
- ---------------------------------------------------------------
Warner-Lambert Co. 450,000 64,434,375
- ---------------------------------------------------------------
230,809,375
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.52%
Dura Pharmaceuticals, Inc.(a) 300,000 14,512,500
- ---------------------------------------------------------------
Teva Pharmaceutical Industries
Ltd.-ADR (Israel) 200,000 9,350,000
- ---------------------------------------------------------------
23,862,500
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-4.22%
Lilly (Eli) & Co. 250,000 16,718,750
- ---------------------------------------------------------------
Merck & Co., Inc. 500,000 44,625,000
- ---------------------------------------------------------------
Pfizer, Inc. 850,000 60,137,500
- ---------------------------------------------------------------
SmithKline Beecham PLC-ADR
(United Kingdom) 1,500,000 71,437,500
- ---------------------------------------------------------------
192,918,750
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.59%
Health Management Associates, Inc.-Class
A(a) 100,000 2,437,500
- ---------------------------------------------------------------
Tenet Healthcare Corp.(a) 800,000 24,450,000
- ---------------------------------------------------------------
26,887,500
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.31%
HEALTHSOUTH Corp.(a) 550,000 14,059,375
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.89%
MedPartners, Inc.(a) 1,600,000 40,700,000
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-1.76%
Arterial Vascular Engineering,
Inc.(a) 350,000 18,593,750
- ---------------------------------------------------------------
Baxter International Inc. 300,000 13,875,000
- ---------------------------------------------------------------
Boston Scientific Corp.(a) 325,000 14,787,500
- ---------------------------------------------------------------
Henry Schein, Inc.(a) 350,000 11,506,250
- ---------------------------------------------------------------
Medtronic, Inc. 500,000 21,750,000
- ---------------------------------------------------------------
80,512,500
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.69%
Covance, Inc.(a) 365,000 $ 6,455,938
- ---------------------------------------------------------------
Omnicare, Inc. 900,000 25,031,250
- ---------------------------------------------------------------
31,487,188
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.20%
Leggett & Platt, Inc. 213,900 8,930,325
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.78%
Colgate-Palmolive Co. 300,000 19,425,000
- ---------------------------------------------------------------
Procter & Gamble Co. (The) 240,000 16,320,000
- ---------------------------------------------------------------
35,745,000
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.51%
Provident Companies, Inc. 700,000 23,362,500
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-2.18%
Ace, Ltd. 200,000 18,587,500
- ---------------------------------------------------------------
American International Group,
Inc. 450,000 45,928,125
- ---------------------------------------------------------------
Travelers Group, Inc. 500,000 35,000,000
- ---------------------------------------------------------------
99,515,625
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-1.77%
Allstate Corp. 800,000 66,350,000
- ---------------------------------------------------------------
Travelers Property Casualty
Corp.-Class A 400,000 14,450,000
- ---------------------------------------------------------------
80,800,000
- ---------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-1.04%
Merrill Lynch & Co., Inc. 700,000 47,337,500
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-0.49%
Franklin Resources, Inc. 250,000 22,468,750
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-1.85%
Brunswick Corp. 2,500,000 84,375,000
- ---------------------------------------------------------------
LODGING-HOTELS-1.20%
Carnival Corp.-Class A 342,500 16,611,250
- ---------------------------------------------------------------
ITT Corp. 200,000 14,937,500
- ---------------------------------------------------------------
Patriot American Hospitality,
Inc. 700,000 23,100,000
- ---------------------------------------------------------------
54,648,750
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.29%
Deere & Co. 250,000 13,156,250
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.45%
Eaton Corp. 250,000 24,156,250
- ---------------------------------------------------------------
Hillenbrand Industries, Inc. 300,000 12,825,000
- ---------------------------------------------------------------
Tyco International Ltd. 400,000 15,100,000
- ---------------------------------------------------------------
United Technologies Corp. 200,000 14,000,000
- ---------------------------------------------------------------
66,081,250
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.29%
Diebold, Inc. 300,000 13,218,750
- ---------------------------------------------------------------
</TABLE>
FS-3
C H A R T E R
<PAGE> 367
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NATURAL GAS-0.52%
El Paso Natural Gas Co. 400,000 $ 23,975,000
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.80%
Boise Cascade Office Products
Corp.(a) 400,000 7,600,000
- ---------------------------------------------------------------
Wallace Computer Services, Inc. 750,000 28,828,125
- ---------------------------------------------------------------
36,428,125
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-1.82%
BJ Services Co.(a) 300,000 25,425,000
- ---------------------------------------------------------------
Halliburton Co. 400,000 23,850,000
- ---------------------------------------------------------------
Hvide Marine, Inc.-Class A(a) 500,000 16,500,000
- ---------------------------------------------------------------
Petroleum Geo-Services ASA-ADR
(Norway)(a) 250,000 17,312,500
- ---------------------------------------------------------------
83,087,500
- ---------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-1.11%
Exxon Corp. 400,000 24,575,000
- ---------------------------------------------------------------
Royal Dutch Petroleum Co.-ADR-New
York Shares (Netherlands) 500,000 26,312,500
- ---------------------------------------------------------------
50,887,500
- ---------------------------------------------------------------
OIL & GAS (REFINING & MARKETING)-0.51%
Tosco Corp. 700,000 23,100,000
- ---------------------------------------------------------------
OIL & GAS (SERVICES)-0.29%
YPF Sociedad Anonima-ADR
(Argentina) 410,300 13,129,600
- ---------------------------------------------------------------
PERSONAL CARE-1.09%
Avon Products, Inc.(b) 350,000 22,925,000
- ---------------------------------------------------------------
Gillette Co. 300,000 26,718,750
- ---------------------------------------------------------------
49,643,750
- ---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.96%
Xerox Corp. 555,000 44,018,438
- ---------------------------------------------------------------
POWER PRODUCERS
(INDEPENDENT)-0.19%
CalEnergy, Inc.(a) 250,000 8,562,500
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUST-1.38%
Cali Realty Corp. 425,000 17,212,500
- ---------------------------------------------------------------
Crescent Real Estate Equities,
Inc. 400,000 14,400,000
- ---------------------------------------------------------------
Starwood Lodging Trust 300,000 17,943,750
- ---------------------------------------------------------------
Vornado Realty Trust 300,000 13,387,500
- ---------------------------------------------------------------
62,943,750
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-0.79%
CompUSA, Inc.(a)(b) 1,100,000 36,025,000
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-1.97%
Carson Pirie Scott & Co.(a) 250,000 12,046,875
- ---------------------------------------------------------------
Federated Department Stores,
Inc.(a) 400,000 17,600,000
- ---------------------------------------------------------------
J.C. Penney Co., Inc. 400,000 23,475,000
- ---------------------------------------------------------------
Kohl's Corp.(a) 250,000 16,781,250
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-(CONTINUED)
Proffitt's, Inc.(a) 700,000 $ 20,081,250
- ---------------------------------------------------------------
89,984,375
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.22%
Consolidated Stores Corp.(a) 250,000 9,968,750
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.37%
Walgreen Co. 600,000 16,875,000
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.17%
Blue Square-Israel Ltd.-ADR
(Israel)(a) 660,000 7,672,500
- ---------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-0.38%
Costco Companies, Inc.(a) 450,000 17,325,000
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-0.71%
Corporate Express, Inc.(a) 1,000,000 14,687,500
- ---------------------------------------------------------------
Polo Ralph Lauren Corp.(a) 600,000 15,600,000
- ---------------------------------------------------------------
Staples, Inc.(a) 85,000 2,231,250
- ---------------------------------------------------------------
32,518,750
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.16%
Stage Stores, Inc.(a) 200,000 7,300,000
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.90%
Washington Mutual, Inc. 600,000 41,062,500
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-3.27%
American Residential Services,
Inc.(a) 425,000 6,215,625
- ---------------------------------------------------------------
CUC International, Inc.(a) 800,000 23,600,000
- ---------------------------------------------------------------
HFS, Inc.(a) 600,000 42,300,000
- ---------------------------------------------------------------
Service Corp. International 2,000,000 60,875,000
- ---------------------------------------------------------------
Stewart Enterprises, Inc.-Class A 400,000 16,600,000
- ---------------------------------------------------------------
149,590,625
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.02%
Ceridian Corp.(a) 400,000 15,625,000
- ---------------------------------------------------------------
Equifax, Inc. 500,000 15,531,250
- ---------------------------------------------------------------
Fiserv, Inc.(a) 350,000 15,662,500
- ---------------------------------------------------------------
46,818,750
- ---------------------------------------------------------------
TELEPHONE-1.86%
Cincinnati Bell, Inc. 2,200,000 59,400,000
- ---------------------------------------------------------------
SBC Communications, Inc. 400,000 25,450,000
- ---------------------------------------------------------------
84,850,000
- ---------------------------------------------------------------
TOBACCO-1.95%
Philip Morris Companies, Inc. 2,250,000 89,156,250
- ---------------------------------------------------------------
TRUCKS & PARTS-0.13%
Cummins Engine Co., Inc. 100,000 6,093,749
- ---------------------------------------------------------------
Total Common Stocks 3,619,135,550
- ---------------------------------------------------------------
</TABLE>
FS-4
C H A R T E R
<PAGE> 368
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS-8.00%
AUTOMOBILES-0.31%
Volkswagen International Finance
N.V. (Germany), Conv. Gtd.
Notes, 3.00%, 01/24/02 $12,000,000 $ 14,130,000
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.55%
Mark IV Industries, Conv. Sub.
Notes, 4.75%, 11/01/04(c)
(acquired 10/23/97-10/24/97;
cost $14,997,500) 15,000,000 14,460,900
- ---------------------------------------------------------------
Tower Automotive Inc., Conv. Sub.
Notes, 5.00%, 08/01/04(c)
(acquired 07/24/97; cost
$10,591,433) 10,450,000 10,821,184
- ---------------------------------------------------------------
25,282,084
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.03%
EMC Corp., Conv. Sub. Notes,
3.25%, 03/15/02 20,000,000 27,757,000
- ---------------------------------------------------------------
Quantum Corp., Conv. Sub. Notes,
5.00%, 03/01/03 7,000,000 19,396,860
- ---------------------------------------------------------------
47,153,860
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.23%
Veritas Software Corp., Conv.
Sub. Notes, 5.25%, 11/01/04(c)
(acquired 10/09/97; cost
$10,500,000) 10,500,000 10,368,750
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.32%
SCI Systems, Inc., Conv. Sub.
Notes, 5.00%, 05/01/06 8,000,000 14,769,840
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-0.53%
Altera Corp., Conv. Sub. Notes,
5.75%, 06/15/02 5,000,000 8,750,550
- ---------------------------------------------------------------
Analog Devices, Conv. Sub. Notes,
3.50%, 12/01/00 10,000,000 15,307,400
- ---------------------------------------------------------------
24,057,950
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.25%
NCS Healthcare Inc., Conv. Sub.
Notes, 5.75%, 08/15/04(c)
(acquired 08/07/97-08/08/97;
cost $12,058,245) 12,000,000 11,546,760
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-1.00%
Loews Corp., Conv. Sub. Notes,
3.125%, 09/15/07 40,000,000 45,646,000
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.50%
Thermo Electron Corp., Conv. Sub.
Deb., 4.25%, 01/01/03(c)
(acquired 06/20/97-06/27/97;
cost $23,144,315) 20,000,000 22,621,800
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.52%
U.S. Filter Corp., Conv. Sub.
Notes, 4.50%, 12/15/01 20,000,000 23,641,600
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.65%
Danka Business Systems PLC, Conv.
Sub. Notes, 6.75%, 04/01/02
(United Kingdom) $22,500,000 $ 29,817,675
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.41%
Nabors Industries, Inc., Conv.
Sub. Notes, 5.00%, 05/15/06 8,000,000 18,872,400
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.14%
Home Depot, Inc., Conv. Sub.
Notes, 3.25%, 10/01/01 5,000,000 6,465,800
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-0.14%
Staples Inc., Conv. Sub. Deb.,
4.50%, 10/01/00(c) (acquired
10/23/97-10/24/97; cost
$6,725,000) 5,000,000 6,361,800
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.56%
Career Horizons, Inc., Conv.
Bonds, 7.00%, 11/01/02 10,000,000 25,409,400
- ---------------------------------------------------------------
WASTE MANAGEMENT-0.86%
Sanifill, Inc., Conv. Sub. Deb.,
5.00%, 03/01/06 18,000,000 25,648,920
- ---------------------------------------------------------------
United Waste Systems, Inc., Conv.
Sub. Notes, 4.50%, 06/01/01 10,250,000 13,820,280
- ---------------------------------------------------------------
39,469,200
- ---------------------------------------------------------------
Total Convertible Corporate
Bonds 365,614,919
- ---------------------------------------------------------------
SHARES
CONVERTIBLE PREFERRED STOCKS-6.72%
FINANCIAL (DIVERSIFIED)-0.56%
AES Trust I-$2.69 Conv. Pfd 250,000 16,000,000
- ---------------------------------------------------------------
AES Trust II-$2.75 Conv. Pfd.,(c)
(acquired 10/24/97; cost
$10,000,000) 200,000 9,525,000
- ---------------------------------------------------------------
25,525,000
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.74%
Medpartners Inc.-$1.44 Conv. Pfd. 1,400,000 33,950,000
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.16%
Conseco Inc.-$4.278 Conv. PRIDES 350,000 53,200,000
- ---------------------------------------------------------------
LODGING-HOTELS-0.50%
Host Marriott Corp., $3.375 Conv.
Pfd. 350,000 22,881,250
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.44%
EVI, Inc., $2.50 Conv. Pfd. 400,000 20,150,000
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.36%
TJX Companies., Inc.-Series E,
$7.00 Conv. Pfd. 50,000 16,250,000
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.40%
Automatic Common Exchange
Security Trust II-$1.55 Conv.
Pfd. 350,000 9,887,500
- ---------------------------------------------------------------
</TABLE>
FS-5
C H A R T E R
<PAGE> 369
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (COMMERCIAL & CONSUMER)-(CONTINUED)
Hvide Capital Trust-$3.25 Conv.
Pfd.(c) (acquired
10/11/96-05/02/97; cost
$8,701,548) 123,000 $ 8,270,520
- ---------------------------------------------------------------
18,158,020
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-2.56%
WorldCom, Inc.-$2.68 Dep. Conv.
Pfd. 1,000,000 117,000,000
- ---------------------------------------------------------------
Total Convertible Preferred
Stocks 307,114,270
- ---------------------------------------------------------------
PRINCIPAL
AMOUNT
U.S. TREASURY NOTES-6.19%
8.875%, 02/15/99 $25,000,000 $ 26,000,750
- ---------------------------------------------------------------
9.125%, 05/15/99(d) 70,000,000 73,541,300
- ---------------------------------------------------------------
8.50%, 02/15/00 20,000,000 21,195,200
- ---------------------------------------------------------------
PRINCIPAL
AMOUNT
U.S. TREASURY NOTES-(CONTINUED)
8.875%, 05/15/00(d) $20,000,000 $ 21,508,400
- ---------------------------------------------------------------
8.75%, 08/15/00(d) 20,000,000 21,553,400
- ---------------------------------------------------------------
11.75%, 02/15/01(d) 80,000,000 94,303,200
- ---------------------------------------------------------------
13.125%, 05/15/01 20,000,000 24,682,600
- ---------------------------------------------------------------
Total U.S. Treasury Notes 282,784,850
- ---------------------------------------------------------------
REPURCHASE AGREEMENT(e)-0.28%
Sanwa Securities (USA) L.P.,
5.73%, 11/03/97(f) 12,899,236 12,899,236
- ---------------------------------------------------------------
TOTAL INVESTMENTS-100.41% 4,587,548,825
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-(0.41)% (18,682,659)
- ---------------------------------------------------------------
NET ASSETS-100.00% $4,568,866,166
===============================================================
</TABLE>
Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debentures
Dep. - Depository
GDR - Global Depository Receipt
Gtd. - Guaranteed
Pfd. - Preferred
PRIDES - Preferred Redemption Increase Dividend Equity Security
Sub. - Subordinated
Notes to Schedule of Investments:
(a)Non-income producing security
(b)A portion of these securities are subject to call options written. See note
8.
(c)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 the procedures established by the Board of Directors. The aggregate
market value of these securities at 10/31/97 was $93,976,714, which
represented 2.06% of the Fund's net assets.
(d)A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See note 7.
(e)Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value 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, private
accounts and certain non-registered investment companies managed by the
investment advisor.
(f)Joint repurchase agreement entered into 10/31/97 with a maturing value of
$200,095,500. Collateralized by $201,314,000 U.S. Government obligations, 0%
to 8.875% due 11/03/97 to 08/15/27 with an aggregate market value at 10/31/97
of $204,000,545.
See Notes to Financial Statements.
FS-6
C H A R T E R
<PAGE> 370
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$3,678,855,389) $4,587,548,825
- ------------------------------------------------------------
Receivable for:
Investments sold 46,111,494
- ------------------------------------------------------------
Capital stock sold 20,097,839
- ------------------------------------------------------------
Dividends and interest 14,817,418
- ------------------------------------------------------------
Variation margin 1,040,625
- ------------------------------------------------------------
Investment for deferred compensation plan 44,514
- ------------------------------------------------------------
Other assets 133,382
- ------------------------------------------------------------
Total assets 4,669,794,097
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 82,481,133
- ------------------------------------------------------------
Capital stock reacquired 10,912,732
- ------------------------------------------------------------
Options written 2,272,031
- ------------------------------------------------------------
Deferred compensation 44,514
- ------------------------------------------------------------
Accrued advisory fees 2,492,536
- ------------------------------------------------------------
Accrued administrative services fees 9,821
- ------------------------------------------------------------
Accrued distribution fees 1,858,913
- ------------------------------------------------------------
Accrued transfer agent fees 549,487
- ------------------------------------------------------------
Accrued operating expenses 306,764
- ------------------------------------------------------------
Total liabilities 100,927,931
- ------------------------------------------------------------
Net assets applicable to shares outstanding $4,568,866,166
============================================================
NET ASSETS:
Class A $3,466,912,125
============================================================
Class B $1,056,094,084
============================================================
Class C $ 5,668,794
============================================================
Institutional Class $ 40,191,163
============================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 258,500,666
============================================================
Class B:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 78,995,187
============================================================
Class C:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 423,413
============================================================
Institutional Class:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 2,981,340
============================================================
Class A:
Net asset value and redemption price per
share $ 13.41
============================================================
Offering price per share:
(Net asset value of $13.41 divided by
94.50%) $ 14.19
============================================================
Class B:
Net asset value and offering price per
share $ 13.37
============================================================
Class C:
Net asset value and offering price per
share $ 13.39
============================================================
Institutional Class:
Net asset value, offering and redemption
price per share $ 13.48
============================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $363,901 foreign
withholding tax) $ 54,637,403
- -----------------------------------------------------------
Interest 20,413,876
- -----------------------------------------------------------
Total investment income 75,051,279
- -----------------------------------------------------------
EXPENSES:
Advisory fees 25,224,069
- -----------------------------------------------------------
Administrative services fees 127,908
- -----------------------------------------------------------
Custodian fees 335,709
- -----------------------------------------------------------
Directors' fees 32,960
- -----------------------------------------------------------
Distribution fees-Class A 9,459,952
- -----------------------------------------------------------
Distribution fees-Class B 8,046,181
- -----------------------------------------------------------
Distribution fees-Class C 6,079
- -----------------------------------------------------------
Transfer agent fees-Class A 4,142,179
- -----------------------------------------------------------
Transfer agent fees-Class B 1,472,206
- -----------------------------------------------------------
Transfer agent fees-Class C 1,330
- -----------------------------------------------------------
Transfer agent fees-Institutional Class 17,500
- -----------------------------------------------------------
Other 1,185,816
- -----------------------------------------------------------
Total expenses 50,051,889
- -----------------------------------------------------------
Less: Fees waived by advisor (498,463)
- -----------------------------------------------------------
Expenses paid indirectly (218,302)
- -----------------------------------------------------------
Net expenses 49,335,124
- -----------------------------------------------------------
Net investment income 25,716,155
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FUTURES AND OPTION CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 479,170,082
- -----------------------------------------------------------
Foreign currencies 8,764
- -----------------------------------------------------------
Futures contracts (2,590,423)
- -----------------------------------------------------------
Option contracts (4,682,882)
- -----------------------------------------------------------
471,905,541
- -----------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 452,544,247
- -----------------------------------------------------------
Foreign currencies (1,823)
- -----------------------------------------------------------
Futures contracts (2,280,695)
- -----------------------------------------------------------
Option contracts 3,564,452
- -----------------------------------------------------------
453,826,181
- -----------------------------------------------------------
Net gain on investment securities, foreign
currencies, futures and option transactions 925,731,722
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $951,447,877
===========================================================
</TABLE>
See Notes to Financial Statements.
FS-7
C H A R T E R
<PAGE> 371
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 25,716,155 $ 45,400,910
- ----------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities,
foreign currencies, futures, and option contracts 471,905,541 187,738,534
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies, futures and option contracts 453,826,181 171,775,447
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 951,447,877 404,914,891
- ----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (29,364,689) (34,698,850)
- ----------------------------------------------------------------------------------------------
Class B (2,392,475) (2,262,959)
- ----------------------------------------------------------------------------------------------
Institutional Class (438,502) (506,177)
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (162,219,599) (170,497,932)
- ----------------------------------------------------------------------------------------------
Class B (34,439,480) (8,672,692)
- ----------------------------------------------------------------------------------------------
Class C (2,594) --
- ----------------------------------------------------------------------------------------------
Institutional Class (1,797,486) (2,168,635)
- ----------------------------------------------------------------------------------------------
Net equalization credits:
Class A 292,768 511,762
- ----------------------------------------------------------------------------------------------
Class B 189,770 219,669
- ----------------------------------------------------------------------------------------------
Institutional Class 6,698 1,194
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 247,700,247 518,654,491
- ----------------------------------------------------------------------------------------------
Class B 397,291,935 417,063,105
- ----------------------------------------------------------------------------------------------
Class C 5,872,568 --
- ----------------------------------------------------------------------------------------------
Institutional Class 4,247,713 2,366,710
- ----------------------------------------------------------------------------------------------
Net increase in net assets 1,376,394,751 1,124,924,577
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,192,471,415 2,067,546,838
- ----------------------------------------------------------------------------------------------
End of period $4,568,866,166 $3,192,471,415
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $3,199,855,109 $2,544,742,646
- ----------------------------------------------------------------------------------------------
Undistributed net investment income 2,895,981 8,877,492
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities, foreign currencies, futures and option
contracts 456,189,864 182,752,246
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 909,925,212 456,099,031
- ----------------------------------------------------------------------------------------------
$4,568,866,166 $3,192,471,415
==============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-8
C H A R T E R
<PAGE> 372
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
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 six diversified portfolios:
AIM Charter Fund, AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital
Development Fund, AIM Constellation Fund and AIM Weingarten Fund. The Fund
currently offers four different classes of shares: Class A shares, Class B
shares, Class C 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 Fund's investment objective is to provide growth
of capital, with current income as a secondary objective.
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations-A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the 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. Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices are
not provided by any of the above methods are valued 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 or are
questionable 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, 1997
$8,764 was reclassified from undistributed net realized gains to
undistributed net investment income as a result of differing book/tax
treatment of foreign currency transactions. Net assets of the Fund were
unaffected as a result of this reclassification.
C. Bond Premiums-It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
D. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed
to shareholders. Therefore, no provision for federal income taxes is
recorded in the financial statements.
E. Expenses-Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
are allocated among the classes.
F. 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.
G. 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.
FS-9
C H A R T E R
<PAGE> 373
H. 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 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.
I. 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 the contracts may not correlate
with changes in the value of the securities being hedged.
J. 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 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 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.
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. Under the voluntary waiver, 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. The
waiver is entirely voluntary but approval is required by the Board of Directors
for any decision by AIM to discontinue the waiver. During the year ended October
31, 1997, AIM waived fees of $498,463. 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.
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, 1997, AIM was
reimbursed $127,908 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, Class B shares and Class C Shares.
During the year ended October 31, 1997, AFS was paid $3,129,677 for such
services.
The Fund, pursuant to another transfer agency and service agreement, has
agreed to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for
providing transfer agent and shareholder services to the Institutional Class.
During the year ended October 31, 1997, the Fund paid AIFS $3,178 for such
services with respect to the Institutional Class. On September 19, 1997, the
Board of Directors of the Fund approved the appointment of AFS as transfer agent
of the Institutional Class to be effective in late 1997 or early 1998.
FS-10
C H A R T E R
<PAGE> 374
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor of the Class
A, Class B and Class C shares of the Fund. The Company has adopted distribution
plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class
A shares (the "Class A Plan"), the Fund's Class B shares (the "Class B Plan"),
and the Fund's Class C shares (the "Class C Plan") (collectively, the "Plans").
The Fund, pursuant to the Class A and Class C Plans, pays AIM Distributors
compensation at the annual rate of 0.30% of the average daily net assets of
Class A shares and 1.00% of the average daily net assets of Class C shares. The
Class A and C Plans are designed to compensate AIM Distributors 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
Class A or Class C 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,
1997, the Class A and Class B, and the period August 4, 1997 through October 31,
1997 Class C shares paid AIM Distributors $9,459,952, $8,046,181, and $6,079,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $2,129,799 from sales of Class A
shares of the Fund during the year ended October 31, 1997. 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, 1997,
AIM Distributors received commissions of $62,653 in contingent deferred sales
charges imposed on redemptions of Fund 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, 1997, the Fund paid legal fees of $12,872
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the year ended
October 31, 1997, the Fund's expenses were reduced by $15,778 for this service.
The Fund also received reductions in transfer agency fees from AFS (an affiliate
of AIM) and reductions in custodian fees of $51,566 and $150,958, respectively,
under expense offset arrangements. The effect of the above arrangements resulted
in reductions of the Fund's total expenses of $218,302 during the year ended
October 31, 1997.
NOTE 4-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 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lesser of i) $325,000,000 or ii) the limit set by
its prospectus for borrowings. During the year ended October 31, 1997, the Fund
did not borrow under the line of credit agreement. The funds which are party to
the line of credit are charged a commitment fee of 0.05% on the unused balance
of the committed line. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
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, 1997 was
$7,160,060,290 and $6,696,104,946, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1997, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $955,676,275
- -------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (53,296,715)
- -------------------------------------------------------------
Net unrealized appreciation of investment
securities $902,379,560
=============================================================
</TABLE>
Cost of investments for tax purposes is $3,685,169,265.
FS-11
C H A R T E R
<PAGE> 375
NOTE 7-FUTURES CONTRACTS
On October 31, 1997, $900,000 principal amount of U.S. Treasury obligations were
pledged as collateral to cover margin requirements for futures contracts. Open
contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NO. OF MONTH/ APPRECIATION
CONTRACT CONTRACTS COMMITMENT (DEPRECIATION)
<S> <C> <C> <C>
Russell 2000 Index 200 Dec. 97/Buy $(2,007,675)
Russell 2000 Index 25 Mar. 98/Buy (325,000)
-----------
$(2,332,675)
===========
</TABLE>
NOTE 8-OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended October 31, 1997 are
summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
-------------------------
NUMBER
OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Beginning of Period -- --
- ---------------------------------------------------------------------------------------
Written 40,155 $ 9,469,083
- ---------------------------------------------------------------------------------------
Closed (11,850) (2,734,038)
- ---------------------------------------------------------------------------------------
Exercised (2,000) (898,562)
- ---------------------------------------------------------------------------------------
Expired -- --
- ---------------------------------------------------------------------------------------
End of period 26,305 $ 5,836,483
=======================================================================================
</TABLE>
Open call option contracts written at October 31, 1997 were as follows:
<TABLE>
<CAPTION>
OCTOBER 31,
NUMBER 1997 UNREALIZED
CONTRACT STRIKE OF PREMIUM MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
----- -------- ------ --------- -------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Avon Products, Inc. Nov. 97 $ 75 3,500 $ 765,410 $ 54,688 $ 710,722
- ---------------------------------------------------------------------------------------------------------------------------------
Bay Networks, Inc. Nov. 97 40 2,000 145,995 31,250 114,745
- ---------------------------------------------------------------------------------------------------------------------------------
Bay Networks, Inc. Nov. 97 42.5 3,000 703,476 37,500 665,976
- ---------------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp. Nov. 97 65 605 300,675 207,968 92,707
- ---------------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp. Nov. 97 75 1,000 174,014 71,875 102,139
- ---------------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp. Nov. 97 85 2,500 495,082 46,875 448,207
- ---------------------------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc. Dec. 97 80 2,500 1,179,960 640,625 539,335
- ---------------------------------------------------------------------------------------------------------------------------------
CompUSA, Inc. Nov. 97 35 500 73,498 40,625 32,873
- ---------------------------------------------------------------------------------------------------------------------------------
CompUSA, Inc. Nov. 97 40 4,000 440,265 75,000 365,265
- ---------------------------------------------------------------------------------------------------------------------------------
Dell Computer Corp. Nov. 97 85 2,000 868,971 750,000 118,971
- ---------------------------------------------------------------------------------------------------------------------------------
HBO & Co. Nov. 97 50 2,700 264,591 84,375 180,216
- ---------------------------------------------------------------------------------------------------------------------------------
Intel Corp. Nov. 97 85 2,000 424,546 231,250 193,296
- ---------------------------------------------------------------------------------------------------------------------------------
$5,836,483 $ 2,272,031 $ 3,564,452
=================================================================================================================================
</TABLE>
FS-12
C H A R T E R
<PAGE> 376
NOTE 9-CAPITAL STOCK
Changes in the capital stock outstanding for the years ended October 31, 1997
and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
--------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sold
- ------------------------------------------------------------------------------------------------------------------------
Class A 64,563,425 $ 804,527,781 71,824,128 $ 752,853,277
- ------------------------------------------------------------------------------------------------------------------------
Class B 37,105,082 454,511,843 41,436,800 435,348,846
- ------------------------------------------------------------------------------------------------------------------------
Class C* 437,883 6,069,012 -- --
- ------------------------------------------------------------------------------------------------------------------------
Institutional Class 600,091 7,589,130 448,911 4,759,971
- ------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
- ------------------------------------------------------------------------------------------------------------------------
Class A 16,507,011 181,612,880 19,521,139 192,994,968
- ------------------------------------------------------------------------------------------------------------------------
Class B 3,210,439 35,080,359 1,039,513 10,333,913
- ------------------------------------------------------------------------------------------------------------------------
Class C* 159 2,155 -- --
- ------------------------------------------------------------------------------------------------------------------------
Institutional Class 193,613 2,149,460 252,209 2,504,537
- ------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (59,039,148) (738,440,414) (40,679,494) (427,193,754)
- ------------------------------------------------------------------------------------------------------------------------
Class B (7,456,466) (92,300,267) (2,705,793) (28,619,654)
- ------------------------------------------------------------------------------------------------------------------------
Class C* (14,629) (198,599) -- --
- ------------------------------------------------------------------------------------------------------------------------
Institutional Class (445,517) (5,490,877) (464,310) (4,897,798)
- ------------------------------------------------------------------------------------------------------------------------
55,661,943 $ 655,112,463 90,673,103 $ 938,084,306
========================================================================================================================
</TABLE>
* Class C commenced sales on August 4, 1997.
NOTE 10-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
capital stock outstanding during each of the years in the five-year period ended
October 31, 1997.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.24 $ 10.66 $ 8.93 $ 9.48 $ 8.38
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.16 0.24 0.23 0.25 0.19
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) 2.91 1.44 2.07 (0.44) 1.23
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Total from investment operations 3.07 1.68 2.30 (0.19) 1.42
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.16) (0.20) (0.24) (0.20) (0.32)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Distributions from capital gains (0.67) (0.90) (0.33) (0.16) --
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Total distributions (0.83) (1.10) (0.57) (0.36) (0.32)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Net asset value, end of period $ 13.48 $ 11.24 $ 10.66 $ 8.93 $ 9.48
============================================================ ======= ======= ======= ======= =======
Total return 29.05% 17.29% 27.45% (2.02)% 17.39%
============================================================ ======= ======= ======= ======= =======
Net assets, end of period (000s omitted) $40,191 $29,591 $25,538 $21,840 $24,196
============================================================ ======= ======= ======= ======= =======
Ratio of expenses to average net assets(a) 0.67%(b)(c) 0.69% 0.74% 0.73% 0.79%
============================================================ ======= ======= ======= ======= =======
Ratio of net investment income to average net assets(a) 1.21%(b) 2.24% 1.98% 2.76% 2.26%
============================================================ ======= ======= ======= ======= =======
Portfolio turnover rate 170% 164% 161% 126% 144%
============================================================ ======= ======= ======= ======= =======
Average brokerage commission rate(d) $0.0615 $0.0638 N/A N/A N/A
============================================================ ======= ======= ======= ======= =======
</TABLE>
(a) The ratios of expenses and net investment income to average net assets prior
to the reduction of advisory fees were 0.68% and 1.20% for 1997 and 0.70%
and 2.23% for 1996, respectively.
(b) Ratios are based on average net assets of $35,307,526.
(c) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have remained the same.
(d) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-13
C H A R T E R
<PAGE> 377
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, 1997, 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 or periods in the
five-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, 1997, 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, 1997, 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 or periods in the five-year period
then ended, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
FS-14
C O N S T E L L A T I O N
<PAGE> 378
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-89.37%
AEROSPACE/DEFENSE-0.35%
BE Aerospace, Inc.(a) 750,000 $ 21,093,750
- ---------------------------------------------------------------
Precision Castparts Corp. 500,000 29,406,250
- ---------------------------------------------------------------
50,500,000
- ---------------------------------------------------------------
AIR FREIGHT-0.39%
AirNet Systems, Inc.(a) 560,000 11,480,000
- ---------------------------------------------------------------
CNF Transportation Inc. 1,000,000 44,625,000
- ---------------------------------------------------------------
56,105,000
- ---------------------------------------------------------------
AIRLINES-0.11%
Southwest Airlines Co. 500,000 16,312,500
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.12%
Mark IV Industries, Inc. 689,062 16,709,754
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.28%
BankBoston Corp. 500,000 40,531,250
- ---------------------------------------------------------------
BANKS (REGIONAL)-0.30%
AmSouth Bancorporation 750,000 36,046,875
- ---------------------------------------------------------------
North Fork Bancorporation,
Inc. 250,000 7,359,375
- ---------------------------------------------------------------
43,406,250
- ---------------------------------------------------------------
BIOTECHNOLOGY-0.08%
Curative Technologies, Inc.(a) 365,100 10,998,638
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-0.62%
Chancellor Media Corp.(a) 140,001 7,682,555
- ---------------------------------------------------------------
Clear Channel Communications,
Inc.(a) 750,000 49,500,000
- ---------------------------------------------------------------
Jacor Communications, Inc.(a) 786,700 32,943,062
- ---------------------------------------------------------------
90,125,617
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.32%
ADC Telecommunications,
Inc.(a) 3,000,000 99,375,000
- ---------------------------------------------------------------
Brightpoint, Inc.(a) 750,000 24,750,000
- ---------------------------------------------------------------
Comverse Technology, Inc.(a) 100,000 4,125,000
- ---------------------------------------------------------------
Digital Microwave Corp.(a) 35,000 1,260,000
- ---------------------------------------------------------------
DSC Communications Corp.(a) 2,800,000 68,250,000
- ---------------------------------------------------------------
Glenayre Technologies, Inc.(a) 1,000,000 13,000,000
- ---------------------------------------------------------------
Lucent Technologies, Inc. 500,000 41,218,750
- ---------------------------------------------------------------
MasTec, Inc.(a) 500,000 16,218,750
- ---------------------------------------------------------------
Motorola, Inc. 600,000 37,050,000
- ---------------------------------------------------------------
PairGain Technologies,
Inc.(a)(b) 1,500,000 42,375,000
- ---------------------------------------------------------------
REMEC, Inc.(a) 250,000 6,343,750
- ---------------------------------------------------------------
Scientific-Atlanta, Inc. 1,750,000 32,484,375
- ---------------------------------------------------------------
Tellabs, Inc.(a) 1,800,000 97,200,000
- ---------------------------------------------------------------
483,650,625
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-3.34%
Citrix Systems, Inc.(a) 250,000 $ 18,359,374
- ---------------------------------------------------------------
Comdisco, Inc. 1,250,000 39,453,125
- ---------------------------------------------------------------
Compaq Computer Corp.(a) 1,743,000 111,116,250
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 2,500,000 74,218,750
- ---------------------------------------------------------------
Data General Corp.(a) 250,000 4,812,500
- ---------------------------------------------------------------
Dell Computer Corp.(a) 1,500,000 120,187,500
- ---------------------------------------------------------------
IDX Systems Corp.(a) 756,900 25,545,375
- ---------------------------------------------------------------
Micron Electronics, Inc.(a) 1,050,000 14,568,750
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a) 2,250,000 77,062,500
- ---------------------------------------------------------------
485,324,124
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.31%
Bay Networks, Inc.(a) 3,000,000 94,875,000
- ---------------------------------------------------------------
Cisco Systems, Inc.(a) 650,000 53,320,313
- ---------------------------------------------------------------
3Com Corp.(a) 1,000,000 41,437,500
- ---------------------------------------------------------------
189,632,813
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-2.23%
Adaptec, Inc.(a) 2,000,000 96,875,000
- ---------------------------------------------------------------
EMC Corp.(a) 1,672,000 93,632,000
- ---------------------------------------------------------------
Iomega Corp.(a) 1,500,000 40,218,750
- ---------------------------------------------------------------
Lexmark International Group,
Inc.(a) 400,000 12,225,000
- ---------------------------------------------------------------
MicroTouch Systems, Inc.(a) 250,000 6,031,250
- ---------------------------------------------------------------
Quantum Corp.(a) 1,000,000 31,625,000
- ---------------------------------------------------------------
Smart Modular Technologies,
Inc.(a) 150,000 7,462,500
- ---------------------------------------------------------------
Storage Technology Corp.(a) 600,000 35,212,500
- ---------------------------------------------------------------
323,282,000
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-7.71%
America Online, Inc.(a) 200,000 15,400,000
- ---------------------------------------------------------------
Applied Voice Technology,
Inc.(a) 250,000 6,500,000
- ---------------------------------------------------------------
Aspect Development, Inc.(a) 325,000 15,193,750
- ---------------------------------------------------------------
Autodesk, Inc. 500,000 18,500,000
- ---------------------------------------------------------------
Avant! Corp.(a) 750,000 19,687,500
- ---------------------------------------------------------------
BMC Software, Inc.(a) 1,750,000 105,656,250
- ---------------------------------------------------------------
Cadence Design Systems,
Inc.(a) 1,750,000 93,187,500
- ---------------------------------------------------------------
Computer Associates
International, Inc. 1,000,000 74,562,500
- ---------------------------------------------------------------
Compuware Corp.(a) 2,014,200 133,188,975
- ---------------------------------------------------------------
Electronic Arts, Inc.(a) 1,000,000 33,875,000
- ---------------------------------------------------------------
Electronics for Imaging,
Inc.(a) 300,000 14,025,000
- ---------------------------------------------------------------
HBO & Co. 2,500,000 108,750,000
- ---------------------------------------------------------------
McAfee Associates, Inc.(a) 200,000 9,950,000
- ---------------------------------------------------------------
Microsoft Corp.(a) 824,200 107,146,000
- ---------------------------------------------------------------
Oracle Corp.(a) 2,000,000 71,562,500
- ---------------------------------------------------------------
</TABLE>
FS-15
C O N S T E L L A T I O N
<PAGE> 379
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Parametric Technology Co.(a) 1,600,000 $ 70,600,000
- ---------------------------------------------------------------
Security Dynamics
Technologies, Inc.(a) 1,000,000 33,875,000
- ---------------------------------------------------------------
Sterling Commerce, Inc.(a) 2,000,000 66,375,000
- ---------------------------------------------------------------
Sterling Software, Inc.(a) 500,000 17,062,500
- ---------------------------------------------------------------
Sybase, Inc.(a) 517,500 8,441,719
- ---------------------------------------------------------------
Symantec Corp.(a) 1,000,000 21,875,000
- ---------------------------------------------------------------
Synopsys, Inc.(a) 1,500,000 58,312,500
- ---------------------------------------------------------------
Wind River Systems(a) 450,000 17,268,750
- ---------------------------------------------------------------
1,120,995,444
- ---------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.16%
Action Performance Companies,
Inc.(a) 400,000 10,250,000
- ---------------------------------------------------------------
Blyth Industries, Inc.(a) 525,000 13,059,375
- ---------------------------------------------------------------
23,309,375
- ---------------------------------------------------------------
CONSUMER FINANCE-3.60%
Aames Financial Corp.(b) 900,000 13,162,500
- ---------------------------------------------------------------
Capital One Financial Corp. 750,000 34,218,750
- ---------------------------------------------------------------
ContiFinancial Corp.(a) 500,000 14,218,750
- ---------------------------------------------------------------
FIRSTPLUS Financial Group,
Inc.(a) 500,000 27,500,000
- ---------------------------------------------------------------
Green Tree Financial Corp. 2,500,000 105,312,500
- ---------------------------------------------------------------
Household International, Inc. 1,000,000 113,250,000
- ---------------------------------------------------------------
IMC Mortgage Co.(a)(b) 1,500,000 26,062,500
- ---------------------------------------------------------------
MBNA Corp. 3,000,000 78,937,500
- ---------------------------------------------------------------
Money Store, Inc. 1,000,000 28,375,000
- ---------------------------------------------------------------
Providian Financial Corp. 500,000 18,500,000
- ---------------------------------------------------------------
SLM Holding Corp. 450,000 63,168,750
- ---------------------------------------------------------------
522,706,250
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD &
HEALTH)-0.81%
Cardinal Health, Inc. 1,000,000 74,250,000
- ---------------------------------------------------------------
McKesson Corp. 400,000 42,925,000
- ---------------------------------------------------------------
117,175,000
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.85%
American Power Conversion
Corp.(a) 1,000,000 27,250,000
- ---------------------------------------------------------------
Avid Technology, Inc.(a) 500,000 14,281,250
- ---------------------------------------------------------------
AVX Corp. 1,000,000 28,250,000
- ---------------------------------------------------------------
Berg Electronics Corp.(a) 1,000,000 23,375,000
- ---------------------------------------------------------------
Black Box Corp.(a) 500,000 20,500,000
- ---------------------------------------------------------------
Hadco Corp.(a) 500,000 27,687,500
- ---------------------------------------------------------------
Kemet Corp.(a) 1,000,000 21,750,000
- ---------------------------------------------------------------
Molex, Inc.-Class A 292,968 10,272,191
- ---------------------------------------------------------------
Sanmina Corp.(a) 700,000 52,325,000
- ---------------------------------------------------------------
Sawtek Inc.(a) 400,000 13,600,000
- ---------------------------------------------------------------
SCI Systems, Inc.(a) 2,250,000 99,000,000
- ---------------------------------------------------------------
Solectron Corp.(a) 1,000,000 39,250,000
- ---------------------------------------------------------------
Symbol Technologies, Inc. 900,000 35,775,000
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-(CONTINUED)
Vishay Intertechnology,
Inc.(a) 17,100 $ 409,331
- ---------------------------------------------------------------
413,725,272
- ---------------------------------------------------------------
ELECTRONIC (COMPONENT DISTRIBUTORS)-0.75%
Arrow Electronics, Inc.(a) 1,300,000 36,887,500
- ---------------------------------------------------------------
Avnet, Inc. 750,000 47,203,125
- ---------------------------------------------------------------
Computer Products, Inc.(a) 250,000 6,812,500
- ---------------------------------------------------------------
Kent Electronics Corp.(a) 500,000 17,468,750
- ---------------------------------------------------------------
108,371,875
- ---------------------------------------------------------------
ELECTRONICS
(INSTRUMENTATION)-0.73%
Methode Electronics,
Inc.-Class A 1,050,000 20,737,500
- ---------------------------------------------------------------
Perkin-Elmer Corp. 894,800 55,925,000
- ---------------------------------------------------------------
Tektronix, Inc. 500,000 29,562,500
- ---------------------------------------------------------------
106,225,000
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-6.43%
Altera Corp.(a) 1,600,000 71,000,000
- ---------------------------------------------------------------
Anadagics, Inc.(a) 321,600 11,899,200
- ---------------------------------------------------------------
Analog Devices, Inc.(a) 1,750,000 53,484,375
- ---------------------------------------------------------------
Atmel Corp.(a) 2,000,000 51,750,000
- ---------------------------------------------------------------
Burr-Brown Corp.(a) 750,000 22,687,500
- ---------------------------------------------------------------
Dallas Semiconductor Corp.(a) 800,000 39,100,000
- ---------------------------------------------------------------
Intel Corp. 1,000,000 77,000,000
- ---------------------------------------------------------------
Lattice Semiconductor Corp.(a) 400,000 20,025,000
- ---------------------------------------------------------------
Linear Technology Corp. 1,500,000 94,312,500
- ---------------------------------------------------------------
Maxim Integrated Products,
Inc.(a) 1,525,000 101,031,250
- ---------------------------------------------------------------
Microchip Technology, Inc.(a) 2,499,975 99,686,503
- ---------------------------------------------------------------
National Semiconductor
Corp.(a) 2,500,000 90,000,000
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 500,000 13,187,500
- ---------------------------------------------------------------
Sipex Corp.(a) 100,000 3,287,500
- ---------------------------------------------------------------
Texas Instruments, Inc. 1,000,000 106,687,500
- ---------------------------------------------------------------
Unitrode Corp.(a) 300,000 8,043,750
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 475,000 20,603,124
- ---------------------------------------------------------------
Xilinx, Inc.(a) 1,500,000 51,187,500
- ---------------------------------------------------------------
934,973,202
- ---------------------------------------------------------------
ENTERTAINMENT-0.16%
Regal Cinemas, Inc.(a) 1,000,000 23,000,000
- ---------------------------------------------------------------
EQUIPMENT
(SEMICONDUCTORS)-2.70%
Applied Materials, Inc.(a) 3,000,000 100,125,000
- ---------------------------------------------------------------
BMC Industries, Inc. 500,000 16,093,750
- ---------------------------------------------------------------
KLA-Tencor Corp.(a) 2,511,700 110,357,819
- ---------------------------------------------------------------
Lam Research Corp.(a) 1,400,000 50,575,000
- ---------------------------------------------------------------
Novellus Systems, Inc.(a) 1,000,000 44,500,000
- ---------------------------------------------------------------
Teradyne, Inc.(a) 1,887,900 70,678,256
- ---------------------------------------------------------------
392,329,825
- ---------------------------------------------------------------
</TABLE>
FS-16
C O N S T E L L A T I O N
<PAGE> 380
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCIAL (DIVERSIFIED)-1.09%
MGIC Investment Corp. 2,000,000 $ 120,625,000
- ---------------------------------------------------------------
SunAmerica, Inc. 1,050,000 37,734,375
- ---------------------------------------------------------------
158,359,375
- ---------------------------------------------------------------
FOOTWEAR-0.15%
Wolverine World Wide, Inc. 1,000,000 22,000,000
- ---------------------------------------------------------------
GAMING, LOTTERY & PARI-MUTUEL COMPANIES-0.28%
International Game Technology 750,000 19,171,875
- ---------------------------------------------------------------
MGM Grand, Inc.(a) 500,000 21,937,500
- ---------------------------------------------------------------
41,109,375
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.29%
Alpharma, Inc. 254,967 5,625,209
- ---------------------------------------------------------------
Columbia Laboratories, Inc.(a) 500,000 8,000,000
- ---------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 900,000 43,537,500
- ---------------------------------------------------------------
Forest Laboratories, Inc.(a) 600,000 27,750,000
- ---------------------------------------------------------------
Jones Medical Industries, Inc. 1,000,050 30,126,507
- ---------------------------------------------------------------
Mylan Laboratories, Inc.(a) 1,000,000 21,937,500
- ---------------------------------------------------------------
Parexel International Corp.(a) 350,000 12,643,750
- ---------------------------------------------------------------
Watson Pharmaceuticals,
Inc.(a) 1,200,000 38,100,000
- ---------------------------------------------------------------
187,720,466
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-2.40%
Health Management Associates,
Inc.-Class A(a) 5,186,530 126,421,680
- ---------------------------------------------------------------
Quorum Health Group, Inc.(a) 1,800,000 43,650,000
- ---------------------------------------------------------------
Tenet Healthcare Corp.(a) 3,913,800 119,615,513
- ---------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 1,350,000 59,484,375
- ---------------------------------------------------------------
349,171,568
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-1.83%
Beverly Enterprises, Inc.(a) 2,000,000 29,875,000
- ---------------------------------------------------------------
Health Care and Retirement
Corp.(a)(b) 1,815,000 68,629,688
- ---------------------------------------------------------------
HEALTHSOUTH Corp.(a) 5,200,000 132,925,000
- ---------------------------------------------------------------
Vencor, Inc.(a) 1,250,000 33,750,000
- ---------------------------------------------------------------
265,179,688
- ---------------------------------------------------------------
HEALTH CARE (MANAGED
CARE)-1.71%
American Oncology Resources,
Inc.(a) 250,000 3,656,250
- ---------------------------------------------------------------
Concentra Managed Care,
Inc.(a) 430,000 14,028,750
- ---------------------------------------------------------------
Express Scripts, Inc.-Class
A(a)(b) 700,000 39,462,500
- ---------------------------------------------------------------
HealthCare COMPARE Corp.(a) 600,000 32,250,000
- ---------------------------------------------------------------
Humana, Inc.(a) 1,235,000 25,935,000
- ---------------------------------------------------------------
Oxford Health Plans, Inc.(a) 911,900 23,538,419
- ---------------------------------------------------------------
PhyCor, Inc.(a) 2,050,000 47,278,125
- ---------------------------------------------------------------
United Healthcare Corp. 602,300 27,894,019
- ---------------------------------------------------------------
Wellpoint Health Networks,
Inc.(a) 752,000 34,404,000
- ---------------------------------------------------------------
248,447,063
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-2.28%
Arterial Vascular Engineering,
Inc.(a) 263,100 $ 13,977,187
- ---------------------------------------------------------------
Biomet, Inc. 875,000 21,820,313
- ---------------------------------------------------------------
Dentsply International, Inc. 820,200 23,273,175
- ---------------------------------------------------------------
Guidant Corp. 800,000 46,000,000
- ---------------------------------------------------------------
Medtronic, Inc. 900,000 39,150,000
- ---------------------------------------------------------------
Physician Sales & Service,
Inc.(a) 850,000 20,825,000
- ---------------------------------------------------------------
Quintiles Transnational
Corp.(a) 605,000 43,862,500
- ---------------------------------------------------------------
Sofamor Danek Group, Inc.(a) 220,100 15,159,388
- ---------------------------------------------------------------
Stryker Corp. 400,000 14,875,000
- ---------------------------------------------------------------
Sullivan Dental Products, Inc. 500,000 11,687,500
- ---------------------------------------------------------------
Sybron International Corp.(a) 2,000,000 80,250,000
- ---------------------------------------------------------------
330,880,063
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-1.90%
American HomePatient,
Inc.(a)(b) 750,000 19,312,500
- ---------------------------------------------------------------
Covance, Inc.(a) 2,000,000 35,375,000
- ---------------------------------------------------------------
FPA Medical Management,
Inc.(a) 1,500,000 36,187,500
- ---------------------------------------------------------------
Lincare Holdings, Inc.(a) 1,000,000 53,625,000
- ---------------------------------------------------------------
Omnicare, Inc. 3,450,000 95,953,125
- ---------------------------------------------------------------
Orthodontic Centers of
America, Inc.(a) 524,200 9,075,213
- ---------------------------------------------------------------
Total Renal Care Holdings,
Inc.(a) 833,333 25,677,083
- ---------------------------------------------------------------
Transition Systems, Inc.(a) 33,300 674,325
- ---------------------------------------------------------------
275,879,746
- ---------------------------------------------------------------
HOMEBUILDING-0.24%
Clayton Homes, Inc. 1,750,000 28,765,625
- ---------------------------------------------------------------
Oakwood Homes Corp. 250,000 6,578,125
- ---------------------------------------------------------------
35,343,750
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.29%
Leggett & Platt, Inc. 1,000,000 41,750,000
- ---------------------------------------------------------------
HOUSEWARES-0.11%
Central Garden and Pet Co.(a) 485,500 12,744,375
- ---------------------------------------------------------------
Helen of Troy Ltd.(a) 185,000 3,075,625
- ---------------------------------------------------------------
15,820,000
- ---------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-0.36%
CapMAC Holdings, Inc. 424,800 12,744,000
- ---------------------------------------------------------------
Everest Reinsurance Holdings,
Inc. 750,000 28,218,750
- ---------------------------------------------------------------
Frontier Insurance Group, Inc. 100,000 3,368,750
- ---------------------------------------------------------------
HCC Insurance Holdings, Inc. 343,100 8,019,963
- ---------------------------------------------------------------
52,351,463
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-0.34%
T. Rowe Price Associates 750,000 49,687,500
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.67%
Callaway Golf Co. 450,000 14,512,500
- ---------------------------------------------------------------
GTECH Holdings Corp.(a) 750,000 24,187,500
- ---------------------------------------------------------------
</TABLE>
FS-17
C O N S T E L L A T I O N
<PAGE> 381
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
LEISURE TIME (PRODUCTS)-(CONTINUED)
Harley-Davidson, Inc. 1,400,000 $ 38,850,000
- ---------------------------------------------------------------
North Face, Inc. (The)(a) 330,000 7,796,250
- ---------------------------------------------------------------
Speedway Motorsports, Inc.(a) 511,200 12,236,850
- ---------------------------------------------------------------
97,583,100
- ---------------------------------------------------------------
LODGING-HOTELS-0.56%
Choice Hotels International,
Inc.(a) 1,000,000 17,562,500
- ---------------------------------------------------------------
Doubletree Corp.(a) 702,800 29,254,050
- ---------------------------------------------------------------
Promus Hotel Corp.(a) 650,000 25,512,500
- ---------------------------------------------------------------
Sun International Hotels Ltd.
(a) 157,600 5,673,600
- ---------------------------------------------------------------
Sunburst Hospitality Corp.(a) 333,333 3,375,000
- ---------------------------------------------------------------
81,377,650
- ---------------------------------------------------------------
MANUFACTURING
(DIVERSIFIED)-0.94%
AMETEK, Inc. 300,000 7,068,750
- ---------------------------------------------------------------
Hillenbrand Industries, Inc. 750,000 32,062,500
- ---------------------------------------------------------------
Pentair, Inc. 500,000 19,312,500
- ---------------------------------------------------------------
Thermo Electron Corp.(a) 1,250,000 46,640,625
- ---------------------------------------------------------------
Tyco International Ltd. 823,964 31,104,641
- ---------------------------------------------------------------
136,189,016
- ---------------------------------------------------------------
MANUFACTURING
(SPECIALIZED)-0.76%
Cognex Corp.(a) 1,000,000 26,750,000
- ---------------------------------------------------------------
Diebold, Inc. 700,000 30,843,750
- ---------------------------------------------------------------
US Filter Corp.(a) 1,300,000 52,162,500
- ---------------------------------------------------------------
109,756,250
- ---------------------------------------------------------------
NATURAL GAS-0.01%
Edge Petroleum Corp.(a) 77,600 1,134,900
- ---------------------------------------------------------------
OFFICE EQUIPMENT &
SUPPLIES-0.18%
Herman Miller, Inc. 350,000 17,106,250
- ---------------------------------------------------------------
HON INDUSTRIES, Inc. 181,900 9,390,587
- ---------------------------------------------------------------
26,496,837
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-7.52%
BJ Services Co.(a) 1,000,000 84,750,000
- ---------------------------------------------------------------
Baker Hughes, Inc. 1,000,000 45,937,500
- ---------------------------------------------------------------
Camco International, Inc. 963,700 69,627,325
- ---------------------------------------------------------------
Cooper Cameron Corp.(a) 1,000,000 72,250,000
- ---------------------------------------------------------------
Diamond Offshore Drilling,
Inc. 900,000 56,025,000
- ---------------------------------------------------------------
ENSCO International, Inc. 1,000,000 42,062,500
- ---------------------------------------------------------------
EVI, Inc.(a) 600,000 38,512,500
- ---------------------------------------------------------------
Falcon Drilling Company,
Inc.(a) 1,500,000 54,562,500
- ---------------------------------------------------------------
Global Industries Ltd.(a) 1,954,200 39,328,275
- ---------------------------------------------------------------
Global Marine, Inc.(a) 700,000 21,787,500
- ---------------------------------------------------------------
Halliburton Co. 750,000 44,718,750
- ---------------------------------------------------------------
Input/Output, Inc.(a) 1,400,000 37,537,500
- ---------------------------------------------------------------
Lone Star Technologies,
Inc.(a) 700,000 26,731,250
- ---------------------------------------------------------------
Marine Drilling Companies,
Inc.(a)(b) 1,500,000 44,437,500
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED)
Nabors Industries, Inc.(a) 1,500,000 $ 61,687,500
- ---------------------------------------------------------------
National-Oilwell, Inc.(a) 200,000 15,312,500
- ---------------------------------------------------------------
Noble Drilling Corp.(a) 1,000,000 35,562,500
- ---------------------------------------------------------------
Pride International, Inc.(a) 1,608,100 53,067,300
- ---------------------------------------------------------------
Rowan Companies, Inc.(a) 1,000,000 38,875,000
- ---------------------------------------------------------------
Santa Fe International Corp. 394,200 19,389,713
- ---------------------------------------------------------------
Smith International, Inc.(a) 1,000,000 76,250,000
- ---------------------------------------------------------------
Varco International,
Inc.(a)(b) 1,500,000 91,406,250
- ---------------------------------------------------------------
Veritas DGC, Inc.(a) 600,000 24,562,500
- ---------------------------------------------------------------
1,094,381,363
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.75%
Apache Corp.(a) 750,000 31,500,000
- ---------------------------------------------------------------
Burlington Resources, Inc. 750,000 36,703,125
- ---------------------------------------------------------------
Pioneer Natural Resources Co. 350,000 14,021,875
- ---------------------------------------------------------------
St. Mary Land & Exploration
Co. 100,000 4,075,000
- ---------------------------------------------------------------
Santa Fe Energy Resources,
Inc.(a) 1,750,000 22,859,375
- ---------------------------------------------------------------
109,159,375
- ---------------------------------------------------------------
PERSONAL CARE-0.47%
Perrigo Co.(a) 1,977,400 30,402,524
- ---------------------------------------------------------------
Rexall Sundown, Inc.(a) 1,755,000 38,390,625
- ---------------------------------------------------------------
68,793,149
- ---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.27%
Xerox Corp. 500,000 39,656,250
- ---------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-0.30%
AES Corp.(a) 1,100,000 43,587,500
- ---------------------------------------------------------------
RESTAURANTS-1.39%
Apple South, Inc.(b) 2,000,000 37,250,000
- ---------------------------------------------------------------
Applebee's International,
Inc.(b) 1,700,000 37,718,750
- ---------------------------------------------------------------
Brinker International, Inc.(a) 1,000,000 14,000,000
- ---------------------------------------------------------------
CKE Restaurants, Inc. 947,900 37,856,756
- ---------------------------------------------------------------
Cracker Barrel Old Country
Store, Inc. 1,125,000 33,187,500
- ---------------------------------------------------------------
Foodmaker, Inc.(a) 250,000 4,109,375
- ---------------------------------------------------------------
Outback Steakhouse, Inc.(a) 500,000 13,531,250
- ---------------------------------------------------------------
Starbucks Corp.(a) 750,000 24,750,000
- ---------------------------------------------------------------
202,403,631
- ---------------------------------------------------------------
RETAIL (BUILDING
SUPPLIES)-0.32%
Eagle Hardware & Garden,
Inc.(a) 750,000 12,750,000
- ---------------------------------------------------------------
Fastenal Co. 350,000 17,150,000
- ---------------------------------------------------------------
Home Depot, Inc. 300,000 16,687,500
- ---------------------------------------------------------------
46,587,500
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.94%
Best Buy Company, Inc.(a) 1,000,000 27,937,500
- ---------------------------------------------------------------
CHS Electronics, Inc.(a) 1,500,000 36,656,250
- ---------------------------------------------------------------
</TABLE>
FS-18
C O N S T E L L A T I O N
<PAGE> 382
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (COMPUTERS & ELECTRONICS)-(CONTINUED)
CompUSA, Inc.(a) 3,000,000 $ 98,250,000
- ---------------------------------------------------------------
Ingram Micro, Inc.-Class A(a) 1,350,000 40,246,875
- ---------------------------------------------------------------
Tech Data Corp.(a) 1,775,000 78,987,500
- ---------------------------------------------------------------
282,078,125
- ---------------------------------------------------------------
RETAIL (DEPARTMENT
STORES)-0.74%
Fred Meyer, Inc.(a) 1,000,000 28,562,500
- ---------------------------------------------------------------
Kohl's Corp.(a) 500,000 33,562,500
- ---------------------------------------------------------------
Nordstrom, Inc. 750,000 45,937,500
- ---------------------------------------------------------------
108,062,500
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-1.71%
Consolidated Stores Corp.(a) 2,500,000 99,687,500
- ---------------------------------------------------------------
Dollar General Corp. 625,082 20,666,773
- ---------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 1,040,400 42,136,200
- ---------------------------------------------------------------
Men's Wearhouse,
Inc.(The)(a)(b) 1,500,050 58,126,938
- ---------------------------------------------------------------
Ross Stores, Inc. 734,000 27,433,250
- ---------------------------------------------------------------
248,050,661
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.62%
CVS Corp. 200,000 12,262,500
- ---------------------------------------------------------------
Rite Aid Corp. 1,300,020 77,188,688
- ---------------------------------------------------------------
89,451,188
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-2.26%
American Stores Co. 3,000,000 77,062,500
- ---------------------------------------------------------------
Kroger Co.(a) 2,700,000 88,087,500
- ---------------------------------------------------------------
Quality Food Centers, Inc.(a) 1,000,000 47,625,000
- ---------------------------------------------------------------
Safeway, Inc.(a) 2,000,000 116,250,000
- ---------------------------------------------------------------
329,025,000
- ---------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-0.56%
Costco Companies, Inc.(a) 500,000 19,250,000
- ---------------------------------------------------------------
Dayton Hudson Corp. 1,000,000 62,812,500
- ---------------------------------------------------------------
82,062,500
- ---------------------------------------------------------------
RETAIL (HOME SHOPPING)-0.71%
CDW Computer Centers,
Inc.(a)(b) 1,200,000 74,400,000
- ---------------------------------------------------------------
Micro Warehouse, Inc.(a)(b) 1,925,200 28,878,000
- ---------------------------------------------------------------
103,278,000
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-3.54%
AutoZone, Inc.(a) 518,700 15,334,069
- ---------------------------------------------------------------
Bed Bath & Beyond, Inc.(a) 1,250,000 39,687,500
- ---------------------------------------------------------------
Finish Line, Inc. (The)-Class
A(a) 250,000 4,218,750
- ---------------------------------------------------------------
General Nutrition Companies,
Inc.(a) 1,000,000 31,500,000
- ---------------------------------------------------------------
Hollywood Entertainment
Corp.(a) 1,500,000 18,375,000
- ---------------------------------------------------------------
Inacom Corp.(a) 580,000 17,871,250
- ---------------------------------------------------------------
Michaels Stores, Inc.(a) 1,250,000 37,578,125
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-(CONTINUED)
Office Depot, Inc.(a) 2,175,000 $ 44,859,375
- ---------------------------------------------------------------
Petco Animal Supplies,
Inc.(a)(b) 850,000 26,137,500
- ---------------------------------------------------------------
Polo Ralph Lauren Corp.(a) 800,000 20,800,000
- ---------------------------------------------------------------
Staples, Inc.(a) 3,500,000 91,875,000
- ---------------------------------------------------------------
Tiffany & Co. 1,000,000 39,500,000
- ---------------------------------------------------------------
Toys "R" Us, Inc.(a) 750,000 25,546,875
- ---------------------------------------------------------------
Viking Office Products,
Inc.(a) 3,000,000 71,812,500
- ---------------------------------------------------------------
Williams-Sonoma, Inc.(a) 750,000 30,093,750
- ---------------------------------------------------------------
515,189,694
- ---------------------------------------------------------------
RETAIL
(SPECIALTY-APPAREL)-0.56%
Gap, Inc. 775,000 41,220,312
- ---------------------------------------------------------------
TJX Companies, Inc. (The) 1,350,000 39,993,750
- ---------------------------------------------------------------
81,214,062
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.22%
Dime Bancorp, Inc. 250,000 6,000,000
- ---------------------------------------------------------------
TCF Financial Corp. 457,000 25,991,875
- ---------------------------------------------------------------
31,991,875
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.24%
Omnicom Group, Inc. 500,000 35,312,500
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.75%
Cerner Corp.(a)(b) 1,750,000 42,437,500
- ---------------------------------------------------------------
Cintas Corp. 100,000 7,225,000
- ---------------------------------------------------------------
Equity Corp. International(a) 400,000 8,150,000
- ---------------------------------------------------------------
HFS, Inc.(a) 500,000 35,250,000
- ---------------------------------------------------------------
Service Corp. International 3,500,000 106,531,250
- ---------------------------------------------------------------
Stewart Enterprises, Inc.-
Class A 1,300,000 53,950,000
- ---------------------------------------------------------------
253,543,750
- ---------------------------------------------------------------
SERVICES (COMPUTER & SYSTEMS)-0.45%
Cambridge Technology Partners,
Inc.(a) 470,400 17,169,600
- ---------------------------------------------------------------
Shared Medical Systems Corp. 410,000 22,447,500
- ---------------------------------------------------------------
SunGard Data Systems Inc.(a) 1,060,000 25,042,500
- ---------------------------------------------------------------
64,659,600
- ---------------------------------------------------------------
SERVICES (DATA
PROCESSING)-2.00%
Affiliated Computer Services,
Inc.(a) 1,000,000 25,125,000
- ---------------------------------------------------------------
BDM International Inc.(a) 361,500 7,998,188
- ---------------------------------------------------------------
BISYS Group, Inc. (The)(a) 463,200 14,417,100
- ---------------------------------------------------------------
CSG Systems International,
Inc.(a) 703,100 27,552,731
- ---------------------------------------------------------------
DST Systems, Inc.(a) 1,000,000 35,312,500
- ---------------------------------------------------------------
Equifax, Inc. 500,000 15,531,250
- ---------------------------------------------------------------
First Data Corp. 400,000 11,625,000
- ---------------------------------------------------------------
Fiserv, Inc.(a) 1,250,000 55,937,500
- ---------------------------------------------------------------
National Data Corp. 750,000 27,703,125
- ---------------------------------------------------------------
</TABLE>
FS-19
C O N S T E L L A T I O N
<PAGE> 383
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (DATA PROCESSING)-(CONTINUED)
Paychex, Inc. 1,300,000 $ 49,562,500
- ---------------------------------------------------------------
PMT Services, Inc.(a) 1,250,000 20,156,250
- ---------------------------------------------------------------
290,921,144
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.20%
AccuStaff, Inc.(a) 1,000,000 28,562,500
- ---------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.21%
Corrections Corp. of
America(a) 1,000,000 30,500,000
- ---------------------------------------------------------------
SPECIALTY PRINTING-0.38%
Gartner Group, Inc.(a) 1,150,000 32,487,500
- ---------------------------------------------------------------
Valassis Communications,
Inc.(a) 750,000 22,125,000
- ---------------------------------------------------------------
54,612,500
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-1.04%
Billing Information
Concepts(a)(b) 780,000 30,615,000
- ---------------------------------------------------------------
CIENA Corp.(a) 1,050,000 57,750,000
- ---------------------------------------------------------------
LCI International, Inc.(a) 2,000,000 51,750,000
- ---------------------------------------------------------------
USLD Communications Corp.(a) 570,300 11,299,068
- ---------------------------------------------------------------
151,414,068
- ---------------------------------------------------------------
TELEPHONE-0.23%
Cincinnati Bell, Inc. 1,250,000 33,750,000
- ---------------------------------------------------------------
TEXTILES (APPAREL)-1.75%
Jones Apparel Group, Inc.(a) 1,500,000 76,312,500
- ---------------------------------------------------------------
Liz Claiborne, Inc. 1,250,000 63,359,375
- ---------------------------------------------------------------
Nautica Enterprises, Inc.(a) 1,300,000 34,612,500
- ---------------------------------------------------------------
St. John Knits, Inc. 500,000 20,093,750
- ---------------------------------------------------------------
Tommy Hilfiger Corp.(a) 1,500,000 59,343,750
- ---------------------------------------------------------------
253,721,875
- ---------------------------------------------------------------
TEXTILES (SPECIALTY)-0.26%
Unifi, Inc. 1,000,000 38,437,500
- ---------------------------------------------------------------
TRUCKERS-0.11%
Caliber System, Inc. 300,200 15,647,925
- ---------------------------------------------------------------
TRUCKS & PARTS-0.07%
Wabash National Corp. 340,200 10,163,475
- ---------------------------------------------------------------
WASTE MANAGEMENT-1.06%
American Disposal Services,
Inc.(a) 500,000 17,625,000
- ---------------------------------------------------------------
Thermo Instrument Systems,
Inc.(a) 908,400 32,759,175
- ---------------------------------------------------------------
USA Waste Services, Inc.(a) 2,807,500 103,877,500
- ---------------------------------------------------------------
154,261,675
- ---------------------------------------------------------------
Total Domestic Common
Stocks 12,986,108,509
- ---------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS-0.08%
FINANCIAL (DIVERSIFIED)-0.08%
MGIC Investment Corp.-$3.12
Conv. Pfd. 116,500 11,883,000
- ---------------------------------------------------------------
CONVERTIBLE BONDS & PRINCIPAL
NOTES-0.37% AMOUNT
BROADCASTING (TELEVISION, RADIO & CABLE)-0.06%
Jacor Communications Inc.,
Conv. Sr. LYON, 5.50%,
06/12/11(b)(c) $ 14,450,000 $ 8,849,614
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.17%
EMC Corp., Conv. Sub. Notes,
3.25%, 03/15/02 17,500,000 24,287,375
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-0.06%
Sandoz Capital BVI Ltd.
(Switzerland),
Sr. Conv. Deb., 2.00%,
10/06/02(d) (Acquired
11/04/96-11/13/96;
Cost $6,240,625) 5,540,000 8,143,800
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.08%
Loews Corp., Conv. Sub. Notes,
3.125%, 09/15/07 10,500,000 11,982,075
- ---------------------------------------------------------------
Total Convertible Bonds &
Notes 53,262,864
- ---------------------------------------------------------------
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-5.07%
CANADA-1.67%
Biovail Corporation
International (Health
Care-Drugs-Generic &
Other)(a) 250,000 $ 7,218,750
- ---------------------------------------------------------------
CanWest Global Communications
Corp.
(Broadcasting-Television,
Radio & Cable) 2,250,000 43,031,250
- ---------------------------------------------------------------
Newbridge Networks Corp.
(Computers-Networking)(a) 2,000,000 106,000,000
- ---------------------------------------------------------------
Newcourt Credit Group, Inc.
(Finance-Diversified) 257,800 8,974,663
- ---------------------------------------------------------------
Northern Telecom Ltd.
(Communications Equipment) 350,000 31,390,625
- ---------------------------------------------------------------
Precision Drilling Corp. (Oil &
Gas-Drilling & Equipment)(a) 1,500,000 46,125,000
- ---------------------------------------------------------------
242,740,288
- ---------------------------------------------------------------
FINLAND-0.70%
Nokia Oy A.B.-Class A-ADR
(Telecommunications-
Cellular/Wireless) 999,950 88,245,588
- ---------------------------------------------------------------
Nokia Oy A.B.-Class A
(Telecommunications-
Cellular/Wireless) 152,650 13,337,418
- ---------------------------------------------------------------
101,583,006
- ---------------------------------------------------------------
GERMANY-0.10%
Adidas A.G. (Footwear) 100,000 14,486,022
- ---------------------------------------------------------------
IRELAND-0.63%
CBT Group PLC-ADR
(Computers-Software &
Services)(a) 49,400 3,791,450
- ---------------------------------------------------------------
Elan Corp. PLC-ADR (Health
Care-Drugs-Generic &
Other)(a) 1,750,000 87,281,250
- ---------------------------------------------------------------
91,072,700
- ---------------------------------------------------------------
</TABLE>
FS-20
C O N S T E L L A T I O N
<PAGE> 384
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ISRAEL-0.41%
ECI Telecommunications Ltd.
Designs (Communications
Equipment) 750,000 $ 20,718,750
- ---------------------------------------------------------------
Tecnomatix Technologies Ltd.
(Computers-Software &
Services)(a)(b) 479,500 14,804,563
- ---------------------------------------------------------------
Teva Pharmaceutical Industries
Ltd.-ADR (Health
Care-Drugs-Generic & Other) 500,000 23,375,000
- ---------------------------------------------------------------
58,898,313
- ---------------------------------------------------------------
ITALY-0.05%
Telecom Italia Mobile S.p.A.
(Telecommunications-
Cellular/Wireless) 1,074,000 3,964,855
- ---------------------------------------------------------------
Telecom Italia S.p.A.
(Telephone) 596,666 3,732,246
- ---------------------------------------------------------------
7,697,101
- ---------------------------------------------------------------
NETHERLANDS-0.20%
ASM Lithography Holding N.V.
(Electronics-Semiconductors)(a) 300,000 21,975,000
- ---------------------------------------------------------------
Verenigde Nederlandse
Uitgeversbedrijven Verenigd
Bezit (Publishing) 328,500 7,783,157
- ---------------------------------------------------------------
29,758,157
- ---------------------------------------------------------------
NORWAY-0.09%
Petroleum Geo-Services ASA-ADR
(Oil & Gas-Drilling &
Equipment)(a) 187,300 12,970,525
- ---------------------------------------------------------------
SWEDEN-0.52%
Telefonaktiebolaget LM
Ericsson-ADR (Communications
Equipment) 1,707,500 75,556,875
- ---------------------------------------------------------------
TAIWAN-0.10%
ASE Test Ltd.-ADR (Electronics-
Semiconductors)(a) 82,200 4,500,450
- ---------------------------------------------------------------
TAIWAN-(CONTINUED)
Taiwan Semiconductor
Manufacturing Co. Ltd.-ADR
(Electronics-Semiconductors)(a) 500,000 $ 9,906,250
- ---------------------------------------------------------------
14,406,700
- ---------------------------------------------------------------
UNITED KINGDOM-0.60%
Danka Business Systems PLC-ADR
(Office Equipment & Supplies) 2,200,000 81,400,000
- ---------------------------------------------------------------
Granada Group PLC (Leisure
Time-Products) 390,000 5,378,530
- ---------------------------------------------------------------
86,778,530
- ---------------------------------------------------------------
Total Foreign Stocks &
Other Equity Interests 735,948,217
- ---------------------------------------------------------------
PRINCIPAL
AMOUNT
U.S. TREASURY BILLS-2.43%(e)
5.093%, 01/02/98 $355,185,000(f) $ 352,350,624
- ---------------------------------------------------------------
COMMERCIAL PAPER-0.21%
Citibank, NA CP Trust, 5.715%,
12/26/97(g) 30,000,000 30,000,000
- ---------------------------------------------------------------
REPURCHASE AGREEMENT-1.67%(h)
Goldman Sachs & Co.(i) 242,843,032 242,843,032
- ---------------------------------------------------------------
TOTAL INVESTMENTS-99.20% 14,412,396,246
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.80% 116,662,726
- ---------------------------------------------------------------
NET ASSETS-100.00% $14,529,058,972
===============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Affiliated issuers are those in which the Fund's holdings of an Issuer
represent 5% or more of the outstanding voting securities of the issuer. The
Fund has never owned enough of the outstanding voting securities of any
issuer to have control (as defined in the Investment Company Act of 1940) of
that issuer. The aggregate market value of these securities as of 10/31/97
was $664,603,803 which represented 4.57% of the Fund's net assets.
(c) Zero coupon bond. The interest rate shown represents the rate of original
issue discount.
(d) 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 this security has been determined in
accordance with procedures established by the Board of Directors. The market
value of this security at 10/31/97 represented 0.06% of the Fund's net
assets.
(e) 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.
(f) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 8.
(g) Variable rate trust certificates representing an interest in a trust
(comprised of eligible debt obligations) entitling the Portfolio to receive
variable rate interest. The Fund has the right, upon seven calendar days'
notice to the trustee, to put its certificates to the trust at par value
plus accrued interest. Because variable rate trust certificates involve a
trust and a third party put feature, they involve complexities and potential
risks that may not be present where the debt obligation is owned directly.
Rate shown is the rate in effect on 10/31/97.
(h) 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, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(i) Joint repurchase agreement entered into 10/31/97 with a maturing value of
$500,239,583. Collateralized by $500,000,000 U.S. Government obligations,
5.63% to 9.50% due 02/01/00 to 08/01/36 with an aggregate market value at
10/31/97 of $510,000,000.
Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debentures
LYON - Liquid Yield Option Notes
Pfd. - Preferred
Sr. - Senior
Sub. - Subordinated
See Notes to Financial Statements.
FS-21
C O N S T E L L A T I O N
<PAGE> 385
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$10,410,065,063) $14,412,396,246
- ------------------------------------------------------------
Foreign currencies, at market value (cost
$43,837) 45,707
- ------------------------------------------------------------
Receivables for:
Investments sold 100,404,112
- ------------------------------------------------------------
Capital stock sold 106,931,262
- ------------------------------------------------------------
Dividends and interest 1,922,668
- ------------------------------------------------------------
Variation margin 7,210,500
- ------------------------------------------------------------
Investment for deferred compensation plan 100,105
- ------------------------------------------------------------
Other assets 55,235
- ------------------------------------------------------------
Total assets 14,629,065,835
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 56,413,158
- ------------------------------------------------------------
Capital stock reacquired 27,338,316
- ------------------------------------------------------------
Deferred compensation 100,105
- ------------------------------------------------------------
Accrued advisory fees 7,883,834
- ------------------------------------------------------------
Accrued administrative service fees 18,472
- ------------------------------------------------------------
Accrued directors' fees 24,640
- ------------------------------------------------------------
Accrued distribution fees 3,864,856
- ------------------------------------------------------------
Accrued transfer agent fees 2,384,261
- ------------------------------------------------------------
Accrued operating expenses 1,979,221
- ------------------------------------------------------------
Total liabilities 100,006,863
- ------------------------------------------------------------
Net assets applicable to shares outstanding $14,529,058,972
============================================================
NET ASSETS:
Class A $14,319,441,125
============================================================
Class C $ 21,508,420
============================================================
Institutional Class $ 188,109,427
============================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 489,907,670
============================================================
Class C:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 737,163
============================================================
Institutional Class:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 6,269,599
============================================================
CLASS A:
Net asset value and redemption price per
share $ 29.23
============================================================
Offering price per share:
(Net asset value of $29.23 divided by
94.50%) $ 30.93
============================================================
CLASS C:
Net asset value and offering price per
share $ 29.18
============================================================
INSTITUTIONAL CLASS:
Net asset value, offering and redemption
price per share $ 30.00
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $582,223 foreign
withholding tax) $ 32,008,695
- ------------------------------------------------------------
Interest 61,609,664
- ------------------------------------------------------------
Total investment income 93,618,359
- ------------------------------------------------------------
EXPENSES:
Advisory fees 82,922,239
- ------------------------------------------------------------
Administrative service fees 251,513
- ------------------------------------------------------------
Custodian fees 808,078
- ------------------------------------------------------------
Directors' fees 91,513
- ------------------------------------------------------------
Distribution fees-Class A 38,860,415
- ------------------------------------------------------------
Distribution fees-Class C 26,490
- ------------------------------------------------------------
Transfer agent fees-Class A 21,499,897
- ------------------------------------------------------------
Transfer agent fees-Class C 5,881
- ------------------------------------------------------------
Transfer agent fees-Institutional Class 24,455
- ------------------------------------------------------------
Other 3,850,511
- ------------------------------------------------------------
Total expenses 148,340,992
- ------------------------------------------------------------
Less: Fees waived by advisor (2,805,955)
- ------------------------------------------------------------
Expenses paid indirectly (290,066)
- ------------------------------------------------------------
Net expenses 145,244,971
- ------------------------------------------------------------
Net investment income (loss) (51,626,612)
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND FUTURES CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 851,008,605
- ------------------------------------------------------------
Foreign currencies (275,168)
- ------------------------------------------------------------
Futures contracts 195,426,592
- ------------------------------------------------------------
1,046,160,029
- ------------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 1,270,975,830
- ------------------------------------------------------------
Foreign currencies 1,294
- ------------------------------------------------------------
Futures contracts (36,703,480)
- ------------------------------------------------------------
1,234,273,644
- ------------------------------------------------------------
Net gain on investment securities,
foreign currencies and futures
contracts 2,280,433,673
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $2,228,807,061
============================================================
</TABLE>
See Notes to Financial Statements.
FS-22
C O N S T E L L A T I O N
<PAGE> 386
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (51,626,612) $ (25,042,610)
- -----------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities,
foreign currencies and futures contracts 1,046,160,029 394,119,929
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies and futures contracts 1,234,273,644 672,745,646
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,228,807,061 1,041,822,965
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (401,536,883) (233,242,373)
- -----------------------------------------------------------------------------------------------
Institutional Class (10,336,039) (4,789,469)
- -----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 1,280,740,251 3,470,281,071
- -----------------------------------------------------------------------------------------------
Class C 22,611,449 --
- -----------------------------------------------------------------------------------------------
Institutional Class (139,767,829) 135,200,711
- -----------------------------------------------------------------------------------------------
Net increase in net assets 2,980,518,010 4,409,272,905
- -----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 11,548,540,962 7,139,268,057
- -----------------------------------------------------------------------------------------------
End of period $14,529,058,972 $11,548,540,962
===============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 9,520,633,579 $ 8,408,805,783
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (270,243) (124,538)
- -----------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities, foreign currencies and futures contracts 1,022,762,877 388,200,602
- -----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 3,985,932,759 2,751,659,115
- -----------------------------------------------------------------------------------------------
$14,529,058,972 $11,548,540,962
===============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
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 six diversified portfolios:
AIM Constellation Fund, AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM
Capital Development Fund, AIM Charter Fund and AIM Weingarten Fund. The Fund
currently offers three different classes of shares: the Class A shares, the
Class C shares and the Institutional Class. Class C shares commenced sales on
August 4, 1997. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is to seek capital appreciation.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations--A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the 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 (including convertible bonds) are valued on the
basis of prices provided by an independent
FS-23
C O N S T E L L A T I O N
<PAGE> 387
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 or are
questionable 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 would not be reflected in the computation of the Fund's net
asset value. If events materially affecting the value of such securities
occur during such period, then these securities will be valued at their
fair market 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, 1997,
$275,168 was reclassified from undistributed net realized gains to
undistributed net investment income (loss) as a result of differing
book/tax treatments on foreign currency transactions. In addition,
$51,756,075 was reclassified from undistributed net investment income
(loss) to paid-in capital as a result of a net operating tax loss. The
reclassifications were made in order to comply with the requirements of the
American Institute of Certified Public Accountants Statement of Position
93-2. 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--Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated
between the classes.
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 foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract 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 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 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 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. Under the voluntary waiver, 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, 1997, AIM waived fees of $2,805,955. The waiver is entirely
voluntary but approval is required by the
FS-24
C O N S T E L L A T I O N
<PAGE> 388
Board of Directors for 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.
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, 1997, AIM was
reimbursed $251,513 for such services.
The Fund, pursuant to a transfer agent 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 C shares. During the
year ended October 31, 1997, AFS was reimbursed $10,499,779 for such services.
The Fund, pursuant to a transfer agent and service agreement, has agreed to
pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing
transfer agent and shareholder services to the Fund. During the year ended
October 31, 1997, the Portfolio paid AIFS $24,455 for such services. On
September 19, 1997, the Board of Directors of the Fund approved the appointment
of AFS as transfer agent of the Fund to be effective in late 1997 or early 1998.
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 C shares and a master distribution agreement with Fund
Management Company ("FMC") to serve as the distributor for the Institutional
Class. The Company has adopted distribution plans pursuant to Rule 12b-1 under
the 1940 Act with respect to the Fund's Class A shares (the "Class A Plan") and
the Fund's Class C shares (the "Class C Plan") (collectively, the "Plan"). The
Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual
rate of 0.30% of the average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class C shares. The Plan is designed to compensate
AIM Distributors 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 Class A or Class C shares of the Fund. 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 and Class C shares.
During the year ended October 31, 1997 for the Class A shares and the period
August 4, 1997 (date sales commenced) through October 31, 1997, the Class C
shares, paid AIM Distributors $38,860,415 and $26,490, respectively as
compensation under the Plan.
AIM Distributors received commissions of $10,566,898 from sales of the Class A
shares of the Fund during the year ended October 31, 1997. 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, 1997,
AIM Distributors received commissions of $253,473 in contingent deferred sales
charges imposed on the redemptions of Fund 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, 1997, the Fund paid legal fees of $34,413
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund which reduced Fund
expenses by $49,686 during the year ended October 31, 1997. The Fund also
received reductions in transfer agency fees from AFS (an affiliate of AIM) and
reductions in custodian fees of $70,375 and $170,005, respectively, under
expense offset arrangements. The effect of the above arrangements resulted in a
reduction of the Fund's total expenses of $290,066 during the year ended October
31, 1997.
NOTE 4-DIRECTOR'S 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.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lessor of (i) $325,000,000 or (ii) the limit set
by its prospectus for borrowings. During the year ended October 31, 1997, the
Fund did not borrow under the line of credit agreement. The funds which are
party to the line of credit are charged a commitment fee of 0.05% on the unused
balance of the committed line. The commitment fee is allocated among the funds
based on their respective average net assets for the period.
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, 1997 was
$9,490,517,179 and $8,083,184,229, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1997, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $4,320,251,644
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (333,338,001)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $3,986,913,643
==========================================================
</TABLE>
Cost of investments for tax purposes is $10,425,482,603.
FS-25
C O N S T E L L A T I O N
<PAGE> 389
NOTE 7-CAPITAL STOCK
Changes in the capital stock outstanding for the years ended October 31, 1997
and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 211,624,665 $ 5,717,830,615 282,903,859 $ 6,791,107,589
- -----------------------------------------------------------------------------------------------------------------------------
Class C* 745,655 22,872,597 -- --
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Class 5,274,034 141,917,489 7,711,696 189,568,037
- -----------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 15,529,296 381,406,093 10,007,849 218,670,843
- -----------------------------------------------------------------------------------------------------------------------------
Class C* -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Class 387,258 9,720,186 200,095 4,444,113
- -----------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (178,999,514) (4,818,496,457) (146,642,433) (3,539,497,361)
- -----------------------------------------------------------------------------------------------------------------------------
Class C* (8,492) (261,148) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Class (10,657,023) (291,405,504) (2,422,264) (58,811,439)
- -----------------------------------------------------------------------------------------------------------------------------
43,895,879 $ 1,163,583,871 151,758,802 $ 3,605,481,782
=============================================================================================================================
</TABLE>
*Class C Shares commenced sales on August 4, 1997.
NOTE 8-OPEN FUTURES CONTRACTS
On October 31, 1997, $13,341,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open future
contracts. Open futures contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF MONTH/ APPRECIATION
CONTRACT CONTRACTS COMMITMENT (DEPRECIATION)
-------- --------- ---------- --------------
<S> <C> <C> <C>
S&P 500 Index............................................... 690 Dec. '97 $(16,400,635)
</TABLE>
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
capital stock outstanding during each of the years in the
five-year period ended October 31, 1997.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 26.01 $ 24.05 $ 18.49 $ 17.13 $ 13.27
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.02 0.04 0.02 0.03 --
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains on securities (both realized and unrealized) 4.86 2.67 6.06 1.33 3.86
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 4.88 2.71 6.08 1.36 3.86
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Distributions from capital gains (0.89) (0.75) (0.52) -- --
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 30.00 $ 26.01 $ 24.05 $ 18.49 $ 17.13
============================================================ ======== ======== ======== ======== ========
Total return 19.42% 11.81% 34.09% 7.94% 29.09%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $188,109 $293,035 $138,918 $ 39,847 $ 12,338
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets(a) 0.65%(b)(c) 0.66% 0.66% 0.69% 0.87%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets(d) 0.06%(b) 0.21% 0.18% 0.36% 0.04%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 67% 58% 45% 79% 70%
============================================================ ======== ======== ======== ======== ========
Average brokerage commission rate paid(e) $ 0.0576 $ 0.0596 N/A N/A N/A
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Ratios of expenses to average net assets prior to waiver of advisory fees
and/or expense reimbursement were 0.67%, 0.67%, 0.68%, and 0.70% for the
periods 1997-1994, respectively.
(b) Ratios are based on average net assets of $271,723,352.
(c) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have remained the same.
(d) Ratios of net investment income prior to waiver of advisory fees and/or
expense reimbursement were 0.04%, 0.20%, 0.16% and 0.35% for the periods
1997-1994, respectively.
(e) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-26
C O N S T E L L A T I O N
<PAGE> 390
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, 1997, 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 or periods in the
five-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, 1997, 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, 1997, 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 or periods in the five-year period then
ended.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
FS-27
W E I N G A R T E N
<PAGE> 391
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-84.72%
AEROSPACE/DEFENSE-0.06%
Coltec Industries, Inc.(a) 183,600 $ 3,672,000
- ---------------------------------------------------------------
AGRICULTURAL PRODUCTS-0.70%
DIMON, Inc. 675,000 17,507,813
- ---------------------------------------------------------------
Universal Corp. 700,000 26,906,250
- ---------------------------------------------------------------
44,414,063
- ---------------------------------------------------------------
AIR FREIGHT-0.26%
CNF Transportation Inc. 375,000 16,734,375
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.13%
Federal-Mogul Corp. 11,300 478,131
- ---------------------------------------------------------------
MascoTech, Inc. 416,400 7,911,600
- ---------------------------------------------------------------
8,389,731
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-1.05%
First Union Corp. 700,000 34,343,750
- ---------------------------------------------------------------
NationsBank Corp. 550,000 32,931,250
- ---------------------------------------------------------------
67,275,000
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-2.62%
BankAmerica Corp. 650,000 46,475,000
- ---------------------------------------------------------------
Chase Manhattan Corp. 800,000 92,300,000
- ---------------------------------------------------------------
Citicorp 225,000 28,139,063
- ---------------------------------------------------------------
166,914,063
- ---------------------------------------------------------------
BANKS (REGIONAL)-0.06%
North Fork Bancorporation, Inc. 121,500 3,576,656
- ---------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-0.29%
PepsiCo, Inc. 500,000 18,406,250
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-0.44%
Chancellor Media Corp.(a) 200,000 10,975,000
- ---------------------------------------------------------------
Jacor Communications, Inc.(a) 400,000 16,750,000
- ---------------------------------------------------------------
27,725,000
- ---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.46%
Crompton & Knowles Corp. 400,000 10,100,000
- ---------------------------------------------------------------
Cytec Industries Inc.(a) 25,000 1,218,750
- ---------------------------------------------------------------
Millennium Chemicals Inc. 750,000 17,625,000
- ---------------------------------------------------------------
28,943,750
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-1.37%
Lucent Technologies, Inc.(b) 600,000 49,462,500
- ---------------------------------------------------------------
Tellabs, Inc.(a) 700,000 37,800,000
- ---------------------------------------------------------------
87,262,500
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-2.81%
Compaq Computer Corp. 1,000,000 $ 63,750,000
- ---------------------------------------------------------------
Dell Computer Corp.(a) 300,000 24,037,500
- ---------------------------------------------------------------
Digital Equipment Corp.(a) 350,000 17,521,875
- ---------------------------------------------------------------
International Business Machines
Corp. 750,000 73,546,875
- ---------------------------------------------------------------
178,856,250
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-0.97%
Bay Networks, Inc.(a) 1,000,000 31,625,000
- ---------------------------------------------------------------
Cisco Systems, Inc.(a) 365,100 29,949,609
- ---------------------------------------------------------------
61,574,609
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.89%
Adaptec, Inc.(a) 700,000 33,906,250
- ---------------------------------------------------------------
EMC Corp.(a) 400,000 22,400,000
- ---------------------------------------------------------------
56,306,250
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-3.68%
America Online, Inc.(a) 100,000 7,700,000
- ---------------------------------------------------------------
BMC Software, Inc.(a) 290,000 17,508,750
- ---------------------------------------------------------------
Cadence Design Systems, Inc.(a) 300,000 15,975,000
- ---------------------------------------------------------------
Computer Associates
International, Inc. 550,000 41,009,375
- ---------------------------------------------------------------
Computer Sciences Corp.(a) 161,400 11,449,313
- ---------------------------------------------------------------
Compuware Corp.(a) 500,000 33,062,500
- ---------------------------------------------------------------
HBO & Co. 600,000 26,100,000
- ---------------------------------------------------------------
Microsoft Corp.(a) 500,000 65,000,000
- ---------------------------------------------------------------
Unisys Corp.(a) 1,200,000 15,975,000
- ---------------------------------------------------------------
233,779,938
- ---------------------------------------------------------------
CONSUMER FINANCE-2.87%
ContiFinancial Corp.(a) 333,200 9,475,375
- ---------------------------------------------------------------
FIRSTPLUS Financial Group,
Inc.(a) 600,000 33,000,000
- ---------------------------------------------------------------
Green Tree Financial Corp. 725,000 30,540,625
- ---------------------------------------------------------------
Household International, Inc. 300,000 33,975,000
- ---------------------------------------------------------------
Money Store, Inc. 435,200 12,348,800
- ---------------------------------------------------------------
SLM Holding Corp. 450,000 63,168,750
- ---------------------------------------------------------------
182,508,550
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD &
HEALTH)-1.14%
AmeriSource Health Corp.-Class A
(a) 575,000 34,140,625
- ---------------------------------------------------------------
Cardinal Health, Inc. 250,000 18,562,500
- ---------------------------------------------------------------
Sysco Corp. 500,000 20,000,000
- ---------------------------------------------------------------
72,703,125
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.57%
American Power Conversion
Corp.(a) 600,000 16,350,000
- ---------------------------------------------------------------
General Electric Co. 1,224,400 79,050,325
- ---------------------------------------------------------------
</TABLE>
FS-28
W E I N G A R T E N
<PAGE> 392
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT-(CONTINUED)
Honeywell, Inc. 200,000 $ 13,612,500
- ---------------------------------------------------------------
SCI Systems, Inc.(a) 185,200 8,148,800
- ---------------------------------------------------------------
Solectron Corp.(a) 560,400 21,995,700
- ---------------------------------------------------------------
Symbol Technologies, Inc. 610,300 24,259,425
- ---------------------------------------------------------------
163,416,750
- ---------------------------------------------------------------
ELECTRONICS
(INSTRUMENTATION)-0.83%
Perkin-Elmer Corp. 300,000 18,750,000
- ---------------------------------------------------------------
Waters Corp.(a) 775,000 34,100,000
- ---------------------------------------------------------------
52,850,000
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-2.76%
Analog Devices, Inc.(a) 425,000 12,989,063
- ---------------------------------------------------------------
Intel Corp. 625,000 48,125,000
- ---------------------------------------------------------------
Linear Technology Corp. 300,000 18,862,500
- ---------------------------------------------------------------
Maxim Integrated Products,
Inc.(a) 275,000 18,218,750
- ---------------------------------------------------------------
National Semiconductor Corp.(a) 550,000 19,800,000
- ---------------------------------------------------------------
Texas Instruments, Inc. 400,000 42,675,000
- ---------------------------------------------------------------
VLSI Technology, Inc.(a) 500,000 14,812,500
- ---------------------------------------------------------------
175,482,813
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-1.10%
Applied Materials, Inc.(a) 1,000,000 33,375,000
- ---------------------------------------------------------------
KLA-Tencor Corp.(a) 350,000 15,378,125
- ---------------------------------------------------------------
Teradyne, Inc.(a) 570,900 21,373,069
- ---------------------------------------------------------------
70,126,194
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-2.80%
American Express Co. 400,000 31,200,000
- ---------------------------------------------------------------
Amresco, Inc.(a) 500,000 15,687,500
- ---------------------------------------------------------------
Federal Home Loan Mortgage Corp. 875,000 33,140,625
- ---------------------------------------------------------------
Federal National Mortgage
Association 775,000 37,539,063
- ---------------------------------------------------------------
MBIA, Inc. 348,400 20,816,900
- ---------------------------------------------------------------
MGIC Investment Corp. 400,000 24,125,000
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 280,900 13,764,100
- ---------------------------------------------------------------
SunAmerica, Inc. 50,100 1,800,469
- ---------------------------------------------------------------
178,073,657
- ---------------------------------------------------------------
FOODS-0.85%
ConAgra, Inc. 450,000 13,556,250
- ---------------------------------------------------------------
Dean Foods Co. 529,300 25,042,506
- ---------------------------------------------------------------
Sara Lee Corp. 300,000 15,337,500
- ---------------------------------------------------------------
53,936,256
- ---------------------------------------------------------------
FOOTWEAR-0.17%
Wolverine World Wide, Inc. 500,000 11,000,000
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-3.35%
Abbott Laboratories 326,100 19,994,006
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-(CONTINUED)
American Home Products Corp. 500,000 $ 37,062,500
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 594,000 52,123,500
- ---------------------------------------------------------------
Johnson & Johnson 711,300 40,810,838
- ---------------------------------------------------------------
Warner-Lambert Co. 441,700 63,245,919
- ---------------------------------------------------------------
213,236,763
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.68%
Dura Pharmaceuticals, Inc.(a) 395,800 19,146,825
- ---------------------------------------------------------------
ICN Pharmaceuticals, Inc. 900,000 43,312,500
- ---------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 1,400,000 44,450,000
- ---------------------------------------------------------------
106,909,325
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-2.46%
Lilly (Eli) & Co. 450,000 30,093,750
- ---------------------------------------------------------------
Merck & Co., Inc. 750,000 66,937,500
- ---------------------------------------------------------------
Pfizer, Inc. 366,500 25,929,875
- ---------------------------------------------------------------
Schering-Plough Corp. 600,000 33,637,500
- ---------------------------------------------------------------
156,598,625
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.74%
Quorum Health Group, Inc.(a) 937,500 22,734,375
- ---------------------------------------------------------------
Tenet Healthcare Corp.(a) 386,300 11,806,294
- ---------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 290,600 12,804,563
- ---------------------------------------------------------------
47,345,232
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM
CARE)-0.82%
Health Care and Retirement
Corp.(a) 222,350 8,407,609
- ---------------------------------------------------------------
HEALTHSOUTH Corp.(a) 1,200,000 30,675,000
- ---------------------------------------------------------------
NovaCare, Inc.(a) 1,000,000 13,062,500
- ---------------------------------------------------------------
52,145,109
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.29%
MedPartners, Inc.(a) 725,000 18,442,188
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-3.25%
Arterial Vascular Engineering,
Inc.(a) 350,000 18,593,750
- ---------------------------------------------------------------
Baxter International Inc. 643,700 29,771,125
- ---------------------------------------------------------------
Becton, Dickinson & Co. 1,000,000 46,062,500
- ---------------------------------------------------------------
Boston Scientific Corp.(a) 250,000 11,375,000
- ---------------------------------------------------------------
DePuy, Inc.(a) 577,800 14,806,125
- ---------------------------------------------------------------
Guidant Corp. 400,000 23,000,000
- ---------------------------------------------------------------
Stryker Corp. 875,000 32,539,063
- ---------------------------------------------------------------
Sybron International Corp.(a) 757,500 30,394,688
- ---------------------------------------------------------------
206,542,251
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.07%
Physician Support Systems,
Inc.(a) 309,200 4,753,950
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.41%
Furniture Brands International,
Inc.(a) 559,900 9,378,325
- ---------------------------------------------------------------
</TABLE>
FS-29
W E I N G A R T E N
<PAGE> 393
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HOUSEHOLD FURNITURE & APPLIANCES-(CONTINUED)
Maytag Corp. 502,700 $ 16,777,613
- ---------------------------------------------------------------
26,155,938
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.72%
Dial Corp. 1,000,000 16,875,000
- ---------------------------------------------------------------
Procter & Gamble Co. (The) 430,000 29,240,000
- ---------------------------------------------------------------
46,115,000
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.45%
AFLAC Inc. 224,700 11,431,613
- ---------------------------------------------------------------
Conseco Inc. 425,000 18,540,625
- ---------------------------------------------------------------
Equitable Companies, Inc. 800,000 32,950,000
- ---------------------------------------------------------------
Nationwide Financial Services,
Inc.-Class A 600,000 18,262,500
- ---------------------------------------------------------------
Torchmark Corp. 271,600 10,830,050
- ---------------------------------------------------------------
92,014,788
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-1.74%
Ace, Ltd. 400,000 37,175,000
- ---------------------------------------------------------------
Allmerica Financial Corp. 50,800 2,381,250
- ---------------------------------------------------------------
American International Group,
Inc. 352,600 35,987,238
- ---------------------------------------------------------------
Travelers Group, Inc. 500,000 35,000,000
- ---------------------------------------------------------------
110,543,488
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-1.91%
Allstate Corp. 565,300 46,884,569
- ---------------------------------------------------------------
Everest Re Holdings, Inc. 925,000 34,803,125
- ---------------------------------------------------------------
Exel Ltd. 353,800 21,382,788
- ---------------------------------------------------------------
Fremont General Corp. 400,000 18,650,000
- ---------------------------------------------------------------
121,720,482
- ---------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-0.53%
Merrill Lynch & Co., Inc. 213,000 14,404,125
- ---------------------------------------------------------------
Salomon, Inc. 250,000 19,421,875
- ---------------------------------------------------------------
33,826,000
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-1.07%
Franklin Resources, Inc. 388,800 34,943,400
- ---------------------------------------------------------------
T. Rowe Price Associates 500,000 33,125,000
- ---------------------------------------------------------------
68,068,400
- ---------------------------------------------------------------
LODGING-HOTELS-1.92%
Carnival Corp.-Class A 800,000 38,800,000
- ---------------------------------------------------------------
Doubletree Corp.(a) 203,600 8,474,850
- ---------------------------------------------------------------
Host Marriott Corp.(a) 208,500 4,352,438
- ---------------------------------------------------------------
ITT Corp. 350,000 26,140,625
- ---------------------------------------------------------------
Marriott International, Inc. 250,000 17,437,500
- ---------------------------------------------------------------
Patriot American Hospitality,
Inc. 630,000 20,790,000
- ---------------------------------------------------------------
Promus Hotel Corp.(a) 150,000 5,887,500
- ---------------------------------------------------------------
121,882,913
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-1.44%
Caterpillar Inc. 350,000 $ 17,937,500
- ---------------------------------------------------------------
Deere & Co. 550,000 28,943,750
- ---------------------------------------------------------------
Dover Corp. 376,200 25,393,500
- ---------------------------------------------------------------
Ingersoll-Rand Co. 501,150 19,513,528
- ---------------------------------------------------------------
91,788,278
- ---------------------------------------------------------------
MANUFACTURING
(DIVERSIFIED)-2.37%
AlliedSignal Inc. 275,000 9,900,000
- ---------------------------------------------------------------
Carlisle Companies, Inc. 87,800 3,797,350
- ---------------------------------------------------------------
Crane Co. 161,500 6,712,344
- ---------------------------------------------------------------
Eaton Corp. 175,000 16,909,375
- ---------------------------------------------------------------
Thermo Electron Corp.(a) 1,250,000 46,640,625
- ---------------------------------------------------------------
Tyco International Ltd. 800,000 30,200,000
- ---------------------------------------------------------------
U.S. Industries, Inc. 577,500 15,520,313
- ---------------------------------------------------------------
United Technologies Corp. 300,000 21,000,000
- ---------------------------------------------------------------
150,680,007
- ---------------------------------------------------------------
MANUFACTURING
(SPECIALIZED)-0.50%
Diebold, Inc. 450,150 19,834,734
- ---------------------------------------------------------------
U.S. Filter Corp.(a) 300,000 12,037,500
- ---------------------------------------------------------------
31,872,234
- ---------------------------------------------------------------
NATURAL GAS-0.13%
Coastal Corp. 132,700 7,978,587
- ---------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-0.48%
Exxon Corp. 500,000 30,718,750
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-2.84%
BJ Services Co.(a) 275,000 23,306,250
- ---------------------------------------------------------------
Cooper Cameron Corp.(a) 190,600 13,770,850
- ---------------------------------------------------------------
Halliburton Co. 800,000 47,700,000
- ---------------------------------------------------------------
Nabors Industries, Inc.(a) 1,075,000 44,209,375
- ---------------------------------------------------------------
Newpark Resources, Inc.(a) 198,400 8,233,600
- ---------------------------------------------------------------
Santa Fe International Corp. 176,800 8,696,350
- ---------------------------------------------------------------
Schlumberger Ltd. 400,000 35,000,000
- ---------------------------------------------------------------
180,916,425
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.43%
Bowater, Inc. 650,000 27,178,125
- ---------------------------------------------------------------
PERSONAL CARE-1.17%
Avon Products, Inc. 597,000 39,103,500
- ---------------------------------------------------------------
Gillette Co. 400,000 35,625,000
- ---------------------------------------------------------------
74,728,500
- ---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.74%
Xerox Corp. 589,900 46,786,444
- ---------------------------------------------------------------
</TABLE>
FS-30
W E I N G A R T E N
<PAGE> 394
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
POWER PRODUCERS (INDEPENDENT)-0.31%
AES Corp.(a) 500,000 $ 19,812,500
- ---------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.53%
Gannett Co., Inc. 300,000 15,768,750
- ---------------------------------------------------------------
New York Times Co.-Class A 325,000 17,793,750
- ---------------------------------------------------------------
33,562,500
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUST-0.52%
Starwood Lodging Trust 550,000 32,896,875
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.33%
Home Depot, Inc. 375,000 20,859,375
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.77%
CompUSA, Inc.(a) 981,200 32,134,300
- ---------------------------------------------------------------
Ingram Micro, Inc.-Class A(a) 1,200,000 35,775,000
- ---------------------------------------------------------------
Tech Data Corp.(a) 1,000,000 44,500,000
- ---------------------------------------------------------------
112,409,300
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-1.50%
Federated Department Stores,
Inc.(a) 375,000 16,500,000
- ---------------------------------------------------------------
Fred Meyer, Inc.(a) 1,000,000 28,562,500
- ---------------------------------------------------------------
J.C. Penney Co., Inc. 300,000 17,606,250
- ---------------------------------------------------------------
Proffitt's, Inc.(a) 1,150,000 32,990,625
- ---------------------------------------------------------------
95,659,375
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.87%
Consolidated Stores Corp.(a) 618,125 24,647,734
- ---------------------------------------------------------------
Family Dollar Stores, Inc. 466,200 10,955,700
- ---------------------------------------------------------------
Ross Stores, Inc. 525,000 19,621,875
- ---------------------------------------------------------------
55,225,309
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.70%
CVS Corp. 450,000 27,590,625
- ---------------------------------------------------------------
Rite Aid Corp. 290,000 17,218,750
- ---------------------------------------------------------------
44,809,375
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.49%
Kroger Co.(a) 1,125,000 36,703,125
- ---------------------------------------------------------------
Safeway, Inc.(a) 1,000,000 58,125,000
- ---------------------------------------------------------------
94,828,125
- ---------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-1.42%
Costco Companies, Inc.(a) 1,100,000 42,350,000
- ---------------------------------------------------------------
Dayton Hudson Corp. 425,000 26,695,313
- ---------------------------------------------------------------
Wal-Mart Stores, Inc. 601,800 21,138,225
- ---------------------------------------------------------------
90,183,538
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-1.18%
Barnes & Noble, Inc.(a) 138,600 3,542,962
- ---------------------------------------------------------------
Bed Bath & Beyond, Inc.(a) 475,000 15,081,250
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-(CONTINUED)
Office Depot, Inc.(a) 1,370,700 $ 28,270,687
- ---------------------------------------------------------------
Payless ShoeSource, Inc.(a) 217,500 12,125,625
- ---------------------------------------------------------------
Toys "R" Us, Inc.(a) 475,000 16,179,687
- ---------------------------------------------------------------
75,200,211
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.39%
Intimate Brands, Inc. 254,700 5,444,212
- ---------------------------------------------------------------
TJX Companies, Inc. (The) 650,000 19,256,250
- ---------------------------------------------------------------
24,700,462
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-1.44%
Ahmanson (H.F.) & Co. 800,000 47,200,000
- ---------------------------------------------------------------
Charter One Financial, Inc. 246,885 14,350,190
- ---------------------------------------------------------------
Washington Mutual, Inc. 440,000 30,112,500
- ---------------------------------------------------------------
91,662,690
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.68%
Interpublic Group of Companies,
Inc. 412,500 19,593,750
- ---------------------------------------------------------------
Outdoor Systems, Inc.(a) 405,100 12,456,825
- ---------------------------------------------------------------
Universal Outdoor Holdings,
Inc.(a) 269,000 11,365,250
- ---------------------------------------------------------------
43,415,825
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-2.14%
HFS, Inc.(a) 725,000 51,112,500
- ---------------------------------------------------------------
Service Corp. International 2,795,700 85,094,118
- ---------------------------------------------------------------
136,206,618
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.64%
Equifax, Inc. 1,789,800 55,595,662
- ---------------------------------------------------------------
First Data Corp. 400,000 11,625,000
- ---------------------------------------------------------------
Fiserv, Inc.(a) 482,100 21,573,975
- ---------------------------------------------------------------
National Data Corp. 425,000 15,698,438
- ---------------------------------------------------------------
104,493,075
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.37%
AccuStaff, Inc.(a) 761,200 21,741,775
- ---------------------------------------------------------------
Kelly Services, Inc.-Class A 46,900 1,664,950
- ---------------------------------------------------------------
23,406,725
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.50%
CIENA Corp.(a) 375,000 20,625,000
- ---------------------------------------------------------------
MCI Communications Corp. 500,000 17,750,000
- ---------------------------------------------------------------
WorldCom, Inc.(a) 1,690,800 56,853,150
- ---------------------------------------------------------------
95,228,150
- ---------------------------------------------------------------
TELEPHONE-0.55%
Bell Atlantic Corp. 233,300 18,634,837
- ---------------------------------------------------------------
Cincinnati Bell, Inc. 600,000 16,200,000
- ---------------------------------------------------------------
34,834,837
- ---------------------------------------------------------------
</TABLE>
FS-31
W E I N G A R T E N
<PAGE> 395
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TEXTILES (APPAREL)-0.16%
Jones Apparel Group, Inc.(a) 200,000 $ 10,175,000
- ---------------------------------------------------------------
TOBACCO-0.53%
Philip Morris Companies, Inc. 849,900 33,677,288
- ---------------------------------------------------------------
TRUCKERS-0.33%
Caliber System, Inc. 400,000 20,850,000
- ---------------------------------------------------------------
WASTE MANAGEMENT-0.98%
Browning-Ferris Industries, Inc. 1,000,000 32,500,000
- ---------------------------------------------------------------
USA Waste Services, Inc.(a) 800,000 29,600,000
- ---------------------------------------------------------------
62,100,000
- ---------------------------------------------------------------
Total Domestic Common Stocks 5,389,072,735
- ---------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS-1.38%
FINANCIAL (DIVERSIFIED)-1.06%
MGIC Investment Corp.-$3.12
Conv. Pfd. 400,000 40,800,000
- ---------------------------------------------------------------
SunAmerica, Inc.-Series E, $3.10
Dep. Conv. Pfd. 228,800 26,655,200
- ---------------------------------------------------------------
67,455,200
- ---------------------------------------------------------------
LODGING-HOTELS-0.32%
Host Marriott Corp., $3.375
Conv. Pfd. 310,800 20,318,550
- ---------------------------------------------------------------
Total Domestic Convertible
Preferred Stocks 87,773,750
- ---------------------------------------------------------------
PRINCIPAL
AMOUNT
DOMESTIC CONVERTIBLE BONDS & NOTES-0.74%
ELECTRICAL EQUIPMENT-0.64%
SCI Systems, Inc., Conv. Sub. Notes, 5.00%,
05/01/06
(acquired 10/31/96-12/06/96;
cost $27,581,905)(c) $22,050,000 40,709,371
- ---------------------------------------------------------------
MANUFACTURING
(SPECIALIZED)-0.10%
U.S. Filter Corp., Conv. Sub.
Notes, 6.00%, 09/15/05 2,700,000 6,005,205
- ---------------------------------------------------------------
Total Domestic Convertible
Bonds & Notes 46,714,576
- ---------------------------------------------------------------
U.S. DOLLAR DENOMINATED FOREIGN
BONDS & NOTES-0.39%
SWITZERLAND-0.39%
Sandoz Capital BVI Ltd.
(Financial-Diversified),
Sr. Conv. Deb., 2.00%, 10/06/02
(acquired 11/01/96-11/05/96;
cost $18,721,100)(c) 17,000,000 24,990,000
- ---------------------------------------------------------------
SHARES
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-8.99%
CANADA-1.25%
Newbridge Networks Corp.
(Computers-Networking)(a) 220,000 11,660,000
- ---------------------------------------------------------------
CANADA-(CONTINUED)
Northern Telecom Ltd.
(Communications Equipment) 325,000 $ 29,148,438
- ---------------------------------------------------------------
Philip Services Corp. (Waste Management)(a) 2,200,000
- ---------------------------------------------------------------
79,308,438
- ---------------------------------------------------------------
FINLAND-0.33%
Nokia Oy A.B.-Class A-ADR
(Communications Equipment) 240,000 21,180,000
- ---------------------------------------------------------------
FRANCE-1.81%
Banque Nationale de Paris
(Banks-Major Regional) 670,000 29,619,035
- ---------------------------------------------------------------
Elf Aquitaine S.A. (Oil &
Gas-Refining & Marketing) 285,000 35,277,597
- ---------------------------------------------------------------
Renault S.A. (Automobiles)(a) 600,000 16,694,838
- ---------------------------------------------------------------
Societe Generale (Banks-Major
Regional) 245,000 33,554,370
- ---------------------------------------------------------------
115,145,840
- ---------------------------------------------------------------
GERMANY-0.32%
Adidas A.G. (Footwear) 78,800 11,414,985
- ---------------------------------------------------------------
VEBA A.G.
(Manufacturing-Diversified) 158,000 8,815,746
- ---------------------------------------------------------------
20,230,731
- ---------------------------------------------------------------
HONG KONG-0.46%
HSBC Holdings PLC (Banks-Major
Regional) 469,000 10,615,664
- ---------------------------------------------------------------
Sun Hung Kai Properties Ltd.
(Land Development) 2,505,000 18,467,955
- ---------------------------------------------------------------
29,083,619
- ---------------------------------------------------------------
IRELAND-0.26%
Elan Corp. PLC-ADR (Health
Care-Drugs-Generic & Other)(a) 326,600 16,289,175
- ---------------------------------------------------------------
ISRAEL-0.15%
Teva Pharmaceutical Industries
Ltd.-ADR (Health
Care-Drugs-Generic & Other) 200,000 9,350,000
- ---------------------------------------------------------------
ITALY-0.67%
Telecom Italia Mobile S.p.A.
(Telecommunications-Cellular/Wireless) 6,000,000 22,150,030
- ---------------------------------------------------------------
Telecom Italia S.p.A.
(Telephone) 3,333,333 20,850,559
- ---------------------------------------------------------------
43,000,589
- ---------------------------------------------------------------
MEXICO-0.03%
Panamerican Beverages,
Inc.-Class A
(Beverages-Non-Alcoholic) 68,300 2,117,300
- ---------------------------------------------------------------
NETHERLANDS-1.77%
Akzo Nobel N.V.
(Chemicals-Diversified) 135,750 23,919,688
- ---------------------------------------------------------------
ASM Lithography Holding N.V.
(Electronics-Semiconductors)(a) 250,000 18,312,500
- ---------------------------------------------------------------
</TABLE>
FS-32
W E I N G A R T E N
<PAGE> 396
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NETHERLANDS-(CONTINUED)
Philips Electronics N.V.-ADR-New
York Shares (Electrical
Equipment) 900,000 $ 70,537,500
- ---------------------------------------------------------------
112,769,688
- ---------------------------------------------------------------
SINGAPORE-0.13%
Asia Pulp & Paper Co. Ltd.-ADR
(Paper & Forest Products) 745,700 8,482,338
- ---------------------------------------------------------------
SWEDEN-0.52%
Telefonaktiebolaget LM
Ericsson-ADR (Communications
Equipment) 750,000 33,187,500
- ---------------------------------------------------------------
SWITZERLAND-0.33%
Novartis A.G. (Health
Care-Diversified) 13,300 20,829,779
- ---------------------------------------------------------------
UNITED KINGDOM-0.96%
Granada Group PLC (Leisure
Time-Products) 1,330,000 18,342,168
- ---------------------------------------------------------------
UNITED KINGDOM-(CONTINUED)
SmithKline Beecham PLC-ADR
(Health Care-Drugs-Major
Pharmaceuticals) 900,000 $ 42,862,500
- ---------------------------------------------------------------
61,204,668
- ---------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests 572,179,665
- ---------------------------------------------------------------
PRINCIPAL
AMOUNT
U.S. TREASURY BILLS-0.24%(d)
5.093%, 01/02/98 $ 15,645,000(e) 15,520,153
- ---------------------------------------------------------------
REPURCHASE AGREEMENTS-3.32%(f)
CIBC Wood Gundy Securities
Corp., 5.75%, 11/03/97 (g) 100,000,000 100,000,000
- ---------------------------------------------------------------
Goldman, Sachs, & Co., 5.70%,
11/03/97(h) 111,011,779 111,011,779
- ---------------------------------------------------------------
Total Repurchase Agreements 211,011,779
- ---------------------------------------------------------------
TOTAL INVESTMENTS-99.78% 6,347,262,658
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.22% 13,874,661
- ---------------------------------------------------------------
TOTAL NET ASSETS-100.00% $6,361,137,319
===============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 7.
(c) 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 10/31/97 was $65,699,371 which
represented 1.03% of the Fund's net assets.
(d) 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.
(e) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 9.
(f) 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, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(g) Joint repurchase agreement entered into on 10/31/97 with maturing value of
$400,191,667. Collateralized by $400,695,000 U.S. Government obligations, 0%
to 7.75% due 11/12/97 to 07/30/07 with an aggregate market value at 10/31/97
of $408,000,188.
(h) Joint repurchase agreement entered into on 10/31/97 with maturing value of
$700,332,500. Collateralized by $691,835,000 U.S. Government obligations, 0%
to 8.50% due 10/15/98 to 05/15/07 with an aggregate market value at 10/31/97
of $714,757,792.
Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debentures
Pfd. - Preferred
Sr. - Senior
Sub. - Subordinated
See Notes to Financial Statements.
FS-33
W E I N G A R T E N
<PAGE> 397
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$4,878,060,355) $6,347,262,658
- --------------------------------------------------------
Foreign currencies, at market value
(cost $24,034) 23,692
- --------------------------------------------------------
Receivables for:
Investments sold 32,071,207
- --------------------------------------------------------
Capital stock sold 12,718,493
- --------------------------------------------------------
Dividends and interest 3,624,232
- --------------------------------------------------------
Variation margins 324,000
- --------------------------------------------------------
Investment for deferred compensation
plan 80,090
- --------------------------------------------------------
Other assets 133,271
- --------------------------------------------------------
Total assets 6,396,237,643
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 19,092,775
- --------------------------------------------------------
Options written 600,000
- --------------------------------------------------------
Capital stock reacquired 8,360,129
- --------------------------------------------------------
Deferred compensation 80,090
- --------------------------------------------------------
Accrued advisory fees 3,355,000
- --------------------------------------------------------
Accrued administrative service fees 13,321
- --------------------------------------------------------
Accrued distribution fees 1,981,745
- --------------------------------------------------------
Accrued transfer agent fees 878,386
- --------------------------------------------------------
Accrued operating expenses 738,878
- --------------------------------------------------------
Total liabilities 35,100,324
- --------------------------------------------------------
Net assets applicable to shares
outstanding $6,361,137,319
========================================================
NET ASSETS:
Class A $5,810,582,232
========================================================
Class B $ 486,105,308
========================================================
Class C $ 2,326,193
========================================================
Institutional Class $ 62,123,586
========================================================
CAPITAL STOCK, $.001 PAR VALUE PER
SHARE:
CLASS A:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 255,794,618
========================================================
CLASS B:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 21,757,228
========================================================
CLASS C:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 104,104
========================================================
INSTITUTIONAL CLASS:
Authorized 200,000,000
- --------------------------------------------------------
Outstanding 2,695,286
========================================================
CLASS A:
Net asset value and redemption price
per share $ 22.72
- --------------------------------------------------------
Offering price per share:
(Net asset value of
$22.72 divided by 94.50%) $ 24.04
========================================================
CLASS B:
Net asset value and offering price per
share $ 22.34
========================================================
CLASS C:
Net asset value and offering price per
share $ 22.34
========================================================
INSTITUTIONAL CLASS:
Net asset value, offering and
redemption price per share $ 23.05
========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $781,220 foreign
withholding tax) $ 53,208,013
- ----------------------------------------------------------
Interest 14,062,704
- ----------------------------------------------------------
Total investment income 67,270,717
- ----------------------------------------------------------
EXPENSES:
Advisory fees 37,487,692
- ----------------------------------------------------------
Administrative service fees 163,243
- ----------------------------------------------------------
Custodian fees 518,851
- ----------------------------------------------------------
Directors' fees 48,806
- ----------------------------------------------------------
Distribution fees-Class A 16,399,127
- ----------------------------------------------------------
Distribution fees-Class B 3,831,989
- ----------------------------------------------------------
Distribution fees-Class C 2,338
- ----------------------------------------------------------
Transfer agent fees-Class A 7,665,449
- ----------------------------------------------------------
Transfer agent fees-Class B 875,767
- ----------------------------------------------------------
Transfer agent fees-Class C 473
- ----------------------------------------------------------
Transfer agent fees-Institutional Class 5,963
- ----------------------------------------------------------
Other 1,473,922
- ----------------------------------------------------------
Total expenses 68,473,620
- ----------------------------------------------------------
Less: Fees waived by advisor (2,187,021)
- ----------------------------------------------------------
Expenses paid indirectly (116,775)
- ----------------------------------------------------------
Net expenses 66,169,824
- ----------------------------------------------------------
Net investment income 1,100,893
- ----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FUTURES AND OPTION
CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 917,642,460
- ----------------------------------------------------------
Foreign currencies (2,376,476)
- ----------------------------------------------------------
Futures contracts 12,648,342
- ----------------------------------------------------------
Options contracts 5,967,683
- ----------------------------------------------------------
933,882,009
- ----------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 434,974,571
- ----------------------------------------------------------
Foreign currencies 14,469
- ----------------------------------------------------------
Futures contracts (264,000)
- ----------------------------------------------------------
Options contracts 3,811,862
- ----------------------------------------------------------
438,536,902
- ----------------------------------------------------------
Net gain on investment securities,
foreign currencies, futures and option
contracts 1,372,418,911
- ----------------------------------------------------------
Net increase in net assets resulting from
operations $1,373,519,804
==========================================================
</TABLE>
See Notes to Financial Statements.
FS-34
W E I N G A R T E N
<PAGE> 398
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,100,893 $ 14,147,587
- ----------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities,
foreign currencies, futures and options contracts 933,882,009 590,548,116
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies, futures and options contracts 438,536,902 79,138,554
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,373,519,804 683,834,257
- ----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (14,688,010) --
- ----------------------------------------------------------------------------------------------
Institutional Class (444,894) --
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (552,547,910) (606,609,217)
- ----------------------------------------------------------------------------------------------
Class B (32,151,485) (7,814,517)
- ----------------------------------------------------------------------------------------------
Institutional Class (6,655,833) (7,332,667)
- ----------------------------------------------------------------------------------------------
Net equalization credits (charges):
Class A 436,828 2,368,957
- ----------------------------------------------------------------------------------------------
Class B 62,469 992,175
- ----------------------------------------------------------------------------------------------
Class C -- --
- ----------------------------------------------------------------------------------------------
Institutional Class (91,147) 65,590
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 126,373,106 362,344,237
- ----------------------------------------------------------------------------------------------
Class B 166,861,272 210,825,508
- ----------------------------------------------------------------------------------------------
Class C 2,401,569 --
- ----------------------------------------------------------------------------------------------
Institutional Class (7,373,537) 5,462,015
- ----------------------------------------------------------------------------------------------
Net increase in net assets 1,055,702,232 644,136,338
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 5,305,435,087 4,661,298,749
- ----------------------------------------------------------------------------------------------
End of period $6,361,137,319 $5,305,435,087
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $3,937,446,869 $3,649,184,459
- ----------------------------------------------------------------------------------------------
Undistributed net investment income 28,516,289 44,516,626
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities, foreign currencies, futures and options
contracts 925,614,568 580,711,311
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 1,469,559,593 1,031,022,691
- ----------------------------------------------------------------------------------------------
$6,361,137,319 $5,305,435,087
==============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-35
W E I N G A R T E N
<PAGE> 399
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Weingarten Fund (the "Fund") is a series 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 six diversified portfolios:
AIM Weingarten Fund, AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital
Development Fund, AIM Charter Fund and AIM Constellation Fund. The Fund
currently offers four different classes of shares: the Class A shares, Class B
shares, Class C shares and the Institutional Class. Class C shares commenced
sales on August 4, 1997. 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. The Fund's investment objective is
to seek growth of capital principally through investment in common stocks of
seasoned and better capitalized companies. 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. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations--A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the 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 in 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 (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market quotations are not readily
available or are questionable are valued at fair value as determined in good
faith by or under the supervision of the 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 would not be reflected in the computation of the Fund's net
asset value. If events materially affecting the value of such securities
occur during such period, then these securities will be valued at their fair
market 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 foreign currency contract for the purchase
or sale of a security denominated in a foreign currency in order to "lock
in" the U.S. dollar price of that security. The Fund could be exposed to
risk if counterparties to the contracts are unable to meet the terms of
their contracts.
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 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 the change in the value of
the contracts may not correlate with changes in the value of 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
FS-36
W E I N G A R T E N
<PAGE> 400
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 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 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.
F. Put options--The Fund may purchase put options. By purchasing a put option,
the Fund obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this right, a
Fund pays an option premium. The option's underlying instrument may be a
security, or a futures contract. Put options may be used by a Fund to hedge
securities it owns by locking in a minimum price at which the Fund can sell.
If security prices fall, the put option could be exercised to offset all or
a portion of the Fund's resulting losses. At the same time, because the
maximum the Fund has at risk is the cost of the option, purchasing put
options does not eliminate the potential for the Fund to profit from an
increase in the value of the securities hedged.
G. 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, 1997,
undistributed net investment income was decreased by $2,376,476 and
undistributed net realized gains increased by $2,376,476 in order to comply
with the requirements of the American Institute of Certified Public
Accountants Statement of Position 93-2. Net assets of the Fund were
unaffected by the reclassifications discussed above.
H. 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.
I. Expenses--Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
which are attributable to more than one class are allocated between the
classes.
J. 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 but approval is
required by the Board of Directors of the Company for any decision by AIM to
discontinue the waiver. During the year ended October 31, 1997, AIM waived fees
of $2,187,021. 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.
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
FS-37
W E I N G A R T E N
<PAGE> 401
the Fund. During the year ended October 31, 1997, AIM was reimbursed $163,243
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, Class B shares and Class C
shares. During the year ended October 31, 1997, AFS was reimbursed $4,656,522
for such services.
The Fund, pursuant to a transfer agent and service agreement, has agreed to
pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing
transfer agent and shareholder services to the Fund. During the year ended
October 31, 1997, the Portfolio paid AIFS $5,963 for such services. On September
19, 1997, the Board of Directors of the Fund approved the appointment of AFS as
transfer agent of the Fund to be effective in late 1997 or early 1998.
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, Class B and Class C shares and a master distribution agreement with
Fund Management Company ("FMC") to serve as the distributor for the
Institutional Class. The Company has adopted distribution plans pursuant to Rule
12b-1 under the 1940 Act with respect to the Fund's Class A shares (the "Class A
Plan"), the Fund's Class B shares (the "Class B Plan"), and the Fund's Class C
shares (the "Class C Plan") (collectively, the "Plans"). The Fund, pursuant to
the Plan, pays AIM Distributors compensation at the annual rate of 0.30% of the
average daily net assets of Class A shares and 1.00% of the average daily net
assets of Class C shares. The Plan is designed to compensate AIM Distributors
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 Class A or Class C 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,
1997 for the Class A shares and Class B shares and the period August 4, 1997
(date sales commenced) through October 31, 1997, the Class C shares paid AIM
Distributors $16,399,127, $3,831,989 and $2,338, respectively, as compensation
under the Plans.
AIM Distributors received commissions of $1,521,630 from sales of the Class A
shares of the Fund during the year ended October 31, 1997. 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, 1997,
AIM Distributors received commissions of $38,015 in contingent deferred sales
charges imposed on redemptions of Fund 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, 1997, the Fund paid legal fees of $15,778
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund which reduced the
Fund's expenses by $21,962 during the year ended October 31, 1997. The Fund also
received reductions in transfer agency fees from AFS (an affiliate of AIM) and
reductions in custodian fees of $77,032 and $17,781, respectively, under expense
offset arrangements. The effect of the above arrangements resulted in a
reduction of the Fund's total expenses of $116,775 during the year ended October
31, 1997.
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 is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lessor of (i) $325,000,000 or (ii) the limit set
by its prospectus for borrowings. During the year ended October 31, 1997, the
Fund did not borrow under the line of credit agreement. The funds which are
party to the line of credit are charged a commitment fee of 0.05% on the unused
balance of the committed line. The commitment fee is allocated among the funds
based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the year ended October 31, 1997 was $7,275,089,932 and
$7,776,089,044, respectively.
FS-38
W E I N G A R T E N
<PAGE> 402
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of October 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $1,533,476,526
- ----------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (75,979,727)
- ----------------------------------------------------------------------------
Net unrealized appreciation of investment securities $1,457,496,799
============================================================================
</TABLE>
Cost of investments for tax purposes is $4,889,765,859.
NOTE 7-OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended October 31, 1997 are
summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
-------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ------------
<S> <C> <C>
Beginning of period 55,804 $ 22,601,072
- ---------------------------------------------------------------------------------------
Written 86,525 29,354,760
- ---------------------------------------------------------------------------------------
Closed (91,359) (35,943,337)
- ---------------------------------------------------------------------------------------
Exercised (38,470) (10,831,639)
- ---------------------------------------------------------------------------------------
Expired (9,500) (3,963,917)
- ---------------------------------------------------------------------------------------
End of period 3,000 $ 1,216,939
=======================================================================================
</TABLE>
Open call option contracts written at October 31, 1997 were as follows:
<TABLE>
<CAPTION>
OCTOBER 31,
CONTRACT STRIKE NUMBER OF PREMIUM 1997 UNREALIZED
MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
ISSUE -------- ------ --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Lucent Technologies, Inc. November 85 3,000 $1,216,939 $600,000 $616,939
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 8-PUT OPTIONS WRITTEN
Transactions in put options purchased during the year ended October 31, 1997 are
summarized as follows:
<TABLE>
<CAPTION>
PUT OPTION CONTRACTS
-------------------------
NUMBER OF PREMIUMS
CONTRACTS PAID
--------- -----------
<S> <C> <C>
Beginning of period -- --
- ---------------------------------------------------------------------------------------
Purchased 7,500 $ 1,053,750
- ---------------------------------------------------------------------------------------
Exercised (7,500) (1,053,750)
- ---------------------------------------------------------------------------------------
End of period 0 $ 0
- ---------------------------------------------------------------------------------------
</TABLE>
NOTE 9-OPEN FUTURES CONTRACTS
On October 31, 1997, $363,000 principal amount of U.S. Treasury obligations were
pledged as collateral to cover margin requirements for open futures contracts.
Open futures contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF MONTH/ APPRECIATION
CONTRACT CONTRACTS COMMITMENT (DEPRECIATION)
-------- --------- ---------- --------------
<S> <C> <C> <C>
S&P 400 Midcap Index 96 Dec. '97 $(264,000)
</TABLE>
FS-39
W E I N G A R T E N
<PAGE> 403
NOTE 10-CAPITAL STOCK
Changes in the capital stock outstanding during the years ended October 31, 1997
and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 36,066,523 $748,100,033 34,550,539 $648,183,624
- ---------------------------------------------------------------------------------------------------------------------
Class B 9,401,446 192,004,936 12,381,545 231,706,372
- ---------------------------------------------------------------------------------------------------------------------
Class C* 117,736 2,708,502 -- --
- ---------------------------------------------------------------------------------------------------------------------
Institutional Class 377,655 7,900,669 516,716 9,877,153
- ---------------------------------------------------------------------------------------------------------------------
Issued as a reinvestment of dividends:
Class A 29,415,559 528,061,835 32,395,132 557,844,149
- ---------------------------------------------------------------------------------------------------------------------
Class B 1,715,350 30,687,644 425,933 7,326,082
- ---------------------------------------------------------------------------------------------------------------------
Class C* -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Institutional Class 313,585 5,650,803 338,803 5,871,449
- ---------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (56,267,501) (1,149,788,762) (44,929,759) (843,683,536)
- ---------------------------------------------------------------------------------------------------------------------
Class B (2,748,694) (55,831,308) (1,500,861) (28,206,946)
- ---------------------------------------------------------------------------------------------------------------------
Class C* (13,632) (306,933) -- --
- ---------------------------------------------------------------------------------------------------------------------
Institutional Class (951,830) (20,925,009) (552,275) (10,286,587)
- ---------------------------------------------------------------------------------------------------------------------
17,426,197 $288,262,410 33,625,773 $578,631,760
=====================================================================================================================
</TABLE>
* Class C shares commenced sales on August 4, 1997.
FS-40
W E I N G A R T E N
<PAGE> 404
NOTE 11-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
capital stock outstanding during each of the years in the five-year period ended
October 31, 1997.
<TABLE>
<CAPTION>
OCTOBER 31,
-------------------------------------------------------
1997 1996 1995 1994 1993
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 20.46 $ 20.48 $ 17.94 $ 17.69 $ 16.73
- -------------------------------- ------- -------- -------- -------- --------
Income from investment
operations:
Net investment income 0.08 0.17 0.10 0.17 0.16
- -------------------------------- ------- -------- -------- -------- --------
Net gains on securities (both
realized and unrealized) 4.90 2.52 4.35 0.58 0.93
- -------------------------------- ------- -------- -------- -------- --------
Total from investment
operations 4.98 2.69 4.45 0.75 1.09
- -------------------------------- ------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.15) -- (0.13) (0.17) (0.13)
- -------------------------------- ------- -------- -------- -------- --------
Distributions from capital
gains (2.24) (2.71) (1.78) (0.33) --
- -------------------------------- ------- -------- -------- -------- --------
Total distributions (2.39) (2.71) (1.91) (0.50) (0.13)
- -------------------------------- ------- -------- -------- -------- --------
Net asset value, end of period $ 23.05 $ 20.46 $ 20.48 $ 17.94 $ 17.69
================================ ======= ======== ======== ======== ========
Total return 27.37% 15.34% 28.69% 4.37% 6.53%
================================ ======= ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $62,124 $ 60,483 $ 54,332 $ 40,486 $ 39,821
================================ ======= ======== ======== ======== ========
Ratio of expenses to average net
assets(a) 0.64%(b)(c) 0.65% 0.70% 0.65% 0.78%
================================ ======= ======== ======== ======== ========
Ratio of net investment income
to average net assets(d) 0.50%(b) 0.80% 0.45% 1.00% 0.97%
================================ ======= ======== ======== ======== ========
Portfolio turnover rate 128% 159% 139% 136% 109%
================================ ======= ======== ======== ======== ========
Average broker commission rate
paid(e) $0.0618 $ 0.0615 N/A N/A N/A
================================ ======= ======== ======== ======== ========
Borrowings for the period:
Amount of debt outstanding at
end of period (000s omitted) -- -- -- -- --
================================ ======= ======== ======== ======== ========
Average amount of debt
outstanding during the period
(000s omitted)(f) -- -- $ 6 -- --
================================ ======= ======== ======== ======== ========
Average number of shares
outstanding during the period
(000s omitted)(f) 3,146 2,908 2,526 2,256 1,826
================================ ======= ======== ======== ======== ========
Average amount of debt per share
during the period -- -- $ 0.0024 -- --
================================ ======= ======== ======== ======== ========
</TABLE>
(a) After waiver of advisory fees. Ratios of expenses to average net assets
prior to waiver of advisory fees were 0.68%, 0.68%, 0.72%, 0.68%, and 0.81%
for the periods 1997-1993, respectively.
(b) Ratios are based on average net assets of $66,222,553.
(c) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have remained the same.
(d) Ratios of net investment income to average net assets prior to waiver of
advisory fees were 0.46%, 0.77%, 0.43%, 0.98%, and 0.94%, for the periods
1997-1993, respectively.
(e) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(f) Averages computed on a daily basis.
FS-41
W E I N G A R T E N
<PAGE> 405
PART C
OTHER INFORMATION
Item 24(a) Financial Statements:
1. AIM Aggressive Growth Fund - Retail Class (Class A)
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October
31, 1997 (audited)
2. AIM Blue Chip Fund - Retail Classes (Class A, Class
B and Class C)
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October
31, 1997 (audited)
3. AIM Capital Development Fund - Retail Classes
(Class A, Class B and Class C)
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October
31, 1997 (audited)
4. AIM Charter Fund - Retail Classes (Class A, Class B
and Class C)
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October
31, 1997 (audited)
5. AIM Charter Fund - Institutional Class
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October
31, 1997 (audited)
C-1
<PAGE> 406
6. AIM Weingarten Fund - Retail Classes (Class A,
Class B and Class C)
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October
31, 1997 (audited)
7. AIM Weingarten Fund - Institutional Class
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October
31, 1997 (audited)
8. AIM Constellation Fund - Retail Class (Class A,
Class B and Class C)
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October
31, 1997 (audited)
9. AIM Constellation Fund - Institutional Class
In Part A:
Financial Highlights
In Part B:
(1) Independent Auditors' Report
(2) Financial Statements as of October
31, 1997 (audited)
(b) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C> <C> <C>
(1) (a) - Articles Supplementary, as filed with the State of
Maryland on October 1, 1997, were filed electronically as
an Exhibit to Post-Effective Amendment No. 53 on October
9, 1997, and are hereby incorporated by reference.
(b) - Articles Supplementary, as filed with the State of
Maryland on June 24, 1997, were filed electronically as an
Exhibit to Post-Effective Amendment No. 53 on October 9,
1997, and are hereby incorporated by reference.
(c) - Articles Supplementary, as filed with the State of
Maryland on June 26, 1996, were filed electronically as an
Exhibit to Post-Effective Amendment No. 50 on July 24,
1996, and are hereby incorporated by reference.
</TABLE>
C-2
<PAGE> 407
<TABLE>
<S> <C> <C> <C>
(d) - Articles Supplementary, as filed with the State of
Maryland on December 19, 1995, were filed electronically
as an Exhibit to Post-Effective Amendment No. 47 on
December 29, 1995, and are hereby incorporated by
reference.
(e) - Articles Supplementary, as filed with the State of
Maryland on June 5, 1995, were filed electronically as an
Exhibit to Post-Effective Amendment No. 47 on December 29,
1995, and are hereby incorporated by reference.
(f) - Articles of Amendment, as filed with the State of Maryland
on June 5, 1995, were filed electronically as an Exhibit
to Post-Effective Amendment No. 47 on December 29, 1995,
and are hereby incorporated by reference.
(g) - Articles Supplementary, as filed with the State of
Maryland on October 8, 1993, were filed as an Exhibit to
Post-Effective Amendment No. 43 on February 28, 1994, and
were filed electronically as an Exhibit to Post-Effective
Amendment No. 47 on December 29, 1995, and are hereby
incorporated by reference.
(h) - 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
were filed electronically as an Exhibit to Post-Effective
Amendment No. 47 on December 29, 1995, and are hereby
incorporated by reference.
(i) - 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
were filed electronically as an Exhibit to Post-Effective
Amendment No. 47 on December 29, 1995, and are hereby
incorporated by reference.
(j) - 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 were filed electronically as an Exhibit
to Post-Effective Amendment No. 47 on December 29, 1995,
and are hereby incorporated by reference.
(2) (a) - Amended and Restated Bylaws, dated effective December 11,
1996, were filed electronically as an Exhibit to
Post-Effective Amendment No. 51 on January 15, 1997, and
are hereby incorporated by reference.
(b) - 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.
(c) - 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.
(d) - Amended and Restated By-Laws of Registrant were filed as
an Exhibit to Post-Effective Amendment No. 37 on February
28, 1990.
(e) - By-Laws of Registrant were filed as an Exhibit to Post-
Effective Amendment No. 34 on June 13, 1988.
(3) - Voting Trust Agreements - None.
(4) (a) - Form of specimen certificate of shares of Registrant's AIM
Blue Chip Fund was filed electronically as an Exhibit to
Registrant's AIM Blue Chip Fund registration statement on
Form N-14 on December 29, 1995, and is hereby incorporated
by reference.
</TABLE>
C-3
<PAGE> 408
<TABLE>
<S> <C> <C> <C>
(b) - Form of specimen certificate of shares of Registrant's AIM
Capital Development Fund was filed electronically as an
Exhibit to Registrant's AIM Capital Development Fund
registration statement on Form N-14 on December 29, 1995,
and is hereby incorporated by reference.
(c) - 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.
(d) - 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.
(e) - 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.
(f) - 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) Master Investment Advisory Agreement, dated February
28, 1997, between Registrant and A I M Advisors, Inc. was
filed electronically as an Exhibit to Post-Effective
Amendment No. 53 on October 9, 1997, and is hereby
incorporated by reference.
- (2) Amendment No. 2, dated March 12, 1996, to the
Master Investment Advisory Agreement, dated October 18,
1993, between Registrant and A I M Advisors, Inc., was
filed electronically as an Exhibit to Post-Effective
Amendment No. 49 on May 31, 1996.
- (3) 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 was filed electronically as an
Exhibit to Post-Effective Amendment No. 47 on December 29,
1995.
- (4) 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 was filed electronically as an
Exhibit to Post-Effective Amendment No. 47 on December 29,
1995.
- (5) 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.
- (6) 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 February 28,
1997, between Registrant, A I M Advisors, Inc. and A I M
Capital Management, Inc. was filed electronically as an
Exhibit to Post-Effective Amendment No. 53 on October 9,
1997, and is hereby incorporated by reference.
- (2) 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 was
filed electronically as an Exhibit to Post-Effective
Amendment No. 51 on January 15, 1997.
</TABLE>
C-4
<PAGE> 409
<TABLE>
<S> <C> <C> <C>
- (3) 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) - (1) Amendment No. 1 to the Master Distribution Agreement,
dated February 28, 1997, between Registrant (on behalf of
the Class B shares of AIM Constellation Fund) and A I M
Distributors, Inc. is filed herewith electronically.
- (2) Master Distribution Agreement, dated February 28,
1997, between Registrant (on behalf of Registrant's Class
B shares) and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment
No. 53 on October 9, 1997, and is hereby incorporated by
reference.
- (3) Amendment No. 1, dated June 11, 1996, to Master
Distribution Agreement, dated June 14, 1995, between
Registrant (on behalf of the portfolio's Class B shares)
and A I M Distributors, Inc., was filed electronically as
an Exhibit to Post-Effective Amendment No. 50 on July 24,
1996, and was filed electronically as an Exhibit to Post-
Effective Amendment No. 53 on October 9, 1997.
- (4) Master Distribution Agreement, dated June 14, 1995,
between Registrant (on behalf of the portfolio's Class B
shares) and A I M Distributors, Inc., was filed
electronically as an Exhibit to Post-Effective Amendment
No. 47 on December 29, 1995.
- (5) Master Distribution Agreement, dated August 4, 1997,
between Registrant (on behalf of the portfolio's Class A
and Class C shares) and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment
No. 53 on October 9, 1997, and is hereby incorporated by
reference.
- (6) Master Distribution Agreement, dated February 28,
1997, between Registrant (on behalf of Registrant's Class
A shares) and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment
No. 53 on October 9, 1997.
- (7) Amendment No. 1, dated December 4, 1995, to Master
Distribution Agreement, dated October 18, 1993, between
Registrant (on behalf of the portfolio's Class A shares)
and A I M Distributors, Inc., was filed electronically as
an Exhibit to Post-Effective Amendment No. 49 on May 31,
1996.
- (8) Master Distribution Agreement, dated October 18,
1993, between Registrant (on behalf of the portfolio's
Class A shares) and A I M Distributors, Inc., was filed as
an Exhibit to Post-Effective Amendment No. 43 on February
28, 1994, and was filed electronically as an Exhibit to
Post-Effective Amendment No. 47 on December 29, 1995.
- (9) 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.
- (10) 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.
- (11) Master Distribution Agreement, dated February 28,
1997, between Registrant and Fund Management Company was
filed electronically as an Exhibit to Post-Effective
Amendment No. 53 on October 9, 1997, and is hereby
incorporated by reference.
</TABLE>
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- (12) 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.
- (13) 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.
(b) - Form of Selected Dealer Agreement between A I M
Distributors, Inc. and selected dealers is filed herewith
electronically.
(c) - Form of Bank Selling Group Agreement between A I M
Distributors, Inc. and banks is filed herewith
electronically.
(7) (a) - Retirement Plan for Registrant's Non-Affiliated Directors,
effective as of March 8, 1994, as restated September 18,
1995, was filed electronically as an Exhibit to Post-
Effective Amendment No. 47 on December 29, 1995, and is
hereby incorporated by reference.
(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 Registrants
Non-Affiliated Directors as approved March 12, 1997, is
filed herewith electronically.
(d) - Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Directors, as approved December 5, 1995,
was filed electronically as an Exhibit to Post-Effective
Amendment No. 47 on December 29, 1995.
(e) - 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.
(8) (a) - (1) Amendment No. 3, dated December 4, 1995, to the
Custodian Contract, dated October 1, 1992, between
Registrant and State Street Bank and Trust Company, was
filed electronically as an Exhibit to Post-Effective
Amendment No. 49 on May 31, 1996, and is hereby
incorporated by reference.
- (2) Amendment No. 2, dated September 19, 1995, to the
Custodian Contract, dated October 1, 1992, between
Registrant and State Street Bank and Trust Company, was
filed electronically as an Exhibit to Post-Effective
Amendment No. 47 on December 29, 1995, and is hereby
incorporated by reference.
- (3) Amendment No. 1, dated October 15, 1993, to the
Custodian Contract, dated October 1, 1992, between
Registrant and State Street Bank and Trust Company, was
filed electronically as an Exhibit to Post-Effective
Amendment No. 47 on December 29, 1995, and is hereby
incorporated by reference.
- (4) 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 was filed electronically as an
Exhibit to Post-Effective Amendment No. 47 on December 29,
1995, and is hereby incorporated by reference.
(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.
</TABLE>
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(9) (a) - (1) Amended and Restated Transfer Agency and Service
Agreement, dated as of December 29, 1997, between
Registrant and A I M Fund Services, Inc. is filed herewith
electronically.
- (2) Amendment No. 1, dated August 4, 1997, to the Transfer
Agency and Service Agreement dated November 1, 1994,
between Registrant and A I M Fund Services, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment
No. 53 on October 9, 1997.
- (3) 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.
- (4) Amendment No. 2, dated July 1, 1997, to the Transfer
Agency and Service Agreement dated July 1, 1995, between
Registrant and A I M Institutional Fund Services, Inc. was
filed electronically as an Exhibit to Post-Effective
Amendment No. 53 on October 9, 1997.
- (5) Amendment No. 1, dated July 1, 1996, to the Transfer
Agency and Service Agreement dated July 1, 1995, between
Registrant and A I M Institutional Fund Services, Inc. was
filed electronically as an Exhibit to Post-Effective
Amendment No. 53 on October 9, 1997.
- (6) Transfer Agency and Service Agreement, dated July 1,
1995, between Registrant and A I M Institutional Fund
Services, Inc., was filed electronically as an Exhibit to
Post-Effective Amendment No. 47 on December 29, 1995.
- (7) 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.
- (8) 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.
- (9) 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.
- (10) Transfer Agency and Registrar Agreement, dated May
15, 1992, as amended 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.
- (11) 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) Preferred Registered Technology Escrow Agreement,
dated September 10, 1997, between Registrant and First
Data Investor Services Group, Inc., is filed herewith
electronically.
</TABLE>
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- (2) Exhibit 1, effective as of August 4, 1997, to the
Remote Access and Related Services Agreement, dated
December 23, 1994, between the Registrant and First Data
Investor Services Group, Inc. is filed herewith
electronically.
- (3) Amendment No. 3, dated February 1, 1997, to the Remote
Access and Related Services Agreement, dated December 23,
1994, between Registrant and First Data Investor Services
Group, Inc. (formerly, The Shareholder Services Group,
Inc.) was filed electronically as an Exhibit to Post-
Effective Amendment No. 53 on October 9, 1997, and is
hereby incorporated by reference.
- (4) 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.), was filed electronically as an Exhibit to Post-
Effective Amendment No. 47 on December 29, 1995, and is
hereby incorporated by reference.
- (5) 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.), was
filed electronically as an Exhibit to Post-Effective
Amendment No. 47 on December 29, 1995, and is hereby
incorporated by reference.
- (6) 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 was filed
electronically as an Exhibit to Post-Effective Amendment
No. 47 on December 29, 1995, and is hereby incorporated by
reference.
- (7) 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-
Effective Amendment No. 40 on February 26, 1992, and is
hereby incorporated by reference.
(c) - (1) Agreement and Plan of Reorganization between
Registrant and Baird Blue Chip Fund, Inc., dated December
20, 1995, was filed electronically as an Appendix to Part
A of Registrant's AIM Blue Chip Fund registration
statement on Form N-14 on December 29, 1995.
- (2) Amendment, dated May 23, 1996, to Agreement and Plan
of Reorganization between Registrant and Baird Capital
Development Fund, Inc., dated December 20, 1995, was filed
electronically as an Exhibit to Post-Effective Amendment
No. 49 on May 31, 1996.
- (3) Agreement and Plan of Reorganization between
Registrant and Baird Capital Development Fund, Inc., dated
December 20, 1995, was filed electronically as an Appendix
to Part A of Registrant's AIM Capital Development Fund
registration statement on Form N-14 on December 29, 1995.
- (4) Agreement and Plan of Merger, dated September 30,
1988, was filed as an Exhibit to Post-Effective Amendment
No. 35 on September 30, 1988.
- (5) Articles of Merger, dated September 30, 1988, was
filed as an Exhibit to Post-Effective Amendment No. 35 on
September 30, 1988.
</TABLE>
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(d) - (1) Master Administrative Services Agreement, dated
February 28, 1997, between Registrant and A I M Advisors,
Inc. was filed electronically as an Exhibit to Post-
Effective Amendment No. 53 on October 9, 1997, and is
hereby incorporated by reference.
- (2) Amendment No. 2, dated June 11, 1996, to the Master
Administrative Services Agreement dated October 18, 1993,
between Registrant and A I M Advisors, Inc., was filed
electronically as an Exhibit to Post-Effective Amendment
No. 50 on July 24, 1996.
- (3) Amendment No. 1, dated December 4, 1995, to the Master
Administrative Services Agreement, dated October 18, 1993,
between Registrant and A I M Advisors, Inc., was filed
electronically as an Exhibit to Post-Effective Amendment
No. 49 on May 31, 1996.
- (4) 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 was filed electronically
as an Exhibit to Post-Effective Amendment No. 47 on
December 29, 1995.
- (5) 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., was filed electronically as an Exhibit to Post-
Effective Amendment No. 47 on December 29, 1995.
- (6) 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 was filed electronically
as an Exhibit to Post-Effective Amendment No. 47 on
December 29, 1995.
- (7) 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 was filed electronically
as an Exhibit to Post-Effective Amendment No. 47 on
December 29, 1995.
- (8) 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 was filed electronically
as an Exhibit to Post-Effective Amendment No. 47 on
December 29, 1995.
- (9) Administrative Services Agreement, dated October
18, 1993, 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 was filed electronically as an
Exhibit to Post-Effective Amendment No. 47 on December 29,
1995.
- (10) 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.
- (11) 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.
- (12) 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.
</TABLE>
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(10) (a) - Opinion of Ballard Spahr Andrews & Ingersoll was filed
electronically as an Exhibit to Post-Effective Amendment
No. 53 on October 7, 1997, and is hereby incorporated by
reference.
(b) - Opinion of Ballard Spahr Andrews & Ingersoll was filed as
an Exhibit to Registrant's Rule 24f-2 Notice for the
fiscal year ending September 30, 1996 on November 27, 1996
(for AIM Blue Chip Fund).
(c) - 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, 1996 on December 20, 1996.
(11) (a) - Consent of KPMG Peat Marwick LLP is filed herewith
electronically.
(b) - Consent of Tait, Weller & Baker is filed herewith
electronically.
(c) - Consents of Price Waterhouse LLP are filed herewith
electronically.
(d) - Consent of Ballard Spahr Andrews & Ingersoll, LLP is filed
herewith electronically.
(12) - Schedule of Affiliated Company Transactions for the fiscal
year ended October 31, 1997 for AIM Constellation Fund and
AIM Aggressive Growth Fund is filed herewith
electronically.
(13) - None.
(14) (a) - (1) Forms of Registrant's IRA Documents are filed herewith
electronically.
- (2) Revised Form of Registrant's IRA Documents was filed
as an Exhibit to Post-Effective Amendment No. 42 on August
16, 1993.
(b) - (1) Forms of Registrant's Simplified Employee Pension Plan
and Salary Reduction Simplified Employee Pension Plan
Documents are filed herewith electronically.
- (2) 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.
(c) - (1) Forms of Registrant's Money Purchase Pension and
Profit Sharing Plan Document, Trust Agreement, Adoption
Agreements, Summary Plan Descriptions and Applications are
filed herewith electronically.
- (2) 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.
(d) - (1) Forms of Registrant's 403(b) Plan Documents are filed
herewith electronically.
- (2) Revised Form of Registrant's 403(b) Plan was filed
electronically as an Exhibit to Post-Effective Amendment
No. 52 on June 9, 1997.
(e) - Forms of Registrant's SIMPLE IRA are filed herewith
electronically.
(f) - Forms of Registrant's Roth IRA are filed herewith
electronically.
(15) (a) - (1) Amendment No. 1 to Registrant's Amended and Restated
Master Distribution Plan for the Class B shares of AIM
Constellation Fund is filed herewith electronically.
</TABLE>
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- (2) Registrant's Amended and Restated Master Distribution
Plan, dated June 30, 1997, for the Class B shares was
filed electronically as an Exhibit to Post-Effective
Amendment No. 53 on October 9, 1997, and is hereby
incorporated by reference.
- (3) Amendment No. 1, dated June 11, 1996, to
Registrant's Master Distribution Plan for the Class B
shares of AIM Charter Fund, AIM Weingarten Fund, AIM Blue
Chip Fund and AIM Capital Development Fund, dated June 14,
1995, was filed electronically as an Exhibit to Post-
Effective Amendment No. 50 on July 24, 1996.
- (4) Registrant's Master Distribution Plan for the Class
B shares of AIM Charter Fund and AIM Weingarten Fund,
dated June 14, 1995, was filed electronically as an
Exhibit to Post-Effective Amendment No. 47 on December 29,
1995.
- (5) Registrant's Third Amended and Restated Master
Distribution Plan, dated August 4, 1997, for the Class A
and Class C shares was filed electronically as an Exhibit
to Post-Effective Amendment No. 53 on October 9, 1997, and
is hereby incorporated by reference.
- (6) Registrant's Second Amended and Restated Master
Distribution Plan, dated June 30, 1997, for the Class A
shares was filed electronically as an Exhibit to Post-
Effective Amendment No. 53 on October 9, 1997.
- (7) Registrant's Amended and Restated Master Distribution
Plan for the Class A shares, effective as of June 15, 1995
(effective as of December 4, 1995, with respect to the AIM
Blue Chip Fund and AIM Capital Development Fund), was
filed electronically as an Exhibit to Post-Effective
Amendment No. 49 on May 31, 1996.
- (8) Amendment No. 1, dated December 4, 1995, to the
Amended Master Distribution Plan for the Retail Classes,
dated September 27, 1993, as amended, was filed
electronically as an Exhibit to Post-Effective Amendment
No. 49 on May 31, 1996.
- (9) Registrant's Amended Master Distribution Plan for the
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
was filed electronically as an Exhibit to Post-Effective
Amendment No. 47 on December 29, 1995.
- (10) Registrant's Amended Master Distribution Plan for the
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.
- (11) Registrant's Master Distribution Plan for the 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.
- (12) 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.
- (13) Registrant's Amended Distribution Plans for the
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 Distribution Plan is
filed herewith electronically.
</TABLE>
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- (2) Form of Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan was
filed electronically as an Exhibit to Post-Effective
Amendment No. 51 on January 15, 1997.
- (3) Form of Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan was
filed electronically as an Exhibit to Post-Effective
Amendment No. 49 on May 31, 1996.
- (4) Form of Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan was
filed electronically as an Exhibit to Post-Effective
Amendment No. 47 on December 29, 1995.
- (5) Form of Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan was
filed as an Exhibit to Post-Effective Amendment No. 42 on
August 16, 1993.
- (6) Form of Shareholder Service Agreement to be used in
connection with Registrant's AIM Aggressive Growth Fund's
Distribution Plan was filed as an Exhibit to Post-
Effective Amendment No. 42 on August 16, 1993.
- (7) Form of Dealer Assistance Agreement to be used in
connection with Registrant's Master Distribution 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 Distribution Plan
is filed herewith electronically.
- (2) Form of Bank Shareholder Service Agreement to be
used in connection with Registrant's Master Distribution
Plan was filed electronically as an Exhibit to
Post-Effective Amendment No. 51 on January 15, 1997.
- (3) Form of Bank Shareholder Service Agreement to be used
in connection with Registrant's Master Distribution Plan
was filed electronically as an Exhibit to Post-Effective
Amendment No. 49 on May 31, 1996.
- (4) Form of Bank Shareholder Service Agreement to be used
in connection with Registrant's Master Distribution Plan
was filed electronically as an Exhibit to Post-Effective
Amendment No. 47 on December 29, 1995.
- (5) Form of Bank Shareholder Service Agreement to be used
in connection with Registrant's Master Distribution Plan
was filed as an Exhibit to Post-Effective Amendment No. 42
on August 16, 1993.
- (6) Form of Bank Shareholder Service Agreement to be used
in connection with Registrant's AIM Aggressive Growth
Fund's Master Distribution Plan was filed as an Exhibit to
Post-Effective Amendment No. 42 on August 16, 1993.
- (7) Form of Bank Shareholder Service Agreement to be used
in connection with Registrant's Master Distribution Plan
was filed as an Exhibit to Post-Effective Amendment No. 34
on June 13, 1988.
(d) - (1) Form of Variable Group Annuity Contract Holder Service
Agreement to be used in connection with Registrant's
Master Distribution Plan is filed herewith electronically.
</TABLE>
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- (2) Form of Variable Group Annuity Contract Holder Service
Agreements to be used in connection with Registrant's
Master Distribution Plan was filed as an Exhibit to Post-
Effective Amendment No. 42 on August 16, 1993, and was
filed electronically as an Exhibit to Post-Effective
Amendment No. 47 on December 29, 1995.
- (3) Form of Variable Group Annuity Contract Holder Service
Agreement to be used in connection with Registrant's
Master Distribution Plan was filed as an Exhibit to Post-
Effective Amendment No. 40 on February 26, 1992.
(e) - (1) Form of Agency Pricing Agreement to be used in
connection with Registrant's Master Distribution Plan is
filed herewith electronically.
- (2) Form of Agency Pricing Agreement (for Class A
shares) to be used in connection with Registrant's Master
Distribution Plan was filed electronically as an Exhibit
to Post-Effective Amendment No. 51 on January 15, 1997.
- (3) Form of Service Agreement for Certain Retirement Plans
(for the Retail Classes) to be used in connection with
Registrant's Master Distribution Plan was filed
electronically as an Exhibit to Registrant's AIM Blue Chip
Fund registration statement on Form N-14 on December 29,
1995.
- (4) Form of Service Agreement for Certain Retirement Plans
(for the Institutional Classes) to be used in connection
with Registrant's Master Distribution Plan was filed
electronically as an Exhibit to Post-Effective Amendment
No. 47 on December 29, 1995.
- (5) Form of Service Agreement for Certain Retirement Plans
(for the Retail Classes) to be used in connection with
Registrant's Master Distribution Plan was filed
electronically as an Exhibit to Post-Effective Amendment
No. 47 on December 29, 1995.
(f) - (1) Forms of Service Agreement for Brokers for Bank Trust
Departments and for Bank Trust Departments is filed
herewith electronically.
- (2) Forms of Bank Trust Departments and Brokers of Bank
Trust Departments Agreements to be used in connection with
Registrant's Master Distribution Plan were filed
electronically as an Exhibit to Post-Effective Amendment
No. 51 on January 15, 1997.
- (3) Forms of Bank Trust Departments and Brokers of Bank
Trust Departments Agreements to be used in connection with
Registrant's Master Distribution Plan were filed
electronically as an Exhibit to Registrant's AIM Blue Chip
Fund registration statement on Form N-14 on December 29,
1995.
- (4) Forms of Bank Trust Departments and Brokers of Bank
Trust Departments Agreements to be used in connection
with Registrant's Master Distribution Plan were filed
electronically as an Exhibit to Post-Effective Amendment
No. 47 on December 29, 1995.
(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) - Second Amended and Restated Multiple Class Plan (Rule 18f-
3) (effective September 1, 1997) was filed electronically
as an Exhibit to Post-Effective Amendment No. 53 on
October 9, 1997, and is hereby incorporated by reference.
(b) - Amended and Restated Multiple Class Plan (Rule 18f-3)
(effective July 1, 1997) was filed electronically as an
Exhibit to Post-Effective Amendment No. 53 on October 9,
1997.
</TABLE>
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(c) - Multiple Class Plan (Rule 18f-3) (effective September 27,
1996) was filed as an Exhibit to Post-Effective Amendment
No. 51 on January 15, 1997.
(d) - Amendment No. 1, dated June 11, 1996, to the Multiple
Class Plan (Rule 18f-3), dated December 4, 1995 was filed
electronically as an Exhibit to Post-Effective Amendment
No. 50 on July 24, 1996.
(e) - Amended Multiple Class Plan (Rule 18f-3), as amended
December 4, 1995, was filed electronically as an Exhibit
to Post-Effective Amendment No. 47 on December 29, 1995.
(f) - Multiple Class Plan (Rule 18f-3) was filed electronically
as an Exhibit to Post-Effective Amendment No. 46 on June
6, 1995.
(27) - Financial Data Schedules are filed herewith
electronically.
</TABLE>
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>
Title of Class Number of Record Holders as of February 2, 1998
- -------------- -----------------------------------------------
Retail Class: Class A Class B Class C
<S> <C> <C> <C>
AIM Blue Chip Fund 39,337 29,725 699
AIM Capital Development Fund 48,584 32,826 1,511
AIM Charter Fund 145,424 79,150 828
AIM Weingarten Fund 273,759 44,321 512
AIM Constellation Fund 764,363 10,417 3,061
AIM Aggressive Growth Fund 184,769 N/A N/A
</TABLE>
<TABLE>
<CAPTION> Number of Record Holders
Title of Class as of February 2, 1998
- -------------- -----------------------
<S> <C>
Institutional Class:
AIM Charter Fund 10
AIM Weingarten Fund 8
AIM Constellation Fund 12
</TABLE>
C-14
<PAGE> 419
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 $25,000,000 limit
of liability.
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.
C-15
<PAGE> 420
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 Advisor Funds, Inc.
AIM Funds Group
AIM International Funds, Inc.
AIM Investment Securities Funds
(AIM Limited Maturity Treasury Fund - Class A shares)
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
(AIM Limited Maturity Treasury Fund --
Institutional Class)
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 None
John Caldwell Senior Vice President None
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
Marilyn M. Miller Senior Vice President None
B.J. Thompson First Vice President None
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
& Assistant Secretary
James R. Anderson Vice President None
John J. Arthur Vice President & Treasurer Senior Vice President &
Treasurer
Mary K. Coleman Vice President None
Melville B. Cox Vice President & Chief Compliance Vice President
Officer
Charles R. Dewey Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
William H. Kleh Vice President None
</TABLE>
- -----------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-16
<PAGE> 421
<TABLE>
<S> <C> <C>
Terri L. Ransdell Vice President None
Carol F. Relihan Vice President Senior Vice President &
Secretary
Kamala C. Sachidanandan Vice President None
Frank V. Serebrin Vice President None
Christopher T. Simutis Vice President None
Robert D. Van Sant, Jr. Vice President None
Gary K. Wendler Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
Luke Beausoleil Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Glenda A. Dayton Assistant Vice President None
Kathleen M. Douglas Assistant Vice President None
Terri L. Fiedler Assistant Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer & Controller
Mary E. Gentempo Assistant Vice President None
Jeffrey L. Horne Assistant Vice President None
Melissa E. Hudson Assistant Vice President None
Jodie L. Johnson Assistant Vice President None
Kathryn A. Jordan Assistant Vice President None
Kim T. Lankford Assistant Vice President None
Wayne W. LaPlante Assistant Vice President None
Ivy B. McLemore Assistant Vice President None
David B. O'Neil Assistant Vice President None
Patricia M. Shyman Assistant Vice President None
Nicholas D. White Assistant Vice President None
Norman W. Woodson Assistant Vice President None
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, officer or partner of Fund Management Company:
<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 Chairman of the Board
Directors of Directors
J. Abbott Sprague President & Director None
Robert H. Graham Senior Vice President & Director President & Director
Mark D. Santero Senior Vice President None
William J. Wendel Senior Vice President None
John J. Arthur Vice President & Treasurer Senior Vice President
& Treasurer
Carol F. Relihan Vice President & General Senior Vice President &
Counsel & Director Secretary
James R. Anderson Vice President None
Nancy A. Beck Vice President None
Jesse H. Cole Vice President None
Melville B. Cox Vice President & Chief Compliance Vice President
Officer
</TABLE>
C-17
<PAGE> 422
<TABLE>
<S> <C> <C>
Stephen I. Winer Vice President, Assistant Assistant Secretary
General Counsel & Assistant
Secretary
Kathleen J. Pflueger Secretary Assistant Secretary
David E. Hessel Assistant Vice President, None
Assistant Treasurer & Controller
Jeffrey L. Horne Assistant Vice President None
Dana R. Sutton Assistant Vice President & Vice President &
Assistant Treasurer Assistant Treasurer
Robert W. Morris, Jr. Assistant Vice President None
Ann M. Srubar Assistant Vice President None
Nicholas D. White Assistant Vice President None
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>
(c) - None.
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 100, 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 Fund Services, Inc., P. O. Box 4739, Houston, Texas 77210-4739.
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-18
<PAGE> 423
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 27th day of
February, 1998.
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 February 27, 1998
--------------------------
(Charles T. Bauer)
/s/ Robert H. Graham Director & President February 27, 1998
------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ Bruce L. Crockett Director February 27, 1998
--------------------------
(Bruce L. Crockett)
/s/ Owen Daly II Director February 27, 1998
-----------------------------
(Owen Daly II)
/s/ Jack Fields Director February 27, 1998
-------------------------------
(Jack Fields)
/s/ Carl Frischling Director February 27, 1998
-------------------------------
(Carl Frischling)
/s/ John F.Kroeger Director February 27, 1998
----------------------------
(John F. Kroeger)
/s/ Lewis F. Pennock Director February 27, 1998
----------------------------
(Lewis F. Pennock)
/s/ Ian W. Robinson Director February 27, 1998
----------------------------
(Ian W. Robinson)
/s/ Louis S. Sklar Director February 27, 1998
-----------------------------
(Louis S. Sklar)
Senior Vice President &
/s/ John J. Arthur Treasurer (Principal Financial February 27, 1998
----------------------------- and Accounting Officer)
(John J. Arthur)
</TABLE>
<PAGE> 424
INDEX TO EXHIBITS
AIM EQUITY FUNDS, INC.
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
(6)(b) Form of Selected Dealer Agreement between A I M Distributors,
Inc. and selected dealers
(6)(c) Form of Bank Selling Group Agreement between A I M Distributors,
Inc. and banks
(7)(c) Form of Deferred Compensation Agreement for Registrant's Non-
Affiliated Directors, as approved March 12, 1997
(9)(a)(1) Amended and Restated Transfer Agency and Service Agreement, dated
as of December 29, 1997
(9)(b)(1) Preferred Registered Technology Escrow Agreement, dated September
10, 1997, between Registrant and First Data Investor Services
Group, Inc.
(9)(b)(2) Exhibit 1, effective as of August 4, 1997, to the Remote Access
and Related Services Agreement, dated December 23, 1994, between
the Registrant and First Data Investor Services Group, Inc.
(11)(a) Consent of KPMG Peat Marwick LLP
(11)(b) Consent of Tait, Weller & Baker
(11)(c) Consents of Price Waterhouse LLP
(11)(d) Consent of Ballard Spahr Andrews & Ingersoll, LLP
(12) Schedule of Affiliated Company Transactions for the fiscal year
ended October 31, 1997 for AIM Constellation Fund and AIM
Aggressive Growth Fund
(14)(a)(1) Forms of Registrant's IRA Documents
(14)(b)(1) Forms of Registrant's Simplified Employee Pension Plan and Salary
Reduction Simplified Employee Pension Plan Documents
(14)(c)(1) Forms of Registrant's Money Purchase Pension and Profit Sharing
Plan Document Trust Agreement
(14)(d)(1) Forms of Registrant's 403(b) Plan Documents
(14)(e) Forms of Registrant's SIMPLE IRA Documents
(14)(f) Forms of Registrant's Roth IRA Documents
(15)(a)(1) Amendment No. 1 to Registrant's Amended and Restated Master
Distribution Plan for the Class B shares of AIM Constellation
Fund
(15)(b)(1) Form of Shareholder Service Agreement
(15)(c)(1) Form of Bank Shareholder Service Agreement
</TABLE>
<PAGE> 425
<TABLE>
<S> <C>
(15)(d)(1) Form of Variable Group Annuity Contract Holder Service Agreement
(15)(e)(1) Form of Agency Pricing Agreement
(15)(f)(1) Form of Service Agreement for Brokers for Bank Trust Departments
and for Bank Trust Departments
(27) Financial Data Schedules
</TABLE>
<PAGE> 1
EXHIBIT 6(b)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SELECTED DEALER AGREEMENT
FOR INVESTMENT COMPANIES MANAGED
BY A I M ADVISORS, INC.
TO THE UNDERSIGNED SELECTED DEALER:
Gentlemen:
A I M Distributors, Inc., as the exclusive national distributor of shares of
the common stock (the "Shares") of the registered investment companies listed
on Schedule A attached hereto which may be amended from time to time by us (the
"Funds"), understands that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), or, if a foreign dealer, that
you agree to abide by all of the rules and regulations of the NASD for purposes
of this Agreement (which you confirm by your signature below). In consideration
of the mutual covenants stated below, you and we hereby agree as follows:
1 Sales of Shares through you will be at the public offering price of such
Shares (the net asset value of the Shares plus any sales charge applicable
to such Shares), as determined in accordance with the then effective
prospectus used in connection with the offer and sale of Shares
(the "Prospectus"), which public offering price may reflect scheduled
variations in, or the elimination of, the Sales Charge on sales of the
Funds' Shares either generally to the public or in connection with special
purchase plans, as described in the Prospectus. You agree that you will
apply any scheduled variation in, or elimination of, the Sales Charge
uniformly to all offerees in the class specified in the Prospectus.
2 You agree to purchase Shares solely through us and only for the purpose of
covering purchase orders already received from customers or for your own
bona fide investment. You agree not to purchase for any other securities
dealer unless you have an agreement with such other dealer or broker to
handle clearing arrangements and then only in the ordinary course of
business for such purpose and only if such other dealer has executed a
Selected Dealer Agreement with us. You also agree not to withhold any
customer order so as to profit therefrom.
3 The procedures relating to the handling of orders shall be subject to
instructions which we will forward from time to time to all selected
dealers with whom we have entered into a Selected Dealer Agreement. The
minimum initial order shall be specified in the Funds' then current
prospectuses. All purchase orders are subject to receipt of Shares by us
from the Funds concerned and to acceptance of such orders by us. We reserve
the right in our sole discretion to reject any order.
4 With respect to the Funds the Shares of which are indicated on the attached
Schedule as being sold with a Sales Charge (the "Load Funds"), you will be
allowed the concessions from the public offering price provided in the
Load Funds' prospectus. With respect to the Funds, the Shares of which are
indicated on the attached Schedule A as being sold with a contingent
deferred sales charge (the "CDSC Funds"), you will be paid a commission or
concession as disclosed in the CDSC Fund's then current prospectus. With
respect to the Funds whose Shares are indicated on the attached Schedule as
being sold without a Sales Charge or a contingent deferred sales charge
(the "No-Load Funds"), you may charge a reasonable administrative fee. For
the purpose of this Agreement the terms "Sales Charge" and "Dealer
Commission" apply only to the Load Funds and the CDSC Funds. All commissions
and concessions are subject to change without notice by us and will comply
with any changes in regulatory requirements. You agree that you will not
combine customer orders to reach breakpoints in commissions for any purpose
whatsoever unless authorized by the Prospectus or by us in writing.
5 You agree that your transactions in shares of the Funds will be limited to
(a) the purchase of Shares from us for resale to your customers at the
public offering price then in effect or for your own bona fide investment,
(b) exchanges of Shares between Funds, as permitted by the Funds' then
current registration statement (which includes the Prospectus) and in
accordance with procedures as they may be modified by us from time to time,
and (c) transactions involving the redemption of Shares by a Fund or the
repurchase of Shares by us as an accommodation to shareholders. Redemptions
by a Fund and repurchases by us will be effected in the manner and upon the
terms described in the Prospectus. We will, upon your request, assist you
in processing such orders for redemptions or repurchases. To facilitate
prompt payment following a redemption or repurchase of Shares, the owner's
signature shall appear as registered on the Funds' records and, as
described in the Prospectus, it may be required to be guaranteed by a
commercial bank, trust company or a member of a national securities
exchange.
7/97
<PAGE> 2
6 Sales and exchanges of Shares may only be made in those states and
jurisdictions where the Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for sale,
and you agree to indemnify us and/or the Funds for any claim, liability,
expense or loss in any way arising out of a sale of Shares in any state or
jurisdiction in which such Shares are not so registered or qualified.
7 We shall accept orders only on the basis of the then current offering
price. You agree to place orders in respect of Shares immediately upon the
receipt of orders from your customers for the same number of shares. Orders
which you receive from your customers shall be deemed to be placed with us
when received by us. Orders which you receive prior to the close of
business, as defined in the Prospectus, and placed with us within the time
frame set forth in the Prospectus shall be priced at the offering price
next computed after they are received by you. We will not accept from you
a conditional order on any basis. All orders shall be subject to
confirmation by us.
8 Your customer will be entitled to a reduction in the Sales Charge on
purchases made under a Letter of Intent or Right of Accumulation described
in the Prospectus. In such case, your Dealer's Concession will be based
upon such reduced Sales Charge; however, in the case of a Letter of Intent
signed by your customer, an adjustment to a higher Dealer's Concession
will thereafter be made to reflect actual purchases by your customer if he
should fail to fulfil his Letter of Intent. When placing wire trades, you
agree to advise us of any Letter of Intent signed by your customer or of
any Right of Accumulation available to him of which he has made you aware.
If you fail to so advise us, you will be liable to us for the return of
any commissions plus interest thereon.
9 You and we agree to abide by the Rules of Fair Practice of the NASD and all
other federal and state rules and regulations that are now or may become
applicable to transactions hereunder. Your expulsion from the NASD will
automatically terminate this Agreement without notice. Your suspension from
the NASD or a violation by you of applicable state and federal laws and
rules and regulations of authorized regulatory agencies will terminate this
Agreement effective upon notice received by you from us. You agree that it
is your responsibility to determine the suitability of any Shares as
investments for your customers, and that AIM Distributors has no
responsibility for such determination.
10 With respect to the Load Funds and the CDSC Funds, and unless otherwise
agreed, settlement shall be made at the offices of the Funds' transfer
agent within three (3) business days after our acceptance of the order. With
respect to the No-Load Funds, settlement will be made only upon receipt by
the Fund of payment in the form of federal funds. If payment is not so
received or made within ten (10) business days of our acceptance of the
order, we reserve the right to cancel the sale or, at our option, to sell
the Shares to the Funds at the then prevailing net asset value. In this
event, or in the event that you cancel the trade for any reason, you agree
to be responsible for any loss resulting to the Funds or to us from your
failure to make payments as aforesaid. You shall not be entitled to any
gains generated thereby.
11 If any Shares of any of the Load Funds sold to you under the terms of this
Agreement are redeemed by the Fund or repurchased for the account of the
Funds or are tendered to the Funds for redemption or repurchase within
seven (7) business days after the date of our confirmation to you of your
original purchase order therefore, you agree to pay forthwith to us the
full amount of the concession allowed to you on the original sale and we
agree to pay such amount to the Fund when received by us. We also agree to
pay to the Fund the amount of our share of the Sales Charge on the original
sale of such Shares.
12 Any order placed by you for the repurchase of Shares of a Fund is subject
to the timely receipt by the Fund's transfer agent 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, in which case you agree to be responsible for any loss
resulting to the Fund or to us from such cancellation.
13 We reserve the right in our discretion without notice to you to suspend
sales or withdraw any offering of Shares entirely, to change the offering
prices as provided in the Prospectus or, upon notice to you, to amend or
cancel this Agreement. You agree that any order to purchase Shares of the
Funds placed by you after notice of any amendment to this Agreement has
been sent to you shall constitute your agreement to any such amendment.
14 In every transaction, we will act as agent for the Fund and you will act as
principal for your own account. You have no authority whatsoever to act as
our agent or as agent for the Funds, any other Selected Dealer or the
Funds' transfer agent and nothing in this Agreement shall serve to appoint
you as an agent of any of the foregoing in connection with transactions
with your customers or otherwise.
15 No person is authorized to make any representations concerning the Funds or
their Shares except those contained in the Prospectus and any such
information as may be released by us as information supplemental to the
Prospectus. If you should make such unauthorized representation, you agree
to indemnify the Funds and us from and against any and all claims,
liability, expense or loss in any way arising out of or in any way
connected with such representation.
7/97
<PAGE> 3
16 We will supply you with copies of the Prospectuses and Statements of
Additional Information of the Funds (including any amendments thereto) in
reasonable quantities upon request. You will provide all customers with a
Prospectus prior to or at the time such customer purchases Shares. You will
provide any customer who so requests a copy of the Statement of Additional
Information on file with the U.S. Securities and Exchange Commission.
17 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
18 No advertising or sales literature, as such terms are defined by the NASD,
of any kind whatsoever will be used by you with respect to the Funds or us
unless first provided to you by us or unless you have obtained our prior
written approval.
19 All expenses incurred in connection with your activities under this
Agreement shall be borne by you.
20 This Agreement shall not be assignable by you. This Agreement shall be
constructed in accordance with the laws of the State of Texas.
21 Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
22 This Agreement constitutes the entire agreement between the undersigned and
supersedes all prior oral or written agreements between the parties hereto.
A I M DISTRIBUTORS, INC.
Date: By: X
------------------ ---------------------------------------
The undersigned accepts your invitation to become a Selected Dealer and agrees
to abide by the foregoing terms and conditions. The undersigned acknowledges
receipt of prospectuses for use in connection with offers and sales of the
Funds.
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 100
Houston, Texas 77046-1173
7/97
<PAGE> 4
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
SELECTED DEALER AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Asian Growth Fund Yes Yes
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM European Development Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM High Income Municipal Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Income Municipal Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Fund Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Fund Yes No
</TABLE>
2/98
<PAGE> 5
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Cash Reserve Shares, AIM Limited Maturity Treasury Fund, AIM
Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Fund.
**For all Funds sold with CDSC (includes Class B and Class C shares).
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
2/98
<PAGE> 1
EXHIBIT 6(c)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
BANK ACTING AS AGENT
FOR ITS CUSTOMERS
Agreement Relating to Shares
of AIM Family of Mutual Funds
(Confirmation and Prospectus to be sent by A I M Distributors,
Inc. to Customer)
A I M Distributors, Inc. is the exclusive national distributor of the shares of
the registered investment companies listed on Schedule A hereto which may be
amended from time to time by us (the "Funds"). As exclusive agent for the
Funds, we are offering to make available shares of common stock or of
beneficial interest, as the case may be, of the Funds (the "Shares") for
purchase by your customers on the following terms:
1 In all sales of Shares you shall act as agent for your customers, and in no
transaction shall you have any authority to act as agent for any Fund or
for us.
2 The customers in question are, for all purposes, your customers and not
customers of A I M Distributors, Inc. In receiving orders from your
customers who purchase Shares, A I M Distributors, Inc. is not soliciting
such customers and, therefore, has no responsibility for determining
whether Shares are suitable investments for such customers.
3 It is hereby understood that in all cases in which you place orders with us
for the purchase of Shares (a) you are acting as agent for the customer;
(b) the transactions are without recourse against you by the customer; (c)
as between you and the customer, the customer will have full beneficial
ownership of the securities; (d) each such transaction is initiated solely
upon the order of the customer; and (e) each such transaction is for the
account of the customer and not for your account.
4 Orders received from you will be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts (defined
below) provided in such Prospectus. Following receipt from you of any order
to purchase Shares for the account of a customer, we shall confirm such
order to you in writing. We shall be responsible for sending your customer
a written confirmation of the order with a copy of the appropriate Fund's
current Prospectus. We shall send you a copy of such confirmation.
Additional instructions may be forwarded to you from time to time. All
orders are subject to acceptance or rejection by us in our sole discretion.
5 Members of the general public, including your customers, may purchase
Shares only at the public offering price determined in the manner described
in the current Prospectus of the appropriate Fund. With respect to the
Funds, the Shares of which are indicated on the attached Schedule A as
being sold with a sales charge (i.e. the "Load Funds"), you will be allowed
to retain a commission or concession from the public offering price
provided in such Load Funds' current Prospectus. With respect to the Funds,
the Shares of which are indicated on the attached Schedule A as being sold
with a contingent deferred sales charge (the "CDSC Funds"), you will be
paid a commission or concession as disclosed in the CDSC Fund's then
current prospectus. With respect to the Funds whose Shares are indicated on
the attached Schedule as being sold without a sales charge or a contingent
deferred sales charge, (i.e. the "No-Load Funds"), you will not be allowed
to retain any commission or concession. All commissions or concessions set
forth in any of the Load Funds' or CDSC Funds' Prospectus are subject to
change without notice by us and will comply with any changes in regulatory
requirements.
6 The tables of sales charges and discounts set forth in the current
Prospectus of each Fund are applicable to all purchases made at any one
time by any "purchaser", as defined in the current Prospectus. For this
purpose, a purchaser may aggregate concurrent purchases of securities of
any of the Funds.
7 Reduced sales charges may also be available as a result of quantity
discounts, rights of accumulation or letters of intent. Further information
as to such reduced sales charges, if any, is set forth in the appropriate
Fund Prospectus. In such case, your discount will be based upon such
reduced sales charge; however, in the case of a letter of intent signed by
your customer, an adjustment to a higher discount will thereafter be made
to reflect actual purchases by your customer if he should fail to fulfill
his letter of intent. You agree to advise us promptly as to the amounts of
any sales made by you to your customers qualifying for reduced sales
charges. If you fail to so advise us of any letter of intent signed by your
customer or of any right of accumulation available to him of which he has
made you aware, you will be liable to us for the return of any discount
plus interest thereon.
8 By accepting this Agreement you agree:
a. that you will purchase Shares only from us;
b. that you will purchase Shares from us only to cover purchase orders
already received from your customers; and
c. that you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholdings.
9 We will not accept from you a conditional order for Shares on any basis.
10 Payment for Shares ordered from us shall be in the form of a wire transfer
or a cashiers check mailed to us. Payment shall be made within three (3)
business days after our acceptance of the order placed on behalf of your
customer. Payment shall be equal to the public offering price less the
discount retained by you hereunder.
7/97
<PAGE> 2
11 If payment is not received within ten (10) business days of our acceptance
of the order, we reserve the right to cancel the sale or, at our option, to
sell Shares to the Fund at the then prevailing net asset value. In this
event you agree to be responsible for any loss resulting to the Fund from
the failure to make payment as aforesaid.
12 Shares sold hereunder shall be available in book-entry form on the books of
the Funds' Transfer Agent unless other instructions have been given.
13 No person is authorized to make any representations concerning Shares of
any Fund except those contained in the applicable current Prospectus and
printed information subsequently issued by the appropriate Fund or by us as
information supplemental to such Prospectus. You agree that you will not
make Shares available to your customers except under circumstances that
will result in compliance with the applicable Federal and State Securities
and Banking Laws and that you will not furnish to any person any
information contained in the then current Prospectus or cause any
advertisement to be published in any newspaper or posted in any public
place without our consent and the consent of the appropriate Fund.
14 Sales and exchanges of Shares may only be made in those states and
jurisdictions where Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for
sales, and you agree to indemnify us and/or the Funds for any claim,
liability, expense or loss in any way arising out of a sale of Shares in
any state or jurisdiction not identified by us as a state or jurisdiction
in which such Shares are so registered or qualified. We agree to indemnify
you for any claim, liability, expense or loss in any way arising out of a
sale of shares in any state or jurisdiction identified by us as a state or
jurisdiction in which shares are so registered or qualified.
15 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
16 All sales will be made subject to our receipt of Shares from the
appropriate Fund. We reserve the right, in our discretion, without notice,
to modify, suspend or withdraw entirely the offering of any Shares and,
upon notice, to change the sales charge or discount or to modify, cancel or
change the terms of this Agreement. You agree that any order to purchase
Shares of the Funds placed by you after any notice of amendment to this
Agreement has been sent to you shall constitute your agreement to any such
agreement.
17 The names of your customers shall remain your sole property and shall not
be used by us for any purpose except for servicing and information mailings
in the normal course of business to Fund Shareholders.
18 Your acceptance of this Agreement constitutes a representation that you are
a "Bank" as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, as amended, and are duly authorized to engage in the transactions to
be performed hereunder.
All communications to us should be sent to A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 100, Houston, Texas 77046. Any notice to you shall
be duly given if mailed or telegraphed to you at the address specified by
you below or to such other address as you shall have designated in writing
to us. This Agreement shall be construed in accordance with the laws of the
State of Texas.
A I M DISTRIBUTORS, INC.
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 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
BANK SELLING GROUP AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Asian Growth Fund Yes Yes
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM European Development Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Income Municipal Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Fund Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Fund Yes No
</TABLE>
2/98
<PAGE> 4
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Cash Reserve Shares, AIM Limited Maturity Treasury Fund, AIM
Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Fund.
**For all Funds sold with CDSC (includes Class B and Class C shares).
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
2/98
<PAGE> 1
EXHIBIT 7(c)
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 and method of payment of amounts
that you defer: for amounts previously deferred and for future elections you
now designate a specific Payment Date and payment method which generally may be
changed with at least one year's advance notice.
PAYMENT DATE ELECTION
Deferred fees (and the income, gains and losses credited
during the deferral period) generally will be paid out as elected by you in
installments or a single sum in cash within 30 days of the Payment Date
elected. (For payments in connection with your termination of service as a
trustee, see below.)
Deferrals must be for a minimum two year period (unless 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 second
anniversary of the applicable Election Date or your retirement date. Thus, fees
previously deferred and fees payable for the calendar year beginning January 1,
1997 may be deferred to the first day of any calendar quarter in any year from
1999.
EXTENDING A PAYMENT DATE
At least one year prior to any Payment Date, you may extend
that Date, provided that the additional period of deferral is at least two
years. You may make this change in Payment Date only once.
-1-
<PAGE> 2
PAYMENT METHOD
The value of your deferrals (based on your election as to how
your deferral account is to be considered invested) will be paid in cash, in
one lump sum or in annual installments (over a period not to exceed 10 years)
as you select at the time you select your Payment Date. You may change this
election, but the change will not be given effect unless it is made at least
one year before your Payment Date or your ceasing to be a trustee (whichever
occurs first). This one year requirement is waived in the case of your death
(see Termination of Service, below).
TERMINATION OF SERVICE
Upon your death, your account under the Agreement will be paid
out as elected by you in installments or 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
timely 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.
-2-
<PAGE> 3
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, if 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> 4
(f) "Deferral Accounts" shall mean the accounts
maintained to reflect the Director's Compensation Deferrals made pursuant to
Section 3 hereof (or pursuant to any prior agreement) 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> 5
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> 6
(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 by giving
written direction to the Presidents of the Funds in such manner and at such
time as the Funds may permit, but no less frequently than quarterly on thirty
(30) days' notice prior to the end of a calendar quarter. A timely change to a
Director's investment designation shall become effective as soon as practicable
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> 7
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. At least 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 second 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 in a single sum unless the
Participant elects, at the time a Payment Date is selected pursuant to
paragraph 4.1(a) or 4.1(b), to receive the amount payable in generally equal
quarterly installments over a period not to exceed ten (10) years. In
addition, as least one year before the Payment Date, a Director may change the
method of payment previously selected.
(e) Irrevocability. Except as provided in paragraph
4.1(b) and 4.1(d), 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) provided the designation
of such method had been made at least one year before such termination occurred,
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
-5-
<PAGE> 8
(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 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 accordance with the method of
payment selected pursuant to paragraph 4.1(d), commencing 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.
-6-
<PAGE> 9
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.
(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 this Agreement, such Accounts shall continue to be maintained
in accordance with the provisions of this Agreement 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.
-7-
<PAGE> 10
(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.
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.
-8-
<PAGE> 11
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,
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.
-9-
<PAGE> 12
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.
-10-
<PAGE> 13
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
-11-
<PAGE> 14
APPENDIX A
----------
AIM ADVISOR FUNDS, INC.
AIM EQUITY FUNDS, INC.
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.
SHORT-TERM INVESTMENTS CO.
SHORT-TERM INVESTMENTS TRUST
TAX-FREE INVESTMENTS CO.
<PAGE> 15
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 50 percent (50%) 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 two 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.
-5-
<PAGE> 16
Payment Method
--------------
I hereby elect to receive the amounts credited to my Deferral
Account in (check one)
o a single payment in cash
o quarterly installments for a period of ____ years (select no more
than 10 years)
o annual installments for a period of ____ (select no more than 10
years)
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:_________________________
-6-
<PAGE> 17
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
-1-
<PAGE> 18
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> 1
EXHIBIT 9(a)(1)
AMENDED AND RESTATED
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
AIM EQUITY FUNDS, INC.
AND
A I M 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 12 MERGER OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 13 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
AMENDED AND RESTATED
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 29th day of December, 1997, by and between
AIM EQUITY FUNDS, INC., a Maryland corporation, having its principal office and
place of business at 11 Greenway Plaza, Suite 100, Houston, Texas 77046 (the
"Fund"), and A I M Fund Services, Inc., a Delaware corporation having its
principal office and place of business at 11 Greenway Plaza, Suite 100,
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 Retail Class and 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
Retail Class and 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 and
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 fees as set out in the initial fee schedule attached hereto for
the Retail Classes and an annual fee in the amount of .009% of average daily
net assets, payable monthly for the Institutional Classes. Such fees and
out-of-pocket expenses and advances identified under Section 2.02 below may be
changed from time to time subject to mutual written agreement between the Fund
and the Transfer Agent.
2
<PAGE> 5
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse the Transfer Agent for out-of-pocket expenses or advances
incurred by the Transfer Agent for the items set out in the fee schedule
attached hereto. In addition, any other expenses incurred by the Transfer
Agent at the request or with the consent of the Fund, will be reimbursed by the
Fund on behalf of the applicable Shares.
2.03 The Fund agrees on behalf of each of the Portfolios to pay all
fees and reimbursable expenses following the mailing of the respective billing
notice. Postage for mailing of dividends, proxies, Fund reports and other
mailings to all Shareholder accounts shall be advanced to the Transfer Agent by
the Fund at least seven (7) days prior to the mailing date of such materials.
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 corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform this Agreement.
3
<PAGE> 6
4.04 It is an open-end, diversified 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.
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
4
<PAGE> 7
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.
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.
5
<PAGE> 8
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.
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 Portfolios.
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 of the Fund.
6
<PAGE> 9
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.
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/ P. MICHELLE GRACE
- -----------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By:
/s/ JOHN CALDWELL
-----------------
President
ATTEST:
/s/ P. MICHELLE GRACE
- -----------------------------
Assistant Secretary
8
<PAGE> 11
RETAIL CLASSES
FEE SCHEDULE
1. For performance by the Transfer Agent pursuant to this Agreement, the Fund
agrees on behalf of each of the Portfolios to pay the Transfer Agent an
annualized fee for shareholder accounts that are open during any monthly
period as set forth below, and an annualized fee of $.70 per shareholder
account that is closed during any monthly period. Both fees shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of
1/12 of the annualized fee for all such accounts.
<TABLE>
<CAPTION>
Per Account Fee
Fund Type Annualized
--------- ----------
<S> <C>
Class A Annual/Semi-Annual Dividends $15.15
Class A Quarterly & Monthly Dividend 17.15
Class A Daily Accrual 19.65
Class B 19.65
Class C 19.65
</TABLE>
2. The Transfer Agent shall provide the AIM Funds with an annualized credit
to the monthly billings of (a) $1.50 for each open account in excess of
100,000 open AIM Funds Accounts up to and including 125,000 open AIM Funds
Accounts; (b) $1.75 for each open account in excess of 125,000 open AIM
Funds Accounts up to and including 150,000 open AIM Funds Accounts; (c)
$2.00 for each open AIM Funds Account in excess of 150,000 open AIM Funds
Accounts up to and including 200,000 open AIM Funds Accounts; (d) $2.25
for each open AIM Funds Account in excess of 200,000 open AIM Funds
Accounts up to and including 500,000 open AIM Funds Accounts; (e) $2.50
for each open AIM Funds Account in excess of 500,000 open AIM Funds
Accounts up to and including 1,000,000 open AIM Funds Accounts; and (f)
$3.00 for each open AIM Funds Account in excess of 1,000,000 open AIM
Funds Accounts.
3. In addition, beginning on the anniversary date of the execution of the
Remote Services Agreement with The Shareholder Services Group, Inc., and
on each subsequent anniversary date, the per account fees shall each be
increased by a percentage amount equal to the percentage increase in the
then current Consumer Price Index (all urban consumers) or its successor
index, though in no event shall such increase be greater than a 7%
increase over the previous fees.
4. Other Fees
IRA Annual Maintenance Fee $10 per IRA account per year (paid by
investor per tax I.D. number).
Balance Credit The total fees due to the Transfer
Agent from all funds affiliated with
the Fund shall be reduced by an amount
equal to one half of investment income
earned by the Transfer Agent on the DDA
balances of the disbursement accounts
for those funds.
9
<PAGE> 12
Remote Services Fee $3.60 per open account per year,
payable monthly and $1.80 per closed
account per year, payable monthly.
5. OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production & equipment
- Magnetic media tapes and freight
- Printing costs, including, without limitation, certificates,
envelopes, checks, stationery, confirmations and statements
- Postage (bulk, pre-sort, ZIP+4, bar coding, first class) direct
pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all lease,
maintenance and line costs
- Ad hoc reports
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- 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
- Courier services
- Banking charges, including without limitation incoming and
outgoing wire charges @ $8.00 per wire
- Rendering fees as billed
- Federal Reserve charges for check clearance
- Record retention, retrieval and destruction costs, including, but
not limited to exit fees charged by third party record keeping
vendors
- Third party audit reviews
- All client specific Systems enhancements will be at the Funds'
cost.
- Certificate Insurance
- Such other miscellaneous expenses reasonably incurred by the
Transfer Agent in performing its duties and responsibilities
under this Agreement
- Check writing fee of $.75 per check redemption.
The Fund agrees that postage and mailing expenses will be paid on the day
of or prior to mailing. In addition, the Fund will promptly reimburse the
Transfer Agent for any other unscheduled expenses incurred by the Transfer
Agent whenever the Fund and the Transfer Agent mutually agree that such
expenses are not otherwise properly borne by the Transfer Agent as part of
its duties and obligations under the Agreement.
10
<PAGE> 1
9(b)(1)
EXHIBIT 2
PREFERRED REGISTRATION
TECHNOLOGY ESCROW AGREEMENT
Account Number 0609111-00002-0109001
Recitals
This Preferred Registration Technology Escrow Agreement including any
Exhibits ("Agreement") is effective this 10th day of September 1997, by and
among Data Securities International, Inc. ("DSI"), a Delaware corporation, First
Data Investor Services Group, Inc. ("Depositor"), and each registered investment
company listed on the attached Schedule A hereof ("Preferred Registrant").
WHEREAS, Depositor has entered into a certain Remote Access and
Related Services Agreement dated December 23, 1994, as amended by Amendment
Number 3 dated as of February 1, 1997 (the "Remote Agreement") with the
Preferred Registrant which pursuant thereto certain proprietary software, as
described in Section 12(i) of the Remote Agreement, in object-code form and
other materials of Depositor have been licensed to Preferred Registrant (the
"Software");
WHEREAS, Depositor and Preferred Registrant desire the Agreement to be
supplementary to said contract pursuant to 11 United States Code Section
365(n);
WHEREAS, availability of or access to the source code and other
proprietary data related to the Software is critical to Preferred Registrant in
the conduct of its business;
WHEREAS, Depositor has deposited or will deposit with DSI such source
code and other proprietary data to provide for retention, administration and
controlled access for Preferred Registration under conditions specified herein;
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the promises, mutual
covenants and conditions contained herein, the parties hereto agree as follows:
1. Deposit Account. Following the delivery of the executed Agreement, DSI
shall open a deposit account ("Deposit Account") for Depositor. The
opening of the Deposit Account means that DSI shall establish an account
ledger in the name of Depositor, assign a deposit account number
("Deposit Account Number"), calendar renewal notices to be sent to
Depositor as provided in Section 30, and request the initial deposit
("Initial Deposit") from Depositor. Depositor has an obligation to make
the Initial Deposit. In the event that Depositor has not made the
Initial Deposit within sixty (60) days of the execution of this
1
<PAGE> 2
Agreement, DSI shall request the Initial Deposit from Depositor and
notify Preferred Registrant that such Initial Deposit has not been
received.
2. Preferred Registration Account. Following the execution and delivery of
the Agreement, DSI shall open a registration account ("Registration
Account") for Preferred Registrant. The opening of the Registration
Account means that DSI shall establish under the Deposit Account an
account ledger with a unique registration number ("Registration Number")
in the name of Preferred Registrant, calendar renewal notices to be sent
to Preferred Registrant as provided in Section 30, and request the
Initial Deposit from Depositor. DSI shall notify Preferred Registrant
upon receipt of Initial Deposit.
3. Term of Agreement. The Agreement will commence on the effective date
and continue through January 31, 2000, unless terminated earlier as
provided in the Agreement. The Agreement may be extended for one (1)
year terms.
4. Exhibit A, Notices and Communications. Notices and invoices to
Depositor, Preferred Registrant or DSI should be sent to the parties at
the addresses identified in the Exhibit A.
Documents, payment of fees, deposits of material, and any written
communication should be sent to the DSI offices as identified in the
Exhibit A.
Depositor and Preferred Registrant agree to each name their respective
designated contact ("Designated Contact") to receive notices from DSI
and to act on their behalf in the performance of their obligations as
set forth in the Agreement. Depositor and Preferred Registrant agree to
notify DSI immediately in the event of a change of their Designated
Contact in the manner stipulated in Exhibit A.
5. Exhibit B and Deposit Material. Depositor will submit proprietary data
and related material ("Deposit Material") to DSI for retention and
administration in the Deposit Account.
The Deposit Material will be submitted together with a completed
document called a "Description of Deposit Material", hereinafter
referred to as Exhibit B. Each Exhibit B should be signed by Depositor
prior to submission to DSI and will be signed by DSI upon completion of
the Deposit Material inspection.
Depositor represents and warrants that it lawfully possesses all Deposit
Material, can transfer Deposit Material to DSI and has the authority to
store Deposit Material in accordance with the terms of the Agreement.
2
<PAGE> 3
6. Deposit Material Inspection. Upon receipt of an Exhibit B and Deposit
Material, DSI will be responsible only for reasonably matching the
labeling of the materials to the item descriptions listed on the Exhibit
B and validating the count of the materials to the quantity listed on
the Exhibit B. DSI will not be responsible for any other claims made by
the Depositor on the Exhibit B. Acceptance will occur when DSI concludes
that the Deposit Material Inspection is complete. Upon acceptance DSI
will sign the Exhibit B and assign it the next Exhibit B number. DSI
shall issue a copy of the Exhibit B to Depositor and Preferred
Registrant within ten (10) days of acceptance.
7. Initial Deposit. The Initial Deposit will consist of all material
initially supplied by Depositor to DSI.
8. Deposit Changes. Depositor may desire or may be obligated to update the
Deposit Account with supplemental or replacement Deposit Material of
technology releases.
Supplemental Deposit ("Supplemental") is Deposit Material which is to be
added to the Deposit Account.
Replacement Deposit ("Replacement") is Deposit Material which will
replace existing Deposit Material as identified by any one or more
Exhibit B(s) in the Deposit Account. Replaced Deposit Material will be
destroyed or returned to Depositor.
9. Deposit. The existing deposit ("Deposit") means all Exhibit B(s) and
their associated Deposit Material currently in DSI's possession.
Destroyed or returned Deposit Material is not part of the Deposit;
however, DSI shall keep records of the destruction or return of Deposit
Material.
10. Replacement Option. Within ten (10) days of receipt of Replacement from
Depositor, DSI will send a letter to Preferred Registrant stating that
Depositor requests to replace existing Deposit Material, and DSI will
include a copy of the new Exhibit B(s) listing the new Deposit Material.
Preferred Registrant has twenty (20) days from the mailing of such
letter by DSI to instruct DSI to retain the existing Deposit Material
held by DSI, and if so instructed, DSI will change the Replacement to a
Supplemental. Conversion to Supplemental may cause an additional
storage unit fee as specified by DSI's Fee and Services Schedule.
If Preferred Registrant does not instruct DSI to retain the existing
Deposit Material, DSI shall permit such Deposit Material to be replaced
with the Replacement. Within ten (10) days of acceptance of the
Replacement by DSI, DSI shall issue a copy of the executed Exhibit B(s)
to Depositor and Preferred Registrant. DSI will either destroy or
return to Depositor all Deposit Material replaced by the Replacement.
3
<PAGE> 4
11. Storage Unit. DSI will store the Deposit in defined units of space,
called storage units. The cost of the first storage unit will be
included in the annual Deposit Account fee.
12. Deposit Obligations of Confidentiality. DSI agrees to establish a
locked receptacle in which it shall place the Deposit and shall put the
receptacle under the administration of one or more of its officers,
selected by DSI, whose identity shall be available to Depositor at all
times. DSI shall exercise a professional level of care in carrying out
the terms of the Agreement.
DSI acknowledges Depositor's assertion that the Deposit shall contain
proprietary data and that DSI has an obligation to preserve and
protect the confidentiality of the Deposit.
Except as provided for in the Agreement, DSI agrees that it shall not
divulge, disclose, make available to third parties, or make any use
whatsoever of the Deposit.
13. Audit Rights. DSI agrees to keep records of the activities undertaken
and materials prepared pursuant to the Agreement. DSI may issue to
Depositor and Preferred Registrant an annual report profiling the
Deposit Account. Such annual report will identify the Depositor,
Preferred Registrant, the current Designated Contacts, selected
special services, and the Exhibit B history, which includes Deposit
Material acceptance and destruction or return dates.
Upon reasonable notice, during normal business hours and during the
term of the Agreement, Depositor or Preferred Registrant will be
entitled to inspect the records of DSI pertaining to the Agreement,
and accompanied by an employee of DSI, inspect the physical status and
condition of the Deposit. The Deposit may not be changed during the
audit.
14. Renewal Period of Agreement. Upon payment of the initial fee or
renewal fee, the Agreement will be in full force and will have an
initial period of at least one (1) year unless otherwise specified.
The Agreement may be renewed for additional periods upon receipt by
DSI of the specified renewal fees prior to the last day of the period
("Expiration Date"). DSI may extend the period of the Agreement to
cover the processing of any outstanding instruction made during any
period of the Agreement.
Preferred Registrant has the right to pay renewal fees and other
related fees. In the event Preferred Registrant pays the renewal fees
and Depositor is of the opinion that any necessary condition for
renewal is not met, Depositor may so notify DSI and Preferred
Registrant in writing. The resulting dispute will be resolved
pursuant to the dispute resolution process defined in Section 25.
4
<PAGE> 5
15. Expiration. If the Agreement is not renewed, or is otherwise
terminated, all duties and obligations of DSI to Depositor and
Preferred Registrant will terminate. If Depositor requests the return
of the Deposit, DSI shall return the Deposit to Depositor only after
any outstanding invoices and the Deposit return fee are paid. If the
fees are not received by the Expiration Date of the Agreement, DSI, at
its option, may destroy the Deposit.
16. Certification by Depositor. Depositor represents to Preferred
Registrant that:
a. The Deposit delivered to DSI consists of the following: source
code deposited on computer magnetic media; all necessary and
available information, proprietary information, and technical
documentation which will enable a reasonably skilled
programmer of Preferred Registrant to create, maintain and/or
enhance the Software without the aid of Depositor or any other
person or reference to any other materials; maintenance tools
(test programs and program specifications); proprietary or
third party system utilities (compiler and assembler
descriptions); description of the system/program generation;
descriptions and locations of programs not owned by Depositor
but required for use and/or support; and names of key
developers for the technology on Depositor's staff.
b. The Deposit will be defined in the Exhibit B(s).
These representations shall be deemed to be made continuously
throughout the term of the Agreement.
17. Indemnification. Depositor and Preferred Registrant agree to defend
and indemnify DSI and hold DSI harmless from and against any and all
claims, actions and suits, whether in contract or in tort, and from
and against any and all liabilities, losses, damages, costs, charges,
penalties, counsel fees, and other expenses of any nature (including,
without limitation, settlement costs) incurred by DSI as a result of
performance of the Agreement except in the event of a judgment which
specifies that DSI acted with gross negligence or willful misconduct.
18. Filing for Release of Deposit by Preferred Registrant. Upon notice to
DSI by Preferred Registrant of the occurrence of a release condition
as defined in Section 21 and payment of the release request fee, DSI
shall notify Depositor by certified mail or commercial express mail
service with a copy of the notice from Preferred Registrant. If
Depositor provides contrary instruction within ten (1O) days of the
mailing of the notice to Depositor, DSI shall not deliver a copy of
the Deposit to Preferred Registrant.
19. Contrary Instruction. "Contrary Instruction" is the filing of an
instruction with DSI by Depositor stating that a Contrary Instruction
is in effect. Such Contrary Instruction
5
<PAGE> 6
means an officer of Depositor warrants that a release condition has not
occurred or has been cured. DSI shall send a copy of the instruction by
certified mail or commercial express mail service to Preferred
Registrant. DSI shall notify both Depositor and Preferred Registrant
that there is a dispute to be resolved pursuant to Section 25. Upon
receipt of Contrary Instruction, DSI shall continue to store the
Deposit pending Depositor and Preferred Registrant joint instruction,
resolution pursuant to Section 25, order by a court of competent
jurisdiction, or termination by non-renewal of the Agreement.
20. Release of Deposit to Preferred Registrant. Pursuant to Section 18, if
DSI does not receive Contrary Instruction from Depositor, DSI is
authorized to release the Deposit, or if more than one Preferred
Registrant is registered to the Deposit, a copy of the Deposit, to the
Preferred Registrant filing for release following receipt of any fees
due to DSI including Deposit copying and delivery fees.
21. Release Conditions of Deposit to Preferred Registrant.
Release conditions are:
a. Depositor ceases to do business, makes an assignment for the
benefit of creditors, becomes insolvent (as revealed by its
books and records or otherwise), is generally unable to pay
its debts as such debts become due, or commences, or has
commenced against it a case under any chapter of state or
federal bankruptcy laws; and Depositor fails to cure any such
event within 60 days after receiving notice from Preferred
Registrant; and
b. Preferred Registrant has paid all amounts due Depositor under
the Remote Agreement.
22. Grant of Use License. Subject to the terms and conditions of the
Agreement, Depositor hereby transfers and upon execution by DSI, DSI
hereby accepts a non-exclusive, nontransferable, royalty-free license
("Use License") for the unexpired term of the Remote Agreement subject
to Section 15 thereof which DSI will transfer to Preferred Registrant
upon controlled release of the Deposit as described in the Agreement.
The Use License will be solely for Preferred Registrant's internal
purposes in connection with support, maintenance, and operation of the
Software solely as set forth in the Remote Agreement and not for any
other purpose or person.
23. Use License Representation. Depositor represents and warrants to
Preferred Registrant and DSI that it has no knowledge of any
incumbrance or infringement of the Deposit, or that any claim has been
made that the Deposit infringes any patent, trade secret, copyright or
other proprietary right of any third party. Depositor warrants that it
has
6
<PAGE> 7
the full right, power, and ability to enter into and perform the
Agreement, to grant the foregoing Use License, and to permit the
Deposit to be placed with DSI.
24. Conditions Following Release. Following a release and subject to
payment to DSI of all outstanding fees, DSI shall transfer the Use
License to Preferred Registrant. Additionally Preferred Registrant
shall be required to maintain the confidentiality of the released
Deposit.
25. Disputes. In the event of a dispute, DSI shall so notify Depositor and
Preferred Registrant in writing. Upon agreement of the parties at the
time of a dispute, such dispute will be settled by arbitration in
accordance with the commercial rules of the American Arbitration
Association ("AAA"). Unless otherwise agreed to by Depositor and
Preferred Registrant, arbitration will take place in San Diego,
California, USA.
26. Verification Rights. Depositor grants to Preferred Registrant the
option to verify the Deposit for accuracy, completeness and
sufficiency. Depositor agrees to permit DSI and at least one employee
of Preferred Registrant to be present at Depositor's facility to
verify, audit and inspect of the Deposit for the benefit of Preferred
Registrant. If DSI is present or is selected to perform the
verification, DSI will be paid according to DSI's then current
verification service hourly rates and any out of pocket expenses.
27. General. DSI may act in reliance upon any instruction, instrument, or
signature believed to be genuine and may assume that any employee
giving any written notice, request, advice or instruction in
connection with or relating to the Agreement has apparent authority
and has been duly authorized to do so. DSI may provide copies of the
Agreement or account history information to any employee of Depositor
or Preferred Registrant upon their request. For purposes of
termination or replacement, Deposit Material shall be returned only to
Depositor's Designated Contact, unless otherwise instructed by
Depositor's Designated Contact.
DSI is not responsible for failure to fulfill its obligations under the
Agreement due to causes beyond DSI's control.
The Agreement is to be governed by and construed in accordance with
the laws of the State of California.
The Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes all previous
communications, representations, understandings, and agreements,
either oral or written, between the parties. The Agreement may be
amended only in a writing signed by the parties.
7
<PAGE> 8
If any provision of the Agreement is held by any court to be invalid
or unenforceable, that provision will be severed from the Agreement
and any remaining provisions will continue in full force.
28. Title to Media. Subject to the terms of the Agreement, title to the
media, upon which the proprietary data is written or stored, is and
shall be irrevocably vested in DSI. Notwithstanding the foregoing,
Depositor will retain ownership of the proprietary data contained on
the media including all copyright, trade secret, patent or other
intellectual property ownership rights subsisting in such proprietary
data.
29. Termination of Rights. The Use License as described above will
terminate in the event that the Agreement is terminated without the
Use License transferring to Preferred Registrant.
30. Fees. Fees are due upon receipt of signed contract, receipt of Deposit
Material, or when service is requested, whichever is earliest. If
invoiced fees are not paid within sixty (60) days of the date of the
invoice, DSI may terminate the Agreement. If the payment is not timely
received by DSI, DSI shall have the right to accrue and collect
interest at the rate of one and one-half percent per month (18% per
annum) from the date of the invoice for all late payments.
Renewal fees will be due in full upon the receipt of invoice unless
otherwise specified by the invoice. In the event that renewal fees are
not received thirty (30) days prior to the Expiration Date, DSI shall
so notify Depositor and Preferred Registrant. If the renewal fees are
not received by the Expiration Date, DSI may terminate the Agreement
without further notice and without liability of DSI to Depositor or
Preferred Registrant.
DSI shall not be required to process any request for service unless
the payment for such request shall be made or provided for in a manner
satisfactory to DSI.
All service fees and renewal fees will be those specified in DSI's Fee
and Services Schedule in effect at the time of renewal or request for
service, except as otherwise agreed. For any increase in DSI's
standard fees, DSI shall notify Depositor and Preferred Registrant at
least ninety (90) days prior to the renewal of the Agreement.
8
<PAGE> 9
For any service not listed on the Fee and Services Schedule, DSI shall
provide a quote prior to rendering such service.
Fees invoiced by DSI are the responsibility of the Preferred
Registrant and as such all invoices in accordance with this Agreement
are to be sent to the Preferred Registrant.
On behalf of the Investment Companies
and respective Portfolios and Classes
set forth in Schedule A attached
hereto as may be amended from
time to time.
<TABLE>
<S> <C>
By: /s/ ROBERT H. GRAHAM FIRST DATA INVESTOR SERVICES
--------------------------------- GROUP, INC.
Name: Robert H. Graham
------------------------------- By: /s/ ILLEGIBLE
Title: President ---------------------------------
------------------------------ Name: ILLEGIBLE
-------------------------------
Title: Executive Vice President
------------------------------
DATA SECURITIES
INTERNATIONAL, INC.
By: /s/ CHRISTIE WOODWARD
---------------------------------
Name: Christie Woodward
-------------------------------
Title: Contract Administrator
------------------------------
</TABLE>
<PAGE> 10
SCHEDULE A
LIST OF FUNDS
AIM ADVISOR FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Advisor Cash Management Fund Class A and Class C Shares
AIM Advisor Flex Fund Class A and Class C Shares
AIM Advisor Income Fund Class A and Class C Shares
AIM Advisor International Value Fund Class A and Class C Shares
AIM Advisor Large Cap Value Fund Class A and Class C Shares
AIM Advisor MultiFlex Fund Class A and Class C Shares
AIM Advisor Real Estate Fund Class A and Class C Shares
</TABLE>
AIM EQUITY FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Blue Chip Fund Class A, B and Class C Shares
AIM Capital Development Fund Class A, B and Class C Shares
AIM Charter Fund Class A, B and Class C Shares
AIM Weingarten Fund Class A, B and Class C Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A Shares and Class C Shares
</TABLE>
AIM FUNDS GROUP
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Balanced Fund Class A, Class B and Class C Shares
AIM Global Utilities Fund Class A, Class B and Class C Shares
AIM Growth Fund Class A, Class B and Class C Shares
AIM High Yield Fund Class A, Class B and Class C Shares
AIM Income Fund Class A, Class B and Class C Shares
AIM Intermediate Government Fund Class A, Class B and Class C Shares
AIM Municipal Bond Fund Class A, Class B and Class C Shares
AIM Value Fund Class A, Class B and Class C Shares
AIM Money Market Fund Class A, Class B, Class C and AIM Cash Reserve Shares
</TABLE>
AIM INTERNATIONAL FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM International Equity Fund Class A, Class B and Class C Shares
AIM Global Aggressive Growth Fund Class A, Class B and Class C Shares
AIM Global Growth Fund Class A, Class B and Class C Shares
AIM Global Income Fund Class A, Class B and Class C Shares
AIM Asian Growth Fund Class A, Class B and Class C Shares
AIM European Development Fund Class A, Class B and Class C Shares
</TABLE>
<PAGE> 11
AIM INVESTMENT SECURITIES FUNDS
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
</TABLE>
AIM TAX-EXEMPT FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Tax-Exempt Cash Fund Class A
AIM Tax-Exempt Bond Fund of Connecticut Class A
Intermediate Portfolio AIM Tax-Free Intermediate Shares - Class A
</TABLE>
<PAGE> 12
EXHIBIT A
DESIGNATED CONTACT
Account Number: 0609111-00002-01090011
<TABLE>
<S> <C>
NOTICES, DEPOSIT MATERIAL RETURNS AND INVOICES TO DEPOSITOR SHOULD BE ADDRESSED TO:
COMMUNICATION, INCLUDING DELINQUENCIES TO First Data Investor Services Group, Inc.
DEPOSITOR SHOULD BE ADDRESSED TO: ------------------------------------------------
4400 Computer Drive
First Data Investor Services Group, Inc. ------------------------------------------------
- ---------------------------------------- Westboro, MA 01581
4400 Computer Drive ------------------------------------------------
- ----------------------------------------
Westboro, MA 01581 ------------------------------------------------
- ----------------------------------------
Invoice Contact: Brendan Bowen
- ---------------------------------------- --------------------------------
Designated Contact: John Corey
---------------------
Telephone: (508) 871-9601
------------------------------
Facsimile:
------------------------------
State of Incorporation: Massachusetts
-----------------
NOTICES AND COMMUNICATION, INCLUDING INVOICES TO PREFERRED REGISTRANT SHOULD BE
DELINQUENCIES TO PREFERRED REGISTRANT ADDRESSED TO:
SHOULD BE ADDRESSED TO: A I M Fund Service, Inc.
-----------------------------------------------
A I M Fund Service, Inc. Eleven Greenway Plaza
Eleven Greenway Plaza -----------------------------------------------
Houston, TX 77046 Houston, TX 77046
-----------------------------------------------
-----------------------------------------------
Designated Contact: Jack Caldwell Invoice Contact: Jack Caldwell
--------------------- -------------------------------
Telephone: (713) 214-1633
------------------------------
Facsimile:
------------------------------
Requests from Depositor or Preferred Registrant INVOICE INQUIRIES AND FEE REMITTANCES TO DSI
Contact should be given Contact or authorized SHOULD BE ADDRESSED TO:
employee Registrant.
DSI
CONTRACTS, DEPOSIT MATERIAL AND NOTICES TO DSI Attn: Accounts Receivable
SHOULD BE ADDRESSED TO:
DSI
Attn: Contract Administration
Telephone:
-------------------------------------
Facsimile:
-------------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Date:
-----------------------------------
</TABLE>
<PAGE> 13
]EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIAL
<TABLE>
<S> <C> <C> <C>
Deposit Account Number: 0609111-00002
------------------------------------------------------------------
Depositor Company Name: First Data Investor Services Group
------------------------------------------------------------------
DEPOSIT TYPE:
X Initial Supplemental Replacement
- ------ ------ ------
If Replacement: Destroy Deposit Return Deposit
------ ------
ENVIRONMENT:
Host System CPU/OS: MS Windows 3.11 or MS/Windows 95 OS on Intel x 86 processor based PC
----------------------------------------------------------------------
Version:
---------------------------------------------------------------------------------
Backup:
----------------------------------------------------------------------------------
Source System CPU/OS: MS Windows 3.11 OS on Intel Pentium 133 MHz PC
--------------------------------------------------------------------
Version:
---------------------------------------------------------------------------------
Compiler: Impress Imaging - Plexus AD v4.1, Informix ESQL v2.2, MS Visual C++ v4.1
--------------------------------------------------------------------------------
Impress Clearinghouse & Toolbar - MS Visual C++ v4.1
--------------------------------------------------------------------------------
ACE Plus - MS Visual Basic 4.0, MS Access v2.0
--------------------------------------------------------------------------------
Special Instructions:
--------------------------------------------------------------------
</TABLE>
DEPOSIT MATERIAL:
Exhibit B Name: Impress Imaging System Version: v5.2.06.01
------------------------- -----------------------------
Impress Clearinghouse Version: v5.2.02.01
------------------------- -----------------------------
Impress Toolbar Version: v5.2.01.01
------------------------- -----------------------------
ACE Plus Version: v2.05.07
------------------------- -----------------------------
<TABLE>
<CAPTION>
Item Label Description Media Quantity
<S> <C> <C>
AIM Funds Source, CD 1
August 8, 1997
</TABLE>
<TABLE>
<S> <C>
For Depositor, I certify that the above For DSI, I received the above described
described Deposit Material was sent to DSI: Deposit Material subject to the terms on
the reverse side of this Exhibit:
By: ILLEGIBLE By: /s/ CHRISTIE WOODWARD
--------------------------------------- ---------------------------------------
Print Name: ILLEGIBLE Print Name: Christie Woodward
------------------------------- -------------------------------
Date: 9/3/97 Date of Acceptance: 9-10-97
------------------------------------- -----------------------
ISE: EXHIBIT B#:
--------- ---------------
</TABLE>
<PAGE> 14
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIAL
Deposit Account Number: 0609111-00002
--------------------------------------------------------
Depositor Company Name: First Data Investor Services Group
--------------------------------------------------------
DEPOSIT TYPE:
X Initial Supplemental Replacement
- ------ ------ ------
If Replacement: Destroy Deposit Return Deposit
------ ------
ENVIRONMENT:
Host System CPU/OS: 3090/MVS
------------------------------------------------------------
Version:
-----------------------------------------------------------------------
Backup:
------------------------------------------------------------------------
Source System CPU/OS: 3090/MVS
----------------------------------------------------------
Version:
-----------------------------------------------------------------------
Compiler: Standard IBM Compiler
----------------------------------------------------------------------
Special Instructions:
----------------------------------------------------------
DEPOSIT MATERIAL:
Exhibit B Name: FSR Source Code - 931761 Version:
------------------------- -----------------------------
FSR JCL - 931384
------------------------- -----------------------------
<TABLE>
<CAPTION>
Item Label Description Media Quantity
<S> <C> <C>
DSN=P03AIM.PRIV.VENDOR.SEA.CSSP Data Tape 1
ROD. PANLIB VOLSER=932154
DSN=P03AIM.PRIV.VENDOR.SEQ.ESC Data Tape 1
ROW.TAPE VOLSER=932155
</TABLE>
<TABLE>
<S> <C>
For Depositor, I certify that the above For DSI, I received the above described
described Deposit Material was sent to DSI: Deposit Material subject to the terms on
the reverse side of this Exhibit:
By: ILLEGIBLE By: /s/ CHRISTIE WOODWARD
--------------------------------------- ---------------------------------------
Print Name: ILLEGIBLE Print Name: Christie Woodward
------------------------------- -------------------------------
Date: 9/3/97 Date of Acceptance: 9-10-97
------------------------------------- -----------------------
ISE: EXHIBIT B#:
--------- ---------------
</TABLE>
<PAGE> 1
EXHIBIT 9(b)(2)
EXHIBIT 1
LIST OF FUNDS
<TABLE>
<S> <C>
AIM ADVISOR FUNDS, INC.
Portfolios: Classes:
AIM Advisor Cash Management Fund Class A and Class C Shares
AIM Advisor Flex Fund Class A and Class C Shares
AIM Advisor Income Fund Class A and Class C Shares
AIM Advisor International Value Fund Class A and Class C Shares
AIM Advisor Large Cap Value Fund Class A and Class C Shares
AIM Advisor MultiFlex Fund Class A and Class C Shares
AIM Advisor Real Estate Fund Class A and Class C Shares
AIM EQUITY FUNDS, INC.
Portfolios: Classes:
AIM Blue Chip Fund Class A, Class B and Class C Shares
AIM Capital Development Fund Class A, Class B and Class C Shares
AIM Charter Fund Class A, Class B and Class C Shares
AIM Weingarten Fund Class A, Class B and Class C Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A and Class C Shares
AIM FUNDS GROUP
Portfolios: Classes:
AIM Balanced Fund Class A, Class B and Class C Shares
AIM Global Utilities Fund Class A, Class B and Class C Shares
AIM Growth Fund Class A, Class B and Class C Shares
AIM High Yield Fund Class A, Class B and Class C Shares
AIM Income Fund Class A, Class B and Class C Shares
AIM Intermediate Government Fund Class A, Class B and Class C Shares
AIM Municipal Bond Fund Class A, Class B and Class C Shares
AIM Value Fund Class A, Class B and Class C Shares
AIM Money Market Fund Class A, Class B, Class C and AIM Cash
Reserve Shares
AIM INTERNATIONAL FUNDS, INC.
Portfolios: Classes:
AIM International Equity Fund Class A, Class B and Class C Shares
AIM Global Aggressive Growth Fund Class A, Class B and Class C Shares
AIM Global Growth Fund Class A, Class B and Class C Shares
AIM Global Income Fund Class A, Class B and Class C Shares
AIM Asian Growth Fund Class A, Class B and Class C Shares
AIM European Development Fund Class A, Class B and Class C Shares
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
AIM INVESTMENT SECURITIES FUNDS
Portfolios: Classes:
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
AIM TAX-EXEMPT FUNDS, INC.
Portfolios: Classes:
AIM Tax-Exempt Cash Fund Class A Shares
AIM Tax-Exempt Bond Fund
Of Connecticut Class A Shares
Intermediate Portfolio AIM Tax-Free Intermediate Shares - Class A
</TABLE>
On behalf of the Funds and respective Portfolios and Classes as set forth in
this Exhibit 1, which may be amended from time to time.
By: /s/ ROBERT H. GRAHAM
------------------------------
Title: President
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ LEONARD A. WEISS
------------------------------
Title: EVP and CFO
Effective as of August 4, 1997.
<PAGE> 1
EXHIBIT 11(a)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders
AIM Equity Funds, Inc.:
We consent to the use of our reports on the AIM Aggressive Growth Fund, AIM
Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM
Constellation Fund, AIM Weingarten Fund (portfolios of AIM Equity Funds, Inc.)
dated December 5, 1997 included herein and the references to our firm under the
headings "Financial Highlights" in the Prospectuses and "Audit Reports" in the
Statement of Additional Information.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
February 27, 1998
<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. 54 to the
Registration Statement on Form N-1A of 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
FEBRUARY 10, 1998
<PAGE> 1
EXHIBIT 11(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Post-Effective Amendment No. 54 to the registration
statement of AIM Equity Funds, Inc. on Form N-1A (the "Registration Statement")
of our report dated February 16, 1993, relating to the 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(C)). We also
consent to the reference to us under the heading "Financial Highlights" in the
Prospectus.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Houston, Texas
February 26, 1998
<PAGE> 2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Post-Effective Amendment No. 54 to the registration
statement of AIM Equity Funds, Inc. on Form N-1A (the "Registration Statement")
of our report dated October 25, 1995, relating to the selected per-share data
and ratios appearing in the September 30, 1995 Annual Report to Shareholders of
Baird Blue Chip Fund, Inc. We also consent to the reference to us under the
heading "Financial Highlights" in the Prospectus.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Houston, Texas
February 26, 1998
<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 caption "Legal Matters" in the Prospectus for the Retail
Classes of Shares of the AIM Aggressive Growth Fund Portfolio, under the caption
"General Information - Legal Counsel" in the Prospectuses for the Retail Classes
of Shares of the AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital
Development Fund, AIM Charter Fund, AIM Weingarten Fund and AIM Constellation
Fund Portfolios, under the caption "Miscellaneous - Legal Matters" in the
Statement of Additional Information for such Retail Classes of Shares, under the
caption "General Information - Legal Counsel" in the Prospectuses for the
Institutional Classes of Shares of the AIM Charter Fund, AIM Weingarten Fund and
AIM Constellation Fund, and under the caption "Management - Legal Matters" in
the Statement of Additional Information for such Institutional Classes of
Shares, all of which are included in Post-Effective Amendment No. 54 to the
Registration Statement under the Securities Act of 1933 (No. 2-25469) and
Amendment No. 54 to the Registration Statement under the Investment Company Act
of 1940 (No. 811-1424) on Form N-1A of AIM Equity Funds, Inc.
/s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
February 17, 1998
<PAGE> 1
EXHIBIT 12
Schedule of Affiliated Company Transactions
AIM Constellation Fund
<TABLE>
<CAPTION>
Share Balance Realized
October 31, Purchase Sales Gain Dividend
Name Of Issuer 1996 Cost Cost (Loss) Income
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aames Financial Corp. 309,100 $25,344,614.00 $16,660,535.00 $ (1,230,690.00) $ 113,461.50
American HomePatient Inc. 750,000 -- -- -- --
ACT Networks, Inc. 500,000 -- $19,000,000.00 $(11,829,316.54) --
American Radio Systems Corp. 650,000 -- $20,225,821.50 $ 3,684,285.55 --
Apple South, Inc. 500,000 $22,571,676.60 -- -- $ 37,700.00
Applebee's International, Inc. 843,600 $21,643,403.00 -- -- $ 70,000.00
Apria Healthcare Group, Inc. 1,750,000 -- $40,081,903.20 $ (9,088,129.69) --
Billing Information Concepts 400,000 $ 9,189,578.74 -- -- --
CapMAC Holdings Inc. 850,000 $ -- $12,126,004.60 $ 381,905.99 $ 68,000.00
CDW Computer Centers, Inc. 650,000 $27,312,566.16 -- -- --
Cerner Corp. -- $39,096,183.13 -- -- --
Chancellor Corp.-Class A 500,000 -- $11,228,330.50 $ 1,658,252.02 --
Compdent Corp. 700,000 -- $24,947,364.80 $(13,608,883.14) --
Gulf South Medical Supply, Inc. 1,160,400 $ 1,282,550.00 $33,798,689.00 $(12,095,200.71) --
Gymboree Corp. 1,447,000 $ 1,655,031.00 $41,136,097.80 $ (6,281,925.77) --
Health Care and Retirement Corp. 2,250,000 $11,690,150.00 $14,545,635.10 $ 5,934,125.45 --
IMC Mortgage Co. -- $18,743,517.50 -- -- --
Jacor Communications Inc., Conv. Sr -- $ 6,592,812.50 -- -- --
LYON, 5.50%, 06/12/11
Marine Drilling Company, Inc. 2,000,000 $14,086,596.50 $19,355,346.50 $ 3,042,405.66 --
Men's Wearhouse, Inc. (The) 1,075,050 $10,244,757.40 -- -- --
Micro Warehouse, Inc. 1,250,000 $14,742,964.10 $ 4,235,843.20 $ (2,789,443.20) --
Network General Corp. 2,185,000 $ 1,465,750.00 $32,819,134.40 $ 790,514.68 --
PairGain Technologies, Inc. 1,366,100 $54,247,005.70 $27,867,889.00 $ 47,582,548.95 --
Petco Animal Supplies, Inc. 675,000 $ 3,458,962.50 -- -- --
Sync Research, Inc. 500,000 -- $18,771,257.50 $(17,072,587.24) --
Tecnomatix Technologies Ltd. 329,500 $ 4,496,994.40 -- -- --
Trump Hotels & Casino Resorts, Inc. 1,540,800 -- $34,898,350.00 $(17,803,354.14) --
Varco International, Inc. 1,326,100 $ 8,338,719.00 $ 4,721,599.00 $ (131,017.00) --
Western Wireless Corp.-Class A 550,000 -- $13,393,251.40 $ (7,287,359.01) --
</TABLE>
<TABLE>
<CAPTION>
Share Balance Market Value
October 31, October 31,
Name Of Issuer 1997 1997
- ----------------------------------------------------------------------------
<S> <C> <C>
Aames Financial Corp. 900,000 $ 13,162,500
American HomePatient Inc. 750,000 $ 19,312,500
ACT Networks, Inc. -- --
American Radio Systems Corp. -- --
Apple South, Inc. 2,000,000 $ 37,250,000
Applebee's International, Inc. 1,700,000 $ 37,718,750
Apria Healthcare Group, Inc. -- --
Billing Information Concepts 780,000 $ 30,615,000
CapMAC Holdings Inc. 424,800 $ 12,744,000
CDW Computer Centers, Inc. 1,200,000 $ 74,400,000
Cerner Corp. 1,750,000 $ 42,437,500
Chacellor Corp.-Class A -- --
Compdent Corp. -- --
Gulf South Medical Supply, Inc. -- --
Gymboree Corp. -- --
Health Care and Retirement Corp. 1,815,000 $ 68,629,688
IMC Mortgage Co. 1,500,000 $ 26,062,500
Jacor Communications Inc., Conv. Sr 14,450,000 $ 8,849,614
LYON, 5.50%, 06/12/11
Marine Drilling Company, Inc. 1,500,000 $ 44,437,500
Men's Wearhouse, Inc. (The) 1,500,050 $ 58,126,938
Micro Warehouse, Inc. 1,925,200 $ 28,878,000
Network General Corp. -- --
PairGain Technologies, Inc. 1,500,000 $ 42,375,000
Petco Animal Supplies, Inc. 850,000 $ 26,137,500
Sync Research, Inc. -- --
Tecnomatix Technologies Ltd. 479,500 $ 14,804,563
Trump Hotels & Casino Resorts, Inc. -- --
Varco International, Inc. 1,500,000 $ 91,406,250
Western Wireless Corp.-Class A -- --
</TABLE>
<PAGE> 2
Schedule of Affiliated Company Transactions
AIM Aggressive Growth Fund
<TABLE>
<CAPTION>
Share Balance Realized
October 31, Purchase Sales Gain Dividend
Name of Issuer 1996 Cost Cost (Loss) Income
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Applied Microsystems Corp. 200,000 -- $ 1,834,792 $ 809,591 --
Arbor Health Care Co. 450,000 $8,923,588 10,004,838 1,582,038 --
Benchmarq Microelectronics, Inc. 375,000 917,670 -- -- --
Brightpoint Inc. 499,950 6,223,611 2,379,947 4,685,264 --
Cannondale Corp. 400,000 1,081,250 7,875,376 453,432 --
CFI ProService, Inc. 165,000 -- 2,543,310 321,546 --
Children's Comprehensive Services, Inc. -- 7,070,140 -- -- --
Cyberoptics Corp. -- 4,768,175 -- -- --
Daisytek International Corp. 394,700 12,913,796 8,460,974 (101,804) --
Engineering Animation, Inc. 310,100 -- -- -- --
Hub Group, Inc. 400,000 2,800,000 2,241,024 1,442,101 --
Insight Enterprises, Inc. -- 11,183,645 -- -- --
Intelliquest Information Group, Inc. 375,000 4,403,275 -- -- --
Iridex Corp. 150,000 1,509,522 1,509,522 (802,370) --
ITEQ, Inc. -- 4,483,440 -- -- --
Loehmann's Holdings, Inc. 500,000 -- 11,395,110 (6,710,565) --
Logan's Roadhouse, Inc. -- 10,413,129 -- -- --
Marks Brothers Jewelers, Inc. 275,000 -- 4,099,172 (1,627,976) --
Maverick Tube Corp. -- 7,151,210 2,001,002 2,176,434 --
MicroTouch Systems, Inc. -- 11,102,844 -- -- --
National Dentex Corp. 185,000 -- 5,501,250 (379,953) --
NCS HealthCare, Inc. 200,000 1,369,690 3,005,276 188,377 --
NS Group, Inc. -- 12,429,756 4,914,000 3,369,325 --
Orcad, Inc. 320,000 -- 3,844,024 (1,659,777) --
Performance Food Group Co. 458,750 -- 7,404,736 (1,346,508) --
Segue Software, Inc. 100,000 -- 2,255,300 (903,245) --
Sipex Corp 600,000 5,574,720 3,592,500 1,820,384 --
STB Systems, Inc. -- 11,624,679 -- -- --
Suburban Ostomy Supply Co. 556,900 6,782,174 10,114,559 (1,103,163) --
TESSCO Technologies Inc., Inc. 300,000 10,209,968 7,438,152 (1,363,012) --
Tollgrade Communications, Inc. -- 8,649,762 -- -- --
Unify Corp. 500,000 -- 7,268,688 (4,918,651) --
</TABLE>
<TABLE>
<CAPTION>
Share Balance Market Value
October 31, October 31,
Name of Issuer 1997 1997
- ------------------------------------------------------------------------
<S> <C> <C>
Applied Microsystems Corp. -- --
Arbor Health Care Co. -- --
Benchmarq Microelectronics, Inc. 425,000 8,818,750
Brightpoint Inc. 700,106 23,103,498
Cannondale Corp. -- --
CFI ProService, Inc. -- --
Children's Comprehensive Services, Inc. 436,100 7,870,243
Cyberoptics Corp. 300,000 8,250,000
Daisytek International Corp. 250,000 9,531,250
Engineering Animation, Inc. 310,100 13,683,162
Hub Group, Inc. 200,000 6,100,000
Insight Enterprises, Inc. 525,000 20,540,625
Intelliquest Information Group, Inc. 525,000 8,925,000
Iridex Corp. -- --
ITEQ, Inc. 650,000 8,125,000
Loehmann's Holdings, Inc. -- --
Logan's Roadhouse, Inc. 452,000 8,079,500
Marks Brothers Jewelers, Inc. -- --
Maverick Tube Corp. 455,000 16,038,750
MicroTouch Systems, Inc. 525,000 12,665,625
National Dentex Corp. -- --
NCS HealthCare, Inc. 125,000 2,921,875
NS Group, Inc. 500,000 13,375,000
Orcad, Inc. -- --
Performance Food Group Co. -- --
Segue Software, Inc. -- --
Sipex Corp 840,000 32,875,000
STB Systems, Inc. 400,000 11,750,000
Suburban Ostomy Supply Co. -- --
TESSCO Technologies Inc., Inc. 350,000 7,525,000
Tollgrade Communications, Inc. 350,000 8,618,750
Unify Corp. -- --
</TABLE>
<PAGE> 1
EXHIBIT 14(a)(1)
[AIM LOGO APPEARS HERE]
IRA APPLICATION
To open your AIM IRA account.
Complete Sections 1-11.
Return completed application and check to: A I M Fund Services, Inc., P.O. Box
4739, Houston, TX 77210-4739. Phone: 800-959-4246.
Make check payable to INVESCO Trust Company.
Please Note: To establish an IRA for your spouse, please copy and submit a
separate application.
Minors cannot open an AIM IRA account.
- --------------------------------------------------------------------------------
1. INVESTOR INFORMATION (Please print or type.)
Name
-----------------------------------------------------------------------
First Name Middle Last Name
Address
--------------------------------------------------------------------
Street
----------------------------------------------------------------------------
City State Zip Code
Social Security Number Birth Date / /
---------------------- -------------------
(Required to Open Account) Month Day Year
Home Telephone ( ) Work Telephone ( )
--- ----------------- --- -----------------
- --------------------------------------------------------------------------------
2. DEALER INFORMATION (To be completed by securities dealer.)
Name of Broker/Dealer Firm
-------------------------------------------------
Main Office Address
--------------------------------------------------------
Representative Name and Number
---------------------------------------------
Authorized Signature of Dealer
---------------------------------------------
Branch Address
-------------------------------------------------------------
Branch Telephone
-----------------------------------------------------------
[ ] Investor is authorized for NAV purchase. (If authorized for NAV
purchase, other than the Broker, please attach NAV Certification
Form.)
- --------------------------------------------------------------------------------
3. ACCOUNT TYPE (Choose one only.)
[ ] IRA [ ] Rollover IRA [ ] SEP IRA* [ ] SARSEP IRA* (No new
SARSEP plans after
12/31/96)
*Employer (for SEP & SARSEP plans only)
-------------------------------------
- --------------------------------------------------------------------------------
4. CONTRIBUTION (Indicate type of contribution.)
[ ] REGULAR - Contribution for tax year 19___.
[ ] ROLLOVER - Represents a rollover from an employer's pension, profit
sharing or 401(k) plan, another IRA or a 403(b) custodial account or
annuity. Please complete a Direct Rollover Form, unless coming from
another IRA.
[ ] TRANSFER - Transfer from another IRA account. Please complete an IRA
Asset-Transfer Form.
[ ] SEP - Employer sponsored. Complete separate application for each
employee.
[ ] SARSEP - Employee salary-reduction SEP. Complete separate application
for each employee. (No new SARSEP plans after 12/31/96.)
13
<PAGE> 2
- --------------------------------------------------------------------------------
5. FUND INVESTMENT
Indicate Fund(s) and contribution amount(s).
MAKE CHECK PAYABLE TO INVESCO TRUST COMPANY. Minimum purchase to open an
IRA is $250.
<TABLE>
<CAPTION>
Fund $ or % of Assets Class of Shares (Check one)
<S> <C> <C>
[ ]AIM Advisor Flex Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Advisor International Value Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Advisor Large Cap Value Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Advisor MultiFlex Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Advisor Real Estate Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Balanced Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Blue Chip Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Capital Development Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Cash Reserve Shares $ [ ]Class C
------------------------
[ ]AIM Charter Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Constellation Fund $ [ ]Class A [ ]Class C
------------------------
[ ]AIM Global Aggressive Growth Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Global Growth Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Global Income Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Global Utilities Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Intermediate Government Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Growth Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM High Yield Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Income Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM International Equity Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Limited Maturity Treasury Shares $ [ ]Class A
------------------------
[ ]AIM Money Market Fund $ [ ]Class A [ ]Class B
------------------------
[ ]AIM Value Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
[ ]AIM Weingarten Fund $ [ ]Class A [ ]Class B [ ]Class C
------------------------
Total $
------------------------
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, AIM Cash Reserve Shares will be
purchased. If you are funding your retirement account through a transfer,
please indicate the contribution amounts both in this section and in Section
3 of the Asset-Transfer Form.
- --------------------------------------------------------------------------------
6. ACCOUNT OPTIONS
Please indicate options you desire:
TELEPHONE EXCHANGE PRIVILEGE
Unless indicated below, I authorize the Transfer Agent to accept
instructions from any person to exchange shares in my account(s) by
telephone in accordance with the procedures and conditions set forth in the
Fund's current prospectus.
[ ] I DO NOT want the Telephone Exchange Privilege.
DOLLAR-COST AVERAGING PLAN (Must be under the same registration and class of
shares.)
I have at least $5,000 in shares in my __________________________ Fund, for
which no certificates have been issued, and I would like to exchange:
$ into the Fund, Account #
---------------- ------------ -----------------
($50 minimum)
$ into the Fund, Account #
---------------- ------------ -----------------
($50 minimum)
$ into the Fund, Account #
---------------- ------------ -----------------
($50 minimum)
on a [ ] monthly [ ] quarterly basis starting in the month of_____________
on the [ ] 10th or [ ] 25th of the month.
14
<PAGE> 3
DIVIDENDS AND CAPITAL GAINS (For clients over 59 1/2)
All distributions are subject to income tax.
[ ] Reinvest dividends and capital gains (Automatic for clients under
59 1/2.)
[ ] Mail dividends and capital gains to home address
[ ] Mail dividends to my bank
Name of Bank
---------------------------------------------------------------
Address Account #
-------------------------------------- ---------------------
- --------------------------------------------------------------------------------
7. WITHHOLDING ELECTION
Distributions from your IRA will be subject to an automatic federal income
tax withholding of 10%, unless otherwise noted below:
[ ] I do not want any federal income tax withheld from my distribution.
[ ] Withhold federal income tax at a rate of _________% (NOTE: The
percentage indicated must be a whole percentage and higher than 10%).
- --------------------------------------------------------------------------------
8. REDUCED SALES CHARGE (optional)
RIGHT OF ACCUMULATION (This option is for Class A shares only.)
I apply for Right of Accumulation reduced sales charges based on the
following accounts in The AIM Family of Funds--Registered Trademark--:
Fund(s) Account No(s).
------------------------------ ------------------------
------------------------------ ------------------------
------------------------------ ------------------------
LETTER OF INTENT
I agree to the Letter of Intent provisions in the Application Instructions. I
plan to invest during a 13-month period a dollar amount of at least: [ ]$25,000
[ ]$50,000 [ ]$100,000 [ ]$250,000 [ ]$500,000 [ ]$1,000,000
- --------------------------------------------------------------------------------
9. BENEFICIARY INFORMATION
I hereby designate the following beneficiary(ies) to receive the balance in
my IRA custodial account upon my death. To be effective, the designation of
beneficiary and any subsequent change in designation of beneficiary must be
filed with the Custodian prior to my death. The balance of my account shall
be distributed in equal amounts to the beneficiary(ies) who survives me. If
no beneficiary is designated or no designated beneficiary or contingent
beneficiary survives me, the balance in my IRA will be distributed to the
legal representatives of my estate. This designation revokes any prior
designations. I retain the right to revoke this designation at any time. I
hereby certify that there is no legal impediment to the designation of this
beneficiary.
PRIMARY BENEFICIARY(IES)
Name % Relationship
------------------------------------- --------------------
Address
--------------------------------------------------------------------
Street City State Zip Code
Beneficiary's Social Security Number Birth Date / /
-------------- -- -- --
Month Day Year
Name % Relationship
------------------------------ ------ --------------------
Address
--------------------------------------------------------------------
Street City State Zip Code
Beneficiary's Social Security Number Birth Date / /
-------------- -- -- --
Month Day Year
15
<PAGE> 4
CONTINGENT BENEFICIARIES
In the event that I die and no primary beneficiary listed above is alive,
distribute all Fund accounts in my IRA to the following contingent
beneficiary(ies) who survives me, in equal amounts unless otherwise
indicated.
Name % Relationship
------------------------------ ------ --------------------
Address
--------------------------------------------------------------------
Street City State Zip Code
Beneficiary's Social Security Number Birth Date / /
-------------- -- -- ----
Month Day Year
Name % Relationship
------------------------------ ------ --------------------
Address
--------------------------------------------------------------------
Street City State Zip Code
Beneficiary's Social Security Number Birth Date / /
-------------- -- -- ----
Month Day Year
- --------------------------------------------------------------------------------
10. AUTHORIZATION AND SIGNATURE
I hereby establish the A I M Distributors, Inc. Individual Retirement
Account (IRA) appointing INVESCO Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the IRA custodial
agreement and disclosure statement and consent to the custodial account
fees as specified. I understand that a $10 annual AIM Fund IRA Maintenance
Fee will be deducted in early December from my AIM IRA.
WITHHOLDING INFORMATION (SUBSTITUTE FORM W-9)
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund
is required to have the following certification: Under the penalties
of perjury I certify by signing this Application as provided below
that:
1. The number shown in Section 1 of this Application is my correct
Social Security (or Tax Identification) Number, and
2. I am not subject to backup withholding either because (a) I have
not been notified by the Internal Revenue Service (the "IRS") that I
am subject to backup withholding as a result of a failure to report
all interest or dividends or (b) the IRS has notified me that I am no
longer subject to backup withholding. (This paragraph (2) does not
apply to real estate transactions, mortgage interest paid, the
acquisition or abandonment of secured property, contributions to an
individual retirement arrangement and payments other than interest and
dividends.)
You must cross out paragraph (2) above if you have been notified by
the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return.
In addition, the Fund hereby incorporates by reference into this
section of the Application either the IRS instructions for Form W-9 or
the substance of those instructions whichever is attached to this
Application.
SIGNATURE PROVISIONS
I, the undersigned Depositor, have read and understand the foregoing
Application and the attached material included herein by reference. In
addition, I certify that the information which I have provided and the
information which is included within the Application and the attached
material included herein by reference is accurate including but not limited
to the representations contained in the Withholding Information section of
this Application above. (The Internal Revenue Service does not require your
consent to any provision of this document other than the certifications to
avoid backup withholding.)
Dated / /
--- --- ---
Signature of IRA Shareholder
-----------------------------------------------
16
<PAGE> 5
- --------------------------------------------------------------------------------
11. MAILING INSTRUCTIONS
Make check payable to INVESCO Trust Company.
Return Application to:
REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY
AIM Fund Services, Inc. AIM Fund Services, Inc.
P.O. Box 4739 11 Greenway Plaza, Suite 763
Houston, TX 77210-4739 Houston, TX 77046
- --------------------------------------------------------------------------------
12. SERVICE ASSISTANCE
Our knowledgeable Client Service Representatives are available to assist you
between 7:30 a.m. and 6:00 p.m. Central time at 800-959-4246.
17 [AIM LOGO APPEARS HERE]
<PAGE> 6
INSTRUCTIONS FOR IRA ASSET-TRANSFER FORM
The IRA Asset-Transfer Form is used to transfer assets from an
existing IRA to an AIM Prototype IRA.
NOTE: It is not necessary to complete this form if the check
representing the transfer of assets has been attached to the
application.
1. Complete Sections 1 through 6 of the IRA Asset Transfer Form (on
pages 19 through 20 of this booklet).
2. Be sure that you have included your bank account or mutual fund
account number in Section 2 of the form, as well as the complete
mailing address for your existing custodian. You should contact
your existing custodian to verify that firm's proper mailing
address.
3. Be sure that your AIM account number is in Section 3 of the
form. If you do not have an AIM IRA, please complete the IRA
Application included on pages 13 through 16 of this booklet.
NOTE: If you currently hold AIM shares through a brokerage firm,
check with your investment representative to determine if you
should establish your IRA with the brokerage firm or directly
with AIM. If you decide to establish your IRA directly with AIM,
you must complete the AIM IRA Application.
4. Contact your existing custodian to determine whether a signature
guarantee is required in Section 5 of the IRA Asset Transfer
Form. Signature guarantees can be obtained at your bank or
brokerage firm.
5. You may wish to attach a current account statement for your
existing IRA to the IRA Asset Transfer Form.
6. Please mail any insurance or annuity policies and contracts
directly to the company which issued them. Do not attach them to
the IRA Application or IRA Asset Transfer Form.
7. Please mail the completed IRA Asset Transfer Form, along with
the completed IRA Application (if establishing a new AIM IRA)
to:
REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY
AIM Fund Services, Inc. AIM Fund Services, Inc.
P.O. Box 4739 11 Greenway Plaza, Suite 763
Houston, TX 77210-4739 Houston, TX 77046
NOTE: If your existing account is a qualified plan, such as a
profit sharing, 401(k) or 403(b) plan, please complete the
Direct Rollover Form on page 23. Refer to the Instructions for
Direct Rollover Form to complete that form.
18
<PAGE> 7
[AIM LOGO APPEARS HERE]
IRA ASSET-TRANSFER FORM
Use this form only when transferring assets from an existing IRA to an AIM IRA.
Note: Use this form ONLY if you want AIM to request the money directly from
another custodian. Complete Sections 1-5.
If you do not already have an AIM IRA, you must also submit an AIM IRA
Application. AIM will arrange the transfer for you.
- --------------------------------------------------------------------------------
1. INVESTOR INFORMATION (PLEASE PRINT OR TYPE.)
Name
-----------------------------------------------------------------------
First Name Middle Last Name
Address
--------------------------------------------------------------------
Street
----------------------------------------------------------------------------
City State Zip Code
Social Security Number Birth Date / /
---------------------- -- -- --
Month Day Year
Home Telephone ( ) Work Telephone ( )
--- ----------------- --- -----------------
- --------------------------------------------------------------------------------
2. CURRENT TRUSTEE/CUSTODIAN
Name of Resigning Trustee
--------------------------------------------------
Account Number of Resigning Trustee
----------------------------------------
Address of Resigning Trustee
-----------------------------------------------
Street
----------------------------------------------------------------------------
City State Zip Code
Attention Telephone
---------------------------------- -----------------------
- --------------------------------------------------------------------------------
3. IRA ACCOUNT INFORMATION
Please deposit proceeds in my [ ]New* [ ]Existing
Existing AIM Account Number
------------------
[ ]IRA Account [ ]Rollover IRA Account
[ ]SEP IRA Account [ ]SARSEP IRA Account
INVESTMENT ALLOCATION:
Fund Name Class %
--------------------------- --------------------- ------------
Fund Name Class %
--------------------------- --------------------- ------------
Fund Name Class %
--------------------------- --------------------- ------------
*If this is a new AIM IRA account, you must attach a completed AIM IRA
Application. If no class of shares is selected, Class A shares will be
purchased, except in the case of AIM Money Market Fund, where AIM Cash
Reserve Shares will be purchased.
- --------------------------------------------------------------------------------
4. TRANSFER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
OPTION 1: Please liquidate from the account(s) listed in Section 2 and
issue a check to my IRA with INVESCO Trust Company.
Amount to liquidate: [ ] All [ ] Partial amount of $_______________
When to liquidate: [ ] Immediately [ ] At maturity ____ /___ /___
OPTION 2: (If the account listed in Section 2 contains shares of an AIM
Fund, you may choose to transfer them "in kind.") Please deposit "in kind"
the shares of the AIM Fund held in my account to INVESCO Trust Company.
NOTE: ONLY AIM FAMILY OF FUND SHARES MAY BE TRANSFERRED IN KIND. TO
TRANSFER ALL OTHER ASSETS, THEY MUST BE LIQUIDATED.
Amount to transfer "in kind" immediately:[ ]all [ ] partial amount of
shares_____________
19
<PAGE> 8
- --------------------------------------------------------------------------------
5. AUTHORIZATION AND SIGNATURE
I have established an Individual Retirement Account with the AIM Funds and
have appointed INVESCO Trust Company as the successor Custodian. Please
accept this as your authorization and instruction to liquidate or transfer
in kind the assets noted above, which your company holds for me.
Your Signature Date / /
---------------------------------- ----- ----- -----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Brokerage Firm
---------------------------------------------
Signature Guaranteed by
---------------------------------------------------
(Name and title)
- --------------------------------------------------------------------------------
6. DISTRIBUTION ELECTION INFORMATION SECTION 6 OF FORM TO BE COMPLETED BY
PRIOR CUSTODIAN
If this participant is age 70 1/2 or older this year, the resigning
Trustee/Custodian must complete this section. Election made by the
participant as of the required beginning date:
1. Method of calculation [ ] declining years [ ] recalculation
[ ] annuitization [ ] amortization
2. Life expectancy [ ] single life payout [ ] joint life expectancy
factor-Joint birth date and relationship________________
3. The amount withheld from this rollover to satisfy this year's required
distribution $____________________
The life-expectancy ages used to calculate this required payment
was _________________________________________
Signature of Current Custodian/Trustee
------------------------------------
- --------------------------------------------------------------------------------
REMAINDER OF FORM TO BE COMPLETED BY AIM
7. CUSTODIAN ACCEPTANCE
This is to advise you that INVESCO Trust Company, as custodian, will accept
the account identified above for:
Depositor's Name Account Number
-------------------- ---------------------
This transfer of assets is to be executed from fiduciary to fiduciary and
will not place the participant in actual receipt of all or any of the plan
assets. No federal income tax is to be withheld from this transfer of
assets.
Authorized Signature Mailing Date / /
------------------------ ---- ---- ----
(INVESCO Trust Company)
- --------------------------------------------------------------------------------
8. INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check and return to:
INVESCO Trust Company, c/o A I M Fund Services, Inc., P.O. Box 4739,
Houston, TX 77210-4739.
Make check payable to INVESCO Trust Company.
Indicate the AIM account number and the social security number of the IRA
holder on all documents.
20 [AIM LOGO APPEARS HERE]
<PAGE> 9
[AIM LOGO APPEARS HERE]
DIRECT ROLLOVER FORM
To directly roll over distributions from your employer's qualified plan to your
AIM IRA.
Note: Use this form ONLY if you want AIM to request the money directly from
another custodian. Effective January 1, 1993, the Unemployment Compensation
Amendments of 1992 require that certain distributions from 403(b) accounts and
employer qualified plans (Keogh, money purchase pension, profit sharing and
401(k) plans) are subject to 20% withholding tax, unless the distribution is
"directly rolled over" to a new employer's qualified plan, a 403(b) account or
an IRA. Your employer will inform you what portion of your distribution is
eligible for rollover.
Please use this form to request a "direct rollover" to your AIM IRA. If you
currently do not have an IRA, you must also submit an AIM IRA Application with
this request. You may also use your former employer's direct rollover form.
PLEASE CONTACT YOUR EMPLOYER TO DETERMINE IF ADDITIONAL FORMS ARE REQUIRED.
- --------------------------------------------------------------------------------
1 PLAN TYPE Indicate type of retirement plan to be rolled over. [ ] 403(b) Plan
[ ] Employer's Qualified Retirement Plan
- --------------------------------------------------------------------------------
2 INVESTOR INFORMATION (Please print or type.)
Name
-------------------------------------------------------------------------
First Name Middle Last Name
Address
----------------------------------------------------------------------
Street City State Zip Code
Social Security Number Birth Date / /
-------------------- ---- ---- ----
Day Phone ( ) Month Day Year
---- ------------
- --------------------------------------------------------------------------------
3 CURRENT PLAN CUSTODIAN OR FORMER EMPLOYER INFORMATION
Name of Resigning Custodian or Former Employer
------------------------------
Former Employer Plan Name or Fund Account Number
------------------- --------
Address of Releasing Institution
--------------------------------------------
City State Zip Code
----------------------- ------------- ---------
Attention Telephone
------------------------------ ---------------------
- --------------------------------------------------------------------------------
4 ROLLOVER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
OPTION 1: Please liquidate from the account(s) listed in Section 3 and
issue a check to my IRA with INVESCO Trust Company.
Amount to liquidate: [ ] All [ ] Partial amount of $_______________
When to liquidate: [ ] Immediately [ ] At maturity_____ /_____ /_____
OPTION 2: (If the account listed in Section 2 contains shares of an AIM Fund,
you may choose to roll them over "in kind.")
NOTE: ONLY AIM FAMILY OF FUND SHARES MAY BE ROLLED OVER IN KIND.
Amount to roll over "in kind" immediately: [ ] all
[ ] partial amount of shares_____________
- --------------------------------------------------------------------------------
5 IRA ACCOUNT INFORMATION
Please deposit proceeds in my [ ] New* [ ] Existing
Existing AIM Account Number
----------------
[ ] IRA Account [ ] Rollover IRA Account
INVESTMENT ALLOCATION:
Fund Name Class %
---------------------- ------------------------- ---------
Fund Name Class %
---------------------- ------------------------- ---------
Fund Name Class %
--------------------- ------------------------- ---------
*If this is a new AIM IRA account, you must attach a completed AIM IRA
application. If no class of shares is selected, Class A shares will be
purchased, except in the case of AIM Money Market Fund, where AIM Cash
Reserve Shares will be purchased.
23
<PAGE> 10
- --------------------------------------------------------------------------------
6 AUTHORIZATION AND SIGNATURE
I have established an Individual Retirement Account with the AIM Funds and
have appointed INVESCO Trust Company as the successor Custodian. Please
accept this as your authorization and instruction to liquidate or transfer
in kind the assets noted above, which your company holds for me.
Your Signature Date / /
-------------------------------- ---- ---- ----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Brokerage Firm
---------------------------------------------
Signature Guaranteed by
---------------------------------------------------
(Name and title)
NOTE: SOME CUSTODIANS OF RETIREMENT PLANS REQUIRE THE COMPLETION OF THEIR
OWN FORM BEFORE SENDING A CHECK TO AIM.
[ ] Yes, I have [ ] No, I have not filed the necessary completed forms
with the current custodian.
- --------------------------------------------------------------------------------
7 DISTRIBUTION ELECTION INFORMATION SECTION 7 OF FORM TO BE COMPLETED BY
PRIOR CUSTODIAN
If this participant is age 70 1/2 or older this year, the resigning
Trustee/Custodian must complete this section. Election made by the
participant as of the required beginning date:
1. Method of calculation [ ] declining years [ ] recalculation
[ ] annuitization [ ] amortization
2. Life expectancy [ ] single life payout
[ ] joint life expectancy factor-Joint birth date and relationship______
3. The amount withheld from this rollover to satisfy this year's required
distribution $____________________
The life-expectancy ages used to calculate this required payment was _______
Signature of Current Custodian/Trustee
-------------------------------------
- --------------------------------------------------------------------------------
REMAINDER OF FORM TO BE COMPLETED BY AIM
8 CUSTODIAN ACCEPTANCE
This is to advise you that INVESCO Trust Company, as custodian, will accept
the account identified above for:
Depositor's Name Account Number
--------------------- ----------------------
This direct rollover is to be executed from fiduciary to fiduciary and will
not place the participant in actual receipt of all or any of the plan
assets.
No federal income tax is to be withheld from this direct rollover.
Authorized Signature Mailing Date / /
------------------------- ---- ---- ----
(INVESCO Trust Company)
- --------------------------------------------------------------------------------
9 INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check and return to:
INVESCO Trust Company, c/o A I M Fund Services, Inc., P.O. Box 4739,
Houston, TX 77210-4739.
Make check payable to INVESCO Trust Company.
Indicate the AIM account number and the social security number of the IRA
holder on all documents.
24 [AIM LOGO APPEARS HERE]
<PAGE> 11
[AIM LOGO APPEARS HERE]
AUTOMATIC BANK DRAFT
To establish regular, monthly purchases of Fund shares.
The Automatic Bank Draft is a service available to shareholders of The AIM
Family of Funds--Registered Trademark--, making possible regular, monthly
purchases of Funds to allow dollar-cost averaging. Each month, A I M Fund
Services,Inc. will arrange for an amount of money selected by you ($50 minimum
per Fund) to be deducted from your checking account and used to purchase shares
of a specified AIM Fund. You will receive confirmations from A I M Fund
Services, Inc., and your bank statement will reflect the amount of the draft.
- --------------------------------------------------------------------------------
1 DRAFT AMOUNT
I authorize you to withdraw a total of $ __________________ ($50 minimum
per Fund) from my checking account at the bank shown below, beginning in
__________________________________ and invest this amount in shares of the
AIM Fund listed below. You have the option of selecting the 10th, 25th or
both dates each month for the automatic bank draft. Please refer to Section
2 for this selection. ALL DRAFTS WILL BE CONSIDERED CURRENT-YEAR IRA
CONTRIBUTIONS.
I agree that if the check is not honored by my bank upon presentation, AIM
Fund Services, Inc. may discontinue this service. I also authorize AIM Fund
Services, Inc. to liquidate sufficient shares of the Fund to make up any
deficiency resulting from a dishonored check. I understand that this program
may be discontinued at any time by the Fund or by myself by written notice to
AIM Fund Services, Inc. received no later than ten business days prior to the
above designated investment date.
- --------------------------------------------------------------------------------
2 FUND ACCOUNT INFORMATION (Please enter information exactly as your account is
registered.)
Name(s) AIM Account #
--------------------------------- -----------------------
---------------------------------
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
Fund $
--------------------- --------------------------------------------------
$50 Minimum per draft. Draft date: [ ]10th [ ]25th
*Total $
--------------------------------
Signature Signature
-------------------------- ------------------------------
(All registered owners must sign.) (All registered owners must sign.)
*Please note that each draft (per Fund account) will be treated as a
separate item by your bank.
- --------------------------------------------------------------------------------
3 BANK AUTHORIZATION
Name of Bank
-----------------------------------------------------------------
Address of Bank
--------------------------------------------------------------
Bank Account # ABA Routing #
---------------------- ---------------------------
Please honor checks on my account by The Shareholders Services Group, Inc.
(TSSG), a wholly-owned subsidiary of First Data Corporation. Your authority
to do so shall continue until you receive further notice from me revoking
this authority. You may terminate your participation in this arrangement by
written notice either to TSSG or me. I agree that your rights with respect to
each check shall be the same as if it were drawn by me. I further agree that
should any check be dishonored, with or without cause, intentionally or
inadvertently, you shall be under no liability whatsoever.
------------------------------- -------------------------------------------
Depositor's Name (please print) Signature (exactly as appearing on bank
records)
------------------------------- -------------------------------------------
Depositor's Name (please print) Signature (exactly as appearing on bank
records)
25
<PAGE> 12
- --------------------------------------------------------------------------------
4 VOIDED CHECK
ATTACH YOUR VOIDED CHECK HERE.
AIM Fund Services, Inc.
P.O. Box 4739
Houston, Texas 77210-4739
Phone: 800-959-4246
[Voided Check Graphic]
26 [AIM LOGO APPEARS HERE]
<PAGE> 13
[AIM LOGO APPEARS HERE]
Form 5305-A (Rev. October 1992) Department of the Treasury Internal Revenue
Service
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
(under Section 408(a) of the Internal Revenue Code)
Please fill out and retain with your tax records. Do NOT file with Internal
Revenue Service or AIM.
- --------------------------------------------------------------------------------
Name of depositor
---------------------------------------------------------------
Date of birth of depositor / / Social Security Number
----- ----- ----- -----------
Month Day Year
Address of depositor [ ] Check if Amendment
-------------------------------------
Name of Custodian INVESCO Trust Company
Address or principal place of business of custodian The State of Colorado
The Depositor whose name appears above is establishing an individual retirement
account under section 408(a) to provide for his or her retirement and for the
support of his or her beneficiaries after death.
The Custodian named above has given the Depositor the disclosure statement
required under Regulations section 1.408-6.
The Depositor assigned the custodial account ________ dollars ($______) in cash.
The Depositor and the Custodian make the following agreement:
- --------------------------------------------------------------------------------
A I M DISTRIBUTORS, INC. CUSTODIAN AGREEMENT
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. NO PART OF THE CUSTODIAL FUNDS may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. NO PART OF THE CUSTODIAL FUNDS may be invested in collectibles (within the
meaning of section 408(m)) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold and silver coins and coins issued
under the laws of any state.
ARTICLE IV
1. NOTWITHSTANDING ANY PROVISION of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. UNLESS OTHERWISE ELECTED by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. THE DEPOSITOR'S ENTIRE INTEREST in the custodial account must be, or begin
to be, distributed by the Depositor's required beginning date (April 1 following
the calendar year end in which the Depositor reaches age 70 1/2. By that date,
the Depositor may elect, in a manner acceptable to the Custodian, to have the
balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of the
Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. IF THE DEPOSITOR DIES before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the Depositor or,
if the Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the
life expectancy of the designated beneficiary or beneficiaries starting by
December 31 of the year following the year of the Depositor's death. If,
however, the beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced distributions are treated as having begun on the Depositor's required
beginning date, even though payments may actually have been made before that
date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
5. IN THE CASE OF DISTRIBUTION over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment for each year,
divide the Depositor's entire interest in the Custodial account as of the close
of business on December 31 of the preceding year by the life expectancy of the
Depositor (or the joint life and last survivor expectancy of the Depositor and
the Depositor's designated beneficiary, or the life expectancy of the designated
beneficiary, whichever applies). In the case of distributions under paragraph 3,
determine the initial life expectancy (or joint life and last survivor
expectancy) using the attained ages of the Depositor and designated beneficiary
as of their birthdays in the year the Depositor reaches age 70 1/2. In the case
of distribution in accordance with paragraph 4(b)(ii), determine life expectancy
using the attained age of the designated beneficiary as of the beneficiary's
birthday in the year distributions are required to commence.
27
<PAGE> 14
6. THE OWNER OF TWO OR MORE INDIVIDUAL RETIREMENT ACCOUNTS may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524 to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. THE DEPOSITOR AGREES to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408.6.
2. THE CUSTODIAN AGREES to submit reports to the Internal Revenue Service and
the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
ARTICLE VIII
1. PURSUANT TO THE TERMS of this A I M Distributors, Inc. Individual
Retirement Custodial Account Agreement and the related IRA Account Application
(referred to herein as the "IRA Adoption Agreement") (such Agreements being
collectively referred to herein as the "Agreement"), the Depositor directs the
Custodian to invest all custodial account funds after deductions for sales
charges and Custodian fees, in shares issued by the investment company or
companies selected by the Depositor on the related IRA Adoption Agreement, until
the Depositor hereafter gives the Custodian contrary instructions pursuant to
Article XIII below. The investment companies from which the Depositor may select
are enumerated on the applicable list prepared by A I M Distributors, Inc. (the
"Distributor"), a copy of which accompanies the Adoption Agreement. Such
investment companies are part of "The AIM Family of Funds--Registered
Trademark--," which are managed or advised by subsidiaries of A I M Management
Group Inc., and any such investment company will hereafter be referred to as
"Investment Company."
2. (i) ANNUAL CASH CONTRIBUTIONS:
The Depositor may make annual cash contributions to the account within the
limits specified in Article I. All contributions shall be hand delivered or
mailed to the Custodian by the Depositor, with an indication of the taxable year
to which such contribution relates. Additionally, if the Depositor's employer
maintains a qualified simplified employee pension (SEP), such employer may
contribute on behalf of the Depositor, the lesser of 15% of the Depositor's
compensation from such employer or $30,000.
(ii) ROLLOVER CONTRIBUTIONS:
In addition to any annual contributions referred to in Paragraph (i) above,
but subject to this Paragraph (ii), the Depositor may contribute to the account,
at any time, a rollover contribution of such cash or other property as shall
constitute a rollover amount or contribution under section 402(a)(5), 402(a)(7),
403(a)(4), 403(b)(8) or 408(d)(3) of the Code. The Custodian will accept for the
account all rollover contributions which consist of cash, and it may, but shall
be under no obligation to, accept any other rollover contribution. In the case
of rollover contributions composed of assets other than cash, the prospective
Depositor shall provide the Custodian with a description of such assets and such
other information as the Custodian may reasonably require. The Custodian may
accept all or any part of such a rollover contribution if it determines that the
assets of which such contribution consists are either in a medium proper for
investment hereunder or that the assets can be promptly liquidated for cash.
The Depositor warrants that any rollover contribution to the account consists
of cash, the same property received in the distribution or, in the case of
amounts distributed to the Depositor from a qualified employer's plan or
annuity, the proceeds from the sale of the same property received in the
distribution. The Depositor also warrants that in the case of a rollover into
the account of amounts distributed to the Depositor from a qualified employer's
plan or annuity, only amounts in excess of the amounts considered to be the
Depositor's employee contributions included in such distribution constitute the
contribution to this account. Additionally, the Depositor affirms that the
contribution to the account does not consist of amounts received from an
inherited individual retirement account or annuity. An individual retirement
account or annuity shall be treated as inherited if it was acquired by reason of
the death of an individual other than the Depositor's spouse. The Depositor also
affirms that in the case of a rollover into the account of amounts distributed
from an individual retirement account or annuity or retirement bond, he has not
during the one year period ending on the date of the distribution received any
other distribution from an individual retirement account or annuity or
retirement bond which constituted a rollover contribution (as described in
section 408(d)(3) of the Code).
3. THE DEPOSITOR SHALL BE FULLY AND SOLELY RESPONSIBLE for all taxes,
interest and penalties which might accrue or be assessed by reason of any excess
deposit, and interest, if any, earned thereon. Any contributions made by or on
behalf of the Depositor in respect of a taxable year of the Depositor shall be
made by or on behalf of the Depositor to the Custodian for deposit in the
custodial account within the time period for claiming any income tax deduction
for such taxable year. It shall be the sole responsibility of the Depositor to
determine the amount of the contributions made hereunder. The Depositor shall
execute such forms as the Custodian may require in connection with any
contribution hereunder.
ARTICLE IX
1. THE CUSTODIAN SHALL from time to time, subject to the provisions of
Articles IV and V, make distributions out of the custodial account to the
Depositor, in such manner and amounts as may be specified in written
instructions of the Depositor. All such instructions shall be deemed to
constitute a certification by the Depositor that the distribution so directed is
one that the Depositor is permitted to receive. A declaration of the Depositor's
intention as to the disposition of an amount distributed pursuant to Article V
hereof shall be in writing and given to the Custodian. The Custodian shall have
no liability with respect to any contribution to the custodial account, any
investment of assets in the custodial account or any distribution therefrom
pursuant to instructions received from the Depositor or pursuant to this
Agreement, or for any consequences to the Depositor arising from such
contributions, investments or distributions including, but not limited to,
excise and other taxes and penalties which might accrue or be assessed by reason
thereof, nor shall the Custodian be under any duty to make any inquiry or
investigation with respect thereto.
2. IF THE DEPOSITOR IS DISABLED (as defined in Section 72(m) of the Code),
all or a portion of the balance in the custodial account may be distributed to
him/her as soon as practicable after the Custodian receives written notice of
the Depositor's disability and a written request for distribution. The Custodian
may require such proof of disability as it deems necessary prior to the time
that amounts are distributed to the Depositor due to such disability.
3. THE DEPOSITOR SHALL BE fully and solely responsible for all taxes and
penalties which might accrue or be assessed for having failed to make the annual
minimum withdrawal required in any year.
ARTICLE X
A Depositor shall have the right to designate a beneficiary or beneficiaries
to receive any amounts remaining in his account in the event of his death. Any
prior beneficiary designation may be changed or revoked at any time by a
Depositor by written designation signed by the Depositor on a form acceptable
to, and filed with, the Custodian; provided, however, that such designation, or
change or revocation of a prior designation shall not become effective until it
has been received by the Custodian, nor shall it be effective unless received by
the Custodian no later than thirty days before the death of the Depositor, and
provided further that the last such designation of beneficiary or change or
revocation of beneficiary executed by the Depositor, if received by the
Custodian within the time specified, shall control. Unless otherwise provided in
the beneficiary designation, amounts payable by reason of the Depositor's death
will be paid in equal shares only to the primary beneficiary or beneficiaries
who survive the Depositor, or, if no primary beneficiary survives the Depositor,
to the contingent beneficiary or beneficiaries who survive the Depositor. If the
Depositor had not, by the date of his death, properly designated a beneficiary
in accordance with the preceding sentences, or if no designated beneficiary
survives the Depositor, then the Depositor's beneficiary shall be the
Depositor's estate.
ARTICLE XI
1. ANY ADMINISTRATIVE OR OTHER FEES of the Custodian and its agents for
performing duties pursuant to this Agreement shall be in such amount as shall be
established from time to time. The Depositor agrees to pay the Custodian the
fees specified in its current fee schedule and authorizes the Custodian to
charge the Depositor's custodian account for the amount of such fees.
2. UPON THIRTY DAYS' PRIOR WRITTEN NOTICE, the Custodian may substitute a new
fee schedule. The Custodian's fees, any income, gift, estate and inheritance
taxes and other taxes of any kind whatsoever, including transfer taxes incurred
in connection with the investment or reinvestment of the assets of the custodial
account, that may be levied or assessed in respect of such assets, and all other
administrative expenses incurred by the Custodian in the performance of its
duties including fees for legal services rendered to the Custodian, may be
charged to the custodial account with the right to liquidate Investment Company
shares for this purpose, or at the Custodian's option, shall be billed to the
Depositor directly.
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ARTICLE XII
1. THIS AGREEMENT SHALL take effect only when accepted and signed by the
Custodian. As directed, the Custodian shall then open and maintain a separate
custodial account for Depositor and invest the initial contribution hereunder in
shares of the Investment Company. Where the IRA Adoption Agreement is checked
for spousal accounts, separate custodial accounts will be opened and maintained
in each spouse's name. The amounts specified in the IRA Adoption Agreement shall
be credited to each spouse's separate custodial account except that no more than
$2,000 shall be credited to either custodial account.
2. THE CUSTODIAN SHALL invest subsequent contributions as directed. If any
such written instructions are not received as required however, or if received,
are in the opinion of the Custodian unclear, or if the accompanying contribution
exceeds $2,000 for the Depositor and/or $2,000 for the Depositor's spouse, the
Custodian may hold or return all or a portion of the contribution uninvested
without liability for loss of income or appreciation, and without liability for
interest, pending receipt of written instructions or clarification.
3. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, less charges, received on
Investment Company shares held in the custodial account shall (unless received
in additional such shares) be reinvested in shares of the Investment Company,
which shall be credited to the custodial account. If any distribution on such
shares may be received at the election of the Depositor in additional such
shares or in cash or other property, the Custodian shall elect to receive it in
additional Investment Company shares.
4. ALL INVESTMENT COMPANY SHARES ACQUIRED by the Custodian hereunder shall be
registered in the name of the Custodian (with or without identifying the
Depositor) or of its nominees. The Custodian shall deliver, or cause to be
executed and delivered, to the Depositor all notices, prospectuses, financial
statements, proxies and proxy solicitation materials relating to such Investment
Company shares held in the custodial account. The Custodian shall not vote any
Investment Company shares except in accordance with the written instructions
received from the Depositor.
ARTICLE XIII
1. THE CUSTODIAN SHALL keep adequate records of transactions it is required
to perform hereunder. Not later than six months after the close of each calendar
year or after the Custodian's registration or removal pursuant to Article XV
below, the Custodian shall render to the Depositor or the Depositor's legal
representative a written report or reports reflecting the transactions effected
by it during such period and the assets and liabilities of the custodial account
at the close of the period. Sixty days after rendering such report(s), the
Custodian shall (to the extent permitted by law) be forever released and
discharged from all liability and accountability to anyone with respect to its
acts and transactions shown in or reflected by such report(s), except with
respect to those as to which the Depositor or the Depositor's legal
representative shall have filed written objections with the Custodian within the
latter such sixty-day period.
2. THE CUSTODIAN SHALL receive and invest contributions as directed by the
Depositor, hold and distribute such investments, and keep adequate records and
reports thereon, all in accordance with this Agreement. The parties do not
intend to confer any other fiduciary duties of the Custodian, and none shall be
implied. The Custodian shall not be liable (and assumes no responsibility) for
the collection of contributions, the deductibility or propriety of any
contribution under this Agreement, or the purposes or propriety of any
distribution from the account, which matters are the responsibility of the
Depositor or the Depositor's legal representative.
3. THE DEPOSITOR, to the extent permitted by law, shall always fully
indemnify the Custodian and save it harmless from any and all liability
whatsoever which may arise in connection with this Agreement and matters which
it contemplates, except that which arises due to the Custodian's negligence and
willful misconduct. The Custodian shall not be obligated or expected to commence
or defend any legal action or preceding in connection with this Agreement or
such matters unless agreed upon by the Custodian and Depositor or said legal
representative, and unless fully indemnified for so doing to the Custodian's
satisfaction.
4. THE CUSTODIAN MAY conclusively rely upon and shall be protected in acting
upon any written order from the Depositor or the Depositor's legal
representative or any other notice, request, consent, certificate or other
instruments or paper believed by it to be genuine and to have been properly
executed, and as long as it acts in good faith in taking or omitting to take any
other action in reliance thereon.
ARTICLE XIV
1. THE CUSTODIAN MAY resign at any time upon thirty days' notice in writing
to the Depositor, and may be removed by the Depositor at any time upon thirty
days' notice in writing to the Custodian. Upon such resignation or removal, the
Depositor shall appoint a successor custodian to serve under this Agreement.
Upon receipt by the Custodian of written acceptance of such appointment by the
successor custodian, the Custodian shall transfer to such successor the assets
of the custodial account and all necessary records (or copies thereof)
pertaining thereto, provided that (at the Custodian's request) any successor
custodian shall agree not to dispose of any such records without the Custodian's
consent. The Custodian is authorized, however, to reserve such assets as it may
deem advisable for payment of any other liabilities constituting a charge on or
against the assets of the custodial account or on or against the Custodian, with
any balance of such reserve remaining after the payment of all such items to be
paid over to the successor custodian.
2. THE CUSTODIAN SHALL NOT be liable for the acts or omissions of such
successor custodian.
3. THE CUSTODIAN, AND EVERY SUCCESSOR CUSTODIAN appointed to serve under this
Agreement, must be a bank (as defined in Section 408(n) of the Code) or such
other person who qualifies with the Internal Revenue Service to serve in the
manner prescribed by Code section 408(a)(2) and satisfies the Custodian, upon
request, as to such qualification.
4. AFTER THE CUSTODIAN HAS transferred the custodial account assets
(including any reserve balance as contemplated above) to the successor
custodian, the Custodian shall be relieved of all further liability with respect
to this Agreement, the custodial account and the assets thereof.
ARTICLE XV
1. THE CUSTODIAN SHALL terminate the custodial account and pay the
proceeds of the account to the depositor if within thirty days after the
resignation or removal of the Custodian pursuant to Article XV above, the
Depositor has not appointed a successor custodian which has accepted such
appointment unless within that time the Distributor appoints such successor and
gives written notice thereof to the Depositor and the Custodian. The Distributor
shall have the right, but not the duty, to appoint such a successor. Termination
of the custodial account shall be effected by distributing all of the assets
therein in cash or in kind to the Depositor in a lump sum, subject to the
Custodian's right to reserve funds as provided in said Article XV.
2. UPON TERMINATION of the custodial account in any manner provided for in
this Article XVI, this Agreement shall terminate and have no further force and
effect, and the Custodian shall be relieved from all further liability with
respect to this Agreement, the custodial account and all assets thereof so
distributed.
ARTICLE XVI
1. ANY NOTICE FROM THE CUSTODIAN TO THE DEPOSITOR provided for in this
Agreement shall be effective when mailed if sent by first class mail to the
Depositor at the Depositor's last known address as shown on the Custodian's
records. Any notice required or permitted to be given to the Custodian, shall
become effective upon actual receipt by the Custodian at such address as the
Custodian shall provide the Depositor from time to time in writing.
2. THIS AGREEMENT IS accepted by the Custodian and shall be construed and
administered in accordance with the laws of The State of Colorado. The Custodian
and the Depositor hereby waive and agree to waive right to trial by jury in an
action or proceeding instituted in respect to this custodial account. The
Depositor further agrees that the venue of any litigation between him and the
Custodian with respect to the custodial account shall be in the State of
Colorado.
3. THIS AGREEMENT is intended to qualify under section 408 of the Code as an
Individual Retirement Account and to entitle the Depositor to any retirement
savings deduction which he may qualify for under section 219 of the Code, and if
any provision hereof is subject to more than one interpretation or any term used
herein is subject to more than one construction, such ambiguity shall be
resolved in favor of that interpretation or construction which is consistent
with that intent.
4. ALL PROVISIONS IN THIS AGREEMENT ARE subject to the Code and to
regulations promulgated thereunder. In the event that any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
5. THE CUSTODIAN SHALL have no duties whatsoever except such duties as it
specifically agrees to in writing, and no implied covenants or obligations shall
be read into this Agreement against the Custodian. The Custodian shall not be
liable under this Agreement, except for its own bad faith, gross negligence or
willful misconduct.
6. NO INTEREST, RIGHT OR CLAIM IN OR TO ANY PART of the custodial account or
any payment therefrom shall be assignable, transferable, or subject to sale,
mortgage, pledge, hypothecation, communication, anticipation, garnishment,
attachment, execution, or levy of any kind and the Custodian shall not recognize
any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute or
anticipate the same, except as required by law.
7. THE DEPOSITOR HEREBY DELEGATES to the Custodian the power to amend this
Agreement from time to time as it deems appropriate, and hereby consents to all
such amendments, provided, however, that all such amendments are in compliance
with the provisions of the Code and the regulations promulgated thereunder. All
such amendments shall be effective as of the date specified in a written notice
of amendment which will be sent to the Depositor.
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INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF FORM
This model custodial account agreement may be used by an individual who
wishes to adopt an individual retirement account under section 408(a). When
fully executed by the Depositor and the Custodian not later than the time
prescribed by law for filing the Federal income tax return for the Depositor's
tax year (not including any extensions thereof), a Depositor will have an
individual retirement account (IRA) custodial account which meets the
requirements of section 408(a). This account must be created in the United
States for the exclusive benefit of the Depositor or his/her beneficiaries.
DEFINITIONS
Custodian. -- The Custodian must be a bank or savings and loan association,
as defined in section 408(n), or other person who has the approval of the
Internal Revenue Service to act as custodian.
DEPOSITOR. -- The Depositor is the person who establishes the custodial
account.
IRA FOR NON-WORKING SPOUSES
Contributions to an IRA custodial account for a non-working spouse must be
made to a separate IRA custodial account established by the non-working spouse.
This form may be used to establish the IRA custodial account for the
non-working spouse.
An individual's social security number will serve as the identification
number of his or her individual retirement account.
For more information, obtain a copy of the required disclosure statement from
your custodian or get Publication 590, Individual Retirement Arrangements.
(IRAs).
SPECIFIC INSTRUCTIONS
Article IV -- Distribution made under this Article may be made in a single
sum, periodic payment, or a combination of both. The distribution option should
be reviewed in the year the Depositor reaches age 70 1/2 to make sure the
requirements of section 408(a)(6) have been met.
Article IX -- This article and any that follow it may incorporate additional
provisions that are agreed upon by the Depositor and the Custodian to complete
the agreement. These may include, for example: definitions, investment powers,
voting rights, exculpatory provisions, amendment and termination, removal of
Custodian, Custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the Depositor, etc. Use additional pages if
necessary and attach them to this form.
Note: This form may be reproduced and reduced in size for adoption to
passbook or card purposes.
THE AIM FAMILY OF FUNDS--Registered Trademark--
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
DISCLOSURE STATEMENT
Under applicable federal regulations, a custodian of an individual
retirement account is required to furnish each depositor who has established or
is establishing an individual retirement account with a statement which
discloses certain information regarding the account. INVESCO Trust Company
(hereinafter referred to as the "Custodian") is providing this Disclosure
Statement to you in accordance with that requirement, and this Disclosure
Statement contains general information about the The AIM Family of
Funds--Registered Trademark-- Individual Retirement Custodial Account
(hereinafter referred to as "IRA"). This Disclosure Statement should be reviewed
in conjunction with both the Individual Retirement Custodial Account agreement
(From 5305-A and any attachments thereto, hereinafter referred to as the
"Custodial Agreement") and the Adoption Agreement for your IRA. You should
review this Disclosure Statement and the IRA documents with your attorney or tax
advisor. The Custodian cannot give tax advice or determine whether or not the
IRA is appropriate for you.
A. SEVEN DAY RIGHT TO REVOKE YOUR IRA.
You may revoke your IRA at any time within seven business days after the date
the IRA is established, by giving proper notice. For purposes of revocation, it
will be assumed that you received the Disclosure Statement no later than the
date of your check with which you opened your IRA. Written notice must be hand
delivered or sent by first class mail, in which case, the revocation will be
effective as of the date the notice is postmarked (or if sent by certified or
registered mail, the date of certification or registration). Notice of
revocation should be made to: A I M Distributors, Inc., Eleven Greenway Plaza,
Suite 763, P.O. Box 4739, Houston, Texas 77210-4739, Attention: Shareholder
Services Department, area code (800) 959-4246. If you revoke your IRA, you are
entitled to a refund of your entire contribution to the IRA, without adjustment
for such items as sales commissions, administrative expenses or fluctuation in
market value. If you do not revoke within seven business days after the
establishment of the IRA, you will be deemed to have accepted the terms and
conditions of the IRA and cannot later revoke the IRA without certain potential
penalties.
B. STATUTORY REQUIREMENTS.
An IRA is a trust or custodial account created or organized in the United
States for your exclusive benefit or that of your beneficiaries. It must be
created by a written governing instrument that meets the following requirements:
(1) THE TRUSTEE OR CUSTODIAN MUST BE A BANK, federally insured credit union,
savings and loan association or another person eligible to act as trustee or
custodian;
(2) EXCEPT FOR ROLLOVER CONTRIBUTIONS (as described in Part F below), no
contribution will be accepted unless it is in cash or cash equivalent,
including, but not by way of limitation, personal checks, cashier's checks, and
wire transfers;
(3) EXCEPT FOR ROLLOVERS and simplified employee pension ("SEP")
contributions, contributions of more than $2,000 for any tax year may not be
made;
(4) YOU WILL HAVE A NONFORFEITABLE INTEREST IN THE ACCOUNT;
(5) NO PART OF THE TRUST OR CUSTODIAL FUNDS will be invested in life
insurance contracts, nor may the assets be commingled with other property except
in a common trust fund or common investment fund. Furthermore, as provided in
section 408(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
your IRA may not be invested in "collectibles," such as art works, antiques,
metals, gems, stamps, coins (with an exception for certain U.S.-minted gold and
silver coins), and certain other types of tangible personal property. An
investment in a collectible would be treated as a distribution from your IRA
which would be includible in your gross income, and, if you had not attained the
age of 59 1/2, the distribution would also be subject to the premature
distribution penalty as discussed in Part E(4) below;
(6) YOUR ENTIRE INTEREST IN THE ACCOUNT MUST BE, or begin to be, distributed
on or before April 1 of the calendar year following the calendar year in which
you reach age 70 1/2. The distribution may be made in a single sum, or you may
receive periodic distributions, so long as your entire interest is distributed
in equal or substantially equal payments over any of the following periods:
(a) your life;
(b) the lives of you and your designated beneficiary;
(c) a period certain not extending beyond your life expectancy;
(d) a period certain not extending beyond the life expectancy of you and
your designated beneficiary.
If the distributions from your IRA are to be made over one of the foregoing
periods, the amount distributed each year must meet the minimum distribution
requirements set forth in your IRA Custodial Agreement, or you will incur a
penalty as described in Part E(8) below;
(7) IF YOU DIE AFTER DISTRIBUTIONS HAVE commenced but before your entire
interest has been distributed to you, payments must continue at least as rapidly
as under the method of distribution in effect, at your death. If you die before
distributions have commenced, generally your entire interest must be distributed
within five years of your death. However, if your interest is payable to a
designated beneficiary, payments may be made over the life or a period not
exceeding the life expectancy of the beneficiary; provided, however, that such
payments must commence within one year of your death unless your designated
beneficiary is your surviving spouse, in which case payments need not commence
until the date on which you would have attained age 70 1/2. You should advise
the Custodian as to your beneficiary and the method of distribution desired.
C. INVESTMENT OF YOUR IRA.
Under the terms of the Custodial Agreement, your contributions will be
invested by the Custodian in full and fractional shares of the investment
company or companies that you select. As provided in the Custodial Agreement,
you may only invest your IRA Funds in shares of investment companies which are
part of "The AIM Family of Funds--Registered Trademark--," which are managed
or advised by subsidiaries of A I M Management Group Inc. You will be provided
with a list of the investment companies from which you may choose to invest.
Subject to the foregoing and to any additional restrictions described in the
Custodial Agreement, you have complete control over the investment of your IRA
Funds. The Custodian will not provide any form of investment advice or make
investment recommendations of any type, so you will make all investment
decisions on the basis of information you obtain from other sources. When you
make a decision on how you wish to invest Funds held in your IRA, you should
provide the Custodian with specific
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instructions, detailing your investment decision so that the Custodian can
effectuate such investments as provided in your IRA Custodial Agreement. If you
fail to direct the Custodian as to the Investment of all or any portion of your
IRA account, the Custodian shall hold such uninvested amount in your account and
shall incur no liability for interest or earnings thereon. All dividends and
capital gain distributions received on shares of an investment company held in
your IRA will be reinvested in shares of that investment company, if available,
which shall be credited to the Custodian account. Detailed information about the
shares of the AIM fund(s) you select must be furnished to you in the form of
prospectuses governed by rules of the Securities and Exchange Commission.
D. LIMITATIONS AND RESTRICTIONS ON IRA CONTRIBUTIONS AND DEDUCTIONS.
Except in the case of rollover contributions (see Part F below), generally
you may contribute up to the lesser of $2,000 or 100% of your compensation
(earned income) to your IRA for any taxable year. A non-working spouse may
contribute up to $2,000 to a separate IRA.
Section 219 of the Code contains special provisions governing whether amounts
contributed to your IRA will be deductible from gross income for federal income
tax purposes. To the extent you are not eligible or elect not to make deductible
IRA contributions, you may make nondeductible IRA contributions within the
aforementioned limits which are reduced by the amount of any deductible
contributions. The following is a summary of the rules regarding the
deductibility of contributions to your IRA. You should consult your tax advisor
to determine the specific application of such rules to your IRA contributions
for any particular taxable year.
(1) IF NEITHER YOU NOR YOUR SPOUSE IS an "active participant" (as
determined under section 219(g) of the Code and any regulations or rulings
thereunder) in a retirement plan during any part of the taxable year, you may
take a deduction for contributions to your IRA for such taxable year in an
amount equal to the lesser of $2,000 or 100% of your compensation (earned
income) for such taxable year.
(2) IF EITHER YOU OR YOUR SPOUSE (unless you file separate income tax returns
as noted below) is considered an "active participant" in a retirement plan for
any part of the taxable year, the extent, if any, to which contributions to your
IRA will be deductible depends on the amount of your adjusted gross income
("AGI"). The maximum IRA deduction as specified in Paragraph (1) above will be
reduced in the same ratio that the excess of your AGI over $25,000 (for a single
individual), $40,000 (for a married couple filing jointly) and zero (for a
married couple filing separately) bears to $10,000. Thus, if you are an active
participant in a retirement plan, no IRA deduction will be permitted if:
(a) You are a single individual with AGI in excess of $35,000,
(b) you are married and file a joint return with AGI in excess of $50,000,
or
(c) you are married, file separate returns and either you or your spouse
have AGI in excess of $10,000.
(3) IF YOU ARE MARRIED and your spouse has no compensation for the
taxable year, or elects to be treated as having no compensation for such year,
you are permitted an additional deduction in the amount of $2,000 for
contributions to an IRA for the benefit of your spouse provided that your spouse
has not attained age 70 1/2 and you file a joint income tax return for such
year, subject to the provisions of (1) or (2) above, whichever is applicable.
(see below)
You will be considered an "active participant" for any particular taxable
year if you are covered by a retirement plan for any part of such year.
Generally, you will be considered covered by a retirement plan for a year if
your employer or union has a retirement plan under which money is added to your
account or you are eligible to earn retirement credits for such year. For
example, if you are covered under a profit-sharing plan, certain government
plans, a salary reduction arrangement (such as a tax-sheltered annuity
arrangement or a 401(k) plan), a SEP or a plan which promises you a retirement
benefit which is based upon the number of years of service you have with the
employer, you are likely to be an active participant. Your Form W-2 for the
year should indicate your participation status. You are an active participant
for a year even if you are not yet vested in your retirement benefit. Also, if
you make required contributions or voluntary employee contributions to a
retirement plan, you are an active participant. In certain plans you may be an
active participant even if you were only with the employer for part of the
year. You should note that if you are married but file a separate tax return,
and you did not live with your spouse at any time during the taxable year, your
spouse's active participation does not affect your ability to make deductible
contributions.
No deduction will be allowed under (1) or (2) above for any contribution
which is made for the taxable year during which you attain age 70 1/2 or for any
subsequent year. You are permitted to contribute and deduct up to $4,000 for
contributions to your IRA and a spousal IRA, subject to the provisions of (1)
and (2) above. However, in no event shall the contribution to either IRA exceed
$2,000. It should be noted that if both you and your spouse work, each may
contribute up to $2,000 of compensation (earned income) to his or her own IRA.
If your employer maintains a SEP, your employer may contribute to your IRA up
to the lesser of 15% of your compensation from such employer or $30,000.
Since SEP contributions are excluded from your gross income, such contributions
are not deductible for federal income tax purposes.
If contributions to your IRA are deductible as outlined above, you may claim
such deduction even if you do not itemize your deductions on your federal income
tax return. You must make contributions to your IRA during the taxable year for
which you claim the deduction or by the deadline for filing your federal income
tax return for such year (without regard to any filing deadline extension). For
example, if you are a calendar-year taxpayer, you must make contributions no
later than April 15th in order to take a deduction for the previous year.
If any portion of a contribution to your IRA is nondeductible as outlined
above, you must so designate on your federal income tax return, as required
under section 408(o)(4) of the Code and file From 8606 with your tax return.
E. FEDERAL INCOME TAX STATUS OF THE IRA AND CERTAIN DISTRIBUTIONS.
(1) IN GENERAL. Except as described below, your IRA and earnings thereon are
exempt from federal income tax until distributions are made from the IRA.
(2) TAX TREATMENT OF DISTRIBUTIONS. If all contributions to your IRA (other
than rollover contributions) have been deductible for federal income tax
purposes then all distributions from your IRA will be taxable as ordinary
income. However, if you have made any nondeductible IRA contributions,
distributions from your IRA will be treated as partially a return of deductible
contributions, if any, (taxable), partially a return of nondeductible
contributions (nontaxable) and partially a distribution of earnings (taxable).
The portion of an IRA distribution which will be excludable from income will be
determined by multiplying the total amount distributed by a fraction, the
numerator of which is the aggregate of all your nondeductible IRA contributions,
and the denominator of which is the aggregate balance of all of your IRAs
(including rollover IRAs and SEPs). For purposes of the foregoing, (a) all of
your IRAs will be treated as a single IRA, (b) all distributions during a
taxable year will be treated as a single distribution and (c) the aggregate
balance of your IRAs will be determined as of the end of the calendar year with
or within which your taxable year ends, after adding back any distributions for
such year.
Distributions from your IRA are not eligible for any special tax treatment
such as five-or ten-year averaging or capital gains treatment.
(3) EXCESS CONTRIBUTIONS. If contributions to your IRA are in excess of the
limits stated in Part D above, you will be assessed a 6% nondeductible excise
tax on such excess amounts. This tax is payable for each year the excess is
permitted to remain in your IRA. However, if the excess contribution has not
been taken as a deduction, and if the excess and all earnings thereon are
returned before the due date for filing your income tax return for the year in
which the excess contribution was made, the 6% excise tax will not be assessed.
The earnings on such excess contribution that are returned to you will be
taxable as ordinary income and will be deemed to have been earned and taxable in
the tax year during which the excess contribution was made. In addition, if you
are not disabled or have not reached age 59 1/2, the earnings will be subject to
the 10% premature withdrawal penalty discussed below. The 6% excess contribution
tax may be eliminated for future tax years by withdrawing the excess
contribution from your IRA before the due date for filing your tax return for
that year or by under-contributing for a subsequent year by an amount equal to
the excess contribution. If the total contributions for the year to your IRA are
$2,000 or less, and there are no employer contributions for the year, you may
withdraw any excess contributions after the due date for filing your tax return,
including extensions, and not include the amount withdrawn in your gross income.
This applies only to the part of the excess that you did not take a deduction
for. It is not necessary to withdraw the interest or other income earned on the
excess. You will have to pay the 6% tax on the excess amount for each year the
excess contribution was in the IRA.
If the contributions to your IRA for any year are more than $2,000, you must
include in your gross income any excess over $2,000, unless it is an excess
rollover contribution attributable to erroneous information. You may also have
to pay a 10% tax on premature distributions on the amount you withdraw, unless
you are age 59 1/2 or disabled.
If less than the maximum amount of contributions has been made in years
before the year you make an excess contribution, the prior year's difference may
not be used to reduce the excess contribution. Qualified rollover contributions,
as described in Part F below, are not considered excess contributions.
(4) PREMATURE DISTRIBUTIONS. In addition to any regular income tax that may
be payable, distributions from your IRA that occur before you reach age 59 1/2
(except in the event of disability, death, rollover, medical expenses in excess
of 7.5% of adjusted gross income, medical insurance premiums in the event of
unemployment or as a qualifying distribution of an excess contribution), will be
assessed a 10% additional income tax on the amount distributed which is
includible in your gross income. However, the additional 10% income tax will not
be imposed if the distribution is one of a scheduled series of level payments to
be made over your life or life expectancy or over the joint lives or joint life
expectancies of you and your beneficiary. Amounts treated as distributions from
the IRA because of pledging the IRA as described below, or prohibited
transactions as described below, will also be considered premature distributions
if they occur before you reach age 59 1/2 (assuming you are not disabled).
31
<PAGE> 18
(5) PLEDGING THE IRA. If you pledge your IRA as security for a loan, the
portion so pledged is treated as being distributed to you in that year. In
addition
to any regular income tax that may be payable on the distribution, the premature
distribution penalty as discussed above may also be applicable.
(6) PROHIBITED TRANSACTIONS. If you or your beneficiary engages in a
prohibited transaction, as described in section 4975 of the Code with respect to
your IRA, your IRA will lose its exemption from tax and you must include the
fair market value of your IRA in your gross income for the year during which the
prohibited transaction occurred. In addition to any regular income tax that may
be payable, the premature distribution
penalty as discussed above may also be applicable.
(7) INSUFFICIENT OR LATE DISTRIBUTIONS. In addition to the regular income tax
that may be payable on distributions from your IRA, you will be assessed
penalties on certain accumulations if funds in your IRA are not distributed in
accordance with the rules described in Part B above. If the amount distributed
from your IRA during the year is less than the minimum amount required to be
distributed during such year, an excise tax will be imposed. The tax imposed is
equal to 50% of the amount by which the minimum required distribution exceeds
the amount actually distributed during the year.
(8) ESTATE AND GIFT TAX STATUS OF DISTRIBUTIONS. Generally, for estate tax
purposes, the value of your IRA will be fully includible in your gross estate in
the event of your death. For gift tax purposes, beneficiary designations will
not be treated as gifts. Also, contributions to an IRA on behalf of a spouse who
has no earned income or elects to be treated as having no earned income will
qualify for the annual present interest gift exclusion. You should consult your
tax advisor with respect to the application of community property laws on estate
and gift tax issues relating to your IRA.
(9) INHERITED IRAS. Your IRA will be treated as an inherited IRA if, upon
your death, it is acquired by a beneficiary other than your surviving spouse. An
inherited IRA may not be rolled over to a qualified plan or to another IRA, nor
may an inherited IRA accept any regular or rollover deposits. Only a beneficiary
who is your surviving spouse will be allowed to roll over the IRA funds into his
or her own IRA.
(10) FEDERAL INCOME TAX WITHHOLDING. The taxable portion of
distributions from your IRA is subject to federal income tax withholding unless
you elect not to have withholding applied. If you elect not to have withholding
applied to taxable distributions from your IRA, or if insufficient federal
income tax is withheld from any distribution, you may be responsible for payment
of estimated taxes, as well as for penalties under the estimated tax rules, if
withholding and estimated tax payments were not sufficient. Additional
information regarding withholding and the necessary election forms will be
provided no later than at the time a distribution is requested.
F. ROLLOVER CONTRIBUTIONS.
A rollover is a tax-free distribution of cash or other assets from one
retirement program to another. There are two kinds of rollover contributions to
an IRA. In one, you contribute amounts distributed to you from one IRA to
another IRA. With the other, you contribute amounts distributed to you from your
employer's qualified plan or 403(b) plan to an IRA. A rollover is an allowable
IRA contribution which is not subject to the limits on regular contributions
discussed in Part D above. However, you may not deduct a rollover contribution
to your IRA on your tax return.
If you receive a distribution from the qualified plan of your employer or
former employer, the distribution must be an "eligible rollover distribution" in
order for you to be able to roll all or part of the distribution over to your
IRA. The portion you contribute to your IRA will not be taxable to you until you
withdraw it from the IRA. Your employer or former employer will give you the
opportunity to roll over the distribution directly from the plan to the IRA. If
you elect, instead, to receive the distribution, you must deposit it into the
IRA within 60 days after you receive it.
An "eligible rollover distribution" is any distribution from a qualified plan
that would be taxable other than (1) a distribution that is one of a series of
periodic payments for an employee's life or over a period of 10 years or more,
(2) a required distribution after you attain age 70 1/2 and (3) certain
corrective distributions.
If the entire amount in your IRA has been contributed in a tax-free rollover
from your employer's or former employer's qualified plan or 403(b) plan, you may
later roll over the IRA to a new employer's plan if such plan permits rollovers.
Your IRA would then serve as a conduit for those assets. However, you may later
roll those IRA funds into a new employer's plan only if you make no further
contributions to that IRA, or commingle the IRA rollover funds with existing IRA
assets.
G. AMENDMENTS.
The Custodian of your IRA may amend the agreements establishing your IRA at
any time. The Custodian will comply with the amendment procedures set forth in
your Custodial Agreement.
H. FINANCIAL DISCLOSURE.
Because the value of assets held in your IRA is subject to market
fluctuation, the value of your IRA can neither be guaranteed nor projected.
There is no assurance of growth in the value of your IRA or guarantee of
investment results. You will, however, be provided with periodic statements of
your IRA, including current market values of investments. Certain fees will be
charged by the Custodian in connection with your IRA.
Such fees are disclosed on the Custodian's fee schedule, a copy of which
has been provided to you. Upon thirty days' prior written notice, the Custodian
may substitute a new fee schedule. Any fees or other expenses incurred in
connection with your IRA will be deducted from your IRA (with liquidation of
Fund Shares, if necessary), or at the Custodian's option, such fees or expenses
may be billed to you directly.
For its services to the various funds, in The AIM Family of
Funds--Registered Trademark--, INVESCO Trust Company receives a custodian fee.
This fee is in addition to fees it receives for acting as Custodian under the
IRA. INVESCO Trust Company and A I M Distributors, Inc. also will receive
additional fees for performing specific services with respect to the various
funds in the AIM Family of Funds. Any such fees will be fully disclosed to you.
Potential investors should obtain a copy of the current Prospectus relating to
the fund(s) selected for investment prior to making an investment. Also, copies
of the Statement of Additional Information relating to such fund(s) will be
provided upon your request to A I M Distributors, Inc.
I. MISCELLANEOUS.
Each year you will be provided a statement(s) of account which will give the
amount of contributions to the IRA, the year to which each contribution relates,
and the total value of the IRA as of the end of the year. Information relating
to contributions and distributions must be reported annually to the Internal
Revenue Service and to you. You must also file Form 5329 (Return for Individual
Retirement Savings Arrangement) with the Internal Revenue Service for each
taxable year during which you are assessed any penalty or tax as discussed in
Part E above.
Your IRA has been approved by the Internal Revenue Service. Such approval is
a determination as to the form of the IRA, and does not represent a
determination of the IRA's merits as an investment.
Further information about IRAs can be obtained from any district office of
the Internal Revenue Service or from the Custodian.
All provisions in this Disclosure Statement are subject to the Code and to
the regulations promulgated thereunder. This Disclosure Statement constitutes a
nontechnical restatement and summary of certain provisions of the Code which may
affect your IRA. This is not a legal document. Your legal rights and obligations
are governed by the federal tax laws and regulations and your Custodial
Agreement and Adoption Agreement with the Custodian.
32
<PAGE> 1
EXHIBIT 14(b)(1)
SEP AND SARSEP IRA ADOPTION AGREEMENT [AIM LOGO APPEARS HERE]
The undersigned Employer hereby establishes a Simplified Employee Pension Plan
(SEP) and/or a Salary Reduction Simplified Employee Pension Plan (SARSEP) for
the exclusive benefit of Employees who are eligible to participate. The terms of
the Plan are set forth in this Adoption Agreement and the accompanying Plan
Document which is hereby adopted and incorporated herein by reference.
- --------------------------------------------------------------------------------
1. EMPLOYER AND PLAN INFORMATION
Employer's Name
-------------------------------------------------------------
Address
---------------------------------------------------------------------
Tax I.D. Number Telephone Number
---------------------------- --------------
Form of Business:
[ ] Sole Proprietor [ ] Partnership [ ] Corporation
[ ] Electing S Corporation
Name of individual authorized to issue instructions to AIM:
----------------------------------------------------------------------------
Plan Year: Plan Type:
[ ] Calendar year. [ ] SEP IRA only
[ ] Employer's Taxable Year ending on . [ ] SARSEP IRA only
------
[ ] Combined SEP and SARSEP IRA
- --------------------------------------------------------------------------------
2. EFFECTIVE DATES
(a) New Plan: Effective as of .
------------------
(b) Amended and Restated Plan:
(i) Original Plan effective as of .
------------------------
(ii) Amended and Restated Plan effective as of .
----------------------
(c) Elective Deferrals effective as of .
-----------------------
- --------------------------------------------------------------------------------
3. ELIGIBILITY REQUIREMENTS
(a) Age: [ ] No requirement. [ ] Minimum age _____________ (not over 21).
(b) Service:
Employees who have performed services for the Employer during at least
________ (maximum 3) of the immediately preceding 5 Plan Years.
(c) Excluded Classes of Employees (select all applicable options):
[ ] None.
[ ] Employees covered by a collective bargaining agreement under which
retirement plan benefits have been the subject of good faith bargaining.
[ ] Employees whose Compensation as defined at Code Section 414(q)(7)
is less than $400 (as adjusted for inflation) during the Plan Year.
[ ] Non-resident aliens.
- --------------------------------------------------------------------------------
4. EMPLOYER ALLOCATION FORMULA
[ ] (a) Proportionate Allocation described at paragraph 3.3(a) of the SEP
and SARSEP Plan Document, or
[ ] (b) Integrated Allocation described at paragraph 3.3(b) of the Plan
Document. This allocation formula may not be adopted if the Employer
maintains any other plan which is integrated with Social Security.
15
<PAGE> 2
- --------------------------------------------------------------------------------
5. EMPLOYEE ELECTIVE DEFERRALS (FOR SARSEP ONLY)
% limit ________ (not to exceed 15%). Dollar limit $ _________________(not
to exceed $9,240 as indexed).
- --------------------------------------------------------------------------------
6. CASH BONUS OPTION
An Employee [ ] may [ ] may not defer a bonus.
- --------------------------------------------------------------------------------
7. LIMITATIONS ON USE OF PROTOTYPE
An Employer may adopt this Plan even if such Employer maintains another
qualified defined contribution plan, provided that contributions are limited
in accordance with Code Section 415. An Employer may not participate in this
Plan if the Employer maintains currently or has ever maintained a defined
benefit plan which is now terminated. An Employer who participates in this
Plan and who adopts a qualified defined benefit plan, may no longer
participate in this Plan. Thereafter, such Employer shall be considered to
have an individually drafted plan.
- --------------------------------------------------------------------------------
8. TOP-HEAVY MINIMUM CONTRIBUTIONS
The Top-Heavy Plan requirements under Code Section 416 shall be satisfied
by:
[ ] (a) this Plan.
[ ] (b)
----------------------------------------------------------------------
(Name of other qualified plan of the Employer).
- --------------------------------------------------------------------------------
9. SPONSOR CONTACT
Employers should direct questions concerning the language contained in and
qualification of the prototype to:
A I M Distributors, Inc.
Retirement Plans Department
11 Greenway Plaza, Suite 1919
P.O. Box 4333
Houston, Texas 77210-4739
(800) 998-4246 Ext. 5612
In the event that the Sponsor amends, discontinues or abandons this
prototype Plan, notification will be provided to the Employer's address
provided on the first page of this Agreement.
- --------------------------------------------------------------------------------
10. SIGNATURES
(a) This Agreement was signed by the Employer the day of 19 .
------ --------- --
Signed for the Employer by
--------------------------------------------------
Title
-----------------------------------------------------------------------
Signature
-------------------------------------------------------------------
(b) This Agreement was signed by AIM Distributors, Inc. the day of 19 .
---- --- -
Signed for the Sponsor by
--------------------------------------------------
Title
-----------------------------------------------------------------------
Signature
-------------------------------------------------------------------
[AIM LOGO APPEARS HERE] AIM Distributors, Inc. 43101-10/95
16
<PAGE> 3
SEP AND SARSEP IRA PLAN DOCUMENT [AIM LOGO APPEARS HERE]
AIM Distributors, Inc. hereby establishes a Prototype Plan for use, in
conjunction with an Internal Revenue Service approved IRA, by Employers who wish
to establish a qualified Simplified Employee Pension Plan (SEP) and/or a Salary
Reduction Simplified Employee Pension Plan, sometimes called a SARSEP. If the
Employer executes an Adoption Agreement which is accepted by AIM Distributors,
Inc. and which incorporates this document by reference, the Boston Safe Deposit
& Trust will act as custodian or trustee of the IRA plans established by
Employees eligible to receive contributions under the terms of this Plan. The
salary reduction feature of this prototype SEP and SARSEP may not be used by an
Employer who: 1) at any time during the prior Plan Year had more than 25
Employees who would have been eligible to participate; 2) has any leased
employees within the meaning of Code Section 414(n)(2); 3) is a governmental or
tax-exempt entity; 4) has eligible Employees whose taxable year is not the
calendar year; 5) has less than 50% of the Employees that are eligible to make
Elective Deferrals elect to have Elective Deferrals made to the Plan. No part of
this prototype document may be used if the Employer currently maintains or has
ever maintained a defined benefit pension plan which is now terminated. The
Employer's SARSEP shall contain the following terms and conditions:
ARTICLE I
DEFINITIONS
1.1 ADOPTION AGREEMENT The document attached hereto by which the Employer
elects to establish a qualified Salary Reduction Simplified Employee Pension
Plan under the terms of this Prototype Plan.
1.2 CODE The Internal Revenue Code of 1986, including any amendment thereto.
1.3 COMPENSATION The total wages, salaries, fees (for professional services)
and other taxable remuneration (without regard to whether or not an amount is
paid in cash) paid to a Participant from the Employer which are includible in
the Participant's gross income for the taxable year, as defined within the
meaning of Code Section 415(c)(3). Compensation does not include:
(a) Contributions to this plan or any other plan of deferred
compensation; and
(b) Amounts realized from the exercise of a nonqualified stock option,
or when restricted stock becomes freely transferable or is no longer subject to
a substantial risk of forfeiture; and
(c) Amounts realized from the disposition of stock acquired under a
qualified stock option; and
(d) Amounts received as a pension or annuity.
When applicable to a Self-Employed Individual, Compensation shall mean
Earned Income. With respect to any Plan Year, Compensation will be limited to
the first $150,000 of Compensation [or such higher amount determined in
accordance with Code Section 408(k)(3)(C)]. If a Plan determines Compensation
on a period of time that contains fewer than 12 calendar months, then the annual
compensation limit is an amount equal to the annual compensation limit for the
calendar year in which the Compensation period begins multiplied by the ratio
obtained by dividing the number of full months in the period by 12.
1.4 CUSTODIAN BOSTON SAFE DEPOSIT & TRUST or any successor thereto.
1.5 DEFERRAL PERCENTAGE LIMITATION Deferral Percentage Limitation is the
maximum amount of Elective Deferrals, expressed as a percentage of Compensation,
that can be contributed on behalf of any Highly Compensated Employee for a
particular Plan Year. This limitation equals the product of the average of the
Elective Deferrals (expressed as a percentage of each such Employee's
Compensation) made on behalf of each non-highly compensated employee for the
same Plan Year, multiplied by 1.25.
In calculating this average, the percentage for an eligible non-highly
compensated Employee who chooses not to have Elective Deferrals made on his or
her behalf for a Plan Year, is zero. The determination of the deferral
percentage for any Employee is to be made in accordance with Code Section
408(k)(6) and such other requirements as may be provided by the Secretary of
the Treasury. In addition, for purposes of determining the deferral percentage
of a Highly Compensated Employee, the Elective Deferrals and Compensation of
the Employee will also include the Elective Deferrals and Compensation of
any Family Member. This special rule applies, however, only if the Highly
Compensated Employee owns more than 5% of the Employer or is one of the ten
most highly-paid employees. The Elective Deferrals and Compensation of Family
Members used in this special rule do not count in computing the average of the
deferral percentages of non-highly compensated Employees.
1.6 EARNED INCOME Net earnings from self-employment in the trade or business
with respect to which the Plan is established, determined without regard to
items not included in gross income and the deductions allocable to such items,
provided that personal services of the individual are a material income
producing factor. Earned Income shall be reduced by contributions made by an
Employer to a qualified plan, including this Plan, to the extent deductible
under Code Section 404. Earned Income shall also be reduced by one-half of the
self employed's social security taxes.
1.7 EFFECTIVE DATE The date on which the Employer's Plan commences or an
amendment becomes effective. The Effective Date of the Elective Deferral
provisions shall be designated by the Employer in the Adoption Agreement.
1.8 ELECTIVE DEFERRAL(s) Employer contributions made to the Plan at the
election of the Participant, in lieu of cash Compensation, pursuant to a Salary
Savings Agreement or other deferral mechanism, such as a cash option
contribution. With respect to any taxable year, a Participant's Elective
Deferral is the sum of all Employer contributions made on behalf of such
Participant pursuant to an election to defer under any of the following: a
qualified cash or deferred arrangement as described in Code Section 401(k);
this Plan or any other simplified employee pension cash or deferred
arrangement described in Code Section 402(h)(1)(B); an eligible deferred
compensation plan under Code Section 457; and a plan described in Code Section
501(c)(18). Also included are any Employer contributions made on the behalf of
Participant for the purchase of an annuity contract under Code Section 403(b)
pursuant to a Salary Savings Agreement.
1.9 EMPLOYEE Any person employed by the Employer (including Self-Employed
Individuals and partners), all Employees of a member of an affiliated service
group [as defined in Code Section 414(m)], Employees of a controlled group of
corporations [as defined in Code Section 414(b)], Employees of any incorporated
or unincorporated trade or business which is under common control [as defined in
Code Section 414(c)], and all leased Employees who are not Employees of the
Employer but are required to be treated as Employees of the Employer under
section 414(n), and all Employees required to be aggregated under section
414(o) of the Code. All such Employees shall be treated as employed by a
single Employer.
1.10 EMPLOYER Any corporation, partnership, or proprietorship which adopts
this prototype plan, including any entity which succeeds the Employer and adopts
this Plan.
1.11 FAMILY MEMBER An Employee who is related to a Highly Compensated
Employee as a spouse, or as a lineal ascendant (such as a parent or grandparent)
or descendant (such as a child or grandchild) or spouse of either of those, in
accordance with Code Section 414(q) and the regulations thereunder. Family
membership is only applicable to Highly Compensated Employees who either own
more than 5% of the Employer or are one of the ten most highly compensated
Employees.
1.12 HIGHLY COMPENSATED EMPLOYEE An individual described in Code Section
414(q) who, during the current or preceding Plan Year:
(a) Was a 5% owner as defined in Code Section 416(i)(1)(B)(i);
(b) Received Compensation in excess of $50,000, as adjusted pursuant to
Code Section 415(d), and was in the top-paid group (the top 20% of Employees
ranked by Compensation);
(c) Received Compensation in excess of $75,000, as adjusted pursuant to
Code Section 415(d); or
(d) Was an officer as defined in Code Section 416(i)(1)(A) and received
Compensation in excess of 50% of the dollar limit on annual benefits payable
under Code Section 415 for defined benefit plans.
1.13 INDIVIDUAL RETIREMENT ACCOUNT AIM Distributors, Inc. Individual
Retirement Account which meets the requirements of Code Section 408(a)
established in conjunction with the Employer's Plan (IRA), as the recipient
of the Employer's contributions for the benefit of a participating Employee.
1.14 KEY EMPLOYEE Any Employee or former Employee [and the beneficiaries of
these Employees] who, at any time during the current Plan Year and the four
preceding Plan Years, was:
(a) An officer of the Employer [if the Employee's Compensation exceeds
50% of the limit under Code Section 415(b)(1)(A)];
(b) An owner of one of the ten largest interests in the Employer [if the
Employee's Compensation exceeds 100% of the limit under Code Section
415(c)(1)(A) and the ownership interest exceeds 1/2% of the Employer];
(c) A 5% owner of the Employer as defined in Code Section
416(i)(1)(B)(i)]; or
(d) A 1% owner of the Employer [if the Employee has Compensation in
excess of $150,000].
1.15 OWNER-EMPLOYEE A sole proprietor or partner owning more than 10% of
either the capital or profits interest of the partnership.
17
<PAGE> 4
1.16 PARTICIPANT Any Employee of the Employer who is participating in the
Plan.
1.17 PLAN The Simplified Employee Pension Plan with salary reduction
provisions as embodied herein.
1.18 PLAN ADMINISTRATOR The Employer is the Plan's named fiduciary and Plan
Administrator.
1.19 PLAN YEAR The 12-consecutive month period designated by the Employer in
the Adoption Agreement.
1.20 SALARY SAVINGS AGREEMENT A written agreement between the Employer and a
participating Employee where the Employee authorizes the Employer to withhold a
specified percentage of his or her Compensation for deposit to the Plan on
behalf of such Employee.
1.21 SARSEP A Simplified Employee Pension Plan (SEP) in which a
participating Employee may make an election through a Salary Savings Agreement
to have a portion of his or her salary deferred and have the Employer contribute
the entire amount of deferred salary to an IRA on his or her behalf.
1.22 SELF-EMPLOYED INDIVIDUAL An individual who has Earned Income for the
taxable year from the trade or business for which the Plan is established
including an individual who would have had Earned Income but for the fact that
the trade or business had no net profits for the taxable year.
1.23 SEP-IRA The Individual Retirement Account established to receive the
Employer's contributions for the benefit of each participating Employee.
1.24 SPONSOR The institution whose name appears on the cover hereof.
1.25 TAXABLE WAGE BASE The maximum amount of earnings which may be
considered wages at the beginning of the Plan Year under Section 230 of the
Social Security Act.
1.26 TAXABLE YEAR The taxable year of an Employer for Federal income tax
purposes.
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 PARTICIPATION Each Employee of the Employer shall automatically become a
Participant under the Plan as of the first day of the Plan Year during which
such Employee meets the eligibility requirements selected by the Employer in the
Adoption Agreement. Employees shall not be permitted to authorize Elective
Deferrals until the individual satisfies the Plan's eligibility requirements. In
the event an Employee who is not a member of the eligible class of Employees
becomes a member of the eligible class, such Employee shall participate
immediately if such Employee has satisfied the minimum age and service
requirements and would have become a Participant had he or she been in the
eligible class. A former Participant shall again become a Participant
immediately upon returning to the employ of the Employer.
2.2 MAXIMUM AGE The Plan shall not exclude Employees who have attained age
70 1/2, provided such Employees meet the eligibility requirements in the
Adoption Agreement.
2.3 EMPLOYMENT RIGHTS Participation in the Plan shall not confer upon a
Participant any employment rights, nor shall it interfere with the Employer's
right to terminate the employment of any Employee at any time.
2.4 WITHDRAWAL OF CONTRIBUTIONS Participation in the Plan shall not be
terminated, suspended, or in any way affected, if a Participant withdraws all or
any part of his or her IRA. This Plan shall not impose any prohibition on a
Participant's right to make withdrawals from his or her IRA.
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 AMOUNT Prior to the close of each Plan Year, the Employer shall
determine in writing the amount of its contribution for such Plan Year. This is
in addition to any amount contributed pursuant to Salary Savings Agreements with
the Participants. The Employer's contribution shall be discretionary and the
Employer shall be under no obligation to contribute each year. The Employer may
make a contribution even if no Elective Deferrals are contributed for such year.
Contributions to the SEP are deductible by the Employer for the Taxable Year
with or within which the Plan Year of the SEP ends. Contributions made for a
particular Taxable Year and contributed by the due date of the Employer's income
tax return, including extensions, are deemed made in that Taxable Year.
3.2 LIMITATIONS ON ALLOCATIONS The Employer's contribution (including Salary
Savings Agreement amounts) when allocated to eligible Participants for any Plan
Year shall not exceed the lesser of 15% of each Participant's Compensation or
$30,000 [as indexed under Code Section 415]. In addition, the Employer's
contribution shall also bear a uniform relationship to the total Compensation
of each Participant. For purposes of the preceding sentence, the Employer's
contribution to the Old Age, Survivors and Disability Insurance program may be
considered as part of the Employer's contribution. Employer contributions to
the Old Age, Survivors and Disability Insurance Program may not be considered
under this Plan if it is considered under any other plan of the Employer.
3.3 ALLOCATION FORMULAS The Employer's contribution shall be allocated among
eligible Participants in accordance with one of the formulas provided below.
Employees and former Employees employed by the Employer at any time during the
Plan Year, who met the eligibility requirements at any time during the Plan
Year, shall share in the Employer's contribution for such Plan Year, even though
no longer employed. The Employer's contribution shall automatically be allocated
in accordance with paragraph (a) unless paragraph (b) is selected in the
Adoption Agreement.
(a) PROPORTIONATE ALLOCATION The Employer's contribution for each Plan
Year shall be allocated to the IRA of each eligible Employee in the same portion
as such Employee's Compensation [not in excess of $150,000 as adjusted for
inflation under Code Section 401(a)(17)] for such Plan Year bears to all
eligible Employees' Compensation for that year.
(b) INTEGRATED ALLOCATION The Employer's contribution for the Plan Year
shall be allocated to each eligible Participant (using his or her Compensation
earned during the Plan Year) as follows:
(i) First, to the extent contributions are sufficient, all
Participants will receive an allocation equal to 3% of their Compensation.
(ii) Next, any remaining Employer Contributions will be allocated to
Participants who have Compensation in excess of the Taxable Wage Base (excess
Compensation) as in effect at the beginning of the Plan Year. Each such
Participant will receive an allocation in the ratio that his or her excess
Compensation bears to the excess Compensation of all Participants. Participants
may only receive an allocation of 3% of excess Compensation.
(iii) Next, any remaining Employer contributions will be allocated
to all Participants in the ratio that their Compensation plus excess
Compensation bears to the total Compensation plus excess Compensation of all
Participants. Participants may only receive an allocation of up to 2.7% of their
Compensation plus excess Compensation, under this allocation method.
NOTE: If the Plan is not Top-Heavy or if the Top-Heavy minimum contribution or
benefit is provided under another Plan [see Section 8 of the Adoption
Agreement] covering the same Employees, sub-paragraphs (i) and (ii) above may
be disregarded and 5.7% may be substituted for 2.7% where it appears in (iii)
above.
(iv) Next, any remaining Employer contributions will be allocated to
all Participants in the ratio that each Participant's Compensation bears to all
Participants' Compensation.
3.4 RESPONSIBILITY FOR CONTRIBUTIONS The Sponsor shall not be required to
determine if the Employer has made a contribution or if the amount contributed
is in accordance with the Adoption Agreement or the Code. The Employer shall
have sole responsibility in this regard.
ARTICLE IV
EMPLOYEE ELECTIVE DEFERRALS
4.1 ELECTIVE DEFERRAL REQUIREMENTS Elective Deferrals shall only be
permitted for Plan Years in which:
(a) Not less than 50% of the Participants elect to make Elective
Deferrals to the SEP-IRA on their behalf; and
(b) The Employer had no more than 25 Employees at all times during the
prior Plan Year who were eligible to participate in the Plan.
4.2 SALARY SAVINGS AGREEMENT An Employee may elect to have Elective
Deferrals made under this Plan through either a lump sum or continuing Elective
Deferrals, or both, pursuant to his or her Salary Savings Agreement. The amount
of Elective Deferrals may not exceed the percentage or dollar amount specified
in the Employer's Adoption Agreement. Under no circumstances may an Employee's
Elective Deferrals in any calendar year exceed the lesser of:
(a) Fifteen percent of the Employee's Compensation determined without
including the SEP-IRA contributions, (13.0435% of Compensation plus Elective
Deferrals), or
(b) $7,000 as adjusted for inflation at the beginning of such taxable
year. This amount may be reduced if a Participant contributes pre-tax
contributions to qualified plans of this or other Employers.
4.3 TIMING OF ELECTIVE DEFERRALS Elective Deferrals may not be based on
Compensation an Employee has received, or had a right to receive, prior to the
execution of the Employee's Salary Savings Agreement. A Participant may amend
his or her Salary Savings Agreement to increase, decrease or terminate the
Elective Deferral percentage upon written notice to the Employer. Such increase,
decrease or termination shall be effective as soon as reasonably possible, but
in any event within 90 days of written notice. If a Participant terminates his
or her Elective Deferrals, such Participant shall not be permitted to put a new
Salary Savings Agreement into effect until after 90 days. The Employer may also
amend or terminate said agreement on written notice to the Participant to insure
the Plan's qualified status. If a Participant has not authorized the Employer to
withhold at the maximum rate and desires to increase the total withheld for a
Plan Year, such Participant may authorize the Employer to withhold a
supplemental amount up to 100% of his or her Compensation for one or more pay
periods. In no event may the sum of the amounts withheld under the Salary
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<PAGE> 5
Savings Agreement plus the supplemental withholding exceed 15% of a
Participant's Compensation for a Plan Year (net of the Elective Deferrals).
The Employer agrees to deposit Elective Deferrals with the Sponsor for credit
to Participant IRAs within 30 days after being withheld from the Participant's
Compensation.
4.4 CASH BONUS OPTION If permitted by the Employer in the Adoption
Agreement, an Employee may base Elective Deferrals on cash bonuses during the
year that, at the Employee's election, may be contributed to the SEP-IRA or
received by the Employee in cash.
4.5 DISALLOWED ELECTIVE DEFERRALS If the 50% requirement in paragraph
4.1(a) is not satisfied as of the end of any Plan Year, all the Elective
Deferrals made by Employees for that Plan Year shall be considered disallowed
Elective Deferrals.
4.6 NOTIFICATION OF DISALLOWED ELECTIVE DEFERRALS The Employer shall notify
each affected Participant, within 2 1/2 months after the end of the Plan Year to
which the disallowed Elective Deferrals relate, that the deferrals are no longer
considered SARSEP contributions. Such notification shall specify the amount of
the disallowed Elective Deferrals and the Participant's calendar year in which
they are includible in income. Additionally, the notice must provide an
explanation of the applicable penalties if the disallowed Elective Deferrals are
not withdrawn in a timely fashion. The notice to each affected Participant shall
state the following:
(a) The amount of the disallowed Elective Deferral;
(b) That the disallowed Elective Deferrals are includible in the
Participant's gross income for the calendar year or years in which the amounts
deferred would have been received by the Participant in cash had she or he not
made the election to defer, and that the income allocable to such disallowed
Elective Deferrals is includible in the Participant's gross income in the year
withdrawn from the SEP-IRA; and
(c) That the Participant must withdraw the disallowed Elective Deferrals
and allocable income from the SEP-IRA by the April 15 following the calendar
year of notification by the Employer. Disallowed Elective Deferrals not
withdrawn by the April 15 following the calendar year of notification will be
subject to the IRA contribution limitations of Code Section 219 and Section 408
and may be considered excess contributions to the Participant's IRA. Disallowed
Elective Deferrals may be subject to the six percent tax on excess
contributions under Code Section 4973. If income allocable to a disallowed
Elective Deferral is not withdrawn by April 15 following the year of
notification by the Employer, the income may be subject to the ten percent tax
on early distributions under Code Section 72(t) when withdrawn.
4.7 REPORTING Disallowed Elective Deferrals are reported for tax purposes in
the same manner as excess SEP contributions.
ARTICLE V
ACCOUNTS OF PARTICIPANTS
5.1 INDIVIDUAL RETIREMENT ACCOUNT Each Employee, upon becoming a Participant
under the Plan, shall establish an IRA with the Sponsor. The Employee or Sponsor
shall furnish an account number to the Employer certifying the existence of such
account.
5.2 DETERMINATION OF DEPOSIT When making a contribution to the Plan, the
Employer shall calculate each Participant's proportionate share of the
Employer's contribution as determined in the Adoption Agreement. The Employer
shall then deliver the contribution to the Sponsor indicating the amount to be
credited to each Participant's SEP-IRA.
5.3 CONTROL OF ACCOUNT All contributions made under the Plan by the Employer
shall be irrevocable. After allocation to a Participant's SEP-IRA, the Employer
shall have no further control of such contribution and the terms of the
Participant's IRA shall be fully effective.
5.4 ALLOCATION OF ELECTIVE DEFERRALS The Employer shall contribute to each
Employee's SEP-IRA the amount of the Elective Deferrals designated in his or her
Salary Savings Agreement.
ARTICLE VI
LIMITATIONS ON CONTRIBUTIONS
6.1 LIMITATIONS ON ELECTIVE DEFERRALS A Participant's Elective Deferrals may
be limited to the extent necessary to satisfy the maximum contribution
limitations under Code Section 415(c)(1)(A) if the Employer maintains any
other SEP or any qualified plan to which contributions are made for such Plan
Year.
6.2 OVERALL LIMITATIONS ON CONTRIBUTIONS In addition to the dollar
limitation of Code Section 415(c)(1)(A) ($30,000 in 1991), contributions to this
Plan, when aggregated with contributions to all other SEPs and contributions
plus forfeitures under other qualified defined contribution plans of the
Employer, generally may not exceed 25% of Compensation for any Employee. If
these limits are exceeded on behalf of any Employee for a particular Plan Year,
that Employee's Elective Deferrals for that year must be reduced to the extent
of the excess.
6.3 LIMITATIONS FOR HIGHLY COMPENSATED EMPLOYEES Elective Deferrals by a
Highly Compensated Employee must satisfy the Deferral Percentage Limitation
under Code Section 408(k)(6) and paragraph 1.4 herein. Amounts in excess of the
Deferral Percentage Limitation will be deemed excess SEP contributions on behalf
of the affected Highly Compensated Employee.
6.4 NOTIFICATION OF EXCESS SEP CONTRIBUTIONS The Employer shall notify each
affected Participant, within 2 1/2 months following the end of the Plan Year to
which the excess SEP contributions relate, of any excess SEP contributions to
the Participant's SEP-IRA for the applicable year. Such notification shall
specify the amount of the excess SEP contributions and the calendar year in
which the contributions are includible in income and must provide an explanation
of applicable penalties if the excess contributions are not withdrawn in a
timely fashion.
6.5 NOTIFICATION REQUIREMENTS The notification to each affected Participant
of excess SEP contributions must specifically state in a manner calculated to be
understood by the average Employee:
(a) The amount of the excess SEP contributions attributable to the
Participant's Elective Deferrals;
(b) The calendar year in which the excess SEP contributions are
includible in gross income; and
(c) That the Participant must withdraw the excess SEP contributions (and
allocable income) from the SEP-IRA by April 15 following the year of
notification by the Employer. Those excess contributions not withdrawn by April
15 following the year of notification will be subject to the IRA contribution
limitations of Code Section 219 and Section 408 for the preceding calendar year
and thus may be considered an excess contribution to the Participant's IRA.
Such excess contributions may be subject to the six percent tax on excess
contributions under Code Section 4973. If income allocable to an excess SEP
contribution is not withdrawn by April 15 following the year of notification by
the Employer, the income may be subject to the ten percent tax on early
distributions under Code Section 72(t) when withdrawn.
6.6 EXCESS SEP CONTRIBUTIONS INCLUDIBLE IN INCOME Excess SEP contributions
are includible in the participating Employee's gross income on the earliest
dates any Elective Deferrals made on behalf of the Employee during the Plan Year
would have been received by the Employee had he or she originally elected to
receive the amounts in cash. However, if the excess SEP contributions (not
including allocable income) total less than $100, then the excess contributions
are includible in the Employee's gross income in the year of notification.
Income allocable to the excess SEP contributions is includible in the year of
withdrawal from the IRA.
6.7 EXCISE TAXES AND PENALTIES If the Employer fails to notify any of the
affected Employees within 2 1/2 months following the end of the Plan Year of an
excess SEP contribution, the Employer must pay a tax equal to 10% of the excess
SEP contribution. If the Employer fails to notify employees by the end of the
Plan Year following the Plan Year in which the excess SEP contributions arose,
the SEP no longer will be considered to meet the requirements of Code Section
408(k)(6) and contributions in the Employee's IRA will be subject to the IRA
contribution limitations and thus may be considered excess contributions to the
Employee's IRA.
6.8 WITHDRAWAL RESTRICTIONS The Employer shall notify each Participant who
makes an Elective Deferral for a Plan Year that, notwithstanding the prohibition
on withdrawal restrictions contained elsewhere in this Plan, any amount
attributable to such Elective Deferrals which is withdrawn or transferred before
the earlier of 2 1/2 months after the end of the particular Plan Year or the
date the Employer notifies its Employees that the Deferral Percentage
Limitations have been calculated, will be includible in income and possibly
subject to an early penalty tax.
ARTICLE VII
TOP-HEAVY RULES
7.1 TOP-HEAVY MINIMUM CONTRIBUTION Each Plan Year for which the Plan is Top
Heavy under Code Section 416, each non-key Employee shall receive an allocation
of Employer contributions equal to the lesser of 3% of Compensation or the
percentage of Compensation allocated to the Key Employee receiving the highest
percentage allocation. The Top-Heavy minimum contribution shall be satisfied
under this Plan unless the Employer designates another plan in the Adoption
Agreement.
7.2 CONTRIBUTIONS COUNTED TOWARDS MINIMUM For purposes of satisfying the
minimum contribution requirement under Code Section 416, only Employer
contributions shall be taken into account. Employee Elective Deferrals shall
not be considered.
7.3 TOP-HEAVY DETERMINATION This Plan is Top-Heavy for a Plan Year if, as of
the last day of the previous Plan Year (or current Plan Year if this is the
first year of the Plan) the total of elective and non-elective contributions
made on behalf of Key Employees for all years this Plan has been in existence
exceeds 60% of such contributions for all Employees who were eligible to
participate. If the Employer maintains (or maintained within the prior five
years) any other SEP or defined contribution plan in which a Key Employee
participates (or participated), the contributions or account balances, whichever
is applicable, must be aggregated with the contributions made to this Plan. The
contributions (and
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<PAGE> 6
account balances, if applicable) of an Employee who ceases to be a Key Employee
or of an individual who has not been in the employ of the Employer for the
previous five years shall be disregarded. The identification of Key Employees
and the Top-Heavy calculation shall be determined in accordance with Code
Section 416 and the regulations thereunder.
ARTICLE VIII
ADMINISTRATION
8.1 PLAN ADMINISTRATOR The Employer shall be the Plan's named fiduciary and
shall serve as Plan Administrator. As Plan Administrator, the Employer shall:
(a) Carry out the provisions of the Plan including determining
eligibility of Employees, allocating contributions, and interpreting the Plan
when necessary,
(b) Deliver all contributions to the Sponsor showing the amount to be
allocated to each Participant's IRA,
(c) Communicate with Employees regarding their participation and
benefits under the Plan,
(d) Advise Employees in writing of all contributions to their IRAs, and
(e) Perform any other duties required of the Plan Administrator.
8.2 SPONSOR The Sponsor shall be depository for individual IRAs established
by Plan Participants. As depository, the Sponsor shall:
(a) Accept for deposit contributions transmitted by the Employer. The
Sponsor need not verify the amount of the contributions received or the amounts
allocated to individual IRAs provided that no contribution for an individual IRA
exceeds the lesser of $30,000 as indexed or 15% of the individual's Compensation
for the Plan Year, and
(b) Administer each individual IRA in accordance with the provisions of
the Sponsor's IRA document.
ARTICLE IX
AMENDMENT AND TERMINATION
9.1 AMENDMENT BY SPONSOR The Sponsor may amend or terminate any or all
provisions of this prototype plan at any time without obtaining the approval or
consent of any Employer or Participant, provided that no amendment shall
authorize or permit any part of an Employer's contribution to be used for or
diverted to purposes other than for the exclusive benefit of Participants. The
Sponsor will inform each adopting Employer of any amendments to or termination
of the prototype SARSEP.
9.2 QUALIFICATION OF PROTOTYPE The Sponsor intends that this Plan will meet
the requirements of Code Section 408(k)(6) and the regulations thereunder as a
qualified Salary Reduction Simplified Employee Pension Plan. Should the
Commissioner of Internal Revenue or any delegate of the Commissioner at any time
determine that the Plan fails to meet the requirements of said Code
Section 408(k)(6), the Sponsor will amend the Plan so as to maintain its
qualified status.
9.3 AMENDMENT BY EMPLOYER The Employer may amend any option elected in the
Adoption Agreement provided that no amendment shall authorize or permit any part
of the Employer's contribution to be used for or diverted to purposes other than
for the exclusive benefit of Participants. If the Employer amends the Adoption
Agreement other than within the available options, the Employer may no longer
participate in this Plan.
9.4 TERMINATION The Employer may terminate its Plan at any time by filing
written notice with the Sponsor. In such event, the Sponsor shall continue to
administer each Participant's IRA as provided under the IRA agreement. The
Sponsor may also terminate the prototype upon written notice to the Employer.
ARTICLE X
GOVERNING LAW
Construction, validity and administration of the prototype plan, and any
Employer Plan as embodied in the prototype document and accompanying Adoption
Agreement, shall be governed by Federal law to the extent applicable and, to the
extent not applicable, by the laws of the State/Commonwealth in which the
principal office of the Sponsor is located.
<TABLE>
<S> <C>
INTERNAL REVENUE SERVICE Department of the Treasury
Prototype SEP with Salary Reduction Feature 002
FFN: 50441601900-002 Case: 9580093 EIN: 74-1894784 Washington, D.C. 20224
Letter Serial No. C410671b
AIM DISTRIBUTORS INC. Person to Contact: Ms. Arrington
11 GREENWAY PLAZA SUITE 1919 Telephone Number: (202) 622-8173
HOUSTON, TEXAS 77046 Refer Reply to: CP:E:EP:T1
Date: 11-13-95
</TABLE>
Dear Applicant:
In our opinion, the amendment to the form of your Simplified Employee Pension
(SEP) arrangement does not adversely affect its acceptability under section
408(k) of the Internal Revenue Code. This SEP arrangement is approved for use
only in conjunction with an Individual Retirement Arrangement (IRA) which meets
the requirements of Code section 408 and has received a favorable opinion
letter, or a model IRA (Forms 5308 and 5305-A).
Employers who adopt this approved plan will be considered to have a retirement
savings program that satisfies the requirements of Code section 408 provided
that it is used in conjunction with an approved IRA. Please provide a copy of
this letter to each adopting employer.
Code section 408(l) and related regulations require that employers who adopt
this SEP arrangement furnish employees in writing certain information about this
SEP arrangement and annual reports of savings program transactions.
Your program may have to be amended to include or revise provisions in order to
comply with future changes in the law or regulations.
If you have any questions concerning IRS processing of this case, call us at the
above telephone number. Please refer to the Letter Serial Number and File Folder
Number shown in the heading of this letter. Please provide those adopting this
plan with your phone number, and advise them to contact your office if they have
any questions about the operation of this plan.
You should keep this letter as a permanent record. Please notify us if you
terminate the term of this plan.
Sincerely yours,
/s/ [ILLEGIBLE]
-----------------------------------------
Chief, Employee Plans Technical Branch 1
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<PAGE> 7
[AIM LOGO APPEARS HERE]
Form 5305-A (Rev. October 1992) Department of the Treasury
Internal Revenue Service
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
(under Section 408(a) of the Internal Revenue Code)
A I M DISTRIBUTORS, INC. CUSTODIAN AGREEMENT
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. NO PART OF THE CUSTODIAL FUNDS may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. NO PART OF THE CUSTODIAL FUNDS may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3) which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.
ARTICLE IV
1. NOTWITHSTANDING ANY PROVISION of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section 1.401(a)
(9)-2, the provisions of which are incorporated by reference.
2. UNLESS OTHERWISE ELECTED by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. THE DEPOSITOR'S ENTIRE INTEREST in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date (April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last survivor lives of
the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. IF THE DEPOSITOR DIES before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her
interest has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the Depositor or,
if the Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over
the life expectancy of the designated beneficiary or beneficiaries starting by
December 31, of the year following the year of the Depositor's death. If,
however, the beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced distributions are treated as having begun on the Depositor's required
beginning date, even though payments may actually have been made before that
date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
5. IN THE CASE OF DISTRIBUTION over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the Custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of distribution in accordance with paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. THE OWNER OF TWO OR MORE INDIVIDUAL RETIREMENT ACCOUNTS may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524 to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. THE DEPOSITOR AGREES to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408.6.
2. THE CUSTODIAN AGREES to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
ARTICLE VIII
1. PURSUANT TO THE TERMS of this A I M Distributors, Inc. Individual
Retirement Custodial Account Agreement and the related IRA Account Application
(referred to herein as the "IRA Adoption Agreement") (such Agreements being
collectively referred to herein as the "Agreement"), the Depositor directs the
Custodian to invest all custodial account funds after deductions for sales
charges and Custodian fees, in shares issued by the investment company or
companies selected by the Depositor on the related IRA Adoption Agreement, until
the Depositor hereafter gives the Custodian contrary instructions pursuant to
Article XIII below. The investment companies from which the Depositor may select
are enumerated on the applicable list prepared by A I M Distributors, Inc. (the
21
<PAGE> 8
"Distributor"), a copy of which accompanies the Adoption Agreement. Such
investment companies are part of "The AIM Family of Funds," which are managed
or advised by subsidiaries of A I M Management Group Inc., and any such
investment company will hereafter be referred to as "Investment Company."
2. (i) ANNUAL CASH CONTRIBUTIONS:
The Depositor may make annual cash contributions to the account within the
limits specified in Article I. All contributions shall be hand delivered or
mailed to the Custodian by the Depositor, with an indication of the taxable year
to which such contribution relates. Additionally, if the Depositor's employer
maintains a qualified simplified employee pension (SEP), such employer may
contribute on behalf of the Depositor, the lesser of 15% of the Depositor's
compensation from such employer or $30,000.
(ii) ROLLOVER CONTRIBUTIONS:
In addition to any annual contributions referred to in Paragraph (i) above,
but subject to this Paragraph (ii), the Depositor may contribute to the account,
at any time, a rollover contribution of such cash or other property as shall
constitute a rollover amount or contribution under section 402(a)(5), 402(a)(7),
403(a)(4), 403(b)(8) or 408(d)(3) of the Code. The Custodian will accept for the
account all rollover contributions which consist of cash, and it may, but shall
be under no obligation to, accept any other rollover contribution. In the case
of rollover contributions composed of assets other than cash, the prospective
Depositor shall provide the Custodian with a description of such assets and such
other information as the Custodian may reasonably require. The Custodian may
accept all or any part of such a rollover contribution if it determines that the
assets of which such contribution consists are either in a medium proper for
investment hereunder or that the assets can be promptly liquidated for cash.
The Depositor warrants that any rollover contribution to the account
consists of cash, the same property received in the distribution or, in the case
of amounts distributed to the Depositor from a qualified employer's plan or
annuity, the proceeds from the sale of the same property received in the
distribution. The Depositor also warrants that in the case of a rollover into
the account of amounts distributed to the Depositor from a qualified employer's
plan or annuity, only amounts in excess of the amounts considered to be the
Depositor's employee contributions included in such distribution constitute the
contribution to this account. Additionally, the Depositor affirms that the
contribution to the account does not consist of amounts received from an
inherited individual retirement account or annuity. An individual retirement
account or annuity shall be treated as inherited if it was acquired by reason of
the death of an individual other than the Depositor's spouse. The Depositor also
affirms that in the case of a rollover into the account of amounts distributed
from an individual retirement account or annuity or retirement bond, he has not
during the one year period ending on the date of the distribution received any
other distribution from an individual retirement account or annuity or
retirement bond which constituted a rollover contribution (as described in
section 408(d)(3) of the Code).
3. THE DEPOSITOR SHALL BE FULLY AND SOLELY RESPONSIBLE for all taxes,
interest and penalties which might accrue or be assessed by reason of any excess
deposit, and interest, if any, earned thereon. Any contributions made by or on
behalf of the Depositor in respect of a taxable year of the Depositor shall be
made by or on behalf of the Depositor to the Custodian for deposit in the
custodial account within the time period for claiming any income tax deduction
for such taxable year. It shall be the sole responsibility of the Depositor to
determine the amount of the contributions made hereunder. The Depositor shall
execute such forms as the Custodian may require in connection with any
contribution hereunder.
ARTICLE IX
1. THE CUSTODIAN SHALL from time to time, subject to the provisions of
Articles IV and V, make distributions out of the custodial account to the
Depositor, in such manner and amounts as may be specified in written
instructions of the Depositor. All such instructions shall be deemed to
constitute a certification by the Depositor that the distribution so directed is
one that the Depositor is permitted to receive. A declaration of the Depositor's
intention as to the disposition of an amount distributed pursuant to Article V
hereof shall be in writing and given to the Custodian. The Custodian shall have
no liability with respect to any contribution to the custodial account, any
investment of assets in the custodial account or any distribution therefrom
pursuant to instructions received from the Depositor or pursuant to this
Agreement, or for any consequences to the Depositor arising from such
contributions, investments or distributions including, but not limited to,
excise and other taxes and penalties which might accrue or be assessed by reason
thereof, nor shall the Custodian be under any duty to make any inquiry or
investigation with respect thereto.
2. IF THE DEPOSITOR IS DISABLED (as defined in Section 72(m) of the Code),
all or a portion of the balance in the custodial account may be distributed to
him/her as soon as practicable after the Custodian receives written notice of
the Depositor's disability and a written request for distribution. The Custodian
may require such proof of disability as it deems necessary prior to the time
that amounts are distributed to the Depositor due to such disability.
3. THE DEPOSITOR SHALL BE fully and solely responsible for all taxes and
penalties which might accrue or be assessed for having failed to make the annual
minimum withdrawal required in any year.
ARTICLE X
A Depositor shall have the right to designate a beneficiary or beneficiaries
to receive any amounts remaining in his account in the event of his death. Any
prior beneficiary designation may be changed or revoked at any time by a
Depositor by written designation signed by the Depositor on a form acceptable
to, and filed with, the Custodian; provided, however, that such designation, or
change or revocation of a prior designation shall not become effective until it
has been received by the Custodian, nor shall it be effective unless received by
the Custodian no later than thirty days before the death of the Depositor, and
provided further that the last such designation of beneficiary or change or
revocation of beneficiary executed by the Depositor, if received by the
Custodian within the time specified, shall control. Unless otherwise provided in
the beneficiary designation, amounts payable by reason of the Depositor's death
will be paid in equal shares only to the primary beneficiary or beneficiaries
who survive the Depositor, or, if no primary beneficiary survives the Depositor,
to the contingent beneficiary or beneficiaries who survive the Depositor. If the
Depositor had not, by the date of his death, properly designated a beneficiary
in accordance with the preceding sentences, or if no designated beneficiary
survives the Depositor, then the Depositor's beneficiary shall be the
Depositor's surviving spouse, or if there is no surviving spouse, the
Depositor's estate.
ARTICLE XI
1. ANY ADMINISTRATIVE OR OTHER FEES of the Custodian and its agents for
performing duties pursuant to this Agreement shall be in such amount as shall be
established from time to time. The Depositor agrees to pay the Custodian the
fees specified in its current fee schedule and authorizes the Custodian to
charge the Depositor's custodian account for the amount of such fees.
2. UPON THIRTY DAYS' PRIOR WRITTEN NOTICE, the Custodian may substitute a
new fee schedule. The Custodian's fees, any income, gift, estate and inheritance
taxes and other taxes of any kind whatsoever, including transfer taxes incurred
in connection with the investment or reinvestment of the assets of the custodial
account, that may be levied or assessed in respect of such assets, and all other
administrative expenses incurred by the Custodian in the performance of its
duties including fees for legal services rendered to the Custodian, may be
charged to the custodial account with the right to liquidate Investment Company
shares for this purpose, or at the Custodian's option, shall be billed to the
Depositor directly.
ARTICLE XII
1. THIS AGREEMENT SHALL take effect only when accepted and signed by the
Custodian. As directed, the Custodian shall then open and maintain a separate
custodial account for Depositor and invest the initial contribution hereunder in
shares of the Investment Company. Where the IRA Adoption Agreement is checked
for spousal accounts, separate custodial accounts will be opened and maintained
in each spouse's name. The amounts specified in the IRA Adoption Agreement shall
be credited to each spouse's separate custodial account except that no more than
$2,000 shall be credited to either custodial account.
2. THE CUSTODIAN SHALL invest subsequent contributions as directed. If any
such written instructions are not received as required however, or if received,
are in the opinion of the Custodian unclear, or if the accompanying contribution
exceeds $2,000 for the Depositor and/or $2,000 for the Depositor's spouse, the
Custodian may hold or return all or a portion of the contribution uninvested
without liability for loss of income or appreciation, and without liability for
interest, pending receipt of written instructions or clarification.
3. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, less charges, received on
Investment Company shares held in the custodial account shall (unless received
in additional such shares) be reinvested in shares of the Investment Company,
which shall be credited to the custodial account. If any distribution on such
shares may be received at the election of the Depositor in additional such
shares or in cash or other property, the Custodian shall elect to receive it in
additional Investment Company shares.
4. ALL INVESTMENT COMPANY SHARES ACQUIRED by the Custodian hereunder shall
be registered in the name of the Custodian (with or without identifying the
Depositor) or of its nominees. The Custodian shall deliver, or cause to be
executed and delivered, to the Depositor all notices, prospectuses, financial
statements, proxies and proxy solicitation materials relating to such Investment
Company shares held in the custodial account. The Custodian shall not vote any
Investment Company shares except in accordance with the written instructions
received from the Depositor.
ARTICLE XIII
1. THE CUSTODIAN SHALL keep adequate records of transactions it is required
to perform hereunder. Not later than six months after the close of each calendar
year or after the Custodian's registration or removal pursuant to Article XV
below,
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the Custodian shall render to the Depositor or the Depositor's legal
representative a written report or reports reflecting the transactions effected
by it during such period and the assets and liabilities of the custodial account
at the close of the period. Sixty days after rendering such report(s), the
Custodian shall (to the extent permitted by law) be forever released and
discharged from all liability and accountability to anyone with respect to its
acts and transactions shown in or reflected by such report(s), except with
respect to those as to which the Depositor or the Depositor's legal
representative shall have filed written objections with the Custodian within the
latter such sixty-day period.
2. THE CUSTODIAN SHALL receive and invest contributions as directed by the
Depositor, hold and distribute such investments, and keep adequate records and
reports thereon, all in accordance with this Agreement. The parties do not
intend to confer any other fiduciary duties of the Custodian, and none shall be
implied. The Custodian shall not be liable (and assumes no responsibility) for
the collection of contributions, the deductibility or propriety of any
contribution under this Agreement, or the purposes or propriety of any
distribution from the account, which matters are the responsibility of the
Depositor or the Depositor's legal representative.
3. THE DEPOSITOR, to the extent permitted by law, shall always fully
indemnify the Custodian and save it harmless from any and all liability
whatsoever which may arise in connection with this Agreement and matters which
it contemplates, except that which arises due to the Custodian's negligence and
willful misconduct. The Custodian shall not be obligated or expected to commence
or defend any legal action or preceding in connection with this Agreement or
such matters unless agreed upon by the Custodian and Depositor or said legal
representative, and unless fully indemnified for so doing to the Custodian's
satisfaction.
4. THE CUSTODIAN MAY conclusively rely upon and shall be protected in acting
upon any written order from the Depositor or the Depositor's legal
representative or any other notice, request, consent, certificate or other
instruments or paper believed by it to be genuine and to have been properly
executed, and as long as it acts in good faith in taking or omitting to take any
other action in reliance thereon.
ARTICLE XIV
1. THE CUSTODIAN MAY resign at any time upon thirty days' notice in writing
to the Depositor, and may be removed by the Depositor at any time upon thirty
days' notice in writing to the Custodian. Upon such resignation or removal, the
Depositor shall appoint a successor custodian to serve under this Agreement.
Upon receipt by the Custodian of written acceptance of such appointment by the
successor custodian, the Custodian shall transfer to such successor the assets
of the custodial account and all necessary records (or copies thereof)
pertaining thereto, provided that (at the Custodian's request) any successor
custodian shall agree not to dispose of any such records without the Custodian's
consent. The Custodian is authorized, however, to reserve such assets as it may
deem advisable for payment of any other liabilities constituting a charge on or
against the assets of the custodial account or on or against the Custodian, with
any balance of such reserve remaining after the payment of all such items to be
paid over to the successor custodian.
2. THE CUSTODIAN SHALL NOT be liable for the acts or omissions of such
successor custodian.
3. THE CUSTODIAN, AND EVERY SUCCESSOR CUSTODIAN appointed to serve under
this Agreement, must be a bank (as defined in Section 408(n) of the Code) or
such other person who qualifies with the Internal Revenue Service to serve in
the manner prescribed by Code section 408(a)(2) and satisfies the Custodian,
upon request, as to such qualification.
4. AFTER THE CUSTODIAN HAS transferred the custodial account assets
(including any reserve balance as contemplated above) to the successor
custodian, the Custodian shall be relieved of all further liability with respect
to this Agreement, the custodial account and the assets thereof.
ARTICLE XV
1. THE CUSTODIAN SHALL terminate the custodial account and pay the proceeds
of the account to the depositor if within thirty days after the resignation or
removal of the Custodian pursuant to Article XV above, the Depositor has not
appointed a successor custodian which has accepted such appointment unless
within that time the Distributor appoints such successor and gives written
notice thereof to the Depositor and the Custodian. The Distributor shall have
the right, but not the duty, to appoint such a successor. Termination of the
custodial account shall be effected by distributing all of the assets therein in
cash or in kind to the Depositor in a lump sum, subject to the Custodian's right
to reserve funds as provided in said Article XV.
2. UPON TERMINATION of the custodial account in any manner provided for in
this Article XVI, this Agreement shall terminate and have no further force and
effect, and the Custodian shall be relieved from all further liability with
respect to this Agreement, the custodial account and all assets thereof so
distributed.
ARTICLE XVI
1. ANY NOTICE FROM THE CUSTODIAN TO THE DEPOSITOR provided for in this
Agreement shall be effective when mailed if sent by first class mail to the
Depositor at the Depositor's last known address as shown on the Custodian's
records. Any notice required or permitted to be given to the Custodian, shall
become effective upon actual receipt by the Custodian at such address as the
Custodian shall provide the Depositor from time to time in writing.
2. THIS AGREEMENT is accepted by the Custodian and shall be construed and
administered in accordance with the laws of The Commonwealth of Massachusetts.
The Custodian and the Depositor hereby waive and agree to waive right to trial
by jury in an action or proceeding instituted in respect to this custodial
account. The Depositor further agrees that the venue of any litigation between
him and the Custodian with respect to the custodial account shall be in the
County of Suffolk, The Commonwealth of Massachusetts.
3. THIS AGREEMENT is intended to qualify under section 408 of the Code as an
Individual Retirement Account and to entitle the Depositor to any retirement
savings deduction which he may qualify for under section 219 of the Code, and if
any provision hereof is subject to more than one interpretation or any term used
herein is subject to more than one construction, such ambiguity shall be
resolved in favor of that interpretation or construction which is consistent
with that intent.
4. ALL PROVISIONS IN THIS AGREEMENT ARE subject to the Code and to
regulations promulgated thereunder. In the event that any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
5. THE CUSTODIAN SHALL have no duties whatsoever except such duties as it
specifically agrees to in writing, and no implied covenants or obligations shall
be read into this Agreement against the Custodian. The Custodian shall not be
liable under this Agreement, except for its own bad faith, gross negligence or
willful misconduct.
6. NO INTEREST, RIGHT OR CLAIM IN OR TO ANY PART of the custodial account or
any payment therefrom shall be assignable, transferable, or subject to sale,
mortgage, pledge, hypothecation, communication, anticipation, garnishment,
attachment, execution, or levy of any kind and the Custodian shall not recognize
any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute or
anticipate the same, except as required by law.
7. THE DEPOSITOR HEREBY DELEGATES to the Custodian the power to amend this
Agreement from time to time as it deems appropriate, and hereby consents to all
such amendments, provided, however, that all such amendments are in compliance
with the provisions of the Code and the regulations promulgated thereunder. All
such amendments shall be effective as of the date specified in a written notice
of amendment which will be sent to the Depositor.
INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF FORM
This model custodial account agreement may be used by an individual who
wishes to adopt an individual retirement account under section 408(a). When
fully executed by the Depositor and the Custodian not later than the time
prescribed by law for filing the Federal income tax return for the Depositor's
tax year (not including any extensions thereof), a Depositor will have an
individual retirement account (IRA) custodial account which meets the
requirements of section 408(a). This account must be created in the United
States for the exclusive benefit of the Depositor or his/her beneficiaries.
DEFINITIONS
CUSTODIAN. -- The Custodian must be a bank or savings and loan association,
as defined in section 408(n), or other person who has the approval of the
Internal Revenue Service to act as custodian.
DEPOSITOR. -- The Depositor is the person who establishes the custodial
account.
IRA FOR NON-WORKING SPOUSES
Contributions to an IRA custodial account for a non-working spouse must be
made to a separate IRA custodial account established by the non-working spouse.
This form may be used to establish the IRA custodial account for the
non-working spouse.
An employee's social security number will serve as the identification number
of his or her individual retirement account. An employer identification number
is only required for each participant-directed individual retirement account. An
employer identification number is required for a common fund created for
individual retirement accounts.
For more information, obtain a copy of the required disclosure statement
from your custodian or get Publication 590, Individual Retirement Arrangements.
(IRAs).
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SPECIFIC INSTRUCTIONS
ARTICLE IV -- Distribution made under this Article may be made in a single
sum, periodic payment, or a combination of both. The distribution option should
be reviewed in the year the Depositor reaches age 70 1/2 to make sure the
requirements of section 408(a)(6) have been met.
ARTICLE IX -- This article and any that follow it may incorporate additional
provisions that are agreed upon by the Depositor and the Custodian to complete
the agreement. These may include, for example: definitions, investment powers,
voting rights, exculpatory provisions, amendment and termination, removal of
Custodian, Custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the Depositor, etc. Use additional pages if
necessary and attach them to this form.
Note: This form may be reproduced and reduced in size for adoption to
passbook or card purposes.
THE AIM FAMILY OF FUNDS --Registered Trademark--
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
DISCLOSURE STATEMENT
Under applicable federal regulations, a custodian of an individual
retirement account is required to furnish each depositor who has established or
is establishing an individual retirement account with a statement which
discloses certain information regarding the account. Boston Safe Deposit and
Trust Company (hereinafter referred to as the "Custodian") is providing this
Disclosure Statement to you in accordance with that requirement, and this
Disclosure Statement contains general information about the The AIM Family of
Funds --Registered Trademark-- Individual Retirement Custodial Account
(hereinafter referred to as "IRA"). This Disclosure Statement should be reviewed
in conjunction with both the Individual Retirement Custodial Account agreement
(From 5305-A and any attachments thereto, hereinafter referred to as the
"Custodial Agreement") and the Adoption Agreement for your IRA. You should
review this Disclosure Statement and the IRA documents with your attorney or
tax advisor. The Custodian cannot give tax advice or determine whether or not
the IRA is appropriate for you.
A. SEVEN DAY RIGHT TO REVOKE YOUR IRA.
You may revoke your IRA at any time within seven business days after the
date the IRA is established, by giving proper notice. For purposes of
revocation, it will be assumed that you received the Disclosure Statement no
later than the date of your check with which you opened your IRA. Written notice
must be hand delivered or sent by first class mail, in which case, the
revocation will be effective as of the date the notice is postmarked (or if sent
by certified or registered mail, the date of certification or registration).
Notice of revocation should be made to: A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 1919, P.O. Box 4739, Houston, Texas 77210-4739, Attention:
Shareholder Services Department, area code (800) 959-4246. If you revoke your
IRA, you are entitled to a refund of your entire contribution to the IRA,
without adjustment for such items as sales commissions, administrative expenses
or fluctuation in market value. If you do not revoke within seven business days
after the establishment of the IRA, you will be deemed to have accepted the
terms and conditions of the IRA and cannot later revoke the IRA without certain
potential penalties.
B. STATUTORY REQUIREMENTS.
An IRA is a trust or custodial account created or organized in the United
States for your exclusive benefit or that of your beneficiaries. It must be
created by a written governing instrument that meets the following requirements:
(1) THE TRUSTEE OR CUSTODIAN MUST BE A BANK, federally insured credit union,
savings and loan association or another person eligible to act as trustee or
custodian;
(2) EXCEPT FOR ROLLOVER CONTRIBUTIONS (as described in Part F below), no
contribution will be accepted unless it is in cash or cash equivalent,
including, but not by way of limitation, personal checks, cashier's checks, and
wire transfers;
(3) EXCEPT FOR ROLLOVERS, simplified employee pension ("SEP") contributions,
and spousal IRA contributions described below, contributions of more than $2,000
for any tax year may not be made;
(4) YOU WILL HAVE A NONFORFEITABLE INTEREST IN THE ACCOUNT;
(5) NO PART OF THE TRUST OR CUSTODIAL FUNDS will be invested in life
insurance contracts, nor may the assets be commingled with other property except
in a common trust fund or common investment fund. Furthermore, as provided in
section 408(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
your IRA may not be invested in "collectibles," such as art works, antiques,
metals, gems, stamps, coins (with an exception for certain U.S.-minted gold and
silver coins), and certain other types of tangible personal property. An
investment in a collectible would be treated as a distribution from your IRA
which would be includible in your gross income, and, if you had not attained the
age of 59 1/2, the distribution would also be subject to the premature
distribution penalty as discussed in Part E(4) below;
(6) YOUR ENTIRE INTEREST IN THE ACCOUNT MUST BE, or begin to be, distributed
on or before April 1 of the calendar year following the calendar year in which
you reach age 70 1/2. The distribution may be made in a single sum, or you may
receive periodic distributions, so long as your entire interest is distributed
in equal or substantially equal payments over any of the following periods:
(a) your life;
(b) the lives of you and your designated beneficiary;
(c) a period certain not extending beyond your life expectancy;
(d) a period certain not extending beyond the life expectancy of you and
your designated beneficiary.
If the distributions from your IRA are to be made over one of the foregoing
periods, the amount distributed each year must meet the minimum distribution
requirements set forth in your IRA Custodial Agreement, or you will incur a
penalty as described in Part E(8) below;
(7) IF YOU DIE AFTER DISTRIBUTIONS HAVE commenced but before your entire
interest has been distributed to you, payments must continue at least as rapidly
as under the method of distribution in effect, at your death. If you die before
distributions have commenced, generally your entire interest must be distributed
within five years of your death. However, if your interest is payable to a
designated beneficiary, payments may be made over the life or a period not
exceeding the life expectancy of the beneficiary; provided, however, that such
payments must commence within one year of your death unless your designated
beneficiary is your surviving spouse, in which case payments need not commence
until the date on which you would have attained age 70 1/2. You should advise
the Custodian as to your beneficiary and the method of distribution desired.
C. INVESTMENT OF YOUR IRA.
Under the terms of the Custodial Agreement, your contributions will be
invested by the Custodian in full and fractional shares of the investment
company or companies that you select. As provided in the Custodial Agreement,
you may only invest your IRA Funds in shares of investment companies which are
part of "The AIM Family of Funds --Registered Trademark--," which are managed
or advised by subsidiaries of A I M Management Group Inc. You will be provided
with a list of the investment companies from which you may choose to invest.
Subject to the foregoing and to any additional restrictions described in the
Custodial Agreement, you have complete control over the investment of your IRA
Funds. The Custodian will not provide any form of investment advice or make
investment recommendations of any type, so you will make all investment
decisions on the basis of information you obtain from other sources. When you
make a decision on how you wish to invest Funds held in your IRA, you should
provide the Custodian with specific instructions, detailing your investment
decision so that the Custodian can effectuate such investments as provided in
your IRA Custodial Agreement. If you fail to direct the Custodian as to the
Investment of all or any portion of your IRA account, the Custodian shall hold
such uninvested amount in your account and shall incur no liability for
interest or earnings thereon. All dividends and capital gain distributions
received on shares of an investment company held in your IRA will be reinvested
in shares of that investment company, if available, which shall be credited to
the Custodian account. Detailed information about the shares of the AIM fund(s)
you select must be furnished to you in the form of prospectuses governed by
rules of the Securities and Exchange Commission.
D. LIMITATIONS AND RESTRICTIONS ON IRA CONTRIBUTIONS AND DEDUCTIONS.
Except in the case of rollover contributions (see Part F below), generally
you may contribute up to the lesser of $2,000 or 100% of your compensation
(earned income) to your IRA for any taxable year. A non-working spouse may
contribute up to $2,000 to a separate IRA.
Section 219 of the Code contains special provisions governing whether
amounts contributed to your IRA will be deductible from gross income for federal
income tax purposes. To the extent you are not eligible or elect not to make
deductible IRA contributions, you may make nondeductible IRA contributions
within the aforementioned limits which are reduced by the amount of any
deductible contributions. The following is a summary of the rules regarding the
deductibility of contributions to your IRA. You should consult your tax advisor
to determine the specific application of such rules to your IRA contributions
for any particular taxable year.
(1) IF NEITHER YOU, NOR YOUR SPOUSE, IS an "active participant" (as
determined under section 219(g) of the Code and any regulations or rulings
thereunder) in a retirement plan during any part of the taxable year, you may
take a deduction for contributions to your IRA for such taxable year in an
amount equal to the lesser of $2,000 or 100% of your compensation (earned
income) for such taxable year.
(2) IF EITHER YOU, OR YOUR SPOUSE (unless you file separate income tax
returns as noted below), is considered an "active participant" in a retirement
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plan for any part of the taxable year, the extent, if any, to which
contributions to your IRA will be deductible depends on the amount of your
adjusted gross income ("AGI"). The maximum IRA deduction as specified in
Paragraph (1) above will be reduced in the same ratio that the excess of your
AGI over $25,000 (for a single individual), $40,000 (for a married couple filing
jointly) and zero (for a married couple filing separately) bears to $10,000.
Thus, if you are an active participant in a retirement plan, no IRA deduction
will be permitted if:
(a) You are a single individual with AGI in excess of $35,000,
(b) you are married and file a joint return with AGI in excess of
$50,000, or
(c) you are married, file separate returns and either you or your spouse
have AGI in excess of $10,000.
(3) IF YOU ARE MARRIED and your spouse has no compensation for the taxable
year, or elects to be treated as having no compensation for such year, you are
permitted an additional deduction in the amount of $250 for contributions to an
IRA for the benefit of your spouse provided that your spouse has not attained
age 70 1/2 and you file a joint income tax return for such year, subject to the
provisions of (1) or (2) above, whichever is applicable. (see below)
You will be considered an "active participant" for any particular taxable
year if you are covered by a retirement plan for any part of such year.
Generally, you will be considered covered by a retirement plan for a year if
your employer or union has a retirement plan under which money is added to your
account or you are eligible to earn retirement credits for such year. For
example, if you are covered under a profit-sharing plan, certain government
plans, a salary reduction arrangement (such as a tax-sheltered annuity
arrangement or a 401(k) plan), a SEP or a plan which promises you a retirement
benefit which is based upon the number of years of service you have with the
employer, you are likely to be an active participant. Your Form W-2 for the year
should indicate your participation status. You are an active participant for a
year even if you are not yet vested in your retirement benefit. Also, if you
make required contributions or voluntary employee contributions to a retirement
plan, you are an active participant. In certain plans you may be an active
participant even if you were only with the employer for part of the year. You
should note that if you are married but file a separate tax return, and you did
not live with your spouse at any time during the taxable year, your spouse's
active participation does not affect your ability to make deductible
contributions.
No deduction will be allowed under (1) or (2) above for any contribution
which is made for the taxable year during which you attain age 70 1/2 or for any
subsequent year. You are permitted to contribute and deduct up to $4,000 for
contributions to your IRA and a spousal IRA, subject to the provisions of (1)
and (2) above. However, in no event shall the contribution to either IRA exceed
$2,000. It should be noted that if both you and your spouse work, each may
contribute up to $2,000 of compensation (earned income) to his or her own IRA.
If your employer maintains a SEP, your employer may contribute to your IRA
up to the lesser of 15% of your compensation from such employer or $30,000.
Since SEP contributions are excluded from your gross income, such contributions
are not deductible for federal income tax purposes.
If contributions to your IRA are deductible as outlined above, you may claim
such deduction even if you do not itemize your deductions on your federal income
tax return. You must make contributions to your IRA during the taxable year for
which you claim the deduction or by the deadline for filing your federal income
tax return for such year (without regard to any filing deadline extension). For
example, if you are a calendar-year taxpayer, you must make contributions no
later than April 15th in order to take a deduction for the previous year.
If any portion of a contribution to your IRA is nondeductible as outlined
above, you must so designate on your federal income tax return, as required
under section 408(o)(4) of the Code and file From 8606 with your tax return.
E. FEDERAL INCOME TAX STATUS OF THE IRA AND CERTAIN DISTRIBUTIONS.
(1) IN GENERAL. Except as described below, your IRA and earnings thereon are
exempt from federal income tax until distributions are made from the IRA.
(2) TAX TREATMENT OF DISTRIBUTIONS. If all contributions to your IRA (other
than rollover contributions) have been deductible for federal income tax
purposes then all distributions from your IRA will be taxable as ordinary
income. However, if you have made any nondeductible IRA contributions,
distributions from your IRA will be treated as partially a return of deductible
contributions, if any, (taxable), partially a return of nondeductible
contributions (nontaxable) and partially a distribution of earnings (taxable).
The portion of an IRA distribution which will be excludable from income will be
determined by multiplying the total amount distributed by a fraction, the
numerator of which is the aggregate of all your nondeductible IRA contributions,
and the denominator of which is the aggregate balance of all of your IRAs
(including rollover IRAs and SEPs). For purposes of the foregoing, (a) all of
your IRAs will be treated as a single IRA, (b) all distributions during a
taxable year will be treated as a single distribution and (c) the aggregate
balance of your IRAs will be determined as of the end of the calendar year with
or within which your taxable year ends, after adding back any distributions for
such year.
Distributions from your IRA are not eligible for any special tax treatment
such as five-or ten-year averaging or capital gains treatment.
(3) EXCESS CONTRIBUTIONS. If contributions to your IRA are in excess of the
limits stated in Part D above, you will be assessed a 6% nondeductible excise
tax on such excess amounts. This tax is payable for each year the excess is
permitted to remain in your IRA. However, if the excess contribution has not
been taken as a deduction, and if the excess and all earnings thereon are
returned before the due date for filing your income tax return for the year in
which the excess contribution was made, the 6% excise tax will not be assessed.
The earnings on such excess contribution that are returned to you will be
taxable as ordinary income and will be deemed to have been earned and taxable in
the tax year during which the excess contribution was made. In addition, if you
are not disabled or have not reached age 59 1/2, the earnings will be subject to
the 10% premature withdrawal penalty discussed below. The 6% excess contribution
tax may be eliminated for future tax years by withdrawing the excess
contribution from your IRA before the due date for filing your tax return for
that year or by under-contributing for a subsequent year by an amount equal to
the excess contribution. If the total contributions for the year to your IRA are
$2,250 or less, and there are no employer contributions for the year, you may
withdraw any excess contributions after the due date for filing your tax return,
including extensions, and not include the amount withdrawn in your gross income.
This applies only to the part of the excess that you did not take a deduction
for. It is not necessary to withdraw the interest or other income earned on the
excess. You will have to pay the 6% tax on the excess amount for each year the
excess contribution was in the IRA.
If the contributions to your IRA for any year are more than $2,250, you must
include in your gross income any excess over $2,250, unless it is an excess
rollover contribution attributable to erroneous information. You may also have
to pay a 10% tax on premature distributions on the amount you withdraw, unless
you are age 59 1/2 or disabled.
If less than the maximum amount of contributions has been made in years
before the year you make an excess contribution, the prior year's difference may
not be used to reduce the excess contribution. Qualified rollover contributions,
as described in Part F below, are not considered excess contributions.
(4) PREMATURE DISTRIBUTIONS. In addition to any regular income tax that may
be payable, distributions from your IRA that occur before you reach age 59 1/2
(except in the event of disability, death, rollover, medical expenses in excess
of 7.5% of adjusted gross income, medical insurance premiums in the event of
unemployment or as a qualifying distribution of an excess contribution), will be
assessed a 10% additional income tax on the amount distributed which is
includible in your gross income. However, the additional 10% income tax will not
be imposed if the distribution is one of a scheduled series of level payments to
be made over your life or life expectancy or over the joint lives or joint life
expectancies of you and your beneficiary. Amounts treated as distributions from
the IRA because of pledging the IRA as described below, or prohibited
transactions as described below, will also be considered premature distributions
if they occur before you reach age 59 1/2 (assuming you are not disabled).
(5) EXCESS DISTRIBUTIONS If the aggregate of your distributions from
qualified plans and individual retirement accounts exceed a certain limit for
any calendar year, a 15% excise tax will be imposed on such excess
distributions. Generally, the limit is the greater of $150,000 (available only
if a special grandfather provision is not elected on a return filed for a
pre-1989 tax year) or $112,500 as adjusted for cost-of-living increases. For any
such excess distributions prior to your attainment of age 59 1/2, the 15% excise
tax will be offset by the 10% additional income tax on early distributions.
(6) PLEDGING THE IRA. If you pledge your IRA as security for a loan, the
portion so pledged is treated as being distributed to you in that year. In
addition to any regular income tax that may be payable on the distribution, the
premature distribution penalty as discussed above may also be applicable.
(7) PROHIBITED TRANSACTIONS. If you or your beneficiary engages in a
prohibited transaction, as described in section 4975 of the Code with respect to
your IRA, your IRA will lose its exemption from tax and you must include the
fair market value of your IRA in your gross income for the year during which the
prohibited transaction occurred. In addition to any regular income tax that may
be payable, the premature distribution penalty as discussed above may also be
applicable.
(8) INSUFFICIENT OR LATE DISTRIBUTIONS. In addition to the regular income
tax that may be payable on distributions from your IRA, you will be assessed
penalties on certain accumulations if funds in your IRA are not distributed in
accordance with the rules described in Part B above. If the amount distributed
from your IRA during the year is less than the minimum amount required to be
distributed during such year, an excise tax will be imposed. The tax imposed is
equal to 50% of the amount by which the minimum required distribution exceeds
the amount actually distributed during the year.
(9) ESTATE AND GIFT TAX STATUS OR DISTRIBUTIONS. Generally, for estate tax
purposes, the value of your IRA will be fully includible in your gross estate in
the event of your death. For gift tax purposes, beneficiary designations will
not be treated as gifts. Also, contributions to an IRA on behalf of a spouse who
has no earned income or elects to be treated as having no earned income will
qualify for
25
<PAGE> 12
the annual present interest gift exclusion. You should consult your tax advisor
with respect to the application of community property laws on estate and gift
tax issues relating to your IRA.
(10) INHERITED IRAs. Your IRA will be treated as an inherited IRA if, upon
your death, it is acquired by a beneficiary other than your surviving spouse. An
inherited IRA may not be rolled over to a qualified plan or to another IRA, nor
may an inherited IRA accept any regular or rollover deposits. Only a beneficiary
who is your surviving spouse will be allowed to roll over the IRA funds into his
or her own IRA.
(11) FEDERAL INCOME TAX WITHOLDING. The taxable portion of distributions
from your IRA is subject to federal income tax withholding unless you elect not
to have withholding applied. If you elect not to have withholding applied to
taxable distributions from your IRA, or if insufficient federal income tax is
withheld from any distribution, you may be responsible for payment of estimated
taxes, as well as for penalties under the estimated tax rules, if withholding
and estimated tax payments were not sufficient. Additional information regarding
withholding and the necessary election forms will be provided no later than at
the time a distribution is requested.
F. ROLLOVER CONTRIBUTIONS.
A rollover is a tax-free distribution of cash or other assets from one
retirement program to another. There are two kinds of rollover contributions to
an IRA. In one, you contribute amounts distributed to you from one IRA to
another IRA. With the other, you contribute amounts distributed to you from your
employer's qualified plan or 403(b) plan to an IRA. A rollover is an allowable
IRA contribution which is not subject to the limits on regular contributions
discussed in Part D above. However, you may not deduct a rollover contribution
to your IRA on your tax return.
If you receive a distribution from the qualified plan of your employer or
former employer, the distribution must be an "eligible rollover distribution" in
order for you to be able to roll all or part of the distribution over to your
IRA. The portion you contribute to your IRA will not be taxable to you until you
withdraw it from the IRA. Your employer or former employer will give you the
opportunity to roll over the distribution directly from the plan to the IRA. If
you elect, instead, to receive the distribution, you must deposit it into the
IRA within 60 days after you receive it.
An "eligible rollover distribution" is any distribution from a qualified
plan that would be taxable other than (1) a distribution that is one of a series
of periodic payments for an employee's life or over a period of 10 years or
more, (2) a required distribution after you attain age 70 1/2 and (3) certain
corrective distributions.
If the entire amount in your IRA has been contributed in a tax-free rollover
from your employer's or former employer's qualified plan or 403(b) plan, you may
later roll over the IRA to a new employer's plan if such plan permits rollovers.
Your IRA would then serve as a conduit for those assets. However, you may later
roll those IRA funds into a new employer's plan only if you make no further
contributions to that IRA, or commingle the IRA rollover funds with existing IRA
assets.
G. AMENDMENTS.
The Custodian of your IRA may amend the agreements establishing your IRA at
any time. The Custodian will comply with the amendment procedures set forth in
your Custodial Agreement.
H. FINANCIAL DISCLOSURE.
Because the value of assets held in your IRA is subject to market
fluctuation, the value of your IRA can neither be guaranteed nor projected.
There is no assurance of growth in the value of your IRA or guarantee of
investment results. You will, however, be provided with periodic statements of
your IRA, including current market values of investments.
Certain fees will be charged by the Custodian in connection with your IRA.
Such fees are disclosed on the Custodian's fee schedule, a copy of which has
been provided to you. Upon thirty days' prior written notice, the Custodian may
substitute a new fee schedule. Any fees or other expenses incurred in connection
with your IRA will be deducted from your IRA (with liquidation of Fund Shares,
if necessary), or at the Custodian's option, such fees or expenses may be billed
to you directly.
For its services to the various funds, in The AIM Family of
Funds--Registered trademark--, Boston Safe Deposit and Trust Company receives a
custodian fee. This fee is in addition to fees it receives for acting as
Custodian under the IRA. Boston Safe Deposit and Trust Company and A I M
Distributors, Inc. also will receive additional fees for performing specific
services with respect to the various funds in the AIM Family of Funds. Any such
fees will be fully disclosed to you. Potential investors should obtain a copy of
the current Prospectus relating to the fund(s) selected for investment prior to
making an investment. Also, copies of the Statement of Additional Information
relating to such fund(s) will be provided upon your request to A I M
Distributors, Inc.
I. MISCELLANEOUS.
Each year you will be provided a statement(s) of account which will give the
amount of contributions to the IRA, the year to which each contribution relates,
and the total value of the IRA as of the end of the year. Information relating
to contributions and distributions must be reported annually to the Internal
Revenue Service and to you. You must also file Form 5329 (Return for Individual
Retirement Savings Arrangement) with the Internal Revenue Service for each
taxable year during which you are assessed any penalty or tax as discussed in
Part E above.
Your IRA has been approved by the Internal Revenue Service. Such approval is
a determination as to the form of the IRA, and does not represent a
determination of the IRA's merits as an investment.
Further information about IRAs can be obtained from any district office of
the Internal Revenue Service or from the Custodian.
All provisions in this Disclosure Statement are subject to the Code and to
the regulations promulgated thereunder. This Disclosure Statement constitutes a
nontechnical restatement and summary of certain provisions of the Code which may
affect your IRA. This is not a legal document. Your legal rights and obligations
are governed by the federal tax laws and regulations and your Custodial
Agreement and Adoption Agreement with the Custodian.
26
<PAGE> 13
SEP AND SARSEP IRA APPLICATION [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. INVESTOR INFORMATION (Please print or type.)
Name Birth Date / /
--------------------------------------------------- -- -- --
First Name Middle Last Name Month Day Year
Address
---------------------------------------------------------------------
Street City State Zip Code
Social Security Number
---------------------
Daytime Telephone Evening Telephone
-------------------------- ----------------
- --------------------------------------------------------------------------------
2. TYPE OF ACCOUNT
[ ] SEP - Employer contributions only.
[ ] SARSEP - Employee salary-reduction SEP.
[ ] Combined SEP/SARSEP - Employer and Employee contributions.
Name of Employer Telephone
-------------------------------- ------------------
- --------------------------------------------------------------------------------
3. FUND INVESTMENT
Indicate Fund(s) and contribution amount(s). Make check payable to Boston
Safe Deposit and Trust Company. Minimum $25 per fund per contribution
submission.
<TABLE>
<CAPTION>
Fund $ or % of Assets Class of Shares (check one)
<S> <C> <C>
[ ] AIM Balanced Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Charter Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Constellation Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Global Aggressive Growth Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Global Growth Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Global Income Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Growth Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Global Utilities Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM High Yield Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Income Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Intermediate Government Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM International Equity Fund $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Limited Maturity Treasury Shares $ [ ] Class A [ ] Class B
----------------------------
[ ] AIM Money Market Fund $ [ ] Class A
----------------------------
[ ] AIM Value Fund $ [ ] Class A [ ] Class B [ ] Class C
----------------------------
[ ] AIM Weingarten Fund $ [ ] Class A [ ] Class B
----------------------------
Total $ [ ] Class A [ ] Class B
----------------------------
</TABLE>
If no class of shares is selected, Class A shares will be purchased.
All dividends and capital gains will be reinvested in the fund(s)
automatically.
- --------------------------------------------------------------------------------
4. TELEPHONE EXCHANGE
Telephone Exchange Privilege. Unless indicated below, I authorize the
Transfer Agent to accept instructions from any person to exchange shares in
my account(s) by telephone in accordance with the procedures and conditions
set forth in the Fund's current prospectus.
[ ] I do not want the Telephone Exchange Privilege.
27
<PAGE> 14
- --------------------------------------------------------------------------------
5. BENEFICIARY INFORMATION
I hereby designate the following beneficiary to receive the balance in my
IRA custodial account upon my death. To be effective, the designation of
beneficiary and any subsequent change in designation of beneficiary must be
filed with the Custodian prior to my death. If no beneficiary is designated
or no designated beneficiary or contingent beneficiary survives me, the
balance in my IRA will be distributed to the legal representatives of my
estate. This designation revokes any prior designations. I retain the right
to revoke this designation. In the event that I die and no primary
beneficiary listed below (or such beneficiary's heirs, if applicable) is
alive, distribute all Fund accounts in my IRA to the following contingent
beneficiary, or contingent beneficiary's heirs, if applicable.
PRIMARY BENEFICIARY(IES)
Name % Relationship
------------------------------------ ---- --------------
Beneficiary's Social Security Number Birth Date / /
------------- -- -- --
Name % Relationship
------------------------------------ ---- --------------
Beneficiary's Social Security Number Birth Date / /
------------- -- -- --
CONTINGENT BENEFICIARY
Name % Relationship
------------------------------------ ---- --------------
Social Security Number Birth Date / /
--------------------------- -- -- --
- --------------------------------------------------------------------------------
6. AUTHORIZATION AND SIGNATURE
I hereby adopt the A I M Distributors, Inc. Individual Retirement Account
appointing Boston Safe Deposit and Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the IRA custodial
agreement and disclosure statement and consent to the custodial account fees
as specified. I understand that a $10 annual AIM Fund IRA Maintenance Fee
will be deducted in early December from my AIM IRA account. Under the
Interest and Dividend Tax Compliance Act of 1983, the Fund is required to
have the following certification. Under the penalties of perjury, I certify
that (i) the number shown in Section 1 is my correct Social
Security/Taxpayer Identification Number and (ii) I am not subject to backup
withholding because the Internal Revenue Service (a) has not notified me
that I am subject to backup withholding as a result of failure to report all
interest or dividends, or (b) has notified me that I am no longer subject to
backup withholding. Please refer to the Fund prospectus for complete
instructions regarding backup withholding.
Your Signature Date / /
---------------------------------------------- -- -- --
- --------------------------------------------------------------------------------
7. DEALER INFORMATION (To be completed by securities dealer.)
Name of Broker/Dealer Firm Branch #
----------------------- ------------------
Home Office
-----------------------------------------------------------------
Address
---------------------------------------------------------------------
Rep. Name Rep. #
----------------------------------------- --------------------
Authorized Signature Telephone
------------------------------ -----------------
Branch Address
------------------------------------------------
Street City State Zip Code
[ ] Authorized for NAV purchase
28 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43102-10/95
<PAGE> 15
SARSEP IRA ENROLLMENT AND SALARY [ AIM LOGO APPEARS HERE]
SAVINGS AGREEMENT
- --------------------------------------------------------------------------------
8. INVESTOR INFORMATION (Please print or type.)
Name Date / /
---------------------------------------------------- -- -- --
First Name Middle Last Name Month Day Year
Address
---------------------------------------------------------------------
Street City State Zip Code
Birth Date / / Hire Date / /
--- --- --- --- --- ---
Month Day Year Month Day Year
- -------------------------------------------------------------------------------
Social Security Number
------------------------------------------------------
[ ] I HEREBY ELECT TO BECOME A PARTICIPANT IN THE SARSEP.
As a Participant, I hereby authorize the Company to deduct ______% of my
Compensation or a flat dollar amount of $ __________ per pay period which I
understand will be contributed by the Employer to my IRA. I understand that
my annual SARSEP contribution cannot exceed the lesser of 15% of my
compensation or $9,240, or an amount as limited by IRS regulations. The
minimum contribution is $25 PER FUND PER CONTRIBUTION SUBMISSION.
[ ] I AM PRESENTLY A PARTICIPANT IN THE SARSEP.
As a Participant, I hereby authorize the Company to change the amount it
deducts from my Compensation from _______% to _______% or if a dollar amount
has been specified, from $_______________ per pay period to $_______________
per pay period. I understand that this change will be effective 30 days from
the first day of the month following receipt of this notice.
[ ] I HEREBY WITHDRAW MY AUTHORIZATION TO CONTINUE PAYROLL DEDUCTIONS UNDER THE
SARSEP.
I understand this directive will be effective 30 days from delivery of this
notice to the Employer. I further understand that I may not again authorize
payroll deductions for a period of 90 days from the date of this notice.
[ ] CASH BONUS ELECTION (IF APPLICABLE)
I hereby authorize the Company to deduct ________% from my cash bonus as an
additional contribution to my IRA. I understand that my total annual
contribution cannot exceed the lesser of 15% of my compensation or $9,240,
or an amount as limited by IRS regulations.
--------------------------------------
Participant's Signature
29 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43103-10/95
<PAGE> 16
30
<PAGE> 17
SEP AND SARSEP TOP-HEAVY TEST [AIM LOGO APPEARS HERE]
Plan Year End
--------------------------
- --------------------------------------------------------------------------------
1. A Top-Heavy Test must be performed at the end of each plan year. A Plan
becomes top heavy when 60% of the Plan's aggregate SEP and/or SARSEP
contributions or 60% of the aggregate market value of the Plan as of the
last day of the Plan year is allocated to key employees. You may test using
either market values or contributions, but you may find it easier to test
based on contributions.
<TABLE>
<CAPTION>
Key Employees' Names Contributions Market Value
(SEP and SARSEP) 12/31 or Fiscal Year End
<S> <C> <C>
$ $
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
(A) Total $ $
--------------------- -------------------------------
</TABLE>
<TABLE>
<CAPTION>
Non-Key Employees' Names Contributions Market Value
(SEP and SARSEP) 12/31 or Fiscal Year End
<S> <C> <C>
$ $
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
- --------------------------------------- --------------------- -------------------------------
(B) Total S $
--------------------- -------------------------------
(C) Plan Totals (line A + line B) $ $
--------------------- -------------------------------
(D) Top-Heavy Percentage
(line A divided by line C) --------------------- -------------------------------
(If greater than 60%, plan is "top heavy")
</TABLE>
Note: If you have additional key or non-key employees, please attach additional
pages as necessary.
If the Plan is top heavy, the employer must make a minimum contribution on
behalf of all non-key eligible employees. The contribution must equal the
highest percentage deferred by a key employee, up to a maximum of 3%, based on
the non-key employee's compensation. These contributions can be made to any
qualified retirement plan (SEP or SARSEP IRA), as indicated in the adoption
agreement. Key employees may also receive the top-heavy contribution.
31 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43104-10/95
<PAGE> 18
32
<PAGE> 19
SARSEP IRA ACTUAL DEFERRAL [AIM LOGO APPEARS HERE]
PERCENTAGE (ADP) TEST
Plan Year End
----------------------
- --------------------------------------------------------------------------------
1. THE ACTUAL DEFERRAL PERCENTAGE (ADP) TEST
The Actual Deferral Percentage (ADP) Test is an annual test which restricts
the amount that Highly Compensated Employees may contribute through salary
deferral to their SARSEP accounts. Each Highly Compensated Employee may
defer no more than 125% of the deferral percentage of the Non-Highly
Compensated (NHC) group of employees. The test must be performed annually as
of the last day of the plan year.
- --------------------------------------------------------------------------------
2. INSTRUCTIONS
(1) Separate eligible employees into two groups: Highly Compensated and
Non-Highly Compensated. The definition of Highly Compensated is provided
in the Question and Answer Section on page 13.
(2) List each ELIGIBLE employee in their respective group indicating their
compensation and salary deferral. IMPORTANT: You must also include all
eligible employees who elect not to make salary deferral contributions.
Indicate their deferral amount ($) in Column 4 as zero.
(3) Compute each eligible employees' deferral percentage in Column 4.
(4) Add up the deferred percentage of each employee in the Highly
Compensated group and the Non-Highly Compensated group separately.
Divide by the number of eligible employees in each group.
(5) Compare the two groups' average deferral percentages. Each Highly
Compensated participant cannot defer more than 125% of the average
deferral percentage of the Non-Highly Compensated group.
- --------------------------------------------------------------------------------
3. DEFINITIONS
(1) EMPLOYEE: For the purposes of this worksheet we are listing only
employees eligible for this SARSEP. An employee who was eligible at any
time during the Plan Year, but who terminates prior to the end of the
Plan Year is included for this test. Additionally, an eligible employee
who elects not to make Elective Deferrals shall be treated as having a
0% Deferral Percentage.
(a) HIGHLY COMPENSATED EMPLOYEE An Employee (and certain family
members) who meet the criteria listed in Sections 1.11 and 1.12
of the SEP and SARSEP IRA Plan Document. (Also see Question and
Answer Section on page 13.)
(b) NON-HIGHLY COMPENSATED EMPLOYEE: An Employee who doesn't meet
the definition of Highly Compensated.
(2) ELECTIVE DEFERRALS: All contributions made to the SARSEP at the election
of an eligible employee (Participant) in lieu of cash compensation or
bonuses pursuant to a salary savings agreement or cash option election.
(3) COMPENSATION: Total wages, salaries, fees, bonuses or other taxable
remuneration paid to Participant from the Employer during the period in
which the individual actually participated in the Plan. Compensation
shall be limited to $160,000 (or any higher limit announced by the IRS).
The Compensation limit must be adjusted proportionately for Plan Years
of less than 12 months.
33
<PAGE> 20
- --------------------------------------------------------------------------------
4. ELIGIBLE NON-HIGHLY COMPENSATED (NHC) EMPLOYEES
NOTE: Please read the Definitions before completing worksheet.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Deferral
Employee Name Elective Deferrals Compensation Percentage
column 2 divided
by column 3
<S> <C> <C> <C>
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
</TABLE>
(5) Total of all Deferral Percentages (column 4)
---------------
(6) Number of eligible Non-Highly Compensated Employees (column 1)
-------------
(7) Average Deferral Percentage for Non-Highly Compensated
Employees (line 5 divided by line 6)
--------------------
- --------------------------------------------------------------------------------
5. ELIGIBLE HIGHLY COMPENSATED (HC) EMPLOYEES
NOTE: Please read the Definitions before completing worksheet.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Deferral
Employee Name Elective Deferrals Compensation Percentage
column 2 divided
by column 3
<S> <C> <C> <C>
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
$ $ %
- --------------------------------------- ---------------------------- ------------------- -----------------
</TABLE>
(A) Total of all Deferral Percentages (column 4)
------------------
(B) Number of eligible Highly Compensated Employees (column 1)
----------------
(C) Average Deferral Percentage for Highly Compensated Employees
(line A divided by line B)
--------------------
(D) EACH HIGHLY COMPENSATED PARTICIPANT MAY NOT DEFER MORE THAN 125% X LINE 7,
SECTION 4
125% X _________________ = ______________ ADP FOR EACH HIGHLY COMPENSATED
PARTICIPANT
34 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43105-3/96
<PAGE> 21
SEP/SARSEP TRANSMITTAL FORM [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. EMPLOYER INFORMATION (Please print or type.)
Name of Employer
------------------------------------------------------------
Address
---------------------------------------------------------------------
City State Zip Code
------------------------------ --------------- --------------
- --------------------------------------------------------------------------------
2. EMPLOYER'S AUTHORIZATION (Signature(s) of authorized employer
representative)
We hereby authorize Boston Safe Deposit and Trust Company to invest
contributions in accordance with the instructions below.
Date / /
- ------------------------------------------------------------ -- -- --
Month Day Year
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name of Social Security Selected Contribution per Fund**
Participant Number AIM Funds* (Minimum $25 per Fund)
SEP SARSEP
<S> <C> <C> <C> <C>
1 $ $
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
2
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
3
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
4
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
5
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
6
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
</TABLE>
*Indicate funds used by each participant.
**Indicate dollar($) amount contributed per fund.
35
<PAGE> 22
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name of Social Security Selected Contribution per Fund**
Participant Number AIM Funds* (Minimum $25 per Fund)
SEP SARSEP
<S> <C> <C> <C> <C>
7 $ $
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
8
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
9
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
10
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
11
----------------------------- ------------------------- ------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
------------------------ ------------ ------------
Total Employer Contributions $
------------
Total Employee Salary
Deferral Contributions $
-----------
Total Employer and
Employee Contributions $
-----------
</TABLE>
If a contribution for a participant is to be invested in more than one fund, $25
or more must be invested in each fund selected. Attach form, check (payable to
Boston Safe Deposit and Trust) and SEP and SARSEP applications and mail to:
AIM Fund Services, Inc.
Attn: Retirement Plans Operations
P.O. Box 2646
Houston, Texas 77252-2646
*Indicate funds used by each participant.
**Indicate dollar($) amount contributed per fund.
36 [AIM LOGO APPEARS HERE] A I M Distributors, Inc. 43106-10/95
<PAGE> 1
EXHIBIT 14(c)(1)
AIM PROFIT SHARING/MONEY PURCHASE PENSION PLAN
ENROLLMENT & BENEFICIARY DESIGNATION FORM [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. EMPLOYEE INFORMATION (Please Print)
Company Name Trust Tax ID #
------------------------------ ---------------
Last Name First Middle
------------- ------------ -----------------------
Social Security Number
----------------------------------------------------
Address
-------------------------------------------------------------------
Home Phone Work Phone
--------------------------- ------------------------
- --------------------------------------------------------------------------------
2. INVESTMENT SELECTION
I elect to have my Employer contributions invested as indicated below. If
any existing assets are being transferred to AIM, they will be invested the
same as your future contributions. (Write in the name of each AIM Fund you
choose to invest in as permitted by the Plan.)
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
[ %] AIM
--------------------------------
100% Total (Minimum $25 per fund, per payroll deferral)
- --------------------------------------------------------------------------------
3. PRIMARY BENEFICIARY(IES)
I name the following person(s) to receive benefits payable from my
company's retirement plan upon my death:
<TABLE>
<S> <C> <C>
Name Relationship Percentage of Benefits
----------------------------------------------- ----------------------------------- [ %]
Social Security Number Birthdate / /
----------------------------- ------------ ------------- -----------
Street Address City State Zip Code
----------------------- ----------------- --- -------------------
Name Relationship Percentage of Benefits
----------------------------------------------- ----------------------------------- [ %]
Social Security Number Birthdate / /
----------------------------- ------------ ------------- ----------- Percentages must
Street Address City State Zip Code total 100%
----------------------- ----------------- --- -------------------
</TABLE>
Attach additional sheets if you wish to name more than two primary
beneficiaries.
- --------------------------------------------------------------------------------
4. CONTINGENT BENEFICIARY(IES)
If my primary beneficiary(ies) is/are deceased at the time of my death, the
following person(s) shall receive benefits payable from my Company
Retirement Plan upon my death:
<TABLE>
<S> <C> <C>
Name Relationship Percentage of Benefits
----------------------------------------------- ----------------------------------- [ %]
Social Security Number Birthdate / /
----------------------------- ------------ ------------- -----------
Street Address City State Zip Code
----------------------- ----------------- --- -------------------
Name Relationship Percentage of Benefits
----------------------------------------------- ----------------------------------- [ %]
Social Security Number Birthdate / /
----------------------------- ------------ ------------- ----------- Percentages must
Street Address City State Zip Code total 100%
----------------------- ----------------- --- -------------------
</TABLE>
Attach additional sheets if you wish to name more than two contingent
beneficiaries.
- --------------------------------------------------------------------------------
5. SPOUSAL CONSENT
(This section must be completed only if you are married and selecting a
primary beneficiary other than your spouse.)
I, the spouse of the above-named employee, consent to my spouse's
designation. I understand that if a primary beneficiary other than myself
has been named, no benefit will be paid to me from the Plan upon my
spouse's death unless I am named also as an additional primary beneficiary
or as a contingent beneficiary, and the primary beneficiary(ies) is/are
deceased.
Spouse's Signature Date / /
-------------------------------- ----- ----- -----
Signature of Witness (other than spouse) Date / /
---------- ----- ----- -----
- --------------------------------------------------------------------------------
6. EMPLOYEE AUTHORIZATION (Please sign and date this form)
I understand that my designation becomes effective on the day I submit this
form and replaces any earlier beneficiary designation I have made under the
Plan. If I am married at the time of my death, my spouse will receive my
Plan benefits, regardless of whom I have named as beneficiary, if Section 4
of this form is not complete.
Employee Signature Date / /
-------------------------------- ----- ----- -----
A I M Distributors, Inc. *40700-12/96
<PAGE> 2
PROFIT SHARING/MONEY PURCHASE
PLAN APPLICATION [AIM LOGO APPEARS HERE]
Complete Sections 1-9. Please print or type.
- -------------------------------------------------------------------------------
1. EMPLOYER INFORMATION
Name of Employer/Business
---------------------------------------------------
Plan Name
-------------------------------------------------------------------
Address
-------------------------------------------------------------------
Street City State Zip Code
Trust Tax I.D# Daytime Telephone - -
---- -------------- ---- ---- --------
- --------------------------------------------------------------------------------
2. DEALER INFORMATION: To be completed by securities dealer.
Dealer's Name
--------------------------------------------------------------
Main Office Address
--------------------------------------------------------
Rep. Name and Number
--------------------------------------------------------
Branch Rep. Signature
---------------------------- --------------------------
Home Office Address
---------------------------------------------------------
Telephone - -
---- ---- ---------
- --------------------------------------------------------------------------------
3. PLAN TRUSTEES
Name Plan Adm./Contact Person
------------------------- ----------------------
Name Plan Adm. Telephone - -
------------------------- ----- ----- -----
- --------------------------------------------------------------------------------
4. TYPE OF CONTRIBUTION
Note: If you have paired AIM Profit Sharing and Money Purchase Pension
Plans, you must submit separate applications and separate contribution
checks. [ ] Profit Sharing Plan [ ] Money Purchase Plan
- --------------------------------------------------------------------------------
5. TYPE OF ACCOUNT ESTABLISHMENT
[ ] Establish separate accounts for each participant. (Attach participant
listing.)
[ ] Establish a pooled account for all participants. (Record keeper is
responsible for allocating plan assets to each participant.)
- --------------------------------------------------------------------------------
6. FUND INVESTMENT
Indicate fund(s) and contribution amount(s). Make check payable to Boston
Safe Deposit and Trust Company.
<TABLE>
<CAPTION>
Class of
Shares Class of Shares
Fund $ or % of (Check one) Fund $ or % of (Check one)
Assets Assets
<S> <C> <C> <C> <C> <C>
[ ] AIM Balanced Fund $ [ ] A [ ] B [ ] AIM Intermediate Government Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Blue Chip Fund $ [ ] A [ ] B [ ] AIM Growth Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Capital Develop-
ment Fund $ [ ] A [ ] B [ ] AIM High Yield Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Charter Fund $ [ ] A [ ] B [ ] AIM Income Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Constellation
Fund $ [ ] A [ ] AIM International Equity Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Global Aggressive
Growth Fund $ [ ] A [ ] B [ ] AIM Limited Maturity Treasury Shares $ [ ] A
----------- ----------
[ ] AIM Global Growth
Fund $ [ ] A [ ] B [ ] AIM Money Market Fund $ [ ] A [ ] B [ ] C
----------- ----------
[ ] AIM Global Income
Fund $ [ ] A [ ] B [ ] AIM Value Fund $ [ ] A [ ] B
----------- ----------
[ ] AIM Global Utilities
Fund $ [ ] A [ ] B [ ] AIM Weingarten Fund $ [ ] A [ ] B
----------- ----------
Total from both columns $
----------
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, where Class C shares will be
purchased. If you are funding your retirement account through a transfer,
please indicate the contribution amounts both in this section and in Section
3 of the Asset-Transfer Form.
<PAGE> 3
- -------------------------------------------------------------------------------
7. TELEPHONE EXCHANGE PRIVILEGE
Unless indicated below, the plan authorizes the Transfer Agent to accept
instructions from any person to exchange shares in its plan account(s) by
telephone, in accordance with the procedures and conditions set forth in the
Fund's current prospectus.
[ ] The plan DOES NOT want the telephone exchange privilege.
- --------------------------------------------------------------------------------
8. REDUCED SALES CHARGE (optional)
RIGHT OF ACCUMULATION
The plan applies for Right of Accumulation reduced sales charges based on
the following accounts in The AIM Family of Funds--Registered Trademark--.
Fund(s) Account No(s).
----------------------- -------------------------------
LETTER OF INTENT
The plan agrees to the Letter of Intent provisions as stated in Fund's
prospectus(es). The plan agrees to invest during a 13-month period a dollar
amount of at least:
[ ]$25,000 [ ]$50,000 [ ]$100,000 [ ]$250,000 [ ]$500,000 [ ]$1,000,000
- --------------------------------------------------------------------------------
9. DUPLICATE ACCOUNT STATEMENT
Name
------------------------------------------------------------------------
Address
---------------------------------------------------------------------
(AIM will only send one duplicate statement. Check one of the following
boxes.)
[ ]Plan Administrator [ ]Record Keeper [ ]Benefit Consultant [ ]Trustee
- --------------------------------------------------------------------------------
10. AUTHORIZATION AND SIGNATURE
The trustee(s) hereby adopts the AIM Distributors, Inc. Money
Purchase/Profit Sharing Plan appointing Boston Safe Deposit and Trust
Company as Custodian. The trustee(s) has received and read the current
prospectus of the investment company(ies) selected in this agreement. The
trustee(s) understands that a $10 annual maintenance fee for each
participant in the AIM Money Purchase/Profit Sharing Plan will be
deducted in early December. The trustee(s) acknowledges reading and
completing the AIM Funds Money Purchase/Profit Sharing Plan Adoption
Agreement(s) and Trust Agreement.
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund is
required to have the following certification. Please refer to the Fund
prospectus for complete instructions regarding backup withholding. Under the
penalties of perjury, the trustee(s) certifies that (i) the number shown in
Section 1 is its correct Taxpayer Identification Number and (ii) the plan is
not subject to backup withholding because the Internal Revenue Service (a)
has not notified the plan that it is subject to backup withholding as a
result of failure to report all interest or dividends, or (b) has notified
the plan that it is no longer subject to backup withholding (does not apply
to real estate transactions, mortgage interest paid, the acquisition or
abandonment of secured property, contributions to an individual retirement
arrangement (IRA), and payments other than interest and dividends).
Certification Instructions - You must cross out item(b) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of underreporting of interest or dividends on your tax
return.
[ ] Exempt from Backup Withholding (i.e. exempt entity as described in
Application Instructions)
Signature of Plan Trustee Date / /
----------------------------- ---- ---- ------
Signature of Plan Trustee Date / /
----------------------------- ---- ----- -------
Signature of Plan Trustee Date / /
----------------------------- ---- ----- -------
- --------------------------------------------------------------------------------
11. INSTRUCTIONS
Make check payable to Boston Safe Deposit and Trust Company.
Return completed application and check to A I M Distributors, Inc., P.O.
Box 4739, Houston, TX 77210-4739.
[AIM LOGO APPEARS HERE] A I M Distributors, Inc. 42600-12/96
<PAGE> 4
[AIM LOGO APPEARS HERE]
AIM FAMILY OF FUNDS
PROTOTYPE MONEY PURCHASE PENSION AND PROFIT SHARING PLANS
MONEY PURCHASE PENSION AND PROFIT SHARING PLAN DOCUMENT, TRUST AGREEMENT,
ADOPTION AGREEMENTS, SUMMARY PLAN DESCRIPTIONS AND APPLICATIONS
AIM DISTRIBUTORS, INC.
<PAGE> 5
AIM DISTRIBUTORS, INC.
PROTOTYPE PAIRED DEFINED CONTRIBUTION PLANS
PROFIT SHARING/MONEY PURCHASE PENSION PLANS
TABLE OF CONTENTS
I. Adopting the AIM Profit Sharing Plan: Adoption Agreement #001
II. Adopting the AIM Money Purchase Pension Plan: Adoption Agreement #002
III. Money Purchase Pension and Profit Sharing Plan Basic Document #01
IV. Determination Letters
V. Trust Agreement
VI. Employee Notices
- Model Summary Plan Description for Profit Sharing Plan
- Model Summary Plan Description for Money Purchase Plan
VII. Forms
- Money Purchase Pension and Profit Sharing Plan Account Application
- Participant Enrollment & Beneficiary Designation
- Asset Transfer Form
- Contribution Transmittal Form
1
<PAGE> 6
ESTABLISHING
YOUR
PROTOTYPE DEFINED CONTRIBUTION PLANS
PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
The Prototype Paired Defined Contribution Plans sponsored by AIM Distributors,
Inc. are a Profit Sharing Plan and a Money Purchase Pension Plan. Both of these
plans are provided under one plan document with separate adoption agreements.
An employer can adopt either one or both of these plans.
AIM Distributors, Inc. will not act as trustee, plan administrator, nor record
keeper. Before establishing a qualified plan, you should consult with a tax
advisor or attorney. Failure to properly complete these documents could result
in plan disqualification.
To establish the AIM Prototype Profit Sharing and/or Money Purchase Pension
Plan the following forms need to be completed:
1. PLAN ADOPTION AGREEMENT(S). (Section I & II.)
You must complete the appropriate adoption agreement, Profit Sharing
Agreement #001, or Money Purchase Pension Agreement #002, and all
other documents stated in the plan set up instructions.
To establish both a Money Purchase Pension and a Profit Sharing Plan
(Paired Plans), you must complete both the Profit Sharing Adoption
Agreement (Agreement #001) and the Money Purchase Adoption Agreement
(Agreement #002) found in Sections I & II.
2. FIDELITY BOND REQUIREMENT: All qualified plans are required to be covered
by a Fidelity Bond equal to at least 10% of the asset value of the plan,
and not less than $1,000 nor greater than $500,000. Fidelity bonds can be
obtained through your business insurance agent.
3. TRUST AGREEMENT DOCUMENT (Section III.)
Complete and sign pages 77 and 78 of the Trust Document.
4. AIM PROFIT SHARING/MONEY PURCHASE PLAN ACCOUNT APPLICATION (Section VII.)
Complete a separate application for each plan established: Profit
Sharing and/or Money Purchase Pension Plan.
5. PARTICIPANT ENROLLMENT AND DESIGNATION OF BENEFICIARY FORM (Section VII
Employer retains)
Each eligible employee must complete an enrollment and beneficiary
form and return it to the plan administrator to be retained with plan
records. A copy of the employee's enrollment form should be forwarded
to AIM only if you are requesting that individual mutual fund accounts
be established for each employee.
2
<PAGE> 7
Do not return the employee enrollment forms if you are
establishing "pooled" investment accounts for the plan. AIM will
only establish "individual" mutual fund participant accounts for
plans with less than 50 participants.
6. TO TRANSFER ASSETS FROM AN EXISTING PLAN: Complete the Asset Transfer
Form in Section V as well as the documents indicated on the previous
page.
7. FEES: There is an annual custodial account fee of $10.00 for each
participant account or each "pooled" account establish at AIM.
After completion, return only the AIM Money Purchase Pension and Profit Sharing
Account Application and a copy of the participant enrollment forms (individual
mutual fund accounts only) with your contribution to establish the plan. Do not
return participant enrollment forms if establishing "pooled" AIM Fund
investment accounts.
Enclose your initial contribution check payable to: Boston Safe Deposit &
Trust Company.
DO NOT return the Adoption Agreement(s), Summary Plan Description(s),
Beneficiary Form, or Trust Agreement to AIM. These documents must be retained
with your permanent plan records.
Return to:
AIM Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
DEADLINE: New Plans must execute all plan documents prior to the last day of
the plan year (fiscal or calendar year). The plans contribution must be made
by the due date of the business tax return including extensions for the
contribution to be tax deductible.
NOTICE TO EMPLOYEES
Once you have adopted the AIM Money Purchase Pension and/or Profit Sharing Plan
you will need to communicate the adoption and principal provisions of the plan
to employees. This is done by providing the following information to employees:
1. SUMMARY PLAN DESCRIPTION
The employer must give each eligible employee a Summary Plan Description
(SPD) of the plan and file the Summary Plan Description with the Department
of Labor within 120 days of establishing the plan. You must complete the
SPD to indicate the plan features you have designated in the adoption
agreement. AIM has partially completed the SPD in accordance with the
features we pre-marked. Any future amendments to the adoption agreement
must also be made to the SPD.
There is a sample letter provided for filing the SPD with the Department
of Labor.
These notices are provided in Section VII.
3
<PAGE> 8
ADOPTING THE AIM PROFIT SHARING PLAN
ADOPTION AGREEMENT #001
4
<PAGE> 9
ADOPTING THE AIM PROFIT SHARING PLAN ADOPTION
AGREEMENT #001
TO ADOPT THE AIM SPONSORED PROFIT SHARING PLAN YOU WILL NEED TO COMPLETE
THE FOLLOWING FORMS:
- The Profit Sharing Adoption Agreement and Summary Plan Description
(SPD) and Trust Agreement
- A Profit Sharing Plan Account Application
- An Enrollment and Beneficiary Designation Form for each participant.
PLAN STRUCTURE:
If you are establishing "pooled" investment accounts, utilizing a third
party administrator for record keeping:
- Submit only the AIM Profit Sharing and/or Money Purchase Pension Plan
Account Application indicating all the AIM Funds permitted as
investment options by the Plan and the investment amount for each
fund. You must identify the Plan's trustees. If you are not making
your full contribution at this time, we require a minimum $1,000
initial contribution.
If you want AIM to establish separate mutual fund accounts for each plan
participant:
- Submit the AIM Profit Sharing Account Applications with the
participant enrollment forms (Section VII).
- Identify each participant's name, mailing address, SS # and their AIM
Fund'(s) investment election on the enrollment form.
- The plan administrator must submit all contributions with a breakdown
identifying each participant and their total contribution allocated to
the funds the participant has chosen.
- The minimum contribution per participant is $25 per fund, per
contribution submission.
- The maximum number of individual, participants accounts AIM will
establish is 50, utilizing no more than 6 AIM Funds.
- Duplicate statements will be issued to your recordkeeper or
administrator, if requested.
RETURN TO: AIM Fund Services
P.O. Box 4739
Houston, TX 71210-4739
ADOPTION AGREEMENT
To make it easy for you, the Profit Sharing Plan Adoption Agreement has been
partially completed to reflect the features most frequently chosen. Please
review the completed plan adoption agreement with your legal or tax advisor to
ensure that the plan provisions are appropriate.
NOTE: If desired, you may change any of the prechecked elections by making the
appropriate change and placing your initials and date next to the section being
changed.
[X] PRE-CHECKED SECTIONS:
The key sections in this Adoption Agreement which have been completed are as
follows:
5
<PAGE> 10
- - All employees who are Age 21 and have fulfilled one year of service are
eligible to share in plan for contributions. (Years of service cannot
exceed 2 years: all contributions are then 100% vested.)
- - An employee who completes 1,000 hours of service within 12 consecutive
months of their date of hire is credited with a year of service for initial
eligibility. Only 500 hours of service are required in any year thereafter
for a participant to be eligible for a plan contribution. There is no
requirement that a participant be employed on the last day of the plan year
to receive a contribution in the year they separate from service.
- - After fulfilling age and service eligibility requirements, employees may
enter the plan on the first day of a plan year on the first day of the
seventh month of the plan year. (Calendar Year = January 1 & July 1 entry
dates)
- - All union and non U.S. resident alien employees are excluded from
participation. Please note that all other employees of the plan sponsors,
as well as employees of certain companies related to the plan sponsor, are
eligible to participate.
- - Please note that all other employees of the plan sponsors, as well as
employees of certain companies related to the plan sponsor, are eligible to
participate.
- - The employees annual contribution will be discretionary.
- - The plan is not integrated with Social Security. If you choose to integrate
your contribution, AIM will not compute the integration allocation.
- - Normal retirement age of 65.
- - No Loans and No Hardship Distributions are permitted.
- - No Life Insurance may be purchased by the plan.
- - The Employer is the Plan Administrator responsible for administration of
the Plan. (If you appoint another entity as the Plan Administrator, that
entity must sign Section XV of the Adoption Agreement to accept the
responsibility of Plan Administrator.
[X] SECTIONS TO BE COMPLETED BY EMPLOYER
The following sections of the Adoption Agreement must be completed by the
employer.
Section II: Employer Data (Page 1 & 2) - Complete A through G. If
applicable, Complete H and I. (Name, address, TIN, etc.)
Section IX: Vesting - Choose the vesting schedule desired.
SECTION XIV: Allocation Limitation - complete this section.
Section XVI: Self Trusteed Plan - You must designate a trustee or trustees
of this plan. The trustee(s) must sign the Adoption Agreement.
NEITHER AIM NOR BOSTON SAFE DEPOSIT & TRUST COMPANY WILL ACT
AS THE PLAN TRUSTEE. The trustees must sign the Adoption
Agreement on page 12.
Section XVII: Employer Signature - Read the employer acknowledgment and
execute this section.
6
<PAGE> 11
Fidelity Bond - Contact your insurance company regarding the purchase of a
fidelity bond which will cover the plan administrator and plan fiduciaries. The
bond must be for at least $1,000 or an amount equal to 10% of the plan's assets
not to exceed $500,000.
FAILURE TO PROPERLY COMPLETE THESE DOCUMENTS COULD RESULT IN DISQUALIFICATION
OF YOUR PLAN AND LOSS OF TAX BENEFITS. DEADLINE: NEW PLANS MUST BE EXECUTED BY
THE LAST DAY OF THE PLAN'S TAX YEAR (CALENDAR OR FISCAL).
PLAN ADMINISTRATION: NEITHER AIM DISTRIBUTORS, NOR AIM FUND SERVICES WILL ACT AS
THE PLAN ADMINISTRATOR. AIM WILL NOT REVIEW PLAN DOCUMENTS, CALCULATE
CONTRIBUTION ALLOCATIONS, PROVIDE RECORD KEEPING SERVICES, PERFORM
DISCRIMINATION TEST, OR FILE FORM 5500. ALL ADMINISTRATIVE, TAX REPORTING AND
ACCOUNTING FUNCTIONS ARE THE RESPONSIBILITY OF THE PLAN SPONSOR OR APPOINTED
THIRD PARTY.
7
<PAGE> 12
PROFIT SHARING ADOPTION AGREEMENT
FOR PROTOTYPE PAIRED DEFINED CONTRIBUTION PLAN
#001 SPONSORED BY
AIM DISTRIBUTORS, INC.
ADOPTION AGREEMENT #001
This is the Adoption Agreement for paired defined contribution plan #001 of
basic plan document #001, which is a combined prototype profit sharing/money
purchase pension plan. This Adoption Agreement may be adopted either singly or
in combination with paired defined contribution plan #002, a prototype money
purchase pension plan.
NOTE: Before executing this Adoption Agreement, the Employer should consult
with a tax advisor or attorney. Failure to properly complete this
Adoption Agreement may result in Plan disqualification.
- -----------------------------------
The Employer hereby establishes a profit sharing plan and a trust upon the
respective terms and conditions contained in the prototype paired defined
contribution plan (the "Plan") and the Trust Agreement annexed hereto and
appoints as Trustee of such trust the person(s) who have executed this Adoption
Agreement evidencing their acceptance of such appointment. The Plan and, the
Trust Agreement, if applicable, shall be supplemented and modified by the terms
and conditions contained in this Adoption Agreement and shall be effective on
the Effective Date.
The Sponsor will inform the Employer of any amendments made to the Plan or the
discontinuance or abandonment of the Plan.
- -----------------------------------
1. SPONSOR DATA
------------
A. AIM DISTRIBUTORS, INC.
Name of Sponsor (or authorized representative)
B. 11 GREENWAY PLAZA- SUITE 1919
Address
HOUSTON, TX 77046
C. (713) 347-1919
Telephone Number
- -----------------------------------
II. EMPLOYER DATA
A. ___________________________________________________
Name of Employer and Employer Identification Number
B. ___________________________________________________
Address
C. (_____)____________________________________________
Telephone Number
D. ___________________________________________________
Employers Taxable Year End
E. ___________________________________________________
Plan Year End
F. The Employer is: [ ] A corporate entity
[ ] A non corporate entity
[ ] A corporation electing to be taxed under
Subchapter S
8
<PAGE> 13
G. ___________________________________________________
Effective Date (should be first day of a Plan Year)
H. If this is an amendment of an existing plan, complete the following:
______________________________________________________________________
Effective Date of Amendment (should be first day of a Plan Year)
______________________________________________________________________
Name of Prior Plan
______________________________________________________________________
Effective Date of Prior Plan
I. ______________________________________________________________________
Limitation Year, if different from E., above
III. ELIGIBILITY
A. Employees shall be eligible to participate in the Plan upon
completion of the eligibility requirements (complete 1 and 2)
(Plan section 3.1):
1. Years of Service. The Employee must complete (check one box):
[X] One Year of Service.
[ ] ____ Years of Service. (You can require less than or more
than one Year of Service, but not more than two (2). If
you select more than one Year of Service, the Employee
must be 100% vested once he becomes eligible, and you must
select vesting schedule B in section X of this Adoption
Agreement. If the Year of Service is or includes a
fractional year, an Employee will not be required to
complete any specified number of Hours of Service (sec IV,
A of this Adoption Agreement) to receive credit for such
fractional year.
2. Age. The Employee must attain age 21 (not greater than age
21).
B. The following Employees will not be eligible to participate in the
Plan (Plan section 3.1):
[X] Union Employees. Employees included in a unit of employees
covered by a collective bargaining agreement between the Employer
and Employee representatives (as defined in section 3.1(b)(i) of
the Plan), if retirement benefits were the subject of good faith
bargaining.
[X] Nonresident Aliens. Employees who are nonresident aliens and who
receive no earned income from the Employer which constitutes
income from sources within the United States. For purposes of
this section III, the term "Employee" includes all employees of
this Employer or any employer aggregated with this Employer under
sections 414(b), (c) or (m) or (o) of the Code and individuals who
are Leased Employees required to be considered Employees of any
such employer under section 414(n) or (o) of the Code. Therefore,
all employees of companies in a controlled group of businesses
will be eligible to participate in this plan.
- -----------------------------------
9
<PAGE> 14
IV. CREDITED SERVICE
A. The Plan provides that a Year of Service requires at least 1,000 Hours
of service during a Plan Year. If a lower number of hours is desired,
state the number here: 1,000 (Plan section 2.42).
B. The Plan permits Hours of Service to be determined by the use of
service equivalencies under one of the methods selected below (choose
one method)(Plan section 2.19):
1. [X] On the basis of actual hours for which an Employee is paid or
entitled to payment.
2. [ ] On the basis of days worked. An Employee will be credited with
ten (10) Hours of Service if under section 2.19 of the plan such
Employee would be credited with at least one (1) Hour of Service
during the day.
3. [ ] On the basis of weeks worked. An Employee will be credited
with forty-five (45) Hours of Service if under section 2.19 of the
Plan such Employee would be credited with at least one (1) Hour of
Service during the week.
4. [ ] On the basis of semimonthly payroll periods. An Employee will
be credited with ninety-five (95) Hours of Service if under section
2.19 of the Plan such Employee would be credited with at least one
(1) Hour of Service during the semimonthly payroll period.
5. [ ] On the basis of months worked. An Employee will be credited
with one hundred ninety (190) Hours of Service if under section
2.19 of the Plan such Employee would be credited with at least one
(1) Hour of Service during the month.
C. Service with a predecessor employer (choose 1 or 2)(Plan sections 3.3
and 8.5):
1. [X] No credit will be given for service with a predecessor
employer.
- or -
2. [ ] Credit will be given for service with the following
predecessor employer(s):
----------------------------------
NOTE: The Plan provides that if this is a continuation of a
predecessor plan, service under the predecessor plan must be
counted.
- ----------------------------------
V. COMPENSATION
A. Compensation (choose 1 or 2)(Plan section 2.7):
1. [ ] shall include
- or -
2. [X] shall not include
Employer Contributions made pursuant to a salary reduction agreement
which are not includable in the gross income of the Employee under
sections 125, 402(e)(3), 402(h) or 403(b) of the Code.
B. The effective date of the election in A. above shall be
___________________________ (but not earlier than the first day of the
first Plan Year beginning after 1986).
- ----------------------------------
10
<PAGE> 15
VI. CONTRIBUTIONS
A. Profit sharing plan formulas (choose 1 or 2)(Plan section 4.19(b)):
1. [X] Discretionary pursuant to Employer resolution. If no
resolution is adopted, then _0_% of Participants'
compensation.
-or-
2. [ ] ___% of Participants' Compensation, plus discretionary
amount, if any, by Employer resolution.
NOTE: Each of these formulas is subject to maximum limitations on
contributions as provided in the Plan and the Internal Revenue Code.
In no event may the Employer Contribution exceed 15% of the aggregate
compensation of all Participants for the year, plus up to 10% credit
carryover in certain circumstances. Additional limitations are
included in the Plan where the Employer also has another qualified
retirement plan. The limit on contributions and forfeitures allocated
to an individual participant's account, per year is generally the
lesser of 25% of compensation or $30,000.
- --------------------------------
VII. ALLOCATION OF EMPLOYER CONTRIBUTIONS
A. Formula (choose 1 or 2)(Plan section 5.3(b)). NOTE: If you provide
for hardship withdrawals you must use Formula 1.
1. [X] Nonintegrated Plan -- Employer contributions shall be
allocated to the accounts of all eligible Participants
prorated upon compensation.
-or-
2. [ ] Integrated Plan -- Employer contributions and forfeitures
shall be integrated with Social Security and allocated in
accordance with the provisions of Plan section 5.3(b). The
Plan's Integration Level shall be (choose (a),(b) or (c))):
(a) [ ] Taxable Wage Base. (The maximum amount considered as
wages for such year under section 3121(a)(1) of the
Internal Revenue Code (the Social Security taxable wage
base) as of the beginning of the Plan Year).
-or-
(b) [ ] $______ (a dollar amount not to exceed the Taxable
Wage Base).
-or-
(c) [ ] _____% of the Taxable Wage Base (not to exceed 100%).
NOTE: If you maintain any other plan in addition to this Plan,
only one plan may be integrated with Social Security.
B. Contribution Eligibility (Plan section 4.1(c)):
The Plan provides that all Participants will share in Employer
Contributions for the Plan Year, except the following (if elected):
[ ] Participants who terminate employment during the Plan year with
not more than 500 Hours of Service and who are not Employees as
of the last day of the Plan Year (other than Participants who
die, retire or become Totally and Permanently Disabled).
If a fewer number of hours than 500 is desired, state the number
here: _____.
11
<PAGE> 16
- --------------------------
VIII. DISTRIBUTIONS.
A. Normal Retirement Age is (choose 1 or 2)(Plan section 2.26):
1. [X] The date a Participant reaches age 65 (not more than 65
or less than 55). If no age is indicated, normal
retirement age shall be 65.
2. [ ] The later of age ____ (not more than 65) or the ____
(not more than 5th) anniversary of the day the
Participant commenced participation in the Plan. The
participation commencement date is the first day of the
first Plan Year in which the Participant commenced
participation in the Plan.
B. Early Retirement Date (choose 1 or 2)(Plan section 2.10):
1. [ ] Early Retirement Date is the first day of the month
coincident with or next following the date upon which a
Participant reaches age 55 (not less than 55) and
completes 5 years of service (not more than 15).
2. [X] Early Retirement will not be permitted under the Plan.
C. All distributions will be in the form of a lump sum in accordance with
the Safe Harbor Rules in Article 9, Section 9.6 of the Plan Document.
- --------------------------
IX. OPTIONAL FEATURES
A. Hardship withdrawals (choose 1 of 2)(Plan section 12.2):
1. [ ] The Plan permits hardship withdrawals.
- or -
2. [X] The Plan does not permit hardship withdrawals.
NOTE: The Plan may not provide hardship withdrawals if integration
with Social Security is elected in section VII.A.2.
B. Loans (choose 1 or 2)(Plan ARTICLE 13):
1. [ ] The Plan permits loans to Participants.
- or -
2. [X] The Plan does not permit loans to Participants.
NOTE: The Plan may not permit loans to Owner-Employees of
noncorporate entities or to Shareholder-Employees of
subchapter S corporations. If Plan loans are permitted, the
Trustee designated in section XVI of this Adoption Agreement
may not be the Sponsor's designated Trustee.]
C. Insurance (choose 1 or 2)(Plan ARTICLE 14):
1. [ ] The Plan permits Participants to designate a portion of
their Account to purchase life insurance contracts. (MUST
NOT be selected if Sponsor's designated trustee is appointed
as Trustee).
12
<PAGE> 17
The percentage of the Employer Contributions which may
be applied to purchase life insurance contracts shall
be equal to _____%.
-or -
2. [X] The Plan does not permit Participants to designate a
portion of their Account to purchase life insurance
contracts.
NOTE: Section 14.5 of the Plan provides certain limits on the amount
of Employer Contributions that can be applied to purchase life
insurance contracts.]
- ------------------------------
X. VESTING
Employer Contributions and earnings will become vested if the
Participant terminates employment for any reasons other than
retirement at or after Normal Retirement Age or Early Retirement Date,
death, or disability pursuant to the following schedule (choose A, B,
C or D) (Plan section 8.3):
<TABLE>
<CAPTION>
A. [ ] Years of
Service Vested Percentage
------- -------- ----------
<S> <C>
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
</TABLE>
B. [ ] 100% vesting immediately after satisfaction of the
eligibility requirements.
NOTE: If a service requirement greater than one year is chosen for
eligibility in section III.A.1. of this Adoption Agreement, vesting
schedule B must be chosen.
C. [ ] 100% vesting after years of service (not to exceed
three).
- or -
<TABLE>
<CAPTION>
D. [ ] Years of
Service Vested Percentage
------- -------- ----------
<S> <C> <C>
1 year ___%
2 years ___% (not less than 20)
3 years ___% (not less than 40)
4 years ___% (not less than 60)
5 years ___% (not less than 80)
6 years ___% (not less than 100)
</TABLE>
- ------------------------------
XI. INVESTMENT CHOICES
A. [X] Investment of Trust assets may be selected only from
Shares or other investments offered by the Sponsor.
(AIM Distributors Inc., AIM Family of Funds)
B. [ ] ___% of the Trust assets must be invested in Shares
or other investments offered by the Sponsor with the
remainder in such other investments as may be
acceptable within the discretion of the Trustee.
13
<PAGE> 18
C. [ ] 50% of the Trust assets must be invested in Shares or
other investments offered by the Sponsor with the
remainder in such other investments as may be
acceptable within the discretion of the Trustee.
D. [ ] 25% of the Trust assets must be invested in Shares or
other investments offered by the Sponsor with the
remainder in such other investments as may be
acceptable within the discretion of the Trustee.
The Sponsor may impose additional limitations
relating to the type of permissible investments in
the Trust (Plan section 7.3).
- ------------------------------
XII. INVESTMENT AUTHORITY
Contributions to the Plan shall be invested by the Trustee in
accordance with instructions of the Employer or Plan Administrator
except that (choose A, B or C) (Plan section 7.2):
A. [ ] No exceptions; the or Plan Administrator shall make
all investment selections.
B. [ ] The Employer delegates all investment responsibility
to the Trustee. (MAY NOT be selected if Sponsor's
designated trustee is appointed as Trustee).]
C. [X] Each Participant [ ] may, [X] shall direct that:
1. [X] Amounts voluntarily contributed by such
Participant pursuant to section 4.3 of the
Plan, rollover contributions pursuant to
section 4.4 of the Plan and direct transfers
pursuant to section 4.5 of the Plan, if any,
- and/or -
2. [X] Employer Contributions on the Participant's
behalf, shall be invested in specified
investments offered by the Sponsor.
Participants may make or change such
directions by giving written notice to the
Plan Administrator. Reasonable restrictions
may be imposed on this privilege by the Plan
Administrator or the Sponsor for purposes of
administrative convenience.
- ------------------------------
XIII. TOP-HEAVY PROVISIONS
Participants who are eligible to receive the minimum allocation
provided by section 5.2 of the Plan shall receive a minimum allocation
of contributions and forfeitures under this Plan equal to 3% of
Compensation, or if lesser, the largest percentage of Compensation
allocated on behalf of any Key Employee for the Plan Year.
NOTE: If the Participant also participates in paired defined
contribution plan #002 (the money purchase pension plan), the
required minimum allocation must be made under paired defined
contribution plan #002 (the money purchase pension plan).
- ------------------------------
14
<PAGE> 19
XIV. ALLOCATION LIMITATIONS
COMPLETE THIS SECTION ONLY IF YOU MAINTAIN OR EVER MAINTAINED ANOTHER
QUALIFIED PLAN (OTHER THAN PAIRED PLAN #002) IN WHICH ANY PARTICIPANT
IN THIS PLAN IS (OR WAS) A PARTICIPANT OR COULD BECOME A PARTICIPANT.
THIS SECTION MUST ALSO BE COMPLETED IF THE EMPLOYER MAINTAINS A
WELFARE BENEFIT FUND, AS DEFINED IN SECTION 419(e) OF THE CODE, OR AN
INDIVIDUAL MEDICAL ACCOUNT, AS DEFINED IN SECTION 415(l)(2) OF THE
CODE, UNDER WHICH AMOUNTS ARE TREATED AS ANNUAL ADDITIONS WITH RESPECT
TO ANY PARTICIPANT IN THIS PLAN.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a
master or prototype plan (choose either 1 or 2) (Plan section
6.3):
1. [ ] The provision of section 6.2 will apply as if the
other plan were a master or prototype plan.
- or -
2. [ ] (On an attachment, provide the method under which
the plans will limit total annual additions to the
maximum permissible amount, and will properly reduce
any excess amounts, in a manner that precludes
Employer discretion).
B. If the Participant is or has ever been a participant in a
defined benefit plan maintained by the Employer attach an
explanation of the method under which the plan involved will
satisfy the 1.0 limitation in a manner that precludes
Employer discretion.
- ------------------------------
XV. ADMINISTRATION
A. The Plan Administrator of the Plan will be (choose 1, 2, 3 or
4) (Plan sections 2.30 and 15.4):
1. [ ] The Trustee
- or -
2. [X] The Employer
- or -
3. [ ] An individual Plan Administrator designated
by the Employer
-----------------------------------
Name
-----------------------------------
Address
-----------------------------------
Signature
- or -
15
<PAGE> 20
4. [ ] A committee of two or more Employees
designated by the Employer:
-----------------------------
Name & Title
-----------------------------
Signature
-----------------------------
Name & Title
-----------------------------
Signature
-----------------------------
Name & Title
-----------------------------
Signature
NOTE: If no Plan Administrator has been designated or serving at any
time, the Employer will be deemed the Plan Administrator
(Plan section 15.4).
B. The Plan Administrator (including all members of a committee,
if a committee is named) is a Named Fiduciary for the Plan. If
other persons are also to be Named Fiduciaries, their names
and addresses are:
Name:
-------------------------------------------
Address:
----------------------------------------
------------------------------------------------
Signature
Name:
-------------------------------------------
Address:
----------------------------------------
------------------------------------------------
Signature
Name:
-------------------------------------------
Address:
----------------------------------------
------------------------------------------------
Signature
C. The Named Fiduciaries have all of the powers set forth in the
Plan. If any powers or duties are to be allocated among them,
or delegated to third parties, indicate below what the powers
or duties are and to whom they are to be delegated (Plan
section 15.3):
-------------------------------
-------------------------------
-------------------------------
-------------------------------
16
<PAGE> 21
XVI. THE TRUSTEE
A. The Employer hereby appoints the following to serve as
Trustee, and the trustee, by signing this Adoption Agreement
accepts the appointment (complete either A or B) (Plan section
2.39):
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
B. The Employer hereby appoints the Sponsor's designated
trustee(s) to serve as Trustee(s):
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Dated:
-------------------------------
(Signature of) Trustee
17
<PAGE> 22
VII. EMPLOYER SIGNATURE
The Employer acknowledges receipt of the current prospectus of the
investment companies designated by the Employer for its initial
investments under the Plan and represents that it has delivered a copy
thereof to each Participant in the Plan, and that it will deliver to
each Participant making contributions and each new Participant, a copy
of the then current prospectus of such investment companies. The
Employer further represents that the information in this Adoption
Agreement shall become effective only when approved and countersigned
by the Trustee. The right to reject this Adoption Agreement for any
reason is reserved by the sponsor.
This Adoption Agreement must be used only in conjunction with basic
plan document #01.
NOTE: An Employer who has ever maintained or who later adopts any
plan (including, after December 31, 1985, a welfare benefit
fund, as defined in section 419(e) of the Code, which provides
post-retirement medical benefits allocated to separate
accounts for Key Employees, as defined in section 419A(d)(3) of
the Code, or an individual medical account, as defined in
section 415(1)(2) of the Code), in addition to this Plan
(other than paired defined contribution plan #002), may not
rely on the opinion letter issued by the National Office of
the Internal Revenue Service as evidence that this Plan is
qualified under section 401 of the Internal Revenue Code. If
the Employer who adopts or maintains multiple plans wishes to
obtain reliance that the plans are qualified, application for a
determination letter should be made to the appropriate Key
District Director of Internal Revenue.
This Adoption Agreement consists of 11 pages.
IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement
to be executed by its duly authorized officers this ___ day of ____.
-------------------------------
(Name of Employer)
By:
-------------------------------
(Name & Title)
Date:
------------------
18
<PAGE> 23
ADOPTING THE AIM MONEY PURCHASE PENSION PLAN
ADOPTION AGREEMENT #002
19
<PAGE> 24
ADOPTING THE AIM MONEY PURCHASE PENSION PLAN ADOPTION
AGREEMENT #002
To adopt the AIM Sponsored Money Purchase Pension Plan you will need to
complete the following forms:
o The Money Purchase Pension Adoption Agreement and Summary Plan
Description (SPD)
o A Money Purchase Pension Account Application
o An Enrollment and Beneficiary Designation Form for each participant.
PLAN STRUCTURE:
If you are establishing "pooled" investment accounts, utilizing a third party
administrator for record keeping:
o Submit only the AIM Money Purchase Profit Sharing and/or Profit Sharing
Plan Account Application indicating all the AIM Funds permitted as
investment options by the Plan. You must identify the Plan's trustees.
If you want AIM to establish separate mutual fund accounts for each plan
participant, registered in the plan's name:
o Submit the AIM Money Purchase Plan Account Application with the
participant enrollment forms (Section VII)
o Identify each participant's name, mailing address, SS # and their AIM
Fund's investment election on the enrollment form.
o The plan administrator must submit all contributions with a breakdown
identifying each participant, and their total contribution allocated
to the funds the participant has chosen.
o The minimum contribution per participant is $25 per fund, per
contribution submission.
o The maximum number of individual participants accounts AIM will
establish is 50 utilizing no more than 6 AIM Funds.
o Duplicate statements will be issued to your recordkeeper or
administrator if requested.
Return to:
AIM Fund Services
P.O. Box 4739
Houston, TX 77210-4739
ADOPTION AGREEMENT
To make it easy for you, the Money Purchase Pension Adoption Agreement has been
partially completed to reflect the retirement plans provisions most frequently
chosen. Please review the completed plan adoption agreement with your legal or
tax advisor to ensure that the plan provisions are correct. NOTE: If desired,
you may change any of the prechecked elections by making the appropriate change
and placing your initials and date next to the section being changed.
[X] PRE-CHECKED SECTIONS:
The key sections in this Adoption Agreement which have been completed are as
follows:
o All employees who are Age 21 and have fulfilled one year of service are
eligible for contributions. (Years of service cannot exceed 2 years:
all contributions are then 100% vested).
20
<PAGE> 25
o An employee who completes 1,000 hours of service, within 12 consecutive
months of their date of hire, is credited with a year of service for
initial eligibility. Only 500 hours of service are required in any year
thereafter for a participant to be eligible for a plan contribution.
There is no requirement that a participant be employed on the last day
of the plan year to receive a contribution in the year they separate
from service.
o After fulfilling age and service eligibility requirements, employees
will enter the plan on the plan anniversary date or the date which is
six months subsequent to each plan anniversary date. (Calendar Year =
January 1 & July 1)
o All union and non-resident alien employees are excluded from
participation.
o A MONEY PURCHASE PENSION PLAN REQUIRES A FIXED ANNUAL CONTRIBUTION FROM
THE EMPLOYER STATED AS A PERCENTAGE OF EACH ELIGIBLE EMPLOYEE'S
COMPENSATION (SECTION VI).
o The plan is not integrated with Social Security. If you choose to
integrate your contribution, AIM will not compute the allocation.
o Normal retirement age of 65.
o No Loans and No Hardship Distributions are permitted.
o No Life Insurance may be purchased by the plan
MONEY PURCHASE PENSION PLAN ADOPTION AGREEMENT
SECTIONS TO BE COMPLETED BY EMPLOYER
The following sections must be completed by the employer.
Section II: Employer Data (Page 2) - Complete A through G. If applicable,
Complete H and I. (Name, address, TIN, etc.)
Section VI: Contributions - Must complete percentage under A(1).
Section IX: Vesting - Choose the vesting schedule desired.
Section XV: Self Trusteed Plan - You must designate the trustee of this
plan. Neither AIM nor Boston Safe Deposit & Trust Company will
be the plan's trustee.
Section XVI: Employer Signature - Read the employer acknowledgment and
execute this section.
Fidelity Bond - Contact your insurance company regarding the purchase of a
fidelity bond which will cover the plan and plan fiduciaries.
The bond must be for at least $1,000 or an amount equal to 10%
of the plan's assets not to exceed $500,000.
21
<PAGE> 26
FAILURE TO PROPERLY COMPLETE THESE DOCUMENTS COULD RESULT IN DISQUALIFICATION
OF YOUR PLAN AND LOSS OF TAX BENEFITS. DEADLINE: NEW PLANS MUST BE EXECUTED BY
THE LAST DAY OF THE PLAN'S TAX YEAR (CALENDAR OR FISCAL).
PLAN ADMINISTRATION: NEITHER AIM DISTRIBUTIONS, NOR AIM FUND SERVICES WILL ACT
AS THE PLAN ADMINISTRATOR. AIM WILL NOT REVIEW PLAN DOCUMENTS, COMPUTE
CONTRIBUTION ALLOCATION, PROVIDE RECORD KEEPING SERVICES, PERFORM
DISCRIMINATION TEST, OR FILE FORM 5500. ALL ADMINISTRATIVE, TAX REPORTING AND
ACCOUNTING FUNCTIONS ARE THE RESPONSIBILITY OF THE PLAN SPONSOR OR APPOINTED
THIRD PARTY.
22
<PAGE> 27
MONEY PURCHASE PENSION ADOPTION AGREEMENT
FOR PROTOTYPE PAIRED DEFINED CONTRIBUTION PLAN
#002 SPONSORED BY
AIM DISTRIBUTORS, INC.
ADOPTION AGREEMENT #002
This is the Adoption Agreement for paired defined contribution plan #002 of
basic plan document #01, which is a combined prototype profit sharing/money
purchase pension defined contribution plan. This adoption agreement may be
adopted either singly or in combination with paired defined contribution plan
#001, a prototype profit sharing plan.
Note: Before executing this Adoption Agreement, the Employer should consult
with a tax advisor or attorney. Failure to properly complete this Adoption
Agreement may result in Plan disqualification.
- --------------------
The Employer hereby establishes a money purchase pension plan and a trust upon
the respective terms and conditions contained in the prototype paired defined
contribution plan (the "Plan") and the Trust Agreement annexed hereto and
appoints as Trustee of such trust the person(s) who have executed this Adoption
Agreement evidencing their acceptance of such appointment. The Plan, the Trust
Agreement, and the Custody Agreement, if applicable, shall be supplemented and
modified by the terms and conditions contained in this Adoption Agreement and
shall be effective on the Effective Date.
The Sponsor will inform the Employer of any amendments made to the Plan or the
discontinuance or abandonment of the Plan.
- --------------------
I. SPONSOR DATA
A. AIM DISTRIBUTORS, INC.
----------------------
Name of Sponsor (or authorized representative)
B. 11 GREENWAY PLAZA SUITE 1919
----------------------------
Address
HOUSTON, TX 77046
------------------
City State
C. (713) 347-1919
--------------
Telephone Number
- --------------------
II. EMPLOYER DATA
A.
----------------------------------------------
(Name of Employer and Employer Identification Number
B.
----------------------------------------------
Address
2. C. ( )
--- ------------------------------------------
Telephone Number
D.
-------------------------------
Employer's Taxable Year End
E.
-------------------------------
Plan Year End
23
<PAGE> 28
F. The Employer is: [ ] A corporate entity
[ ] A noncorporate entity
[ ] A corporation electing to be taxed under
Subchapter S
G.
-----------------------
Effective Date (should be first day of a Plan Year)
H. If this is an amendment of an existing plan, complete the following:
-----------------------
Effective Date of Amendment (should be first day of a Plan Year)
-----------------------
Name of Prior Plan
-----------------------
Effective Date of Prior Plan
I.
-----------------------
Limitation Year, if different from E., above
- ----------------------
III. ELIGIBILITY
A. Employee shall be eligible to participate in the Plan upon completion
of the eligibility requirements (complete 1 and 2)(Plan section 3.1):
1. Years of Service. The Employee must complete (check one box):
[X] One Year of Service
[ ] ___ Years of Service. (You can require less than or more
than one Year of Service, but not more than two (2). If you
select more than one Year of Service, the Employee must be
100% vested once he becomes eligible, and you must select
vesting schedule B in section IX of this Adoption Agreement.
If the Year of Service is or includes a fractional year, an
Employee will not be required to complete any specified
number of Hours of Service (Section IV, A of this Adoption
Agreement) to receive credit for such fractional year.
2. Age. The Employee must attain age 21 (not greater than age 21).
B. The following Employees will not be eligible to participate in the
Plan (Plan section 3.1):
[X] Union Employees. Employees included in a unit of employees
covered by a collective bargaining agreement between the
Employer and the Employee representatives (as defined in section
3.1(b)(i) of the Plan), if retirement benefits were the subject
of good faith bargaining.
[X] Nonresident Aliens. Employees who are nonresident aliens and
who receive no earned income from the Employer which constitutes
income from sources within the United States.
For purposes of this section III, the term "Employee" includes
all employees of this Employer or any employer aggregated with
this Employer under sections 414(b),(c),(m) or (o) of the Code
and individuals who are Leased Employees required to be
considered Employees of any such employer under section 414 (n)
or (o) of the Code.
- --------------------
24
<PAGE> 29
IV. CREDITED SERVICE
A. The Plan provides that a Year of Service requires at least 1,000 hours
during any Plan Year. If a lower number of hours is desired, state the
number here: 1,000 (Plan section 2.42).
B. The Plan permits Hours of Service to be determined by the use of
service equivalencies under one of the methods selected below (choose
one method) (Plan section 2.19):
1. [X] On the basis of actual hours of which an Employee is paid or
entitled to payment.
2. [ ] On the basis of days worked. An Employee will be credited
with ten (10) Hours of Service if under section 2.19 of the
Plan such Employee would be credited with at least one (1)
Hour of Service during the day.
3. [ ] On the basis of weeks worked. An Employee will be credited
with forty-five (45) Hours of Service if under section 2.19
of the Plan such Employee would be credited with at least
one (1) Hour of Service during the week.
4. [ ] On the basis of semimonthly payroll periods. An Employee
will be credited with ninety-five (95) Hours of Service if
under section 2.19 of the Plan such Employee would be
credited with at least one (1) Hour of Service during the
semimonthly payroll period.
- or -
5. [ ] On the basis of months worked. An Employee will be credited
with one hundred ninety (190) Hours of Service if under
section 2.19 of the Plan such Employee would be credited
with at least one (1) Hour of Service during the month.
C. Service with a predecessor employer (choose 1 or 2)(Plan sections 3.3
and 8.5):
1. [X] No credit will be given for service with a predecessor
employer.
- or -
2. [ ] Credit will be given for service with the following
predecessor employer(s):
---------------
NOTE: The Plan provides that if this is a continuation of a
predecessor plan, service under the predecessor plan must be
counted.
- --------------------------------
V. COMPENSATION
A. Compensation (choose 1 or 2)(Plan section 2.7):
1. [ ] shall include
- or -
2. [X] shall not include
Employer Contributions made pursuant to a salary reduction agreement
which are not includable in the gross income of the Employee under
sections 125, 402(a)(8), 402(h) or 403(b) of the Code.
B. The effective date of the election in A. above shall be __________
(but not earlier than the first day of the first Plan Year beginning
after 1986).
25
<PAGE> 30
VI. CONTRIBUTIONS
A. Formulas (choose 1 or 2)(Plan section 4.1.(a)):
1. [X] Plan no integrated with Social Security
The Employer will contribute ___% of compensation for each
Participant (not less than 3% if the profit sharing Adoption
Agreement is also adopted and, in any event, not more than 25%).
2. [ ] Integrated Plan - The Employer will contribute an amount
equal to ___% (base contribution percentage, not less than
3) of each Participant's Compensation (as defined in
section 2.7 of the Plan) for the Plan Year, up to the
Integration Level plus ___% (not less than 3% and not to
exceed the base contribution percentage by more than the
lesser of: (1) the base contribution percentage, or (2) the
Maximum Disparity Rate of such Participant's Compensation
in excess of the Integration Level.
a. [ ] Taxable Wage Base. (The maximum amount considered as
wages for such year under section 3121(a)(1) of the
Internal Revenue Code (the Social Security taxable
wage base) as of the beginning of the Plan Year).
-or-
b. [ ] $_________(a dollar amount not to exceed the Taxable
Wage Base).
-or-
c. [ ] ______% of the Taxable Wage Base (not to exceed 100%).
NOTE: If you maintain any other plan in addition to this Plan,
only one plan may be integrated with Social Security.
B. Forfeitures for a given Plan Year (choose 1 or 2)(Plan section 5.3(a)):
1. [ ] Shall be applied to reduce the Employer Contribution in that
year, or if in excess of the Employer Contribution for such Plan
Year, the excess amounts shall be used to reduce the Employer
Contribution in the next succeeding Plan Year or Years.
-or-
2. [ ] Shall be added to the Employer Contribution and allocated
accordingly.
C. Contribution Eligibility (Plan section 4.1(c)):
The Plan provides that all Participants will share in Employer
Contributions for the Plan Year, except the following (if elected):
[X] Participants who terminate employment during the Plan Year with not
more than 500 Hours of Service and who are not Employees as of the
last day of the Plan Year (other than Participants who die, retire or
become Totally and Permanently Disabled).
If a fewer number of hours than 500 is desired, state the number here:____.
26
<PAGE> 31
- ------------------------------
VII. DISTRIBUTIONS
A. Normal Retirement Age is (choose 1 or 2 )(Plan section 2.26):
1. [X] The date a Participant reaches age 65
(not more than 65 or less than 55.) If no age is indicated,
normal retirement age shall be 65.
-or-
2. [] The later of age ______ (not more than 65) or the ______
(not more than 5th) anniversary of the day the Participant
commenced participation in the Plan. The participation
commencement date is the first day of the first Plan Year
in which the Participant commenced participation in the
Plan.
B. Early Retirement (choose 1 or 2)(Plan section 2.10):
1. [] Early Retirement Date is the first day of the month
coincident with or next following the date upon which a
Participant reaches age 55 (not less than 55) and completes
5 years of service (not more than 15)
-or-
2. [X] Early Retirement will not be permitted under the Plan.
- ------------------------------
VIII. OPTIONAL FEATURES
A. Loans (choose 1 or 2)(Plan ARTICLE 13):
1. [] The Plan permits loans to Participants.
-or-
2. [X] The Plan does not permit loans to Participants.
NOTE: The Plan may not permit loans to Owner-Employees of noncorporate
entities or to Shareholder-Employees of subchapter S
corporations. If Plan loans are permitted, the Trustee
designated in section XV of this Adoption Agreement may not
be the Sponsor's designated Trustee.]
B. Insurance (choose 1 or 2)(Plan ARTICLE 14):
1. [ The Plan permits Participants to designate a portion of
their Account to purchase life insurance contracts. (MUST
NOT be selected if Sponsor's designated trustee is appointed
as Trustee).
The percentage of the Employer Contributions which may be
applied to purchase life insurance contracts shall be equal
to ___%.
-or-
2. [X] The Plan does not permit Participants to designate a portion
of their Account to purchase life insurance contracts.
NOTE: Section 14.5 of the Plan provides certain limits on the amount
of Employer contributions that can be applied to purchase life
insurance contracts.
27
<PAGE> 32
- ------------------------
IX. VESTING
Employer Contributions will become vested if the Participant terminates
employment for any reasons other than retirement, death, or disability
pursuant to the following schedule (chosen A, B, C or D) Plan section 8.3):
<TABLE>
<CAPTION>
A. [ ] Years of
Service Vested Percentage
-------------------------
<S> <C>
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
</TABLE>
B. [ ] 100% vesting immediately after satisfaction of the eligibility
requirements.
NOTE: If a service requirement greater than one year is chosen for
eligibility in section III.A.1. of this Adoption Agreement,
vesting schedule B must be chosen).
C. [ ] 100% vesting after ____ years of service (not to exceed three).
- or -
<TABLE>
<CAPTION>
D. [ ] Years of
Service Vested Percentage
-------------------------
<S> <C>
1 year ___%
2 years ___%(not less than 20)
3 years ___%(not less than 40)
4 years ___%(not less than 60)
5 years ___%(not less than 80)
6 years ___%(not less than 100)
</TABLE>
- ------------------------
X. INVESTMENT CHOICES
A. [X] Investment of Trust assets may be selected only from Shares or
other investments offered by the Sponsor.
B. [ ] ___% of the Trust assets must be invested in Shares or other
investments offered by the Sponsor with the remainder in such
other investments as may be acceptable within the discretion of
the Trustee.]
C. [ ] 50% of the Trust assets must be invested in Shares or other
investments offered by the Sponsor with the remainder in such
other investments as may be acceptable within the discretion of
the Trustee.]
D. [ ] 25% of the Trust assets must be invested in Shares or other
investments offered by the Sponsor with the remainder in such
other investments as may be acceptable within the discretion of
the Trustee.]
The Sponsor may impose additional limitations relating to the
type of permissible investments in the Trust (Plan section 7.3).
28
<PAGE> 33
- ------------------------------
XI. INVESTMENT AUTHORITY
Contributions to the Plan shall be invested by the Trustee in accordance
with instructions of the Employer or Plan Administrator except that
(choose [A], [B] or [C])] (Plan section 7.2):
A. [ ] No exceptions; the Employer or Plan Administrator shall make
all investment selections.
B. [ ] The Employer delegates all investment responsibility to the
Trustee. (MUST NOT be selected if Sponsor's designated trustee
is appointed as Trustee.)]
-or-
C. [X] Each Participant [ ] may, [X] shall direct that:
1. [ ] Amounts voluntarily contributed by such Participant
pursuant to section 4.3 of the Plan rollover contributions
pursuant to section 4.4 of the Plan, and direct transfers
pursuant to section 4.5 of the Plan, if any,
-and/or-
2. [X] Employer Contributions on the Participant's behalf shall
be invested in specified investments offered by the
Sponsor. Participants may make or change such directions
by giving written notice to the Plan Administrator.
Reasonable restrictions may be imposed on this privilege
by the Plan Administrator or the Sponsor for purposes of
administrative convenience.
- ------------------------------
XII. TOP-HEAVY PROVISIONS
Participants who are eligible to receive the minimum allocation provided
by section 5.2 of the Plan shall receive a minimum contribution under
this Plan equal to 3% of Compensation, or if lesser, the largest
percentage of Compensation allocated on behalf of any Key Employee for
the Plan Year under this Plan and paired defined contribution plan #001.
NOTE: If the Participant also participates in paired defined
contribution plan #001 (the profit sharing plan), the required minimum
contribution must be made under this Plan, even if the integrated plan
combination formula is selected.
- ------------------------------
XIII. ALLOCATION LIMITATIONS
COMPLETED THIS SECTION ONLY IF YOU MAINTAIN OR EVER MAINTAINED ANOTHER
QUALIFIED PLAN (OTHER THAN PAIRED PLAN #001) IN WHICH ANY PARTICIPANT IN
THIS PLAN IS (OR WAS) A PARTICIPANT OR COULD BECOME A PARTICIPANT. THIS
SECTION MUST ALSO BE COMPLETED IF THE EMPLOYER MAINTAINS A WELFARE
BENEFIT FUND, AS DEFINED IN SECTION 419(e) OF THE CODE, OR AN INDIVIDUAL
MEDICAL ACCOUNT, AS DEFINED IN SECTION 415(1)(2) OF THE CODE, UNDER
WHICH AMOUNTS ARE TREATED AS ANNUAL ADDITIONS WITH RESPECT TO ANY
PARTICIPANT IN THIS PLAN.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master
or prototype plan (choose either 1 or 2)(Plan section 6.3):
1. [ ] The provisions of section 6.2 will apply as if the
other plan were a master or prototype plan.
29
<PAGE> 34
-or-
2. [ ] (On an attachment, provide the method under which the
plans will limit total annual additions to the
permissible amount, and will properly reduce any
excess amounts, in a manner that precludes
Employer discretion).
B. If the Participant is or has ever been a participant in a
defined benefit plan maintained by the Employer attach an
explanation of the method under which the plan involved will
satisfy the 1.0 limitation in a manner that precludes Employer
discretion.
- ------------------------------
XIV. ADMINISTRATION
A. The Plan Administrator of the Plan will be (choose [1], [2], [3]
or [4]) (Plan sections 2.30 and 15.4):
1. [ ] The Trustee
NOTE: If the Trustee designated in section XV of this Adoption
Agreement is the Sponsor's designated Trustee, it may be
appointed as Plan Administrator.
-or-
2. [X] The Employer
-or-
3. [ ] An individual Plan Administrator designated by the
Employer
--------------------------------------------------
Name
--------------------------------------------------
Address
--------------------------------------------------
-or-
4. [ ] A committee of two or more Employees designated by the
Employer:
--------------------------------------------------
Name & Title
--------------------------------------------------
Signature
--------------------------------------------------
Name & Title
--------------------------------------------------
Signature
--------------------------------------------------
Name & Title
--------------------------------------------------
30
<PAGE> 35
[Signature]
NOTE: If no Plan Administrator has been designated or serving at any time,
the Employer will be deemed the Plan Administrator (Plan section 15.4).
B. The Plan Administrator (including all members of a committee, if a
committee is named) is a Named Fiduciary for the Plan. If other persons are
also to be Named Fiduciaries, their names and addresses are:
Name:
-----------------------------------
Address:
--------------------------------
----------------------------------------
Name:
-----------------------------------
Address:
--------------------------------
----------------------------------------
Name:
-----------------------------------
Address:
--------------------------------
----------------------------------------
C. The Named Fiduciaries have all of the powers set forth in the Plan. If any
powers or duties are to be allocated among them, or delegated to third
parties, indicate below what the powers or duties are and to whom they are
to be delegated (Plan section 15.3):
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
***************************
XV. THE TRUSTEE
A. The Employer hereby appoints the following to serve as Trustee (Plan
section 2.39):
Name:
------------------------------------
Address:
----------------------------------
----------------------------------------
Dated:
---------------- ----------------------
(Signature of) Trustee
Name:
------------------------------
31
<PAGE> 36
Address:
------------------------------------
-------------------------------------------
Dated:
-------------- ----------------------
(Signature of) Trustee
Name:
--------------------------------------
Address:
-----------------------------------
-------------------------------------------
Dated:
-------------- ----------------------
(Signature of Trustee)
B. The Employer hereby appoints the Sponsor's designated trustee(s) to serve
as Trustee(s):
Name:
-------------------------------------
Address:
------------------------------------
-----------------------------------------
Dated:
--------------- -----------------------
(Signature of Trustee)
Name:
----------------------------------------
Address:
--------------------------------------
--------------------------------------------
Dated:
--------------- ------------------------
(Signature of Trustee)
Name:
----------------------------------------
Address:
--------------------------------------
--------------------------------------------
Dated:
--------------- ------------------------
(Signature of Trustee)
********************************
32
<PAGE> 37
XVI. EMPLOYER SIGNATURE
The Employer acknowledges receipt of the current prospectus of the
investment companies designated by the Employer for its initial investments
under the Plan and represents that it has delivered a copy thereof to each
Participant in the Plan, and that it will deliver to each Participant
making contributions and each new Participant, a copy of the then current
prospectus of such investment companies. The Employer further represents
that the information in this Adoption Agreement shall become effective
only when approved and countersigned by the Trustee. The right to reject
this Adoption Agreement for any reason is reserved.
This Adoption Agreement must be used only in conjunction with basic plan
document #01.
NOTE: An Employer who has ever maintained or who later adopts any plan
(including a welfare benefit fund, as defined in section 419(e) of the
Code, which provides post-retirement medical benefits allocated to
separate accounts for Key Employees, as defined in section 419A(d)(3)
of the Code, or an individual medical account as defined in section
415(l)(2) of the Code), in addition to this Plan (other than paired
plan #001), may not rely on the opinion letter issued by the National
Office of the Internal Revenue Service as evidence that this Plan is
qualified under section 401 of the Internal Revenue Code. If the
Employer who adopts or maintains multiple plans wishes to obtain
reliance that the plans are qualified, application for a
determination letter should be made to the appropriate Key District
Director of Internal Revenue.
This Adoption Agreement consists of 17 pages.
IN WITNESS WHEREOF, the Employer has caused this Adoption
Agreement to be executed by its duly authorized officers this _
day of ________________.
--------------------------------
(Name of Employer)
By:
--------------------------------
(Name & Title)
Date:
------------------
33
<PAGE> 38
MONEY PURCHASE PENSION AND PROFIT SHARING
PLAN BASIC DOCUMENT
34
<PAGE> 39
AMENDMENT TO THE
INVESTMENT COMPANY INSTITUTE
PROTOTYPE MONEY PURCHASE PENSION AND PROFIT SHARING PLAN
BASIC DOCUMENT #01
FIRST
The Plan is hereby amended by the word-for-word adoption of the model
language contained in Revenue Procedure 93-12, for distributions made on or
after January 1, 1993, as follows:
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this provision, a
Distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an Eligible Rollover Distribution
paid directly to an Eligible Retirement Plan specified by the Distributee
in a Direct Rollover.
Definitions
(a) Eligible Rollover Distribution. An Eligible Rollover Distribution
is any distribution of all or any portion of the balance to the credit
of the Distributee, except that an Eligible Rollover Distribution does
not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the Distributee or the joint lives
(or joint life expectancies) of the Distributee and the Distributee's
designated Beneficiary, or for a specified period of ten (10) years or
more; any distribution to the extent such distribution is required
under section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities).
(b) Eligible Retirement Plan. An Eligible Retirement Plan is an
individual retirement account described in section 408(a) of the Code,
an individual retirement annuity described in section 408(b) of the
Code, an annuity plan described in section 403(a) of the Code, or a
qualified trust described in section 401(a) of the Code, that accepts
the Distributee's Eligible Rollover Distribution. However, in the case
of an Eligible Rollover Distribution to the surviving spouse, an
Eligible Retirement Plan is an individual retirement account or
individual retirement annuity.
(c) Distributee. A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving
spouse and the Employee's or former Employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations order,
as defined in section 414(p) of the Code, are Distributees with regard
to the interest of the spouse or former spouse.
(d) Direct Rollover. A Direct Rollover is a payment by the Plan to
the Eligible Retirement Plan specified by the Distributee.
35
<PAGE> 40
SECOND
The Plan is hereby amended by the word-for-word adoption of the model language
contained in Revenue Procedure 94-13 as follows:
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Compensation of each
Employee taken into account under the Plan shall not exceed the OBRA '93 Annual
Compensation Limit. The OBRA '93 Annual Compensation Limit is $150,000, as
adjusted by the Commissioner for increases in the cost-of-living in accordance
with section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding
12 months, over which Compensation is determine ("Determination Period")
beginning in such calendar year. If a Determination Period consists of fewer
than 12 months, the OBRA '93 Annual Compensation Limit will be multiplied by a
fraction, the numerator of which is the number of months in the Determination
period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under section 401(a)(17) of the Code shall mean the OBRA
'93 Annual Compensation Limit set forth in this provision.
If Compensation for any prior Determination Period is taken into account in
determining an Employee's benefits accruing in the current Plan Year, the
Compensation for that prior Determination Period is subject to the OBRA '93
Annual Compensation Limit in effect for that prior Determination Period. For
this purpose, for Determination Periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA '93 Annual
Compensation Limit is $150,000.
36
<PAGE> 41
MONEY PURCHASE PENSION AND
PROFIT SHARING PLAN
PLAN DOCUMENT
37
<PAGE> 42
PROTOTYPE MONEY PURCHASE PENSION
AND PROFIT SHARING PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
------- ----
ARTICLE 1
GENERAL
<S> <C> <C>
1.1 Purpose ...................................................................... 5
1.2 Trust ........................................................................ 5
ARTICLE 2
DEFINITIONS
2.1 Account ...................................................................... 5
2.2 Adoption Agreement ........................................................... 5
2.3 Affiliated Employers ......................................................... 5
2.4 Beneficiary ................................................................... 5
2.5 Break in Service ............................................................. 5
2.6 Code ......................................................................... 5
2.7 Compensation ................................................................. 5
2.8 Custodian .................................................................... 5
2.9 Determination Date ........................................................... 5
2.10 Early Retirement Date ......................................................... 5
2.11 Earned Income ................................................................ 6
2.12 Effective Date ............................................................... 6
2.13 Eligibility Computation Period ............................................... 6
2.14 Employee ..................................................................... 6
2.15 Employer ..................................................................... 6
2.16 Employer Contributions ....................................................... 6
2.17 Entry Dates .................................................................. 6
2.18 ERISA ........................................................................ 6
2.19 Hour of Service .............................................................. 6
2.20 Integration Level ............................................................ 7
2.21 Key Employee ................................................................. 7
2.22 Leased Employee .............................................................. 7
2.23 Maximum Disparity Rate ....................................................... 8
2.24 Maximum Profit Sharing Disparity Rate ........................................ 8
2.25 Non-Key Employee ............................................................. 8
2.26 Normal Retirement Age ........................................................ 8
2.27 Owner-Employee ............................................................... 8
2.28 Participant .................................................................. 8
2.29 Plan ......................................................................... 8
2.30 Plan Administrator ........................................................... 8
2.31 Plan Year .................................................................... 8
2.32 Self-Employed Individuals .................................................... 8
2.33 Shares ....................................................................... 8
2.34 Sponsor ...................................................................... 9
2.35 Taxable Wage Base ............................................................ 9
2.36 Total and Permanent Disability................................................ 9
2.37 Trust ........................................................................ 9
2.38 Trust Agreement .............................................................. 9
2.39 Trustee ...................................................................... 9
2.40 Valuation Date ............................................................... 9
2.41 Vesting Computation Period ................................................... 9
2.42 Year of Service ............................................................... 9
ARTICLE 3
ELIGIBILITY AND YEARS OF SERVICE
3.1 Eligibility Requirement ...................................................... 9
3.2 Participation and Service Upon Reemployment .................................. 9
3.3 Predecessor Employers ........................................................ 9
ARTICLE 4
CONTRIBUTIONS
4.1 Employer Contributions ....................................................... 9
4.2 Payment ...................................................................... 10
4.3 Nondeductible Voluntary Contributions by Participants......................... 10
4.4 Rollovers..................................................................... 10
</TABLE>
38
<PAGE> 43
<TABLE>
<S> <C> <C>
4.5 Direct Transfers ............................................................ 10
ARTICLE 5
ALLOCATIONS
5.1 Individual Accounts ......................................................... 10
5.2 Minimum Allocation .......................................................... 11
5.3 Allocation of Employer Contributions and Forfeitures ........................ 11
5.4 Coordination of Social Security Integration ................................. 12
5.5 Withdrawals and Distributions ............................................... 12
5.6 Determination of Value of Trust Fund and of Net Earnings or Losses .......... 12
5.7 Allocation of Net Earnings or Losses ........................................ 12
5.8 Responsibilities of the Plan Administrator .................................. 13
ARTICLE 6
LIMITATIONS ON ALLOCATIONS
6.1 Employers Who Do Not Maintain Other Qualified Plans ......................... 13
6.2 Employers Who Maintain Other Qualified Master
or Prototype Defined Contribution Plans ..................................... 13
6.3 Employers Who, In Addition to This Plan, Maintain Other Qualified Plans
Which are Defined Contribution Plans Other Than Master or Prototype Plans ... 14
6.4 Employers, Who In Addition To This Plan,
Maintain A Qualified Defined Benefit Plan ................................... 14
6.5 Definitions ................................................................. 14
ARTICLE 7
TRUST FUND
7.1 Receipt of Contributions by Trustee ......................................... 16
7.2 Investment Responsibility ................................................... 16
7.3 Investment Limitations ...................................................... 16
ARTICLE 8
VESTING
8.1 Nondeductible Voluntary Contributions and Earnings .......................... 16
8.2 Rollovers, Transfers and Earnings ........................................... 16
8.3 Employer Contributions and Earnings ......................................... 16
8.4 Amendments to Vesting Schedule .............................................. 17
8.5 Determination of Years of Service ........................................... 17
8.6 Forfeiture of Nonvested Amounts ............................................. 17
8.7 Reinstatement of Benefit..................................................... 18
ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 General...................................................................... 18
9.2 Qualified Joint and Survivor Annuity ........................................ 18
9.3 Qualified Preretirement Survivor Annuity .................................... 18
9.4 Definitions.................................................................. 18
9.5 Notice Requirements ......................................................... 19
9.6 Safe Harbor Rules ........................................................... 19
9.7 Transitional Rules .......................................................... 20
ARTICLE 10
DISTRIBUTION PROVISIONS
10.1 Vesting on Distribution Before Break In Service ............................. 21
10.2 Restrictions on Immediate Distributions ..................................... 21
10.3 Commencement of Benefits .................................................... 21
10.4 Early Retirement With Age and Service Requirement ........................... 22
10.5 Nontransferability of Annuities ............................................. 22
10.6 Conflicts With Annuity Contracts ............................................ 22
ARTICLE 11
TIMING AND MODES OF DISTRIBUTION
11.1 General Rules ............................................................... 22
11.2 Required Beginning Date ..................................................... 22
11.3 Limits on Distribution Periods .............................................. 22
11.4 Determination of Amount to be Distributed Each Year ......................... 22
</TABLE>
39
<PAGE> 44
<TABLE>
<S> <C> <C>
11.5 Death Distribution Provisions ............................................... 22
11.6 Designation of Beneficiary ................................................... 23
11.7 Definitions ................................................................. 23
11.8 Transitional Rules .......................................................... 24
11.9 Optional Forms of Benefit ................................................... 25
ARTICLE 12
WITHDRAWALS
12.1 Withdrawal of Nondeductible Voluntary Contributions ......................... 25
12.2 Hardship Withdrawals ........................................................ 25
12.3 Manner of Making Withdrawals ................................................ 25
I2.4 Limitations on Withdrawals .................................................. 26
ARTICLE 13
LOANS
13.1 General Provisions........................................................... 26
13.2 Administration of Loan Program............................................... 26
13.3 Amount of Loan............................................................... 26
13.4 Manner of Making Loans....................................................... 26
13.5 Terms of Loan................................................................ 27
13.6 Security for Loan............................................................ 27
13.7 Segregated Investment........................................................ 27
13.8 Repayment of Loan............................................................ 27
13.9 Default on Loan.............................................................. 27
13.10 Unpaid Amounts............................................................... 27
ARTICLE 14
INSURANCE
14.1 Insurance ................................................................... 27
14.2 Policies .................................................................... 27
14.3 Beneficiary ................................................................. 27
14.4 Payment of Premiums ......................................................... 28
14.5 Limitation on Insurance Premiums ............................................ 28
14.6 Insurance Company ........................................................... 28
14.7 Distribution of Policies .................................................... 28
14.8 Policy Features ............................................................. 29
14.9 Changed Conditions .......................................................... 29
14.10 Conflicts ................................................................... 29
ARTICLE 15
ADMINISTRATION
15.1 Duties and Responsibilities of Fiduciaries;
Allocation of Fiduciary Responsibility ...................................... 29
15.2 Powers and Responsibilities of the Plan Administrator ....................... 29
15.3 Allocation of Duties and Responsibilities ................................... 30
15.4 Appointment of the Plan Administrator ....................................... 30
15.5 Expenses .................................................................... 30
15.6 Liabilities ................................................................. 30
15.7 Claims Procedure ............................................................ 30
ARTICLE 16
AMENDMENT, TERMINATION AND MERGER
16.1 Sponsor's Power to Amend..................................................... 31
16.2 Amendment by Adopting Employer...............................................
16.3 Vesting Upon Plan Termination................................................ 31
16.4 Vesting Upon Complete Discontinuance of Contributions........................ 31
16.5 Maintenance of Benefits Upon Merger.......................................... 31
16.6 Special Amendments........................................................... 31
ARTICLE 17
MISCELLANEOUS
17.1 Exclusive Benefit of Participants and Beneficiaries ......................... 31
17.2 Nonguarantee of Employment................................................... 32
17.3 Rights to Trust Assets....................................................... 32
17.4 Nonalienation of Benefits.................................................... 32
17.5 Aggregation Rules............................................................ 32
17.6 Failure of Qualification..................................................... 32
17.7 Applicable Law............................................................... 32
</TABLE>
40
<PAGE> 45
ARTICLE 1
GENERAL
1.1 PURPOSE. The Employer hereby establishes this Plan to provide
retirement, death and disability benefits for eligible employees and their
Beneficiaries. This Plan is a standardized prototype paired defined contribution
plan and is designed to permit adoption of profit sharing provisions, money
purchase pension provisions, or both. The provisions herein and the selections
made by the Employer by execution of the money purchase pension or profit
sharing Adoption Agreement or Agreements, shall constitute the Plan. It is
intended that the Plan and Trust qualify under sections 401 and 501 of the
Internal Revenue Code of 1986, as amended and with the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
1.2 TRUST. The Employer has simultaneously adopted a Trust authorizing a
Trustee to receive, invest, and distribute funds in accordance with the Plan.
ARTICLE 2
DEFINITIONS
2.1 ACCOUNT. The aggregate of the individual bookkeeping subaccounts
established for each Participant, as provided in section 5.1.
2.2 ADOPTION AGREEMENT. The written agreement or agreements of the
Employer and the Trustee by which the Employer establishes this Plan and adopts
the Trust Agreement forming a part hereof, as the same may be amended from
time to time. The Adoption Agreement contains all the options that may be
selected by the Employer. The information set forth in the Adoption Agreement
executed by the Employer shall be deemed to be a part of this Plan as if set
forth in full herein.
2.3 AFFILIATED EMPLOYERS. The Employer and any corporation which is a
member of a controlled group of corporations (as defined in section 414(b) of
the Code) which includes the Employer, any trade or business (whether or not
incorporated) which is under common control (as defined in section 414(c) of the
Code) with the Employer, or any service organization (whether or not
incorporated) which is a member of an affiliated service group (as defined in
sections 414(m) and (o) of the Code) which includes the Employer.
2.4 BENEFICIARY. The person or persons (natural or otherwise) designated
by a Participant in accordance with section 11.6 to receive any undistributed
amounts credited to the Participant's Account under the Plan at the time of the
Participant's death.
2.5 BREAK IN SERVICE. An Eligibility Computation Period or Vesting
Computation Period in which an Employee fails to complete more than five hundred
(500) Hours of Service.
2.6 CODE. The Internal Revenue Code of 1986, as amended from time to time,
or any successor statute.
2.7 COMPENSATION.
(a) Compensation will mean all of each Participant's W-2 earnings.
For purposes of determining allocations under Section 5.3, only
Compensation while the Employee is a Participant shall be
converted.
(b) For any self-employed individual covered under the Plan,
Compensation will mean Earned Income.
(c) Compensation shall include only that Compensation that is
actually paid to the Participant during the Plan Year.
(d) Notwithstanding the above, if elected by the Employer in the
Adoption Agreement, Compensation shall include any amount which is contributed
by the Employer pursuant to a salary reduction agreement and which is not
includable in the gross income of the Employee under sections 125, 402(e)(3),
402(h) or 403(b) of the Code. The effective date of this subsection shall be
elected by the Employer in the Adoption Agreement.
(e) The annual Compensation of each Participant taken into account
under the Plan for any year shall not exceed one hundred fifty thousand dollars
($150,000), as adjusted by the Secretary at the same time and in the same manner
as under section 415(d) of the Code. In determining the Compensation of a
Participant for purposes of this limitation, the rules of section 414(q)(6) of
the Code shall apply, except in applying such rules, the term "family" shall
include only the Spouse of the Participant and any lineal descendants of the
Participant who have not attained age nineteen (19) before the close of the
year. If, as a result of the application of such rules, the limitation is
exceeded, then (except for purposes of determining the portion of Compensation
up to the Integration Level to the extent this Plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals in
proportion to each such individual's Compensation as determined under this
section prior to the application of this limitation. The effective date of this
subsection shall be the first Plan Year beginning on or after January 1, 1989.
2.8 CUSTODIAN. The custodian, if any, designated in the Adoption
Agreement.
2.9 DETERMINATION DATE. With respect to any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For the first Plan
Year of the Plan, the last day of that Plan Year.
2.10 EARLY RETIREMENT DATE. The first day of the month coincident with or
next following the date upon which the Participant satisfies the early
retirement age and service requirements in the Adoption Agreement; provided,
however, such requirements may not be less than age fifty-five (55), nor more
than fifteen (15) Years of Service.
41
<PAGE> 46
2.11 EARNED INCOME. The net earnings from self-employment in the trade or
business with respect to which the Plan is established, for which personal
services of the individual are a material income-producing factor. Net earnings
will be determined without regard to items not included in gross income and the
deductions allocable to such items. Net earnings are reduced by contributions to
a qualified plan to the extent deductible under section 404 of the Code. Net
earnings shall be determined with regard to the deduction allowed to the
Employer by section 164(f) of the Code for taxable years beginning after
December 31, 1989.
2.12 EFFECTIVE DATE. The first day of the first Plan Year for which the
Plan is effective as specified in the Adoption Agreement.
2.13 ELIGIBILITY COMPUTATION PERIOD. For purposes of determining Years of
Service and Breaks in Service for eligibility to participate, the initial
Eligibility Computation Period shall be the twelve (12) consecutive month period
beginning with the day the Employee first performs an Hour of Service for the
Employer (employment commencement date). The succeeding twelve (12) consecutive
month periods commence with the first and each following anniversary of the
Employee's employment commencement date.
2.14 EMPLOYEE. Any person, including a Self-Employed Individual, who is
employed by the Employer maintaining the Plan or any other employer required to
be aggregated with such Employer under sections 414(b),(c),(m) or (o) of the
Code. The term "Employee" shall also include any Leased Employee deemed to be an
Employee of any Employer described above as provided in sections 414(n) or (o)
of the Code.
2.15 EMPLOYER. The corporation, proprietorship, partnership or other
organization that adopts the Plan by execution of an Adoption Agreement.
2.16 EMPLOYER CONTRIBUTIONS. The contribution of the Employer to the Plan
and Trust as set forth in section 4.1 and the Adoption Agreement.
2.17 ENTRY DATES. The Effective Date shall be the first Entry Date.
Thereafter, the Entry Dates shall be the first day of each Plan Year and the
first day of the seventh month of each Plan Year.
2.18 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
2.19 HOUR OF SERVICE.
(a) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours shall be credited to
the Employee only for the computation period or periods in which the duties are
performed; and
(b) Each hour for which an Employee is paid, or entitled to payment,
by the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including disability), layoff,
jury duty, military duty, or leave of absence. No more than five hundred one
(501) Hours of Service shall be credited under this paragraph to an Employee on
account of any single, continuous period during which the Employee performs no
duties (whether or not such period occurs in a single computation period). Hours
under this paragraph will be calculated and credited pursuant to section
2530.200b-2 of the Department of Labor regulations which are incorporated herein
by this reference.
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under paragraph (a) or paragraph (b), as the
case may be, and under this paragraph (c). These hours shall be credited to
the Employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement, or payment is made.
(d) Solely for purposes of determining whether an Employee has a Break
in Service, Hours of Service shall also include an uncompensated authorized
leave of absence not in excess of two (2) years, or military leave while the
Employee's reemployment rights are protected by law or such additional or other
periods as granted by the Employer as military leave (credited on the basis of
forty (40) Hours of Service per each week or eight (8) Hours of Service per
working day), provided the Employee returns to employment at the end of his
leave of absence or within ninety (90) days of the end of his military leave,
whichever is applicable.
(e) Hours of Service will be credited for employment with other
members of an affiliated service group (under section 414(m)), a controlled
group of corporations (under section 414(b)), or a group of trades or businesses
under common control (under section 414(c)) of which the adopting Employer is a
member, and any other entity required to be aggregated with the Employer
pursuant to section 414(o) and the regulations thereunder. Hours of Service will
also be credited for any individual considered an Employee for purposes of this
Plan under section 414(n) or section 414(o) and the regulations thereunder.
(f) Solely for purposes of determining whether an Employee has a Break
in Service, Hours of Service shall also include absence from work for maternity
or paternity reasons, if the absence begins on or after the first day of the
first Plan Year beginning after 1984. During this absence, the Employee shall be
credited with the Hours of Service which would have been credited but for the
absence, or, if such hours cannot be determined with eight (8) hours per day.
An absence from work for maternity or paternity reasons means an absence:
(i) by reason of the pregnancy of an Employee;
(ii) by reason of the birth of a child of the Employee;
42
<PAGE> 47
(iii) by reason of the placement of a child with
the Employee in connection with adoption; or
(iv) for purposes of caring for such a child for a
period immediately following such birth or placement.
These Hours of Service shall be credited in the computation period following
the computation period in which the absence begins, except as necessary to
prevent a Break in Service in the computation period in which the absence
begins. However, no more than five hundred one (501) Hours of Service will be
credited for purposes of any such maternity or paternity absence from work.
(g) The Employer may elect to compute Hours of Service by
the use of one of the service equivalencies in the Adoption Agreement. Only one
method may be selected. If selected, the service equivalency must be applied to
all Employees covered under the Plan.
(h) If the Employer amends the method of crediting
service from the elapsed time method described in section 1.410 (a)-7 of the
Treasury regulations to the Hours of Service computation method by the adoption
of this Plan, or an Employee transfers from a plan under which service is
determined on the basis of elapsed time, the following rules shall apply for
purposes of determining the Employee's service under this Plan up to the time
of amendment or transfer:
(i) the Employee shall receive credit, as of the
date of amendment or transfer, for a number of Years of Service equal to the
number of one (1) year periods of service credited to the Employee as of the
date of the amendment or transfer; and
(ii) the Employee shall receive credit in the
applicable computation period which includes the date of amendment or transfer,
for a number of Hours of Service determined by applying the weekly service
equivalency specified in paragraph (g) to any fractional part of a year
credited to the Employee under this paragraph (h) as of the date of amendment
or transfer. The use of the weekly service equivalency shall apply to all
Employees who formerly were credited with service under the elapsed time
method.
2.20 INTEGRATION LEVEL. The Taxable Wage Base or such lesser amount
elected by the Employer in the Adoption Agreement.
2.21 KEY EMPLOYEE.
(a) Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination period
was an officer of the Employer if such individual's annual Compensation exceeds
fifty percent (50%) of the dollar limitation under section 415(b)(1)(A) of the
Code; an owner (or considered an owner under section 318 of the Code) of one of
the ten (10) largest interests in the Employer if such individual's
Compensation exceeds one hundred percent (100%) of the dollar limitation under
section 415(c)(1)(A) of the Code; a Five Percent (5%) Owner of the Employer; or
a one percent (1%) owner of the Employer who has annual Compensation of more
than one hundred fifty thousand dollars ($150,000).
(b) For purposes of this section, annual Compensation
means compensation as defined in section 415(c)(3) of the Code, but including
amounts contributed by the Employer pursuant to a salary reduction agreement
which are excludable from the Employee's gross income under sections 125,
402(a)(8), 402(h) or 403(b) of the Code.
(c) For purposes of this section, determination period is
the Plan Year containing the Determination Date and the four (4) preceding Plan
Years.
2.22 LEASED EMPLOYEE.
(a) Any person (other than an Employee of any of the
Affiliated Employers) who, pursuant to an agreement between any of the
Affiliated Employers and any other person ("leasing organization"), has
performed service for any of the Affiliated Employers (or for any of the
Affiliated Employers and related persons determined in accordance with section
414(n)(6) of the Code) on a substantially full-time basis for a period of at
least one (1) year and such services are of a type historically performed by
employees in the Affiliated Employer's business field. Contributions or benefits
provided a Leased Employee by the leasing organization which are attributable
to services performed for the Affiliated Employer shall be treated as provided
by the Affiliated Employer.
(b) A Leased Employee shall not be considered an Employee
of an Affiliated Employer if:
(i) such employee is covered by a money purchase
pension plan providing:
(1) a nonintegrated employer
contribution rate of at least ten percent (10%) of compensation (as defined in
section 415(c)(3) of the Code), but including amounts contributed pursuant to a
salary reduction agreement which are excludable from the employee's gross
income under sections 125, 402(a)(8), 402(h) or 403(b) of the Code;
(2) immediate participation; and
(3) full and immediate vesting.
and
(ii) Leased Employee's do not constitute more than
twenty percent (20%) of the Affiliated
Employees non-Highly-Compensated workforce.
(c) The determination of whether a person is a
Leased Employee will be made pursuant to
section 414(n) of the Code.
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<PAGE> 48
2.23 MAXIMUM DISPARITY RATE. The lesser of.
(a) five and seven-tenths percent (5.7%);
(b) the applicable percentage determined in accordance
with the table below:
if the Integration Level is
<TABLE>
<CAPTION>
The Applicable
More Than But Not More Than Percentage Is:
- --------- ----------------- --------------
<S> <C> <C>
$0 X * 5.7%
X of TWB 80% Of TWB 4.3%
80% of TWB Y ** 5.4%
</TABLE>
* X = the greater of $10,000 or 20% of the Taxable Wage Base.
** Y = any amount more then 80% of the Taxable Wage Base but less than
100% of the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the applicable
percentage is five and seven-tenths percent (5.7%).
2.24 MAXIMUM PROFIT SHARING DISPARITY RATE. The lesser of:
(a) two and seven-tenths percent (2.7%);
(b) the applicable percentage determined in accordance
with the table below:
If the Integration Level is
<TABLE>
<CAPTION>
The Applicable
More Than But Not More than Percentage Is:
- --------- ----------------- --------------
<S> <C> <C>
$0 X * 2.7%
X of TWB 80% of TWB 1.3%
80% of TWB Y ** 2.4%
</TABLE>
* X = the greater of $10,000 or 20% of the Taxable Wage Base.
** Y = any amount more than 80% of the Taxable Wage Base but less than
100 of the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the applicable
percentage is two and seven-tenths percent (2.7%).
2.25 NON-KEY EMPLOYEE. Any Employee or former Employee who is not a
Key Employee. In addition, any Beneficiary of a Non-Key Employee shall be
treated as a Non-Key Employee.
2.26 NORMAL RETIREMENT AGE. The age selected in the Adoption
Agreement, but not less than age fifty-five (55). If the Employer enforces a
mandatory retirement age, the Normal Retirement Age is the lesser of that
mandatory age or the age specified in the Adoption Agreement.
2.27 OWNER-EMPLOYEE. An individual who is a sole proprietor, or who
is a partner owning more than ten percent (10%) of either the capital or
profits interest of a partnership.
2.28 PARTICIPANT. A person who has met the eligibility requirements
of section 3.1 and whose Account hereunder has been neither completely
forfeited nor completely distributed.
2.29 PLAN. The prototype paired defined contribution profit sharing
and money purchase pension plan provided under this basic plan document.
References to the Plan shall refer to the profit sharing provisions, the money
purchase pension provisions, or both, as the context may require.
2.30 PLAN ADMINISTRATOR. The person, persons or entity appointed by
the Employer pursuant to ARTICLE 15 to manage and administer the Plan.
2.31 PLAN YEAR. The twelve (12) consecutive month period designated
by the Employer in the Adoption Agreement.
2.32 SELF-EMPLOYED INDIVIDUAL. An individual who has Earned Income
for the taxable year from the trade or business for which the Plan is
established, or an individual who would have had Earned Income for the taxable
year but for the fact that the trade or business had no net profits for the
taxable year.
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<PAGE> 49
2.33 SHARES. Shares of stock in any regulated investment company
registered under the Investment Company Act of 1940 that are made available for
investment purposes as an investment option under this Plan.
2.34 SPONSOR. The sponsor designated in the Adoption Agreement
which has made this Plan available to the Employer.
2.35 TAXABLE WAGE BASE. The maximum amount of earnings which may be
considered wages for a year under section 3121(a)(1) of the Code in effect as
of the beginning of the Plan Year.
2.36 TOTAL AND PERMANENT DISABILITY. The inability of the
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment, which condition, in the
opinion of a physician chosen by the Plan Administrator, can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months.
2.37 TRUST. The fund maintained by the Trustee for the investment
of Plan assets in accordance with the terms and conditions of the Trust
Agreement.
2.38 TRUST AGREEMENT. The agreement between the Employer and the
Trustee under which the assets of the Plan are held, administered, and managed.
The provisions of the Trust Agreement shall be considered an integral part of
this Plan as if set forth fully herein.
2.39 TRUSTEE. The individual or corporate Trustee or Trustees
under the Trust Agreement as they may be constituted from time to time.
2.40 VALUATION DATE. The last day of each Plan Year and such other
dates as may be determined by the Plan Administrator, as provided in section
5.6 for valuing the Trust assets.
2.41 VESTING COMPUTATION PERIOD. The Plan Year.
2.42 YEAR OF SERVICE. An Eligible Computation Period, Vesting
Computation Period, or Plan Year, whichever is applicable, during which an
Employee has completed at least one thousand (1,000) Hours of Service (whether
or not continuous). The Employer may, in the Adoption Agreement, specify a
fewer number of hours.
ARTICLE 3
ELIGIBILITY AND YEARS OF SERVICE
3.1 ELIGIBILITY REQUIREMENTS.
(a) Each Employee of the Affiliated Employers shall
become a Participant in the Plan as of the first Entry Date after the date on
which the Employee has satisfied the minimum age and service requirements
specified in the Adoption Agreement.
(b) The Employer may elect in the Adoption Agreement to
exclude from participation:
(i) Employees included in a unit of employees
covered by a collective bargaining agreement between the Employer and Employee
representatives, if retirement benefits were the subject of good faith
bargaining. For this purpose, the term "Employee representatives" does not
include any organization more than half of whose members are Employees who are
owners, officers, or executives of the Employer; and
(ii) nonresident aliens who receive no earned
income from the Employer which constitutes income from sources within the
United States.
3.2 PARTICIPATION AND SERVICE UPON REEMPLOYMENT. Upon the
reemployment of any Employee, the following rules shall determine his
eligibility to participate in the Plan and his credit for prior service.
(a) Participation. If the reemployed Employee was a
Participant in the Plan during his prior period of employment, he shall be
eligible upon reemployment to resume participation in the Plan. If the
reemployed Employee was not a Participant in the Plan, he shall be considered a
new Employee and required to meet the requirements of section 3.1 in order to
be eligible to participate in the Plan, subject to the reinstatement of credit
for prior service under paragraph (b) below.
(b) Credit for Prior Service. In the case of any Employee
who is reemployed before or after incurring a Break in Service, any Hour of
Service and Year of Service credited to the Employee at the and of his prior
period of employment shall be reinstated as of the date of his reemployment.
3.3 PREDECESSOR EMPLOYERS. If specified in the Adoption Agreement,
Years of Service with a predecessor employer will be treated as service for the
Employer for eligibility purposes; provided, however, If the Employer maintains
the plan of a predecessor employer, Years of Service with such employer will be
treated as service with the Employer without regard to any election.
ARTICLE 4
CONTRIBUTIONS
4.1 EMPLOYER CONTRIBUTIONS.
(a) Money Purchase Pension Contributions. For each Plan
Year, the Employer shall contribute to the Trust an amount equal to such
uniform percentage of Compensation of each eligible Participant as may be
determined by the Employer in accordance with the money purchase pension
contribution formula specified in the Adoption Agreement. Subject to the
limitations of section 5.4, the money purchase pension contribution formula may
be integrated with Social Security, as set forth in the Adoption Agreement.
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<PAGE> 50
(b) Profit Sharing Contribution. For each Plan Year, the
Employer shall contribute to the Trust an amount as may be determined by the
Employer in accordance with the profit sharing formula set forth in the
Adoption Agreement.
(c) Eligible Participants. Subject to the Minimum
Allocation rules of section 5.2 and the exclusions specified in this section,
each Participant shall be eligible to share in the Employer Contribution. An
Employer may elect in the Adoption Agreement that Participants who terminate
employment during the Plan Year with not more than five hundred (500) Hours of
Service and who are not Employees as of the last day of the Plan Year (other
than Participants who die, retire or become totally and Permanently Disabled
during the Plan Year) shall not be eligible to share in the Employer
Contribution. An Employer may further elect in the Adoption Agreement to
allocate a contribution on behalf of a Participant who completes fewer than
five hundred (500) Hours of Service and is otherwise ineligible to share in the
Employer Contribution. If the Employer fails to specify in the Adoption
Agreement the number of Hours of Service required to share in the Employer
Contribution, the number shall be five hundred (500) Hours of Service.
(d) Contribution Limitation. In no event shall any
Employer Contribution exceed the maximum amount deductible from the Employer's
income under section 404 of the Code, or the maximum limitations under section
415 of the Code provided in ARTICLE 6.
4.2 PAYMENT. All Employer Contributions to the Trust for any Plan
Year shall be made either in one lump-sum or in installments in U.S. currency,
by check, or in Shares within the time prescribed by law, including extensions
granted by the Internal Revenue Service, for filing the Employer's federal
income tax return for the taxable year with or within which such Plan Year
ends. All Employer Contributions to the Trust for a money purchase pension plan
for any Plan Year shall be made within the time prescribed by regulations under
section 412(c)(10) of the Code.
4.3 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS BY PARTICIPANTS.
(a) This Plan will not accept nondeductible Employee
contributions for Plan Years beginning after the Plan Year in which this Plan
is adopted by the Employer. Employee contributions made with respect to Plan
years beginning after December 31, 1986 will be limited so as to meet the
nondiscrimination test of section 401(m).
(b) A separate account shall be maintained by the Trustee
for the nondeductible Employee contributions of each Participant.
(c) Employee contributions and earnings thereon shall be
fully vested and nonforfeitable at all times.
(d) The provisions of this section shall apply to
Employee contributions made prior to the first Plan Year after the Plan Year in
which the Employer adopts this Plan.
4.4 ROLLOVERS.
(a) Subject to the approval of the Plan Administrator, a
participant who has participated in any other qualified plan described in
section 401(a) of the Code or in a qualified annuity plan described in section
403(a) of the Code shall be permitted to make a rollover contribution in the
form of cash to the Trustee of an amount received by the Participant that is
attributable to participation in such other plan (reduced by any nondeductible
voluntary contributions he made to the plan). provided that the rollover
contribution complies with all requirements of sections 402(c) or 403(a)(4) of
the Code, whichever is applicable.
(b) Before approving such a Participant rollover, the
Plan Administrator may request from the Participant or the Employer any
documents which the Plan Administrator, in its discretion, deems necessary for
such rollover.
(c) Any rollover contribution to the Trust shall be
credited to the Participants rollover subaccount established under section 5.1
and separately accounted for.
4.5 DIRECT TRANSFER.
(a) The Plan shall accept a transfer of assets directly
from another plan qualified under sections 401(a) or 403(a) of the Code only if
the Plan Administrator, in its sole discretion, agrees to accept such a
transfer. In determining whether to accept such a transfer the Plan
Administrator shall consider the administrative inconvenience engendered by
such a transfer and any risks to the continued qualification of the Plan under
section 401(a) of the Code. Acceptance of any such transfer shall not preclude
the Plan Administrator from refusing any subsequent such transfers.
(b) Any transfer of assets accepted under this section
shall be credited to the Participant's direct transfer subaccount and shall be
separately accounted for at all times and shall remain subject to the
provisions of the transferor plan (as it existed at the time of such transfer)
to the extent required by section 411(d)(6) of the Code (including, but not
limited to, any rights to Qualified Joint and Survivor Annuities and qualified
preretirement survivor annuities) as if such provisions were pan of the Plan.
In all other respects, however, such transferred assets will be subject to the
provisions of the Plan.
(c) Assets accepted under this section shall be fully
vested and nonforfeitable.
(d) Before approving such a direct transfer, the Plan
Administrator may request from the Participant or the Employer (or the prior
employer) any documents the Plan Administrator, in its discretion, deems
necessary for such direct transfer.
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<PAGE> 51
ARTICLE 5
ALLOCATIONS
5.1 INDIVIDUAL ACCOUNTS. The Plan Administrator shall establish
and maintain an Account in the name of each Participant. The Account shall
contain the following subaccounts:
(a) A money purchase pension contribution subaccount to
which shall be credited each such Participant's share of (i) Employer
Contributions under section 4.1 (a); (ii) the net comings or net losses on the
investment of the assets of the Trust; (iii) distributions; and (iv) dividends,
capital gain distributions and other earnings received on any Shares credited
to the Participant's subaccount;
(b) A profit sharing contribution subaccount to which
shall be credited each such Participant's share of (i) Employer Contributions
under section 4.1 (b); (ii) forfeitures; (iii) the net earnings or net losses
on the investment of the assets of the mat; (iv) distributions; and (v)
dividends, capital gain distributions and other earnings received on any
Shares credited to the Participant's subaccount;
(c) A nondeductible voluntary contribution subaccount to
which shall be credited (i) nondeductible voluntary contributions by the
Participant under section 4.3; (ii) the net earnings or net losses on the
investment of the assets of the Trust; (iii) distributions; and (iv) dividends,
capital gain distributions and other earnings received on any Shares credited
to the Participant's subaccount;
(d) A direct transfer subaccount to which shall be
credited (i) contributions to the Trust accepted under section 4.5(a); (ii) the
not earnings or net losses on the investment of the assets of the Trust; (iii)
distributions; and (iv) dividends, capital gain distributions and other
earnings received on any Shares credited to the Participant's subaccount;
(e) A rollover subaccount to which shall be credited (i)
contributions to the Trust accepted under section 4.4(a); (ii) the net earnings
or net losses on the investment of the assets of the Trust; (iii)
distributions; and (iv) dividends, capital gain distributions and other
earnings received on any Shares credited to the Participant's subaccount.
5.2 MINIMUM ALLOCATION.
(a) Except as otherwise provided in this section, the
Employer Contributions and forfeitures allocated on behalf of any Participant
who is not a Key Employee shall not be less than the lesser of three percent
(3%) of such Participant's Compensation or in the case where the Employer has
no defined benefit plan which designates this Plan to satisfy section 401 of
the Code, the largest percentage of Employer Contributions and forfeitures, as
a percentage of the first one hundred and fifty thousand dollars ($150,000) of
the Key Employee's Compensation, allocated on behalf of any Key Employee for
that year. The minimum allocation is determined without regard to any Social
Security contribution. This minimum allocation shall be made even though, under
other Plan provisions, the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the year
because of (i) the Participant's failure to complete one thousand (1,000) Hours
of Service (or any equivalent provided in the Plan); or (ii) the Participant's
failure to make mandatory Employee contributions to the Plan; or (iii)
Compensation less than a stated amount. For purposes of this subsection, all
defined contribution plans required to be included in an aggregation group
under section 416(g)(2)(A)(i) shall be treated as a single plan.
(b) For purposes of computing the minimum allocation,
Compensation shall mean Compensation as defined in section 6.5(b) of the Plan.
(c) The provision in subsection (a) above shall not apply
to any Participant who was not employed by the Employer on the last day of the
Plan Year.
(d) The provision in subsection (a) above shall not apply
to any Participant to the extent the Participant is covered under any other
plan or plans of the Employer and the Employer has provided in the Adoption
Agreement that the minimum allocation or benefit requirement applicable to
top-heavy plans will be met in the other plan or plans.
(e) The minimum allocation required (to the extent
required to be nonforfeitable under section 416(b)) may not be forfeited under
section 411 (a)(3)(B) or 411(a)(3)(D).
5.3 ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES.
(a) All money purchase pension contributions for a given
Plan Year shall be allocated to the Account of the Participant for whom such
contribution was made. Any forfeiture from a Participant's money purchase
pension contribution subaccount arising under the Plan for a given Plan Year
shall be applied as specified In the Adoption Agreement, either (i) to reduce
the Employer Contribution in that year, or if in excess of the Employer
Contribution for such Plan Year, the excess amounts shall be used to reduce the
Employer Contribution in the next succeeding Plan Year or Years or (ii) to be
added to the Employer Contributions and allocated accordingly.
(b) All profit sharing contributions and forfeitures from
a Participant's profit sharing contribution subaccount will be allocated to the
Account of each Participant in the ratio that such Participant's Compensation
bears to the Compensation of all Participants. However, if the profit sharing
contribution formula selected in the Adoption Agreement is integrated with
Social Security, profit sharing contributions for the Plan Year plus any
forfeitures will be allocated to Participants' Accounts as follows:
(i) Step One. Contributions and forfeitures will
be allocated to each Participant's Account in the ratio that each Participant's
total Compensation bears to all Participants' total Compensation, but not in
excess of three percent (3%) of each Participant's Compensation. (Step One is
not applicable if the Employer enters into the money purchase pension Adoption
Agreement).
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<PAGE> 52
(ii) Step Two. Any contributions and forfeitures
remaining after the allocation in Step One (if any) will be allocated to each
Participant's Account in the ratio that each Participant's Compensation for the
Plan Year in excess of the Integration Level bears to the excess Compensation
of all Participants, but not in excess of three percent (3%). (Step Two is not
applicable if the Employer enters into the money purchase pension Adoption
Agreement).
(iii) Step Three. Any contributions and
forfeitures remaining after the allocation in Step Two (if any) will be
allocated to each Participant's Account in the ratio that the sum of each
Participant's total Compensation and Compensation in excess of the Integration
Level bears to the sum of all Participants' total Compensation and Compensation
in excess of the Integration Level, but not in excess of whichever of the
following is applicable:
(1) if the Employer has not adopted the money
purchase pension Adoption Agreement, then the Maximum Profit Sharing Disparity
Rate; or
(2) If the Employer has adopted the money
purchase pension Adoption Agreement, then the lesser of:
(A) the percentage of each Participant's
Compensation for the Plan Year up to the Integration Level determined by
dividing the allocation by such Compensation (the base contribution
percentage); or
(B) the Maximum Disparity Rate.
(iv) Step Four. Any remaining contributions or
forfeitures will be allocated to each Participant's Account in the ratio that
each Participant's total Compensation for the Plan Year bears to all
Participants' total Compensation for that year.
(c) Notwithstanding anything in (a) or (b) above to the
contrary, forfeitures arising under a Participant's money purchase pension
contribution subaccount will only be used to reduce the contributions of the
Participant's Employer who adopted this Plan, and forfeitures arising under a
Participant's profit sharing contribution subaccount will be reallocated only
for the benefit of Employees of the Participant's Employer who adopted this
Plan.
5.4 COORDINATION OF SOCIAL SECURITY INTEGRATION. If the Employer
maintains plans involving integration with Social Security other than this
Plan, and if any Participant is eligible to participate in more than one of
such plans, all such plans will be considered to be integrated if the extent of
the integration of all such plans does not exceed one hundred percent (100%).
For purposes of the preceding sentence, the extent of integration of a plan is
the ratio (expressed as a percentage) which the actual benefits, benefit rate,
offset rate, or Employer Contribution rate under the plan bears to the
integration limitation applicable to such plan. If the Employer enters into
both the money purchase pension Adoption Agreement and the profit sharing
Adoption Agreement under this Plan, integration with Social Security may only
be selected in one Adoption. Agreement.
5.5 WITHDRAWALS AND DISTRIBUTIONS. Any distribution to a
Participant or his Beneficiary, any amount transferred from a Participant's
Account directly to the Trustee of any other qualified plan described in
section 401(a) of the Code or to a qualified annuity plan described in section
403(a) of the Code, or any withdrawal by a Participant shall be charged to the
appropriate subaccount(s) of the Participant as of the date of the distribution
or the withdrawal.
5.6 DETERMINATION OF VALUE OF TRUST FUND AND OF NET EARNINGS OR
LOSSES. As of each Valuation Date the Trustee shall determine for the period
then ended the sum of the net earnings or losses of the Trust (excluding with
respect to Shares and other assets specifically allocated to a specific
Participant's subaccount, (i) dividends and capital gain distributions from
Shares, (ii) receipts or income attributable to insurance policies, (iii)
income gains and/or losses attributable to a Participant's loans made pursuant
to ARTICLE 13 or to any other Assets) which shall reflect accrued but unpaid
interest, dividends, gains, or losses realized from the sale, exchange or
collection of assets, other income received, appreciation in the fair market
value of assets, depreciation in the fair market value of assets,
administration expenses, and taxes and other expenses paid. Gains or losses
realized and adjustments for appreciation or depreciation in fair market value
shall be computed with respect to the difference between such value as of the
preceding Valuation Date or date of purchase, whichever is applicable, and the
value as of the date of disposition or the current Valuation Date, whichever is
applicable.
5.7 ALLOCATION OF NET EARNINGS OR LOSSES.
(a) As of each Valuation Date the net earnings or losses
of the Trust (excluding with respect to Shares and other assets specifically
allocated to a specific Participant's subaccount, (i) dividends and capital
gain distributions from Shares, (ii) dividends or credits attributable to
insurance policies, (iii) income gains and/or losses attributable to a
Participant's loans made pursuant to ARTICLE 13 or to any other assets, all of
which shall be allocated to such Participant's subaccount) for the valuation
period then ending shall be allocated to the Accounts of all Participants (or
Beneficiaries) having credits in the fund both on such date and at the
beginning of such valuation period. Such allocation shall be made by the
application of a fraction, the numerator of which is the value of the Account
of a specific Participant (or Beneficiary) as of the immediately preceding
Valuation Date, reduced by any distributions therefrom since such preceding
Valuation Date, and the denominator of which is the total value of all such
Accounts as of the preceding Valuation Date, reduced by any distributions
therefrom since such preceding Valuation Date.
(b) To the extent that Shares and other assets are
specifically allocated to a specific Participant's subaccount: (i) dividends
and capital gain distributions from Shares; (ii) dividends or credits
attributable to insurance policies; and (iii) income gains and/or losses
attributable to a Participant's loans made pursuant to ARTICLE 13 or to any
other assets, all shall be allocated to such Participant's subaccount.
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<PAGE> 53
5.8 RESPONSIBILITIES OF THE PLAN ADMINISTRATOR. The Plan
Administrator shall maintain accurate records with respect to the contributions
made by or on behalf of Participants under the Plan, and shall furnish the
Trustee with written instructions directing the Trustee to allocate all Plan
contributions to the Trust among the separate Accounts of Participants in
accordance with section 5.1 above, In making any such allocation, the Trustee
shall be fully entitled to rely on the instructions furnished by the Plan
Administrator, and shall be under no duty to make any inquiry or investigation
with respect there to.
ARTICLE 6
LIMITATIONS ON ALLOCATIONS
6.1 EMPLOYERS WHO DO NOT MAINTAIN OTHER QUALIFIED PLANS.
(a) If the Participant does not participate in, and has
never participated in another qualified plan or a welfare benefit fund, as
defined in section 419(e) of the Code, maintained by the Employer, or an
individual medical account, as defined in section. 415(1)(2) of the Code,
maintained by the Employer, which provides in Annual Addition as defined in
section 6.5(a), the amount of Annual Additions that may be credited to the
Participant's Account for any Limitation Year will not exceed the lesser of the
Maximum Permissible Amount or any other limitation contained in this Plan. If
the Employer Contribution that would otherwise be contributed or allocated to
the Participant's Account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual Additions for the Limitation Year
will equal the Maximum Permissible Amount.
(b) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant on the basis of a reasonable estimation of
the Participant's Compensation for the Limitation Year, uniformly determined
for all Participants similarly situated.
(c) As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of the Participant's actual Compensation for
the Limitation Year.
(d) If, pursuant to subsection (c) or as a result of the
allocation of forfeitures, there is an Excess Amount the excess will be
disposed of as follows:
(i) Any nondeductible voluntary Employee
contributions, to the extent they would reduce the Excess Amount, will be
returned to the Participant;
(ii) If after the application of paragraph (i) an
Excess Amount still exists, and the Participant is covered by the Plan at the
and of the Limitation Year, the Excess Amount in the Participant's Account will
be used to reduce Employer Contributions (including any allocation of
forfeitures) for such Participant in the next Limitation Year, and each
succeeding Limitation Year if necessary;
(iii) if after the application of paragraph (i) an
Excess Amount still exists, and the Participant is not covered by the Plan at
the end of the Limitation Year, the Excess Amount will be held unallocated in a
suspense account. The suspense account will be applied to reduce future
Employer Contributions (including allocation of any forfeitures) for all
remaining Participants in the next Limitation Year, and each succeeding
Limitation Year if necessary;
(iv) if a suspense account is in existence at any
time during the Limitation Year pursuant to this section, it will not
participate in the allocation of the Trust's investment gains and losses. If a
suspense account is in existence at any time during a particular Limitation
Year, all amounts in the suspense account must be allocated and reallocated to
Participants' Accounts before any Employer or any Employee contributions may be
made to the Plan for that Limitation Year. Excess accounts may not be
distributed to Participants or former Participants.
6.2 EMPLOYERS WHO MAINTAIN OTHER QUALIFIED MASTER OR PROTOTYPE
DEFINED CONTRIBUTION PLANS.
(a) This section applies if, in addition to this Plan,
the Participant is covered under another qualified master or prototype defined
contribution plan maintained by the Employer, a welfare benefit fund, as
defined in section 419(e) of the Code maintained by the Employer or an
individual medical account, a defined in section 415(1)(2) of the Code,
maintained by the Employer which provides an Annual Addition as defined in
section 6.5(a), during any Limitation Year. The Annual Additions that may be
credited to a Participant's Account under this Plan for any such Limitation
Year will not exceed the Maximum Permissible Amount reduced by the Annual
Additions credited to a Participant's Account under the other plans and welfare
benefit funds for the same Limitation Year. If the Annual Additions with
respect to the Participant under other defined contribution plans and welfare
benefit funds maintained by the Employer are less than the Maximum Permissible
Amount and the Employer Contribution that would otherwise be contributed or
allocated to the Participant's Account under this Plan would cause the Annual
Additions for the Limitation Year to exceed this limitation, the amount
contributed or allocated will be reduced so that the Annual Additions under all
such plans and funds for the Limitation Year will equal the Maximum Permissible
Amount. If the Annual Additions with respect to the Participant under such
other defined contribution plans and welfare benefit funds in the aggregate are
equal to or greater than the Maximum Permissible Amount, no amount will be
contributed or allocated to the Participant's Account under this Plan for the
Limitation Year.
(b) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant in the manner described in section 6.1
(b).
(c) As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of the Participant's actual Compensation for
the Limitation Year.
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(d) If, pursuant to section 6.2(c), or as a result of the
allocation of forfeitures, a Participants Annual Additions under this Plan and
such other plans would result in an Excess Amount for a Limitation Year, the
Excess Amount will be deemed to consist of the Annual Additions last allocated,
except that Annual Additions attributable to a welfare benefit fund or
individual medical account will be deemed to have been allocated first
regardless of the actual allocation date.
(e) If an Excess Amount was allocated to a Participant on
an allocation date of this Plan which coincides with an allocation date of
another plan, the Excess Amount attributed to this Plan will be the product of
(i) the total Excess Amount allocated as of such
date, times
(ii) the ratio of (1) the Annual Additions
allocated to the Participant for the Limitation Year as of such date under this
Plan to (2) the total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other qualified master
or prototype defined contribution plans.
(f) Any Excess Amount attributed to this Plan will be
disposed of in the manner described in section 6.1 (d).
6.3 EMPLOYERS WHO, IN ADDITION TO THIS PLAN, MAINTAIN OTHER
QUALIFIED PLANS WHICH ARE DEFINED CONTRIBUTION PLANS OTHER THAN MASTER OR
PROTOTYPE PLANS. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a Master or Prototype
Plan, Annual Additions which may be credited to the Participant's Account under
this Plan for any Limitation Year will be limited in accordance with section
6.2 as though the other plan were a Master or Prototype Plan unless the
Employer provides other limitations in the Adoption Agreement.
6.4 EMPLOYERS WHO, IN ADDITION TO THIS PLAN, MAINTAIN A QUALIFIED
DEFINED BENEFIT PLAN. If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this Plan, the sum
of the Participant's Defined Benefit Fraction and Defined Contribution Fraction
will not exceed 1.0 in any Limitation Year. The Annual Additions which may be
credited to the Participant's Account under this Plan for any Limitation Year
will be limited in accordance with the Adoption Agreement.
6.5 DEFINITIONS. Unless otherwise expressly provided herein, for
purposes of this ARTICLE only, the following definitions and rules of
interpretation shall apply:
(a) Annual Additions. The sum of the following amounts
credited to a Participant's Account for the Limitation Year:
(i) Employer Contributions;
(ii) Employee contributions;
(iii) forfeitures; and
(iv) amounts allocated after March 31, 1984 to an
individual medical account; as defined in section 415(l)(2) of the Code, which
is part of a pension or annuity plan maintained by the Employer, are treated as
Annual Additions to a defined contribution plan. Also, amounts derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date, which are attributable to post-retirement medical benefits
allocated to the separate account of a key employee, as defined in section
419A(d)(3) of the Code, under a welfare benefit fund, as defined in section
419(e) of the Code, maintained by the Employer, are treated as Annual Additions
to a defined contribution plan.
For this purpose, any Excess Amount applied under sections 6.1 (d) or 6.2(f) in
the Limitation Year to reduce Employer Contributions will be considered Annual
Additions for such Limitation Year.
(b) Compensation. A Participant's earned income, wages,
salaries, and fees for professional services and other amounts received for
personal services actually rendered in the course of employment with the
Employer maintaining the Plan (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses), and excluding the
following:
(i) Employer contributions to a plan of deferred
compensation which are not includable in the Employee's gross income for the
taxable year in which contributed, or Employer Contributions under a simplified
employee pension plan to the extent such contributions are excluded from the
Employee's gross income, or any distributions from a plan of deferred
compensation;
(ii) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock option; and
(iv) Other amounts which received special tax
benefits, or contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity described in section
403(b) of the Code (whether or not the amounts are actually excludable from the
gross income of the Employee).
For purposes of applying the limitations of this
ARTICLE, Compensation for a Limitation Year is the Compensation actually paid
or includable in gross income during such year.
Notwithstanding the preceding sentence, Compensation
for a Participant in a defined contribution plan who is Totally and Permanently
Disabled (as defined in section 22(e)(3) of the Code) is the Compensation such
Participant would have received for the Limitation Year if the Participant had
been paid at the rate of Compensation paid Immediately before becoming
permanently and totally disabled; such imputed Compensation for the disabled
Participant may
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be taken into account only if the Participant is not a Highly-Compensated
Employee (as defined in section 414(q) of the Code), and contributions made on
behalf of such Participant are nonforfeitable when made.
(c) DEFINED BENEFIT FRACTION. A fraction, the numerator
of which is the sum of the Participant's Projected Annual Benefits under all the
defined benefit plans (whether or not terminated) maintained by the Employer,
and the denominator of which is the lesser of one hundred percent (100%) of the
dollar limitation determined for the Limitation Year under sections 415(b) and
(d) of the Code or one hundred forty percent (140%) of highest average
compensation, including any adjustments under section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the denominator of this
fraction will not be less than one hundred twenty-five percent (125%) of the
sum of the annual benefits under such plans which the Participant had accrued
as of the close of the last Limitation Year beginning before January 1, 1987
disregarding any changes in the terms and conditions of the plan after May 5,
1986. The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of section 415 of
the Code for all Limitation Years beginning before January 1, 1987.
(d) DEFINED CONTRIBUTION DOLLAR LIMITATION. Thirty
thousand dollars ($30,000) or, if greater, one-fourth (1/4) of the defined
benefit dollar limitation set forth in section 415(b)(1) of the Code as in
effect for the Limitation Year.
(e) DEFINED CONTRIBUTION FRACTION. A fraction, the
numerator of which is the sum of the Annual Additions to the Participant's
Account under all the defined contribution plans (whether or not terminated)
maintained by the Employer for the current and all prior Limitation Years
(including the Annual Additions attributable to the Participant's nondeductible
voluntary contributions to all defined benefit plans, whether or not
terminated, maintained by the Employer, and the Annual Additions attributable
to all welfare benefit funds, as defined in section 419(e) of the Code and
individual medical accounts, as defined in section 415(1)(2) of the Code,
maintained by the Employer), and the denominator of which is the sum of the
maximum aggregate amounts for the current and all prior Limitation Years of
service with the Employer (regardless of whether a defined contribution plan
was maintained by the Employer). The maximum aggregate amount in any Limitation
Year is the lesser of one hundred percent (100%) of the dollar limitation in
effect under section 415(c)(1)(A) of the Code or thirty-five percent (35%) of
the Participant's Compensation for such year.
If the Participant was a Participant as of the end of the
first day of the first Limitation Yew beginning after December 31, 1986, in one
or mom defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted if the
sum of this fraction and the Defined Benefit Fraction would otherwise exceed
1.0 under the terms of this Plan. Under the adjustment, an amount equal to the
product of (1) the excess of the sum of the fractions over 1.0 times (2) the
denominator of this fraction, will be permanently subtracted from the numerator
of this fraction. The adjustment is calculated using the fractions as they
would be computed as of the end of the last Limitation Year beginning before
January 1, 1987, and disregarding any changes in the terms and conditions of
the Plan made after May 5, 1986, but using the section 415 limitation
applicable to the first Limitation Year beginning on or after January 1, 1987.
the Annual Addition for any Limitation Year beginning before January 1, 1987,
shall not be recomputed to treat all Employee contributions as Annual
Additions.
(f) EMPLOYER. For purposes of this ARTICLE, Employer
shall mean the employer that adopts this Plan, and all members of a controlled
group of corporations (as defined in section 414(b) of the Code as modified by
section 415(h) of the Code), all commonly controlled trades or businesses (as
defined in section 414(c) of the Code as modified by section 415(h) of the
Code), or affiliated service groups (as defined in section 414(m) of the Code)
of which the adopting Employer is a part and any other entity required to be
aggregated with the Employer pursuant to regulations under section 414(o) of
the Code.
(g) EXCESS AMOUNT. The excess of the Participant's Annual
Addition for the Limitation Year over the Maximum Permissible Amount.
(h) HIGHEST AVERAGE COMPENSATION. The average
compensation for the three consecutive Plan Years that produce the highest
average.
(i) LIMITATION YEAR. A Plan Year, or the twelve (12)
consecutive month period elected by the Employer in the Adoption Agreement. All
qualified plans maintained by the Employer must use the same Limitation Year.
If the Limitation Year is amended to a different twelve (12) consecutive month
period, the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made.
(j) MASTER OR PROTOTYPE PLAN. A plan the form of which
is the subject of a favorable opinion letter from the Internal Revenue Service.
(k) MAXIMUM PERMISSIBLE AMOUNT. The maximum Annual
Addition that may be contributed or allocated to a Participant's Account under
the Plan for any Limitation Year shall not exceed the lesser of:
(i) the Defined Contribution Dollar Limitation;
or
(ii) twenty-five percent (25%) of the Participant's
Compensation for the Limitation Year.
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The Compensation limitation referred to in subsection (b)
shall not apply to any contribution for medical benefits (within the meaning of
section 401(h) or section 419A(f)(2) of the Code) which is otherwise treated as
an Annual Addition under section 415(l)(1) or section 419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different twelve (12) consecutive month
period, the Maximum Permissible Amount will not exceed the Defined Contribution
Dollar Limitation multiplied by the following fraction:
Number of Months in the Short Limitation Year
12
(l) PROJECTED ANNUAL BENEFIT. The annual retirement
benefit (adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or Qualified
Joint and Survivor Annuity) to which the Participant would be entitled under
the terms of the Plan assuming:
(i) the Participant will continue employment
until Normal Retirement Age under the Plan (or current age, if later), and
(ii) the Participant's Compensation for the current
Limitation Year and all other relevant factors used to determine benefits under
the Plan will remain constant for all future Limitation Years.
ARTICLE 7
TRUST FUND
7.1 RECEIPT OF CONTRIBUTIONS BY TRUSTEE. All contributions to the
Trust that we received by the Trustee, together with any earnings thereon,
shall be held, managed and administered by the Trustee named in the Adoption
Agreement in accordance with the terms and conditions of the Trust Agreement
and the Plan. The Trustee may use a Custodian designated by the Sponsor to
perform recordkeeping and custodial functions. The Trustee shall be subject to
the proper directions of the Employer or the Plan Administrator made in
accordance with the terms of the Plan and ERISA.
7.2 INVESTMENT RESPONSIBILITY.
(a) If the Employer elects in the Adoption Agreement to
exercise investment authority and responsibility, the selection of the
investments in which assets of the Trust are invested shall be the
responsibility of the Plan Administrator and each Participant will have a
ratable interest in all assets of the Trust.
(b) If the Adoption Agreement so provides and the
Employer elects to permit each Participant or Beneficiary to select the
investments in his Account, no person, including the Trustee and the Plan
Administrator, shall be liable for any loss or for any breach of fiduciary duty
which results from such Participant's or Beneficiary's exercise of control.
(c) If the Adoption Agreement so provides and the
Employer elects to permit each Participant or Beneficiary to select the
investments in his Account, the Employer or the Plan Administrator must
complete a schedule of Participant designations.
(d) If Participants and Beneficiaries are permitted to
select the investment in their Accounts, all investment related expenses,
including administrative fees charged by brokerage houses, will be charged
against the Accounts of the Participants.
(e) The Plan Administrator may at any time change the
selection of investments in which the assets of the Trust are invested, or
subject to such reasonable restrictions as may be imposed by the Sponsor for
administrative convenience, may submit an amended schedule of Participant
designations. Such amended documents may provide for a variance in the
percentages of contributions to any particular investment or a request that
Shares in the Trust be reinvested in whole or in part in other Shares.
7.3 INVESTMENT LIMITATIONS. The Sponsor may impose reasonable
investment limitations an the Employer and the Plan Administrator relating to
the type of permissible investments in the Trust or the minimum percentage of
Trust assets to be invested in Shares.
ARTICLE 8
VESTING
8.1 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS AND EARNINGS. The
Participant's nondeductible voluntary contribution subaccount shall be fully
vested and nonforfeitable at all times and no forfeitures will occur as a
result of an Employee's withdrawal of nondeductible voluntary contributions.
8.2 ROLLOVERS, TRANSFERS AND EARNINGS. The Participant's rollover
subaccount and direct transfer subaccount shall be fully vested and
nonforfeitable at all times.
8.3 EMPLOYER CONTRIBUTIONS AND EARNINGS. Notwithstanding the
vesting schedule elected by the Employer in the Adoption Agreement, the
Participant's money purchase pension contribution subaccount and profit sharing
contribution subaccount shall be fully vested and nonforfeitable upon the
Participant's death, disability, attainment of Normal Retirement Age, or, if the
Adoption Agreement provides for an Early Retirement Date, attainment of the
required age and completion of the required service, In the absence of any of
the preceding events, the Participant's money purchase contribution subaccount
and his profit sharing contribution subaccount shall vest in accordance with a
minimum vesting
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schedule specified in the Adoption Agreement. The schedule must be at least as
favorable to Participants as either schedule (a) or (b) below.
(a) Graduated vesting according to the following schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
(b) Full one hundred percent (100%) vesting after three (3) Years of
Service.
8.4 AMENDMENTS TO VESTING SCHEDULE.
(a) If the Plan's vesting schedule is amended, or the Plan is
amended in any way that directly or indirectly affects the computation of the
Participant's nonforfeitable percentage or if the Plan is deemed amended by an
automatic change to or from a top-heavy vesting schedule, each Participant with
at least three (3) Years of Service with the Employer may elect, within a
reasonable period after the adoption of the amendment or change, to have the
nonforfeitable percentage computed under the Plan without regard to such
amendment or change. For any Participants who do not have at least one (1) Hour
of Service in any Plan Year beginning after December 31, 1988, the preceding
sentence shall be applied by substituting "five (5) Years of Service" for
"three (3) Years of Service" where such language appears.
(b) The period during which the election may be made shall commence
with the date the amendment is adopted or deemed to be made and shall end on
the latest of:
(i) sixty (60) days after the amendment is adopted;
(ii) sixty (60) days after the amendment becomes effective;
or
(iii) sixty (60) days after the Participant is issued written
notice of the amendment by the Employer or Plan Administrator.
(c) No amendment to the Plan shall be effective to the extent that
it has the effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's Account balance may be
reduced to the extent permitted under section 412(c)(8) of the Code. For
purposes of this paragraph, a Plan amendment which has the effect of decreasing
a Participant's Account balance or eliminating an optional form of benefit,
with respect to benefits attributable to service before the amendment shall be
treated as reducing an accrued benefit. Furthermore, if the vesting schedule of
a Plan is amended, in the case of an Employee who is a Participant as of the
later of the date such amendment is adopted or the date it becomes effective,
the nonforfeitable percentage (determined as of such date) of such Employee's
right to his Employer-derived accrued benefit will not be less than his
percentage computed under the Plan without regard to such amendment.
8.5 DETERMINATION OF YEARS OF SERVICE. For purposes of determining the
vested and nonforfeitable percentage of the Participant's Employer Contribution
subaccounts, all of the Participant's Years of Service with the Employer or an
Affiliated Employer shall be taken into account. If specified in the Adoption
Agreement, Years of Service with a predecessor employer will be treated as
service for the Employer; provided, however, if the Employer maintains the plan
of a predecessor employer, Years of Service with such predecessor employer will
be treated as service with the Employer without regard to any election.
8.6 FORFEITURE OF NONVESTED AMOUNTS.
(a) For Plan Years beginning before 1985, any portion of a
Participant's Account that is not vested shall be forfeited by him as of the
last day of the Plan Year in which a Break in Service occurs. For Plan Years
beginning after 1984, any portion of a Participant's Account that is not vested
shall be forfeited by him as of the last day of the Plan Year in which his
fifth consecutive Break in Service occurs. Any amounts thus forfeited shall be
reallocated as provided in ARTICLE 5 and shall not be considered part of a
Participant's Account in computing his vested interest. The remaining portion of
the Participant's Account will be nonforfeitable.
(b) If a distribution is made at a time when a Participant has a
vested right to less than one hundred percent (100%) of the value of the
Participant's Account attributable to Employer Contributions and forfeitures,
as determined in accordance with the provisions of section 8.3, and the
nonvested portion of the Participant's Account has not yet been forfeited in
accordance with paragraph (a) above:
(i) a separate remainder subaccount shall be established
for the Participant's interest in the Plan as of the time of the distribution,
and
(ii) at any relevant time the Participant's vested portion
of the separate remainder subaccount shall be equal to an amount ("X")
determined by the following formula:
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X = P(AB + (R x D)) - (R x D)
For purposes of applying the formula: P is the vested percentage at
the relevant time; AB is the Account balance at the relevant time; D is the
amount of the distribution; and R is the ratio of the Account balance at the
relevant time to the Account balance after distribution.
8.7 REINSTATEMENT OF BENEFIT. If a benefit is forfeited because a
Participant or Beneficiary cannot be found, such benefit will be reinstated if
a claim is made by the Participant or Beneficiary.
ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 GENERAL. The provisions of this ARTICLE shall apply to any
Participant who is credited with at least one (1) Hour of Service with the
Employer on or after August 23, 1984, and such other Participants as provided
in section 9.7.
9.2 QUALIFIED JOINT AND SURVIVOR ANNUITY. Unless an optional form of
benefit is selected pursuant to a Qualified Election within the ninety (90) day
period ending on the Annuity Starting Date, a married Participant's Vested
Account Balance will be paid in the form of a Qualified Joint and Survivor
Annuity and an unmarried Participant's Vested Account Balance will be paid in
the form of a life annuity. The Participant may elect to have such annuity
distributed upon attainment of the Earliest Retirement Age under the Plan.
9.3 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. Unless an optional form of
benefit has been selected within the Election Period pursuant to a Qualified
Election, if a Participant dies before the Annuity Starting Date, then the
Participant's Vested Account Balance shall be applied toward the purchase of an
annuity for the life of the Surviving Spouse. The Surviving Spouse may elect to
have such annuity distributed within a reasonable period after the
Participant's death.
9.4 DEFINITIONS.
(a) Election Period.
(i) The period which begins on the first day of the Plan Year
in which the Participant attains age thirty-five (35) and ends on the date of
the Participant's death. If a Participant separates from service prior to the
first day of the Plan Year in which age thirty-five (35) is attained, with
respect to the Account balance as of the date of separation, the Election
Period shall begin on the date of separation.
(ii) A Participant who has not yet attained age thirty-five (35)
as of the end of any current Plan Year may make a special Qualified Election to
waive the qualified preretirement survivor annuity for the period beginning on
the date of such election and ending on the first day of the Plan Year in
which the Participant will attain age thirty-five (35). Such election shall not
be valid unless the Participant receives a written explanation of the qualified
preretirement survivor annuity in such terms as are comparable to the
explanation required under section 9.5. Qualified preretirement survivor
annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age thirty-five (35). Any new waiver
on or after such date shall be subject to the full requirements of this ARTICLE.
(b) Earliest Retirement Age. The earliest date on which, under the
Plan, the Participant could elect to receive retirement benefits.
(c) Qualified Election.
(i) A waiver of a Qualified Joint and Survivor Annuity or a
qualified preretirement survivor annuity. Any waiver of a Qualified Joint and
Survivor Annuity or a qualified preretirement survivor annuity shall not be
effective unless:
(1) the Participant's Spouse consents in writing to the
election;
(2) the election designates a specific Beneficiary,
including any class of Beneficiaries or any contingent Beneficiaries, which may
not be changed without spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal consent);
(3) the Spouse's consent acknowledges the effect of the
election; and
(4) the Spouse's consent is witnessed by a Plan
representative or notary public. Additionally, a Participant's waiver of the
Qualified Joint and Survivor Annuity shall not be effective unless the election
designates a form of benefit payment which may not be changed without spousal
consent (or the Spouse expressly permits designations by the participant
without any further spousal consent). If it is established to the satisfaction
of a Plan representative that there is no Spouse or that the Spouse cannot be
located, a waiver will be deemed a Qualified Election.
(ii) Any consent by a Spouse obtained under this provision (or
establishment that the consent of Spouse may not be obtained) shall be
effective only with respect to such Spouse. A consent that permits designations
by the Participant without any requirement of further consent by such Spouse
must acknowledge that the Spouse has the right to limit consent to a specific
Beneficiary, and a specific form of benefit where applicable, and that the
Spouse voluntarily elects to relinquish either or both of such rights.
A revocation of a prior waiver may be made by a Participant without the consent
of the Spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision
shall be valid unless the Participant has received notice as provided in
section 9.5.
(d) Qualified Joint And Survivor Annuity. An immediate annuity for
the life of the Participant with a survivor annuity for the life of the Spouse
which equals fifty percent (50%) of the amount of the annuity which is payable
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during the joint lives of the Participant and the Spouse and which is the
amount of benefit which can be purchased with the Participant's Vested Account
Balance.
(e) Spouse(Surviving Spouse). The Spouse or Surviving Spouse of the
Participant, provided that a former spouse will be treated as the Spouse or
Surviving Spouse and a current Spouse will not be treated as the Spouse or
Surviving Spouse to the extent provided under a qualified domestic relations
order as described in section 414(p) of the Code.
(f) Annuity Starting Date. The first day of the first period for
which an amount is paid as an annuity or any other form.
(g) Vested Account Balance. The aggregate value of the Participant's
Vested Account Balances derived from Employer and Employee contributions
(including rollovers and direct transfers), whether vested before upon death,
including the proceeds of insurance contracts if any, on the Participant's life,
The provisions of this ARTICLE shall apply to a Participant who is vested in
amounts attributable to Employer Contributions, Employee contributions (or both)
at the time of death or distribution.
9.5 Notice Requirements
(a) In the case of a Qualified Joint and Survivor Annuity, the Plan
Administrator shall no less than thirty (30) days and no more than ninety (90)
days prior to the Annuity Starting Date, provide each Participant a written
explanation of:
(i) the terms and conditions of a Qualified Joint and Survivor
Annuity;
(ii) the Participant's right to make and the effect of an
election to waive the Qualified Joint and Survivor Annuity form of
benefit;
(iii) the rights of a Participant's Spouse; and
(iv) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity.
(b) In the case of a qualified preretirement survivor annuity as
described in section 9.3, the Plan Administrator shall provide each Participant
within the applicable period for such Participant a written explanation of the
qualified preretirement survivor annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the requirements of
subsection (a) applicable to a Qualified Joint and Survivor Annuity.
(c) The applicable period for a Participant is whichever of the following
periods ends last:
(i) the period beginning with the first day of the Plan Year in
which the Participant attains age thirty-two (32) and ending with the
close of the Plan Year preceding the Plan Year in which the
Participant attains age thirty-five (35);
(ii) a reasonable period ending after the individual becomes a
Participant;
(iii) a reasonable period ending after subsection (e) ceases to
apply to the Participant;
(iv) a reasonable period ending after this ARTICLE first applies
to the Participant.
Notwithstanding the foregoing, notice must be provided within a reasonable
period ending after separation form service in the case of a participant who
separates from service before attaining age thirty-five (35).
(d) For purposes of applying subsection (c), a reasonable period ending
after the enumerated events described above in subsections (ii), (iii) and (iv)
is the end of the two-year period beginning one (1) year prior to the date the
applicable event occurs, and ending on (1) year after that date. In the case of
a Participant who separates from service before the Plan year in which age
thirty-five (35) is attained, notice shall be provided within the two (2) year
period beginning one (1) year prior to separation and ending one (1) year after
separation. If such a participant thereafter returns to employment with the
Employer, the applicable period for such Participant shall be redetermined.
(e) Notwithstanding the other requirements of this section, the
respective notices prescribed by this section need not be given to a
Participant if:
(i) the Plan "fully subsidizes" the cost of a Qualified Joint and
Survivor Annuity or qualified preretirement survivor annuity; and
(ii) the Plan does not allow the Participant to waive the Qualified
Joint and Survivor Annuity or qualified preretirement survivor annuity and does
not allow a married Participant to designate a nonspouse Beneficiary.
For purposes of this subsection, plan fully subsidizes the costs of a
benefit if no increase in cost, or decrease in benefits to the Participant may
result from the Participant's failure to elect another benefit.
9.6 Safe Harbor Rules
(a) This section shall apply to a Participant in a profit sharing plan,
and to any distribution, made on or after the first day of the first Plan year
beginning after December 31, 1988, from or under a separate account
attributable solely to accumulated deductible Employee contributions, as
defined in section 72(o)(5)(B) of the Code, and maintained on behalf of a
Participant in a money purchase pension plan (including a target benefit plan)
if the following conditions are satisfied:
(i) the Participant does not or cannot elect payments in the form of
a life annuity; and
(ii) on the death of a Participant, the Participant's Vested Account
Balance will be paid to the Participant's Surviving Spouse, but if there is no
Surviving Spouse, or if the Surviving Spouse has consented in a manner
conforming to a Qualified Election, then to the Participant's Designated
Beneficiary.
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(b) The Surviving Spouse may elect to have distribution of the
Vested Account Balance commence within the ninety (90) day period following the
date of the Participant's death. The Account balance shall be adjusted for
gains or losses occurring after the Participant's death in accordance with the
provisions of the Plan governing the adjustment of Account balances for other
types of distributions.
(c) This section shall not be operative with respect to a
Participant in a profit sharing plan if the plan is a direct or indirect
transferee of a defined benefit plan, money purchase plan, a target benefit
plan, stock bonus, or profit sharing plan which is subject to the survivor
annuity requirements of sections 401(a)(11) and 417 of the Code. If this
section is operative, then the provisions of the ARTICLE, other than section
9.7, shall be inoperative.
(d) The Participant may waive the spousal death benefit described in
this section at any time provided that no such waiver shall be effective unless
it satisfies the conditions of section 9.4(c) (other than the notification
requirement referred to therein) that would apply to the Participant's waiver
of the qualified preretirement survivor annuity.
(e) For purposes of this section, Vested Account Balance shall mean,
in the case of a money purchase pension plan or a target benefit plan, the
Participant's separate Account balance attributable solely to accumulated
deductible Employee contributions within the meaning of section 72(o)(5)(B) of
the Code. In the case of a profit sharing plan, Vested Account Balance shall
have the same meaning as provided in section 9.4(g).
9.7 TRANSITIONAL RULES.
(a) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed by the previous
sections of this ARTICLE must be given the opportunity to elect to have the
prior sections of this ARTICLE apply if such Participant is credited with at
least one (1) Hour of Service under this Plan or a predecessor plan in a Plan
Year beginning on or after January 1, 1976, and such Participant had at least
ten (10) years of vesting service when he or she separated from service.
(b) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one (1) Hour of Service under this Plan or
a predecessor plan on or after September 2, 194, and who is not otherwise
credited with any service in a Plan Year beginning on or after January 1, 1976,
must be given the opportunity to have his or her benefits paid in accordance
with subsection (d).
(c) The respective opportunities to elect (as described in
subsections (a) and (b) above) must be afforded to the appropriate
Participants during the period commencing on August 23, 1984, and ending on the
date benefits would otherwise commence to said Participants.
(d) Any Participant who has elected pursuant to subsection (b) and
any Participant who does not elect under subsection (a) or who meets the
requirements of subsection (a) except that such Participant does not have at
least ten (10) years of vesting service when he or she separates from service,
shall have his or her benefits distributed in accordance with all of the
following requirements if benefits would have been payable in the form of a
life annuity:
(i) Automatic Joint and Survivor Annuity. If benefits in the
form of a life annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or after
Normal Retirement Age; or
(2) dies on or after Normal Retirement Age while still
working for the Employer; or
(3) begins to receive payments on or after the qualified
early retirement age; or
(4) separates from service on or after attaining Normal
Retirement age; (or qualified early retirement age) and under satisfying the
eligibility requirements for the payments of benefits under the Plan and
thereafter dies before beginning to receive such benefits; then such benefits
will be received under this Plan in the form of a Qualified Joint and Survivor
Annuity, unless the Participant has elected otherwise during the Election
Period. The Election Period must begin at least six (6) months before the
Participant attains qualified early retirement age and end not more than ninety
(90) days before the commencement of benefits. Any election hereunder will be
in writing and may be changed by the Participant at any time.
(ii) Election of Early Survivor Annuity. A Participant who is
employed after attaining the qualified early retirement age will be given the
opportunity to elect, during the Election Period, to have a survivor annuity
payable on death. If the Participant elects the survivor annuity, payments
under such annuity must not be less than the payments which would have been
made to the Spouse under the Qualified Joint and Survivor Annuity if the
Participant had retired on the day before his or her death. Any election under
this provision will be in writing and may be changed by the Participant at any
time. The Election Period begins on the later of (1) the 90th day before the
Participant attains the qualified early retirement age; or (2) the date on
which participation begins, and ends on the date the Participant terminates
employment.
(e) The following terms shall have the meanings specified herein:
(i) Qualified Early Retirement Age. The latest of:
(1) the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits;
(2) the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age; or
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(3) the date the Participant begins participation.
(ii) Qualified Joint and Survivor Annuity. An annuity for
the life of the Participant with a survivor annuity for the life of the Spouse
as described in section 9.4(d).
ARTICLE 10
DISTRIBUTION PROVISIONS
10.1 VESTING ON DISTRIBUTION BEFORE BREAK IN SERVICE.
(a) If an Employee terminates service, and the value of the
Employee's vested Account balance derived from Employer and Employee
Contributions is not greater than three thousand five hundred dollars ($3,500),
the Employee will receive a distribution of the value of the entire vested
portion of such Account balance and the nonvested portion will be treated as a
forfeiture. For purposes of this section, if the value of an Employee's
vested Account balance is zero, the Employee shall be deemed to have received a
distribution of such vested Account balance. A Participant's vested Account
balance shall not include accumulated deductible Employee contributions within
the meaning of section 72(o)(5)(B) of the Code for Plan Years beginning prior
to January 1, 1989.
(b) If an Employee terminates service and elects, in accordance with
the ARTICLE, to receive the value of his Vested Account Balance, the nonvested
portion will be treated as a forfeiture. If the Employee elects to have
distributed less than the entire vested portion of the Account balance derived
from Employer Contributions, the part of the nonvested portion that will be
treated as a forfeiture is the total nonvested portion multiplied by a
fraction, the numerator of which is the amount of the distribution attributable
to Employer Contributions and the denominator of which is the total value of
the vested Employer derived Account balance.
(c) If an Employee receives a distribution pursuant to this section
and the Employee resumes employment covered under this Plan, the Employee's
Employer-derived Account balance will be restored to the amount on the date of
distribution if the Employee repays to the Plan the full amount of the
distribution attributable to Employer Contributions before the earlier of five
(5) years after the first date on which the Participant is subsequently
reemployed by the Employer, or the date the Participant incurs five (5)
consecutive one (1) year Breaks in Service following the date of the
distribution. If an Employee is deemed to receive a distribution to this
section, and the Employee resumes employment covered under this Plan before the
date the Participant incurs five (5) consecutive one (1) year Breaks in
Service, upon the reemployment of such Employee, the Employer-derived Account
balance of the Employee will be restored to the amount on the date of such
deemed distribution.
10.2 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS.
(a) If the value of a Participant's vested Account balance derived
from Employer and Employee contributions exceeds(or at the time of any prior
distribution exceeds) three thousand five hundred dollars (3,500) and the
Account balance is immediately distributable, the Participant and the
Participant's Spouse (or where either the Participant or the Spouse has died,
the survivor) must consent to any distribution of such Account balance. The
consent of the Participant and the Participant's Spouse shall be obtained in
writing within the ninety (90) day period ending on the Annuity Starting Date.
The Annuity Starting Date is the first day of the first period for which an
amount is paid as an annuity or any other form. The Plan Administrator shall
notify the Participant and the Participant's Spouse of the right to defer any
distribution until the Participant's Account balance is no longer immediately
distributable. Such notification shall include a general description of the
material features, and an explanation of the relative values of, the optional
forms of benefit available under the Plan in a manner that would satisfy the
notice requirements of section 417(a)(3), and shall be provided no less than
thirty (30) days and no more than ninety (90) days prior to the Annuity
Starting Date.
(b) Notwithstanding the provisions of subsection (a), only the
Participant need consent to the commencement of a distribution in the form of a
Qualified Joint and Survivor Annuity while the Account balance is immediately
distributable. (Furthermore, if payment in the form of a Qualified Joint and
Survivor Annuity is not required with respect to the Participant pursuant to
section 9.6 of the Plan, only the Participant need consent to the distribution
of an Account balance that is immediately distributable).
Neither the consent of the Participant nor the Participant's Spouse shall be
required to the extent that a distribution is required to satisfy section
401(a)(9) or section 415 of the Code. In addition, upon termination of this
Plan if the Plan does not offer an annuity option (purchased from a commercial
provider), the Participant's Account balance may, without the Participant's
consent, be distributed to the Participant or transferred to another defined
contribution plan (other than an employee stock ownership plan as defined in
section 4975(e)(7) of the Code) within the same controlled group.
(c) An Account balance is immediately distributable if any part of
the Account balance could be distributed to the Participant (or Surviving
Spouse) before the Participant attains *or would have attained if not deceased)
the later of Normal Retirement Age or age sixty-two (62).
(d) For purposes of determining the applicability of the foregoing
consent requirements to distributions made before the first day of the first
Plan Year beginning after December 31, 1988, the Participant's vested Account
balance shall not include amounts attributable to accumulated deductible
Employee contributions within the meaning of section 72*o)(5)(B) of the Code.
10.3 COMMENCEMENT OF BENEFITS.
(a) Unless the Participant elects otherwise, distribution of
benefits will begin no later than the 60th day after the latest of the close of
the Plan Year in which:
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(i) the Participant attains age sixty-five (65) (or
Normal Retirement Age, if earlier);
(ii) the 10th anniversary of the year in which the
Participant commenced participant in the Plan occurs; or
(iii) the Participant terminates service with the
Employer.
(b) Notwithstanding the foregoing, the failure of a
Participant and Spouse to consent to a distribution while a benefit is
immediately distributable, within the meaning of section 10.2 of the Plan, shall
be deemed to be an election to defer commencement of payment of any benefit
sufficient to satisfy this section.
10.4 EARLY RETIREMENT WITH AGE AND SERVICE REQUIREMENT. If a
Participant separates from service before satisfying the age requirement for
early retirement, but has satisfied the service requirement, the Participant
will be entitled to elect an early retirement benefit upon satisfaction of such
age requirement.
10.5 NONTRANSFERABILITY OF ANNUITIES. Any annuity contract
distributed herefrom must be nontransferable.
10.6 CONFLICTS WITH ANNUITY CONTRACTS. The terms of any annuity
contract purchased and distributed by the Plan to a Participant or Spouse shall
comply with the requirements of this Plan.
ARTICLE 11
TIMING AND MODES OF DISTRIBUTION
11.1 GENERAL RULES.
(a) Subject to ARTICLE 9, the requirements of this ARTICLE
shall apply to any distribution of a Participant's interest and will take
precedence over any inconsistent provisions of this Plan. Unless otherwise
specified, the provisions of this ARTICLE apply to calendar years beginning
after December 31, 1984.
(b) All distributions required under this ARTICLE shall be
determined and made in accordance with the income tax regulations under section
401(a)(9) of the Code, including the minimum distribution incidental benefit
requirement of section 1.40(a)(9)-2 of the proposed regulations.
11.2 REQUIRED BEGINNING DATE. The entire interest of a Participant
must be distributed or begin to be distributed no later than the Participant's
Required Beginning Date.
11.3 LIMITS ON DISTRIBUTION PERIODS. As of the first Distribution
Calendar Year, distributions, if not made in single-sum, may only be made over
one of the following periods (or a combination thereof):
(a) the life of the Participant;
(b) the life of the Participant and a Designated Beneficiary;
(c) a period certain not extending beyond the Life Expectancy
of the Participant; or
(d) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a Designated Beneficiary.
11.4 DETERMINATION OF AMOUNT TO BE DISTRIBUTED EACH YEAR.
(a) Individual Account.
(i) If a Participant's Benefit is to be distributed
over (1) a period not extending beyond the Life Expectancy of the Participant or
the joint life and last survivor expectancy of the Participant and the
Participant's Designated Beneficiary or (2) a period not extending beyond the
Life Expectancy of the Designated Beneficiary, the amount required to be
distributed for each calendar year, beginning with distribution for the first
Distribution Calendar Year, must at least equal the quotient obtained by
dividing the Participant's Benefit by the Applicable Life Expectancy.
(ii) For calendar years beginning before January 1,
1989, if the Participant's Spouse is not the Designated Beneficiary, the method
of distribution selected must assure that at least fifty percent (50%) of the
present value of the amount available for distribution is paid within the Life
Expectancy of the Participant.
(iii) For calendar years beginning after December 31,
1988, the amount to be distributed each year, beginning with distributions for
the first Distribution Calendar Year shall not be less than the quotient
obtained by dividing the Participant's Benefit by the lesser of (1) the
Applicable Life Expectancy or (2) if the Participant's Spouse is not the
Designated Beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of section 1.40(a)(9)-2 of the proposed regulations.
Distributions after the death of the Participant shall be distributed using the
Applicable Life Expectancy in subsection (a)(i) above as the relevant divisor
without regard to proposed regulations section 1.40(a)(9)-2.
(iv) The minimum distribution required for the
Participant's first Distribution Calendar Year must be made on or before the
Participant's Required Beginning Date. The minimum distribution for other
calendar years, including the minimum distribution for the Distribution
Calendar Year in which the Employee's Required Beginning Date occurs, must be
made on or before December 31, of that Distribution Calendar Year.
(b) Other Forms. If the Participant's benefit is distributed
in the form of an annuity purchased from an insurance company, distributions
thereunder shall be made in accordance with the requirements of section
401(a)(9) of the Code and the proposed regulations thereunder.
11.5 DEATH DISTRIBUTION PROVISIONS.
(a) Distribution Beginning Before Death. If the Participant
dies after distribution of his or her interest has begun, the remaining portion
of such interest will continue to be distributed at least as rapidly as under
the method of distribution being used prior to the Participant's death.
(b) Distribution Beginning After Death. If the Participant
dies before distribution of his or her interest begins, distribution of the
Participant's entire interest shall be completed by December 31 of the calendar
year
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containing the fifth anniversary of the Participant's death except to the extent
that an election is made to receive distributions in accordance with (i) or (ii)
below:
(i) if any portion of the Participant's interest is payable
to a Designated Beneficiary, distributions may be made over the life or over a
period certain not greater than the Life Expectancy of the Designated
Beneficiary commencing on or before December 31 of the calendar year immediately
following the calendar year in which the Participant died;
(ii) if the Designated Beneficiary is the Participant's
Surviving Spouse, the date distributions are required to begin in accordance
with (i) above shall not be earlier than the later of (1) December 31 of the
calendar year immediately following the calendar year in which the Participant
died and (2) December 31 of the calendar year in which the Participant would
have attained age seventy and one-half (70 1/2).
(c) If the Participant has not made an election pursuant to this
section by the time of his or her death, the Participant's Designated
Beneficiary must elect the method of distribution no later than the earlier of
(1) December 31 of the calendar year in which distributions would be required to
begin under this section; or (2) December 31 of the calendar year which contains
the fifth anniversary of the date of death of the Participant. If the
Participant has no Designated Beneficiary, or if the Designated Beneficiary does
not elect a method of distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death.
(d) For purposes of subsection (b) above, if the Surviving Spouse
dies after the Participant, but before payments to such Spouse begin, the
provisions of subsection (b), with the exception of paragraph (ii) therein,
shall be applied as if the Surviving Spouse were the Participant.
(e) For purposes of this section, any amount paid to a child of
the Participant will be treated as if it had been paid to the Surviving Spouse
if the amount becomes payable to the Surviving Spouse when the child reaches the
age of majority.
(f) For the purposes of this section, distribution of a
Participant's interest is considered to begin on the Participant's Required
Beginning Date (or, if subsection (d) above is applicable, the date distribution
is required to begin to the Surviving Spouse pursuant to subsection (b) above).
If distribution is in the form of an annuity described in section 11.4(b) above
irrevocably commences to the Participant before the Required Beginning Date, the
date distribution is considered to begin is the date distribution actually
commences.
11.6 DESIGNATION OF BENEFICIARY. Subject to the rules of ARTICLE 9, a
Participant (or former Participant) may designate from time to time any person
or persons (who may be designated contingently or successively and may be an
entity other than a natural person) as his Beneficiary who will be entitled to
receive any undistributed amounts credited to the Participant's separate
Account under the Plan at any time of the Participant's death. Any such
beneficiary designation by a Participant shall be made in writing in the manner
prescribed by the Plan Administrator, and shall be effective only when filed
with the Plan Administrator during the Participant's lifetime. A Participant
my change or revoke his Beneficiary designation at any time in the manner
prescribed by the Plan Administrator. If any portion of the Participant's
Account is invested in insurance pursuant to ARTICLE 14, the Beneficiary of the
benefits under the insurance policy shall be the person or persons designated
under the policy. If the Designated Beneficiary (or each of the Designated
Beneficiaries) predeceases the Participant, the Participant's Beneficiary
designation shall be ineffective. If no Beneficiary designation is in effect
at the time of the Participant's death, his Beneficiary shall be his estate.
11.7 DEFINITIONS.
(a) APPLICABLE LIFE EXPECTANCY. The Life Expectancy (or
joint and last survivor expectancy) calculated using the attained age of the
Participant (or Designated Beneficiary) as of the Participant's (or Designated
Beneficiary's) birthday in the applicable calendar year reduced by one (1) for
each calendar year which as elapsed since the date Life Expectancy was first
calculated. If Life Expectancy is being recalculated, the Applicable Life
Expectancy shall be the Life Expectancy as so recalculated. The applicable
calendar year shall be the first Distribution Calendar Year, and if Life
Expectancy is being recalculated such succeeding calendar year.
If annuity payments commence in accordance with section 11.4(b) before the
Required Beginning Date, the applicable calendar year is the year such payments
commence. If distribution is in the form of an immediate annuity purchased
after the Participant's death with the Participant's remaining interest, the
applicable calendar year is the year of purchase.
(b) DESIGNATED BENEFICIARY. The individual who is designated
as the Beneficiary under the Plan in accordance with section 401(a)(9) and the
proposed regulations thereunder.
(c) DISTRIBUTION CALENDAR YEAR. A calendar year for which a
minimum distribution is required. For distributions beginning before the
Participant's death, the first Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the Participant's
Required Beginning Date. For distributions beginning after the Participant's
death, the first Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to section 11.5 above.
(d) LIFE EXPECTANCY.
(i) Life Expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in Table V and
VI of section 1.72-9 of the income tax regulations.
(ii) Unless otherwise elected by the Participant (or
Spouse, in the case of distributions described in section 11.5(b)(ii)above) by
the time distributions are required to begin, life expectancies shall be
recalculated
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annually. Such election shall be irrevocable as to the Participant (or Spouse)
and shall apply to all subsequent years. The Life Expectancy of a non-
Spouse Beneficiary may not be recalculated.
(e) Participant's Benefit.
(i) The Account balance as of the last valuation date in the
calendar year immediately preceding the Distribution Calendar Year
(valuation calendar year) increased by the amount of any contributions or
forfeitures allocated to the Account balance as of dates in the valuation
calendar year after the valuation date and decreased by distributions made in
the valuation calendar year after the valuation date.
(ii) For purposes of subsection (i) above, if any portion of
the minimum distribution for the first Distribution Calendar Year is made in
the second Distribution Calendar Year on or before the Required Beginning Date,
the amount of the minimum distribution made in the second Distribution Calendar
Year shall be treated as if it had been made in the immediately preceding
Distribution Calendar Year.
(f) Required Beginning Date.
(i) General Rule. The Required Beginning Date of a Participant
is the first day of April of the calendar year following the calendar year in
which the Participant attains age seventy and one-half (70 1/2).
(ii) Transitional Rules. The Required Beginning Date of a
Participant who attains age seventy and one-half (70 1/2) before January 1,
1988, shall be determined in accordance with (1) or (2) below:
(1) Non-Five-Percent Owners. The Required Beginning Date
of a Participant who is not a Five Percent (5%) Owner is the first day of April
of the calendar year following the calendar year in which the later of
retirement or attainment of age seventy and one-half (70 1/2) occurs.
(2) Five Percent Owners. The Required Beginning Date of a
Participant who is a Five Percent (5%) Owner during any year beginning after
December 31, 1979, is the first day of April following the later of:
(A) the calendar year in which the Participant
attains age seventy and one-half (70 1/2); or
(B) the earlier of the calendar year with or within
which ends the Plan Year in which the Participant becomes a Five Percent (5%)
Owner, or the calendar year in which the Participant retires. The Required
Beginning Date of a Participant who is not a Five Percent (5%) Owner who
attains age seventy and one-half (70 1/2) during 1988 and who has not retired
as of January 1, 1989, is April 1, 1990.
(iii) Five Percent Owner. A Participant is treated as a Five
Percent (5%) Owner for purposes of this section if such Participant is a Five
Percent (5%) Owner as defined in section 416(i) of the Code (determined in
accordance with section 416 but without regard to whether the Plan is to-heavy)
at any time during the Plan Year ending with or within the calendar year in
which such owner attains age sixty-six and one-half (66 1/2) or any subsequent
year.
(iv) Once distributions have begun to a Five Percent (5%) Owner
under this section, they must continue to be distributed, even if the
Participant ceases to be a Five Percent (5%) Owner in a subsequent year.
11.8 Transitional Rule.
(a) Notwithstanding the other requirements of this ARTICLE and
subject to the requirements of ARTICLE 9, distribution on behalf of any
Employee, including a Five Percent (5%) Owner, may be made in accordance with
all of the following requirements (regardless of when such distribution
commences):
(i) The distribution by the Trust is one which would not have
disqualified such trust under section 401(a)(9) of the Internal Revenue Code as
in effect prior to amendment by the Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in the Trust is being
distributed or, if the Employee is deceased, by a Beneficiary of such Employee.
(iii) Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before January 1, 1984.
(iv) The Employee had accrued a benefit under the Plan as of
December 31, 1983.
(v) The method of distribution designated by the Employee or
the Beneficiary specifies the time at which distributions will be made, and in
the case of any distribution upon the Employee's death, the Beneficiaries of
the Employee listed in order of priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation contains the
required information described above with respect to the distributions to be
made upon the death of the Employee.
(c) For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Employee, or the Beneficiary, to whom
such distribution is being made, will be presumed to have designated the method
of distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirements in subsections (a)(i) and (a)(v).
(d) If a designation is revoked, any subsequent distribution must
satisfy the requirements of section 401(a)(9) of the Code and the proposed
regulations thereunder. If a designation is revoked subsequent to the date
distributions are required to begin, the Trust must distribute by the end of
the calendar year following the calendar year in which the revocation occurs
the total amount not yet distributed which would have been required to have
been distributed to satisfy section 401(a)(9) of the Code and the regulations
thereunder but for the section 242(b)(2) election.
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For calendar years beginning after December 31, 1988, such distributions must
meet the minimum distribution incidental benefit requirements in section
1.401(a)(9)-2 of the proposed regulations. Any changes in the designation will
be considered to be a revocation of the designation. However, the mere
substitution or addition of another beneficiary (one not named in the
designation)under the designation will not be considered to be a revocation of
the designation, so long as such substitution or addition does not alter the
period over which distributions are to be made under the designation, directly
or indirectly (for example, by altering the relevant measuring life). In the
case in which an amount is transferred or rolled over from one plan to another
plan, the rules in Q&A J-2 and Q&A J-3 shall apply.
11.9 OPTIONAL FORMS OF BENEFIT
(a) Except to the extent benefits are required to be paid in the form
of an automatic joint and survivor annuity under ARTICLE 9, any amount which a
Participant shall be entitled to receive under the Plan shall be distributed in
one or a combination of the following ways:
(i) in a lump-sum payment of cash, the amount of which
shall be determined by redeeming all Shares credited to the Participant's
Account under the Plan as of the date of distribution;
(ii) in a lump-sum payment including a distribution in kind
of all Shares credited to the Participant's Account under the Plan as of the
date of distribution;
(iii) in substantially equal monthly, quarterly, or annual
installment payments of cash, or the distribution of Shares in kind, over a
period certain not to exceed the Life Expectancy of the Participant or the joint
and last survivor Life Expectancy of the Participant and his Beneficiary,
determined in each case as of the earlier of: (1) the end of the Plan Year in
which occurs the event entitling the Participant to a distribution of benefits,
or (2) the date such installments commence;
(iv) if permitted by the Sponsor, in monthly, quarterly, or
annual installment payments of cash, or the distribution of Shares in kind, so
that the amount distributed in each Plan Year equals the quotient obtained by
dividing the Participant's Account at the beginning of that Plan Year by the
joint and last survivor Life Expectancy of the participant and the Beneficiary
for that Plan Year. The Life Expectancy will be computed using the recomputation
method described in section 11.7(d). Unless the Spouse of the retired
Participant is the Beneficiary, the actuarial present value of all expected
payments to the retired Participant must be more than fifty percent (50%) of the
actuarial present value of payments to the retired Participant and the
Beneficiary; or
(v) by application of the Participant's vested Account to
the purchase of a nontransferable immediate or deferred annuity contract, on an
individual or group basis. Unless the Spouse of the retired Participant is the
Beneficiary, the actuarial present value of all expected payments to the
retired Participant must be more than fifty percent (50%) of the actuarial
present value of payments to the retired Participant and the Beneficiary.
(b) If the Participant fails to select a method of distribution,
except as may be required by ARTICLE 9, all amounts which he is entitled to
receive under the Plan shall be distributed to him in a lump-sum payment.
ARTICLE 12
WITHDRAWALS
12.1 WITHDRAWAL OF NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS. Subject to the
Qualified Election requirements of ARTICLE 9 and section 12.3, any Participant
who has made nondeductible voluntary contributions may, upon thirty (30) days
notice in writing filed with the Plan Administrator, have paid to him all or
any portion of the fair market value of his nondeductible voluntary contribution
subaccount.
12.2 HARDSHIP WITHDRAWALS. If the Adoption Agreement so provides and
the Employer elects, this section applies only to the profit sharing
contribution subaccount and only if the profit sharing allocation formula
selected in the Adoption Agreement is not integrated with Social Security.
(a) Demonstration of Need. Subject to the Qualified Election
requirements of ARTICLE 9 and section 12.3, if a Participant establishes an
immediate and heavy financial need for funds because of a hardship resulting
form the purchase or renovation of a primary residence, the education of the
participant or a member of his immediate family, or (including special
education), the medial or personal expenses of the Participant or a member of
his immediate family, or other demonstrable emergency as determined by the Plan
Administrator on a uniform and nondiscriminatory basis, the Participant shall
be permitted, subject to the limitations of subsection (b) below, to make a
hardship withdrawal of an amount credited to his profit sharing contribution
subaccount under the Plan.
(b) Amount of Hardship Withdrawal. The amount of any hardship
withdrawal by a Participant under subsection (a) above shall not exceed the
amount required to meet the immediate financial need created by the hardship
and not reasonably available from other resources of the Participant.
(c) Prior Withdrawal of Nondeductible Voluntary Participant
Contributions. A Participant shall not be permitted to make a hardship
withdrawal under subsection (a) above unless he has already withdrawn, in
accordance with section 12.1, any amount credited to his nondeductible
voluntary contributions subaccount.
12.3 MANNER OF MAKING WITHDRAWALS. Any withdrawal by a Participant under
the Plan shall be made only after the Participant files a written request with
the plan Administrator specifying the nature of the withdrawal (and the reasons
therefor, if a hardship withdrawal), and the amount of funds requested to be
withdrawn. Upon approving any withdrawal, the Plan Administrator shall furnish
the Trustee with written instructions directing the Trustee to make the
withdrawal in a lump-sum payment of cash to the Participant. In making any
withdrawal payment, the Trustee shall be fully
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entitled to rely on the instructions furnished by the Plan Administrator, and
shall be under no duty to make any inquiry or investigation with respect
thereto. Unless section 9.6 is applicable, if the Participant is married, his
Spouse must consent to the withdrawal pursuant to a Qualified Election (as
defined in section 9.4(c)) within the ninety (90) day period ending on the date
of the withdrawal.
12.4 LIMITATIONS ON WITHDRAWALS. The Plan Administrator may prescribe
uniform and nondiscriminatory rules and procedures limiting the number of times
a Participant may make a withdrawal under the Plan during any Plan Year, and
the minimum amount a Participant may withdraw on any single occasion.
13.1 GENERAL PROVISIONS.
(a) If the Adoption Agreement so provides and the Employer so elects,
loans shall be made available to any Participant or Beneficiary who is
party-in-interest (as defined in section 3(14) of ERISA) on a reasonably
equivalent basis. A Participant or Beneficiary who is not a party-in-interest
(as defined in section 3(14) of ERISA) shall not be eligible to receive a loan
under this ARTICLE.
(b) Loans shall not be made available to Highly-Compensated
Employees (as defined in section 414(q) of the Code) in an amount greater than
the amount made available to other Employees.
(c) Loans must be adequately secured and bear a reasonable interest
rate.
(d) No participant loan shall exceed the present value of the
Participant's Vested Account Balance.
(e) Unless section 9.6 is applicable, a Participant must obtain the
consent of his or her Spouse, if any, to use of the Account balance as security
for the loan. Spousal consent shall be obtained no earlier than the beginning
of the ninety(90) day period that ends on the date on which the loan is to be
so secured. The consent must be in writing, must acknowledge the effect of the
loan, and must be witnessed by a Plan representative or notary public. Such
consent shall thereafter be binding with respect to the consenting Spouse or any
subsequent Spouse with respect to that loan. A new consent shall be required if
the Account balance is used for renegotiation, extension, renewal or other
revision of the loan.
(f) In the event of default, foreclosure on the note and attachment
of security will not occur until a distributable event occurs under the Plan.
(g) Loans will not be made to any shareholder-employee or
Owner-Employee. For purposes of this requirement, a shareholder-employee means
an Employee or officer of an electing small business (subchapter S) corporation
who owns (or is considered as owning within the meaning of section 318(a)(1)
of the Code), on any day during the taxable year of such corporation, more than
five percent(5%) of the outstanding stock of the corporation.
(h) If a valid spousal consent has been obtained in accordance with
subsection (e), then, notwithstanding any other provision of this Plan, the
portion of the Participant's Vested Account Balance used as a security interest
held by the Plan by reason of a loan outstanding to the Participant shall be
taken into account for purposes of determining the amount of the Account
balance payable at the time of death or distribution, but only if the reduction
is used as repayment of the loan. If less than one hundred percent (100%) of
the Participant's Vested Account Balance (determined without regard to the
preceding sentence) is payable to the Surviving Spouse, then the Account
balance shall be adjusted by first reducing the Vested Account Balance by the
amount of the security used as repayment of the loan, and then determining the
benefit payable to the Surviving Spouse.
13.2 ADMINISTRATION OF LOAN PROGRAM.
(a) The Plan's loan program will be administered by the Plan
Administrator.
(b) Loan requests shall be made on a form prescribed by the Plan
Administrator and shall comply with section 13.4.
(c) Loan request that comply with all the requirements of this
ARTICLE shall be approved by the Plan Administrator.
(d) The rate of interest to be charged on loans shall be determined
under section 13.5.
(e) The only collateral that may be used as security for a loan, and
the limitations and requirements applicable, are determined under
section 13.6.
(f) The rules regarding defaults are set forth in section 13.9.
13.3 AMOUNT OF LOAN. Loans to any Participant or Beneficiary will not be
made to the extent that such loan, when added to the outstanding balance of all
other loans to the Participant or Beneficiary, would exceed the lesser of:
(a) fifty thousand dollars ($50,000) reduced by the excess (if any) of
the highest outstanding balance of loans during the one (1) year period ending
on the day before the loan is made, over the outstanding balance of loans from
the Plan on the date the loan is made; or
(b) one-half(1/2) the present value of the nonforfeitable accrued
benefit of the Participant.
(c) For the purpose of the above limitation, all loans from all
plans of the Employer and other members of a group of employers described in
sections 414(b), 414(c) and 414(m) of the Code are aggregated.
13.4 MANNER OF MAKING LOANS. A request by a Participant for a loan shall
be made in writing to the Plan Administrator and shall specify the amount of
the loan, and the subaccount(s) or Shares of the Participant from which the loan
should be made. The terms and conditions on which the Plan Administrator shall
approve loans under the Plan shall be applied on a uniform and
nondiscriminatory basis with respect to all Participants. If a Participant's
request for a loan is
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approved by the Plan Administrator, the Plan Administrator shall furnish the
Trustee with written instructions directing the Trustee to make the loan in a
lump-sum payment of cash to the Participant. In making any loan payment under
this ARTICLE, the Trustee shall be fully entitled to rely on the instructions
furnished by the Plan Administrator and shall be under no duty to make any
inquiry or investigation with respect thereto.
13.5 TERMS OF LOAN. Loans shall be made on such terms and subject to
such limitations as the Plan Administrator shall prescribe. Furthermore, any
loan shall, by its terms, require that repayment (principal and interest) be
amortized in level payments, not less frequently than quarterly, over a period
not extending beyond five (5) years from the date of the loan, unless such loan
is used to acquire a dwelling unit which, within a reasonable time (determined
at the time the loan is made) will be used as the principal residence of the
Participant. The rate of interest to be charged shall be determined by the Plan
Administrator in accordance with the rates quoted by representative financial
institutions in the local area for similar loans.
13.6 SECURITY FOR LOAN. Any loan to a Participant under the Plan
shall be secured by the pledge of all the Participant's right, title, and
interest in the Trust. Such pledge shall be evidenced by the execution of a
promissory note by the Participant which shall provide that, in the event of
any default by the participant on a loan repayment, the Plan Administrator
shall be authorized (to the extent permitted by law) to deduct the amount of
the loan outstanding and any unpaid interest due thereon from the Participant's
wages or salary to be thereafter paid by the Employer, and to take any and all
other actions necessary and appropriate to enforce collection of the unpaid
loan. An assignment or pledge of any portion of the Participant's interest in
the Plan and a loan, pledge, or assignment with respect to any insurance
contract purchased under the Plan, will be treated as a loan under this
section. In the event the value of the Participant's vested Account at any time
is less than one hundred twenty-five percent (125%) of the outstanding loan
balance, the Plan Administrator shall request additional collateral of
sufficient value to adequately secure the repayment of the loan. Failure to
provide such additional collateral upon a request of the Plan Administrator
shall constitute an event of default.
13.7 SEGREGATED INVESTMENT. Loans shall be considered a Participant
directed investment and, for the limited purposes of allocated earnings and
losses pursuant to ARTICLE 5, shall not be considered a part of the common fund
under the Trust.
13.8 REPAYMENT OF LOAN. The Plan Administrator shall have the sole
responsibility for ensuring that a Participant timely makes all loan
repayments, and for notifying the Trustee in the event of any default by the
Participant on the loan. Each loan repayment shall be paid to the Trustee and
shall be accompanied by written instructions from the Plan Administrator that
identify the Participant on whose behalf the loan repayment was being made.
13.9 DEFAULT ON LOAN.
(a) In the event of a termination of the Participant's
employment with the Affiliated Employers or a default by a Participant on a
loan repayment, all remaining payments on the loan shall be immediately due and
payable. The Employer shall, upon the direction of the Plan Administrator, to
the extent permitted by law, deduct the total amount of the loan outstanding
and any unpaid interest due thereon from the wages or salaries payable to the
Participant by the Employer in accordance with the Participant's promissory
note. In addition, the Plan Administrator shall take any and all other actions
necessary and appropriate to enforce collection of the unpaid loan. However,
attachment of the Participant's Account pledged as security will not occur
until a distributable event occurs under the Plan.
(b) For purposes of this section, the term "default" shall
mean failure, by a period of at least ten (10) days, to make any loan payment
(whether principal or interest or both) that is due and payable. Neither the
Plan Administrator nor any other fiduciary is required to give any written or
oral notice of default.
13.10 UNPAID AMOUNTS. Upon the occurrence of a Participant's
retirement or death, or upon a Participant's fifth consecutive Break in Service
or earlier distribution, the unpaid balance of any loan, including any unpaid
interest, shall be deducted from any payment or distribution from the Trust to
which such Participant or his Beneficiary may be entitled. If after charging
the Participant's Account with the unpaid balance of the loan, including any
unpaid interest, there still remains an unpaid balance of any such loan and
interest, then the remaining unpaid balance of such loan and interest shall be
charged against any property pledged as security with respect to such loan.
ARTICLE 14
INSURANCE
14.1 INSURANCE. If the Adoption Agreement so provides and the
Employer elects to allocate or permit Participants to allocate a portion of
their Accounts to purchase life insurance, the ensuing subsections of this
ARTICLE shall apply:
14.2 POLICIES. The Plan Administrator shall instruct the Trustee
to procure one or more life insurance policies on the Participant's life, the
terms of which shall conform to the requirements of the Plan and the Code. The
policies and the companies which write them shall be subject to the approval of
the Plan Administrator and the Trustee. The Trustee shall procure and hold such
policies in the name of the nominee. The Trustee shall be the sole owner of all
contracts purchased hereunder, and it shall be so designated in each policy and
application therefor.
14.3 BENEFICIARY. The Participant shall have the right to name the
Beneficiary and to choose the benefit option under the policy for the
Beneficiary. The Trustee shall designate the Beneficiary of all such policies
in accordance with the written directions of the Plan Administrator and the
policy terms. Such designations may be outlined in the original application as
forwarded to the issuing company. However, the Plan Administrator shall have
available and shall furnish the
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Participant with the necessary forms for any Beneficiary designation or change
of Beneficiary and it will keep a copy of all executed designations as part of
its records. Upon a Participant's death, the Plan Administrator will promptly
furnish the Trustee a copy of the last designation and shall authorize the
Trustee to complete such forms as the insurance company may require in order to
effect the benefit option.
14.4 PAYMENT OF PREMIUMS. Subject to the provisions of sections 7.3 and
14.5, premium payments to the insurer may be made only by the Trustee with
respect to any insurance policy purchased on behalf of a Participant and shall
constitute first an investment of a portion of the funds of the Participant's
Employer Contribution subaccounts up to the maximum amount of such subaccounts
permitted to be applied toward such premium payments, as provided in section
14.5. If a Participant's subaccounts lack sufficient assets to pay premiums on
a life insurance policy due on his behalf, the Trustee, at the direction of the
Plan Administrator, acting upon the request of the Participant, shall borrow
under the policy loan provisions, if any, the amount necessary to pay such
premiums, using the cash value of the insurance as security, or the Trustee may
liquidate assets held in the Participant's Account, in the same order, of
sufficient value to pay such premiums. Any loans shall be repaid by the
application of earnings, contributions, or forfeitures to the Account of the
Participant insured by such policy. In the absence of the Plan administrator's
direction to borrow or to liquidate assets to pay premiums, the life insurance
policy shall be put on a paid-up-basis or, if it has no cash value, canceled.
14.5 LIMITATION ON INSURANCE PREMIUMS. The Trustee shall not pay, nor
shall anyone on behalf of the Trustee pay, any life insurance premium for any
Participant out of the Participant's Employer Contribution subaccounts unless
the amount of such payment, plus all premiums previously so paid on behalf of
the Participant, is less than fifty percent (50%) of the Employer Contributions
and forfeitures allocated to the Participant's Employer Contribution
subaccounts as determined on the date such premium is paid with respect to
reserve life insurance policies and shall be less than twenty-five percent
(25%) thereof with respect to nonreserve (term) policies, or, if both reserve
life and term insurance are purchased on the life of any Participant, the sum
of the term insurance premium plus one-half (1/2) of the reserve life premiums
may not exceed twenty-five percent (25%) of the Employer Contributions made on
behalf of such Participant. For purposes of these incidental insurance
provisions, reserve life insurance contracts are contracts with both
nondecreasing death benefits and nonincreasing premiums. Dividends received on
life insurance policies shall be considered a reduction of premiums paid in
such computations.
If payment of premiums on a Participant's life insurance policy is
prohibited because of the limitation, the Trustee, as directed by the Plan
Administrator, shall permit the Participant to maintain that part of the
coverage made available by the prohibited premiums, either by payment of the
amount of the prohibited premium by the Participant from sources other than the
Trust or by distributing the policy to the extent of the Participant's vested
interest to the Participant and eliminating it from the Trust.
Nothing contained in the foregoing provisions of section 14.4 and
this section shall be deemed to authorize the payment of any premium or
premiums for any Participant which would result in a failure to maintain any
mandatory investment in Shares required by the Sponsor in the account or
subaccounts of any such Participant.
14.6 INSURANCE COMPANY. No insurance company which may issue any policies
for the purposes of this Plan shall be required to take or permit any action
contrary to the provisions of said policies, nor shall such insurance company
be deemed to be a party to, or responsible for the validity of, this Plan for
any purpose. No such insurance company shall be required to look into the terms
of this Plan or question any action of the Trustee hereunder, nor be
responsible to see that any action of the Trustee is authorized by the terms of
this Plan. Any such issuing insurance company shall be fully discharged from
any and all liability for any amount paid to the Trustee or paid in accordance
with the direction of the Trustee, as the case may be, or for any change made
or action taken by such insurance company upon such direction and no such
insurance company shall be obliged to see the distribution or further
application of any monies paid by it. The certificate of the Trustee signed by
one of its trust officers, assistant secretary, or other authorized
representative thereof, may be received by any insurance company as conclusive
evidence of any of the matters mentioned in the Plan and any insurance company
shall be fully protected in taking or permitting any action on the faith
thereof and shall incur no liability or responsibility for so doing.
14.7 DISTRIBUTION OF POLICIES. Upon a Participant's death, the Trustee,
upon direction of the Plan Administrator, shall procure the payment of the
proceeds of any policy held by the Participant in accordance with its terms and
this Plan. The Trustee shall be required to pay over all the proceeds of any
policy to the Participant's Designated Beneficiary in accordance with the
distribution provisions of the Plan. A Participant's Spouse will be the
Designated Beneficiary unless a Qualified Election has been made in accordance
with section 9.4(c) of the Plan. Under no circumstances shall the Trust retain
any part of the proceeds. Subject to the joint and survivor annuity
requirements of ARTICLE 9, the policies shall be converted or distributed upon
commencement of benefits in accordance with the provisions of this section.
Upon a Participant's retirement at or after his Normal Retirement Age, unless
there is a single sum distribution in which case any policy shall be
distributed, any such policy shall be converted paid-up contract and delivered
to the Participant but the Plan Administrator may, with the Participant's
consent, direct that a portion or all of such cash value of the policy be
converted to provide retirement income as permitted within the terms of the
policy and this Plan. Upon a Participant's retirement due to Total and
Permanent Disability, any such policy shall be held for his account and
assigned or delivered to the Participant in addition to any other benefits
provided by this Plan. Upon a Participant's termination of employment for
reasons other than death, Total and Permanent Disability, or retirement as
stated above, to the extent of life insurance
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purchased by Employer Contributions, he shall be entitled to a vested interest
in any policy held for his account as his interest is vested in the remainder
of his Employer Contribution subaccounts (exclusive of any such policy).
Whenever the Participant is entitled to one hundred percent (100%), then such
policy shall be assigned and delivered to the Participant in accordance with its
terms and the terms of the Plan. Whenever the Participant is entitled to
vesting of less than one hundred percent(100%), then the Participant shall be
entitled to a vested interest of the cash surrender value of any such policy
equal to his percent of vested interest in his Employer Contribution
subaccounts, exclusive of the policy, and one of the following distribution
procedures shall apply:
(a) If the nonvested portion of the cash surrender value of all
policies held for the Participant's Account is less than the amount of his
vested termination benefit exclusive of the policies, then, such policy shall
be assigned to the Participant and the remainder of the Participant's vested
interest in the Participant's Employer Contribution subaccounts shall be
reduced by the cash surrender value of the nonvested portion of all policies,
after which it shall be paid or distributed to the Participant in accordance
with the terms of the Plan; or
(b) If the nonvested portion of the cash surrender value of all
policies held for the Participant's Account exceeds the Participant's vested
interest in the Employer Contribution subaccount exclusive of such policies,
the Participant shall be given the opportunity to purchase such policies by
paying to the Trustee the amount of such excess within thirty (30) days after
notice to him of the amount to be paid. Upon receipt of such payment said policy
shall be assigned and delivered to the Participant to the full satisfaction of
all termination benefits under this Plan. Any such policy not so purchased
shall be surrendered by the Trustee for its cash value and the proceeds thereof
deposited in the Trust for reallocation pursuant to ARTICLE 5.
It is the intention hereof that the total termination benefit of a
Participant whose interest is not fully vested shall be equal to the sum of the
vested percentage of his Employer Contribution subaccounts exclusive of all
such policies and the same percentage of the cash value of all such policies
held for his Account. To the extent possible under the foregoing provisions,
such total termination benefits shall be satisfied by the transfer and delivery
to the Participant of one or more such policies with the balance, if any, to be
paid in cash or in kind.
14.8 POLICY FEATURES. The Trustee shall arrange, where possible, that all
policies purchased for the benefit of a Participant shall have the same dividend
option which shall be on the premium reduction plan, and as nearly as may be
possible all policies issued under the Plan shall have the same anniversary
date. To the extent any dividends or credits earned on insurance policies are
not applied toward the next premiums due, they shall be allocated to the
Participant's Employer Contribution subaccount in the same manner as a
Participant's directed investment.
14.9 CHANGED CONDITIONS. From time to time because of changed conditions,
the Trustee, acting at the direction of the Plan Administrator upon the
election of the Participant concerned, shall obtain an additional contract or
policy or make such change in the contracts or policies maintained by the
Trustee on the life of the Participant as may be required by such changed
conditions, within the limits permitted by the insurance company which issued
or is requested to issue a contract and the limits established by this Plan.
14.10 CONFLICTS. In the event of any conflict between the terms of the
Plan and the provisions of any contract issued hereunder, the terms of the Plan
shall control.
ARTICLE 15
ADMINISTRATION
15.1 DUTIES AND RESPONSIBILITIES OF FIDUCIARIES; ALLOCATION OF FIDUCIARY
RESPONSIBILITY. A fiduciary of the Plan shall have only those specific powers,
duties, responsibilities, and obligations as are explicitly given him under the
Plan and Trust Agreement. In general, the Employer shall have the sole
responsibility for making contributions to the Plan required under ARTICLE 4;
appointing the Trustee and the Plan Administrator; and determining the funds
available for investment under the Plan. The Plan Administrator shall have the
sole responsibility for the administration of the Plan, as more fully described
in section 15.2. It is intended that each fiduciary shall be responsible only
for the proper exercise of his own powers duties, responsibilities, and
obligations under the Plan and Trust Agreement, and shall not be responsible
for any act or failure to act of another fiduciary. A fiduciary may serve in
more than one fiduciary capacity with respect to the Plan.
15.2 POWERS AND RESPONSIBILITIES OF THE PLAN ADMINISTRATOR.
(a) ADMINISTRATION OF THE PLAN. The Plan Administrator shall have all
powers necessary to administer the Plan, including the power to construe and
interpret the Plan documents; to decide all questions relating to an
individual's eligibility to participate in the Plan; to determine the amount,
manner and timing of any distribution of benefits or withdrawal under the Plan;
to approve and ensure the repayment of any loan to a Participant under the
Plan; to resolve any claim for benefits in accordance with section 15.7; and to
appoint or employ advisors, including legal counsel to render advice with
respect to any of the Plan Administrator's responsibilities under the Plan.
Any construction, interpretation, or application of the Plan by the Plan
Administrator shall be final, conclusive, and binding. All actions by the Plan
Administrator shall be taken pursuant to uniform standards applied to all
persons similarly situated. The Plan Administrator shall have no power to add
to, subtract from, or modify any of the terms of the Plan, or to change or add
to any benefits provided by the Plan, or to waive or fail to apply any
requirements of eligibility for a benefit under the Plan.
(b) RECORDS AND REPORTS. The Plan Administrator shall be responsible
for maintaining sufficient records to reflect the Eligibility Computation
Periods in which an Employee is credited with one or more Years of Service
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for purposes of determining his eligibility to participate in the Plan, and the
Compensation of each Participant for purposes of determining the amount of
contributions that may be made by or on behalf of the Participant under the
Plan. The Plan Administrator shall be responsible for submitting all required
reports and notifications relating to the Plan to Participants or their
Beneficiaries, the Internal Revenue Service and the Department of Labor.
(c) Furnishing Trustee with Instructions. The Plan Administrator
shall be responsible for furnishing the Trustee with written instructions
regarding all contributions to the Trust, all distributions to Participants in
accordance with ARTICLE 10 all withdrawals by Participants in accordance with
ARTICLE 12, all loans to Participants in accordance with ARTICLE 13 and all
purchases of life insurance in accordance with ARTICLE 14. In addition, the
Plan Administrator shall be responsible for furnishing the Trustee with any
further information respecting the Plan which the Trustee may request for the
performance of its duties or for the purpose of making any returns to the
Internal Revenue Service or Department of Labor as may be required of the
Trustee.
(d) Rules and Decisions. The Plan Administrator may adopt such
rules as it deems necessary, desirable, or appropriate in the administration of
the Plan. All rules and decisions of the Plan Administrator shall be applied
uniformly and consistently to all Participants in similar circumstances. When
making a determination or calculation, the Plan Administrator shall be entitled
to rely upon information furnished by a Participant or Beneficiary, the
Employer, the legal counsel of the Employer, or the Trustee.
(e) Application and Forms for Benefits. The Plan Administrator may
require a Participant or Beneficiary to complete and file with it an
application for a benefit, and to furnish all pertinent information requested
by it. The Plan Administrator may rely upon all such information so furnished
to it, including the Participant's or Beneficiary's current mailing address.
(f) Facility of Payment. Whenever, in the Plan Administrator's
opinion, a person entitled to receive a payment of a benefit or installment
thereof is under a legal disability or is incapacitated in any way so as to be
unable to manage his financial affairs, it may direct the Trustee to make
payments to such person or to the legal representative or to a relative or
friend of such person for that person's benefit, or it may direct the Trustee
to apply the payment for the benefit of such person in such manner as it
considers advisable.
15.3 ALLOCATION OF DUTIES AND RESPONSIBILITIES. The Plan Administrator
may, by written instrument, allocate among its members or employees any of its
duties and responsibilities not already allocated under the Plan or may
designate persons other than members or employees to carry out any of the Plan
Administrator's duties and responsibilities under the Plan. Any such duties or
responsibilities thus allocated must be described in the written instrument. If
a person other than an Employee of the Employer is so designated, such person
must acknowledge in writing his acceptance of the duties and responsibilities
allocated to him.
15.4 APPOINTMENT OF THE PLAN ADMINISTRATOR. The Employer shall designate
in the Adoption Agreement the Plan Administrator who shall administer the
Employer's Plan. Such Plan Administrator may consist of an individual, a
committee of two or more individuals, whether or not, in either such case, the
individual or any of such individuals are Employees of the Employer, a
consulting firm or other independent agent, the Trustee (with its consent), or
the Employer itself. The Plan Administrator shall be charged with the full
power and the responsibility for administering the Plan in all its details. If
no Plan Administrator has been appointed by the Employer, or if the person
designated as Plan Administrator by the Employer is not serving as such for any
reason, the Employer shall be deemed to be the Plan Administrator of the Plan.
The Plan Administrator may be removed by the Employer, or may resign by giving
notice in writing to the Employer, and in the event of the removal,
resignation, or death, or other termination of service by the Plan
Administrator, the Employer shall, as soon as practicable, appoint a successor
Plan Administrator, such successor thereafter to have all of the rights,
privileges, duties, and obligations of the predecessor Plan Administrator.
15.5 EXPENSES. The Employer shall pay all expenses authorized and
incurred by the Plan Administrator in the administration of the Plan except to
the extent such expenses are paid from the Trust.
15.6 LIABILITIES. The Plan Administrator and each person to whom duties
and responsibilities have been allocated pursuant to section 15.3 may be
indemnified and held harmless by the Employer with respect to any alleged
breach of responsibilities performed or to be performed hereunder. The Employer
and each Affiliated Employer shall indemnify and hold harmless the Sponsor
against all claims, liabilities, fines, and penalties, and all expenses
reasonably incurred by or imposed upon him (including, but not limited to,
reasonable attorney's fees) which arise as a result of actions or failure to
act in connection with the operation and administration of the Plan.
15.7 CLAIMS PROCEDURE.
(a) Filing a Claim. Any Participant or Beneficiary under the Plan
may file a written claim for a Plan benefit with the Plan Administrator or with
a person named by the Plan Administrator to receive claims under the Plan.
(b) Notice of Denial of Claim. In the event of a denial or
limitation of any benefit or payment due to or requested by any Participant or
Beneficiary under the Plan ("claimant"), claimant shall be given a written
notification containing specific reasons for the denial or limitation of his
benefit. The written notification shall contain specific reference to the
pertinent Plan provisions on which the denial or limitation of his benefit is
based. In addition, it shall contain a description of any other material or
information necessary for the claimant to perfect a claim, and an explanation
of why such material or information is necessary. The notification shall
further provide appropriate information as to the steps to be taken if the
claimant wishes to submit his claim for review. This written notification shall
be given to a claimant within ninety (90)
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days after receipt of his claim by the Plan Administrator unless special
circumstances require an extension of time for processing the claim. If such an
extension of time for processing is required, written notice of the extension
shall be furnished to the claimant prior to the termination of said ninety (90)
day period, and such notice shall indicate the special circumstances which make
the postponement appropriate.
(c) Right of Review. In the event of a denial or limitation of his
benefit, the claimant or his duly authorized representative shall be permitted
to review pertinent documents and to submit to the Plan Administrator issues and
comments in writing. In addition, the claimant or his duly authorized
representative may make a written request for a full and fair review of his
claim and its denial by the Plan Administrator; provided, however, that such
written request must be received by the Plan Administrator (or its delegate to
receive such requests) within sixty (60) days after receipt by the claimant of
written notification of the denial or limitation of the claim. The sixty (60)
day requirement may be waived by the Plan Administrator in appropriate cases.
(d) Decision on Review. A decision shall be rendered by the Plan
Administrator within sixty (60) days after the receipt of the request for
review, provided that where special circumstances require an extension of time
for processing the decision, it may be postponed on written notice to the
claimant (prior to the expiration of the initial sixty (60) day period) for an
additional sixty (60) days, but in no event shall the decision by rendered more
than one hundred twenty (120) days after the receipt of such request for
review. Any decision by the Plan Administrator shall be furnished to the
claimant in writing and shall set forth the specific reasons for the decision
and the specific Plan provisions on which the decision is based.
(e) Court Action. No Participant or Beneficiary shall have the
right to seek judicial review of a denial of benefits, or to bring any action
in any court to enforce a claim for benefits prior to filing a claim for
benefits or exhausting his rights to review under this section.
ARTICLE 16
AMENDMENT, TERMINATION AND MERGER
16.1 SPONSOR'S POWER TO AMEND. The Sponsor may amend any part of the
Plan. For purposes of Sponsor's amendments, the mass submitted shall be
recognized as the agent of the Sponsor. If the Sponsor does not adopt the
amendments made by the mass submitted, it will no longer be identical to or a
minor modifier of the mass submitted plan.
16.2 AMENDMENT BY ADOPTING EMPLOYER.
(a) The Employer may:
(i) change the choice of options in the Adoption Agreement;
(ii) add overriding language in the Adoption Agreement when
such language is necessary to satisfy section 415 or section 416 of the Code
because of the required aggregation of multiple plans; and
(iii) add certain model amendments published by the Internal
Revenue Service which specifically provide that their adoption will not cause
the Plan to be treated as individually designed.
(b) An Employer that amends the Plan for any other reason, including
a waiver of the minimum funding requirement under section 412(d) of the Code,
will no longer participate in this prototype plan and will be considered to
have an individually designed plan.
16.3 VESTING UPON PLAN TERMINATION. In the event of the termination or
partial termination of the Plan, the Account balance of each affected
Participant will be nonforfeitable.
16.4 VESTING UPON COMPLETE DISCONTINUANCE OF CONTRIBUTIONS. In the event
of a complete discontinuance of contributions under the Plan, the Account
balance of each affected Participant will be nonforfeitable.
16.5 MAINTENANCE OF BENEFITS UPON MERGER. In the event of a merger or
consolidation with, or transfer of assets to any other plan, each Participant
will receive a benefit immediately after such merger, consolidation or transfer
(if the Plan then terminated) which is at least equal to the benefit the
Participant was entitled to immediately before such merger, consolidation or
transfer (if the Plan had been terminated).
16.6 SPECIAL AMENDMENTS. The Employer may from time to time make any
amendment to the Plan that may be necessary to satisfy section 415 or 416 of
the Code. Any such amendment will be adopted by the Employer by completing
overriding Plan language in the Adoption Agreement. In the event of such an
agreement, the Employer must obtain a separate determination letter from the
Internal Revenue Service to continue reliance on the Plan's qualified status.
ARTICLE 17
MISCELLANEOUS
17.1 EXCLUSIVE BENEFIT OF PARTICIPANTS AND BENEFICIARIES.
(a) All assets of the Trust shall be retained for the exclusive
benefit of Participants and their Beneficiaries, and shall be used only to pay
benefits to such persons or to pay the fees and expenses of the Trust. The
assets of the Trust shall not revert to the benefit of the Employer, except as
otherwise specifically provided in section 17.1(b).
(b) To the extent permitted or required by ERISA and the Code,
contributions to the Trust under this Plan are subject to the following
conditions:
(i) If a contribution or any part thereof is made to the
Trust by the Employer under a mistake of fact, such contribution or part
thereof shall be returned to the Employer within one (1) year after the date
the contribution is made.
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(ii) In the event the Plan is determined not to meet the initial
qualification requirements of section 401 of the Code, contributions made in
respect of any period for which such requirements are not met shall be returned
to the Employer within one (1) year after the Plan is determined not to meet
such requirements, but only if the application for the qualification is made by
the time prescribed by law for filing the Employer's return for the taxable
year in which the Plan is adopted, or such later date as the Secretary of the
Treasury may prescribe.
(iii) Contributions to the Trust are specifically conditioned on
their deductibility under the Code and, to the extent a deduction is disallowed
for any such contribution, such amount shall be returned to the Employer within
one (1) year after the date of the disallowance of the deduction.
17.2 NONGUARANTEE OF EMPLOYMENT. Nothing contained in this Plan shall be
construed as a contract of employment between the Employer and any Employee, or
as a right of any Employee to be continued in the employment of the Employer,
or as a limitation of the right of the Employer to discharge any of its
Employees, with or without cause.
17.3 RIGHTS TO TRUST ASSETS. No Employee, Participant, or Beneficiary
shall have any right to, or interest in, any assets of the Trust upon
termination of employment or otherwise, except as provided under the Plan. All
payments of benefits under the Plan shall be made solely out of the assets of
the Trust.
17.4 NONALIENATION OF BENEFITS. No benefit or interest available
hereunder will be subject to assignment or alienation, either voluntarily or
involuntarily. The preceding sentence shall also apply to the creation,
assignment, or recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order, unless such order is
determined to be a qualified domestic relations order, as defined in section
414(p) of the Code, or any domestic relations order entered before January 1,
1985.
17.5 AGGREGATION RULES.
(a) Except as provided in ARTICLE 6, all Employees of the Employer
or any Affiliated Employer will be treated as employed by a single employer.
(b) If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and the plan
established for other trades or businesses must, when looked at as a single
plan, satisfy sections 401(a) and (d) of the Code for the Employees of this
and all other trades or businesses.
(c) If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan which
satisfies sections 401(a) and (d) of the Code and which provides contributions
and benefits not less favorable than provided for Owner-Employees under this
Plan.
(d) If an individual is covered as an Owner-Employee under the plans
of two or more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
employees under the plan of the trades or businesses which are controlled must
be as favorable as those provided for him under the most favorable plan of the
trade or business which is not controlled.
(e) For purposes of paragraphs (b), (c) and (d), an Owner-Employee,
or two or more Owner-Employees, will be considered to control a trade or
business if the Owner-Employee, or two or more Owner-Employees together:
(i) own the entire interest in an unincorporated trade or
business; or
(ii) in the case of a partnership, own more than fifty percent
(50%) of either the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or
more Owner-Employees shall be treated as owning an interest in a partnership
which is owned, directly or indirectly, by a partnership which such
Owner-Employee, or such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
17.6 FAILURE OF QUALIFICATION. If the Employer's plan fails to attain or
retain qualification, such plan will no longer participate in this
master/prototype plan and will be considered an individually designed plan.
17.7 APPLICABLE LAW. Except to the extent otherwise required by ERISA, as
amended, this Plan shall be construed and enforced in accordance with the laws
of the state in which the Employer's principal place of business is located, as
specified in the Adoption Agreement.
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DETERMINATION LETTERS
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<TABLE>
<S> <C>
INTERNAL REVENUE SERVICE Department of the Treasury
Description: Prototype Standardized Profit Sharing Plan
50241605001 Case: 9012605 EIN: 74-1894784
01 Plan: 001 Letter Serial No: D248294a
Washington D.C. 20224
Person to Contact: Ms. Arrington
AIM DISTRIBUTORS, INC. Telephone Number: (202) 566-4576
ELEVEN GREENWAY PLAZA Refer Reply to: E:EP:Q:ICU
SUITE 1919
HOUSTON, TX 77046 Date: 07/10/90
</TABLE>
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit
of their employees. This opinion relates only to the acceptability of the form
of the plan under the Internal Revenue Code. It is not an opinion of the effect
of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for officers, owners, or highly compensated
employees than for other employees. Except as stated below, the Key District
Director will not issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16) if: (1) an employer ever maintained another qualified plan for one
or more employees who are covered by this plan, other than a specified paired
plan within the meaning of section 7 of Rev. Proc. 89-9, 1989-6 I.R.S. 14; or
(2) after December 31, 1985, the employer maintains a welfare benefit fund
defined in Code section 419(e), which provides postretirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419A(d)(3). In such situations, the employer should request a determination as
to whether the plan, considered with all related qualified plans and, if
appropriate, welfare benefit funds, satisfies the requirements of Code section
401(a)(16) as to limitations on benefits and contributions in Code section 415.
The plan identified above is not a replacement plan as defined in section 3.10
of Rev. Proc. 89-9, 1989-6 I.R.S. 14. Therefore, an adopting employer may not
rely on this opinion letter to extend the remedial amendment period under
section 401(b) of the Code and regulations thereunder.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of the plan.
Sincerely yours,
/s/ [ILLEGIBLE]
Chief, Employee Plans Qualifications Branch
<PAGE> 75
<TABLE>
<S> <C>
Internal Revenue Service Department of the Treasury
Plan Description: Prototype Standardized Money Purchase Pension Plan
M: 50241605001-002 Case: 9812606 EIN: 74-1894784
BPD: 01 Plan: 802 Letter Serial No: D248295a
Washington DC 20224
Person to Contact: Ms. Arrington
AIM DISTRIBUTORS INC
Telephone Number: (202) 566-4576
ELEVEN GREENWAY PLAZA
SUITE 1919 Refer Reply to: E:EP:Q:ICU
HOUSTON, TX 77046
Date: 07/10/90
</TABLE>
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit
of their employees. This opinion relates only to the acceptability of the form
of the plan under the Internal Revenue Code. It is not an opinion of the effect
of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for officers, owners, or highly compensated
employees than for other employees. Except as stated below, the Key District
Director will not issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16). If: (1) an employer ever maintained another qualified plan for one
or more employees who are covered by this plan, other than a specified paired
plan within the meaning of section 7 of Rev. Proc. 89-9, 1989-6 I.R.S. 14; or
(2) after December 31, 1985, the employer maintains a welfare benefit fund
defined in Code section 419(e), which provides postretirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419A(d)(3). In such situations, the employer should request a determination as
to whether the plan, considered with all related qualified plans and, if
appropriate, welfare benefit funds, satisfies the requirements of Code section
401(a)(16) as to limitations on benefits and contributions in Code section 415.
The plan identified above is not a replacement plan as defined in section 3.10
of Rev. Proc. 89-9, 1989-6 I.R.S. 14. Therefore, an adopting employer may not
rely on this opinion letter to extend the remedial amendment period under
section 401(b) of the Code and regulations thereunder.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/ [ILLEGIBLE]
Chief, Employee Plans Qualifications Branch
<PAGE> 76
TRUST AGREEMENT
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PROTOTYPE DEFINED CONTRIBUTION TRUST
71
<PAGE> 78
INVESTMENT COMPANY INSTITUTE
PROTOTYPE DEFINED CONTRIBUTION TRUST
TABLE OF CONTENTS
ARTICLE PAGE
- ------- ----
ARTICLE I ACCOUNTS
1.1 Establishing Accounts 4
1.2 Charges Against Accounts 4
1.3 Prospectus to be Provided 4
ARTICLE II RECEIPT OF CONTRIBUTIONS 4
ARTICLE III INVESTMENT POWERS OF THE TRUSTEE
3.1 Investment of Account Assets 4
3.2 Directed Investments 5
3.3 General Investment Powers 5
3.4 Investment in Combined Funds 5
3.5 Other Powers of the Trustee 6
3.6 General Powers 6
3.7 Valuation of Trust 6
3.8 Bonding 6
3.9 Duties not Assigned 6
ARTICLE IV DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNT 6
ARTICLE V REPORTS OF THE TRUSTEE AND THE PLAN ADMINISTRATOR 7
ARTICLE VI TRUSTEE'S FEES AND EXPENSES OF THE TRUST 7
ARTICLE VII DUTIES OF THE EMPLOYER AND THE PLAN ADMINISTRATOR
7.1 Information and Data to be Furnished 7
the Trustee
7.2 Limitation of Duties 7
ARTICLE VIII LIABILITY OF THE TRUST
8.1 Trustee's Liability 7
ARTICLE IX DELEGATION OF POWERS
9.1 Delegation by the Trustee 8
9.2 Delegation with Employer Approval 8
ARTICLE X AMENDMENT 8
ARTICLE XI RESIGNATION OR REMOVAL OF TRUSTEE 8
ARTICLE XII TERMINATION OF THE TRUST
12.1 Term of the Trust 9
12.2 Termination by the Trustee 9
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ARTICLE XIII MISCELLANEOUS
13.1 No Diversion of Assets 9
13.2 Notices 9
13.3 Multiple Trustees 9
13.4 Conflict with Plan 9
13.5 Applicable Law 9
13.6 Returned Contributions 9
13.7 General Undertaking 9
13.8 Invalidity of Certain Provisions 9
13.9 Counterpart Originals 9
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<PAGE> 80
TRUST AGREEMENT
The employer identified at the end of this Trust Agreement (the
"Employer") has established a prototype Money Purchase Pension and/ or Profit
Sharing Plan sponsored by the AIM Family of Funds (the "Plan") for the benefit
of Participants therein pursuant to section 401 of the Internal Revenue Code of
1986. As part of the Plan, the Employer has requested such person or persons
(individual, corporate, or other entity), as may be designated in the Adoption
Agreement, to serve as Trustee pursuant to the Trust established for the
investment of contributions under the Plan upon the terms and conditions set
forth in this Trust Agreement.
Unless the context of this Trust Agreement clearly indicates otherwise,
the terms defined in ARTICLE 2 of the Plan entered into by the Employer, of
which this Trust Agreement forms a part, shall, when used herein, have the same
meaning as in the Plan.
ARTICLE I
ACCOUNTS
1.1 ESTABLISHING ACCOUNTS. The Trustee shall open and maintain a Trust
account for the Plan and, as part thereof, Participants' Accounts for such
individuals as the Plan Administrator shall, from time to time, give written
notice to the Trustee as being Participants in the Plan. The Trustee shall also
open and maintain such other subaccounts as may be appropriate or desirable to
aid in the administration of the Plan. Separate subaccounts shall be maintained
for each Participant and shall be credited with the contributions made by the
Employer and with forfeitures allocated to each such Participant pursuant to
the Plan (and all earnings thereon). If nondeductible voluntary contributions
by Participants are permitted by the Plan, the Trustee shall open and maintain
as a part of the Trust a separate subaccount for each Participant who makes
such nondeductible voluntary contributions, each such subaccount to be credited
with the Participant's voluntary contributions (and all earnings attributable
to such contributions). If trustee transfers or rollover contributions from
another qualified plan are received, the Trustee shall open and maintain a
separate rollover subaccount for each Participant, each such subaccount to be
credited with the Participant's trustee transfers or rollover contributions
(and all earnings attributable to such contributions).
1.2 CHARGES AGAINST ACCOUNTS. Upon receipt of written instructions from
the Plan Administrator, the Trustee shall charge the appropriate subaccount of
the Participant for any withdrawals or distributions made under the Plan and
any forfeiture, which may be required under the Plan, of unvested interests
attributable to Employer Contributions. The Plan Administrator will give
written instructions to the Trustee specifying the manner in which Employer
Contributions and any forfeiture of the nonvested portion of Accounts, as
allocated by the Plan Administrator in accordance with the provisions of the
Plan, are to be credited to the various Accounts maintained for Participants.
1.3 PROSPECTUS TO BE PROVIDED. The Plan Administrator shall ensure that
a Participant who makes a nondeductible voluntary contribution has previously
received or receives a copy of the then current prospectus relating to the
Shares. Delivery of such a nondeductible voluntary contribution, pursuant to
the provisions of the Plan by the Plan Administrator to the Trustee shall
entitle the Trustee to assume that the Participant has received such a
prospectus.
ARTICLE II
RECEIPT OF CONTRIBUTIONS
The Trustee shall accept and hold in the Trust contributions made by the
Employer and Participants under the Plan. The Plan Administrator shall give
written instructions to the Trustee specifying the Participants' Accounts to
which contributions are to be credited, the amount of each such credit which is
attributable to Employer Contributions, and the amount, if any, which is
attributable to the Participant's nondeductible voluntary contributions. If
written instructions are not received by the Trustee, or is such instructions
are received but are deemed by the Trustee to be unclear, upon notice to the
Employer and Plan Administrator, the Trustee may elect to hold all or part of
any such contribution in cash, without liability for rising security prices or
distributions made, pending receipt by it from the Plan Administrator of
written instructions or other clarification, or the Trustee may return the
contribution to the Employer. If any contributions or earnings are less than
any minimum which the then current prospectus for the Shares requires, the
Trustee may hold the specified portion of contributions or earnings in cash,
without interest, until such time as the proper amount has been contributed or
earned so that the investment in the Shares required under the Plan may be
made. All payments to the Trust shall be remitted in U.S. currency or other
property to the Trustee at the address specified by it. Any payments not in U.S.
currency may, in the sole discretion of the Trustee, be refused.
ARTICLE III
INVESTMENT POWERS OF THE TRUSTEE
3.1 INVESTMENT OF ACCOUNT ASSETS. The Trustee shall invest the amount of
each contribution made hereunder and all earnings on the Trust in full and
fractional Shares in accordance with the current prospectus for such Shares, in
such amounts and proportions as shall from time to time be designated by the
Plan Administrator on forms provided by the Sponsor, and shall credit such
Shares to the Accounts of each Participant on whose behalf or by whom the
contributions are made and any forfeitures are allocated. All dividends and
capital gain distributions received on the Shares held by the Trustee in each
Account, shall, if received in cash, be reinvested in such Shares in accordance
with the current prospectus for such Shares and shall in any event be credited
to such Account. If any distribution on Shares may be received at the election
of the shareholder in additional Shares, the Trustee shall so elect. The Trustee
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<PAGE> 81
shall deliver, or cause to be executed and delivered, to the Plan
Administrator, all notices, prospectuses, financial statements, proxies, and
proxy soliciting materials relating to Shares held hereunder. The Trustee shall
not vote any of the Shares held hereunder, except in accordance with the
written instructions of the Plan Administrator. If no such written instructions
are received, such Shares shall not be voted. The obligations of the Trustee
hereunder may be delegated by it as provided in Sections 9.1 and 9.2.
The Trustee shall sell Shares and purchase Shares to accomplish any change
in investments desired by the Employer as indicated on any amended Adoption
Agreement or other instructions in accordance with the terms of the Plan.
Notwithstanding the above, if periodic payments are being made to a
Participant pursuant to ARTICLE IV hereof, any dividends received on Shares held
in such Participant's Account, which dividends are invested at an offering price
which includes a sales charge, need not be invested in additional Shares but may
be held for distribution to the Participant in periodic payments. In such
instances, the Trustee may make any election necessary to receive any such
dividends in cash.
3.2 DIRECTED INVESTMENTS. When so instructed by the Plan Administrator,
the Trustee shall invest all or any portion of the individual Account of any
Participant in accordance with the direction of the Employer or such
Participant in lieu of participation in the general assets of the Trust. Such
directed investments shall be accounted for separately for each Participant.
Except as otherwise provided herein, the Trustee shall not have any discretion,
and is specifically prohibited from exercising any control or discretion, with
respect to such directed investments. Each Participant who directs the
investment of his Account shall be solely and absolutely responsible for the
investment or reinvestment of all directed investment assets held on is behalf
in Trust, and, except as otherwise provided herein, the Trustee shall not
question any such direction, review any securities or other such assets, or make
suggestions with respect to the investment, retention or disposition of any such
assets; provided that:
(a) If any contributions are transmitted to otherwise received or
held as directed investment assets without investment directions from the
Participant, the Trustee shall retain such amounts in a noninterest-bearing
savings account in a federally insured institution for the benefit of the
Participant.
(b) The Trustee may establish such reasonable rules and regulations,
applied on a uniform basis to all Participants, with respect to the
requirements for, and the form and manner of, effectuating any transaction with
respect to directed investment assets including, without limitation, minimum
amounts, rules applicable to conversion of directed investments into general
assets of the Trust, and appropriate adjustments (based on fair market values)
to Accounts to reflect any such conversion, as the Trustee shall determine to
be consistent with the purposes of the Plan. Any such rules and regulations
shall be binding upon all persons interested in the Trust.
(c) The Trustee may establish a procedure for the periodic review of
directed investment assets to determine, in light of the facts and
circumstances reasonably known to it, whether any actual or proposed investment
of such assets constitutes or would constitute a prohibited transaction as that
term is defined in sections 406-408 of ERISA and the corresponding provisions
of the Code. If the Trustee determines that any investment constitutes or would
constitute a prohibited transaction, the Trustee shall promptly communicate
this determination to the Plan Administrator, and shall recommend that the
investment be prevented or disposed of, as the case may be, and may recommend
any other action authorized or required by law, to prevent or remedy the
transaction.
(d) In accordance with and pursuant to uniform and nondiscriminatory
rules established under and in accordance with the Plan, the Trustee may deny
the Plan Administrator's application to allow a directed investment proposed by
a Participant.
(e) Notwithstanding anything herein to the contrary, in no event
shall the Trustee engage in any transaction that would be prohibited under
ERISA.
3.3 GENERAL INVESTMENT POWERS. Subject to any investment limitations or
minimum requirements for investments in Shares imposed by the Sponsor, and
subject to investment instructions given by the Plan Administrator, the Trustee
shall be authorized and empowered to invest and reinvest all or any part of the
Trust in any property, real or personal or mixed, including, but not being
limited to, capital or common stock (whether voting or nonvoting or whether or
not currently paying a dividend), preferred or preference stock (whether voting
or nonvoting or whether or not paying a dividend), Shares of regulated
investment companies, convertible securities, corporate and governmental
obligations, leaseholds, ground rents, mortgages, and other interests in
realty, trust, and participation certificates, oil, mineral or gas properties,
royalty interests or rights, including equipment pertaining thereto, notes and
other evidences of indebtedness or ownership, secured or unsecured, contracts,
choses in action, and warrants, and other instruments entitling the owner
thereof to subscribe to or purchase any of the aforesaid. Subject to any
investment limitations or requirements imposed by the Sponsor relating to the
type of permissible investments in the Trust or the minimum percentage of Trust
assets to be invested in Shares, and subject to the provisions of ARTICLE VIII
hereof, in making and retaining such investments and reinvestments pursuant
hereto, the Trustee shall not be bound as to the character of any investments
by any statute, rule of court, or custom governing the investment of Trust
funds.
3.4 INVESTMENT IN COMBINED FUNDS. If the Trustee is a banking
institution, subject to any investment limitations or minimum requirements for
investment in Shares imposed by the Sponsor, and subject to investment
instructions given by the Plan Administrator, it may, subject to the election
of the Sponsor or the Employer, cause funds
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of this Trust to be invested in its commingled funds for qualified employee
benefit plan trusts and such commingled funds are hereby adopted and made a
part of the Plan of which this Trust is a part, and any funds of this Trust
invested in any such commingled funds shall be subject to all the provisions
thereof, as the same may be amended from time to time.
3.5 OTHER POWERS OF THE TRUSTEE. The Trustee is authorized and empowered
with respect to the Trust:
(a) Subject to any investment limitations or minimum requirements
for investment in Shares imposed by the Sponsor, and subject to investment
instructions given by the Plan Administrator, to sell, exchange, convey,
transfer, or otherwise dispose of, either at public or private sale, any
property, real or personal or mixed, at any time held by it, for such
consideration and on such terms and conditions as to credit or otherwise as
the Trustee may deem best.
(b) Subject to the provisions of section 3.1, to vote in person or
by proxy any stocks, bonds, or other securities held by it; to exercise any
options appurtenant to any stocks, bonds, or other securities, or to exercise
any rights to subscribe for additional stocks, bonds, or other securities, and
to make any and all necessary payments therefor, to join in, or to dissent
from, and to oppose, the reorganizations, consolidation, liquidation, sale, or
merger of corporations, or properties in which if may be interested as Trustee,
upon such terms and conditions as it may deem wise.
(c) To make, execute, acknowledge, and deliver any and all documents
of transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted.
(d) To register any investment held in the Trust in the name of the
Trust or in the name of a nominee, and to hold any investment in bearer form,
but the books and records of the Trustee shall at all times show that all such
investments are part of the Trust.
(e) To employ suitable agents and counsel (who may also be agents
and/or counsel for the Employer or the Sponsor) and to pay their reasonable
expenses and compensation.
(f) To borrow or raise monies for the purpose of the Trust from any
source and, for any sum so borrowed to issue its promissory note as Trustee and
to secure the repayment thereof by pledging all or any part of the Trust fund,
but nothing herein contained shall obligate the Trustee to render itself liable
individually for the amount of any such borrowing; and no person loaning money
to the Trustee shall be bound to see the application of money loaned or to
inquire into the validity or propriety of any such borrowing.
Each and all of the foregoing powers may be exercised without a court
order or approval. No one dealing with the Trustee need inquire concerning the
validity or propriety of anything that is done or need see to the application
of any money paid or property transferred to or upon the order of the Trustee.
3.6 GENERAL POWERS. The Trustee shall have all of the powers necessary or
desirable to do all acts, take all such proceedings, and exercise all such
rights and privileges, whether or not expressly authorized herein, which it may
deem necessary or proper for the administration and protection of the property
of the Trust and to accomplish any action provided for in the Plan.
3.7 VALUATION OF TRUST. The Trustee, as of the Valuation Date, and at
such other time or times as it determines, shall determine the net worth of the
assets of the Trust. In determining such net worth, the assets of the Trust
shall be evaluated at their fair market value and all expenses shall be
deducted. The Trustee may adopt such methods of valuation as it deems advisable.
3.8 BONDING. Except to the extent otherwise required by law, the Trustee
shall not be required to obtain any bonds in connection with its duties
hereunder. The cost of any bond obtained may be charged as an expense of the
Trust, but if not so charged, shall be paid by the Employer.
3.9 DUTIES NOT ASSIGNED. The duties of the Trustee with respect to the
Plan are limited to those assumed by the Trustee by the terms of this Trust. The
Trustee shall not be deemed, by virtue hereof, to be the administrator or
sponsor of the Plan, and shall not be responsible for filing reports, returns
or disclosures with any government agency except as may otherwise be required
by its duties as Trustee under applicable law.
ARTICLE IV
DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNT
Distributions from the Trust shall be made by the Trustee in accordance
with proper written directions of the Plan Administrator in accordance with the
provisions of section 15.2 of the Plan, and the Plan Administrator shall have
the sole responsibility for determining that the directions given conform to
provisions of the Plan and applicable law, including (without limitation)
responsibility for calculating the vested interests of the Participant, for
calculating the amounts payable to a Participant pursuant to ARTICLE 11 of the
Plan, and for determining the proper person to whom benefits are payable under
the Plan. Except to the extent otherwise provided in the Plan, the interest of
Participants and Beneficiaries in the Trust and in the net earnings and profits
thereof may not be assigned or used by a Participant or Beneficiary as
collateral for a loan and shall not be subject to garnishment, attachment, levy
or execution of any kind for the debts or defaults of the Trustee or of any
person, natural or legal, having interest in the Trust.
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ARTICLE V
REPORTS OF THE TRUSTEE AND THE PLAN ADMINISTRATOR
The Trustee shall keep accurate and detailed records of all receipts,
investments, disbursements, and other transactions required to be performed
hereunder with respect to the Trust. The Trustee shall file with the Plan
Administrator a written report or reports reflecting the receipts,
disbursements, and other transactions effected by it with respect to the Trust
during such Plan Year and the assets and liabilities of the Trust at the close
of the Plan Year. Such report or reports shall be open to inspection by any
Participant for a period of one hundred eighty (180) days immediately following
the date on which it is filed with the Plan Administrator. Except as otherwise
prescribed by ERISA, upon the expiration of such one hundred eighty (180) day
period, the Trustee shall be forever released and discharged from all liability
and accountability to anyone with respect to its acts, transactions, duties,
obligations, or responsibilities as shown in or reflected by such report,
except with respect to any such acts or transactions as to which the Plan
Administrator shall have filed written objections with the Trustee within such
one hundred eighty (180) day period, and except for willful misconduct or lack
of good faith on the part of the Trustee.
ARTICLE VI
TRUSTEE'S FEES AND EXPENSES OF THE TRUST
The Trustee's fees for performing its duties hereunder shall be such
reasonable amounts as shall be established by it from time to time. The Trustee
shall furnish the Employer with its current schedule of fees and shall give
written notice to the Employer whenever its fees are changed or revised. Such
fees, any taxes of any kind whatsoever which may be levied or assessed upon or
in respect of the Trust, to the extent incurred by the Trustee and any and all
reasonable expenses incurred by the Trustee in the performance of its duties,
including fees for legal services rendered to the Trustee, shall, unless paid by
the Employer, be paid from the Trust in the manner provided in the Plan.
Unless paid by the Employer, all fees of the Trustee and taxes and other
expenses charged to a Participant's Account may be collected by the Trustee
from the amount of any contribution to be credited or distribution to be
charged to such Account or may be paid by redeeming or selling assets credited
to such Account.
ARTICLE VII
DUTIES OF THE EMPLOYER AND THE PLAN ADMINISTRATOR
7.1 INFORMATION AND DATA TO BE FURNISHED THE TRUSTEE. In addition to
making the contributions called for in ARTICLE II hereof, the Employer, through
the Plan Administrator, agrees to furnish the Trustee with such information and
data relative to the Plan as is necessary for the proper administration of the
Trust established hereunder.
7.2 LIMITATION OF DUTIES. Neither the Employer nor any of its officers,
directors, or partners, nor the Plan Administrator shall have any duties or
obligations with respect to this Trust Agreement, except those expressly set
forth herein and in the Plan.
ARTICLE VIII
LIABILITY OF THE TRUST
8.1 TRUSTEE'S LIABILITY
(a) The Employer shall indemnify and save the Trustee (including its
affiliates, representatives and agents) harmless from and against any
liability, cost or other expense, including, but not limited to, the payment of
attorneys' fees that the Trustee may incur in connection with this Trust
Agreement or the Plan unless such liability, cost or other expense (whether
direct or indirect) arises from the Trustee's own willful misconduct or gross
negligence. The Employer recognizes that a burden of litigation may be imposed
upon the Trustee as a result of some act or transaction for which it has no
responsibility or over which it has no control under this Trust Agreement.
Therefore, the Employer agrees to indemnify and hold harmless and, if
requested, defend the Trustee (including its affiliates, representatives and
agents) from any expenses (including counsel fees, liabilities, claims,
damages, actions, suits or other charges) incurred by the Trustee in
prosecuting or defending against any such litigation.
(b) The Trustee shall not be liable for, and the Employer will
indemnify and hold harmless the Trustee (including its affiliates,
representatives and agents) from and against all liability or expense
(including counsel fees) because of (i) any investment action taken or omitted
by the Trustee in accordance with any direction of the Employer or a
Participant, or investment inaction in the absence of directions from the
Employer or a Participant or (ii) any investment action taken by the Trustee
pursuant to an order to purchase or sell securities placed by the Employer or a
Participant directly with a broker, dealer or issuer. It is understood that
although, when the Trustee is subject to the direction of the Employer or a
Participant the Trustee will perform certain ministerial duties with respect to
the portion of the Fund subject to such direction (the "Directed Fund"), such
duties do not involve the exercise of any discretionary authority or other
authority to manage and control assets of the Directed Fund and will be
performed in the normal course of business by officers and employees of the
Trustee or its affiliates, representatives or agents who may be unfamiliar with
investment management. It is agreed that the Trustee is not undertaking any
duty or obligation, express or implied, to review, and will not be deemed to
have any knowledge of or responsibility with respect to, any transaction
involving the investment of the Directed Fund as a result of the performance of
its ministerial duties. Therefore, in the event that "knowledge" of the Trustee
shall be a prerequisite to imposing a duty upon or determining liability of the
Trustee under the Plan or this Trust or any law or regulation regulating the
conduct of the Trustee with
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respect to the Directed Fund, as a result of any act or omission of the
Employer or any Participant, or as a result of any transaction engaged in by
any of them, then the receipt and processing of investment orders and other
documents relating to Plan assets by an officer or other employee of the
Trustee or its affiliates, representatives or agents engaged in the performance
of purely ministerial functions shall not constitutes "knowledge" of the
Trustee.
(c) Notwithstanding the foregoing provisions of this Trust
Agreement, the Trustee shall discharge its duties hereunder with the care,
skill, prudence and diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and with like aims. Any
investment selected by the Trustee without specific direction from the Employer
shall be selected to diversify the investments of the Trust fund so as to
minimize the risk of large losses, unless in the circumstances it is clearly
prudent not to do so. The Trustee shall perform its duties in accordance with
this Trust Agreement insofar as this Trust Agreement is consistent with the
provisions of ERISA. To the extent not prohibited by ERISA, the Trustee shall
not be responsible in any way for any action or omission of the Employer or the
Plan Administrator with respect to the performance of their duties and
obligations set forth in the Plan. To the extent not prohibited by ERISA, the
Trustee shall not be responsible for any action or omission of any of its
agents, or with respect to reliance upon advice of its counsel (whether or not
such counsel is also counsel to the Employer or to the Plan Administrator),
provided that such agents or counsel were prudently chosen by the Trustee and
that the Trustee relied in good faith upon the action of such agent or the
advice of such counsel. The Trustee shall be indemnified and held harmless by
the Employer against liability or losses occurring by reason of any act or
omission of the Trustee under this Trust Agreement, unless such act or omission
is due to its own willful nonfeasance, malfeasance, or misfeasance or other
breach of duty under ERISA, to the extent that such indemnification does not
violate ERISA or any other federal or state laws.
ARTICLE IX
DELEGATION OF POWERS
9.1 DELEGATION BY THE TRUSTEE. With respect to Shares held by the Plan,
the Trustee hereby delegates to the custodian or other agent designated by the
Sponsor the functions designated in (a) through (d) hereunder, other than the
investment, management or control of the Trust assets. With respect to assets
other than Shares, the Trustee may delegate in writing pursuant to a procedure
permitted and established by the Sponsor, to a person (individual, corporate,
or other entity) designated by the Sponsor as an agent or custodian, any of the
powers or functions of the Trustee hereunder other than the investment,
management or control of the Trust assets, including (without limitation):
(a) custodianship of all or any part of the assets of the Trust;
(b) maintaining and accounting for the Trust and for Participants
and other Accounts as a part thereof;
(c) distribution of benefits as directed by the Plan Administrator;
and
(d) Preparation of the annual report on the status of the Trust.
The agent or custodian so appointed may act as agent for the Trustee,
without investment responsibility, for fees to be mutually agreed upon by the
Employer and the agent or custodian and paid in the same manner as Trustee's
fees. The Trustee shall not be responsible for any act or omission of the
agent or custodian arising from any such delegation, except to the extent
provided in ARTICLE VIII.
9.2 DELEGATION WITH EMPLOYER APPROVAL. The Trustee (whether or not a bank
or trust company) and the Employer may, by mutual agreement, arrange for the
delegation by the Trustee to the Plan Administrator or any agent of the
Employer of any powers of functions of the Trustee hereunder other than the
investment and custody of the Trust assets. The Trustee shall not be
responsible for any act or omission of such person or persons arising from any
such delegation, except to the extent provided in ARTICLE VIII.
ARTICLE X
AMENDMENT
As provided in section 16.1 of the Plan, and subject to the limitations
set forth herein, the prototype Adoption Agreement, Plan and Trust Agreement
may be amended at any time, in whole or in part, by the Sponsor. The Trustee
hereby delegates authority to the Sponsor, and to any successor Sponsor, to so
amend the prototype Adoption Agreement, Plan and Trust Agreement and the
Trustee hereby agrees that it shall be deemed to have consented to any
amendment so made which does not increase the duties of the Trustee without its
consent.
ARTICLE XI
RESIGNATION OR REMOVAL OF TRUSTEE
The Trustee may resign at any time upon thirty (30) days notice in writing
to the Employer, and may be removed by the Sponsor or Employer at any time upon
thirty (30) days notice in writing to the Trustee. Upon such resignation or
removal, the Sponsor or Employer shall appoint a successor Trustee or
Trustees. Upon receipt by the Trustee of written acceptance of such
appointment by the successor Trustee, the Trustee shall transfer and pay over
to such successor the assets of the Trust and all records pertaining thereto,
provided that any successor Trustee shall agree not to dispose of any such
records without the Trustee's consent. The successor Trustee shall be entitled
to rely upon all accounts, records, and other documents received by it from the
Trustee, and shall not incur any liability whatsoever for such reliance. The
Trustee is authorized, however, to reserve such sum of money or property as it
may deem advisable
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for payment of all its fees, compensation, costs, and expenses, or for payment
of any other liabilities constituting a charge on or against the reasonable
assets of the Trust or on or against the Trustee, with any balance of such
reserve remaining after the payment of all such items to be paid over to the
successor Trustee. Upon the assignment, transfer, and payment over of the
assets of the Trust, and obtaining a receipt thereof from the successor
Trustee, the Trustee shall be released and discharged from any and all claims,
demands, duties, and obligations arising out of the Trust and its management
thereof, excepting only claims based upon the Trustee's willful misconduct or
lack of good faith. The successor Trustee shall hold the assets paid over to
it under terms similar to those of this Trust Agreement under a trust that will
qualify under section 401 of the Code. If within thirty (30) days after the
Trustee's resignation or removal, the Employer or Sponsor has not appointed a
successor Trustee which has accepted such appointment, the Trustee may apply to
a court of competent jurisdiction for appointment or a successor or appoint
such successor itself.
ARTICLE XII
TERMINATION OF THE TRUST
12.1 TERM OF THE TRUST. This Trust shall continue as to the Employer so
long as the Plan is in full force and effect. If the Plan ceases to be in full
force and effect, this Trust shall thereupon terminate unless expressly
extended by the Employer.
ARTICLE XIII
MISCELLANEOUS
13.1 NO DIVERSION OF ASSETS. At no time shall it be possible for any part
of the assets of the Trust to be used for or diverted to purposes other than
for the exclusive benefit of Participants and their Beneficiaries or revert to
the Employer, except as specifically provided in the Plan or this Trust
Agreement.
13.2 NOTICES. Any notice from the Trustee to the Employer or from the
Employer to the Trustee provided for in the Plan and Trust shall be effective
if sent by first class mail to their respective last address of record.
13.3 MULTIPLE TRUSTEES. In the event that there shall be two (2) or more
of the Trustees serving hereunder, any action taken or decision made by any
such Trustee may be taken or made by a majority of them with the same effect as
if all had joined therein, if there be more than two (2), or unanimously if
there be two (2).
13.4 CONFLICT WITH PLAN. In the event of any conflict between the
provisions of the Plan and those of this Trust Agreement, the Plan shall
prevail.
13.5 APPLICABLE LAW. Except to the extent otherwise required by ERISA,
as amended, this Trust Agreement shall be construed in accordance with the laws
of the state where the Trustee has its principal place of business.
13.6 RETURNED CONTRIBUTIONS.
(a) A contribution made by the Employer by a mistake of fact shall,
if the Administrator so directs, be returned to the Employer within one (1)
year after its repayment. The Administrator shall, in its sole discretion,
determine whether the contribution was made by mistake of fact based upon such
evidence as it deems appropriate.
(b) A contribution made by the Employer that is conditioned on
deductibility under section 404 of the Code shall, to the extent such deduction
is disallowed, be returned to the Employer within one (1) year after the
disallowance, if the Administrator so directs.
13.7 GENERAL UNDERTAKING. All parties to this Trust and all persons
claiming any interest whatsoever hereunder agree to perform any and all acts
and execute any and all documents and papers which may be necessary or
desirable for the carrying out of the Trust or any of its provisions.
13.8 INVALIDITY OF CERTAIN PROVISIONS. If any provision of this Trust
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof and the Trust shall be construed
and enforced as if such provisions had not been included.
13.9 COUNTERPART ORIGINALS. This Trust may be executed in one or more
counterpart originals.
IN WITNESS WHEREOF, the Employer and the Trustee(s) have signed this Trust
effective as of the date specified in the Adoption Agreement.
----------------------------
Attest: [NAME OF EMPLOYER]
------------------ BY: ---------------------
Secretary President
TRUSTEE(S)
----------------------------
----------------------------
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-------------------------------------
)
) SS
)
I,_______________________________________, a notary public in and for the
jurisdiction above named, do hereby certify that _____________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
did personally appear before me and do acknowledge that they executed the
foregoing Trust as their free act and deed.
Subscribed and sworn to before me this_____ day of ______________, 19____.
-------------------------------------
Notary Public
My Commission
Expires:
--------------------
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EMPLOYEE NOTICES
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SPD, Pension and Welfare Benefits Administration
Room N-5644
U.S. Department of Labor
200 Constitution Avenue N.W.
Washington, DC 20210
Re:
Dear Sir or Madam:
Enclosed is a copy of the _____________ Summary Plan Description. This copy is
(Plan Name)
respectfully being submitted to Department of Labor in order to satisfy the
disclosure requirements of ERISA for Qualified Plans.
Should you have any questions, please feel free to contact me at your earliest
convenience.
Sincerely,
Plan Sponsor
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MODEL
SUMMARY PLAN DESCRIPTION
OF THE
-------------------------------
[INSERT NAME OF EMPLOYER)
PROFIT SHARING PLAN
Copyright 1990 Investment Company Institute March 1990
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<PAGE> 90
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
I. INTRODUCTION ........................................................... 3
II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS .......................... 3
A. Terms With Special Meanings ...................................... 3
B. Participation .................................................... 4
C. Individual Accounts .............................................. 4
D. Contributions .................................................... 4
E. Allocations ...................................................... 5
F. Vesting .......................................................... 7
G. Forfeitures ...................................................... 8
H. Distributions of Benefits ........................................ 8
I. Investment of Plan Assets ........................................ 9
J. Withdrawals ...................................................... 10
K. Loans ............................................................ 10
L. Insurance ........................................................ 10
III. CLAIMS PROCEDURE ....................................................... 11
IV. CHANGES TO THE PLAN .................................................... 11
V. GENERAL INFORMATION .................................................... 11
VI. NON-APPLICATION OF PBGC GUARANTEES ..................................... 12
VII. SPECIAL RIGHTS UNDER ERISA ............................................. 12
</TABLE>
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MODEL
SUMMARY PLAN DESCRIPTION
OF THE
-------------------------------
(INSERT NAME OF EMPLOYER)
PROFIT SHARING PLAN
I. INTRODUCTION
_____________________________[INSERT NAME OF EMPLOYER] (the "Employer") is
pleased to be able to provide you with the ____________________ [INSERT NAME OF
EMPLOYER] Profit Sharing Plan (the "Plan" or the "Profit Sharing Plan"). The
Plan is effective as of ________________________________[INSERT EFFECTIVE DATE].
The Plan is a defined contribution plan, to which the Employer makes
contributions to an account held in your name. With this type of plan, the
retirement benefit you receive will depend on the investment performance of the
amounts that are in your account. The Plan is designed to provide retirement
income to employees who remain with the Employer until retirement and to those
who have a vested interest in their account when they terminate their employment
with the Employer.
Only the main features of the Plan am explained in this Summary Plan
Description. Any questions which are not answered here should be referred to
_________________________________________________(INSERT NAME OF DEPARTMENT OR
PERSONNEL RESPONSIBLE FOR PARTICIPANT INFORMATION), if there is any
inconsistency between the Plan as described in this Summary Plan Description
and the Plan document itself, the terms of the Plan document will govern.
Copies of the Plan document and the Trust Agreement are available for your
inspection during regular working hours.
II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS
A. TERMS-WITH SPECIAL MEANINGS
Certain words and terms used in this Summary have special meanings.
Many of these terms am defined in this section, while others are
explained in the text of the Summary. To assist you in identifying
these terms within the text; they are capitalized.
1. BENEFICIARY. Your designated Beneficiary is the person you name
to receive your benefit distribution in the event of your death.
If you are married, you will need written consent from your
spouse to name someone other than your spouse as your
Beneficiary.
2. BREAK IN SERVICE. A Break in Service occurs if you complete
less than 501 Hours of Service with the Employer during a Plan
Year.
3. COMPENSATION. Compensation is the total compensation paid to you
by the Employer during any portion of a Plan Year during which
you were a Plan Participant. If you an self employed, your
Compensation is your earned income less your deductible
contributions to any qualified retirement plans.
4. HOURS OF SERVICE. Each hour for which you are paid or entitled to
be paid by the Employer. In addition, uncompensated authorized
leaves of absence that do not exceed two years, military leave
while your reemployment rights are protected by law, and absences
from work for maternity or paternity reasons may be credited as
Hours of Service for the purpose of determining whether you had a
Break in Service.
5. PARTICIPANT. A Participant is an employee who has met the
requirements for participating in this Plan, and whose account
has been neither completely forfeited nor distributed.
6. PLAN YEAR. The Plan Year is the 12-month period ending on the
date shown in section V of this Summary.
7. SPONSOR. The Sponsor is the organization which has made this Plan
available to the Employer.
8. TRUST. The Trust is a fund maintained by the Trustee for the
investment of Plan assets, including the amount in your account.
9. YEAR OF SERVICE. A Year of Service is the applicable 12-month
period during which you complete 1,000 [INSERT NUMBER OF HOURS)
or more Hours of Service. For eligibility purposes, the
applicable 12-month period Is your first year of employment or
any Plan Year,
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<PAGE> 92
beginning after your hire date. For vesting purposes, the
applicable 12-month period is the Plan Year.
B. PARTICIPATION
You will be eligible to participate in the Plan after you have met the
following eligibility requirements:
[CHECK ALL APPLICABLE ITEMS]
X You have reached age 21
- -
X You have completed 1 Year (s) of Service.
- -
X You are not a member of a collective bargaining unit.
- -
X You are not a nonresident alien.
- -
The first entry date, or date in which you can first participate in
the Plan if you meet these requirements, is _________________________ [INSERT
EFFECTIVE DATE). Thereafter, the entry date(s) will be January 1 & July 1 of
each year.
Once you become a Participant, you will remain a Participant as long
as you do not incur a Break in Service. If you do incur a Break in Service, and
are later reemployed by the Employer, you will be reinstated as a Participant
and any previous Hours of Service will be reinstated as of the date of your
reemployment.
C. INDIVIDUAL-ACCOUNTS
A separate account will be maintained for you within the Plan. This
account will be further divided into subaccounts, which will be
credited with the different types of contributions that are described
in the next section, the subaccounts that will be maintained for you
are as follows:
1. PROFIT SHARING CONTRIBUTION SUBACCOUNT. This subaccount will be
credited with your share of Employer Profit Sharing
Contributions, forfeitures (if any), distributions from this
subaccount, and the earnings and losses attributable to this
subaccount.
2. TRUSTEE TRANSFER AND ROLLOVER SUBACCOUNTS. These subaccounts will
be credited with any rollover contributions or transfer
contributions you may make to the Plan, any distributions from
this subaccount, and the earnings and losses attributable to this
subaccount. Include the following item if your plan permits
voluntary employee contributions:
3. NONDEDUCTIBLE VOLUNTARY CONTRIBUTION SUBACCOUNT. This subaccount
will be credited with your Voluntary Employee Contributions, any
distributions from this subaccount, and the earnings and losses
attributable to this subaccount.
D. CONTRIBUTIONS
X 1. EMPLOYER PROFIT SHARING CONTRIBUTIONS. The Employer will make
- Profit Sharing Contributions to the Plan each Plan Year in
accordance with the following contribution formula:
[CHECK ONE OF THE FOLLOWING]:
X Contributions will be made in an amount to be determined
each year by the Employer.
_ Contributions will be made in an amount equal to ___________
INSERT CONTRIBUTION PERCENTAGE] of each Participant's
Compensation, plus any discretionary amount the Employer may
choose to contribute.
2. ROLLOVER CONTRIBUTIONS AND DIRECT TRANSFERS. If you have
participated in other pension or profit sharing plans, you will
be permitted to make a rollover contribution to the Plan of
certain amounts you may receive from those other plans. You will
also be permitted, with the approval of
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<PAGE> 93
the Plan Administrator, to authorize a direct transfer to the
Plan of amounts that are attributable to your participation
in other pension or profit sharing plans.
CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY
EMPLOYEE CONTRIBUTIONS:
3. VOLUNTARY EMPLOYEE CONTRIBUTIONS. To increase your
retirement benefits from this Plan, you may choose to make
voluntary contributions to the Plan of up to NA [INSERT
MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE] of your
compensation. Such contributions will not be permitted,
however, for Plan Years beginning after __________ [THE PLAN
YEAR IN WHICH THE PLAN IS ADOPTED]. The minimum contribution
you must make if you choose to make a voluntary,contribution
is as follows:
[CHECK ONE OF THE FOLLOWING ITEMS]:
___ The minimum voluntary contribution is __________[INSERT
MINIMUM VOLUNTARY CONTRIBUTION PERCENTAGE] of your
Compensation.
X There is no minimum voluntary contribution.
E. ALLOCATIONS.
ELIGIBILITY FOR ALLOCATIONS. Each Plan Year the Employer may make a
Profit Sharing Contribution to the Plan in accordance with the formula
described in the previous section . If the Employer chooses to make a Profit
Sharing Contribution for a year, your account will be allocated a share of
that contribution. If you are an employee as of the last day of the Plan Year.
X Unless you terminate your employment during the Plan year with not more
- than 500 Hours of Service. (You will receive an allocation, however, if
you die, retire or become disabled during the Plan Year).
Under some circumstances, special minimum allocation rules may result in your
receiving an allocation even if you do not meet any of the requirements set
forth above.
AMOUNT OF ALLOCATION. If you are eligible, your account will be
credited with a portion of the Profit Sharing Contribution (and any
forfeitures) as follows:
[CHECK ONE OF THE FOLLOWING ITEMS]:
X * Your account will be credited with a portion of the Profit Sharing
- - Contribution that is equal to the ratio of your Compensation to the
Compensation of all Participants for such year.
For example, if your Compensation for a Plan Year was $10,000 and the
total Compensation of all Participants was $100,000, your account would
be credited with $10,000/$100,000 = 1/10 of the total contribution made
by the Employer for that Plan Year.
[CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE
NOT ADOPTED THE MONEY PURCHASE PENSION PLAN)
__ * Profit Sharing Contributions WILL be allocated to eligible Participants
in four steps as follows:
Step One: Your account will be credited with a portion of the Profit
Sharing Contribution that is equal to the ratio of your Compensation to
the Compensation of all Participants for such year, but only up to a
maximum of three percent of each Participant's Compensation.
Step Two: Your account will be credited with a portion of the balance
of the Profit Sharing Contribution (after the allocation in Step One)
that is equal to the ratio of your Compensation in excess of the Plan's
Integration Level to the Compensation in excess of the Plan's
Integration Level of all Participants for such year, but only up to a
maximum of three percent of any Participant's Compensation in excess of
the Plan's Integration Level.
For example, if the Plan's Integration Level were $51,300 and your
Compensation were $61,300, your Compensation in excess of the
Integration Level would be $10,000. If the total Compensation in excess
of the Integration Level of all Participants were $70,000, your account
would be credited with $10,000/$70,000 = 1/7 of the total allocation
made under Step Two (but only up to a maximum of three percent of your
Compensation in excess of the Plan's Integration Level, or $300).
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Step Three: Your account will be credited with a portion of the balance
of the Profit Sharing Contribution (after the allocations in Step One
and Step Two) that is equal to the ratio that the sum of your
Compensation plus your Compensation in excess of the Plan's Integration
Level bears to the sum of all Participants' Compensation plus their
Compensation in excess of the Plan's Integration Level for such year,
up to a maximum of the Maximum Profit Sharing Disparity Rate.
The Maximum Profit Sharing Disparity Rate is 2.7 percent if the
Integration Level equals the annual earnings subject to Social Security
(FICA) tax (the taxable wage base). If the Integration Level is lower
(see below), then the Maximum Profit Sharing Disparity Rate is
determined by the following formula:
If the Integration is:
<TABLE>
<CAPTION>
The Applicable
More Than But Not More Than Percentage Is:
--------- ----------------- --------------
<S> <C> <C>
$0 X */ 2.7%
-
X of TWB 80% of TWB 1.3%
80% of TWB Y **/ 2.4%
--
</TABLE>
*/ X = the greater of $10,000 or 20% of the Taxable Wage Base.
- -
**/ Y = any amount more than 80% of the Taxable Wage Base but less
- -- than 100% of the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
For example, if the Maximum Profit Sharing Disparity Rate is 2.7 percent, your
Compensation is $61,300, the Plan's Integration Level is $51,300, the total
Compensation of all Participants is $700,000 and the Compensation of all
Participants that is in excess of the Plan's Integration Level is $70,000, then
the ratio applied under Step Three would be:
(61,300 + 10,000)/(700,000 + 70,000) - 9.25%
However, this exceeds the Maximum Profit Sharing Disparity Rate, so 2.7 percent
is applicable instead, and your account would receive 2.7% of the Employer
contribution under this step.
STEP FOUR: Your account will be credited with a portion of the balance of the
Profit Sharing Contribution (after the allocations in Step One, Step Two and
Step Three) that is equal to the ratio of your Compensation to the Compensation
of all Participants for such year.
[CHOOSE IF YOUR PLAN IS INTEGRATED WITH SOCIAL SECURITY AND YOU HAVE ADOPTED THE
MONEY PURCHASE PENSION PLAN]:
__ Profit Sharing Contributions will be allocated to eligible Participants in
two steps as follows:
STEP ONE: Your account will be credited with a portion of the Profit Sharing
Contribution that is equal to the ratio that the sum of your Compensation plus
your Compensation in excess of the Plan's Integration Level bears to the sum of
all Participants' Compensation plus their Compensation in excess of the Plan's
Integration level for such year, up to a maximum that does not exceed the lesser
of two amounts. The first is the percentage determined by dividing the
allocation by your Compensation up to the Plan's Integration Level. The second
is the Maximum Disparity Rate.
The Maximum Disparity Rate is 5.7 percent if the Integration Level equals the
annual earnings subject to Social Security (FICA) tax (the taxable wage base).
If the Integration Level is lower (see below), then the Maximum Disparity Rate
is determined by the following formula:
If the Integration is:
<TABLE>
<CAPTION>
The Applicable
More Than But Not More Than Percentage Is:
--------- ----------------- --------------
<S> <C> <C>
$0 X*/ 5.7%
-
</TABLE>
88
<PAGE> 95
X Of TWB 80% of TWB 4.3%
80% of TWB Y **/ 5.4%
*/ X - the greater of $ 10,000 or 20% of the Taxable
- Wage Base.
**/ Y - any amount more than 80% of the Taxable Wage
-- Base but less than 100% of the Taxable Wage
Base.
"TWB" means the Taxable Wage Base.
For example, if the Maximum Disparity Rate is 5.7 percent, your
Compensation is $61,300, the Plan's Integration Level is $51,300, the
total Compensation of all Participants is $700,000 and the
Compensation of all Participants that is in excess of the Plan's
Integration Level is $70,000, then the ratio applied under Step One
would be.
(61,300 + 10,000)/(700,000 + 70,000) = 9.25%
However, this exceeds the Maximum Disparity Rate, so 5.7 percent is
applicable instead. (This assumes the allocation as a percentage of
your Compensation up to the Plan's Integration Level would exceed 5.7
percent).
Step Two: Your account will be credited with a portion of the balance
of the Profit Sharing Contribution (after the allocation in Step One)
that is equal to the ratio of your Compensation to the Compensation
of all Participants for such year.
The Plan's Integration Level is equal to:
[CHECK ONE OF THE FOLLOWING ITEMS)
__ The taxable wage base, which is the annual earnings subject to Social
Security (FICA) tax.
__ A dollar amount equal to $__________________________[INSERT DOLLAR AMOUNT].
__ A percentage of the taxable wage base equal to ___% of the annual earnings
subject to Social Security (FICA) tax.
Under some circumstances, special minimum allocation rules may result in your
receiving a larger allocation than you normally would. The amount that can be
allocated to your Account in any Plan Year, including forfeitures (if any), is
limited by rules applying to all qualified plans.
F. VESTING.
Vesting refers to the nonforfeitable interest you have in each of your
subaccounts. In other words, your vested interest in your account is the
amount you will receive when your account is distributed to you.
You will always have a 100 percent vested and nonforfeitable interest
in the amounts you have in your:
__ * Trustee Transfer and Rollover Subaccounts.
(CHECK THE FOLLOWING ITEM ONLY IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
__ * Nondeductible Voluntary Contribution Subaccount.
You will earn a vested interest in your Profit Sharing Contribution
Subaccount in accordance with the following:
[CHECK ONE OF THE FOLLOWING ITEMS]:
__ * You will always have a 100 percent vested and nonforfeitable interest
in your Profit Sharing Contribution Subaccount.
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<PAGE> 96
__ * You will have a 100 percent vested and nonforfeitable interest
in your Profit Sharing Contribution Subaccount in the event of any of
the following:
* You reach your Normal Retirement Age or Early Retirement Date.
* You die or become disabled.
Otherwise, you will earn a vested interest in your Profit Sharing Contribution
Subaccount in accordance with the following schedule:
[CHECK ONE OF THE FOLLOWING ITEMS]:
<TABLE>
<CAPTION>
__ * YEARS 0F SERVICE VESTED PERCENTAGE
---------------- -----------------
<S> <C>
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
</TABLE>
For example, if you are employed for six years, you will be entitled
to the entire amount in your Profit Sharing Contribution Subaccount.
However, if you terminate employment with the Employer after only four
years, even though you return to employment with the Employer six
years later, you will be entitled to receive only 60 percent of that
amount.
__ * You will be 100 percent vested after three years of service. If you
terminate employment prior to three years you will not have any vested
interest in your Profit Sharing Contribution Subaccount.
G. FORFEITURES.
[CHECK ONE OF THE FOLLOWING ITEMS]:
__ * You have a 100 percent vested and nonforfeitable interest in the
amounts in your account at all times. Your account therefore will not
be subject to forfeitures.
__ * Forfeitures occur when you terminate employment before becoming fully
vested in your account, as explained in the section on "Vesting."
Effective for the first Plan Year beginning after 1984, any portion of
your Account that is not vested will be forfeited as of the last day
of the Plan Year in which your fifth consecutive Break in Service
occurs. Forfeited amounts will not be reinstated, even if you return
to service with the Employer. Such forfeitures will be allocated among
the Accounts of other Participants in the same manner as Profit
Sharing Contributions.
H. DISTRIBUTION OF BENEFITS.
1. ELIGIBILITY FOR DISTRIBUTION. You will be entitled to receive a
distribution of the vested amounts in your account upon
occurrence of any of the following:
* Your termination of employment with the Employer for any reason.
* Your total and permanent disability.
* Your death.
* Termination of the Plan.
* Your attainment of normal retirement age, which is:
[CHECK ONE OF THE FOLLOWING ITEMS),
X * Age 65
-
__ * Age _____ [INSERT NORMAL RETIREMENT AGE] or the___________
INSERT ANNIVERSARY DATE) of the day you commenced
participation in the plan.
(CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS EARLY RETIREMENT):
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<PAGE> 97
__ * If you elect Early Retirement, attainment of your Early
Retirement Date, which is the first day of the month
coincident with or next following the date you reach age
____________________INSERT EARLY RETIREMENT AGE] and
complete __________ INSERT NUMBER OF YEARS] Years of
Service.
2. TIMING OF DISTRIBUTION. You will begin receiving benefit
distributions in accordance with the following;
* Generally, benefit distributions will commence not later than 60 days
after the end of the Plan Year in which you become eligible to receive
benefits.
* In the event of your death, your spouse, if you are married, will
generally be entitled to receive your benefit distribution. If you are
unmarried, or if your spouse has given written consent, your
designated Beneficiary will receive your benefit distribution, If you
have no spouse or designated Beneficiary, your benefit distribution
will go to your estate.
* If you so elect, you may defer commencement of the distribution of
your benefit beyond the date you first become eligible to receive that
distribution, to a date which you may specify. The date you specify
must not be later than the April 1 following the close of your taxable
year in which you attain age 70-1/2.
* If you attained age 70-1/2 before January 1, 1988, special rules apply
to your distributions.
If you wish to receive benefit distributions before attaining age 59-1/2, you
may be subject to a penalty tax, and you must notify the Plan Administrator in
writing that you am aware of the consequences of this tax.
3. FORM OF DISTRIBUTION. Your benefit will automatically
be distributed or a lump sum payment of cash, or a lump sum payment that
includes an in-kind distribution of all mutual fund shares credited to your
account.
I. INVESTMENT OF PLAN ASSETS
All contributions made to the Plan are kept in the Trust. A separate
account including all of the subaccounts described in the section on
"Participant Accounts," is maintained for you within that Trust. The assets of
the Trust are invested as follows:
[CHECK ONE OF THE FOLLOWING ITEMS]:
X * You must direct the Plan Administrator to invest the amounts in all of
- - your subaccounts in specified investments offered by the Sponsor.
__ * _____________________ (INSERT PERCENTAGE) of the assets of the Trust
are invested in shares or other investments offered by the Sponsor. The
remaining assets are invested in such other investments as are
acceptable to the Trustee.
__ * You ___ [INSERT "MAY" OR "MUST"] direct the Plan Administrator to
invest the amounts in the following subaccount in specified investments
offered by the Sponsor:
[CHECK ONE OR MORE OF THE FOLLOWING ITEMS]:
__ * The amounts in your Nondeductible Voluntary Contribution
Subaccount.
__ * The amounts in your Profit Sharing Contribution Subaccount.
__ * The amounts in your Trustee Transfer and Rollover
Subaccounts.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS WITHDRAWALS]:
J. WITHDRAWALS
You may make the following types of withdrawals from your account:
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<PAGE> 98
(CHECK ALL APPLICABLE ITEMS]
__ * If you have made Voluntary Employee Contributions to the Plan, you will
be permitted to withdraw the amounts in your Nondeductible Voluntary
Contribution Subaccount. If you are married, your spouse must consent
to the withdrawal.
__ * In the event of an imminent and heavy financial need due to the
purchase or renovation of a primary residence, the educational, medical
or personal expenses of you or a member of your immediate family, or
other hardship, you will be permitted to make a hardship withdrawal of
amounts credited to your Profit Sharing Contribution Subaccount.
All hardship withdrawals are subject to approval by the Plan
Administrator. Such withdrawals can only be made after prior
withdrawal of all amounts in your Nondeductible Voluntary Contribution
Subaccount, and after exhausting all other reasonable sources of
funds. If you are married, your spouse must consent to any withdrawals.
(CHECK THE FOLLOWING ITEM IF PLAN LOANS ARE PERMITTED):
__ K. LOANS.
This Plan contains provisions that permit you to borrow (with the
consent of your spouse) from the Plan part of your vested interest in your
account. Such a loan will not be made, however, if the total of all outstanding
loans to you from all pension and profit sharing plans of the Employer exceed
the lesser of $50,000 (taking into account the highest principal balance of any
loan outstanding at any time during the preceding 12 months) or one-half of the
value of your vested interest in your account.
The Plan Administrator will set the terms of all loans. The maximum
payment term for any loan will generally be five years. The interest rate will
be determined by the Plan Administrator. Your account will be security for the
loan.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS PARTICIPANTS TO PURCHASE LIFE
INSURANCE]:
__ L. INSURANCE.
The Plan contains provisions permitting you to designate a portion of
the amounts in your Profit Sharing Contribution Subaccount to purchase life
insurance. The portion of your Profit Sharing Contribution Subaccount which may
be used to purchase life insurance is equal to____________________ [INSERT
PERCENTAGE] of that subaccount.
III. CLAIMS PROCEDURE
You or your Beneficiary may file a written claim for benefits under
this Plan with the Plan Administrator at any time. If your claim is denied to
any extent by the Plan Administrator, a written notification must be sent to you
within 90 days. If you choose to appeal the decision, a request for review must
be made in writing to the Plan Administrator within 60 days of receipt of
written notification of the denial. Within 60 days after the appeal is filed, or
within 120 days, if there are special circumstances involved, the Plan
Administrator will issue a written decision.
IV. CHANGES TO THE PLAN
A. AMENDMENT OF THE PLAN
The Employer, together with the Sponsor, reserves the right to amend
the Plan at any time. You will be kept informed of any material amendments to
the Plan by updates to this Summary Plan Description.
B. TERMINATION OF THE PLAN
The Employer intends to continue this Plan indefinitely. However, the
Employer reserves the right to terminate the Plan at any time. if a termination
takes place, or If the Employer discontinues making contributions to the Plan,
you WILL have a 100 percent vested and nonforfeitable interest in all of the
amounts in your account. These amounts may be distributed to you at that time,
or may be distributed in accordance with the benefit distribution rules.
C. MERGER, CONSOLIDATION OR TRANSFER OF THE PLAN
In the event of the merger, consolidation or transfer of assets or
liabilities of the Plan to any other plan, your benefits will not be decreased
from what they would have been prior to such an event.
V. GENERAL INFORMATION
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<PAGE> 99
Name of Plan: ______________________________________________________
[INSERT NAME OF EMPLOYER] Profit Sharing Plan
Employer: ______________________________________________________
______________________________________________________
[INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF EMPLOYER)
Type of Plan: Profit Sharing Plan
Type of Administration: Trusteed
Employer's Fiscal Year: ______________________________________________________
Plan Year End: ______________________________________________________
Plan Administrator: ______________________________________________________
[INSERT NAME, ADDRESS AND TELEPHONE NUMBER OF PLAN
ADMINISTRATOR]
Trustees: ______________________________________________________
______________________________________________________
[INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF
PRINCIPAL PLACE OF EACH TRUSTEE]
Agent for Service of Legal
Process: ______________________________________________________
[INSERT NAME AND ADDRESS OF PERSON DESIGNATED AS AGENT
FOR SERVICE OF LEGAL PROCESS)
Employer Identification # ______________________________________________________
Plan Number: ______________________________________________________
Also, a complete list of the employers and employee organizations sponsoring the
Plan may be obtained by participants and beneficiaries upon written request to
the Plan administrator, and is available for examination by participants and
beneficiaries, as required by Labor Reg. Section 1.2520.104-bl and Section
2520.104b-30.
VI. NON-APPLICATION OF PBGC GUARANTEES
Because this Plan is a defined contribution plan, the benefits you will
receive are exempt from and not insured by the Pension Benefit Guaranty
Corporation.
VII. SPECIAL RIGHTS UNDER ERISA
As a participant in the [INSERT NAME OF EMPLOYER] Profit Sharing Plan, you
are entitled to certain rights and protections under the Employee Retirement
Income Security Act of 1974 (ERISA). ERISA provides that all Plan Participants
shall be entitled to:
* Examine, without charge, at the Plan Administrator's office and at
other specified locations, all Plan documents, including insurance
contracts, affecting the individual making the request, and copies of
all documents filed by the Plan with the U.S. Department of Labor,
such as annual reports and Plan descriptions.
* Obtain copies of all Plan documents and other Plan information upon
written request to the Plan Administrator. The Plan Administrator may
make a reasonable charge for the copies.
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<PAGE> 100
* Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with a
copy of this summary annual report.
* obtain a statement of the total value of your account under the Plan
and your vested (nonforfeitable) portion of this account. This
statement must be requested in writing and is not required to be
given more than once a year, The Plan will provide the statement free
of charge.
In addition to creating rights for Plan Participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. These
people who operate your plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan Participants and
Beneficiaries. No one, including your Employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit under this Plan or exercising your rights under ERISA. If
your claim for a benefit is denied in whole or in part you must receive a
written explanation of the reason for the denial. You have the right to have
the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above
rights. For instance, if you request materials from the Plan and do not receive
them within 30 days, you may file suit in a federal court. In such a case, the
court may require the Plan Administrator to provide the materials and pay you up
to $100 a day until you receive the materials unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored in whole or in part, you may file
suit in a state or federal court. If it should happen that Plan fiduciaries
misuse the Plan's money, or if you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor, or you may
file suit in a federal court. The court will decide who should pay court costs
and legal fees. If you lose, the court may order you to pay these costs and
fees, for example, if it finds your claim is frivolous. if you have any
questions about your Plan, you should contact the Plan Administrator. If you
have any questions about this statement or about your rights under ERISA, you
should contact the nearest Area Office of the U.S. Labor-Management Services
Administration, Department of Labor.
94
<PAGE> 101
MODEL
SUMMARY PLAN DESCRIPTION
OF THE
--------------------------------
[INSERT NAME OF EXPLOYER1
MONEY PURCHASE PENSION PLAN
Copyright 1990 Investment Company Institute March 1990
95
<PAGE> 102
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
I. INTRODUCTION ............................................................. 3
II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS .......................... 3
A. Terms With Special Meanings ......................................... 3
B. Participation ....................................................... 4
C. Individual Accounts ................................................. 4
D. Contributions ....................................................... 4
E. Allocations ......................................................... 5
F. Vesting ............................................................. 6
G. Forfeitures ......................................................... 7
H. Distributions of Benefits ........................................... 7
I. Investment of Plan Assets ........................................... 8
J. Withdrawals ......................................................... 9
K. Loans ............................................................... 9
L. Insurance ........................................................... 9
III. CLAIMS PROCEDURE ....................................................... 9
IV. CHANGES TO THE PLAN .................................................... 9
V. GENERAL INFORMATION .................................................... 10
VI. NON-APPLICATION OF PBGC GUARANTEES ..................................... 11
VII. SPECIAL RIGHTS UNDER ERISA ............................................. 11
</TABLE>
96
<PAGE> 103
MODEL
SUMMARY PLAN DESCRIPTION
OF THE
-------------------------------------
[INSERT NAME OF EMPLOYER]
MONEY PURCHASE PENSION PLAN
I. INTRODUCTION
__________________________________ [INSERT NAME OF EMPLOYER] (the
"Employer") is pleased to be able to provide you with the____________________
[INSERT NAME OF EMPLOYER] Money Purchase Pension Plan (the "Plan" or the
"Pension Plan"). The Plan is effective as of ____________________________
[INSERT EFFECTIVE DATE].
The Plan is a defined contribution plan, to which the Employer makes
contributions to an account hold in your name. With this type of plan; the
retirement benefit you receive will depend on the investment performance of the
amounts that are in your account. The Plan is designed to provide retirement
income to employees who remain with the Employer until retirement and to those
who have a vested interest in their account when they terminate their employment
with the Employer.
Only the main features of the Plan are explained in this Summary Plan
Description. Any questions which are not answered here should be referred to
____________________________ [INSERT NAME OF DEPARTMENT OR PERSONNEL RESPONSIBLE
FOR PARTICIPANT INFORMATION]. If there is any inconsistency between the Plan as
described in this Summary Plan Description and the Plan document itself, the
terms of the Plan document will govern. Copies of the Plan document and the
Trust Agreement are available for your inspection during regular working hours.
II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS
A. TERMS WITH SPECIAL MEANINGS
Certain words and terms used in this Summary have special meanings.
Many of these terms are fined in this section, while others are
explained in the text of the Summary. To assist you in identifying
these terms within the text, they are capitalized.
1. BENEFICIARY. Your designated Beneficiary is the person you name
to receive your benefit distribution in the event of your death.
If you are married, you will need written consent from your
spouse to name someone other than your spouse as your
Beneficiary.
2. BREAK IN SERVICE. A Break in Service occurs if you complete less
than 501 Hours of Service with the Employer during a Plan Year.
3. COMPENSATION. Compensation is the total compensation paid to you
by the Employer during any portion of a Plan Year during which
you were a Plan Participant. If you are self-employed, your
Compensation is your earned income less your deductible
contributions to any qualified retirement plans.
4. HOURS OF SERVICE. Each hour for which you are paid or entitled to
be paid by the Employer. In addition, uncompensated authorized
leaves of absence that do not exceed two years, military leave
while your reemployment rights are protected by law, and absences
from work for maternity or paternity reasons may be credited as
Hours of Service for the purpose of determining whether you had
a Break in Service.
5. PARTICIPANT. A Participant is an employee who has met the
requirements for participating in this Plan, and whose account
has been neither completely forfeited nor distributed.
6. Plan Year. The Plan Year is the 12-month period ending on the
date shown in section V of this Summary.
7. SPONSOR. The Sponsor is the organization which has made this Plan
available to the Employer.
8. TRUST. The Trust is a fund maintained by the Trustee for the
investment of Plan assets, including the amount in your account.
9. YEAR OF SERVICE. A Year of Service is the applicable 12-month
period during which you complete 1,000 or more Hours of Service.
For
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<PAGE> 104
eligibility purposes, the applicable 12-month period is your
first year of employment or any Plan Year, For vesting purposes,
the applicable 12-month period is the Plan Year.
B. PARTICIPATION.
You will be eligible to participate in the Plan after you have met the
following eligibility requirements:
[CHECK ALL APPLICABLE ITEMS]
[X] o You have reached age 21.
[X] o You have completed 1 Year(s) of Service.
[X] o You are not a member of a collective bargaining unit.
[X] o You are not a nonresident alien.
The first entry date, or date in which you can first participate in
the Plan if you meet these requirements, is ________________ [INSERT EFFECTIVE
DATE]. Thereafter, do entry date(s) will be January 1 & July 1 of each Plan
Year.
Once you become a Participant, you will remain a Participant as long
as you do not incur a Break in Service. If you do incur a Break in Service, and
are later reemployed by the Employer, you will be reinstated as a Participant
and any previous Hours of Service will be reinstated as of the date of your
reemployment.
C. INDIVIDUAL ACCOUNTS
A separate account will be maintained for you within the Plan. This account
will be further divided into subaccounts, which will be credited with the
different types of contributions that are described in the next section. The
subaccounts that will be maintained for you are as follows:
1. MONEY PURCHASE PENSION CONTRIBUTION SUBACCOUNT. This subaccount
will be credited with your share of Employer Money Purchase Pension
Contributions, distributions from this subaccount, and the earnings and losses
attributable to this subaccount.
2. TRUSTEE TRANSFER AND ROLLOVER SUBACCOUNTS. These subaccounts will
be credited with any rollover contributions or transfer contributions you
may make to the Plan, any distributions from the subaccount, and the earnings
and losses attributable to the subaccount.
(CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
___ 3. NONDEDUCTIBLE VOLUNTARY CONTRIBUTION SUBACCOUNT. This subaccount
will be credited with our Voluntary Employee Contributions, any distributions
from this subaccount, and the earnings and losses attributable to this
subaccount.
D. CONTRIBUTIONS
The Employer will make, or you will be permitted to make, the
following types of contributions. These contributions will be allocated to the
appropriate subaccounts within your account.
1. EMPLOYER MONEY PURCHASE PENSION CONTRIBUTIONS. The Employer
will make Money Purchase Pension Contributions to the Plan each
Plan Year in accordance with a formula based on your
Compensation. This formula is given in the section on
"Allocations."
2. ROLLOVER CONTRIBUTIONS AND DIRECT TRANSFERS. If you have
participated in other pension or profit sharing plans, you will
be permitted to make a rollover contribution to the Plan of
certain amounts you may receive from those other plans.
You will also be permitted, with the approval of the Plan
Administrator, to authorize a direct transfer to the Plan of
amounts that are attributable to your participation in other
pension or profit sharing plans.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS].
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<PAGE> 105
3. VOLUNTARY EMPLOYEE CONTRIBUTIONS. To increase your
--- retirement benefits from this Plan, you may choose to make
voluntary contributions to the Plan of up to _____ (INSERT
MAXIMUM VOLUNTARY EMPLOYEE CONTRIBUTION PERCENTAGE) of your
Compensation. Such contributions will not be permitted, however,
for Plan Years beginning after _____________ (THE PLAN YEAR IN
WHICH THE PLAN IS ADOPTED). The minimum contribution you must
make if you choose to make a voluntary contribution is as
follows:
[CHECK ONE OF THE FOLLOWING ITEMS]:
- The minimum voluntary contribution is ____ [INSERT MINIMUM
--- VOLUNTARY CONTRIBUTION PERCENTAGE] of your Compensation.
X - There is no minimum voluntary contribution.
---
E. Allocations
1. ELIGIBILITY FOR ALLOCATIONS. Each Plan Year the Employer will make
a Money Purchase Pension Contribution to the Plan in accordance with the
formula based on your Compensation. Your account will be allocated a
contribution if you are an employee as of the last day of the Plan Year.
[X] o Unless you terminate your employment during the Plan Year with not
more than 500 [INSERT HOURS OF SERVICE REQUIREMENT] Hours of Service.
(You will receive an allocation, however, if you die, retire or become
disabled during the Plan Year).
Under some circumstances, special minimum allocation rules may result in your
receiving an allocation, even if you do not meet any of the requirements set
forth above.
2. AMOUNT OF ALLOCATION. If you are eligible, your account will be
credited with a Money Purchase Pension Contribution as follows:
[CHECK ONE OF THE FOLLOWING ITEMS]
o The Employer will make a contribution on your behalf equal to _______
(INSERT CONTRIBUTION PERCENTAGE) of your Compensation.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN IS INTEGRATED WITH SOCIAL
SECURITY]:
o The Employer will make a contribution equal to ______% of your
- --- Compensation up to the Plan's Integration Level, plus ____% of your
Compensation excess of the Plan's Integration Level.
The Plan's Integration Level is equal to:
(CHECK ONE OF THE FOLLOWING ITEMS):
[ ] o The taxable wage base, which is the annual earnings subject
to Social Security (FICA) tax.
[ ] o A dollar amount equal to ____ [INSERT DOLLAR AMOUNT].
[ ] o A percentage of the taxable wage base equal to ___% of the
annual earnings subject to Social Security (FICA) tax.
For example, suppose that the Plan's taxable wage base is
equal to $51,300, and that your Compensation during a Plan
Year totaled $61,300. You would receive an allocation of
____ [INSERT CONTRIBUTION PERCENTAGE] of your first $51,300
in Compensation, and
____ [INSERT EXCESS CONTRIBUTION PERCENTAGE] on the
remainder of $ 10,000.
Under some circumstances, special minimum allocation rules may cause you to
receive a larger allocation than you normally would. The amount that can be
allocated to your account in any Plan Year is limited by rules applying to all
qualified plans.
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<PAGE> 106
F. VESTING.
Vesting refers to the nonforfeitable interest you have in each of your
subaccounts. In other words, your vested interest in your account is the amount
you will receive when your account is distributed to you.
You will always have a 100 percent vested and nonforfeitable interest
in the amounts you have in your:
o Trustee transfer and rollover subaccounts.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
o Nondeductible Voluntary Contribution Subaccount.
You will earn a vested interest in your Money Purchase Pension
Contribution Subaccount in accordance with the following:
[CHECK ONE OF THE FOLLOWING ITEMS]:
[ ] o You will always have a 100 percent vested and nonforfeitable interest
in your Money Purchase Pension Contribution Subaccount.
[ ] o You will have a 100 percent vested and nonforfeitable interest in your
Money Purchase Pension Contribution Subaccount in the event of any of
the following:
o You reach your Normal Retirement Age or Early Retirement Date.
o You die or become disabled.
Otherwise, you will earn a vested interest in your Money Purchase
Pension Contribution Subaccount in accordance with the following schedule:
[CHECK ONE OF THE FOLLOWING ITEMS]
[ ] o YEARS OF SERVICE VESTED PERCENTAGE
---------------- -----------------
1 year 0%
2 years 20%
3 yam 40%
4 years 60%
5 years 80%
6 or more years 100%
For example, If you are employed for six years, you will be entitled
to the entire amount in your Money Purchase Pension Contribution
Subaccount. However, If you terminate employment with the Employer
after only four years, even though you return to employment with the
Employer six years later, you will be entitled to receive only 60
percent of that amount.
[ ] o You will be 100 percent vested after three years of service. If you
terminate employment prior to three years you will not have any vested
amount in your Money Purchase Pension Contribution Subaccount.
Any portion of your Money Purchase Pension Contribution Subaccount in
which you do not have a vested interest will be forfeited by you as of
the last day of the Plan Year in which your fifth consecutive Break in
Service occurs.
G. FORFEITURES
[CHECK ONE OF THE FOLLOWING ITEMS]:
[ ] o You have a 100 percent vested and nonforfeitable interest in the
amounts in your account at all times. You will therefore not be
subject to forfeitures.
[ ] o Forfeitures occur when you terminate employment before becoming fully
vested in your account, as explained in the section on "Vesting."
Effective for the Trust Plan Year beginning after 1984, any portion of
your account that is not vested will be forfeited as of the last day
of the Plan Year in which your fifth consecutive Break in Service
occurs. Forfeited amounts will not be reinstated, even if you return
to service with the Employer. Such forfeitures either will be:
100
<PAGE> 107
[CHECK ONE OF THE FOLLOWING ITEMS]:
[ ] o Used by the Employer as a credit against its future
contributions to the Plan; or
[ ] o Reallocated among the accounts of remaining Participants in
proportion to their pay.
H. DISTRIBUTION OF BENEFITS.
1. ELIGIBILITY FOR DISTRIBUTION. You will be entitled to receive a
distribution of the vested amounts in your account upon occurrence of any of the
following:
o Your termination of employment with the Employer for any reason.
o Your total and permanent disability.
o Your death.
o Termination of the Plan.
o Your attainment of normal retirement age, which is:
[CHECK ONE Of THE FOLLOWING ITEMS]:
[X] o Age 65.
[ ] o Age ____ [INSERT NORMAL RETIREMENT AGE] or the ____________
[INSERT ANNIVERSARY DATE] of the day you commenced
participation in the Plan.
[CHECK THE FOLLOWING IF YOUR PLAN PERMITS EARLY RETIREMENT]:
[ ] o If you elect early retirement, attainment of your early
retirement date, which is the first day of the month
coincident with or next following the date you reach age _
(INSERT EARLY RETIREMENT AGE) and complete _________ [INSERT
NUMBER OF YEARS] Years of Service.
2. TIMING OF DISTRIBUTIONS. You will begin receiving benefit
distributions in accordance with the following:
o Generally, benefit distributions will commence not later then 60 days
after the end of the Plan Year in which you become eligible to receive
benefits.
o In the event of your death, your spouse, if you are married, will
generally be entitled to receive your benefit distribution. If you are
unmarried, or if your spouse has given written consent, your
designated Beneficiary will receive your benefit distribution. If you
have no spouse or designated Beneficiary, your benefit distribution
will go to your estate.
o If you so elect, you may defer commencement of the distribution of
your benefit beyond the date you first become eligible to receive that
distribution, to a date which you may specify. The date you specify
must not be later than the April 1 following the close of your taxable
year in which you attain age 70-1/2.
o If you attained age 70-1/2 before January 1, 1988, special rules apply
to your distributions.
If you wish to receive benefit distributions before attaining age
59-1/2, you may be subject to a penalty tax, and you must notify the Plan
Administrator in writing that you are aware of the consequences of this tax.
3. FORM OF DISTRIBUTION. Your benefit will automatically be
distributed in the form of a in a lump sum payment of cash, or a lump sum
payment that includes an in-kind distribution of all mutual fund shares credited
to your account.
I. INVESTMENT OF PLAN ASSETS
All contributions made to the Plan are kept in the Trust. A separate
account, including all of the subaccounts described in the section on
"Participant accounts," is maintained for you within that Trust. The assets of
the Trust are invested as follows:
101
<PAGE> 108
(CHECK ONE OF THE FOLLOWING ITEMS::
[X] o All of the assets of the Trust are invested in shares or other
investments offered by the Sponsor.
[ ] o _________ [INSERT PERCENTAGE] of the assets of the Trust are invested
in shares or other investments offered by the Sponsor. The remaining
assets are invested in such other investments as are acceptable to the
Trustee.
[ ] o You ______ [INSERT "may" OR "must"] direct the Plan Administrator to
invest the amounts in the following subaccount in specified
investments offered by the Sponsor:
(CHECK ONE OR MORE OF THE FOLLOWING ITEMS):
[ ] o The amounts in your Nondeductible Voluntary Contribution Subaccount.
[ ] o The amounts in your Money Purchase Pension Contribution Subaccount.
[ ] o The amounts in your trustee transfer and rollover subaccounts.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS VOLUNTARY EMPLOYEE
CONTRIBUTIONS]:
[ ] J. WITHDRAWALS
If you have made Voluntary Employee Contributions to the Plan, you
will be permitted to withdraw the amounts in your Nondeductible Voluntary
Contribution Subaccount. If you are married, your spouse must consent to the
withdrawal.
[CHECK THE FOLLOWING ITEM IF PLAN LOANS ARE PERMITTED]
[ ] K. LOANS
The Plan contains provisions that permit you to borrow from the Plan
part of your vested interest in your account. Such a loan will not be made,
however, if the total of all outstanding loans to you from all pension and
profit sharing plans of the Employer exceed the lower of $50,000 (taking into
account the highest principal balance of any loan outstanding at any time during
the preceding 12 months) or one-half of the value of your vested interest in
your account.
The Plan Administrator will set the terms of all loans. The maximum
payment term for any loan will generally be five years. The interest rate will
be determined by the Plan Administrator, your account will be security for the
loan.
[CHECK THE FOLLOWING ITEM IF YOUR PLAN PERMITS PARTICIPANTS TO PURCHASE
LIFE INSURANCE]:
[ ] L. INSURANCE.
The Plan contains provisions permitting you to designate a portion of
the amounts in your Money Purchase Pension Contribution Subaccount to purchase
life insurance. The portion of your Money Purchase Pension Contribution
Subaccount which may be used to purchase life insurance is equal to ________
[INSERT PERCENTAGE] of that subaccount.
III. CLAIMS PROCEDURE
You or your Beneficiary may file a written claim for benefits under this
Plan with the Plan Administrator at any time. If your claim is denied to any
extent by the Plan Administrator, a written notification must be sent to you
within 90 days. If you choose to appeal the decision, a request for review must
be made in writing to the Plan Administrator within 60 days of receipt for
written notification of the denial. Within 60 days after the appeal is filed, or
within 120 days, if there are special circumstances involved, the Plan
Administrator will issue a written decision.
102
<PAGE> 109
IV. CHANGES TO PLAN
A. AMENDMENT OF THE PLAN
The Employer, together with the Sponsor, reserves the right to amend
the Plan at any time. You will be kept informed of any material amendments to
the Plan by updates to this Summary Plan Description.
B. TERMINATION OF THE PLAN
The Employer intends to continue this Plan indefinitely. However, the
Employer reserves the right to terminate the Plan at any time. If a termination
takes place, or if the Employer discontinues making contributions to the Plan,
you will have a 100 percent vested and nonforfeitable interest in all of the
amounts in your account. These amounts may be distributed to you at that time,
or may be distributed in accordance with the benefit distribution rules.
C. Merger, Consolidation, or Transfer of the Plan
In the event of the merger, consolidation or transfer of assets or
liabilities of the Plan to any other plan, your benefits will not be decreased
from what they would have been prior to such an event.
V. GENERAL INFORMATION
NAME OF PLAN: _____________________________________________________
Money Purchase Pension Plan
EMPLOYER: _____________________________________________________
_____________________________________________________
TYPE OF PLAN: Money Purchase Pension Plan
TYPE OF ADMINISTRATION: Trusteed
EMPLOYER'S FISCAL YEAR: __________________________
PLAN YEAR END: __________________________
PLAN ADMINISTRATOR: _____________________________________________________
_____________________________________________________
_____________________________________________________
Trustees: _____________________________________________________
_____________________________________________________
_____________________________________________________
[INSERT NAME, TITLE, ADDRESS AND PHONE NUMBER OF
PRINCIPAL PLACE OF BUSINESS OF EACH TRUSTEE)
AGENT FOR SERVICE OF LEGAL PROCESS: __________________________________________
__________________________________________
INSERT NAME AND ADDRESS OF PERSON DESIGNATED
AS AGENT FOR SERVICE OF LEGAL PROCESS)
EMPLOYER IDENTIFICATION NUMBER: __________________________________________
PLAN NUMBER: __________________________________________
Also, a complete list of the employers and employee organizations sponsoring the
Plan may be obtained by participants and beneficiaries upon written request to
the Plan administrator, and is available for examination by participants and
beneficiaries, as required by Labor Reg. Section 2520.104b-1 and Section
2520.104b-30.
V1. NON-APPLICATION OF PBGC GUARANTEES
Because this Plan is a defined contribution plan, the benefits you will
receive are exempt from and not insured by the Pension Benefit Guaranty
Corporation.
103
<PAGE> 110
VII. SPECIAL RIGHTS UNDER ERISA
As a participant in the ________________________________ [INSERT NAME OF
EMPLOYER] Money Purchase Pension Plan, you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of 1974 (ERISA).
ERISA provides that all Plan Participants shall be entitled to:
o Examine, without charge, at the Plan Administrator's office and at
other specified locations, all Plan documents, including insurance
contracts, affecting the individual making the request, and copies of
all documents filed by the Plan with the U.S. Department of Labor, such
as detailed annual reports and Plan descriptions. Obtain copies of all
Plan documents and other Plan information upon written request to the
Plan Administrator. The Plan Administrator may make a reasonable charge
for the copies.
o Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with
a copy of this summary annual report.
o Obtain a statement of the total value of your account under the
Plan and your vested (nonforfeitable) portion of this account. This
statement must be requested in writing and is not required to be
given more than once a year. The Plan will provide the statement
free of charge.
In addition to creating rights for Plan Participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. These
people who operate your plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan Participants and
Beneficiaries. No one, including your Employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit under this Plan or exercising your rights under ERISA. If
your claim for a benefit is denied in whole or in part you must receive a
written explanation of the reason for the denial. You have the right to have
the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request materials from the Plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to
$100 a day until you receive the materials unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored, in whole or in part, you may file
suit in a state or federal court. If it should happen that Plan fiduciaries
misuse the Plan's money, or if you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor, or you may
file suit in a federal court. The court will decide who should pay court costs
and legal fees. If you lose, the court may order you to pay these costs and
fees, for example, if it finds your claim is frivolous. If you have any
questions about your Plan, you should contact the Plan Administrator. If you
have any questions about this statement or about your rights under ERISA, you
should contact the nearest Area Office of the U.S. Labor-Management Services
Administration, Department of Labor.
NOTICE TO INTERESTED PARTIES
Current employees of ________________________________ are hereby notified that
(Name of Employer)
___________________________ has adopted the __________________________________
(Name of Adopting Employer) (Name of Plan or Plans)
as its employee retirement benefit plan.
The employee eligible to participate under this Plan are
____________________________________.
(Insert Eligible Class of Employees)
It is not expected that this Plan will be submitted to the Internal Revenue
Service for an advance determination as to whether or not the Plan meets the
qualification requirements of section 401(a) of the Internal Revenue Code.
However, this Plan is a prototype plan and the Internal Revenue Service has
previously issued a favorable opinion letter to the sponsor with regard to the
this plan.
As in interested party, you have the right to submit to the Key District
Director of the Internal Revenue Service, either individually or jointly with
other interested parties, your comments as to whether this Plan meets the
qualification requirements of the Internal Revenue Code.
104
<PAGE> 111
You may also, either or jointly with other interested parties, request that the
Department of Labor submit, on your behalf, comments to the Key District
Director regarding qualification of this Plan.
If the Department of Labor declines to comment on all or some of the matters you
raise, you may, individually or jointly if your request was made to the
Department jointly, submit your comments on these matters directly to the Key
District Director as the following address:
___________________________________________
(NAME AND ADDRESS OF KEY DISTRICT DIRECTOR)
The Department of Labor may not comment on behalf of interested parties unless
requested to do so by the lesser of 10 employees or 10 percent of the employees
who qualify as interested parties. The number of persons needed for the
Department of Labor to comment with respect to this Plan is ___________________.
A request to the Department of Labor should be sent to the following address:
Administrator of Pension and Welfare Benefit Programs
U.S. Department of Labor
200 Constitution Avenue N.W.
Washington, D.C. 20216
Attention: 3001 Comment Request
Any comment you submit to the Key District to the Key District Director, or any
request to the Department of Labor must include the name of the Plan, the Plan
number, the opinion letter number, the adopting employer's identification
number, the name and address of the sponsor, and the name and address of the
Plan administrator. Any request to the Department of Labor must also include
the address of the Key District Director. This information can be found at the
end of this Notice.
A comment to the Key District must be received by
____________________________________.
(Date 45 Days After Plan is Adopted)
if you wish to preserve your right to comment to the Key District Director, or
by ____________________________________ if you wish to waive that right.
(Date 55 Days After Plan is Adopted)
If there are matters upon which you request the Department of Labor to comment
upon on your behalf, and the Department declines to do so, you may submit
comments on these matters directly to the Key District Director. These comments
must be received by the Key District Director within 15 days from the time the
Department of Labor notifies you that it will not comment on a particular
matter, or by ___________________________________ whichever is later.
(Date 75 Days After The Plan is Adopted).
Detailed instructions regarding the requirements for submitting comments may
be found in sections 6,7, and 8 of Revenue Procedure 80-30.
Additional information concerning this Plan (including, where applicable, a
description of the circumstances which may result in eligibility of loss of
benefits, a description of the source of financing of the plan, and copies of
section 6 of Revenue Procedure 80-30) is available at_________________________
(LOCATION)
during the hours of _________________, for inspection of copying. There may be
a normal charge for copying and/or mailing.
The following information will be needed for correspondence with the Department
of Labor or the Key District Director:
___________________________________
(Name of Adopting Employer)
105
<PAGE> 112
______________________________________
(Name of Plan or Plans)
______________________________________
Plan Identification Number(s)
______________________________________
(Opinion Letter Number)
______________________________________
(Name of Sponsor)
______________________________________
(Address of Sponsor)
______________________________________
(Adopting Employer's EIN)
______________________________________
(Name of Plan Administrator)
______________________________________
(Address of Plan Administrator)
______________________________________
(Address of Key District Director)
106
<PAGE> 113
FORMS
107
<PAGE> 114
[AIM LOGO APPEARS HERE]
ASSET TRANSFER FORM
AIM Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Phone Number 1-800-347-1919 (ext. 506)
THIS FORM SHOULD BE USED ONLY IF YOU ARE TRANSFERRING PLAN ASSETS DIRECTLY
TO AIM.
================================================================================
1. PRINT PLAN NAME AND ADDRESS HERE
- --------------------------------------------------------------------------------
Plan Name/Trustees
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip
Tax ID Number
-------------------------------------------------------------------
Telephone ( )
-----------------------------------------------------------------
================================================================================
2. ACCOUNT TO BE TRANSFERRED TO AIM
- --------------------------------------------------------------------------------
Account Number
- --------------------------------------------------------------------------------
Name of Resigning Trustee/Custodian
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
City State Zip
- --------------------------------------------------------------------------------
Attention Telephone
================================================================================
3. PLEASE TELL US WHERE TO INVEST THE MONEY YOU ARE TRANSFERRING
Please deposit proceeds in my [ ] existing [ ]* new
[ ] Money Purchase Plan
[ ] Profit Sharing
* Application Attached
- --------------------------------------------------------------------------------
Fund Name Account Number
- --------------------------------------------------------------------------------
Fund Name Account Number
If assets are to be invested in multiple participant accounts you must submit a
separate statement identifying each participant and the percentage to be
invested in each fund(s).
If transferred assets are to be invested in "pooled" accounts you must indicate
the percentage (%) to be invested in each funds.
================================================================================
4. PLEASE AUTHORIZE YOUR CURRENT OR CUSTODIAN TO TRANSFER ACCOUNT TO THE AIM
FUNDS
To Resign Trustee or Custodian:
Please transfer [ ] all or [ ] part ($_________________) of our assets listed in
Section 2 to The AIM Funds.
[ ] immediately [ ] at maturity
[ ] Please transfer [ ] all or part (__________________) of the assets to AIM
Fund Acct# ___________________________.
- --------------------------------------------------------------------------------
Signature/Trustee Date
An Important note: Your current investment manager or custodian may require your
signature to be guaranteed.
Call that institution for requirement.
Signature guaranteed by:
- --------------------------------------------------------------------------------
Name of Bank or Firm
- --------------------------------------------------------------------------------
Signature of Officer and Title
================================================================================
5. CUSTODIAN ACCEPTANCE OF PLAN
This to advise you that _______________________, trustee custodian, will accept
the account identified above for: Plan Name ________________________________
Account Number _____________________________
This transfer of assets is to be executed from fiduciary to fiduciary and will
not place the participant in actual receipt of all or any of the plan assets.
NO FEDERAL INCOME TAX IS TO BE WITHHELD FROM THIS TRANSFER OF ASSETS.
If you have any further questions regarding the transfer, please feel free to
contact us at the above toll-free number.
- --------------------------------------------------------------------------------
Authorized Signature/Trustee
- --------------------------------------------------------------------------------
Date
================================================================================
6. RESIGNING TRUSTEE OR CUSTODIAN
Please Indicate Account Number on all documents sent to AIM.
Please attach a copy of this form to the check.
Check Payable to: AIM Funds, FBO: (Plan Name)
c/o AIM Fund Services, Inc,
P.O. Box 4739
Houston, TX 77210-4739
108
<PAGE> 115
PROFIT SHARING AND/OR MONEY PURCHASE PENSION PLAN
CONTRIBUTION TRANSMITTAL FORM
All contributions must be allocated in dollars to the fund(s) selected as
investment options of the plan. For plans using individual mutual fund accounts
for each participant, you must allocate each participant's contribution to their
selected AIM Fund(s). The minimum investment in $25 per fund per contribution
submission for each participant.
Plan Name:
----------------------------------------------------------------------
Tax ID#:
------------------------------------------------------------------------
Contribution for Plan Year:
-----------------------
<TABLE>
<CAPTION>
================================================================================
NAME SS# AIM AIM AIM TOTAL
____ FUND ____ FUND ____ FUND
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ $ $ $
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total $ $ $ $
================================================================================
</TABLE>
1
<PAGE> 1
EXHIBIT 14(d)(1)
403(b) PLAN [AIM LOGO APPEARS HERE]
ACCOUNT APPLICATION
To open your AIM 403(b) Plan account.
Employer mail to: A I M Fund Services, Inc., P.O. Box 4399, Houston, TX
77210-4399. Phone: 800-959-4246
ALL sections must be fully completed.
- --------------------------------------------------------------------------------
1. EMPLOYEE INFORMATION (please print)
Participant
--------------------------------- Birth Date / /
First Name Middle Last Name ---- ---- ---
Address
-------------------------------------------------------------------
Street City State Zip Code
Social Security # Daytime Telephone
-------------------- -------------------
Employer
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. INVESTMENT INFORMATION (Minimum investment in any AIM Fund is $25 per pay
period per Fund.)
CONTRIBUTIONS:
[ ] I will be making salary-deferral contributions in the amount of
$_______________ or______% of compensation.
[ ] This is a transfer of 403(b) assets only; no salary-deferral
contribution will be made at this time.
Each contribution to the Custodial Account shall be invested in the
following AIM Funds in the amounts specified.
<TABLE>
<CAPTION>
EQUITY FUNDS $ OR % OF ASSETS CLASS OF SHARES FIXED INCOME FUNDS $ OR % OF ASSETS CLASS OF SHARES
(CHECK ONE) (CHECK ONE)
<S> <C> <C> <C> <C> <C>
AIM Blue Chip Fund $ Class [ ] A [ ] B AIM Balanced Fund $ Class [ ] A [ ] B
------------ ------------
AIM Capital AIM Global Income Fund $ Class [ ] A [ ] B
Development Fund $ Class [ ] A [ ] B ------------
------------ AIM Intermediate
AIM Charter Fund $ Class [ ] A [ ] B Government Fund $ Class [ ] A [ ] B
------------ ------------
AIM High Yield Fund $ Class [ ] A [ ] B
AIM Global Aggressive ------------
Growth Fund $ Class [ ] A [ ] B AIM Income Fund $ Class [ ] A [ ] B
------------ ------------
AIM Global Growth Fund $ Class [ ] A [ ] B
------------ AIM Limited Maturity
AIM Constellation Fund $ Class [ ] A Treasury Shares $ Class [ ] A
------------ ------------
AIM Growth Fund $ Class [ ] A [ ] B MONEY MARKET FUNDS $
------------ ------------
AIM Money Market Fund $ Class [ ] A [ ] B [ ] C
AIM International ------------
Equity Fund $ Class [ ] A [ ] B Total $
------------ ------------
AIM Global Utilities
Fund $ Class [ ] A [ ] B
------------
AIM Value Fund $ Class [ ] A [ ] B
------------
AIM Weingarten Fund $ Class [ ] A [ ] B
------------
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, where Class C Shares will be
purchased.
BILLING: PLEASE CONFIRM WITH YOUR EMPLOYER THAT THIS IS REQUIRED BEFORE
COMPLETING THIS SECTION. MY EMPLOYER HAS REQUESTED THAT AIM FORWARD A
BILLING EACH MONTH FOR SUBMISSION OF MY ON-GOING SALARY-DEFERRAL
CONTRIBUTION. (NOTE: BILLING IS ONLY AVAILABLE WHEN AN ORGANIZATION HAS 10
OR MORE 403(B) PARTICIPANTS WITH AIM.)
PLEASE REMIT THE BILLING TO:
Employer's Name Attention
-------------------------- -------------------
Address Telephone
---------------------------------- -------------------
- --------------------------------------------------------------------------------
3. ACCOUNT OPTIONS
Please indicate options you desire, if any.
TELEPHONE EXCHANGE PRIVILEGE. Unless indicated below, I authorize the
Transfer Agent to accept from any person instructions to exchange shares in
my account(s) by telephone for shares of other AIM Funds within the same
Class of Shares, in accordance with the procedures and conditions set forth
in the Fund's current prospectus.
[ ] I DO NOT want the telephone exchange privilege.
11
<PAGE> 2
REDUCED SALES CHARGE (optional/available for Class A shares only)
Right of Accumulation
I apply for Right of Accumulation reduced sales charges based on the
following accounts in The AIM Family of Funds(--Registered Trademark--):
Fund(s) Account No(s).
--------------------------- -------------------------
LETTER OF INTENT
I agree to the Letter of Intent provisions in the prospectus. I plan to
invest during a 13-month period a dollar amount of at least:
[ ]$25,000 [ ]$50,000 [ ]$100,000 [ ]$250,000 [ ]$500,000 [ ]$1,000,000
- --------------------------------------------------------------------------------
4. BENEFICIARY DESIGNATION
Primary Beneficiary:
I hereby designate the following individual(s) to receive the full value of
the assets of my 403(b) plan with A I M Distributors, Inc. upon my death.
This revokes any and all prior Beneficiary Designations made by me and
filed with the Custodian. (If you designate a beneficiary other than your
spouse, your spouse must acknowledge the designation by signing this form.)
Full Name
------------------------------------------------------------------
Address
-------------------------------------------------------------------
Social Security #
----------------------------------------------------------
Relationship
---------------------------------------------------------------
Percentage of Assets
-------------------------------------------------------
Please complete and sign the beneficiary designation. We cannot accept this
application without proper designation of beneficiary. If you wish to
identify additional or contingent beneficiaries, please attach a separate
letter identifying the same information requested above.
- --------------------------------------------------------------------------------
5. AUTHORIZATION AND SIGNATURE
I hereby adopt the A I M Distributors, Inc. 403(b)(7) Custodial Agreement
appointing Boston Safe Deposit and Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the 403(b)(7)
custodial agreement and consent to the custodial account fee as specified.
I understand that an annual AIM 403(b)(7) Maintenance Fee (currently $10)
will be deducted in early December from my 403(b)(7) Fund account.
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund is
required to have the following certification. Please refer to the Fund
prospectus for complete instructions regarding backup withholding. Under
the penalties of perjury, I certify that (i) the number shown in Section 1
is my correct Social Security/Taxpayer Identification Number and (ii) I am
not subject to backup withholding because the Internal Revenue Service (a)
has not notified me that I am subject to backup withholding as a result of
failure to report all interest or dividends, or (b) has notified me that I
am no longer subject to backup withholding (does not apply to real estate
transactions, mortgage interest paid, the acquisition or abandonment of
secured property, contributions to an individual retirement arrangement
[403(b)(7)], and payments other than interest and dividends).
Certification Instructions-You must cross out item (b) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of underreporting of interest or dividends on your tax
return.
[ ] Exempt from Backup Withholding (i.e. exempt entity as described in the
prospectus)
[ ] Nonresident alien [Form(s) W-8 attached]
Your Signature Date / /
------------------------------------------- --- --- ---
- --------------------------------------------------------------------------------
6. BROKER/DEALER INFORMATION:
Name of Broker/Dealer Firm
-------------------------------------------------
Branch Address
-------------------------------------------------------------
Rep. Name and Number
-------------------------------------------------------
Rep. Signature
-------------------------------------------------------------
Rep. Telephone
----------------------
12 [AIM LOGO APPEARS HERE] A I M Distributors, Inc.
<PAGE> 3
403(b) PLAN [AIM LOGO APPEARS HERE]
ASSET-TRANSFER FORM
To move assets from another 403(b) custodian to AIM.
Use this form only when transferring assets from an existing 403(b)
(account # __________) to an AIM 403(b) (account # __________).
If you do not already have an AIM 403(b), you must also submit a 403(b)
Application. AIM will arrange the transfer for you.
- --------------------------------------------------------------------------------
1. INVESTOR INFORMATION (please print)
Name
-----------------------------------------------------------------------
Address
--------------------------------------------------------------------
City State Zip
----------------------------------- ----------- -----------
Social Security Number Daytime Telephone
----------------- ----------------
- --------------------------------------------------------------------------------
2. CURRENT CUSTODIAN
Name of Resigning Trustee Account Number
--------------- -------------------
Address of Resigning Trustee
-----------------------------------------------
City State Zip
----------------------------------- ----------- -----------
Attention Telephone
------------------------------ -------------------------
- --------------------------------------------------------------------------------
3. 403(b) ACCOUNT INFORMATION
Please deposit proceeds in my
[ ] existing [ ] new*
<TABLE>
<CAPTION>
EQUITY FUNDS $ OR % OF ASSETS CLASS OF SHARES (CHECK ONE)
<S> <C> <C>
AIM Blue Chip Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Capital Development Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Charter Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Global Aggressive Growth Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Global Growth Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Constellation Fund $ [ ] Class A
-------------------------------
AIM Growth Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM International Equity Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Global Utilities Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Value Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Weingarten Fund $ [ ] Class A [ ] Class B
-------------------------------
FIXED INCOME FUNDS CLASS OF SHARES (CHECK ONE)
AIM Balanced Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Global Income Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Intermediate Government Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM High Yield Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Income Fund $ [ ] Class A [ ] Class B
-------------------------------
AIM Limited Maturity Treasury Shares $ [ ] Class A
-------------------------------
MONEY MARKET FUNDS CLASS OF SHARES (CHECK ONE)
AIM Money Market Fund $ [ ] Class A [ ] Class B [ ] Class C
-------------------------------
Total $
-------------------------------
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, where Class C Shares will be
purchased.
- --------------------------------------------------------------------------------
4. TRANSFER INSTRUCTIONS
To Resigning Trustee or Custodian:
Please liquidate [ ] all or [ ] part of the account(s) listed in Section 2
and transfer the proceeds to my 403(b) account with Boston Safe Deposit and
Trust Company.
13
<PAGE> 4
[ ] Partial amount to transfer $
-------------------
[ ] immediately [ ] at maturity ( / / )
---- ---- ----
[ ] Please transfer "In Kind" [ ] all [ ] part of the shares of the AIM
Fund held in my account to Boston Safe Deposit and Trust Company.
Percent of shares to transfer %
-----
- --------------------------------------------------------------------------------
5. AUTHORIZATION AND SIGNATURE
I have established a 403(b) account with the AIM Funds and have appointed
Boston Safe Deposit and Trust Company as the successor Custodian. Please
accept this as your authorization and instruction to liquidate or transfer
in kind the assets noted above, which your company holds for me.
Your Signature Date / /
------------------------------------ ---- ---- ----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Firm
-------------------------------------------------------
Signature Guaranteed by
----------------------------------------------------
(Name & Title)
- --------------------------------------------------------------------------------
6. CUSTODIAN ACCEPTANCE
This is to advise you that Boston Safe Deposit and Trust Company, as
custodian, will accept the account identified above for:
Depositor's Name Account Number
------------------------------- ------------
This transfer of assets is to be executed from fiduciary to fiduciary and
will not place the participant in actual receipt of all or any of the plan
assets. No federal income tax is to be withheld from this transfer of
assets.
Authorized Signature
---------------------------------------------------
(Boston Safe Deposit and Trust Company)
Mailing Date / /
---- ---- ----
- --------------------------------------------------------------------------------
7. INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check. Indicate account number on
all documents. Return this completed form and completed 403(b) Application
to Boston Safe Deposit and Trust Company, c/o A I M Fund Services, Inc.,
P.O. Box 4399, Houston, TX 77210-4399. Phone: 800-959-4246.
- --------------------------------------------------------------------------------
8. DISTRIBUTION ELECTION INFORMATION
If this participant is age 70-1/2 or older this year, the resigning
Trustee/Custodian must complete this section. Election made by the
participant as of the required beginning date:
1. Method of calculation (check one): [ ] declining years
[ ] recalculation
2. Life expectancy (check one): [ ] single life payout
[ ] joint life payout*
3. The amount withheld from this transfer to satisfy this year's required
distribution: $
-------------------
Were any previous distributions made to the participant this year?
[ ] No [ ] Yes $
------------------------------
The factor used to calculate this required payment was
---------------------
Name of Designated Beneficiary
--------------------------------------------
Relationship Date of Birth / /
------------------------------------ --- --- ---
Signature of Current Custodian/Trustee
-------------------------------------
[AIM LOGO APPEARS HERE] A I M Distributors, Inc.
14
<PAGE> 5
403(b) PLAN
EXCHANGE AND CONTRIBUTION CHANGE FORM [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. PARTICIPANT INFORMATION (PLEASE PRINT)
Employee Name
--------------------------------------------------------------
Social Security Number Account Number
---------------------- ---------------
Employer Name
--------------------------------------------------------------
- --------------------------------------------------------------------------------
2. FUND EXCHANGE
An AIM Fund exchange is the transfer of existing fund assets from one AIM
Fund to another AIM Fund. Please consult your investment adviser first.
Fund exchanges will not effect how your future 403(b) contributions are
invested. You must indicate under the 403(b) Contribution Section any
changes with respect to your future contribution.
From AIM Fund to AIM Fund Shares, or $ or %
---------- --------- ----- ---- ----
From AIM Fund to AIM Fund Shares, or $ or %
---------- --------- ----- ---- ----
- --------------------------------------------------------------------------------
3. 403(b) CONTRIBUTIONS
MARK BELOW THE STATEMENT THAT APPLIES
[ ] All future contributions are to be invested as previously indicated.
[ ] All future contributions (indicate % or dollar amount) are to be
invested as indicated below.
INVESTMENT SELECTION
I wish to change the investment of my future 403(b) contributions to the
AIM Funds listed below. This change is to be effective with the first
payroll contribution received following receipt of this form.
A. Fund %
--------------------------------- -----------------------
B. Fund %
--------------------------------- -----------------------
C. Fund %
--------------------------------- -----------------------
D. Fund %
--------------------------------- -----------------------
Total: 100%
Signature Date
--------------------------------------- ------------------
Please return the completed form to A I M Fund Services, Inc.,
Attn: Qualified Plan Services Department, P.O. Box 4399, Houston, TX
77210-4399. Phone: 800-959-4246.
If you have any questions, please call one of our Client Services
Representatives. Please retain a photocopy of this form for your records.
15 A I M Distributors, Inc.
<PAGE> 6
403(b) PLAN
AGREEMENT FOR SALARY DEFERRAL [AIM LOGO APPEARS HERE]
Use this form only if your employer does not supply you with its own form.
Submit this form to your employer.
[ ] Original Authorization
[ ] Amended Authorization
BY THIS AGREEMENT MADE BETWEEN
(the "Employee")
-----------------------------------------------------------
(Please Print)
and
(the "Employer")
-----------------------------------------------------------
the parties hereto agree as follows:
Effective with the paycheck dated ______________________________ , 19_____
(which date is subsequent to the date of execution of this Agreement), the
Employee's basic salary will be deferred by the amount indicated in item
(1) or (2) below, as designated by the Employee.
This Agreement shall be legally binding and irrevocable as to each of the
parties hereto while employment continues; provided, however, that either
party may terminate this Agreement by giving at least 30 days written
notice of the date of termination.
The amount of the Employee's salary deferral cannot exceed the Exclusion
Allowance under Section 403(b) of the Internal Revenue Code or the
limitations under Section 402(g) and 415 of the Internal Revenue Code.
The amount of the Employee's salary deferral will be: (select one)
1. $ per pay period beginning .
------------------- --------------------------
2. % of basic salary beginning .
------------------ -------------------------
It is understood that the amount of such salary deferral will be sent by
the Employer directly to A I M Fund Services, Inc., P.O. Box 4399, Houston,
Texas 77210-4399. Checks should be made payable to Boston Safe Deposit and
Trust Company. If your employer is requesting a billing from AIM, please
indicate this on the application.
Signed this day of , 19 .
---------------------- --------------------------- ----
Employee Signature
---------------------------------------------------------
Signed this day of , 19 .
---------------------- --------------------------- ----
Name of Employer
-----------------------------------------------------------
By
-------------------------------------------------------------------------
(Accepted)
Title
----------------------------------------------------------------------
17 A I M Distributors, Inc.
<PAGE> 7
403(b) PLAN
SALARY-DEFERRAL WORKSHEET [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. INSTRUCTIONS
Under current IRS rules, the maximum amount you may defer from your salary
is based upon a formula using a number of factors, including current
salary, years of service, type of employer, and plan contributions made on
your behalf in past years.
Simplified, the contribution to your 403(b) plan is the lesser of:
o Basic Exclusion Allowance
o 20% of your gross salary
o $9,500
It is important not to exceed the maximum permitted contribution in any tax
year. Excess contributions may be subject to federal taxes unless corrected
by April 15 of the tax year following the tax year for which the
contribution is made. Excess contributions, not corrected, are also subject
to a 6% non-deductible annual excise tax.
Please note that some employees of certain church organizations and
employees of more than one qualified organization are subject to somewhat
different limitations. Also, special "catch-up" provisions may permit you
to exceed the basic limits. If you think you may qualify for such special
treatment, consult your tax adviser for details.
The worksheet below will help you determine the amount you may defer.
However, you may be required to further reduce this amount if your employer
is making plan contributions in addition to your deferrals or you are
currently making salary-deferral contributions to other retirement plans.
You should keep this worksheet for your own records. Do not return it to
AIM.
- --------------------------------------------------------------------------------
2. WORKSHEET DEFINITIONS
Current Salary $ = Current annual salary (before
--------------- salary-deferral contributions)
Service Years = Years of service with current
--------------- employer (enter whole and fractional
years; however, if less than 1 year,
use "1" year).
Prior Contributions $ = All contributions (excluding this
--------------- year's salary deferrals) made by
your present employer to a pension
or profit sharing plan, state
teachers retirement plan,403(b)
plan, 457 deferred compensation
plan or SEP-IRA.
Prior Deferrals $ = All salary deferrals made to 403(b)
--------------- plans, including tax-sheltered
annuities, 457 plans (relating to
state deferred compensation plans),
SAR-SEP, and 401(k) plans on your
behalf by your present employer in
past years.
Current Deferrals $ = Your salary-deferral contributions
--------------- made in the current tax year. This
amount may be zero or the amount
deferred year to date.
- --------------------------------------------------------------------------------
3. BASIC EXCLUSION ALLOWANCE FOR SALARY DEFERRALS:
<TABLE>
<S> <C> <C>
a. $ x x .1667 = $
------------------------------------- --------------- ------------------------------
Current Salary Service Years
b. $ + $ = $
------------------------------------- ----------------------- ------------------------------
Prior Contributions Prior Deferrals
c. $ - $ = $
------------------------------------- ----------------------- ------------------------------
Total Line a Total Line b Basic Exclusion Allowance
d. $ x .20 = $
------------------------------------- ------------------------------
Current Salary Employer's Contribution Limit
e. $9,500 - = $
----------------------------- ------------------------------
Current Year's Salary Deferral Salary Deferral Limit
f. Your Basic Salary Deferral Limit is the lesser of c, d, or e = $
------------------------------
</TABLE>
19
<PAGE> 8
4. SPECIAL INCREASE IN DOLLAR LIMITATION:
This option is only available if you have at least 15 years of service with
the same qualified employer. This Special Increase in the Dollar Limitation
may permit you to exceed the $9,500 salary-deferral limit.
<TABLE>
<S> <C> <C>
g. ($5,000 x ) - $ = $
-------------------------- ------------------------ -----------------------------
Service Years Prior Deferrals
h. Total of Special Increase Dollars(1) used in prior years
under this option = $
-----------------------------
i. $15,000 - $ = $
------------------------ -----------------------------
Amount on Line h
j. Lesser of lines g or i or $3,000 = $
-----------------------------
k. $9,500 + = $
--------------------------- -----------------------------
Amount on Line j Special Deferral Limit
l. The maximum amount you can defer is the lesser of lines
c, d, or k = $
-----------------------------
</TABLE>
- --------------------------------------------------------------------------------
5. "CATCH-UP" OPTIONS
Employees of a qualified organization(2) may elect to use one of three
special "catch-up" options to increase your 403(b) contribution. Each
option is irrevocable and once chosen, no other "catch-up" option may be
used in future years. However, an individual may choose to use the Basic
Exclusion Allowance in any year instead of the "catch-up" option. NOTE: The
"catch-up" options calculate the total amount your employer plus you may
contribute. Your salary deferral may not exceed $9,500 even if the total
"catch-up" amount is greater than $9,500.
<TABLE>
<CAPTION>
OPTION A-May be elected only in the year in which the participant separates
from service.
<S> <C>
m. Amount on line c, recalculated using steps a, b, c based on
only the last 10 years of service = $
------------------------------
n. The option's limit is the lesser of line m or $30,000
(Your salary-deferral contribution is limited to $9,500.) = $
------------------------------
OPTION B-May be elected in any year of service.
o. Amount on line c = $
------------------------------
p. $3,200 + $ = $
---------------------- ------------------------------
Total Line d
q. Option b overall limit = $ $15,000
------------------------------
r. The maximum contribution under this option is the lesser
of line o, p or q
(Your salary-deferral contribution is limited to $9,500.) = $
------------------------------
OPTION C-May be elected in any year of service.
s. x .20 = $
--------------------------- ------------------------------
Current Salary
t. The maximum contribution under this option is the lesser
of line s, or $30,000
(Your salary-deferral contribution is limited to $9,500.) = $
------------------------------
</TABLE>
(1) Special Increase in Dollar Limitation permits you an additional
lifetime contribution up to $15,000, not to exceed $3,000 extra in any one
year. Step h accounts for previous contributions made under this option.
(2) A "qualified organization" is an educational organization [described
in IRC Section 170(b)(1)(A)(ii)], hospital, home health service agency
[described in IRC Section 501(c)(3) and which has been determined by the
Secretary of Health, Education, and Welfare to be a home health agency, as
defined in Section 1861(o) of the Social Security Act], health and welfare
service agency, church or convention or association of churches [described
in IRC Section 414(e)] or an organization which is exempt from tax under
IRC Section 501 and which is controlled by or associated with a church or a
convention or association of churches.
You should review these calculations with your tax adviser. You may also
want to consult the Internal Revenue Service Publication 571 as an
additional source of information. The Custodian, its agent or the sponsor
of the AIM 403(b) Plan will not provide legal or tax advice, nor calculate
your 403(b) plan contributions.
20 [AIM LOGO APPEARS HERE] A I M Distributors, Inc.
<PAGE> 9
403(b)(7) PLAN
CUSTODIAL AGREEMENT
ARTICLE I. EFFECTIVE DATE
This AIM 403(b)(7) Custodial Agreement shall become effective on the date on
which the Custodian or its agent, A I M Distributors, Inc., receives
incorporated AIM 403(b)(7) Application executed by the Employee.
ARTICLE II. DEFINITIONS
2.01. ACCOUNT OR FUND(S) means the separate account or accounts established
and maintained by the Custodian for an Employee pursuant to this Agreement.
2.02. AGREEMENT OR AIM 403(b)(7) AGREEMENT means this document and the
Application.
2.03. AIM FUND(S) means any of the mutual funds which are distributed by
A I M Distributors, Inc. and are part of The AIM Family of Funds--Registered
Trademark--.
2.04. APPLICATION OR AIM 403(b)(7) APPLICATION means the document(s) which
established the Agreement and is (are) executed by the Employer, Employee and
Custodian.
2.05. BENEFICIARY means the person or persons (including entities) designated
by the Employee as entitled to receive the Account balance, if any, at the
Employee's death. If at the time of the Employee's death, no designated
Beneficiary is alive, Beneficiary shall mean the Employee's surviving spouse or,
if the Employee does not have a surviving spouse, the Employee's estate.
2.06. CODE means the Internal Revenue Code of 1986, as amended.
2.07. CONTRIBUTIONS shall mean Salary Reduction Contributions and/or Employer
Contributions.
2.08. CUSTODIAN means the party who executed the Application as Custodian,
and any successor thereto, provide that such successor is either a bank or
another person who satisfies the requirements of Code Section 401(f)(2).
2.09. DESIGNATION OF BENEFICIARY means a form executed and submitted to the
Custodian in accordance with the terms of Article IX.
2.10. DISABILITY means the inability of the Employee to engage in any
substantial gainful activity because of any medically determinable physical or
mental impairment which can be expected to result in death or to be of
long-continued and indefinite duration. The Employee shall not be considered to
be suffering from Disability until the Custodian has received certification from
the Employer to such effect.
2.11. DISTRIBUTOR means A I M Distributors, Inc. and any successor thereto.
2.12. EMPLOYEE means an individual who is employed by the Employer and who
has properly executed the Application.
2.13. EMPLOYER means the employer who is listed on the Application.
2.14. EMPLOYER CONTRIBUTIONS mean the amount, if any, transmitted by the
Employer to the Custodian for addition to the Employee's Account other than
Salary Reduction Contributions.
2.15. SALARY REDUCTION CONTRIBUTION means the amount not included in the
Employee's compensation pursuant to a written salary reduction agreement and
transmitted by the Employer to the Custodian for addition to the Employee's
Account.
ARTICLE III. MAINTENANCE OF A CUSTODIAL ACCOUNT
3.01. SALARY REDUCTION CONTRIBUTIONS TO THE ACCOUNT. The Employee may make
Salary Reduction Contributions to the Account. Any salary reduction agreement
between the Employer and the Employee shall be effective only as to amounts
earned by the Employee after such agreement becomes effective. Each such
agreement shall be legally binding and irrevocable with respect to compensation
subsequently earned. A salary reduction agreement may be terminated by written
notice received at least 30 days prior to the date of termination. The Employer
and Employee shall not enter into more than one salary reduction agreement in
any one taxable year of the Employee.
3.02. TRANSFERS TO AND FROM THE ACCOUNT. All direct or indirect asset
transfers to an Account from an existing custodial account described in Code
Section 403(b)(7) or an annuity contract qualified under Code Section 403(b)(1)
shall be in cash unless the Custodian otherwise consents. Direct transfers into
an account may be accepted to the extent permitted by the Code. The Employee has
the right by proper written instruction to cause a transfer of cash or, if
agreed to by the Custodian, shares of AIM Fund(s) to another custodial account
described in Code Section 403(b)(7), an annuity contract qualified under Code
Section 403(b)(1), an individual retirement account described in Code Section
408(a) or an individual retirement annuity described in Code Section 408(b).
3.03. ROLLOVERS TO THE ACCOUNT. The Employee shall be permitted to make
rollover contributions to the Account of an amount received by the Employee that
is attributable to participation in another annuity or custodial account which
meets the requirements of Section 403(b) of the Code. Neither the Custodian nor
the Distributor shall have responsibility to ensure that contributions under
3.02 or 3.03 satisfy the applicable provisions of the Code.
3.04. EMPLOYER CONTRIBUTIONS. In addition to Salary Reduction Contributions,
the Employer may make a contribution to the Account on behalf of the Employee in
accordance with any retirement plan, fund or program for which the Employee is
eligible, subject to the limitations under 3.05.
3.05. CONTRIBUTION LIMITS.
(a) Unless the Employee has made a special election as described under
Section 415(c)(4) of the Code, the total amount of annual additions that may be
made to the Account on behalf of the Employee for any limitation year shall not
exceed the lesser of:
(i) $30,000 (or, if greater, one-fourth the defined benefit plan
dollar limitation in effect under Section 415(b)(1) of the Code for the
limitation year); or
(ii) 25 percent of the Employee's compensation (within the meaning of
Section 415(c)(3) of the Code) for the limitation year.
(b) For purposes of this subsection (a) above, the term "annual additions"
shall include contributions to the Account under 3.01 (pertaining to Salary
Reduction Contributions) for the limitation year.
(c) The term "limitation year" shall mean the calendar year, unless the
Employee elects to change the limitation year to another twelve-month period by
attaching a statement to his or her federal income tax return in accordance with
the regulations under Section 415 of the Code. If the Employee is in control of
the Employer (within the meaning of Code Section 414(b) or (c), as modified by
Code Section 415(h)), the limitation year shall be the same as the limitation
year of the Employer under Section 415 of the Code.
(d) If the Employer or any affiliated employer as described in Section
415(h) of the Code makes contributions on behalf of the Employee to any other
annuity contract described in Section 403(b) of the Code, then the contributions
to such annuity contract shall be combined with the contributions to the Account
for purposes of the limitations of subsection (a) above.
3.06. LIMITATIONS ON SALARY REDUCTION CONTRIBUTIONS. For any taxable year
beginning after December 31, 1986, Salary Reduction Contributions shall not
exceed the amount of $9,500, as adjusted in accordance with Code Section
402(g)(4), or such greater amount as may be permitted with respect to the
Employee for the taxable year under Code Section 402(g)(8).
ARTICLE IV. INVESTMENT OF CONTRIBUTIONS
4.01. PURCHASE OF SHARES. As soon as is practical after the Custodian
receives a Contribution, it shall invest such Contribution in shares of the
designated AIM Fund(s).
4.02. REPORTS AND VOTING OF SECURITIES. The Custodian shall deliver to
the Employee or, if applicable, his other Beneficiary, any notices,
prospectuses, financial statements, proxies and proxy solicitation materials
received by it with respect to investments made for the Employee's Account.
4.03. DIVIDEND. All capital gain distributions and dividends received on the
shares of the selected AIM Fund(s) shall be automatically reinvested in shares
of the Fund consistent with the Employee's investment instruction in effect on
the date such dividend or distribution is paid.
ARTICLE V. DISTRIBUTIONS AND WITHDRAWALS
5.01. INSTRUCTIONS TO CUSTODIAN. The Custodian shall not be responsible for
making any distributions until such time as it has been notified in writing by
the Employee to begin making distributions. No distribution will be made upon
the death of the Employee unless the Custodian has been notified in writing of
the Employee's death. The Custodian may require adequate verification of such
death. Distributions to the Employee (or, if applicable, his or her Beneficiary)
of amounts in the Account shall be made in cash and/or, if the Distributor
consents, in kind.
5.02. EMPLOYEE WITHDRAWALS.
(a) After Attainment of Age 59-1/2. At any time after the Employee attains
age 59-1/2, he or she may withdraw amounts from his or her Account by making
written instructions to the Custodian as to the amounts to be so withdrawn.
(b) Hardship Withdrawals. An Employee who has a financial hardship,
as determined by the Employer, and who has made all available withdrawals
pursuant to the paragraph above and pursuant to the provisions of any other
plans of the Employer and any related entities of which he is a member and who
has obtained all available loans pursuant to the provisions of any other plans
of the Employer and any related entities of which he or she is a member may
withdraw from his Account an amount not to exceed the lesser of the balance of
21
<PAGE> 10
his Account or the amount determined by the Employer as being available for
withdrawal pursuant to this paragraph. For purposes of this paragraph, financial
hardship means the immediate and heavy financial needs of the Employee. A
withdrawal based upon financial hardship pursuant to this paragraph shall not
exceed the amount required to meet the immediate financial need created by the
hardship and not reasonably available from other resources of the Employee. The
determination of the existence of an Employee's financial hardship and the
amount required to be distributed to meet the need created by the hardship shall
be made by the Employer. A withdrawal shall be deemed to be made on account of
an immediate and heavy financial need of an Employee if the withdrawal is on
account of:
(i) medical expenses described in Section 213(d) of the Code incurred by
the Employee, the Employee's spouse or any dependents of the Employee (as
defined in Section 152 of the Code);
(ii) purchase (excluding mortgage payments) of a principal residence of
the Employee;
(iii) payment of tuition for the next semester or quarter of
post-secondary education of the Employee, or the Employee's spouse, children or
dependents (as defined in Section 152 of the Code);
(iv) the need to prevent the eviction of the Employee from his principal
residence or foreclosure on the mortgage of the Employee's principal residence;
(v) such other financial needs which the Commissioner of Internal Revenue
may deem to be immediate and heavy financial needs through the publication of
revenue rulings, notices and other documents of general applicability; or
(vi) such other circumstances as the Employer determines, and certifies,
as an immediate and heavy financial need of the Employee in accordance with
applicable governmental regulations and procedures adopted by the Employer.
The decision of the Employer shall be final and binding, provided that all
Employees similarly situated shall be treated in a uniform and nondiscriminatory
manner. The above notwithstanding, (a) withdrawals under this paragraph from an
Employee's Account shall be limited to the sum of the Employee's Salary
Reduction Contributions to his Account, plus income allocable thereto and
credited to the Employee's Account as of December 31,1988, less any previous
withdrawals of such amounts. An Employee who makes a withdrawal under this
paragraph may not again make Salary Reduction Contributions or employee
contributions to the Account or to any other qualified or nonqualified plan of
the Employer or any related entity for a period of twelve months following such
withdrawal. Further, such Employee may not make Salary Reduction Contributions
to the Account or to any other plan maintained by the Employer or any related
entity for such Employee's taxable year immediately following the taxable year
of the withdrawal in excess of the applicable limit set forth in Section 402(g)
of the Code for such next taxable year less the amount of such Employee's Salary
Reduction Contributions for the taxable year of the withdrawal.All hardship
withdrawals shall be made by executing the Financial Hardship Form prescribed by
AIM Distributors and completed and signed by the Employer and filing such form
with AIM Distributors prior to the proposed date of withdrawal.
5.03. DISTRIBUTIONS AT SEPARATION FROM SERVICE. Unless the Employee otherwise
irrevocably elects in writing within 60 days after the Employee's separation
from service with the Employer, and the Custodian consents to such election,
distribution of the Account shall be made in a lump sum 90 days after the
Employee's separation from service. If the Employee makes such an election,
distribution of the Account shall not commence until the date specified in such
election unless the Employee earlier dies or becomes disabled as defined in this
Agreement.
If the Employee wishes to make such an irrevocable election, he or she may do
so by filing a written notice with the Custodian in a form acceptable to
the Custodian. The written notice to the Custodian shall list the date on which
distribution shall commence, the period over which distribution shall be made,
and amount(s) of each distribution. The Employee may not elect either (a) a date
for commencement of distribution which delays the commencement of distribution
from the Account beyond April 1 following the calendar year during which the
Employee attains age 70-1/2 or (b) a form of distribution which results in the
present value (determined at the time distribution commences) of payments to be
made to the Employee over the Employee's life expectancy (as determined under
Section 1.72-9 of the Treasury Regulations) equaling less than 50% of the
present value of the total payments to be made.
5.04. DISTRIBUTIONS AT THE EMPLOYEE'S DEATH. At the Employee's death, if such
Employee has not already specified the form of distribution, the Beneficiary (or
each beneficiary if there is more than one) may elect the form of distribution.
Such election, which will be irrevocable, must be in writing and provided to the
Custodian within 60 calendar days after the Custodian has received notification
of the Employee's death. If such an election is not made in the time provided,
distribution of the Account shall be made in a lump sum 90 days after the
Custodian receives notification of the Employee's death. Any form of
distribution must comply with the following requirements:
(a) Death While Receiving Distributions. If the Employee had already
begun to receive distributions from the Account and the Employee's spouse is not
the Beneficiary, the Account balance which remains at the time of the Employee's
death shall be distributed to the Beneficiary at least as rapidly as under the
distribution method being used at the time of the Employee's death.
(b) Death Prior to Receiving Distributions. If the Employee had not begun
to receive distributions at his or her death and the Employee's spouse is not
the Beneficiary, the entire Account balance which remains at the time of the
Employee's death shall be distributed to the Beneficiary either (i) within five
(5) years, or (ii) in installments over a period not exceeding the life
expectancy of the Beneficiary (as determined as of the date of the Employee's
death by using the return multiples contained in Section 1.72-9 of the Treasury
Regulations), provided that such distributions commence within one year after
the date of the Employee's death.
(c) Spousal Beneficiary. If the Employee's spouse is the Beneficiary,
regardless of whether distributions to the Employee have already commenced, this
Section 5.04 shall be applied to the spouse as though the spouse were the
Employee and, as though the spouse, as Employee, separated from service with the
Employer on the date of the Employee's death.
5.05. DISTRIBUTION UPON DISABILITY. If the Employee becomes disabled
as defined in this Agreement after his or her separation from service with the
Employer, he or she shall receive a lump sum distribution of the Account 90 days
after the date of such Disability unless, within 60 days after the date of such
Disability, the Employee elects another time for commencement and/or form of
distribution and the Custodian consents to such election. The Employee may not
elect either (a) a date for commencement of distribution which delays the
commencement of distribution from the Account beyond the first April 1 following
the calendar year during which the Employee attains age 70-1/2 or (b) a form of
distribution which results in the present value (determined at the time
distribution commences) of payments to be made to the Employee over the
Employee's life expectancy (as determined under Section 1.72-9 of the Treasury
Regulations) equaling less than 50% of the present value of the total payments
to be made.
5.06. DISTRIBUTION OF EXCESS DEFERRAL. Upon written notice to the Custodian
from the Employee, by the first March 1 following the close of the taxable year
of the Employee, that "excess deferrals" (as that term is defined in Code
Section 402(g)(2)(A)) have been made with respect to the Account for such
taxable year, the Custodian shall distribute to the Employee such "excess
deferrals" not later than the first April 15 following the close of such taxable
year. The Employer shall have sole responsibilities for determining such an
excess deferrals and timely notification to the Custodian.
5.07. DISTRIBUTION TO INCOMPETENTS. If a distribution is payable to a person
known by the Custodian to be a minor or a person under a legal disability, the
Custodian may, in its absolute discretion, make all or any part of the
distribution to (a) a parent of such person, (b) the guardian, committee or
other legal representative, wherever appointed, of such person, including a
custodian for such person under a Uniform Gifts to Minors Act or similar act,
(c) any person having the control and custody of such person, or (d) to such
person directly.
ARTICLE VI. CUSTODIAN
6.01. DUTIES. The Custodian shall:
(a) Receive transmitted Contributions;
(b) Provide safekeeping for the assets in the Account;
(c) Collect income;
(d) Execute orders for purchase, sale or exchange of shares of the AIM
Fund(s) and make settlements in accordance with general practice;
(e) Maintain records of all transactions in the Account;
(f) Transmit to each Employee, not less frequently than annually,
appropriate statements of the amount of the Custodian's compensation, if any,
charged to the Account;
(g) File with the Internal Revenue Service and/or any other government
agency such returns, reports, forms and other information as may be prescribed
as the responsibility of the Custodian in its capacity as Custodian by the
applicable statue and regulations thereunder; and
(h) Perform all other duties and services consistent with the purposes and
intentions of this Agreement.
The Custodian may perform any of its administrative duties through other persons
designated by the Custodian from time to time, including persons otherwise
unaffiliated with the Custodian.
6.02. SHARE REDEMPTIONS. If cash funds are required to pay taxes, fees, or
other expenses pursuant to Article VI or to make payments to the Employee or his
or her Beneficiary pursuant to Article V, the Employee (or Beneficiary, if
applicable) shall redeem shares of the AIM Fund(s) held in the Employee's
Account.
6.03. LIMITATIONS ON LIABILITIES AND DUTIES.
(a) The Custodian shall be fully protected in acting or omitting to take
any action in reliance upon any document, order or other direction believed by
the Custodian to be genuine and properly given. Conversely, the Custodian shall
22
<PAGE> 11
be fully protected in acting or omitting to take any action in reliance on its
belief that any document, order or other direction either is not genuine or was
not properly given.
(b) To the extent permitted by law, 30 days after providing to the Employee
the statements required under Section 6.01(f), the Custodian shall be released
and discharged from all liability to the Employee or any third party as to the
matters contained in such statement unless the Employee files written objections
with the Custodian within such 30-day period.
(c) In no event shall the Custodian or Distributor be under a fiduciary
duty to the Employee in regard to the selection of investments or be liable for
any loss incurred on account of a selected investment.
(d) The Custodian and Distributor shall have no responsibility with regard
to the initial or continued qualification of the Account under Code Section
403(b)(7) or with regard to whether the Account or any Contributions
to the Account satisfy any applicable minimum participation, coverage or
nondiscrimination requirements under the Code.
(e) Neither the Custodian nor the Distributor shall be obligated to
determine the amount of any Contribution due or to collect any Contribution from
the Employee or Employer.
(f) Neither the Custodian nor the Distributor shall be held responsible for
determining the amount, character, or timing of any distribution to the
Employee.
(g) Neither the Custodian nor the Distributor shall have responsibility,
and the Employee shall have sole responsibility, with respect to the computation
of the Employee's "exclusion allowance" as defined in Code Section 403(b)(2),
any applicable limitation(s) on contributions under Code Section 402(g) and Code
Section 415(c), any election available to the Employee under Code Section 415,
or any matters relating to any tax consequences with respect to Contributions,
Account earnings, Account distributions, transfers or rollovers.
(h) The Custodian shall not be required to carry out any instructions not
given in accordance with this Agreement and neither the Custodian nor the
Distributor shall be liable for loss of income, or for appreciation or
depreciation in share value that shall result from the Custodian's failure to
follow instructions not given in accordance with this Agreement.
(i) If instructions are received that, in the opinion of the Custodian, are
unclear, neither the Custodian nor the Distributor shall be liable for loss of
income, or for appreciation or depreciation in share value during the period
preceding the Custodian's receipt of written clarification of the instructions.
(j) The Custodian shall have no responsibility to make any distribution or
process any withdrawal by order of the Employee or Beneficiary unless and until
the requisite written instructions specify the occasion for such action and the
Custodian is furnished with any and all applications, certificates, tax waivers,
signature guarantees and other documents (including proof of any legal
representative's authority) deemed necessary or advisable by the Custodian.
(k) The Custodian shall neither assume nor have any duty of inquiry about
any matter arising under the Plan.
(l) Neither the Custodian nor the Distributor shall have any liability to
the Employee or Beneficiary for any tax penalty or other damages resulting from
any inadvertent failure by the Custodian to make a distribution under this
Agreement.
(m) Neither the Custodian nor the Distributor shall be liable for interest
on temporary cash balances, if any, maintained in the Account.
(n) To the extent permitted by law, the Employee shall always fully
indemnify the Custodian and hold it harmless from any and all liability
whatsoever which may arise either (i) in connection with this Agreement and
matter which it contemplates (except that which arises due to the Custodian's
gross negligence or willful misconduct) or (ii) with respect to making or
failing to make distribution, other than for failure to make distribution in
accordance with instructions therefore which are in full compliance with both
Article IX and this Section 6.03.
(o) Except as required by law, the Custodian shall not be obligated or
expected to commence or to defend a legal action or proceeding in connection
with this Agreement, unless the Custodian and the Employer agree that the
Custodian will defend a given legal action and the Custodian is fully
indemnified for so doing to its satisfaction.
(p) In no event shall the Employee, Employer, or Distributor have any
responsibility or liability for any acts or omissions of the Custodian (or its
agents or designees) hereunder.
6.04. COMPENSATION. In consideration for its services hereunder, the
Custodian shall be entitled to receive the applicable fees specified in its then
current fee schedule, if any. The Custodian may substitute a revised fee
schedule from time to time upon 30 days' written notice to the Employer or
Employee. The Custodian shall be entitled to such reasonable additional fees as
it may from time to time determine for services required of it and not clearly
identified on the fee schedule.
6.05. RESIGNATION AND REMOVAL. The Custodian may resign at any time
by giving at least 30 days' written notice to the Employer or Employee. The
Distributor may remove the Custodian hereunder by giving at least 30 days'
written notice to the Custodian. In each case, the Distributor shall designate a
successor custodian qualified pursuant to Section 2.07 hereof, which successor
custodian shall accept such appointment by a writing to be submitted to the
Employer or Employee and the Custodian.
On the effective date of its resignation or removal, the Custodian shall
transfer to the designated successor custodian the assets and records (or copies
thereof) of the Account provided, however, that the Custodian may retain
whatever assets it deems necessary for payment of its fees, costs, expenses,
compensation and any other liabilities which constitute a charge on or against
the assets of the Account or on or against the Custodian.
ARTICLE VII. FEES, TAXES AND OTHER EXPENSES
Any income taxes or other taxes of any kind whatsoever that may be levied
or assessed upon or in respect of the Account (including any transfer taxes
incurred in connection with the investment and reinvestment of Account assets),
expenses, fees and administrative costs incurred by the Custodian in the
performance of its duties (including fees for legal services rendered to the
Custodian), and the Custodian's compensation as determined under Section 6.04,
if any, shall constitute a charge upon the assets of the Account. At the
Custodian's option, such fee, tax or expense shall be paid from the Account or
directly by the Employee.
ARTICLE VIII. PROTECTION OF EMPLOYEE BENEFITS
At no time shall any part of the Account be used for purposes other than for
the exclusive benefit of the Employee. The Employee's rights to Contributions
shall be nonforfeitable at all times after such Contributions are transferred to
the Custodian.
ARTICLE IX. BENEFICIARY DESIGNATION
Each Employee may submit to the Custodian a properly executed written
Designation of Beneficiary acceptable to the Custodian who will receive any
undistributed assets held in the Account at the time of the Employee's death.
Any such Designation of Beneficiary shall not be effective unless it is filed
during the Employee's lifetime with the Custodian at the Custodian's home
office. Whether or not fully dispositive of the Account, the most recently filed
Designation of Beneficiary accepted by the Custodian shall be controlling and
all previously filed designations shall be considered superseded and shall have
no effect. To the extent that the Account is not fully disposed of at the time
of the Employee's death, it shall go to the Employee's surviving spouse, if any;
otherwise, to the Employee's estate. If a Beneficiary dies while receiving
distributions, the portion of the Account to which the Beneficiary would have
been entitled (had he or she survived) shall be paid to the Beneficiary's
beneficiary or beneficiaries (or if impossible, to the Beneficiary's estate) in
a lump sum within 90 days after the Custodian receives notification of the
Beneficiary's death.
ARTICLE X. AMENDMENT
10.01. BY THE DISTRIBUTOR. The Distributor may amend this Agreement in
its entirety or any portion thereof. The Distributor shall provide copies of
such amendment to the Employer and/or Employee. Neither this Section nor any
other portion of this agreement shall impose on the Distributor an affirmative
obligation to amend the Agreement.
10.02. LIMITATIONS. No amendment shall be made:
(a) Which would cause or permit any part of the Account to be diverted to
purposes other than for the exclusive benefit of the Employee and/or his or her
Beneficiary, or cause or permit any portion of such assets to revert to or
become the property of the Employer;
(b) Without the written consent of the Custodian; or
(c) Which would retroactively deprive any Employee of any benefit to which
he or she was entitled under the Agreement, unless such amendment is necessary,
in the opinion of counsel, to conform the Agreement to, or satisfy the
conditions of, Code Section 403(b), any other law, or any Governmental
regulation or ruling, provided that this prohibition shall not be construed to
prohibit prospective amendment of the Agreement (including prospective amendment
to eliminate a benefit) where such prospective amendment is permitted by law.
ARTICLE XI. TERMINATION
11.01. AUTOMATIC TERMINATION ON DISTRIBUTION. This Agreement shall terminate
when all the assets held in the Account established hereunder have been
distributed or otherwise transferred out of the Account.
11.02. TERMINATION ON DISQUALIFICATION. This Agreement shall terminate if,
after notification by the Internal Revenue Service that the Employee's Account
does not qualify under Code Section 403(b)(7), the Employer and/or Distributor
do not make the amendments necessary to so qualify the Account. On such
23
<PAGE> 12
termination of this Agreement, the Custodian shall distribute in cash or in
kind, to the Employee or, in the event of the Employee's death, to the
Beneficiary, subject to the Custodian's right to reserve funds as provided in
Section 6.05.
ARTICLE XII. LOANS
12.01. LOAN APPLICATION AND CONDITIONS. The Custodian may make a loan to an
Employee from the Employee's Account upon the Custodian's receipt of the
Employee's written application in a form acceptable to the Custodian, provided
the following conditions are satisfied:
(i) each loan shall satisfy rules adopted by the Custodian regarding the
minimum and maximum loan amounts permitted, which rules may be changed at any
time, provided, however, that in no event shall the total of all outstanding
loans to any Employee exceed the lesser of $50,000 (reduced by the highest
outstanding balance of loans from Account during the one year period ending the
day before the day on which such loan is made), or 50% of the balance in the
Employee's Account;
(ii) each loan shall be evidenced by the Employee's execution of a personal
demand note on a form supplied or approved by the Custodian, and each note shall
specify a reasonable rate of interest as determined by the Custodian and shall
require that the loan be repaid by the Employee in approximately equal
installments (not less frequently than quarterly) over a specified period of
time not exceeding five years;
(iii) each loan shall be secured by the Employee's Account balance.
12.02. DEFAULT. If the Employee dies or fails to pay any installment of the
loan when due, the unpaid balance of the loan shall become immediately due and
payable. The Employee may satisfy the loan by paying the outstanding balance of
the loan within such time as may be specified in the note and according to rules
adopted by the Custodian. If the loan and interest are not repaid within the
time specified, the Custodian shall treat the unpaid balance as a deemed
distribution from the Employee's Account, and shall offset the unpaid balance
before making any distribution payment otherwise due under this Agreement to the
Employee or his Beneficiary.
If an Employee does not repay any portion of the principal amount of a loan
within the required term, the Employee shall continue to be liable for the
unpaid balance of the loan including interest owed on principal payments not
made.
12.03. RULES OF ADMINISTRATION. The Custodian shall adopt such rules as from
time to time it deems proper under this Article XII (including, but not limited
to rules regarding maximum and minimum amounts of loans, and permitted number of
loans outstanding) which rules shall be applied on a uniform and
non-discriminatory basis. The Custodian reserves the right to charge an
administrative fee for processing and maintaining loans.
ARTICLE XIII. MISCELLANEOUS
13.01. APPLICABLE LAW. To the extent not preempted by Federal law, this
Agreement shall be construed and administered in accordance with the laws of the
state in which the home office of the Custodian is located. No provision of this
Agreement shall be construed to conflict with any provision of an Internal
Revenue Service regulation, ruling or order affecting the status of this
Agreement under Code Section 403(b)(7).
13.02. EMPLOYER'S SIGNATURE. If the Employer does not sign the Application
and is not required to do so under the Code and the regulations thereunder, the
Employee, to the extent allowed by law, assumes all obligations and
responsibilities of the Employer under this Agreement.
13.03. CHANGE OF ADDRESS. The Employer or if permitted by the Custodian, the
Employee, shall notify the Custodian in writing of any change of address within
30 days of such change.
13.04. NOTICE. Any notice from the Custodian to the Employee pursuant to this
Agreement shall be effective when sent by U.S. Mail to the address of record of
the Employer or Employee. Any notice to the Custodian pursuant to this Agreement
shall be by first class mail addressed to its home of office.
13.05. SUCCESSORS. This Agreement shall be binding upon and shall inure
to the benefit of the successors in interest of the parties hereto.
13.06. CONSTRUCTION. It is intended that this Agreement, together with the
other documents that compose the 403(b)(7) arrangement pursuant to which the
Employee's funds are invested under this Agreement, qualify as a custodial
account under Code Section 403(b)(7). This Agreement shall be construed and
limited by applicable laws, and the powers and discretions conferred hereunder
shall be exercised in a manner consistent with that purpose. Subject to the
foregoing provisions of this Section 12.06, in the event of any conflict between
these Articles I through XII and the documents incorporated in this Agreement by
reference, the provisions of these Articles I through Xll shall prevail.
13.07. SEPARABILITY. If any provision of this Agreement shall be held invalid
or illegal for any reason, such determination shall not affect any remaining
provisions of this Agreement, but this Agreement shall be construed and enforced
as if such invalid or illegal provision had never been included in this
Agreement.
13.08. STATUTORY REQUIREMENTS. In the event any applicable state or local
law, regulating or rule conflicts with and/or supplements the terms of this
Agreement, such law, regulation or rule shall be deemed to supersede and/or
supplement the terms of this Agreement, provided that the Distributor and the
Custodian receive written notice of such law, regulation or rule.
13.09. RETIREMENT PLAN PROVISIONS SHALL CONTROL. In the event Contributions
are being made to the Account pursuant to any retirement plan or program
sponsored by the Employer, to the extent any provisions of this Agreement are
inconsistent with such retirement plan or program, the provisions of the
Employer's retirement plan or program shall control, provided:
(a) such provisions are not contrary to the rules and regulations under
Section 403(b)(7) of the Code; and
(b) such provisions do not impose any additional responsibilities or
duties on the Custodian without its prior written consent. The Employer shall be
responsible for delivering the most recent copy of any such retirement plan or
program to the Custodian.
13.10. ERISA REQUIREMENTS. If the Agreement is determined to constitute part
of an "employee benefit plan" established or maintained by the Employer within
the meaning of Title I of the Employee Retirement Income Security Act of 1974,
as amended, then the Employer shall have sole responsibility and be solely
responsible for ensuring that such employee benefit plan complies at all times
within such law, including, but not limited to, any reporting and disclosure
requirement thereunder.
13.11. PLAN ADMINISTRATION. Absent a separate written agreement to the
contrary, neither the Custodian nor the Distributor shall be considered the plan
administrator for any purpose under the Code or the Employee Retirement Income
Security Act of 1974, as amended.
24
<PAGE> 13
AIM 403(b) PLAN
LOAN PROVISION TERMS AND CONDITIONS
Please retain for your records
AMOUNT
o The maximum loan amount is the lesser of:
50% of your AIM 403 (b) Plan Employee account balance or $50,000 (reduced
by the highest outstanding loan balance in past 12 months).
o The minimum loan amount is $1,000.
o Each account may have no more than one outstanding loan at any time.
o Contact our Customer Service department at 1 (800) 949-4246 ext. 5222
for details.
o Loans are not available for AIM B Shares
LOAN DURATION
The maximum loan duration is five years. The AIM 403(b) Plan does not provide
an extended loan term for the purchase of a principal residence.(1)
RATE OF INTEREST
The interest rate shall be based on the prime rate plus one point as quoted in
The Wall Street Journal on the first business day of the month in which the loan
is granted.
AUTOMATIC REPAYMENT METHOD
If you choose this method, loan payments will be deducted directly from your
checking account on or about the twenty-fifth (25th) of each month, starting on
the second month following the issuance of the loan check. Repayments (principal
and interest) are applied to the particular fund from which the loan was
granted or the fund currently selected to receive repayments. IF A LOAN IS FROM
MORE THAN ONE FUND, THE LOAN REPAYMENTS MUST BE MADE TO ONE PREDESIGNATED AIM
FUND ONLY. (Repayments will not be accepted through payroll deductions.)
COUPON REPAYMENT METHOD
If this method is chosen, A I M Fund Services, Inc. (with its affiliates,
referred to in this agreement as "AIM") will provide you with a repayment
coupon booklet that specifies your monthly payment schedule for the duration of
the loan. You will be responsible for mailing your loan repayments and the
coupon stub directly to AIM. Payments must be received by the 25th of each
month, starting on the second month following the issuance of the loan check.
(continued)
[AIM LOGO APPEARS HERE]
<PAGE> 14
AIM 403(b) PLAN
LOAN PROVISION TERMS AND CONDITIONS
Please retain for your records
LOAN APPLICATION FEE
If you choose the Automatic Repayment Method, there is a $50 application fee.
If you choose the Coupon Repayment Method, the application fee is $100. The
application fees are non-refundable and must be paid by check (made payable to
A I M Fund Services, Inc.). The application fee must accompany the loan
application to initiate the loan process.
ANNUAL FEES
For the Automatic Repayment Method the annual fee is $25. The annual fee for
Coupon Repayment Method is $50. The annual fee is deducted directly from your
AIM 403(b) Plan account in early December and cannot be paid with a separate
check.
LOAN PROCESS
Participants wishing to exercise the AIM 403(b) Plan loan provision are required
to complete and sign the Loan Application, Promissory Note and Security
Agreement, Automatic Repayment Method Authorization Form (if applicable), and
Truth in Lending Disclosure Statement. When all documents are received in good
order, a check for the requested loan amount will be mailed to your address of
record within 10 business days.
REPAYMENT PROCEDURE
All loans must be repaid in monthly installments and within the lesser of five
years or by the time required distributions must begin at age 70 1/2 or before
all of the assets are transferred out of the account.
DEFAULT PROCEDURES
A default shall occur upon AIM's failure to receive two consecutive monthly
installments when due. In the event of default, AIM shall serve the Participant
with a written notice of default. Within fifteen (15) days of the date of such
notice, the Participant shall tender to AIM all outstanding principal and
interest payments due as of the date of the notice of default. If the
Participant fails to remit such amount, AIM may deem the outstanding principal
balance to be a distribution of the Participant's account and will generate a
Form 1099R in the amount of the deemed distribution at the end of the year.
PREPAYMENT
Loans may be prepaid at any time. There is no prepayment penalty. Please
contact a Qualified Plans Representative at 1-800-949-4246 ext. 5222 for your
pay-off amount.
SECURITY
As security for the payment of this note, the Participant hereby grants to AIM
a security interest in the Participant's account balance in the account.
IMPORTANT
AIM assumes no responsibility for current or future tax consequences resulting
from this transaction. Participants should consult their tax advisers for
information concerning their particular situations. Participants assume
responsibility for all tax consequences if monthly payments are not made on a
timely basis.
[AIM LOGO APPEARS HERE]
<PAGE> 15
AIM 403(b) PLAN
LOAN APPLICATION
Please complete this loan application and send it with your application fee to
the address below. Once received, AIM will return the necessary documentation
to begin the loan process. Please allow 3-4 weeks for AIM to secure the
necessary documentation and to complete the loan process.
I hereby submit to AIM this application to borrow funds from my AIM 403(b)
Plan account.
Date of Application AIM Account No.
------------------------ -------------------
Social Security Number Date of Birth
--------------------- ---------------------
Name
----------------------------------------------------------------------------
Address
-------------------------------------------------------------------------
City State Zip
--------------------------------------- ------------- -----------
Phone: Home ( ) Work ( )
-------------------------- ------------------------
Please write in the name of each AIM fund from which the loan will be
withdrawn:
AIM Fund $
------------------------------------------- ---------------------
AIM Fund $
------------------------------------------- ---------------------
AIM Fund $
------------------------------------------- ---------------------
AIM Fund $
------------------------------------------- ---------------------
Total MUST equal amount of loan $
---------------------
REPAYMENTS: My loan repayments are to be made to the AIM _______________ Fund.
(ONE fund only)
All provisions of the AIM 403(b) Plan Custodial Agreement, as amended from time
to time, are incorporated herein by reference. Applicant assumes responsibility
for all tax consequences. AIM assumes no responsibility for current or future
tax consequences resulting from this transaction. We suggest that you consult
your tax adviser for information concerning your particular situation.
X
-------------------------------------- ----------------------------------
Applicant's Signature Date
IMPORTANT: A check made payable to A I M FUND SERVICES, INC. for your
non-refundable application fee must accompany this application to initiate the
loan process.
My loan repayment method is: [ ] Automatic Repayment ($50 application fee) or
[ ] Coupon Repayment ($100 application fee)
A I M Fund Services, Inc., Attn: 403(b) Loan Applications, P.O. Box 4399,
Houston, TX 77210-4399
[AIM LOGO APPEARS HERE]
<PAGE> 16
AIM 403(b) PLAN
AUTOMATIC REPAYMENT METHOD AUTHORIZATION
The Automatic Repayment Method enables you to make monthly loan repayments via
bank drafts from your checking account. The bank drafts are an electronic
transfer of funds from your bank to AIM's bank through the National Automated
Clearing House Association (NACHA). Please verify whether your bank participates
in the National Automated Clearing House Association (NACHA) before submitting
this authorization. (If it does not, you must repay your loan by monthly check
and the loan application fee is $100.) As soon as your bank has accepted your
authorization, and only if your bank is a member of the National Automated
Clearing House Association (NACHA), the amount of each payment will be
electronically deducted from your checking account on, or about, the
twenty-fifth (25th) of each month, starting the second month following the
issuance of the loan check. The bank will process the Electronic Fund Transfer
and a debit entry will appear on your checking account statement.
Please complete this form to authorize AIM to have your loan repayments
deducted from your personal checking account. Attach a voided personal check
in the space provided below.
Make each of my pre-authorized loan payments for $___________ (amount of
monthly loan repayment), and invest into the:
AIM ____________________ Fund.
ATTACH YOUR VOIDED CHECK HERE.
------------------------------------------------------------------------
John Doe 000
123 Main St.
Anywhere, USA 12345
______________________________________ $_____________________
_________________________________________________________________
___________________________ ___________________________
------------------------------------------------------------------------
Name of Bank
----------------------------------------------------------------
Address of Bank Bank Phone #
------------------------------- --------------------
Bank Account # ABA Routing #
------------------------------- -------------------
Please honor drafts on my account by A I M Fund Services, Inc. ("AIM"). Your
authority to so do shall continue until you receive further notice from me
revoking this authority. You may terminate your participation in this
arrangement by written notice either to AIM or me. I agree that your rights
with respect to each draft shall be the same as if it were drawn by me. I
further agree that should any draft be dishonored, with or without cause,
intentionally or inadvertently, you shall be under no liability whatsoever.
<TABLE>
<S> <C>
- ---------------------------------------- -------------------------------------------------
Depositor's Name (please print) Signature (exactly as it appears on bank records)
-------------------------------------------------
Date
</TABLE>
Please complete and return to:
A I M Fund Services, Inc., P.O. Box 4399, Houston, TX 77210-4399
Phone 800-949-4246 ext. 5242
[AIM LOGO APPEARS HERE]
<PAGE> 1
EXHIBIT 14(e)
SIMPLE IRA APPLICATION [AIM LOGO APPEARS HERE]
Complete Sections 1 - 10
Employee: Return completed application to your employer.
Employer: Return completed applications and check to: A I M Fund Services, Inc.,
P. O. Box 4739, Houston, TX 77210-4739.
Phone: 800-959-4246. Minors cannot open an AIM SIMPLE IRA Account. Make check
payable to INVESCO Trust Company.
- --------------------------------------------------------------------------------
1 PARTICIPANT INFORMATION (Please print or type)
Name
----------------------------------------------------------------------
First Name Middle Last Name
Address
-----------------------------------------------------------------
Street City State ZIP Code
Social Security Number Birth Date / /
-------------------- ------ ------ ------
Month Day Year
Home Telephone ( ) Work Telephone ( )
---- ------------------ ---- -------------
- --------------------------------------------------------------------------------
2 EMPLOYER INFORMATION (Please print or type)
Name Contact Person
--------------------------------------- ---------------
Address
-------------------------------------------------------------------
Street City State ZIP Code
Phone ( )
---- ------------------------
- --------------------------------------------------------------------------------
3 DEALER INFORMATION (To be completed by registered securities dealer)
Name of Broker/Dealer Firm
------------------------------------------------
Home Office Address
-------------------------------------------------------
Representative Name and Number
---------------------------------------------
Authorized Signature of Dealer
---------------------------------------------
Branch Address
------------------------------------------------------------
Branch Phone Number ( )
--------- ------------------------
/ / Authorized for NAV purchase (If authorized for NAV purchase, other
than the Broker, please attach NAV Certification Form)
- --------------------------------------------------------------------------------
4 ACCOUNT INFORMATION
Date of Initial Deposit / /
------ ------ ------
Month Day Year
Contribution Type:
/ / Elective Deferral
/ / Employer Contribution
/ / Rollover from SIMPLE IRA
/ / Transfer from SIMPLE IRA
11
<PAGE> 2
5 FUND INVESTMENT
Indicate Fund(s) and contribution amount(s). MAKE CHECK PAYABLE TO INVESCO
TRUST COMPANY (ITC)
<TABLE>
Fund Amount of Investment Class of Shares (check one)
<S> <C> <C> <C> <C>
/ / AIM Advisor Flex Fund $_________________ / / A Shares (522) / / C Shares (322)
/ / AIM Advisor Income Fund _________________ / / A Shares (521) / / C Shares (321)
/ / AIM Advisor International Value Fund _________________ / / A Shares (526) / / C Shares (326)
/ / AIM Advisor Large Cap Value Fund _________________ / / A Shares (520) / / C Shares (320)
/ / AIM Advisor MultiFlex Fund _________________ / / A Shares (524) / / C Shares (324)
/ / AIM Advisor Real Estate Fund _________________ / / A Shares (525) / / C Shares (325)
/ / AIM Aggressive Growth Fund _________________ Fund Currently Closed To New Investors (407)
/ / AIM Blue Chip Fund _________________ / / A Shares (515) / / B Shares (615) / / C Shares (315)
/ / AIM Capital Development Fund _________________ / / A Shares (514) / / B Shares (614) / / C Shares (314)
/ / AIM Constellation Fund _________________ / / A Shares (002) / / B Shares (602) / / C Shares (302)
/ / AIM Limited Maturity Treasury Fund _________________ Only "A Shares" Available (007)
/ / AIM Balanced Fund _________________ / / A Shares (006) / / B Shares (685) / / C Shares (306)
/ / AIM Charter Fund _________________ / / A Shares (010) / / B Shares (645) / / C Shares (310)
/ / AIM Global Aggressive Growth Fund _________________ / / A Shares (081) / / B Shares (691) / / C Shares (381)
/ / AIM Global Growth Fund _________________ / / A Shares (082) / / B Shares (692) / / C Shares (382)
/ / AIM Global Income Fund _________________ / / A Shares (083) / / B Shares (693) / / C Shares (383)
/ / AIM Global Utilities Fund _________________ / / A Shares (408) / / B Shares (655) / / C Shares (308)
/ / AIM Growth Fund _________________ / / A Shares (406) / / B Shares (650) / / C Shares (350)
/ / AIM High Yield Fund _________________ / / A Shares (425) / / B Shares (675) / / C Shares (375)
/ / AIM Income Fund _________________ / / A Shares (402) / / B Shares (665) / / C Shares (365)
/ / AIM Intermediate Government Fund _________________ / / A Shares (404) / / B Shares (660) / / C Shares (360)
/ / AIM International Equity Fund _________________ / / A Shares (016) / / B Shares (694) / / C Shares (316)
/ / AIM Money Market Fund _________________ / / A Shares (401) / / B Shares (680) / / C Shares (380)
/ / AIM Cash Reserve Shares (421)
/ / AIM Value Fund _________________ / / A Shares (405) / / B Shares (690) / / C Shares (305)
/ / AIM Weingarten Fund _________________ / / A Shares (001) / / B Shares (640) / / C Shares (301)
Total $_________________
</TABLE>
(Please note that if no class of shares is selected, Class A shares will be
purchased with the exception of the AIM Money Market Fund where AIM Cash
Reserve Shares will be purchased.)
- --------------------------------------------------------------------------------
6 TELEPHONE EXCHANGE PRIVILEGE
Unless indicated below, I authorize A I M Fund Services, Inc., to accept
instructions from any person to exchange shares in my account(s) by
telephone in accordance with the procedures and conditions set forth in the
AIM Fund's current prospectus.
/ / I DO NOT want the Telephone Exchange Privilege.
- --------------------------------------------------------------------------------
7 REDUCED SALES CHARGE (Optional)
Right of Accumulation (This option is for Class A shares only.) I apply for
Right of Accumulation reduced sales charges based on the following accounts
in The AIM Family of Funds-Registered Trademark-:
<TABLE>
<S> <C>
Fund(s)/Account No(s). Social Security No(s).
-------------- --------------
-------------- --------------
-------------- --------------
</TABLE>
LETTER OF INTENT
I agree to the Letter of Intent provisions in the prospectus. I plan to
invest during a 13-month period a dollar amount of at least:
/ / $25,000 / / $50,000 / / $100,000 / / $250,000
/ / $500,000 / / $1,000,000
12
<PAGE> 3
8 BENEFICIARY INFORMATION
I hereby designate the following beneficiary to receive the balance in my
SIMPLE IRA custodial account upon my death. To be effective, the
designation of beneficiary and any subsequent change in designation of
beneficiary must be filed with the Custodian prior to my death. The balance
of my account shall be distributed in equal amounts to the beneficiary(ies)
who survives me. If no beneficiary is designated or no designated
beneficiary or contingent beneficiary survives me, the balance in my IRA
will be distributed to the legal representatives of my estate. This
designation revokes any prior designations. I retain the right to revoke
this designation at any time. I hereby certify that there is no legal
impediment to the designation of this beneficiary.
PRIMARY BENEFICIARY(IES)
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
CONTINGENT BENEFICIARY
In the event that I die and no primary beneficiary listed above is alive,
distribute all Fund accounts in my SIMPLE IRA to the following contingent
beneficiary(ies) who survives me, in equal amounts. If more than on, please
attach a list.
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
13
<PAGE> 4
9 AUTHORIZATION AND SIGNATURE
I hereby establish the A I M Distributors, Inc. SIMPLE Individual
Retirement Account appointing INVESCO Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the SIMPLE IRA
custodial agreement and disclosure statement and consent to the custodial
account fees as specified. I understand that a $10 annual AIM Fund SIMPLE
IRA Maintenance Fee will be deducted early in each December from my AIM
SIMPLE IRA.
WITHHOLDING INFORMATION (SUBSTITUTE FORM W-9)
Under the penalties of perjury I certify by signing this Application as
provided below that:
(1) The number shown in Section 1 of this Application is my correct Social
Security (or Tax Identification) Number, and
(2) I am not subject to backup withholding because (a) I am exempt from
backup withholding, (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding as
a result of a failure to report all interest or dividends, (c) the IRS
has notified me that I am no longer subject to backup withholding.
(This paragraph (2) does not apply to real estate transactions,
mortgage interest paid, the acquisition or abandonment of secured
property, contributions to an individual retirement arrangement and
payments other than interest and dividends.)
YOU MUST CROSS OUT PARAGRAPH (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS
THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE OF
UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN.
In addition, the Fund hereby incorporates by reference into this section of
the Application either the IRS instructions for Form W-9 or the substance
of those instructions whichever is included in the prospectus.
SIGNATURE PROVISIONS
I, THE UNDERSIGNED DEPOSITOR, HAVE READ AND UNDERSTAND THE FOREGOING
APPLICATION AND THE ATTACHED MATERIAL INCLUDED HEREIN BY REFERENCE. IN
ADDITION, I CERTIFY THAT THE INFORMATION WHICH I HAVE PROVIDED AND THE
INFORMATION WHICH IS INCLUDED WITHIN THE APPLICATION AND THE ATTACHED
MATERIAL INCLUDED HEREIN BY REFERENCE IS ACCURATE INCLUDING BUT NOT LIMITED
TO THE REPRESENTATIONS CONTAINED IN THE WITHHOLDING INFORMATION SECTION OF
THIS APPLICATION. [THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR
CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS
REQUIRED TO AVOID BACKUP WITHHOLDING.]
Dated / /
----- ----- -----
Month Day Year
Signature of SIMPLE IRA Shareholder
----------------------------------------
10 SERVICE ASSISTANCE
Our knowledgeable Client Service Representatives are available to assist
you between 7:30 a.m. and 5:30 p.m. Central time at 800-959-4246.
[AIM LOGO APPEARS HERE]
A I M Distributors, Inc. 12/97
14
<PAGE> 5
AIM SIMPLE IRA ASSET-TRANSFER FORM [AIM LOGO APPEARS HERE]
USE THIS FORM ONLY WHEN TRANSFERRING ASSETS FROM AN EXISTING SIMPLE IRA TO AN
AIM SIMPLE IRA.
Note: Use this form ONLY if you want AIM to request the money directly from
another custodian.
Complete Sections 1 - 5.
If you do not already have an AIM SIMPLE IRA, you must also submit an AIM SIMPLE
IRA Application. AIM will arrange the transfer for you.
- --------------------------------------------------------------------------------
1 INVESTOR INFORMATION (Please print or type.)
Name
----------------------------------------------------------------------
First Name Middle Last Name
Address
-----------------------------------------------------------------
Street
- --------------------------------------------------------------------------------
City State ZIP Code
Social Security Number Birth Date / /
-------------------- ------ ------ ------
Month Day Year
Home Telephone ( ) Work Telephone ( )
---- ------------------ ---- -------------
- --------------------------------------------------------------------------------
2 CURRENT TRUSTEE/CUSTODIAN
Name of Resigning Trustee
--------------------------------------------------
Account Number of Resigning Trustee
----------------------------------------
Address of Resigning Trustee
-----------------------------------------------
Street
- --------------------------------------------------------------------------------
City State ZIP Code
Attention Telephone
------------------------ ------------------------------
- --------------------------------------------------------------------------------
3 IRA ACCOUNT INFORMATION
Please deposit proceeds in my
/ / New*
/ / Existing AIM SIMPLE IRA Account Number
---------------------------
INVESTMENT ALLOCATION:
<TABLE>
<S> <C> <C>
Fund Name Class %
----------------------------- ------------------- --------
Fund Name Class %
----------------------------- ------------------- --------
Fund Name Class %
----------------------------- ------------------- --------
</TABLE>
*If this is a new AIM SIMPLE IRA account, you must attach a completed AIM
SIMPLE IRA Application. If no class of shares is selected, Class A shares
will be purchased, except in the case of AIM Money Market Fund, where AIM
Cash Reserve Shares will be purchased.
- --------------------------------------------------------------------------------
4 TRANSFER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
OPTION 1: Please liquidate from the account(s) listed in Section 2 and
issue a check in cash to my SIMPLE IRA with INVESCO Trust Company.
Amount to liquidate: / / All / / Partial amount of $
----------------
When to liquidate: / / Immediately / / At maturity / /
--- --- ---
OPTION 2: (If the account listed in Section 2 contains shares of an AIM
Fund, you may choose to transfer them "in kind.") Please deposit "in kind"
the shares of the AIM Fund held in my account to INVESCO Trust Company.
NOTE: ONLY AIM FUND SHARES MAY BE TRANSFERRED IN KIND. TO TRANSFER ALL
OTHER ASSETS, THEY MUST BE LIQUIDATED.
Amount to transfer "in kind": / / All / / Partial amount of shares
---------
15
<PAGE> 6
5 AUTHORIZATION AND SIGNATURE
I have established a SIMPLE IRA with the AIM Funds and have appointed
INVESCO Trust Company as the successor Custodian. Please accept this as
your authorization and instruction to liquidate or transfer in kind the
assets noted above, which your company holds for me.
Your Signature Date / /
---------------------------------- ---- ---- ----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Brokerage Firm
---------------------------------------------
Signature Guaranteed by
---------------------------------------------------
(Name and title)
- --------------------------------------------------------------------------------
6 DISTRIBUTION ELECTION INFORMATION
SECTION 6 OF FORM TO BE COMPLETED BY PRIOR CUSTODIAN
If this participant is age 70 1/2 or older this year, the resigning
Trustee/Custodian must complete this section.
Election made by the participant as of the required beginning date:
1. Method of calculation / / declining years / / recalculation
/ / annuitization / / amortization
2. Life expectancy
/ / single life payout / / joint life expectancy factor-Joint birth
date and relationship
--------
3. The amount withheld from this rollover to satisfy this year's required
distribution $
------------------------------------------------------
The life-expectancy ages used to calculate this required payment was
---------------------------------------------------------------------------
Signature of Current Custodian/Trustee
------------------------------------
- --------------------------------------------------------------------------------
REMAINDER OF FORM TO BE COMPLETED BY AIM
7 CUSTODIAN ACCEPTANCE
This is to advise you that INVESCO Trust Company, as custodian, will accept
the account identified above for:
Depositor's Name Account Number
--------------------------- ---------------
This transfer of assets is to be executed from fiduciary to fiduciary and
will not place the participant in actual receipt of all or any of the plan
assets. No federal income tax is to be withheld from this transfer of
assets.
Authorized Signature /s/ Illegible Mailing Date / /
---------------------------- ---- ---- ----
(INVESCO Trust Company)
- --------------------------------------------------------------------------------
8 INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check and return to:
INVESCO Trust Company, c/o A I M Fund Services, Inc., P. O. Box 4739,
Houston, TX 77210-4739.
Make check payable to INVESCO Trust Company.
Indicate the AIM account number and the social security number of the
SIMPLE IRA holder on all documents.
[AIM LOGO APPEARS HERE]
A I M Distributors, Inc. 12/97
16
<PAGE> 7
SIMPLE INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT [AIM LOGO APPEARS HERE]
FORM 5305-SA (December 1996)
Department of the Treasury
Internal Revenue Service (under Sections 408(a) and 408(p) of the Internal
Revenue Code)
ARTICLE I
1.01 THE CUSTODIAN WILL ACCEPT CASH CONTRIBUTIONS made on behalf of the
participant by the participant's employer under the terms of a SIMPLE plan
described in section 408(p). In addition, the Custodian will accept transfers or
rollovers from other SIMPLE IRAs of the participant. No other contributions will
be accepted by the Custodian.
ARTICLE II
2.01 THE PARTICIPANT'S INTEREST in the balance in the custodial account is
nonforfeitable.
ARTICLE III
3.01 NO PART OF THE CUSTODIAL ACCOUNT MAY BE INVESTED IN LIFE INSURANCE
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
3.02 NO PART OF THE CUSTODIAL ACCOUNT MAY BE INVESTED IN COLLECTIBLES
(within the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.
ARTICLE IV
4.01 NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT to the contrary, the
distribution of the participant's interest in the custodial account shall be
made in accordance with the following requirements and shall otherwise comply
with section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are herein incorporated by reference.
4.02 UNLESS OTHERWISE ELECTED by the time distributions are required to
begin to the participant under paragraph 3, or to the surviving spouse under
paragraph 4, other than in the case of a life annuity, life expectancies shall
be recalculated annually. Such election shall be irrevocable as to the
participant and the surviving spouse and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may not be recalculated.
4.03 THE PARTICIPANT'S ENTIRE INTEREST IN THE CUSTODIAL ACCOUNT must be, or
begin to be, distributed by the participant's required beginning date (April 1
following the calendar year-end in which the participant reaches age 70 1/2). By
that date, the participant may elect, in a manner acceptable to the Custodian,
to have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the participant.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last survivor lives of
the participant and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the participant's life expectancy.
(e) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last survivor expectancy
of the participant and his or her designated beneficiary.
4.04 IF THE PARTICIPANT DIES before his or her entire interest is
distributed to him or her, the entire remaining interest will be distributed as
follows:
(a) If the participant dies on or after distribution of his or her
interest has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the participant dies before distribution of his or her interest
has begun, the entire remaining interest will, at the election of the
participant or, if the participant has not so elected, at the election of the
beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the participant's death, or
(ii) Be distributed in equal or substantially equal payments over
the life or life expectancy of the designated beneficiary or beneficiaries
starting by December 31 of the year following the year of the participant's
death. If, however, the beneficiary is the participant's surviving spouse, then
this distribution is not required to begin before December 31 of the year in
which the participant would have reached age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced, distributions are treated as having begun on the participant's
required beginning date, even though payments may actually have been made before
that date.
(d) If the participant dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
4.05 IN THE CASE OF A DISTRIBUTION OVER LIFE EXPECTANCY in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the participant's entire interest in the custodial account as
of the close of business on December 31 of the preceding year by the life
expectancy of the participant (or the joint life and last survivor expectancy of
the participant and the participant's designated beneficiary, or the life
expectancy of the designated beneficiary, whichever applies). In the case of
distributions under paragraph 3, determine the initial life expectancy (or joint
life and last survivor expectancy) using the attained ages of the participant
and designated beneficiary as of their birthdays in the year the participant
reaches age 70 1/2. In the case of a distribution in accordance with section
404(b)(ii), determine life expectancy using the attained age of the designated
beneficiary as of the beneficiary's birthday in the year distributions are
required to commence.
4.06 THE OWNER OF TWO OR MORE INDIVIDUAL RETIREMENT ACCOUNTS may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
5.01 THE PARTICIPANT AGREES TO PROVIDE THE CUSTODIAN with information
necessary for the Custodian to prepare any reports required under sections
408(i) and 408(l)(2) and Regulations section 1.408-5 and 1.408-6.
5.02 THE CUSTODIAN AGREES TO SUBMIT REPORTS to the Internal Revenue Service
and the participant as prescribed by the Internal Revenue Service.
5.03 THE CUSTODIAN ALSO AGREES TO PROVIDE THE PARTICIPANT'S EMPLOYER the
summary description described in section 408(l)(2) unless this SIMPLE IRA is a
transfer SIMPLE lRA.
ARTICLE VI
6.01 NOTWITHSTANDING ANY OTHER ARTICLES which may be added or incorporated,
the provisions of Articles I through III and this sentence will be controlling.
Any additional articles that are not consistent with sections 408(a) and 408(p)
and related regulations will be invalid.
ARTICLE VII
7.01 THIS AGREEMENT WILL BE AMENDED from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
ARTICLE VIII
8.01 APPLICABLE LAW: This Custodial Agreement shall be governed by the laws
of the state where the Trust resides.
8.02 ANNUAL ACCOUNTING: The Custodian shall, at least annually, provide the
Participant or Beneficiary (in the case of death) with an accounting of such
Participant's account. Such accounting shall be deemed to be accepted by the
Participant, if the Participant or Beneficiary does not object in writing within
60 days after the mailing of such accounting statement.
8.03 AMENDMENT: The Participant irrevocably delegates to the Custodian the
right and power to amend this Custodial Agreement. Except as hereafter provided,
the Custodian will give the Participant 30 days prior written notice of any
amendment. In case of a retroactive amendment required by law, the Custodian
will provide written notice to the Participant of the amendment within 30 days
after the amendment is made or, if later, by the time that notice of the
amendment is required to be given under regulations or other guidance provided
by the IRS. The Participant shall be deemed to have consented to any such
amendment unless the Participant notifies the Custodian to the contrary within
30 days after notice to the Participant and requests a distribution or transfer
of the balance in the account.
17
<PAGE> 8
8.04 RESIGNATION AND REMOVAL OF CUSTODIAN:
(a) The Custodian may resign at any time by giving at least 30 days
notice to the Participant. The Custodian may resign and appoint a successor
trustee or custodian to serve under this agreement or under another governing
instrument selected by the successor trustee or custodian by giving the
Participant written notice at least 30 days prior to the effective date of such
resignation and appointment, which notice shall also include a copy of such
other governing instrument, if applicable, and the related disclosure statement.
The Participant shall then have 30 days from the date of such notice to either
request a complete distribution of the account balance or designate a different
successor trustee or custodian. If the Participant does not request distribution
of the account or designate a different successor within such 30 days, the
Participant shall be deemed to have consented to the appointment of the
successor trustee or custodian and the terms of any new governing instrument,
and neither the Participant nor the successor shall be required to execute any
written document to complete the transfer of the account to the successor
trustee or custodian. The successor trustee or custodian may rely on any
information, including beneficiary designations, previously provided by the
Participant.
(b) The Participant may at any time remove the Custodian and replace
the Custodian with a successor trustee or custodian of the Participant's choice
by giving 30 days written notice to the Custodian. In such event, the Custodian
shall then deliver the assets of the account as directed by the Participant.
However, the Custodian may retain a portion of the assets of the SIMPLE IRA as a
reserve for payment of any anticipated remaining fees and expenses, and shall
pay over any remainder of this reserve to the successor trustee or custodian
upon satisfaction of such fees and expenses.
8.05 CUSTODIAN'S FEES AND EXPENSES:
(a) This Section 8.05 of the Custodial Agreement shall be governed by
the requirements of Section 408(p)(7) and IRS Notice 97-6, Section J, and is
further explained in the accompanying SIMPLE IRA Disclosure Statement.
(b) The Participant agrees to pay the Custodian any and all fees
specified in the Custodian's current published fee schedule for establishing and
maintaining this SIMPLE IRA, including any fees for distributions from,
transfers from, and terminations of this SIMPLE IRA. The Custodian may change
its fee schedule at any time by giving the Participant 30 days prior written
notice.
(c) The Participant agrees to pay any expenses incurred by the
Custodian in the performance of its duties in connection with the account. Such
expenses include, but are not limited to, administrative expenses, such as legal
and accounting fees, and any taxes of any kind whatsoever that may be levied or
assessed with respect to such account.
(d) All such fees, taxes, and other administrative expenses charged to
the account shall be collected either from the assets in the account or from any
contributions to or distributions from such account if not paid by the
Participant, but the Participant shall be responsible for any deficiency.
(e) In the event that for any reason the Custodian is not certain as
to who is entitled to receive all or part of the custodial account, the
Custodian reserves the right to withhold any payment from the custodial account,
to request a court ruling to determine the disposition of the custodial assets,
and to charge the custodial account for any expenses incurred in obtaining such
legal determination.
8.06 WITHDRAWAL REQUESTS: All requests for withdrawal shall be in writing
on the form provided by the Custodian. Such written notice must also contain the
reason for the withdrawal and the method of distribution being requested.
8.07 AGE 70 1/2 DEFAULT PROVISIONS:
(a) Unless the Custodian (or the Participant, if the Custodian
permits) elects otherwise, life expectancies for purposes of calculating the
required minimum distribution shall not be recalculated.
(b) If the Participant does not choose any of the distribution methods
under Section 4.03 of this Custodial Agreement by April 1st following the
calendar year in which he/she reaches age 70 1/2, distribution shall be made to
the Participant based on such Participant's single life expectancy.
8.08 DEATH BENEFIT DEFAULT PROVISIONS: Unless the Custodian (or the
Beneficiary, if the Custodian permits) elects otherwise, life expectancies for
purposes of calculating the required minimum death distribution shall not be
recalculated. If the Participant dies before his or her required beginning date
and the beneficiary does not select a method of distribution described in
section 4.04(b)(i) or (ii) by December 31st following the year of death, then
distributions will be made pursuant to proposed regulation 1.401(a)(9)-1.
8.09 INVESTMENT PROVISIONS: Pursuant to IRS Notice 97-6, Q&A J-4, if the
Custodian is the Designated Financial Institution (DFI) and the Participant
timely elects that his or her balance be transferred without cost or penalty to
another SIMPLE IRA in accordance with the provisions described in the
accompanying SIMPLE IRA Disclosure Statement, the Custodian reserves the right
to restrict the participant's choice of investment alternatives as determined by
the Custodian.
8.10 RESPONSIBILITIES: Participant agrees that all information and
instructions given to the Custodian by the Participant is complete and accurate
and that the Custodian shall not be responsible for any incomplete or inaccurate
information provided by the Participant or Participant's beneficiary(ies).
Participant agrees to be responsible for all tax consequences arising from
contributions to and distributions from this Custodial Account and acknowledges
that no tax advice has been provided by the Custodian.
8.11 DESIGNATION OF BENEFICIARY: Except as may be otherwise required by
State law, in the event of the Participant's death, the balance in the account
shall be paid to the beneficiary or beneficiaries designated by the Participant
on a beneficiary designation acceptable to and filed with the Custodian. The
Participant may change the Participant's beneficiary or beneficiaries at any
time by filing a new beneficiary designation with the Custodian. If no
beneficiary designation is in effect, if none of the named beneficiaries survive
the Participant, or if the Custodian cannot locate any of the named
beneficiaries after reasonable search, any balance in the account will be
payable to the Participant's estate.
ARTICLE IX
SELF-DIRECTED SIMPLE IRA PROVISIONS
9.01 INVESTMENT OF CONTRIBUTIONS: At the direction of the Participant, the
Custodian shall invest all contributions to the account and earnings thereon in
investments acceptable to the Custodian, which may include marketable securities
traded on a recognized exchange or "over the counter" (excluding any securities
issued by the Custodian), covered call options, certificates of deposit, and
other investments to which the Custodian consents, in such amounts as are
specifically selected and specified by Participant in orders to the Custodian in
such form as may be acceptable to the Custodian, without any duty to diversify
and without regard to whether such property is authorized by the laws of any
jurisdiction as a trust investment. The Custodian shall be responsible for the
execution of such orders and for maintaining adequate records thereof. However,
if any such orders are not received as required, or, if received, are unclear in
the opinion of the Custodian, all or a portion of the contribution may be held
uninvested without liability for loss of income or appreciation, and without
liability for interest pending receipt of such orders or clarification, or the
contribution may be returned. The Custodian may, but need not, establish
programs under which cash deposits in excess of a minimum set by it will be
periodically and automatically invested in interest-bearing investment funds.
The Custodian shall have no duty other than to follow the written investment
directions of the Participant, and shall be under no duty to question said
instructions and shall not be liable for any investment losses sustained by the
Participant.
9.02 REGISTRATION: All assets of the account shall be registered in the
name of the Custodian or of a suitable nominee. The same nominee may be used
with respect to assets of other investors whether or not held under agreements
similar to this one or in any capacity whatsoever. However, each Participant's
account shall be separate and distinct; a separate account therefor shall be
maintained by the Custodian, and the assets thereof shall be held by the
Custodian in individual or bulk segregation either in the Custodian's vaults or
in depositories approved by the Securities and Exchange Commission under the
Securities Exchange Act of 1934.
9.03 INVESTMENT ADVISOR: The Participant may appoint an Investment Advisor,
qualified under Section 3(38) of the Employee Retirement Income Security Act of
1974, to direct the investment of his SIMPLE IRA. The Participant shall notify
the Custodian in writing of any such appointment by providing the Custodian a
copy of the instruments appointing the Investment Advisor and evidencing the
Investment Advisor's acceptance of such appointment, an acknowledgement by the
Investment Advisor that it is a fiduciary of the account, and a certificate
evidencing the Investment Advisor's current registration under the Investment
Advisor's Act of 1940. The Custodian shall comply with any investment directions
furnished to it by the Investment Advisor, unless and until it receives written
notification from the Participant that the Investment Advisor's appointment has
been terminated. The Custodian shall have no duty other than to follow the
written investment directions of such Investment Advisor and shall be under no
duty to question said instructions, and the Custodian shall not be liable for
any investment losses sustained by the Participant.
9.04 NO INVESTMENT ADVICE: The Custodian does not assume any responsibility
for rendering advice with respect to the investment and reinvestment of
Participant's account and shall not be liable for any loss which results from
Participant's exercise of control over his account. The Custodian and
Participant may specifically agree in writing that the Custodian shall render
such advice, but the Participant shall still have and exercise exclusive
responsibility for control over the investment of the assets of his account, and
the Custodian shall not have any duty to question his investment directives.
9.05 PROHIBITED TRANSACTIONS: Notwithstanding anything contained herein to
the contrary, the Custodian shall not lend any part of the corpus or income of
the account to; pay any compensation for personal services rendered to the
account to; make any part of its services available on a preferential basis to;
acquire for the account any property, other than cash, from; or sell any
property to, any Participant, any member of a Participant's family, or a
corporation con-
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trolled by any Participant through the ownership, directly or indirectly, of 50%
or more of the total combined voting power of all classes of stock entitled to
vote, or of 50% or more of the total value of shares of all classes of stock of
such corporation.
9.06 UNRELATED BUSINESS INCOME TAX: If the Participant directs investment
of the account in any investment which results in unrelated business taxable
income, it shall be the responsibility of the Participant to so advise the
Custodian and to provide the Custodian with all information necessary to prepare
and file any required returns or reports for the account. As the Custodian may
deem necessary, and at the Participant's expense, the Custodian may request a
taxpayer identification number for the account, file any returns, reports, and
applications for extension, and pay any taxes or estimated taxes owed with
respect to the account. The Custodian may retain suitable accountants,
attorneys, or other agents to assist it in performing such responsibilities.
9.07 DISCLOSURES AND VOTING: The Custodian shall deliver, or cause to be
executed and delivered, to Participant all notices, prospectuses, financial
statements, proxies and proxy soliciting materials relating to assets credited
to the account. The Custodian shall not vote any shares of stock or take any
other action, pursuant to such documents, with respect to such assets except
upon receipt by the Custodian of adequate written instructions from Participant.
9.08 MISCELLANEOUS EXPENSES: In addition to those expenses set out in
section 8.05 of this plan, the Participant agrees to pay any and all expenses
incurred by the Custodian in connection with the investment of the account,
including expenses of preparation and filing any returns and reports with regard
to unrelated business income, including taxes and estimated taxes, as well as
any transfer taxes incurred in connection with the investment or reinvestment of
the assets of the account.
9.09 NONBANK TRUSTEE PROVISION: If the Custodian is a nonbank trustee, the
Participant shall substitute another trustee or custodian in place of the
Custodian upon receipt of notice from the Commissioner of the Internal Revenue
Service or his delegate that such substitution is required because the Custodian
has failed to comply with the requirements of Income Tax Regulations Section
1.408-2(e), or is not keeping such records, making such returns, or rendering
such statements as are required by applicable law, regulations, or other
rulings. The successor trustee or custodian shall be a bank, insured credit
union, or other person satisfactory to the Secretary of the Treasury pursuant to
Section 408(a)(2) of the Code. Upon receipt by the Custodian of written
acceptance by its successor of such successor's appointment, Custodian shall
transfer and pay over to such successor the assets of the account (less amounts
retained pursuant to section 8.04 of the Custodial Agreement) and all records
(or copies thereof) of the Custodian pertaining thereto, provided that the
successor trustee or custodian agrees not to dispose of any such records without
the Custodian's consent.
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GENERAL INSTRUCTIONS
Section references are to the Internal Revenue Code unless otherwise noted.
PURPOSE OF FORM
Form 5305-SA is a model custodial account agreement that meets the requirements
of sections 408(a) and 408(p) and has been automatically approved by the IRS. A
SIMPLE individual retirement account (SIMPLE IRA) is established after the form
is fully executed by both the individual (participant) and the Custodian. This
account must be created in the United States for the exclusive benefit of the
participant or his or her beneficiaries. Individuals may rely on regulations for
the Tax Reform Act of 1986 to the extent specified in those regulations. Do not
file Form 5305-SA with the IRS. Instead, keep it for your records.
For more information on SIMPLE IRAs, including the required disclosures the
Custodian must give the participant, get Pub. 590, Individual Retirement
Arrangements (IRAs).
DEFINITIONS
Participant - The participant is the person who establishes the custodial
account. Custodian - The Custodian must be a bank or savings and loan
association, as defined in section 408(n), or any person who has the approval of
the IRS to act as Custodian.
TRANSFER SIMPLE IRA
This SIMPLE IRA is a "transfer SIMPLE IRA" if it is not the original recipient
of contributions under any SIMPLE plan. The summary description requirements of
section 408(l)(2) do not apply to transfer SIMPLE IRAs.
SPECIFIC INSTRUCTIONS
Article IV - Distributions made under this article may be made in a single sum,
periodic payment, or a combination of both. The distribution option should be
reviewed in the year the participant reaches age 70 1/2 to ensure that the
requirements of section 408(a)(6) have been met.
Article VIII - Article VIII and any that follow it may incorporate additional
provisions that are agreed to by the participant and Custodian to complete the
agreement. They may include, for example, definitions, investment powers, voting
rights, exculpatory provisions, amendment and termination, removal of the
Custodian, Custodian's fees, state law requirements, beginning date of
distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the participant, etc. Use additional pages if
necessary and attach them to this form.
FINANCIAL DISCLOSURE
IN GENERAL: IRS regulations require the Custodian to provide you with a
financial projected growth of your SIMPLE IRA account based upon certain
assumptions.
GROWTH IN THE VALUE OF YOUR SIMPLE IRA: Growth in the value of your SIMPLE IRA
is neither guaranteed nor projected. The value of your SIMPLE IRA will be
computed by totaling the fair market value of the assets credited to your
account. At least once a year the Custodian will send you a written report
stating the current value of your SIMPLE IRA assets. The Custodian shall
disclose separately a description of:
(a) The type and amount of each charge;
(b) the method of computing and allocating earnings, and
(c) any portion of the contribution, if any, which may be used for the purchase
of life insurance.
CUSTODIAN FEES: The Custodian may charge reasonable fees or compensation for its
services and it may deduct all reasonable expenses incurred by it in the
administration of your SIMPLE IRA, including any legal, accounting,
distribution, transfer, termination or other designated fees. Any charges made
by the Custodian will be separately disclosed on an attachment hereto. Such fees
may be charged to you or directly to your custodial account. In addition,
depending on your choice of investment vehicles, you may incur brokerage
commissions attributable to the purchase or sale of assets.
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<PAGE> 10
SIMPLE IRA DISCLOSURE STATEMENT [AIM LOGO APPEARS HERE]
RIGHT TO REVOKE YOUR SIMPLE IRA ACCOUNT: You may revoke your SIMPLE IRA within
seven days after you sign the SIMPLE IRA Plan Application by hand delivering or
mailing a written notice to the name and address indicated on the SIMPLE IRA
Plan Application. If you revoke your account by mailing a written notice, such
notice must be postmarked by the seventh day after you sign the Plan
Application. If you revoke your SIMPLE IRA within the seven-day period you will
receive a refund of the entire amount of your contributions to the SIMPLE IRA
without any adjustment for earnings or any administrative expenses. If you
exercise this revocation, we are still required to report certain information to
the IRS.
GENERAL REQUIREMENTS OF A SIMPLE IRA:
1. All SIMPLE contributions must be made in cash, unless you are making a
rollover contribution or transfer, and the Custodian accepts such noncash
assets.
2. The only types of contributions permitted to be made to this SIMPLE IRA are
salary reduction contributions and employer contributions under the
employer's SIMPLE Retirement Plan.
3. The Custodian of your SIMPLE IRA must be a bank, savings and loan
association, credit union or a person who is approved to act in such a
capacity by the Secretary of the Treasury.
4. No portion of your SIMPLE IRA funds may be invested in life insurance
contracts.
5. Your interest in your SIMPLE IRA must be fully vested and is nonforfeitable
at all times.
6. The assets in your SIMPLE IRA may not be commingled with other property
except in a common trust fund or common investment fund.
7. You may not invest the assets of your SIMPLE IRA in collectibles (as
described in Section 408(m) of the Internal Revenue Code.) A collectible is
defined as any work of art, rug or antique, metal or gem, stamp or coin,
alcoholic beverage, or any other tangible personal property specified by
the IRS. However, if the Custodian permits, specially minted U.S. Gold and
Silver bullion coins and certain state-issued coins are permissible SIMPLE
IRA investments.
8. Your interest in your SIMPLE IRA must begin to be distributed to you by the
April 1st following the calendar year you attain the age of 70 1/2. The
methods of distribution, election deadlines and other limitations are
described in detail below.
9. For purposes of the SIMPLE Plan rules, in the case of an individual who is
not a self-employed individual, compensation means the amount described in
section 6051(a)(3) which includes wages, tips and other compensation from
the employer subject to income tax withholding under section 3401(a), and
amounts described in section 6051(a)(8), including elective contributions
made under a SIMPLE plan, and compensation deferred under a section 457
plan. In the case of a self-employed individual, compensation means net
earnings from self-employment determined under section 1402(a), prior to
subtracting any contributions made under the SIMPLE plan on behalf of the
individual.
10. Contributions to a SIMPLE IRA are excludible from federal income tax and
not subject to federal income tax withholding when made to the SIMPLE IRA.
Salary reduction contributions are subject to FICA, FUTA or RRTA tax when
made and must be reported on the employee's Form W-2 wage statement.
Matching and nonelective employer contributions made to a SIMPLE IRA are
not subject to FICA, FUTA or RRTA and are not required to be reported on
Form W-2.
11. A SIMPLE IRA must be established by or on behalf of an employee prior to
the first date by which a contribution is required to be deposited into the
SIMPLE IRA.
ELIGIBLE EMPLOYEES: Under a SIMPLE Retirement Plan established by an Eligible
Employer, all employees of the employer who received at least $5,000 in
compensation from the employer during any two preceding calendar years, whether
or not consecutive, and who are reasonably expected to receive at least $5,000
in compensation during the calendar year, must be eligible to participate in the
SIMPLE Plan for the calendar year. An employer may impose less restrictive
eligibility requirements, such as eliminating or reducing the prior year
compensation requirements, the current year compensation requirement, or both,
under its SIMPLE Plan.
An employer, at its option, may exclude from eligibility employees who are
included in a unit of employees covered by an agreement that the Secretary of
Labor finds to be a collective bargaining agreement between employee
representatives and one or more employers, if there is evidence that retirement
benefits were the subject of good faith bargaining between such employee
representatives and such employer or employers; in the case of a trust
established or maintained pursuant to an agreement that the Secretary of Labor
finds to be a collective bargaining agreement between air pilots represented in
accordance with Title II of the Railway Labor Act and one or more employees, all
employees not covered by that agreement; and employees who are nonresident
aliens and who received no earned income from the employer that constitutes
income from sources within the United States.
PARTICIPATION IN ANOTHER PLAN: An eligible employee may participate in an
employer's SIMPLE Plan, even if he or she also participates in a plan of a
different employer for the same year. However, the employee's salary reduction
contributions are subject to the limitation of section 402(g), which provides an
aggregate limit on the exclusion for elective deferrals for any individual.
Also, an eligible employee who participates in an employer's SIMPLE plan and an
eligible deferred compensation plan described in section 457(b) is subject to
the limitation described in section 457(c). The employee is responsible for
monitoring compliance with these limitations.
ELIGIBLE EMPLOYERS: SIMPLE plans may be established by employers (including
tax-exempt employers and governmental entities) that had no more than 100
employees who earned $5,000 or more in compensation during the preceding
calendar year. For purposes of the 100-employee limitation, all employees
employed at any time during the calendar year are taken into account, regardless
of whether they are eligible to participate in the SIMPLE plan. This means that
otherwise excludible employees (i.e., certain union employees, nonresident
aliens with no U.S.-source income, and those employees who have not met the
plan's minimum eligibility requirements) must be taken into account.
SIMPLE PLAN CONTRIBUTIONS:
ELECTIVE DEFERRALS (SALARY REDUCTION CONTRIBUTIONS) - A salary reduction
contribution is a contribution made pursuant to an employee's election to have
an amount contributed to his or her SIMPLE IRA, rather than have the amount paid
directly to the employee in cash. An eligible employee must be permitted to
elect to have salary reduction contributions made at the level specified by the
employee, expressed as a percentage of compensation for the year or as a
specific dollar amount. The maximum salary reduction contribution per calendar
year may not exceed $6,000, subject to cost of living adjustments. Salary
reduction contributions may not begin until the eligible employee completes a
form provided by the employer designed to permit the employee to elect the
salary reduction percentage or specific dollar amount. An employer may not place
any restrictions on the amount of an employee's salary reduction contributions
(e.g., by limiting the contribution percentage), except to the extent needed to
comply with the annual limit.
EMPLOYER CONTRIBUTIONS - TWO OPTIONS
1. MATCHING CONTRIBUTIONS: Under a SIMPLE plan, an employer is generally
required to make a contribution on behalf of each eligible employee in an amount
equal to the employee's salary reduction contributions, up to a limit of 3% of
the employee's compensation for the entire calendar year.
The 3% limit on matching contributions is permitted to be reduced for a
calendar year at the election of the employer, but only if: the limit is not
reduced below 1%; the limit is not reduced for more than two years out of the
five-year period that ends with and includes the year for which the election is
effective; and employees are notified of the reduced limit within a reasonable
period of time before the 60-day election period during which employees can
enter into salary reduction agreements as described below.
In determining whether the limit was reduced below 3% for a year, any year
before the first year in which an employer (or a predecessor employer) maintains
a SIMPLE plan will be treated as a year for which the limit was 3%. If an
employer chooses to make nonelective contributions for a year in lieu of
matching contributions, that year also will be treated as a year for which the
limit was 3%.
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2. NONELECTIVE CONTRIBUTIONS: Under a SIMPLE plan, an employer may make
nonelective contributions in lieu of matching contributions. These nonelective
contributions must be equal to 2% of each eligible employee's compensation for
the entire calendar year, regardless of whether the employee elects to make
salary reduction contributions for the calendar year. The employer may, but is
not required to, limit nonelective contributions to eligible employees who have
at least $5,000 (or some lower amount selected by the employer) of compensation
for the year. For purposes of this 2% nonelective contribution only, the
compensation taken into account must be limited to the amount of compensation
under section 401(a)(17) for the year. For 1997, this limit is $160,000 and will
be adjusted in accordance with the cost of living.
An employer may substitute the 2% nonelective contribution for the matching
contribution for a year only if eligible employees are notified within a
reasonable period of time before the 60-day election period during which
employees can enter into salary reduction agreements that a 2% nonelective
contribution will be made instead of a matching contribution.
EMPLOYEE ELECTIONS: During the 60-day period immediately preceding January 1st
of a calendar year (i.e., November 2 to December 31 of the preceding calendar
year), an eligible employee must be given the right to enter into a salary
reduction agreement for the calendar year, or to modify a prior agreement
(including reducing the amount subject to this agreement to $0). However, for
the year in which the employee becomes eligible to make salary reduction
contributions, the period during which the employee may enter into a salary
reduction agreement or modify a prior agreement is a 60-day period that includes
either the date the employee becomes eligible or the day before that date. For
example, if an employer establishes a SIMPLE plan effective as of July 1, 1997,
each eligible employee becomes eligible to make salary reduction contributions
on that date and the 60-day period must begin no later than July 1 and cannot
end before June 30, 1997.
During these 60-day periods, employees have the right to modify their salary
reduction agreements without restrictions. In addition, for the year in which an
employee becomes eligible to make salary reduction contributions, the employee
must be able to commence these contributions as soon as the employee becomes
eligible, regardless of whether the 60-day period has ended. An employer may,
but is not required to, provide additional opportunities or longer periods for
permitting eligible employees to enter into salary reduction agreements or to
modify prior agreements.
An employee must be given the right to terminate a salary reduction agreement
for a calendar year at any time during the year even if this is outside a SIMPLE
plan's normal election period. The employer's SIMPLE plan may, however, provide
that an employee who terminates a salary reduction agreement at any time other
than the normal election period is not eligible to resume participation until
the beginning of the next calendar year.
EMPLOYER ADMINISTRATIVE AND NOTIFICATION REQUIREMENTS: An employer must notify
each employee, immediately before the employee's 60-day election period, of the
employee's opportunity to enter into a salary reduction agreement or to modify a
prior agreement. If applicable, this notification must disclose an employee's
ability to select the financial institution that will serve as the trustee or
custodian of the employee's SIMPLE IRA. Such notification must also include the
Summary Description required under section 408(l)(2)(B). Such notification must
also include whether the employer will be making either matching contributions
(including the employer's election to reduce the matching contribution below 3%)
or nonelective contributions as previously described.
If an eligible employee who is entitled to a contribution under the
employer's SIMPLE plan is unwilling or unable to establish a SIMPLE IRA with any
financial institution prior to the date on which the contribution is required to
be made to the SIMPLE IRA of the employee, the employer may execute the
necessary SIMPLE IRA documents on the employee's behalf with a financial
institution selected by the employer.
The employer must deliver the salary reduction contributions to the financial
institution maintaining the SIMPLE IRA as of the earliest date on which the
contributions can reasonably be segregated from the employer's general assets,
but no later than the close of the 30-day period following the last day of the
month in which amounts would otherwise have been payable to the employee in
cash.
Matching and nonelective employer contributions must be made to the financial
institution maintaining the SIMPLE IRA no later than the due date for filing the
employer's income tax return, including extensions, for the taxable year that
includes the last day of the calendar year for which the contributions are made.
ROLLOVERS:
ROLLOVER CONTRIBUTIONS FROM ANOTHER SIMPLE IRA - A rollover contribution to this
SIMPLE IRA is only permitted from another SIMPLE IRA. A rollover contribution
from another SIMPLE IRA is any amount the participant receives from one SIMPLE
IRA and redeposits some or all of it into this SIMPLE IRA. The participant is
not required to roll over the entire amount received from the first SIMPLE IRA.
However, any amount you do not roll over will be taxed at ordinary income tax
rates for federal income tax purposes and may also be subject to an additional
tax if the distribution is a premature distribution described below.
ROLLOVER DISTRIBUTIONS FROM A SIMPLE IRA - A distribution from any SIMPLE IRA
may be rolled over only to another SIMPLE IRA during the two-year period the
participant first participated in the employer's SIMPLE plan. Thus, a
distribution from a SIMPLE IRA during that two-year period qualifies as a
rollover contribution (and is not includible in gross income of the participant)
only if the distribution is paid into another SIMPLE IRA and satisfies the other
requirements that apply to all IRA rollovers under section 408(d)(3). SIMPLE
IRAs may never be rolled into an employer's plan, such as a qualified plan or
section 403(b) plan. After this two-year period, a distribution from a SIMPLE
IRA may be rolled over to any IRA maintained by the individual. This two-year
period begins on the first day on which contributions made by the individual's
employer are deposited in the individual's SIMPLE IRA.
SPECIAL RULES THAT APPLY TO ROLLOVERS -
o The rollover must be completed no later than the 60th day after the day the
distribution was received by you.
o You may have only one IRA-to-IRA rollover during a 12-consecutive-month
period measured from the date you received a distribution of an IRA which
was rolled over to another IRA. (See IRS Publication 590 for more
information.)
o The same property you receive in a distribution must be the same property
you roll over into the second IRA. For example, if you receive a
distribution from an IRA of property, such as stocks, that same stock must
be rolled over into the second IRA.
o You are required to make an irrevocable election indicating that this
transaction will be treated as a rollover contribution.
o You are not required to receive a complete distribution from your IRA in
order to make a rollover contribution into another IRA, nor are you
required to roll over the entire amount you received from the first IRA.
o If you inherit an IRA due to the death of the participant, you may not roll
this IRA into your own IRA unless you are the spouse of the decedent.
o If you are age 70 1/2 or older and wish to roll over to another IRA, you
must first satisfy the minimum distribution requirement for that year and
then the rollover of the remaining amount may be made.
o Rollover contributions to a SIMPLE IRA may not be made from a qualified
plan, 403(b) plan, or any other IRA that is not a SIMPLE IRA.
EXCESS DEFERRALS: Excess elective deferrals (amounts in excess of the $6,000
SIMPLE elective deferral limit) are includible in your gross income in the
calendar year of deferral. Income on the excess elective deferrals is includible
in your income in the year of withdrawal from the SIMPLE IRA. You should
withdraw excess elective deferrals and any allocable income, from your SIMPLE
IRA by April 15 following the year to which the deferrals relate. These amounts
may not be transferred or rolled over tax-free to another SIMPLE IRA. If you
fail to withdraw excess elective deferrals, and any allocable income, by the
following April 15th, the excess elective deferrals will be subject to the IRA
contribution limitations of sections 219 and 408 of the Code and thus may be
considered an excess contribution to your IRA. Such excess deferrals may be
subject to a 6% excise tax for each year they remain in your SIMPLE IRA. Income
on excess elective deferrals is includible in your gross income in the year you
withdraw it from your IRA and must be withdrawn by April 15 following the
calendar year to which the deferrals relate. Income withdrawn from the IRA after
that date may be subject to a 10% tax (or 25% if withdrawn within the first two
years of participation) on early distributions. The rules for determining and
allocating income attributable to excess elective deferrals and other excess
SIMPLE contributions are the same as those governing regular IRA excess
contributions. The trustee or custodian of your SIMPLE IRA will inform you of
the income allocable to such excess amounts.
DISTRIBUTIONS: In general, all distributions from a SIMPLE IRA are subject to
federal income tax by the payee or distributee, whichever the case may be. When
you start withdrawing from your SIMPLE IRA, you may take the distributions in
regular payments, random withdrawals or in a single-sum payment. Generally, all
amounts distributed to you from your SIMPLE IRA are included in your gross
income in the taxable year in which they are received. However, if you have made
nondeductible contributions to any regular IRA as permitted under section
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408(o) of the Code, the nontaxable portion of the distribution, if any, will be
a percentage based upon the ratio of your unrecovered nondeductible
contributions to the aggregate of all IRA balances, including SEP, SIMPLE and
rollover contributions, as of the end of the year in which you take the
distribution, plus distributions from the account during the year. All taxable
distributions from your SIMPLE IRA are taxed at ordinary income tax rates for
federal income tax purposes and are not eligible for either capital gains
treatment or 5/10 year averaging. An employer may not require an employee to
retain any portion of the contribution in the SIMPLE IRA or otherwise impose any
withdrawal restrictions.
PREMATURE DISTRIBUTIONS - In general, if you are under age 59 1/2 and receive
a distribution from your SIMPLE IRA account, a 10% additional income tax will
apply to the taxable portion of the distribution, unless the distribution is
received due to death; disability; a series of substantially equal periodic
payments at least annually over your life expectancy or the joint life
expectancy of you and your designated beneficiary; medical expenses that exceed
7.5% of your adjusted gross income; health insurance premiums paid by certain
unemployed individuals; a qualifying rollover distribution; or the timely
withdrawal of an excess deferral plus income attributable. If you request a
distribution in the form of a series of substantially equal payments, and you
modify the payments before five years have elapsed and before attaining age 59
1/2, the 10% additional income tax will apply retroactively to the year payments
began through the year of such modification. In addition, if you request a
distribution from your SIMPLE IRA within your first two years of participation
in the SIMPLE plan and none of the exceptions listed above applies to the
distribution, the normal 10% additional income tax referred to earlier is
increased to 25%.
AGE 70 1/2 REQUIRED MINIMUM DISTRIBUTIONS - You are required to begin
receiving minimum distributions from your SIMPLE IRA by your required beginning
date (the April 1 of the year following the year you attain age 70 1/2). The
year you attain age 70 1/2 is referred to as your "first distribution calendar
year." Your minimum distribution is based upon the value of your account at the
end of the prior year (less any required distributions you received between
January 1 and April 1 of the year following your first distribution calendar
year) by the joint life expectancy of you and your designated beneficiary. If
you do not have a designated beneficiary then the minimum distribution will be
based upon your single life expectancy.
As you can see, who you designate as beneficiary under your SIMPLE IRA will
affect the period over which distributions may be made. If you have more than
one primary beneficiary, generally the beneficiary with the shortest life
expectancy will be the measuring life expectancy used for determining the period
over which distributions will be made. If no beneficiary is named or you name a
beneficiary which is not an individual (i.e., your estate), distributions will
be based upon your single life expectancy.
By the April 1 following your first distribution calendar year, you must make
certain elections on a form provided by the Custodian. If no election is made,
you will be deemed to have elected to take your distributions over a period not
to exceed your single life expectancy. The required distributions for the second
distribution calendar year and for each subsequent distribution calendar year
must be made by December 31 of such year.
Unless otherwise elected by the Custodian (or by you, if the Custodian
permits) in determining the amount to be distributed for the second distribution
calendar year and subsequent distribution calendar years, your life expectancy
(and your designated beneficiary's life expectancy) shall not be recalculated.
If the Custodian elects (or you elect, if the Custodian permits) to recalculate
your life expectancy or your spouse's life expectancy, you will generally have a
longer period of time over which payments will be made and therefore the minimum
distribution will be less.
CAUTION: If you or your spouse should die, the decedent's life expectancy
that is being recalculated is reduced to zero which will reduce the period of
distribution to the survivor's single life expectancy. If recalculation is not
elected, the death of either person will not have an effect on the payment
period.
In any distribution calendar year you may take more than the required
minimum. However, if you take less than the required minimum with respect to any
distribution calendar year, you are subject to a federal excise tax penalty of
50% of the difference between the amount required to be distributed and the
amount actually distributed.
MINIMUM DISTRIBUTION INCIDENTAL BENEFIT (MDIB) RULE - Basically, this rule
specifies that benefits provided under a retirement plan must be for the primary
benefit of a participant rather than for his/her beneficiaries. If your spouse
is your sole beneficiary, these special MDIB rules do not apply. The amount
required to be distributed under the MDIB rule may in some cases be more than
the amount required under the normal age 70 1/2 required minimum distribution
rules. If someone other than or in addition to your spouse is a named primary
beneficiary, the minimum distribution required is the greater of the amount
determined under the regular 70 1/2 rules and the amount determined under the
MDIB rules. The minimum amount to be distributed under the MDIB rules is the
amount determined by taking the balance in your SIMPLE IRA account and dividing
it by a factor taken from an IRS table specified in IRS regulations. The table
provides life expectancies for you and a beneficiary who is assumed to be 10
years younger.
DEATH DISTRIBUTIONS - If you die after your required beginning date, the
balance in your SIMPLE IRA will be distributed in a manner which is at least as
rapid as the method of distribution being used on the date of your death. If you
die before your required beginning date, the balance in your SIMPLE IRA must
generally be distributed within five years from the date of your death. However
your beneficiary(ies) may elect to receive the balance in your account over the
single life expectancy of your designated beneficiary if distributions begin no
later than the end of the year containing the one year anniversary of your
death. In addition, if your only beneficiary is your surviving spouse,
distributions need not commence until December 31st of the year you would have
attained age 70 1/2.
PROHIBITED TRANSACTIONS - If you or your beneficiary engage in a prohibited
transaction (as defined under Section 4975 of the Internal Revenue Code) with
your SIMPLE IRA, it will lose its tax exemption and you must include the value
of your account in your gross income for that taxable year. If you pledge any
portion of your SIMPLE IRA as collateral for a loan, the amount so pledged will
be treated as a distribution and will be included in your gross income for that
year.
INCOME TAX WITHHOLDING - All withdrawals from your SIMPLE IRA (except a
direct transfer) are subject to federal income tax withholding. You may,
however, elect not to have withholding apply to your SIMPLE IRA distribution in
most cases. If withholding does apply to your distribution, it is at the rate of
10% of the amount of the distribution.
DESIGNATED FINANCIAL INSTITUTION "DFI":
In general, under section 408(p), an employer must permit an employee to select
the financial institution for the SIMPLE IRA to which the employer will make all
contributions on behalf of the employee. In this case, the financial institution
is referred to as a "Non-DFI." Alternatively, under section 408(p)(7), an
employer may require that all SIMPLE contributions initially be made to a single
designated financial institution selected by the employer. In this case, the
financial institution is referred to as a "DFI." Refer to your employer's SIMPLE
Retirement Plan document to determine if the financial institution is a DFI or a
Non-DFI.
USE OF A DESIGNATED FINANCIAL INSTITUTION "DFI" - If an employer requires
that all SIMPLE contributions initially be made to a DFI, the following
requirements must be met:
1. The employer and the financial institution must agree that the
financial institution will be a DFI for the employer's SIMPLE plan;
2. The DFI must agree that, if a participant elects before the expiration
of the employee's 60-day election period, the participant's balance
will be transferred without cost or penalty to another SIMPLE IRA (or
after the two year period no longer applies, to any IRA) to a
financial institution selected by the participant; and
3. Each participant is given written notification describing the
procedures under which, if a participant so elects, the participant's
balance will be transferred without cost or penalty to another SIMPLE
IRA (or after the two year period no longer applies, to any IRA) to a
financial institution selected by the participant.
If the participant elects before the expiration of the 60-day election period
to have the balance transferred without cost or penalty as described above, such
election is valid only with respect to the balance attributable to SIMPLE
contributions for the calendar year following that 60-day election period (or,
for the year in which an employee becomes eligible to make salary reduction
contributions for the remainder of that year) and subsequent calendar years if
such election so provides.
If the participant timely elects the transfer of the balance without cost or
penalty as described above, the participant's balance must be transferred on a
reasonably frequent basis, such as on a monthly basis. If a participant timely
elects this transfer without cost or penalty, the Custodian reserves the right
to restrict the investment to a specified investment option until transferred,
even though a variety of investment options are available with respect to
contributions that the participant has not elected to transfer.
A transfer is deemed to be made without cost or penalty if no liquidation,
transaction, redemption or termination fee, or any commission, load (whether
front-end or back-end) or surrender charge or similar fee or charge is imposed
with respect to the balance being transferred that the participant has filed a
timely election with the DFI. However, the DFI can charge a reasonable annual
administrative fee to a SIMPLE IRA from which balances must be transferred in
accordance with the participant's timely transfer election.
In order to timely elect a transfer without cost or penalty, the participant
must indicate such election on the SIMPLE IRA Plan Application attached hereto
and must be received by the DFI no later than the expiration of the 60-day
election period applicable to the employee. If the participant fails to timely
elect such transfers without cost or penalty, the DFI reserves the right to
charge any or all fees and expenses described in Section 8.05 of this SIMPLE IRA
plan agreement.
USE OF A NONDESIGNATED FINANCIAL INSTITUTION "NON-DFI" - If the employer's
SIMPLE plan permits the participants to select their own financial institution
to serve as trustee or custodian of the SIMPLE IRA, the rules explained above do
not apply and the Custodian may charge any and all fees described in Section
8.05 of the SIMPLE IRA plan agreement.
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<PAGE> 13
TRANSFERS DEFINED - A direct transfer is a payment from this SIMPLE IRA
directly to another trustee or custodian of a SIMPLE IRA (or, after the two-year
period no longer applies, to the trustee or custodian of any IRA). Transfers do
not constitute a distribution since you are never in receipt of the funds. The
monies are transferred directly to the new trustee or custodian. If you should
transfer all or a portion of your SIMPLE IRA to your former spouse's IRA under a
divorce decree (or under a written instrument incident to divorce) or separation
instrument, you will not be deemed to have made a taxable distribution, but
merely a transfer. The portion so transferred will be treated at the time of the
transfer as the IRA of your spouse or former spouse. If your spouse is the
beneficiary of your SIMPLE IRA, in the event of your death, your spouse may
"assume" your SIMPLE IRA. The assumed IRA is then treated as your surviving
spouse's IRA.
SUMMARY DESCRIPTION REQUIREMENTS: In general, the Custodian of any SIMPLE IRA
must annually provide to the employer maintaining the SIMPLE plan a Summary
Description early enough to allow the employer to meet its notification
obligations. If the Custodian of this SIMPLE IRA is a DFI, the Summary
Description will be provided directly to the employer by the Custodian in the
underlying SIMPLE plan agreement. If the Custodian of this SIMPLE IRA is a
Non-DFI, the Summary Description will be provided directly to the employee by
the Custodian. The employee agrees to have the employer complete certain
information contained on the Summary Description with respect to the employer's
SIMPLE plan provisions. A sample Summary Description for a Non-DFI is located on
the following page. The Custodian of a "transfer SIMPLE IRA" is not required to
provide this Summary Description. A SIMPLE IRA is a "transfer SIMPLE IRA" if it
is not a SIMPLE IRA to which the employer has made contributions under the
SIMPLE plan.
PROCEDURES FOR WITHDRAWALS: All distributions from this SIMPLE IRA must be
requested in writing on a form provided to the participant by the Custodian.
After the withdrawal form has been completed and executed by the recipient, the
form must be either hand delivered to the Custodian during normal business hours
or mailed to the Custodian by first class mail, certified or registered mail
prepaid through the U.S. Postal Service, or through any means of an expedited
delivery service. After receipt of a properly executed withdrawal form, the
Custodian will process the distribution as soon as administratively feasible.
FEDERAL ESTATE AND GIFT TAXES: Generally, there is no specific exclusion for
SIMPLE IRAs under the estate tax rules. Therefore, in the event of your death,
your SIMPLE IRA balance will be includible in your gross estate for federal
estate tax purposes. However, if your surviving spouse is the beneficiary of
your SIMPLE IRA, the amount in your SIMPLE IRA may qualify for the marital
deduction available under Section 2056 of the Internal Revenue Code. A transfer
of property for federal gift tax purposes does not include an amount which a
beneficiary receives from a SIMPLE IRA plan.
PENALTIES: If you are under age 59 1/2 and receive a premature distribution from
your SIMPLE IRA, an additional 10% (or 25% for certain SIMPLE IRA distributions)
income tax will apply on the taxable amount of the distribution. If you make an
excess deferral to your SIMPLE IRA and it is not corrected on a timely basis, an
excise tax of 6% is imposed on the excess amount. This tax will apply each year
to any part or all of the excess which remains in your account. If you are age
70 1/2 or over or if you should die, and the appropriate required minimum
distributions are not made from your SIMPLE IRA, an additional tax of 50% is
imposed upon the difference between what should have been distributed and what
was actually distributed.
For tax years ending before 1/1/97, you will be taxed an additional 15% on
any amount you receive and include in income during a calendar year from
qualified plans, TSAs and all IRAs which exceeds the greater of $150,000
(unindexed) or $112,500 (indexed for cost of living). Before you receive an
excess distribution, you should seek advice from your tax advisor with respect
to the application of these rules. For tax years 1997, 1998 and 1999, the 15%
excess distribution tax will not apply. In the event of your death, your estate
may be subject to a 15% tax on the "excess accumulation" in all of your
qualified plans, TSAs and IRAs. You should seek the advice of your own tax
advisor with respect to the application of this excess accumulation excise tax.
You must file IRS Form 5329 with the Internal Revenue Service for any year an
additional tax is due.
IRS APPROVAL AS TO FORM: This SIMPLE IRA Custodial Agreement has been approved
by the Internal Revenue Service as to form. This is not an endorsement of the
plan in operation or of the investments offered.
ADDITIONAL INFORMATION: You may obtain further information on IRAs and SIMPLE
IRAs from your District Office of the Internal Revenue Service. In particular
you may wish to obtain IRS Publication 590 (Individual Retirement Arrangements).
23
<PAGE> 14
SIMPLE TRANSMITTAL FORM [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. EMPLOYER INFORMATION (Please print or type.)
Name of Employer_____________________________________________________________
Address______________________________________________________________________
City_________________________________State_____________________Zip Code______
- --------------------------------------------------------------------------------
2. EMPLOYER'S AUTHORIZATION (Signature(s) of authorized employer representative)
We hereby authorize INVESCO Trust Company to invest contributions in
accordance with the instructions below.
_________________________________________________ Date _________ /___ /____
Month Day Year
<TABLE>
<CAPTION>
(1) (2) (3) (4)
NAME OF SOCIAL SECURITY SELECTED CONTRIBUTION PER FUND**
PARTICIPANT NUMBER AIM FUNDS* (MINIMUM $25 PER FUND)
Salary Employer Nonelective
Deferral Match 2% Contribution
<S> <C> <C> <C> <C> <C>
1 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
2 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
3 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
4 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
5 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
6 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
7 ___________________________________ _______________ __________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
__________________ $_____________ $_____________ $_____________
</TABLE>
* Indicate funds used by each participant. ** Indicate dollar($) amount
contributed per fund.
15
<PAGE> 15
<TABLE>
<CAPTION>
(1) (2) (3) (4)
NAME OF SOCIAL SECURITY SELECTED CONTRIBUTION PER FUND**
PARTICIPANT NUMBER AIM FUNDS* (MINIMUM $25 PER FUND)
Salary Employer Nonelective
Deferral Match 2% Contribution
<S> <C> <C> <C> <C> <C>
8 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
9 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
10 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
11 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
12 __________________ __________________ ________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
________________ $______________ $______________ $______________
Total Employer Contributions $______________
Total Employee Salary
Deferred Contributions $______________
Total Employer and
Employee Contributions $______________
</TABLE>
If a contribution for a participant is to be invested in more than one fund, $25
or more must be invested in each fund selected. Attach form, check (payable to
INVESCO Trust Company) and SIMPLE applications and mail to:
REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY
------------------------------------------------------------------------
AIM FUND SERVICES, INC. AIM FUND SERVICES, INC.
ATTN: RETIREMENT PLANS ATTN: RETIREMENT PLANS
OPERATIONS OPERATIONS
P.O. BOX 4739 P.O. BOX 4739
HOUSTON, TEXAS 77210-4739 HOUSTON, TEXAS 77210-4739
* Indicate funds used by each participant. ** Indicate dollar($) amount
contributed per fund.
[AIM LOGO APPEARS HERE] A I M Distributors, Inc.
12/97
16
<PAGE> 16
[AIM LOGO APPEARS HERE]
SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES OF SMALL EMPLOYERS (SIMPLE)
FORM 5304-SIMPLE (DECEMBER 1996)
(NOT SUBJECT TO THE DESIGNATED FINANCIAL INSTITUTION RULES)
Department of the Treasury
Internal Revenue Service
- --------------------------------------------------------------------------------
Name of Employer_____________________________________establishes the following
SIMPLE plan under section 408(p) of the Internal Revenue Code and pursuant to
the instructions contained in this form.
ARTICLE I - EMPLOYEE ELIGIBILITY REQUIREMENTS (Complete appropriate box(es) and
blanks--see instructions.)
1. GENERAL ELIGIBILITY REQUIREMENTS. The Employer agrees to permit salary
reduction contributions to be made in each calendar year to the SIMPLE IRA
established by each employee who meets the following requirements (select either
1a or 1b):
a / / FULL ELIGIBILITY. All employees are eligible.
b / / LIMITED ELIGIBILITY. Eligibility is limited to employees who are
described in both (i) and (ii) below:
(i) CURRENT COMPENSATION. Employees who are reasonably expected
to receive at least $____________ in compensation (not to exceed
$5,000) for the calendar year.
(ii) PRIOR COMPENSATION. Employees who have received at least
$_____________ in compensation (not to exceed $5,000) during any
___________ calendar year(s) (insert 0, 1, or 2) preceding the
calendar year.
2. EXCLUDABLE EMPLOYEES. (OPTIONAL)
/ / The Employer elects to exclude employees covered under a
collective bargaining agreement for which retirement benefits were the
subject of good faith bargaining.
ARTICLE II - SALARY REDUCTION AGREEMENTS (Complete the box and blank, if
appropriate--see instructions.)
1. SALARY REDUCTION ELECTION. An eligible employee may make a salary
reduction election to have his or her compensation for each pay period
reduced by a percentage. The total amount of the reduction in the
employee's compensation cannot exceed $6,000* for any calendar year.
2. TIMING OF SALARY REDUCTION ELECTIONS.
a. For a calendar year, an eligible employee may make or modify a
salary reduction election during the 60-day period immediately
preceding January 1 of that year. However, for the year in which the
employee becomes eligible to make salary reduction contributions, the
period during which the employee may make or modify the election is a
60-day period that includes either the date the employee becomes
eligible or the day before.
b. In addition to the election periods in 2a, eligible employees may
make salary reduction elections or modify prior elections
___________________. If the Employer chooses this option, insert a
period or periods (e.g., semiannually, quarterly, monthly or daily)
that will apply uniformly to all eligible employees.)
c. No salary reduction election may apply to compensation that an
employee received, or had a right to immediately receive, before
execution of the salary reduction election.
d. An employee may terminate a salary reduction election at any time
during the calendar year. / / If this box is checked, an employee who
terminates a salary reduction election not in accordance with 2b may
not resume salary reduction contributions during the calendar year.
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<PAGE> 17
ARTICLE III - CONTRIBUTIONS (Complete the blank, if appropriate-see
instructions.)
1. SALARY REDUCTION CONTRIBUTIONS. The amount by which the employee
agrees to reduce his or her compensation will be contributed by the
Employer to the employee's SIMPLE IRA.
2. OTHER CONTRIBUTIONS.
a. Matching Contributions
(i) For each calendar year, the Employer will contribute a
matching contribution to each eligible employee's SIMPLE IRA
equal to the employee's salary reduction contributions up to a
limit of 3% of the employee's compensation for the calendar year.
(ii) The Employer may reduce the 3% limit for the calendar year
in (i) only if:
(1) The limit is not reduced below 1%; (2) The limit is not
reduced for more than two calendar years during the
five-year period ending with the calendar year the reduction
is effective; and (3) Each employee is notified of the
reduced limit within a reasonable period of time before the
employees' 60-day election period for the calendar year
(described in Article II, item 2a).
b. Nonelective Contributions
(i) For any calendar year, instead of making matching
contributions, the Employer may make nonelective contributions
equal to 2% of compensation for the calendar year to the SIMPLE
IRA of each eligible employee who has at least $___________ (not
more than $5,000) in compensation for the calendar year. No more
than $160,000* in compensation can be taken into account in
determining the nonelective contribution for each eligible
employee.
(ii) For any calendar year, the Employer may make 2% nonelective
contributions instead of matching contributions only if:
(1) Each eligible employee is notified that a 2% nonelective
contribution will be made instead of a matching
contribution; and
(2) This notification is provided within a reasonable period
of time before the employees' 60-day election period for the
calendar year (described in Article II, item 2a).
3. TIME AND MANNER OF CONTRIBUTIONS.
a. The Employer will make the salary reduction contributions
(described in 1 above) for each eligible employee to the SIMPLE IRA
established at the financial institution selected by that employee no
later than 30 days after the end of the month in which the money is
withheld from the employee's pay. See instructions.
b. The Employer will make the matching or nonelective contributions
(described in 2a and 2b above) for each eligible employee to the
SIMPLE IRA established at the financial institution selected by that
employee no later than the due date for filing the Employer's tax
return, including extensions, for the taxable year that includes the
last day of the calendar year for which the contributions are made.
ARTICLE IV - OTHER REQUIREMENTS AND PROVISIONS
1. CONTRIBUTIONS IN GENERAL. The Employer will make no contributions to
the SIMPLE IRAs other than salary reduction contributions (described
in Article III, item 1) and matching or nonelective contributions
(described in Article III, items 2a and 2b).
2. VESTING REQUIREMENTS. All contributions made under this SIMPLE plan
are fully vested and nonforfeitable.
3. NO WITHDRAWAL RESTRICTIONS. The Employer may not require the employee
to retain any portion of the contributions in his or her SIMPLE IRA or
otherwise impose any withdrawal restrictions.
4. SELECTION OF IRA TRUSTEE. The Employer must permit each eligible
employee to select the financial institution that will serve as the
trustee, custodian, or issuer of the SIMPLE IRA to which the employer
will make all contributions on behalf of that employee.
5. AMENDMENTS TO THIS SIMPLE PLAN. This SIMPLE plan may not be amended
except to modify the entries inserted in the blanks or boxes provided
in Articles I, II, III, VI, and VII.
6. EFFECTS OF WITHDRAWALS AND ROLLOVERS.
a. An amount withdrawn from the SIMPLE IRA is generally includible in
gross income. However, a SIMPLE IRA balance may be rolled over or
transferred on a tax-free basis to another IRA designed solely to hold
funds under a SIMPLE plan. In addition, an individual may roll over or
transfer his or her SIMPLE IRA balance to any IRA on a tax-free basis
after a two-year period has expired since the individual first
participated in a SIMPLE plan. Any rollover or transfer must comply
with the requirements under section 408.
18
<PAGE> 18
b. If an individual withdraws an amount from a SIMPLE IRA during the
two-year period beginning when the individual first participated in a
SIMPLE plan and the amount is subject to the additional tax on early
distributions under section 72(t), this additional tax is increased
from 10% to 25%.
ARTICLE V - DEFINITIONS
1. COMPENSATION.
a. GENERAL DEFINITION OF COMPENSATION. Compensation means the sum of
the wages, tips, and other compensation from the Employer subject to
federal income tax withholding [as described in section 6051(a)(3)]
and the employee's salary reduction contributions made under this
plan, and, if applicable, elective deferrals under a section 401(k)
plan, a SARSEP, or a section 403(b) annuity contract and compensation
deferred under a section 457 plan required to be reported by the
Employer on Form W-2 [as described in section 6051(a)(8)].
b. COMPENSATION FOR SELF-EMPLOYED INDIVIDUALS. For self-employed
individuals, compensation means the net earnings from self-employment
determined under section 1402(a) prior to subtracting any
contributions made pursuant to this plan on behalf of the individual.
2. EMPLOYEE. Employee means a common-law employee of the Employer. The
term employee also includes a self-employed individual and a leased
employee described in section 414(n) but does not include a
nonresident alien who received no earned income from the Employer that
constitutes income from sources within the United States.
3. ELIGIBLE EMPLOYEE. An eligible employee means an employee who
satisfies the conditions in Article 1, item 1 and is not excluded
under Article 1, item 2.
4. SIMPLE IRA. A SIMPLE IRA is an individual retirement account described
in section 408(a), or an individual retirement annuity described in
section 408(b), to which the only contributions that can be made are
contributions under a SIMPLE plan and rollovers or transfers from
another SIMPLE IRA.
ARTICLE VI - PROCEDURES FOR WITHDRAWAL (The Employer will provide each employee
with the procedures for withdrawals of contributions received by the financial
institution selected by that employee, and that financial institution's name and
address (by attaching that information or inserting it in the space below)
unless: (1) that financial institution's procedures are unavailable, or (2) that
financial institution provides the procedures directly to the employee.
See Employee Notification section in the instructions.)
ARTICLE VII - EFFECTIVE DATE
This SIMPLE plan is effective __________________________. (See instructions.)
Name of Employer
-------------------------------------------------------------
By:
--------------------------------------------------------------------------
Signature Date
Address of Employer
-----------------------------------------------------------
Name and Title
---------------------------------------------------------------
*This amount will be adjusted to reflect any annual cost-of-living increases
announced by the IRS.
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<PAGE> 19
MODEL NOTIFICATION TO ELIGIBLE EMPLOYEES
I. OPPORTUNITY TO PARTICIPATE IN THE SIMPLE PLAN
You are eligible to make salary reduction contributions to
the_________________SIMPLE plan. This notice and the attached summary
description provide you with information that you should consider before
you decide whether to start, continue, or change your salary reduction
agreement.
II. EMPLOYER CONTRIBUTION ELECTION
For the ____________ calendar year, the Employer elects to contribute to
your SIMPLE IRA [employer must select either (1), (2), or (3)]:
/ / (1) A matching contribution equal to your salary reduction
contributions up to a limit of 3% of your compensation for the year;
/ / (2) A matching contribution equal to your salary reduction
contributions up to a limit of ___________% (employer must insert a
number from 1 to 3 and is subject to certain restrictions) of your
compensation for the year; or
/ / (3) A nonelective contribution equal to 2% of your compensation
for the year (limited to $160,000, adjusted periodically by the IRS)
if you are an employee who makes at least $____________ (Employer must
insert an amount that is $5,000 or less) in compensation for the year.
III. ADMINISTRATIVE PROCEDURES
If you decide to start or change your salary reduction agreement, you must
complete the salary reduction agreement and return it to
__________________________ (Employer should designate a place or
individual) by _________________(Employer should insert a date that is not
less than 60 days after notice is given).
IV. EMPLOYEE SELECTION OF FINANCIAL INSTITUTION
You must select the financial institution that will serve as the trustee,
custodian, or issuer of your SIMPLE IRA and notify your Employer of your
selection.
20
<PAGE> 20
PAPERWORK REDUCTION ACT NOTICE
You are not required to provide the information requested on a form that is
subject to the Paperwork Reduction Act unless the form displays a valid OMB
control number. Books or records relating to a form or its instructions must be
retained as long as their contents may become material in the administration of
any Internal Revenue law. Generally, tax returns and return information are
confidential, as required by section 6103.
The time needed to complete this form will vary depending on individual
circumstances. The estimated average time is:
<TABLE>
<S> <C> <C>
Recordkeeping. . . . . . . . . . . . . . 3 hr., 38 min.
Learning about the law or the form . . . 2 hr., 26 min.
Preparing the form . . . . . . . . . . . 47 min.
</TABLE>
If you have comments concerning the accuracy of these time estimates or
suggestions for making this form simpler, we would be happy to hear from you.
You can write to the Tax Forms Committee, Western Area Distribution Center,
Rancho Cordova, CA 95743-0001. DO NOT send this form to this address. Instead,
keep it for your records.
GENERAL INSTRUCTIONS
Section references are to the Internal Revenue Code unless otherwise noted.
NOTE: THE INSTRUCTIONS FOR THIS FORM ARE DESIGNED TO ASSIST IN THE ESTABLISHMENT
AND ADMINISTRATION OF THE SIMPLE PLAN; THEY ARE NOT INTENDED TO SUPERSEDE ANY
PROVISIONS IN THE SIMPLE PLAN.
PURPOSE OF FORM
Form 5304-SIMPLE is a model Savings Incentive Match Plan for Employees of Small
Employers (SIMPLE) plan document that an employer may use to establish a SIMPLE
plan described in section 408(p), under which each eligible employee is
permitted to select the financial institution for his or her SIMPLE IRA. It is
important that you keep this form for your records. DO NOT file this form with
the IRS. For more information, see Pub. 560, Retirement Plans for the Self-
Employed, and Pub. 590, Individual Retirement Arrangements (IRAs).
INSTRUCTIONS FOR THE EMPLOYER
WHICH EMPLOYERS MAY ESTABLISH AND MAINTAIN A SIMPLE PLAN?
You are eligible to establish and maintain a SIMPLE plan only if you meet both
of the following requirements:
1. Last calendar year, you had no more than 100 employees (including
self-employed individuals) who earned $5,000 or more in compensation from you
during the year. If you have a SIMPLE plan but later exceed this 100-employee
limit, you will be treated as meeting the limit for the two years following the
calendar year in which you last satisfied the limit. If the failure to continue
to satisfy the 100-employee limit is due to an acquisition or similar
transaction involving your business, special rules apply. Consult your tax
advisor to find out if you can still maintain the plan after the transaction.
2. You do not maintain during any part of the calendar year another
qualified plan with respect to which contributions are made, or benefits are
accrued, for service in the calendar year. For this purpose, a qualified plan
[defined in section 219(g)(5)] includes a qualified pension plan, a
profit-sharing plan, a stock bonus plan, a qualified annuity plan, a
tax-sheltered annuity plan, and a simplified employee pension (SEP) plan.
Certain related employers (trades or businesses under common control) must
be treated as a single employer for purposes of the SIMPLE requirements. These
are: (1) a controlled group of corporations under section 414(b); (2) a
partnership or sole proprietorship under common control under section 414(c); or
(3) an affiliated service group under section 414(m). In addition, if you have
leased employees required to be treated as your own employees under the rules of
section 414(n), then you must count all such leased employees for the
requirements listed above.
21
<PAGE> 21
WHAT IS A SIMPLE PLAN?
A SIMPLE plan is a written arrangement that provides you and your employees with
a simplified way to make contributions to provide retirement income for your
employees. Under a SIMPLE plan, employees may choose whether to make salary
reduction contributions to the SIMPLE plan rather than receiving these amounts
as part of their regular compensation. In addition, you will contribute matching
or nonelective contributions on behalf of eligible employees (see Employee
Eligibility Requirements below and Contributions on page 23). All contributions
under this plan will be deposited into a SIMPLE individual retirement account or
annuity established for each eligible employee with the financial institution
selected by each eligible employee (SIMPLE IRA).
The information provided below is intended to help you understand and
administer the rules of your SIMPLE plan.
WHEN TO USE FORM 5304-SIMPLE
A SIMPLE plan may be established by using this Model Form or any other document
that satisfies the statutory requirements. Thus, you are not required to use
Form 5304-SIMPLE to establish and maintain a SIMPLE plan. Further, do not use
Form 5304-SIMPLE if:
1. You want to require that all SIMPLE plan contributions initially go to a
financial institution designated by you (i.e., you do not want to permit each of
your eligible employees to choose a financial institution that will initially
receive contributions). However, Form 5305-SIMPLE, Savings Incentive Match Plan
for Employees of Small Employers (SIMPLE) (for Use With a Designated Financial
Institution), may be used in such a case;
2. You want employees who are nonresident aliens receiving no earned income
from you that constitutes income from sources within the United States to be
eligible under this plan; or
3. You want to establish a SIMPLE 401(k) plan.
COMPLETING FORM 5304-SIMPLE
Pages 1 and 2 of Form 5304-SIMPLE contain the operative provisions of your
SIMPLE plan. This SIMPLE plan is considered adopted when you have completed all
appropriate boxes and blanks and it has been executed by you.
The SIMPLE plan is a legal document with important tax consequences for you
and your employees. You may want to consult with your attorney or tax advisor
before adopting this plan.
EMPLOYEE ELIGIBILITY REQUIREMENTS (ARTICLE I)
Each year for which this SIMPLE plan is effective, you must permit salary
reduction contributions to be made by all of your employees who are reasonably
expected to receive at least $5,000 in compensation from you during the year,
and who received at least $5,000 in compensation from you in any two preceding
years. However, you can expand the group of employees who are eligible to
participate in the SIMPLE plan by completing the options provided in Article I,
items 1a and 1b. To choose full eligibility, check the box in Article I, item
1a. Alternatively, to choose limited eligibility, check the box in Article I,
item 1b, and then insert $5,000 or a lower compensation amount (including zero)
and two or a lower number of years of service in the blanks in (i) and (ii) of
Article I, item 1b.
In addition, you can exclude from participation those employees covered
under a collective bargaining agreement for which retirement benefits were the
subject of good faith bargaining. You may do this by checking the box in Article
I, item 2.
SALARY REDUCTION AGREEMENTS (ARTICLE II)
As indicated in Article II, item 1, a salary reduction agreement permits an
eligible employee to make a salary reduction election to have his or her
compensation for each pay period reduced by a percentage (expressed as a
percentage or dollar amount). The total amount of the reduction in the
employee's compensation cannot exceed $6,000* for any calendar year.
TIMING OF SALARY REDUCTION ELECTIONS
For a calendar year, an eligible employee may make or modify a salary reduction
election during the 60-day period immediately preceding January 1 of that year.
However, for the year in which the employee becomes eligible to make salary
reduction contributions, the period during which the employee may make or modify
the election is a 60-day period that includes either the date the employee
becomes eligible or the day before.
* This amount will be adjusted to reflect any annual cost-of-living increases
announced by the IRS.
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You can extend the 60-day election periods to provide additional
opportunities for eligible employees to make or modify salary reduction
elections using the blank in Article II, item 2b. For example, you can provide
that eligible employees may make new salary reduction elections or modify prior
elections for any calendar quarter during the 30 days before that quarter.
You may use (but are not required to) the Model Salary Reduction Agreement
to enable eligible employees to make or modify salary reduction elections.
Employees must be permitted to terminate their salary reduction elections
at any time. They may resume salary reduction contributions if permitted under
Article II, item 2b. However, by checking the box in Article II, item 2d, you
may prohibit an employee who terminates a salary reduction election outside the
normal election cycle from resuming salary reduction contributions during the
remainder of the calendar year.
CONTRIBUTIONS (ARTICLE III)
Only contributions described below may be made to this SIMPLE plan. No
additional contributions may be made.
SALARY REDUCTION CONTRIBUTIONS
As indicated in Article III, item 1, salary reduction contributions consist of
the amount by which the employee agrees to reduce his or her compensation. You
must contribute the salary reduction contributions to the financial institution
selected by each eligible employee.
OTHER CONTRIBUTIONS
MATCHING CONTRIBUTIONS.
In general, you must contribute a matching contribution to each eligible
employee's SIMPLE IRA equal to the employee's salary reduction contributions.
This matching contribution cannot exceed 3% of the employee's compensation. See
Definition of Compensation, below.
You may reduce this 3% limit to a lower percentage, but not lower than 1%.
You cannot lower the 3% limit for more than two calendar years out of the
five-year period ending with the calendar year the reduction is effective. NOTE:
If any year in the five-year period described above is a year before you first
established any SIMPLE plan, you will be treated as making a 3% matching
contribution for that year for purposes of determining when you may reduce the
employer matching contribution.
In order to elect this option, you must notify the employees of the reduced
limit within a reasonable period of time before the applicable 60-day election
periods for the year. See Timing of Salary Reduction Elections above.
NONELECTIVE CONTRIBUTIONS.
Instead of making a matching contribution, you may, for any year, make a
nonelective contribution equal to 2% of compensation for each eligible employee
who has at least $5,000 in compensation for the year. Nonelective contributions
may not be based on more than $160,000* of compensation.
In order to elect to make nonelective contributions, you must notify
employees within a reasonable period of time before the applicable 60-day
election periods for such year. See Timing of Salary Reduction Elections above.
NOTE: Insert $5,000 in Article III, item 2b(i) to impose the $5,000 compensation
requirement. You may expand the group of employees who are eligible for
nonelective contributions by inserting a compensation amount lower than $5,000.
EFFECTIVE DATE (ARTICLE VII)
Insert in Article VII, the date you want the provisions of the SIMPLE plan to
become effective. You must insert January 1 of the applicable year unless this
is the first year for which you are adopting any SIMPLE plan. If this is the
first year for which you are adopting a SIMPLE plan, you may insert any date
between January 1 and October 1, inclusive of the applicable year. Do not insert
any date before January 1, 1997.
OTHER IMPORTANT INFORMATION ABOUT YOUR SIMPLE PLAN
TIMING OF SALARY REDUCTION CONTRIBUTIONS
Under the Internal Revenue Code, for all SIMPLE plans, the employer must make
the salary reduction contributions to the financial institution selected by each
eligible employee for his or her SIMPLE IRA no later than the 30th day of the
month following the month in which the
*This amount will be adjusted to reflect any annual cost-of-living increases
announced by the IRS.
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amounts would otherwise have been payable to the employee in cash. The
Department of Labor has indicated that most SIMPLE plans are also subject to
Title I of the Employee Retirement Income Security Act of 1974 (ERISA). The
Department of Labor has informed the IRS that, as a matter of enforcement
policy, for these plans, salary reduction contributions must be made to each
participant's SIMPLE IRA as of the earliest date on which those contributions
can reasonably be segregated from the employer's general assets, but in no event
later than the 30-day deadline described above.
DEFINITION OF COMPENSATION
"Compensation" means the amount described in section 6051(a)(3) [wages, tips,
and other compensation from the employer subject to federal income tax
withholding under section 3401(a)]. Usually, this is the amount shown in box 1
of Form W-2, Wage and Tax Statement. For further information, see Pub. 15
(Circular E), Employer's Tax Guide. Compensation also includes the salary
reduction contributions made under this plan, and, if applicable, compensation
deferred under a section 457 plan. In determining an employee's compensation for
prior years, the employee's elective deferrals under a section 401(k) plan, a
SARSEP, or a section 403(b) annuity contract are also included in the employee's
compensation.
For self-employed individuals, compensation means the net earnings from
self-employment determined under section 1402(a) prior to subtracting any
contributions made pursuant to this SIMPLE plan on behalf of the individual.
EMPLOYEE NOTIFICATION
You must notify each eligible employee prior to the employee's 60-day election
period described above that he or she can make or change salary reduction
elections and select the financial institution that will serve as the trustee,
custodian, or issuer of the employee's SIMPLE IRA. In this notification, you
must indicate whether you will provide:
1. A matching contribution equal to your employees' salary reduction
contributions up to a limit of 3% of their compensation;
2. A matching contribution equal to your employees' salary reduction
contributions subject to a percentage limit that is between 1 and 3% of their
compensation; or
3. A nonelective contribution equal to 2% of your employees' compensation.
You can use the Model Notification to Eligible Employees on page 20 to
satisfy these employee notification requirements for this SIMPLE plan. A Summary
Description must also be provided to eligible employees at this time. This
summary description requirement may be satisfied by providing a completed copy
of pages 1 and 2 of Form 5304-SIMPLE (including the information described in
Article VI - Procedures for Withdrawal).
If you fail to provide the employee notification (including the summary
description) described above, you will be liable for a penalty of $50 per day
until the notification is provided. If you can show that the failure was due to
reasonable cause, the penalty will not be imposed.
If the summary description information with respect to the financial
institution (i.e., the name and address of the financial institution and its
withdrawal procedures) is not available at the time the employee must be given
the summary description, you must provide the summary description without this
information. In such a case, you will have reasonable cause for not including
this information with respect to the financial institution in the summary
description, but only if you see to it that this information is provided to the
employee as soon as administratively feasible once the financial institution has
been selected.
REPORTING REQUIREMENTS
You are not required to file any annual information returns for your SIMPLE
plan, such as Forms 5500, 5500-C/R or 5500-EZ. However, you must report to the
IRS which eligible employees are active participants in the SIMPLE plan and the
amount of your employees' salary reduction contributions to the SIMPLE plan on
Form W-2. These contributions are subject to social security, medicare, railroad
retirement and federal unemployment tax.
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DEDUCTING CONTRIBUTIONS
Contributions to this SIMPLE plan are deductible in your tax year containing the
end of the calendar year for which the contributions are made.
Contributions will be treated as made for a particular tax year if they are
made for that year and are made by the due date (including extensions) of your
income tax return for that year.
SUMMARY DESCRIPTION
Each year the SIMPLE plan is in effect, the financial institution for the SIMPLE
IRA of each eligible employee must provide the employer the information
described in section 408(I)(2)(B). This requirement may be satisfied by
providing the employer a current copy of Form 5304-SIMPLE (including
instructions) together with the financial institution's procedures for
withdrawals from SIMPLE IRAs established at that financial institution,
including financial institution's name and address. The summary description must
be received by the employer in sufficient time to comply with the Employee
Notification requirements above.
There is a penalty of $50 per day imposed on the financial institution for
each failure by the financial institution to provide the summary description
described above. However, if the failure was due to reasonable cause, the
penalty will not be imposed.
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[AIM LOGO APPEARS HERE]
SUMMARY DESCRIPTION FOR NONDESIGNATED FINANCIAL INSTITUTION
Employer must complete the following:
ELIGIBILITY REQUIREMENTS
All Employees of the Employer shall be eligible to participate under the Plan
except:
a. Employees included in a unit of employees covered under a collective
bargaining agreement described in Section 2.02(a) of the Plan.
b. Nonresident alien employees who did not receive U.S. source income
described in Section 2.02(b) of the Plan.
c. Employees who are not reasonably expected to earn $_____________(not to
exceed $5,000) during the Plan Year for which the contribution is being
made.
d. There are no eligibility requirements. All Employees are eligible to
participate upon the later of the plan's effective date or the employee's
date of hire.
Each Eligible Employee will be eligible to become a Participant after having
worked for the Employer during any prior years (not to exceed 2) and received at
least $____________ in compensation (not to exceed $5,000), during each of such
prior years.
WRITTEN ALLOCATION FORMULA
The Employer has agreed to provide contributions for the _______________ Plan
Year as follows (complete only one choice):
a. Matching Contribution
The amount of the Participant's Elective Deferral not in excess of 3% of
such Participant's Compensation (not to exceed $6,000).
b. Matching Contribution
The amount of the Participant's Elective Deferral not in excess of _______%
(not less than 1% nor more than 3%) of each Participant's Compensation (not
to exceed $6,000).
c. Nonelective Employer Contribution 2% of each Participant's Compensation.
The Employer has designated _________________________________________________
(insert Name & Title) to provide additional information to participants about
the Employer's SIMPLE Plan.
- --------------------------------------------------------------------------------
GENERAL DISCLOSURE INFORMATION
The following information explains what a Savings Incentive Match Plan for
Employees ("SIMPLE") is, how contributions are made and how to treat these
contributions for tax purposes. For more specific information, refer to the
employer's SIMPLE Retirement Plan document itself. For a calendar year, you may
make or modify a salary reduction election during the 60-day period immediately
preceding January 1 of that year. However, for the year in which you first
become eligible to make salary reduction contributions, the period during which
you may make or modify the election is a 60-day period that includes either the
date you become eligible or the day before. If indicated in your Employer's
SIMPLE plan, you may have additional opportunities during a calendar year to
make or modify your salary reduction election.
I. SIMPLE RETIREMENT PLAN AND SIMPLE IRA DEFINED
A SIMPLE Retirement Plan is a retirement income arrangement established by your
Employer. Under this SIMPLE Plan, you may choose to defer compensation to your
own Individual Retirement Account or Annuity ("IRA"). You may base these
"elective deferrals" on a salary reduction basis that, at your election, may be
contributed to an IRA or received in cash. This type of plan is available only
to an employer with 100 or fewer employees who earned at least $5,000 during the
prior calendar year. A SIMPLE IRA is a separate IRA plan that you establish with
an eligible financial institution for the purpose of receiving contributions
under this SIMPLE Retirement Plan. Your Employer must provide you with a copy of
the SIMPLE agreement containing eligibility requirements and a description of
the basis upon which contributions may be made. All amounts contributed to your
IRA belong to you, even after you quit working for your Employer.
II. ELECTIVE DEFERRALS - NOT REQUIRED
You are not required to make elective deferrals under this SIMPLE Retirement
Plan. However, if the Employer is matching your elective deferrals, no Employer
contribution will be made on your behalf unless you elect to defer under the
plan.
III. ELECTIVE DEFERRALS - ANNUAL LIMITATION
The maximum amount that you may defer under this SIMPLE Plan for any calendar
year is limited to the lesser of the percentage of your compensation that you
select or $6,000, subject to cost-of-living increases. If you work for other
employers (unrelated to this Employer) who also maintain a salary deferral plan,
there is an overall limit on the maximum amount that you may defer in each
calendar year to all elective SEPs, cash or deferred arrangements under section
401(k) of the Code, other SIMPLE plans and 403(b) plans regardless of how many
employers you may have worked for during the year. This limitation is referred
to as the section 402(g) limit. The section 402(g) limit on elective deferrals
is currently $9,500 and is indexed according to the cost of living.
IV. ELECTIVE DEFERRALS - TAX TREATMENT
The amount that you may elect to contribute to your SIMPLE IRA is excludible
from gross income, subject to the limitations discussed above, and is not
includible as taxable wages on Form W-2. However, these amounts are subject to
FICA taxes.
V. ELECTIVE DEFERRALS - EXCESS AMOUNTS CONTRIBUTED
When "excess elective deferrals" (i.e., amounts in excess of the $6,000 SIMPLE
elective deferral limit or the section 402(g) limit) are made, you are
responsible for calculating whether you have exceeded these limits in the
calendar year. For 1997, the section 402(g) limit for contributions made to all
elective deferral plans is $9,500. Excess elective deferrals are calculated on
the basis of the calendar year.
VI. EXCESS ELECTIVE DEFERRALS - HOW TO AVOID ADVERSE TAX CONSEQUENCES
Excess elective deferrals are includible in your gross income in the calendar
year of deferral. Income on the excess elective deferrals is includible in your
income in the year of withdrawal from the IRA. You should withdraw excess
elective deferrals and any allocable income, from your SIMPLE IRA by April 15
following the year to which the deferrals relate. These amounts may not be
transferred or rolled over tax-free to another SIMPLE IRA. If you fail to
withdraw excess elective deferrals, and any allocable income, by the following
April 15th, the excess elective deferrals will be subject to the IRA
contribution limitations of sections 219 and 408 of the Code and thus may be
considered an excess contribution to your IRA. Such excess deferrals may be
subject to a 6% excise tax for each year they remain in your SIMPLE IRA. Income
on excess elective deferrals is includible in your gross income in the year you
withdraw it from your IRA and must be withdrawn by April 15 following the
calendar year to which the deferrals relate.
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Income withdrawn from the IRA after that date may be subject to a 10% tax (or
25% if withdrawn within the first two years of participation) on early
distributions.
VII. INCOME ALLOCABLE TO EXCESS AMOUNTS
The rules for determining and allocating income attributable to excess elective
deferrals and other excess SIMPLE contributions are the same as those governing
regular IRA excess contributions. The trustee or custodian of your SIMPLE IRA
will inform you of the income allocable to such excess amounts.
VIII. AVAILABILITY OF REGULAR IRA CONTRIBUTION DEDUCTION
In addition to any SIMPLE contribution, you may contribute to a separate IRA the
lesser of $2,000 or 100% of compensation to an IRA as a regular IRA
contribution. However, the amount that you may deduct is subject to various
limitations since you will be considered an "active participant" in an
employer-sponsored plan. See Pub. 590, "Individual Retirement Arrangement," for
more specific information.
IX. SIMPLE IRA AMOUNTS - ROLLOVER OR TRANSFER TO ANOTHER IRA
You may not roll over or transfer from your SIMPLE IRA any SIMPLE contributions
(or income on these contributions) made during the plan year to another IRA
(other than a SIMPLE IRA) until the two years following the date you first
participated in the SIMPLE plan. Also, any distribution made before this time
will be includible in your gross income and may also be subject to a 25% percent
additional income tax for early withdrawal. You may, however, remove excess
elective deferrals and income allocable to such excess amounts from your SIMPLE
IRA before this time, but you may not roll over or transfer these amounts to
another IRA.
After the two-year restriction no longer applies, you may withdraw, or
receive, funds from your SIMPLE IRA, and no more than 60 days later, place such
funds in another IRA or SIMPLE IRA. This is called a "rollover" and may not be
done without penalty more frequently than at one-year intervals. However, there
are no restrictions on the number of times that you may make "transfers" if you
arrange to have such funds transferred between the trustees so that you never
have possession of the funds. You may not, however, roll over or transfer excess
elective deferrals, and income allocable to such excess amounts from your SIMPLE
IRA to another IRA. These excess amounts may be reduced only by a distribution
to you.
X. FILING REQUIREMENTS
You do not need to file any additional forms with the IRS because of your
participation in your employer's SIMPLE Plan.
XI. EMPLOYER TO PROVIDE INFORMATION
Your employer must provide you with a copy of the executed SIMPLE agreement, a
Summary Description, the form you should use to elect to defer amounts to your
SIMPLE IRA, and a statement for each taxable year showing any contribution to
your SIMPLE IRA.
XII. FINANCIAL INSTITUTION WHERE IRA IS ESTABLISHED TO PROVIDE
INFORMATION
The financial institution must provide you with a disclosure statement that
contains information described in section 1.408-6 of the regulations. The
Disclosure Statement that is a part of this Custodian's SIMPLE IRA account
documentation must be read in conjunction with this Summary Description for
Nondesignated Financial Institutions. The Disclosure Statement contains
important information about the SIMPLE plan rules and the contents of such
Disclosure Statement are incorporated herein by reference.
See Publication 590, "Individual Retirement Arrangements," which is available at
most IRS offices, for a more complete explanation of the disclosure
requirements. In addition to the disclosure statement, the financial institution
is required to provide you with a financial statement each year. It may be
necessary to retain and refer to statements for more than one year in order to
evaluate the investment performance of your IRA and in order that you will know
how to report IRA distributions for tax purposes.
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SIMPLE IRA DISCLOSURE STATEMENT [AIM LOGO APPEARS HERE]
RIGHT TO REVOKE YOUR SIMPLE IRA ACCOUNT: You may revoke your SIMPLE IRA within
seven days after you sign the SIMPLE IRA Plan Application by hand delivering or
mailing a written notice to the name and address indicated on the SIMPLE IRA
Plan Application. If you revoke your account by mailing a written notice, such
notice must be postmarked by the seventh day after you sign the Plan
Application. If you revoke your SIMPLE IRA within the seven-day period you will
receive a refund of the entire amount of your contributions to the SIMPLE IRA
without any adjustment for earnings or any administrative expenses. If you
exercise this revocation, we are still required to report certain information to
the IRS.
GENERAL REQUIREMENTS OF A SIMPLE IRA:
1. All SIMPLE contributions must be made in cash, unless you are making a
rollover contribution or transfer, and the Custodian accepts such noncash
assets.
2. The only types of contributions permitted to be made to this SIMPLE IRA are
salary reduction contributions and employer contributions under the
employer's SIMPLE Retirement Plan.
3. The custodian of your SIMPLE IRA must be a bank, savings and loan
association, credit union or person who is approved to act in such a
capacity by the Secretary of the Treasury.
4. No portion of your SIMPLE IRA funds may be invested in life insurance
contracts.
5. Your interest in your SIMPLE IRA must be fully vested and is nonforfeitable
at all times.
6. The assets in your SIMPLE IRA may not be commingled with other property
except in a common trust fund or common investment fund.
7. You may not invest the assets of your SIMPLE IRA in collectibles (as
described in Section 408(m) of the Internal Revenue Code.) A collectible is
defined as any work of art, rug or antique, metal or gem, stamp or coin,
alcoholic beverage, or any other tangible personal property specified by the
IRS. However, if the Custodian permits, specially minted U.S. Gold and
Silver bullion coins and certain state-issued coins are permissible SIMPLE
IRA investments.
8. Your interest in your SIMPLE IRA must begin to be distributed to you by the
April 1st following the calendar year you attain the age of 70-1/2. The
methods of distribution, election deadlines and other limitations are
described in detail below.
9. For purposes of the SIMPLE IRA Plan rules, in the case of an individual who
is not a self-employed individual, compensation means the amount described
in section 6051(a)(3) which includes wages, tips and other compensation from
the employer subject to income tax withholding under section 3401(a), and
amounts described in section 6051(a)(8), including elective contributions
made under a SIMPLE plan, and compensation deferred under a section 457
plan. In the case of a self-employed individual, compensation means net
earnings from self-employment determined under section 1402(a), prior to
subtracting any contributions made under the SIMPLE plan on behalf of the
individual.
10. Contributions to a SIMPLE IRA are excludible from federal income tax and not
subject to federal income tax withholding when made to the SIMPLE IRA.
Salary reduction contributions are subject to FICA, FUTA or RRTA tax when
made and must be reported on the employee's Form W-2 wage statement.
Matching and nonelective employer contributions made to a SIMPLE IRA are not
subject to FICA, FUTA or RRTA and are not required to be reported on Form
W-2.
11. A SIMPLE IRA must be established by or on behalf of an employee prior to the
first date by which a contribution is required to be deposited into the
SIMPLE IRA.
ELIGIBLE EMPLOYEES: Under a SIMPLE Retirement Plan established by an Eligible
Employer, all employees of the employer who received at least $5,000 in
compensation from the employer during any two preceding calendar years, whether
or not consecutive, and who are reasonably expected to receive at least $5,000
in compensation during the calendar year, must be eligible to participate in
the SIMPLE Plan for the calendar year. An employer may impose less restrictive
eligibility requirements, such as eliminating or reducing the prior year
compensation requirements, the current year compensation requirement, or both,
under its SIMPLE Plan.
An employer, at its option, may exclude from eligibility employees who are
included in a unit of employees covered by an agreement that the Secretary of
Labor finds to be a collective bargaining agreement between employee
representatives and one or more employers, if there is evidence that retirement
benefits were the subject of good faith bargaining between such employee
representatives and such employer or employers; in the case of a trust
established or maintained pursuant to an agreement that the Secretary of Labor
finds to be a collective bargaining agreement between air pilots represented in
accordance with Title II of the Railway Labor Act and one or more employees, all
employees not covered by that agreement; and employees who are nonresident
aliens and who received no earned income from the employer that constitutes
income from sources within the United States.
PARTICIPATION IN ANOTHER PLAN: An eligible employee may participate in an
employer's SIMPLE Plan, even if he or she also participates in a plan of a
different employer for the same year. However, the employee's salary reduction
contributions are subject to the limitation of section 402(g), which provides an
aggregate limit on the exclusion for elective deferrals for any individual.
Also, an eligible employee who participates in an employer's SIMPLE plan and an
eligible deferred compensation plan described in section 457(b) is subject to
the limitation described in section 457(c). The employee is responsible for
monitoring compliance with these limitations.
ELIGIBLE EMPLOYERS: SIMPLE plans may be established by employers (including
tax-exempt employers and governmental entities) that had no more than 100
employees who earned $5,000 or more in compensation during the preceding
calendar year. For purposes of the 100-employee limitation, all employees
employed at any time during the calendar year are taken into account,
regardless of whether they are eligible to participate in the SIMPLE plan. This
means that otherwise excludible employees (i.e., certain union employees,
nonresident aliens with no U.S.-source income, and those employees who have not
met the plan's minimum eligibility requirements) must be taken into account.
SIMPLE PLAN CONTRIBUTIONS:
ELECTIVE DEFERRALS (SALARY REDUCTION CONTRIBUTIONS) -- A salary reduction
contribution is a contribution made pursuant to an employee's election to have
an amount contributed to his or her SIMPLE IRA, rather than have the amount
paid directly to the employee in cash. An eligible employee must be permitted
to elect to have salary reduction contributions made at the level specified by
the employee, expressed as a percentage of compensation for the year or as a
specific dollar amount. The maximum salary reduction contribution per calendar
year may not exceed $6,000, subject to cost of living adjustments. Salary
reduction contributions may not begin until the eligible employee completes a
form provided by the employer designed to permit the employee to elect the
salary reduction percentage or specific dollar amount. An employer may not
place any restrictions on the amount of an employee's salary reduction
contributions (e.g., by limiting the contribution percentage), except to the
extent needed to comply with the annual limit.
EMPLOYER CONTRIBUTIONS -- TWO OPTIONS
1. MATCHING CONTRIBUTIONS: Under a SIMPLE plan, an employer is generally
required to make a contribution on behalf of each eligible employee in an
amount equal to the employee's salary reduction contributions, up to a limit of
3% of the employee's compensation for the entire calendar year.
The 3% limit on matching contributions is permitted to be reduced for a
calendar year at the election of the employer, but only if: the limit is not
reduced below 1%; the limit is not reduced for more than two years out of the
five-year period that ends with and includes the year for which the election is
effective; and employees are notified of the reduced limit within a reasonable
period of time before the 60-day election period during which employees can
enter into salary reduction agreements as described below.
In determining whether the limit was reduced below 3% for a year, any year
before the first year in which an employer (or a predecessor employer)
maintains a SIMPLE plan will be treated as a year for which the limit was 3%.
If an employer chooses to make nonelective contributions for a year in lieu of
matching contributions, that year also will be treated as a year for which the
limit was 3%.
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2. NONELECTIVE CONTRIBUTIONS: Under a SIMPLE plan, an employer may make
nonelective contributions in lieu of matching contributions. These nonelective
contributions must be equal to 2% of each eligible employee's compensation for
the entire calendar year, regardless of whether the employee elects to make
salary reduction contributions for the calendar year. The employer may, but is
not required to, limit nonelective contributions to eligible employees who have
at least $5,000 (or some lower amount selected by the employer) of compensation
for the year. For purposes of this 2% nonelective contribution only, the
compensation taken into account must be limited to the amount of compensation
under section 401(a)(17) for the year. For 1997, this limit is $160,000 and will
be adjusted in accordance with the cost of living.
An employer may substitute the 2% nonelective contribution for the matching
contribution for a year only if eligible employees are notified within a
reasonable period of time before the 60-day election period during which
employees can enter into salary reduction agreements that a 2% nonelective
contribution will be made instead of a matching contribution.
EMPLOYEE ELECTIONS: During the 60-day period immediately preceding
January 1st of a calendar year (i.e., November 2 to December 31 of the preceding
calendar year), an eligible employee must be given the right to enter into a
salary reduction agreement for the calendar year, or to modify a prior agreement
(including reducing the amount subject to this agreement to $0). However, for
the year in which the employee becomes eligible to make salary reduction
contributions, the period during which the employee may enter into a salary
reduction agreement or modify a prior agreement is a 60-day period that includes
either the date the employee becomes eligible or the day before that date. For
example, if an employer establishes a SIMPLE plan effective as of July 1, 1997,
each eligible employee becomes eligible to make salary reduction contributions
on that date and the 60-day period must begin no later than July 1 and cannot
end before June 30, 1997.
During these 60-day periods, employees have the right to modify their
salary reduction agreements without restrictions. In addition, for the year in
which an employee becomes eligible to make salary reduction contributions, the
employee must be able to commence these contributions as soon as the employee
becomes eligible, regardless of whether the 60-day period has ended. An employer
may, but is not required to, provide additional opportunities or longer periods
for permitting eligible employees to enter into salary reduction agreements or
to modify prior agreements.
An employee must be given the right to terminate a salary reduction
agreement for a calendar year at any time during the year even if this is
outside a SIMPLE plan's normal election period. The employer's SIMPLE plan may,
however, provide that an employee who terminates a salary reduction agreement
at any time other than the normal election period is not eligible to resume
participation until the beginning of the next calendar year.
EMPLOYER ADMINISTRATIVE AND NOTIFICATION REQUIREMENTS: An employer must notify
each employee, immediately before the employee's 60-day election period, of the
employee's opportunity to enter into a salary reduction agreement or to modify
a prior agreement. If applicable, this notification must disclose an employee's
ability to select the financial institution that will serve as the trustee or
custodian of the employee's SIMPLE IRA. Such notification must also include the
Summary Description required under section 408(1)(2)(B). Such notification must
also include whether the employer will be making either matching contributions
(including the employer's election to reduce the matching contribution below
3%) or nonelective contributions as previously described.
If an eligible employee who is entitled to a contribution under the
employer's SIMPLE plan is unwilling or unable to establish a SIMPLE IRA with
any financial institution prior to the date on which the contribution is
required to be made to the SIMPLE IRA of the employee, the employer may execute
the necessary SIMPLE IRA documents on the employee's behalf with a financial
institution selected by the employer.
The employer must deliver the salary reduction contributions to the
financial institution maintaining the SIMPLE IRA as of the earliest date on
which the contributions can reasonably be segregated from the employer's
general assets, but no later than the close of the 30-day period following the
last day of the month in which amounts would otherwise have been payable to
the employee in cash.
Matching and nonelective employer contributions must be made to the
financial institution maintaining the SIMPLE IRA no later than the due date for
filing the employer's income tax return, including extensions, for the taxable
year that includes the last day of the calendar year for which the
contributions are made.
ROLLOVERS:
ROLLOVER CONTRIBUTIONS FROM ANOTHER SIMPLE IRA - A rollover contribution to
this SIMPLE IRA is only permitted from another SIMPLE IRA. A rollover
contribution from another SIMPLE IRA is any amount the participant receives
from one SIMPLE IRA and redeposits some or all of it into this SIMPLE IRA. The
participant is not required to roll over the entire amount received from the
first SIMPLE IRA. However, any amount you do not roll over will be taxed at
ordinary income tax rates for federal income tax purposes and may also be
subject to an additional tax if the distribution is a premature distribution
described below.
ROLLOVER DISTRIBUTIONS FROM A SIMPLE IRA - A distribution from any SIMPLE
IRA may be rolled over only to another SIMPLE IRA during the two-year period
the participant first participated in the employer's SIMPLE plan. Thus, a
distribution from a SIMPLE IRA during that two-year period qualifies as a
rollover contribution (and is not includible in gross income of the
participant) only if the distribution is paid into another SIMPLE IRA and
satisfies the other requirements that apply to all IRA rollovers under section
408(d)(3). SIMPLE IRAs may never be rolled into an employer's plan, such as a
qualified plan or section 403(b) plan. After this two-year period, a
distribution from a SIMPLE IRA may be rolled over to any IRA maintained by the
individual. This two-year period begins on the first day on which contributions
made by the individual's employer are deposited in the individual's SIMPLE IRA.
SPECIAL RULES THAT APPLY TO ROLLOVERS -
o The rollover must be completed no later than the 60th day after the day the
distribution was received by you.
o You may have only one IRA-to-IRA rollover during a 12-consecutive-month
period measured from the date you received a distribution of an IRA which
was rolled over to another IRA. (See IRS Publication 590 for more
information).
o The same property you receive in a distribution must be the same property
you roll over into the second IRA. For example, if you receive a
distribution from an IRA of property, such as stocks, that same stock must
be rolled over into the second IRA.
o You are required to make an irrevocable election indicating that this
transaction will be treated as a rollover contribution.
o You are not required to receive a complete distribution from your IRA in
order to make a rollover contribution into another IRA, nor are you
required to roll over the entire amount you received from the first IRA.
o If you inherit an IRA due to the death of the participant, you may not roll
this IRA into your own IRA unless you are the spouse of the decedent.
o If you are age 70 1/2 or older and wish to roll over to another IRA, you
must first satisfy the minimum distribution requirement for that year and
then the rollover of the remaining amount may be made.
o Rollover contributions to a SIMPLE IRA may not be made from a qualified
plan, 403(b) plan, or any other IRA that is not a SIMPLE IRA.
EXCESS DEFERRALS: Excess elective deferrals (amounts in excess of the $6,000
SIMPLE elective deferral limit) are includible in your gross income in the
calendar year of deferral. Income on the excess elective deferrals is
includible in your income in the year of withdrawal from the SIMPLE IRA. You
should withdraw excess elective deferrals and any allocable income, from your
SIMPLE IRA by April 15 following the year to which the deferrals relate. These
amounts may not be transferred or rolled over tax-free to another SIMPLE IRA.
If you fail to withdraw excess elective deferrals, and any allocable income, by
the following April 15th, the excess elective deferrals will be subject to the
IRA contribution limitations of sections 219 and 408 of the Code and thus may
be considered an excess contribution to your IRA. Such excess deferrals may be
subject to a 6% excise tax for each year they remain in your SIMPLE IRA. Income
on excess elective deferrals in includible in your gross income in the year you
withdraw it from your IRA and must be withdrawn by April 15 following the
calendar year to which the deferrals relate. Income withdrawn from the IRA
after that date may be subject to a 10% tax (or 25% if withdrawn within the
first two years of participation) on early distributions. The rules for
determining and allocating income attributable to excess elective deferrals and
other excess SIMPLE contributions are the same as those governing regular IRA
excess contributions. The trustee or custodian of your SIMPLE IRA will inform
you of the income allocable to such excess amounts.
DISTRIBUTIONS: In general, all distributions from a SIMPLE IRA are subject to
federal income tax by the payee or distributee, whichever the case may be. When
you start withdrawing from your SIMPLE IRA, you may take the distributions in
regular payments, random withdrawals or in a single-sum payment. Generally, all
amounts distributed to you from your SIMPLE IRA are included in your gross
income in the taxable year in which they are received. However, if you have
made nondeductible contributions to any regular IRA as permitted under section
408(o) of the Code, the nontaxable portion of the distribution, if any, will be
a percentage based upon the ratio of your unrecovered nondeductible
contributions to the aggregate of all IRA balances, including SEP, SIMPLE and
rollover contributions, as of the end of the year in which you take the
distribution, plus distributions from the account during the year. All taxable
distributions from your SIMPLE IRA are taxed at ordinary income tax rates for
federal income tax purposes and
30
<PAGE> 30
are not eligible for either capital gains treatment or 5/10 year averaging. An
employer may not require an employee to retain any portion of the contribution
in the SIMPLE IRA or otherwise impose any withdrawal restrictions.
PREMATURE DISTRIBUTIONS -- In general, if you are under age 59 1/2 and
receive a distribution from your SIMPLE IRA account, a 10% additional income tax
will apply to the taxable portion of the distribution, unless the distribution
is received due to death; disability; a series of substantially equal periodic
payments at least annually over your life expectancy or the joint life
expectancy of you and your designated beneficiary; medical expenses that exceed
7.5% of your adjusted gross income; health insurance premiums paid by certain
unemployed individuals; a qualifying rollover distribution; or the timely
withdrawal of an excess deferral plus income attributable. If you request a
distribution in the form of a series of substantially equal payments, and you
modify the payments before five years have elapsed and before attaining age
59 1/2, the 10% additional income tax will apply retroactively to the year
payments began through the year of such modification. In addition, if you
request a distribution from your SIMPLE IRA within your first two years of
participation in the SIMPLE plan and none of the exceptions listed above applies
to the distribution, the normal 10% additional income tax referred to earlier is
increased to 25%.
AGE 70 1/2 REQUIRED MINIMUM DISTRIBUTIONS -- You are required to begin
receiving minimum distributions from your SIMPLE IRA by your required
beginning date (the April 1 of the year following the year you attain age
70 1/2). The year you attain age 70 1/2 is referred to as your "first
distribution calendar year." Your minimum distribution is based upon the value
of your account at the end of the prior year (less any required distributions
you received between January 1 and April 1 of the year following your first
distribution calendar year) by the joint life expectancy of you and your
designated beneficiary. If you do not have a designated beneficiary then the
minimum distribution will be based upon your single life expectancy.
As you can see, who you designate as beneficiary under your SIMPLE IRA
will affect the period over which distributions may be made. If you have more
than one primary beneficiary, generally the beneficiary with the shortest life
expectancy will be the measuring life expectancy used for determining the
period over which distributions will be made. If no beneficiary is named or
you name a beneficiary which is not an individual (i.e., your estate),
distributions will be based upon your single life expectancy.
By the April 1 following your first distribution calendar year, you must
make certain elections on a form provided by the Custodian. If no election is
made, you will be deemed to have elected to take your distributions over a
period not to exceed your single life expectancy. The required distributions
for the second distribution calendar year and for each subsequent distribution
calendar year must be made by December 31 of such year.
Unless otherwise elected by the Custodian (or by you, if the Custodian
permits) in determining the amount to be distributed for the second
distribution calendar year and subsequent distribution calendar years, your
life expectancy (and your designated beneficiary's life expectancy) shall not
be recalculated. If the Custodian elects (or you elect, if the Custodian
permits) to recalculate your life expectancy or your spouse's life expectancy,
you will generally have a longer period of time over which payments will be
made and therefore the minimum distribution will be less.
CAUTION: If you or your spouse should die, the decedent's life expectancy
that is being recalculated is reduced to zero which will reduce the period of
distribution to the survivor's single life expectancy. If recalculation is not
elected, the death of either person will not have an effect on the payment
period.
In any distribution calendar year you may take more than the required
minimum. However, if you take less than the required minimum with respect to
any distribution calendar year, you are subject to a federal excise tax penalty
of 50% of the difference between the amount required to be distributed and the
amount actually distributed.
MINIMUM DISTRIBUTION INCIDENTAL BENEFIT (MDIB) RULE -- Basically, this
rule specifies that benefits provided under a retirement plan must be for the
primary benefit of a participant rather than for his/her beneficiaries. If your
spouse is your sole beneficiary, these special MDIB rules do not apply. The
amount required to be distributed under the MDIB rule may in some cases be more
than the amount required under the normal age 70 1/2 required minimum
distribution rules. If someone other than or in addition to your spouse is a
named primary beneficiary, the minimum distribution required is the greater of
the amount determined under the regular 70 1/2 rules and the amount determined
under the MDIB rules. The minimum amount to be distributed under the MDIB rules
is the amount determined by taking the balance in your SIMPLE IRA account and
dividing it by a factor taken from an IRS table specified in IRS regulations.
The table provides life expectancies for you and a beneficiary who is assumed
to be 10 years younger.
DEATH DISTRIBUTIONS -- If you die after your required beginning date, the
balance in your SIMPLE IRA will be distributed in a manner which is at least as
rapid as the method of distribution being used on the date of your death. If
you die before your required beginning date, the balance in your SIMPLE IRA
must generally be distributed within five years from the date of your death.
However your beneficiary(ies) may elect to receive the balance in your account
over the single life expectancy of your designated beneficiary if distributions
begin no later than the end of the year containing the one year anniversary of
your death. In addition, if your only beneficiary is your surviving spouse,
distributions need not commence until December 31st of the year you would have
attained age 70 1/2.
PROHIBITED TRANSACTIONS -- If you or your beneficiary engage in a
prohibited transaction (as defined under Section 4975 of the Internal Revenue
Code) with your SIMPLE IRA, it will lose its tax exemption and you must include
the value of your account in your gross income for that taxable year. If you
pledge any portion of your SIMPLE IRA as collateral for a loan, the amount so
pledged will be treated as a distribution and will be included in your gross
income for that year.
INCOME TAX WITHHOLDING -- All withdrawals from your SIMPLE IRA (except a
direct transfer) are subject to federal income tax withholding. You may,
however, elect not to have withholding apply to your SIMPLE IRA distribution in
most cases. If withholding does apply to your distribution, it is at the rate
of 10% of the amount of the distribution.
DESIGNATED FINANCIAL INSTITUTION "DFI":
In general, under section 408(p), an employer must permit an employee to select
the financial institution for the SIMPLE IRA to which the employer will make
all contributions on behalf of the employee. In this case, the financial
institution is referred to as a "Non-DFI." Alternatively, under section
408(p)(7), an employer may require that all SIMPLE contributions initially be
made to a single designated financial institution selected by the employee. In
this case, the financial institution is referred to as a "DFI." Refer to your
employer's SIMPLE Retirement Plan document to determine if the financial
institution is a DFI or a Non-DFI.
USE OF A DESIGNATED FINANCIAL INSTITUTION "DFI" -- If an employer
requires that all SIMPLE contributions initially be made to a DFI, the
following requirements must be met:
1. The employer and the financial institution must agree that the
financial institution will be a DFI for the employer's SIMPLE plan;
2. The DFI must agree that, if a participant elects before the
expiration of the employee's 60-day election period, the
participant's balance will be transferred without cost or penalty to
another SIMPLE IRA (or after the two-year period no longer applies,
to any IRA) to a financial institution selected by the participant;
and
3. Each participant is given written notification describing the
procedures under which, if a participant so elects, the participant's
balance will be transferred without cost or penalty to another SIMPLE
IRA (or after the two-year period no longer applies, to any IRA) to a
financial institution selected by the participant.
If the participant elects before the expiration of the 60-day election
period to have the balance transferred without cost or penalty as described
above, such election is valid only with respect to the balance attributable to
SIMPLE contributions for the calendar year following that 60-day election
period (or, for the year in which an employee becomes eligible to make salary
reduction contributions for the remainder of that year) and subsequent calendar
years if such election so provides.
If the participant timely elects the transfer of the balance without cost
or penalty as described above, the participant's balance must be transferred on
a reasonably frequent basis, such as on a monthly basis. If a participant
timely elects this transfer without cost or penalty, the Custodian reserves the
right to restrict the investment to a specified investment option until
transferred, even though a variety of investment options are available with
respect to contributions that the participant has not elected to transfer.
A transfer is deemed to be made without cost or penalty if no liquidation,
transaction, redemption or termination fee, or any commission, load (whether
front-end or back-end) or surrender charge or similar fee or charge is imposed
with respect to the balance being transferred that the participant has filed a
timely election with the DFI. However, the DFI can charge a reasonable annual
administrative fee to a SIMPLE IRA from which balances must be transferred in
accordance with the participant's timely transfer election.
In order to timely elect a transfer without cost or penalty, the
participant must indicate such election on the SIMPLE IRA Plan Application
attached hereto and must be received by the DFI no later than the expiration of
the 60-day election period applicable to the employee. If the participant fails
to timely elect such transfers without cost or penalty, the DFI reserves the
right to charge any or all fees and expenses described in Section 8.05 of this
SIMPLE IRA plan agreement.
USE OF A NONDESIGNATED FINANCIAL INSTITUTION "NON-DFI" -- If the
employer's SIMPLE plan permits the participants to select their own financial
institution to serve as trustee or custodian of the SIMPLE IRA, the rules
explained above do not apply and the Custodian may charge any and all fees
described in Section 8.05 of the SIMPLE IRA plan agreement.
TRANSFERS DEFINED -- A direct transfer is a payment from this SIMPLE IRA
directly to another trustee or custodian of a SIMPLE IRA (or, after the
two-year period no longer applies, to the trustee or custodian of any IRA).
Transfers do not constitute a distribution since you are never in receipt of
the funds. The monies
31
<PAGE> 31
are transferred directly to the new trustee or custodian. If you should transfer
all or a portion of your SIMPLE IRA to your former spouse's IRA under a divorce
decree (or under a written instrument incident to divorce) or separation
instrument, you will not be deemed to have made a taxable distribution, but
merely a transfer. The portion so transferred will be treated at the time of the
transfer as the IRA of your spouse or former spouse. If your spouse is the
beneficiary of your SIMPLE IRA, in the event of your death, your spouse may
"assume" your SIMPLE IRA. The assumed IRA is then treated as your surviving
spouse's IRA.
SUMMARY DESCRIPTION REQUIREMENTS: In general, the Custodian of any
SIMPLE IRA must annually provide to the employer maintaining the SIMPLE plan a
Summary Description early enough to allow the employer to meet its notification
obligations. If the Custodian of this SIMPLE IRA is a DFI, the Summary
Description will be provided directly to the employer by the Custodian in the
underlying SIMPLE plan agreement. If the Custodian of this SIMPLE IRA is a
Non-DFI, the Summary Description will be provided directly to the employee by
the Custodian. The employee agrees to have the employer complete certain
information contained on the Summary Description with respect to the employer's
SIMPLE plan provisions. A sample Summary Description for a Non-DFI is located on
the following page. The Custodian of a "transfer SIMPLE IRA" is not required to
provide this Summary Description. A SIMPLE IRA is a "transfer SIMPLE IRA" if it
is not a SIMPLE IRA to which the employer has made contributions under the
SIMPLE plan.
PROCEDURES FOR WITHDRAWALS: All distributions from this SIMPLE IRA
must be requested in writing on a form provided to the participant by the
Custodian. After the withdrawal form has been completed and executed by the
recipient, the form must be either hand delivered to the Custodian during normal
business hours or mailed to the Custodian by first class mail, certified or
registered mail prepaid through the U.S. Postal Service, or through any means of
an expedited delivery service. After receipt of a properly executed withdrawal
form, the Custodian will process the distribution as soon as administratively
feasible.
FEDERAL ESTATE AND GIFT TAXES: Generally, there is no specific exclusion for
SIMPLE IRAs under the estate tax rules. Therefore, in the event of your death,
your SIMPLE IRA balance will be includible in your gross estate for federal
estate tax purposes. However, if your surviving spouse is the beneficiary of
your SIMPLE IRA, the amount in your SIMPLE IRA may qualify for the marital
deduction available under Section 2056 of the Internal Revenue Code. A transfer
of property for federal gift tax purposes does not include an amount which a
beneficiary receives from a SIMPLE IRA plan.
PENALTIES: If you are under age 59 1/2 and receive a premature distribution from
your SIMPLE IRA, an additional 10% (or 25% for certain SIMPLE IRA distributions)
income tax will apply on the taxable amount of the distribution. If you make an
excess deferral to your SIMPLE IRA and it is not corrected on a timely basis, an
excise tax of 6% is imposed on the excess amount. This tax will apply each year
to any part or all of the excess which remains in your account. If you are age
70 1/2 or over or if you should die, and the appropriate required minimum
distributions are not made from your SIMPLE IRA, an additional tax of 50% is
imposed upon the difference between what should have been distributed and what
was actually distributed.
For tax years ending before 1/1/97, you will be taxed an additional 15% on
any amount you receive and include in income during a calendar year from
qualified plans, TSAs and all IRAs which exceeds the greater of $150,000
(unindexed) or $112,500 (indexed for cost of living). Before you receive an
excess distribution, you should seek advice from your tax advisor with respect
to the application of these rules. For tax years 1997, 1998 and 1999, the 15%
excess distribution tax will not apply. In the event of your death, your estate
may be subject to a 15% tax on the "excess accumulation" in all of your
qualified plans, TSAs and IRAs. You should seek the advice of your own tax
advisor with respect to the application of this excess accumulation excise tax.
You must file IRS Form 5329 with the Internal Revenue Service for any year an
additional tax is due.
IRS APPROVAL AS TO FORM: This SIMPLE IRA Custodial Agreement has been approved
by the Internal Revenue Service as to form. This is not an endorsement of the
plan in operation or of the investments offered.
ADDITIONAL INFORMATION: You may obtain further information on IRAs and SIMPLE
IRAs from your District Office of the Internal Revenue Service. In particular
you may wish to obtain IRS Publication 590 (Individual Retirement Arrangements).
32
<PAGE> 1
EXHIBIT 14(f)
[AIM LOGO APPEARS HERE]
ROTH IRA APPLICATION
TO OPEN YOUR AIM ROTH IRA ACCOUNT.
Complete Sections 1-9.
Return completed application and check to: A I M Fund Services, Inc., P.O. Box
4739, Houston, TX 77210-4739. Phone: 800-959-4246.
Minors cannot open an AIM Roth IRA account.
- --------------------------------------------------------------------------------
1 INVESTOR INFORMATION (Please print or type.)
Name
----------------------------------------------------------------------
First Name Middle Last Name
Address
-----------------------------------------------------------------
Street City State ZIP Code
Social Security Number Birth Date / /
-------------------------- ---- ---- ----
(Required to Open Account) Month Day Year
Home Telephone ( ) Work Telephone ( )
---- ------------------ ---- -------------
- --------------------------------------------------------------------------------
2 DEALER INFORMATION (To be completed by registered securities dealer)
Name of Broker/Dealer Firm
------------------------------------------------
Home Office Address
-------------------------------------------------------
Representative Name and Number
---------------------------------------------
Authorized Signature of Dealer
---------------------------------------------
Branch Address
------------------------------------------------------------
Branch Phone Number ( )
--------- ------------------------
/ / Authorized for NAV purchase (If authorized for NAV purchase, other
than the Broker, please attach NAV Certification Form)
- --------------------------------------------------------------------------------
3 CONTRIBUTION TYPE
/ / REGULAR - Contribution for tax year 19 _____ .
/ / CONVERSION - Represents a conversion from a Traditional IRA account.
/ / TRANSFER - Transfer from another Roth IRA account. Please complete
Roth IRA Asset-Transfer Form.
4 FUND INVESTMENT
Indicate Fund(s) and contribution amount(s).
MAKE CHECK PAYABLE TO INVESCO TRUST COMPANY. Minimum purchase to open a
Roth IRA is $250.
<TABLE>
<CAPTION>
Fund Amount of Investment Class of Shares (check one)
<S> <C> <C> <C> <C>
/ / AIM Advisor Flex Fund $_________________ / / Class A / / Class C
/ / AIM Advisor International Value Fund $________________ / / Class A / / Class C
/ / AIM Advisor Large Cap Value Fund $________________ / / Class A / / Class C
/ / AIM Advisor MultiFlex Fund $________________ / / Class A / / Class C
/ / AIM Advisor Real Estate Fund $________________ / / Class A / / Class C
/ / AIM Aggressive Growth Fund $________________ Fund currently closed to new investors
/ / AIM Balanced Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Blue Chip Fund $________________ / / Class A / / Class B / / Class C
</TABLE>
9
<PAGE> 2
<TABLE>
<S> <C> <C> <C> <C>
/ / AIM Capital Development Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Charter Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Constellation Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Global Aggressive Growth Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Global Growth Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Global Income Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Global Utilities Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Growth Fund $________________ / / Class A / / Class B / / Class C
/ / AIM High Yield Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Income Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Intermediate Government Fund $________________ / / Class A / / Class B / / Class C
/ / AIM International Equity Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Limited Maturity Treasury Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Money Market Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Cash Reserve Shares
/ / AIM Value Fund $________________ / / Class A / / Class B / / Class C
/ / AIM Weingarten Fund $________________ / / Class A / / Class B / / Class C
Total $________________
</TABLE>
If no class of shares is selected, Class A shares will be purchased, except
in the case of AIM Money Market Fund, where AIM Cash Reserve Shares will be
purchased. If you are funding your retirement account through a transfer,
please indicate the contribution amounts both in this section and in
Section 3 of the Asset-Transfer Form.
- --------------------------------------------------------------------------------
5 TELEPHONE EXCHANGE PRIVILEGE
Unless indicated below, I authorize A I M Fund Services, Inc., to accept
instructions from any person to exchange shares in my account(s) by
telephone in accordance with the procedures and conditions set forth in the
Fund's current prospectus.
/ / I DO NOT want the Telephone Exchange Privilege.
6 DOLLAR-COST AVERAGING PLAN (Must be under the same registration and class
of shares with the exception of AIM Cash Reserve Shares of the AIM Money
Market Fund, which may only be exchanged for Class A shares of another AIM
fund.)
I have at least $5,000 in shares in my __________________________ Fund, for
which no certificates have been issued, and I would like to exchange:
<TABLE>
<S> <C> <C>
$ _________________ into the ______________________________ Fund, Account # ____________________________
($50 minimum)
$__________________ into the ______________________________ Fund, Account # ____________________________
($50 minimum)
$__________________ into the ______________________________ Fund, Account # ____________________________
($50 minimum)
</TABLE>
on a / / monthly / / quarterly basis starting in the month of ______
on or near the / / 10th or / / 25th of the month.
- --------------------------------------------------------------------------------
7 REDUCED SALES CHARGE (optional)
RIGHT OF ACCUMULATION (This option is for Class A shares only.)
I apply for Right of Accumulation reduced sales charges based on the
following accounts in The AIM Family of Funds-Registered Trademark-:
<TABLE>
<S> <C>
Fund(s)/ Account No.(s) _______________________ Social Security No.(s)_________________________________
_______________________ _________________________________
_______________________ _________________________________
</TABLE>
LETTER OF INTENT
I agree to the Letter of Intent provisions in the Prospectus. I plan to
invest during a 13-month period a dollar amount of at least:
/ / $25,000 / / $50,000 / / $100,000 / / $250,000
/ / $500,000 / / $1,000,000
10
<PAGE> 3
8 BENEFICIARY INFORMATION
I hereby designate the following beneficiary(ies) to receive the balance in
my Roth IRA custodial account upon my death. To be effective, the
designation of beneficiary and any subsequent change in designation of
beneficiary must be filed with the Custodian prior to my death. The balance
of my account shall be distributed in equal amounts to the beneficiary(ies)
who survives me. If no beneficiary is designated or no designated
beneficiary or contingent beneficiary survives me, the balance in my Roth
IRA will be distributed to the legal representatives of my estate. This
designation revokes any prior designations. I retain the right to revoke
this designation at any time.
I hereby certify that there is no legal impediment to the designation of
this beneficiary.
PRIMARY BENEFICIARY(IES)
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
CONTINGENT BENEFICIARY
In the event that I die and no primary beneficiary listed above is alive,
distribute all Fund accounts in my SIMPLE IRA to the following contingent
beneficiary(ies) who survives me, in equal amounts. If more than on, please
attach a list.
Name % Relationship
------------------------------ ----- -----------------
Address
--------------------------------------------------------------------
Street City State ZIP Code
Beneficiary's Social Security Number Birth Date / /
--------------- ----- --- ----
Month Day Year
9 SERVICE ASSISTANCE
Our knowledgeable Client Service Representatives are available to assist
you between 7:30 a.m. and 5:30 p.m. Central time at 800-959-4246.
11
<PAGE> 4
10 AUTHORIZATION AND SIGNATURE
I hereby establish the A I M Distributors, Inc. Roth Individual Retirement
Account (IRA) appointing INVESCO Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the Roth IRA
custodial agreement and disclosure statement and consent to the custodial
account fees as specified. I understand that a $10 annual Maintenance Fee
will be deducted early in each December from my AIM Roth IRA.
WITHHOLDING INFORMATION (SUBSTITUTE FORM W-9)
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund
is required to have the following certification: Under the penalties
of perjury I certify by signing this Application as provided below
that:
1. The number shown in Section 1 of this Application is my correct
Social Security (or Tax Identification) Number, and
2. I am not subject to backup withholding either because (a) I have
not been notified by the Internal Revenue Service (the "IRS") that I
am subject to backup withholding as a result of a failure to report
all interest or dividends or (b) the IRS has notified me that I am no
longer subject to backup withholding. (This paragraph (2) does not
apply to real estate transactions, mortgage interest paid, the
acquisition or abandonment of secured property, contributions to an
individual retirement arrangement and payments other than interest and
dividends.)
YOU MUST CROSS OUT PARAGRAPH (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY
THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE
OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN.
In addition, the Fund hereby incorporates by reference into this
section of the Application either the IRS instructions for Form W-9 or
the substance of those instructions--whichever is incorporated in the
Prospectus.
SIGNATURE PROVISIONS
I, the undersigned Depositor, have read and understand the foregoing
Application and the attached material included herein by reference. In
addition, I certify that the information which I have provided and the
information which is included within the Application and the attached
material included herein by reference is accurate including but not limited
to the representations contained in the Witholding Information section of
this Application above. (The Internal Revenue Service does not require your
consent to any provision of this document other than the certifications to
avoid backup withholding.)
Dated ___ /___ /___
Signature of Roth IRA Shareholder
---------------------------------------
11 MAILING INSTRUCTIONS
Make check payable to INVESCO Trust Company.
Return Application to:
<TABLE>
<CAPTION>
REGULAR MAIL OR OVERNIGHT DELIVERIES ONLY
<S> <C>
AIM Fund Services, Inc. AIM Fund Services, Inc.
P.O. Box 4739 11 Greenway Plaza, Suite 763
Houston, TX 77210-4739 Houston, TX 77046
</TABLE>
12
<PAGE> 5
[AIM LOGO APPEARS HERE]
ROTH IRA ASSET-TRANSFER FORM
USE THIS FORM ONLY WHEN TRANSFERRING ASSETS FROM AN EXISTING ROTH IRA TO AN AIM
ROTH IRA.
THIS FORM IS NOT TO BE USED FOR CONVERSIONS.
Note: Use this form ONLY if you want AIM to request the money directly from
another custodian.
Complete Sections 1-5.
If you do not already have an AIM Roth IRA, you must also submit an AIM Roth IRA
Application. AIM will arrange the transfer for you.
1 INVESTOR INFORMATION (Please print or type.)
Name
----------------------------------------------------------------------
First Name Middle Last Name
Address
-----------------------------------------------------------------
Street City State ZIP Code
Social Security Number Birth Date / /
-------------------------- ---- ---- ----
Month Day Year
Home Telephone ( ) Work Telephone ( )
---- ------------------ ---- -------------
2 CURRENT TRUSTEE/CUSTODIAN
Name of Resigning Trustee/Custodian
---------------------------------------
Account Number of Resigning Trustee/Custodian
-----------------------------
Address of Resigning Trustee/Custodian
------------------------------------
Street
---------------------------------------------------------------------------
City State ZIP Code
Attention Telephone
---------------------------------- ------------------
3 ROTH IRA ACCOUNT INFORMATION
<TABLE>
<S> <C> <C>
Please deposit proceeds in my / / New AIM Roth IRA* / / Existing AIM Roth IRA Account Number __________________
</TABLE>
INVESTMENT ALLOCATION:
<TABLE>
<S> <C> <C>
Fund Name ______________________________ Class _________________ % _______________
Fund Name ______________________________ Class _________________ % _______________
Fund Name ______________________________ Class _________________ % _______________
</TABLE>
*If this is a new AIM Roth IRA account, you must attach a completed AIM
Roth IRA Application. If no class of shares is selected, Class A shares
will be purchased with the exception of the AIM Money Market Fund, where
AIM Cash Reserve Shares will be purchased.
4 TRANSFER INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
OPTION 1: Please liquidate from my Roth IRA account listed in Section 2 and
transfer the amount indicated below to my Roth IRA with INVESCO Trust
Company.
Amount to liquidate: / / All / / Partial amount of $_______________
When to liquidate: / / Immediately / / At maturity _____ /_____ /_____
OPTION 2: (If the account listed in Section 2 contains shares of an AIM
Fund, you may choose to transfer them "in kind.") Please deposit "in kind"
the shares of the AIM Fund held in my account to INVESCO Trust Company.
NOTE: ONLY AIM FAMILY OF FUND SHARES MAY BE TRANSFERRED IN KIND. TO
TRANSFER ALL OTHER ASSETS, THEY MUST BE LIQUIDATED.
Amount to transfer "in kind" immediately: / / All / / Partial amount of
shares____________
13
<PAGE> 6
5 AUTHORIZATION AND SIGNATURE
I have established a Roth Individual Retirement Account with the AIM Funds
and have appointed INVESCO Trust Company as the successor Custodian. Please
accept this as your authorization and instruction to liquidate or transfer
in kind the assets noted above, which your company holds for me.
Your Signature Date / /
---------------------------------- --- --- ----
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Brokerage Firm
--------------------------------------------
Signature Guaranteed by
---------------------------------------------------
(Name and title)
REMAINDER OF FORM TO BE COMPLETED BY AIM
6 CUSTODIAN ACCEPTANCE
This is to advise you that INVESCO Trust Company, as custodian, will accept
the account identified above for:
Depositor's Name Account Number
------------------------------- -----------
This transfer of assets is to be executed from fiduciary to fiduciary and
will not place the participant in actual receipt of all or any of the plan
assets. No federal income tax is to be withheld from this transfer of
assets.
Authorized Signature /s/ Illegible Mailing Date / /
----------------------- --- -- ---
(INVESCO Trust Company)
7 INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check. Return this completed form
and completed Roth IRA application to: INVESCO Trust Company, c/o A I M
Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739.
Make check payable to INVESCO Trust Company.
Indicate the AIM account number and the Social Security number of the Roth
IRA holder on all documents.
[AIM LOGO APPEARS HERE]
14
<PAGE> 7
<TABLE>
<CAPTION>
Form 5305-RA ROTH INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT Do not file
(January 1998) (Under Section 408A of the Internal Revenue Code) with the Internal
Revenue Service
<S> <C> <C>
Department of the Treasury
Internal Revenue Services
- ---------------------------------------------------------------------------------------------------------------------------
Name of depositor Date of birth of depositor Social security number
- ---------------------------------------------------------------------------------------------------------------------------
Address of depositor Check if Roth Conversion IRA / /
Check if Amendment / /
- ---------------------------------------------------------------------------------------------------------------------------
Name of Custodian Address or principal place of business or custodian
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The depositor whose name appears above is establishing a Roth individual
retirement account (Roth IRA) under section 408A to provide for his or her
retirement and for the support of his or her beneficiaries after death.
The custodian named above has given the depositor the disclosure statement
required under Regulations section 1.408-6.
The depositor assigned the custodial account $
----------------------
The depositor and the custodian make the following agreement:
- --------------------------------------------------------------------------------
ARTICLE I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then,
except in the case of a rollover contribution described in section 408A(e), the
custodian will accept only cash contributions and only up to a maximum amount of
$2,000 for any tax year of the depositor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no
contributions other than IRA Conversion Contributions made during the same tax
year will be accepted.
ARTICLE II
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married depositor who files jointly, between AGI of $150,000 and $160,000;
and for a married depositor who files separately, between $0 and $10,000. In the
case of a conversion, the custodian will not accept IRA Conversion Contributions
in a tax year if the depositor's AGI for that tax year exceeds $100,000 or if
the depositor is married and files a separate return. Adjusted gross income is
defined in section 408A(c)(3) and does not include IRA Conversion Contributions.
ARTICLE III
The depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE IV
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
ARTICLE V
1. If the depositor dies before his or her entire interest is distributed
to him or her and the grantor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the depositor or, if the
depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:
(a) Be distributed by December 31 of the year containing the fifth
anniversary of the depositor's death, or
(b) Be distributed over the life expectancy of the designated beneficiary
starting no later than December 31 of the following the year of the depositor's
death.
If distributions do not begin by the date described in (b), distribution
method (a) will apply.
2. In case of distribution method 1.(b) above, to determine the minimum
annual payment for each year, divide the grantor's entire interest in the trust
as of the close of business on December 31 of the preceding year by the life
expectancy of the designated beneficiary using the attained age of the
designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent year.
3. If the depositor's spouse is the sole beneficiary on the depositor's
date of death, such spouse will then be treated as the depositor.
ARTICLE VI
1. The depositor agrees to provide the custodian with information necessary
for the custodian to prepare any reports required under sections 408(I) and
408A(d)(3)(E). Regulations sections 1.408-5 and 1.408-6, and under guidance
published by the Internal Revenue Service.
2. The custodian agrees to submit reports to the Internal Revenue Service
and the depositor prescribed by the Internal Revenue Service.
ARTICLE VII
Notwithstanding any other articles which may be added or Incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
ARTICLE VIII
This agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance. Other
amendments may be made with the consent of the persons whose signatures appear
below.
- --------------------------------------------------------------------------------
17 Cat No. 25094Y Form 5305-RA (1-98)
<PAGE> 8
ARTICLE IX
The following information is applicable to Roth IRAs, not Traditional IRAs.
The rules regarding Roth IRAs are new. Congress and the Internal Revenue Service
are refining the rules, so the following rules and/or their interpretation are
subject to change.
1. PURSUANT TO THE TERMS of this A I M Distributors, Inc. Individual
Retirement Custodial Account Agreement and the related Roth IRA Application
(referred to herein as the "Roth IRA Adoption Agreement"), the Depositor directs
the Custodian to invest all custodial account funds after deductions for sales
charges and Custodian fees, in shares issued by the investment company or
companies selected by the Depositor on the Roth IRA Adoption Agreement, until
the Depositor hereafter gives the Custodian contrary instructions pursuant to
Article XIII below. The investment companies from which the Depositor may select
are enumerated on the applicable list prepared by A I M Distributors, Inc. (the
"Distributor"), a copy of which accompanies the Adoption Agreement. Such
investment companies are part of "The AIM Family of Funds-Registered
Trademark-," which are managed or advised by subsidiaries of A I M Management
Group Inc. and any such investment company will hereafter be referred to as
"Investment Company."
2. (i) ANNUAL CASH CONTRIBUTIONS:
The Depositor may make annual cash contributions to the account within the
limits specified in Article I. All contributions shall be hand delivered or
mailed to the Custodian by the Depositor, with an indication of the taxable year
to which such contribution relates.
(ii) ROLLOVER CONTRIBUTIONS:
In addition to any annual contributions referred to in Paragraph (i) above,
but subject to this Paragraph (ii), the Depositor may contribute to the account,
at any time, a rollover contribution of such cash or other property as shall
constitute a rollover amount or contribution under section 402(c), 403(a)(4),
403(b)(8), 408(d)(3) or 408A(e) of the Code. The Depositor shall be responsible
for determining whether a rollover to a Roth IRA is permissible under the
Internal Revenues Code, and the timeliness of any rollover. The Custodian will
accept for the account all rollover contributions which consist of cash, and it
may, but shall be under no obligation to, accept any other rollover
contribution. In the case of rollover contributions composed of assets other
than cash, the prospective Depositor shall provide the Custodian with a
description of such assets and such other information as the Custodian may
reasonably require. The Custodian may accept all or any part of such a rollover
contribution if it determines that the assets of which such contribution
consists are either in a medium proper for investment hereunder or that the
assets can be promptly liquidated for cash. The Custodian may reject any
rollover contribution.
The Depositor warrants that any rollover contribution to the account
consists of cash, the same property received in the distribution or, in the case
of amounts distributed to the Depositor from a qualified employer's plan or
annuity, the proceeds from the sale of the same property received in the
distribution.
3. THE DEPOSITOR SHALL BE FULLY AND SOLELY RESPONSIBLE for all taxes,
interest and penalties which might accrue or be assessed by reason of any excess
or impermissible deposit, and interest, if any, earned thereon. Any
contributions made by or on behalf of the Depositor in respect of a taxable year
of the Depositor shall be made by or on behalf of the Depositor to the Custodian
for deposit in the custodial account within the time period for claiming any
income tax deduction for such taxable year. It shall be the sole responsibility
of the Depositor to determine the amount of the contributions made hereunder.
The Depositor shall execute such forms as the Custodian may require in
connection with any contribution hereunder.
ARTICLE X
1. THE CUSTODIAN SHALL from time to time, subject to the provisions of
Articles IV and V, make distributions out of the custodial account to the
Depositor, in such manner and amounts as may be specified in written
instructions of the Depositor. All such instructions shall be deemed to
constitute a certification by the Depositor that the distribution so directed is
one that the Depositor is permitted to receive. A declaration of the Depositor's
intention as to the disposition of an amount distributed pursuant to Article V
hereof shall be in writing and given to the Custodian. The Custodian shall have
no liability with respect to any contribution to the custodial account, any
investment of assets in the custodial account or any distribution therefrom
pursuant to instructions received from the Depositor or pursuant to this
Agreement, or for any consequences to the Depositor arising from such
contributions, investments or distributions including, but not limited to,
excise and other taxes and penalties which might accrue or be assessed by reason
thereof, nor shall the Custodian be under any duty to make any inquiry or
investigation with respect thereto.
2. THE DEPOSITOR SHALL BE fully and solely responsible for all taxes and
penalties which might accrue or be assessed for having failed to make the annual
minimum withdrawal required in any year.
ARTICLE XI
A Depositor shall have the right to designate a beneficiary or
beneficiaries to receive any amounts remaining in his account in the event of
his death. Any prior beneficiary designation may be changed or revoked at any
time by a Depositor by written designation signed by the Depositor on a form
acceptable to, and filed with, the Custodian; provided, however, that such
designation, or change or revocation of a prior designation shall not become
effective until it has been received by the Custodian, nor shall it be effective
unless received by the Custodian no later than thirty days before the death of
the Depositor, and provided further that the last such designation of
beneficiary or change or revocation of beneficiary executed by the Depositor, if
received by the Custodian within the time specified, shall control. Unless
otherwise provided in the beneficiary designation, amounts payable by reason of
the Depositor's death will be paid in equal shares only to the primary
beneficiary or beneficiaries who survive the Depositor, or, if no primary
beneficiary survives the Depositor, to the contingent beneficiary or
beneficiaries who survive the Depositor. If the Depositor had not, by the date
of his death, properly designated a beneficiary in accordance with the preceding
sentences, or if no designated beneficiary survives the Depositor, then the
Depositor's beneficiary shall be the Depositor's estate.
ARTICLE XII
1. ANY ADMINISTRATIVE OR OTHER FEES of the Custodian and its agents for
performing duties pursuant to this Agreement shall be in such amount as shall be
established from time to time. The Depositor agrees to pay the Custodian the
fees specified in its current fee schedule and authorizes the Custodian to
charge the Depositor's custodian account for the amount of such fees.
2. UPON 30 DAYS' PRIOR WRITTEN NOTICE, the Custodian may substitute a new
fee schedule. The Custodian's fees, any income, gift, estate and inheritance
taxes and other taxes of any kind whatsoever, including transfer taxes incurred
in connection with the investment or reinvestment of the assets of the custodial
account, that may be levied or assessed in respect of such assets, and all other
administrative expenses incurred by the Custodian in the performance of its
duties including fees for legal services rendered to the Custodian, may be
charged to the custodial account with the right to liquidate Investment Company
shares for this purpose, or at the Custodian's option, shall be billed to the
Depositor directly.
ARTICLE XIII
1. THIS AGREEMENT SHALL take effect only when accepted and signed by the
Custodian. As directed, the Custodian shall then open and maintain a separate
custodial account for Depositor and invest the initial contribution hereunder in
shares of the Investment Company. Where the Roth IRA Adoption Agreement is
checked for spousal accounts, separate custodial accounts will be opened and
maintained in each spouse's name. The amounts specified in the Roth IRA Adoption
Agreement shall be credited to each spouse's separate custodial account except
that no more than $2,000 shall be credited to either custodial account.
2. THE CUSTODIAN SHALL invest subsequent contributions as directed. If any
such written instructions are not received as required however, or if received,
are in the opinion of the Custodian unclear, or if the accompanying contribution
exceeds $2,000 for the Depositor and/or $2,000 for the Depositor's spouse, the
Custodian may hold or return all or a portion of the contribution uninvested
without liability for loss of income or appreciation, and without liability for
interest, pending receipt of written instructions or clarification.
3. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, less charges, received on
Investment Company shares held in the custodial account shall (unless received
in additional such shares) be reinvested in shares of the Investment Company,
which shall be credited to the custodial account. If any distribution on such
shares may be received at the election of the Depositor in additional such
shares or in cash or other property, the Custodian shall elect to receive it in
additional Investment Company shares.
4. ALL INVESTMENT COMPANY SHARES ACQUIRED by the Custodian hereunder shall
be registered in the name of the Custodian (with or without identifying the
Depositor) or of its nominees. The Custodian shall deliver, or cause to be
executed and delivered, to the Depositor all notices, prospectuses, financial
statements, proxies and proxy solicitation materials relating to such Investment
Company shares held in the custodial account. The Custodian shall not vote any
Investment Company shares except in accordance with the written instructions
received from the Depositor.
ARTICLE XIV
1. THE CUSTODIAN SHALL keep adequate records of transactions it is required
to perform hereunder. Not later than six months after the close of each calendar
year or after the Custodian's registration or removal pursuant to Article XV
below, the Custodian shall render to the Depositor or the Depositor's legal
representative a written report or reports reflecting the transactions effected
by it during such period and the assets and liabilities of the custodial account
at the close of the period. Sixty days after rendering such report(s), the
Custodian shall (to the extent permitted by law) be forever released and
discharged from all liability and accountability to anyone with respect to its
acts and transactions shown in or reflected by such report(s), except with
respect to those as to which the Depositor or the Depositor's legal
representative shall have filed written objections with the Custodian within the
latter such sixty-day period.
2. THE CUSTODIAN SHALL receive and invest contributions as directed by the
Depositor, hold and distribute such investments, and keep adequate records and
reports thereon, all in accordance with this Agreement. The parties do not
intend to confer any other fiduciary duties of the Custodian, and none shall be
implied. The Custodian shall not be liable (and assumes no responsibility) for
the
18
<PAGE> 9
collection of contributions, the deductibility or propriety of any contribution
under this Agreement, or the purposes or propriety of any distribution from the
account, which matters are the responsibility of the Depositor or the
Depositor's legal representative.
3. THE DEPOSITOR, to the extent permitted by law, shall always fully
indemnify the Custodian and save it harmless from any and all liability
whatsoever which may arise in connection with this Agreement and matters which
it contemplates, except that which arises due to the Custodian's negligence and
willful misconduct. The Custodian shall not be obligated or expected to commence
or defend any legal action or proceeding in connection with this Agreement or
such matters unless agreed upon by the Custodian and Depositor or said legal
representative, and unless fully indemnified for so doing to the Custodian's
satisfaction.
4. THE CUSTODIAN MAY conclusively rely upon and shall be protected in
acting upon any written order from the Depositor or the Depositor's legal
representative or any other notice, request, consent, certificate or other
instruments or paper believed by it to be genuine and to have been properly
executed, and as long as it acts in good faith in taking or omitting to take any
other action in reliance thereon.
ARTICLE XV
1. THE CUSTODIAN MAY resign at any time upon 30 days' notice in writing to
the Depositor, and may be removed by the Depositor at any time upon thirty days'
notice in writing to the Custodian. Upon such resignation or removal, the
Depositor shall appoint a successor custodian to serve under this Agreement.
Upon receipt by the Custodian of written acceptance of such appointment by the
successor custodian, the Custodian shall transfer to such successor the assets
of the custodial account and all necessary records (or copies thereof)
pertaining thereto, provided that (at the Custodian's request) any successor
custodian shall agree not to dispose of any such records without the Custodian's
consent. The Custodian is authorized, however, to reserve such assets as it may
deem advisable for payment of any other liabilities constituting a charge on or
against the assets of the custodial account or on or against the Custodian, with
any balance of such reserve remaining after the payment of all such items to be
paid over to the successor custodian.
2. THE CUSTODIAN SHALL NOT be liable for the acts or omissions of such
successor custodian.
3. THE CUSTODIAN, AND EVERY SUCCESSOR CUSTODIAN appointed to serve under
this Agreement, must be a bank (as defined in Section 408(n) of the Code) or
such other person who qualifies with the Internal Revenue Service to serve in
the manner prescribed by Code section 408(a)(2) and satisfies the Custodian,
upon request, as to such qualification.
4. AFTER THE CUSTODIAN HAS transferred the custodial account assets
(including any reserve balance as contemplated above) to the successor
custodian, the Custodian shall be relieved of all further liability with respect
to this Agreement, the custodial account and the assets thereof.
ARTICLE XVI
1. THE CUSTODIAN SHALL terminate the custodial account and pay the proceeds
of the account to the depositor if within 30 days after the resignation or
removal of the Custodian pursuant to Article XV above, the Depositor has not
appointed a successor custodian which has accepted such appointment unless
within that time the Distributor appoints such successor and gives written
notice thereof to the Depositor and the Custodian. The Distributor shall have
the right, but not the duty, to appoint such a successor. Termination of the
custodial account shall be effected by distributing all of the assets therein in
cash or in kind to the Depositor in a lump sum, subject to the Custodian's right
to reserve funds as provided in said Article XV.
2. UPON TERMINATION of the custodial account in any manner provided for in
this Article XVI, this Agreement shall terminate and have no further force and
effect, and the Custodian shall be relieved from all further liability with
respect to this Agreement, the custodial account and all assets thereof so
distributed.
ARTICLE XVII
1. ANY NOTICE FROM THE CUSTODIAN TO THE DEPOSITOR provided for in this
Agreement shall be effective when mailed if sent by first class mail to the
Depositor at the Depositor's last known address as shown on the Custodian's
records. Any notice required or permitted to be given to the Custodian, shall
become effective upon actual receipt by the Custodian at such address as the
Custodian shall provide the Depositor from time to time in writing.
2. THIS AGREEMENT IS accepted by the Custodian and shall be construed and
administered in accordance with the laws of the State of Colorado. The Custodian
and the Depositor hereby waive and agree to waive right to trial by jury in an
action or proceeding instituted in respect to this custodial account. The
Depositor further agrees that the venue of any litigation between him and the
Custodian with respect to the custodial account shall be in the State of
Colorado.
3. THIS AGREEMENT IS intended to qualify under section 408A of the Code as
a Roth IRA and if any provision hereof is subject to more than one
interpretation or any term used herein is subject to more than one construction,
such ambiguity shall be resolved in favor of that interpretation or construction
which is consistent with that intent.
4. ALL PROVISIONS IN THIS AGREEMENT ARE subject to the Code and to
regulations promulgated thereunder. In the event that any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
5. THE CUSTODIAN SHALL have no duties whatsoever except such duties as it
specifically agrees to in writing, and no implied covenants or obligations shall
be read into this Agreement against the Custodian. The Custodian shall not be
liable under this Agreement, except for its own bad faith, gross negligence or
willful misconduct.
6. NO INTEREST, RIGHT OR CLAIM IN OR TO ANY PART of the custodial account
or any payment therefrom shall be assignable, transferable, or subject to sale,
mortgage, pledge, hypothecation, communication, anticipation, garnishment,
attachment, execution, or levy of any kind and the Custodian shall not recognize
any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute or
anticipate the same, except as required by law.
7. THE DEPOSITOR HEREBY DELEGATES to the Custodian the power to amend this
Agreement from time to time as it deems appropriate, and hereby consents to all
such amendments, provided, however, that all such amendments are in compliance
with the provisions of the Code and the regulations promulgated thereunder. All
such amendments shall be effective as of the date specified in a written notice
of amendment which will be sent to the Depositor.
INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF FORM
This model custodial account agreement may be used by an individual who
wishes to adopt a Roth IRA under section 408A. When fully executed by the
Depositor and the Custodian not later than the time prescribed by law for filing
the Federal income tax return for the Depositor's tax year (not including any
extensions thereof), a Depositor will have a Roth IRA custodial account which
meets the requirements of section 408A. This account must be created in the
United States for the exclusive benefit of the Depositor or his/her
beneficiaries.
DEFINITIONS
CUSTODIAN. The Custodian must be a bank or savings and loan association, as
defined in section 408(n), or other person who has the approval of the Internal
Revenue Service to act as custodian.
DEPOSITOR. The Depositor is the person who establishes the custodial
account.
ROTH IRA FOR NONWORKING SPOUSES
Contributions to a Roth IRA custodial account for a non-working spouse must
be made to a separate Roth IRA custodial account established by the nonworking
spouse.
This form may be used to establish the Roth IRA custodial account for the
nonworking spouse.
An individual's social security number will serve as the identification
number of his or her individual retirement account.
For more information, obtain a copy of the required disclosure statement
from your custodian or get Publication 590, Individual Retirement Arrangements
(IRAs).
SPECIFIC INSTRUCTIONS
ARTICLE IV -- Distribution made under this Article may be made in a single
sum, periodic payment, or a combination of both.
ARTICLE IX -- This article and any that follow it may incorporate
additional provisions that are agreed upon by the Depositor and the Custodian to
complete the agreement. These may include, for example: definitions, investment
powers, voting rights, exculpatory provisions, amendment and termination,
removal of Custodian, Custodian's fees, state law requirements, beginning date
of distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the Depositor, etc. Use additional pages if
necessary and attach them to this form.
Note: This form may be reproduced and reduced in size for adoption to
passbook or card purposes.
THE AIM FAMILY OF FUNDS-Registered Trademark-
ROTH IRA CUSTODIAL ACCOUNT DISCLOSURE STATEMENT
Under applicable federal regulations, a custodian of a Roth IRA account is
required to furnish each depositor who has established or is establishing a Roth
IRA account with a statement which discloses certain information regarding the
account. INVESCO Trust Company (hereinafter referred to as the "Custodian") is
providing this Disclosure Statement to you in accordance with that requirement,
and this Disclosure Statement contains general information about the The AIM
19
<PAGE> 10
Family of Funds-Registered Trademark- Roth IRA Custodial Account (hereinafter
referred to as "Roth IRA"). This Disclosure Statement should be reviewed in
conjunction with both the Roth Individual Retirement Custodial Account agreement
(Form 5305 and any attachments thereto, hereinafter referred to as the
"Custodial Agreement") and the Adoption Agreement for your Roth IRA. You should
review this Disclosure Statement and the Roth IRA documents with your attorney
or tax advisor. The Custodian cannot give tax advice or determine whether or not
the Roth IRA is appropriate for you.
The following information is applicable to Roth IRAs, not Traditional IRAs. The
rules regarding Roth IRAs are new. Congress and the Internal Revenue Service are
refining the rules, so the following rules and/or their interpretation are
subject to change.
A. SEVEN DAY RIGHT TO REVOKE YOUR ROTH IRA.
You may revoke your Roth IRA at any time within 7 business days after the
date the Roth IRA is established, by giving proper notice. For purposes of
revocation, it will be assumed that you received the Disclosure Statement no
later than the date of your check with which you opened your Roth IRA. Written
notice must be hand delivered or sent by first class mail, in which case, the
revocation will be effective as of the date the notice is postmarked (or if sent
by certified or registered mail, the date of certification or registration).
Notice of revocation should be made to: A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 763, P.O. Box 4739, Houston, Texas 77210-4739, Attention:
Shareholder Services Department, area code (800) 959-4246. If you revoke your
Roth IRA, you are entitled to a refund of your entire contribution to the Roth
IRA, without adjustment for such items as sales commissions, administrative
expenses or fluctuation in market value. If you do not revoke within 7 business
days after the establishment of the Roth IRA, you will be deemed to have
accepted the terms and conditions of the Roth IRA and cannot later revoke the
Roth IRA without certain potential penalties.
B. STATUTORY REQUIREMENTS.
A Roth IRA is a trust or custodial account created or organized in the
United States for your exclusive benefit or that of your beneficiaries. It must
be created by a written governing instrument that meets the following
requirements:
(1) THE TRUSTEE OR CUSTODIAN MUST BE A BANK, federally insured credit
union, savings and loan association or another person eligible to act as trustee
or custodian;
(2) EXCEPT FOR ROLLOVER CONTRIBUTIONS (as described in Part F below), no
contribution will be accepted unless it is in cash or cash equivalent,
including, but not by way of limitation, personal checks, cashier's checks, and
wire transfers;
(3) EXCEPT FOR ROLLOVERS contributions of more than $2,000 for any tax year
may not be made;
(4) YOU WILL HAVE A NONFORFEITABLE INTEREST IN THE ACCOUNT;
(5) NO PART OF THE TRUST OR CUSTODIAL FUNDS will be invested in life
insurance contracts, nor may the assets be commingled with other property except
in a common trust fund or common investment fund. Furthermore, as provided in
section 408(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
your Roth IRA may not be invested in "collectibles," such as art works,
antiques, metals, gems, stamps, coins (with an exception for certain U.S.-minted
gold and silver coins and certain bullion), and certain other types of tangible
personal property. An investment in a collectible would be treated as a
distribution from your Roth IRA which would be includible in your gross income,
and, if you had not attained the age of 59 1/2, the distribution would also be
subject to the premature distribution penalty as discussed in Part E(5) below;
(6) UNLIKE A TRADITIONAL IRA, YOUR INTEREST IN YOUR ROTH IRA IS NOT
REQUIRED TO BE DISTRIBUTED WHEN YOU REACH AGE 70 1/2.
C. INVESTMENT OF YOUR ROTH IRA.
Under the terms of the Custodial Agreement, your contributions will be
invested by the Custodian in full and fractional shares of the investment
company or companies that you select. As provided in the Custodial Agreement,
you may only invest your Roth IRA Funds in shares of investment companies which
are part of "The AIM Family of Funds-Registered Trademark-," which are managed
or advised by subsidiaries of A I M Management Group Inc. You will be provided
with a list of the investment companies from which you may choose to invest.
Subject to the foregoing and to any additional restrictions described in the
Custodial Agreement, you have complete control over the investment of your Roth
IRA Funds. The Custodian will not provide any form of investment advice or make
investment recommendations of any type, so you will make all investment
decisions on the basis of information you obtain from other sources. When you
make a decision on how you wish to invest Funds held in your Roth IRA, you
should provide the Custodian with specific instructions, detailing your
investment decision so that the Custodian can effectuate such investments as
provided in your Roth IRA Custodial Agreement. If you fail to direct the
Custodian as to the Investment of all or any portion of your Roth IRA account,
the Custodian shall hold such uninvested amount in your account and shall incur
no liability for interest or earnings thereon. All dividends and capital gain
distributions received on shares of an investment company held in your Roth IRA
will be reinvested in shares of that investment company, if available, which
shall be credited to the Custodian account. Detailed information about the
shares of the AIM fund(s) you select must be furnished to you in the form of
prospectuses governed by rules of the Securities and Exchange Commission.
D. LIMITATIONS AND RESTRICTIONS ON ROTH IRA CONTRIBUTIONS AND DEDUCTIONS.
Except in the case of rollover contributions (see Part F below), generally
you may contribute up to the lesser of $2,000 or 100% of your compensation
(earned income) to your Roth IRA for any taxable year. A non-working spouse may
contribute up to $2,000 to a separate Roth IRA.
Contributions to a Roth IRA are nondeductible, but earnings on a Roth IRA
generally are not subject to federal income tax. The $2,000 individual Roth IRA
limit is reduced by any deductible or nondeductible contributions you make to a
Traditional IRA. You should consult your tax advisor to determine the specific
application of such rules to your Roth IRA contributions for any particular
taxable year.
Contributions to a Roth IRA are not deductible, but earnings on a Roth IRA
generally are not subject to federal income tax if they are distributed after
the account has been in existence for five years and the distribution is made on
account of death, disability, after age 59 1/2, or for certain qualifying
events. The $2,000 maximum contribution to a Roth IRA is reduced for taxpayers
whose income exceeds $95,000 (single filer) or $150,000 (joint filers) and is
phased-out entirely for taxpayers whose income exceeds $110,000 (single) or
$160,000 (joint).
E. FEDERAL INCOME TAX STATUS OF THE ROTH IRA AND CERTAIN DISTRIBUTIONS.
(1) IN GENERAL. Except as described below, your Roth IRA and earnings
thereon are exempt from federal income tax at least until distributions are made
from the Roth IRA.
(2) TAX TREATMENT OF DISTRIBUTIONS FROM A ROTH IRA. Contributions to a Roth
IRA are not tax-deductible, but distributions may be received tax-free under
certain circumstances. After a Roth IRA account has been maintained for at least
five years (whether or not contributions were made for all years), investment
earnings may be withdrawn without being subject to federal income tax if the
distribution is made after age 59 1/2, in the case of death or disability, or
for a first home purchase. A withdrawal for a first home purchase is limited to
$10,000 and is available to a person who has not had an ownership interest in a
principal residence during the two years ending on the date of purchase. The
dollar amount of contributions (but not earnings) to a Roth IRA may be withdrawn
without penalty at any time.
(3) EXCESS CONTRIBUTIONS. If contributions to your Roth IRA are in excess
of the limits stated in Part D above, you will be assessed a 6% nondeductible
excise tax on such excess amounts. This tax is payable for each year the excess
is permitted to remain in your Roth IRA. However, if the excess contribution and
all earnings thereon are returned before the due date for filing your income tax
return for the year in which the excess contribution was made, the 6% excise tax
will not be assessed. The earnings on such excess contributions that are
returned to you will be taxable as ordinary income and will be deemed to have
been earned and taxable in the tax year during which the excess contribution was
made. In addition, if you are not disabled or have not reached age 59 1/2, the
earnings will be subject to the 10% premature withdrawal penalty discussed
below. The 6% excess contribution tax may be eliminated for future tax years by
withdrawing the excess contribution from your Roth IRA before the due date for
filing your tax return for that year or by under-contributing for a subsequent
year by an amount equal to the excess contribution. If the total contributions
for the year to your Roth IRA are $2,000 or less, you may withdraw any excess
contributions after the due date for filing your tax return, including
extensions, and not include the amount withdrawn in your gross income. It is not
necessary to withdraw the interest or other income earned on the excess. You
will have to pay the 6% tax on the excess amount for each year the excess
contribution was in the Roth IRA.
If less than the maximum amount of contributions has been made in years
before the year you make an excess contribution, the prior year's difference may
not be used to reduce the excess contribution. Qualified rollover contributions,
as described in Part F below, are not considered excess contributions.
(4) PREMATURE DISTRIBUTIONS. In addition to any regular income tax that may
be payable, distributions from your Roth IRA that occur before you reach age 59
1/2 (except in the event of disability, death, rollover, or as a qualifying
distribution), will be assessed a 10% additional income tax on the amount
distributed which is includible in your gross income. However, the additional
10% income tax will not be imposed if the distribution is one of a scheduled
series of level payments to be made over your life or life expectancy or over
the joint lives or joint life expectancies of you and your beneficiary. Amounts
treated as distributions from the Roth IRA because of pledging the Roth IRA as
described below, or prohibited transactions as described below, will also be
considered premature distributions if they occur before you reach age 59 1/2
(assuming you are not disabled).
(5) PLEDGING THE ROTH IRA. If you pledge your Roth IRA as security for a
20
<PAGE> 11
loan, the portion so pledged is treated as being distributed to you in that
year. In addition to any regular income tax that may be payable on the
distribution, the premature distribution penalty as discussed above may also be
applicable.
(6) PROHIBITED TRANSACTIONS. If you or your beneficiary engages in a
prohibited transaction, as described in section 4975 of the Code with respect to
your Roth IRA, your Roth IRA will lose its exemption from tax and you must
include the fair market value of your Roth IRA in your gross income for the year
during which the prohibited transaction occurred. In addition to any regular
income tax that may be payable, the premature distribution penalty as discussed
above may also be applicable.
(7) ESTATE AND GIFT TAX STATUS OF DISTRIBUTIONS. You should consult your
tax advisor with respect to the application of community property laws on estate
and gift tax issues relating to your Roth IRA.
(8) FEDERAL INCOME TAX WITHHOLDING. The taxable portion of distributions
from your Roth IRA, if any, is subject to federal income tax withholding unless
you elect not to have withholding applied. If you elect not to have withholding
applied to taxable distributions from your IRA, or if insufficient federal
income tax is withheld from any distribution, you may be responsible for payment
of estimated taxes, as well as for penalties under the estimated tax rules, if
withholding and estimated tax payments were not sufficient. Additional
information regarding withholding and the necessary election forms will be
provided no later than at the time a distribution is requested.
F. ROLLOVER CONTRIBUTIONS.
A rollover is a contribution of cash or other assets from one retirement
program to another. There are two kinds of rollover contributions to an IRA. In
one, you contribute amounts distributed to you from one IRA to another IRA. With
the other type, you contribute amounts distributed to you from your employer's
qualified plan or 403(b) plan to an IRA. A rollover is an allowable IRA
contribution which is not subject to the limits on regular contributions
discussed in Part D above. However, you may not deduct a rollover contribution
to your IRA on your tax return.
If you receive a distribution from the qualified plan of your employer or
former employer, the distribution must be an "eligible rollover distribution" in
order for you to be able to roll all or part of the distribution over to your
IRA. Your employer or former employer will give you the opportunity to roll over
the distribution directly from the plan to the IRA. If you elect, instead, to
receive the distribution, you must deposit it into the IRA within 60 days after
you receive it.
An "eligible rollover distribution" is any distribution from a qualified
plan that would be taxable other than (1) a distribution that is one of a series
of periodic payments for an employee's life or over a period of 10 years or
more, (2) a required distribution after you attain age 70 1/2 and (3) certain
corrective distributions.
The proceeds of a Roth IRA may be rolled over only to another Roth IRA. A
Roth IRA may accept the proceeds of a tax-qualified plan or a traditional IRA,
but any taxable portion of such a rollover shall be subject to federal income
tax. Similarly, a Traditional IRA may be redesignated as a Roth IRA, with the
taxable portion of the converted IRA being subject to federal income tax at the
time of conversion. In the case of such a rollover or conversion during 1998,
the amount required to be included in income shall be spread ratably over four
years.
G. AMENDMENTS.
The Custodian of your Roth IRA may amend the agreements establishing your
Roth IRA at any time. The Custodian will comply with the amendment procedures
set forth in your Custodial Agreement.
H. FINANCIAL DISCLOSURE.
Because the value of assets held in your Roth IRA is subject to market
fluctuation, the value of your Roth IRA can neither be guaranteed nor projected.
There is no assurance of growth in the value of your Roth IRA or guarantee of
investment results. You will, however, be provided with periodic statements of
your Roth IRA, including current market values of investments.
Certain fees will be charged by the Custodian in connection with your Roth
IRA. Such fees are disclosed on the Custodian's fee schedule, a copy of which
has been provided to you. Upon thirty days' prior written notice, the Custodian
may substitute a new fee schedule. Any fees or other expenses incurred in
connection with your Roth IRA will be deducted from your Roth IRA (with
liquidation of Fund Shares, if necessary), or at the Custodian's option, such
fees or expenses may be billed to you directly.
For its services to the various funds, in The AIM Family of
Funds-Registered Trademark-, INVESCO Trust Company receives a custodian fee.
This fee is in addition to fees it receives for acting as Custodian under the
Roth IRA. INVESCO Trust Company and A I M Distributors, Inc., also will receive
additional fees for performing specific services with respect to the various
funds in the AIM Family of Funds. Any such fees will be fully disclosed to you.
Potential investors should obtain a copy of the current Prospectus relating to
the fund(s) selected for investment prior to making an investment. Also, copies
of the Statement of Additional Information relating to such fund(s) will be
provided upon your request to A I M Distributors, Inc.
I. MISCELLANEOUS.
Each year you will be provided a statement(s) of account which will give
the amount of contributions to the Roth IRA, the year to which each contribution
relates, and the total value of the Roth IRA as of the end of the year.
Information relating to contributions and distributions must be reported
annually to the Internal Revenue Service and to you. You must also file Form
5329 (Return for Individual Retirement Savings Arrangement) with the Internal
Revenue Service for each taxable year during which you are assessed any penalty
or tax as discussed in Part E above.
Further information about Roth IRAs can be obtained from any district
office of the Internal Revenue Service or from the Custodian.
All provisions in this Disclosure Statement are subject to the Code and to
the regulations promulgated thereunder. This Disclosure Statement constitutes a
nontechnical restatement and summary of certain provisions of the Code which may
affect your Roth IRA. This is not a legal document. Your legal rights and
obligations are governed by the federal tax laws and regulations and your
Custodial Agreement and Adoption Agreement with the Custodian.
The Depositor has assigned the Roth IRA custodial account
______ dollars ($______) in cash.
The Depositor has assigned the Roth IRA custodial account
______ dollars ($______) in cash.
- --------------------------------------------------------------------------------
Depositor's signature Date
- --------------------------------------------------------------------------------
Custodian's signature Date
- --------------------------------------------------------------------------------
Witness
(Use only if signature of the Depositor or the Custodian is required to be
witnessed.)
21
<PAGE> 1
EXHIBIT 15(a)(1)
AMENDMENT NO. 1
AMENDED AND RESTATED MASTER DISTRIBUTION PLAN
The Amended and Restated Master Distribution Plan (the "Plan"), dated
as of June 30, 1997, pursuant to Rule 12b-1 of AIM Equity Funds, Inc., a
Maryland corporation, is hereby amended as follows:
Schedule A of the Plan is hereby deleted in its entirety and replaced
with the following:
"SCHEDULE A TO
MASTER DISTRIBUTION PLAN
AIM EQUITY FUNDS, INC.
(CLASS B SHARES)
MAXIMUM
ASSET BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE FEE
AIM Blue Chip Fund 0.75% 0.25% 1.00%
AIM Capital Development Fund 0.75% 0.25% 1.00%
AIM Charter Fund 0.75% 0.25% 1.00%
AIM Constellation Fund 0.75% 0.25% 1.00%
AIM Weingarten Fund 0.75% 0.25% 1.00%
All other terms and provisions of the Plan not amended herein shall
remain in full force and effect.
Dated: October 14, 1997
AIM EQUITY FUNDS, INC.
(on behalf of its Class B Shares)
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
-------------------------- ----------------------------
Assistant Secretary President
<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 which may be amended from time to time by A I M Distributors, Inc.
("Distributors")to this Agreement (the "Funds"), under a Distribution Plan (the
"Plan") adopted pursuant to said Rule. This Agreement, being made between
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.
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,
account designations 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.
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.
11/97
<PAGE> 2
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 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.
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 100
Houston, Texas 77046-1173
11/97
<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 Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund B Shares 0.25 March 3, 1998
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund B Shares 0.25 March 3, 1998
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund B Shares 0.25 March 3, 1998
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor Multiflex Fund B Shares 0.25 March 3, 1998
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund B Shares 0.25 March 3, 1998
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Asian Growth Fund A Shares 0.25 November 1, 1997
AIM Asian Growth Fund B Shares 0.25 November 1, 1997
AIM Asian Growth Fund C Shares 1.00** November 1, 1997
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 July 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund B Shares 0.25 November 3, 1997
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM European Development Fund A Shares 0.25 November 1, 1997
AIM European Development Fund B Shares 0.25 November 1, 1997
AIM European Development Fund C Shares 1.00** November 1, 1997
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 Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50 September 15, 1994
</TABLE>
2/98
<PAGE> 4
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 Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM Growth Fund C Shares 1.00** August 4, 1997
AIM High Income Municipal Fund A Shares 0.25 December 22, 1997
AIM High Income Municipal Fund B Shares 0.25 December 22, 1997
AIM High Income Municipal Fund C Shares 1.00** December 22, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Fund 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 1.00** August 4, 1997
AIM Cash Reserve 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 Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
</TABLE>
2/98
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
is paid as an asset-based sales charge, as those terms are defined under
the rules of the National Association of Securities Dealers, Inc.
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.
2/98
<PAGE> 1
EXHIBIT 15(c)(1)
[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.
7/97
<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 assignment,
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.
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 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Asian Growth Fund A Shares 0.25 November 3, 1997
AIM Asian Growth Fund B Shares 0.25 November 3, 1997
AIM Asian Growth Fund C Shares 1.00** November 3, 1997
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 June 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund B Shares 0.25 November 3, 1997
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM European Development Fund A Shares 0.25 November 3, 1997
AIM European Development Fund B Shares 0.25 November 3, 1997
AIM European Development Fund C Shares 1.00** November 3, 1997
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 Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50 September 15, 1994
</TABLE>
10/97
<PAGE> 4
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ----------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM Growth Fund C Shares 1.00** August 4, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Fund 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 1.00** August 4, 1997
AIM Cash Reserve 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 Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
</TABLE>
10/97
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
(0.35% for AIM Advisor Income Fund) is paid as an asset-based sales charge,
as those terms are defined under the rules of the National Association of
Securities Dealers, Inc.
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.
10/97
<PAGE> 1
EXHIBIT 15(d)(1)
EXHIBIT C
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
This Variable Group Annuity Contractholder Service Agreement (the
"Agreement") has been adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act") under a Distribution Plan adopted pursuant
to said Rule. This Agreement, being made between A I M Distributors, Inc.
("Distributors") and the authorized insurance company, sets forth the terms for
the provision of specialized services to holders of Group Annuity Contracts
(the "Contracts") issued by insurance company separate accounts 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 AIM-managed mutual
funds (or designated classes of such funds) (the "Fund(s)") listed in Appendix
A, attached hereto, which may be amended from time to time by Distributors.
Distributors' role in these arrangements will be solely as agent for the Funds.
1. To the extent you provide specialized services to holders of
Contracts who have selected the Fund(s) for purposes of their Group Annuity
Contracts ("Contractholders") you will receive payment pursuant to the
distribution plan adopted by each of the Funds. Such services to Group
Contractholders may include, without limitation, some or all of the
following: answering inquiries regarding the Fund(s); 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. You represent that you will accept a fee
hereunder only so long as you continue to provide personal services to
Contractholders.
2. Shares of the Fund(s) purchased by you will be registered in your
name and you may exercise all applicable rights of a holder of such Shares.
You agree to transmit to the Funds, in a timely manner, all purchase orders
and redemption requests and to forward to each of your Contractholders as
you deem necessary, periodic shareholder reports and other communications
received from the Funds.
3. You agree to wire to the Fund(s)' custodian bank, within three (3)
business days of the placing of a purchase order, federal funds in an
amount equal to the amount of all purchase orders placed by you on behalf
of your Contractholders and accepted by the Funds (net of any redemption
orders placed by you on behalf of your Contractholders).
C-1
<PAGE> 2
4. You shall provide such facilities and personnel (which may be all
or any part of the facilities currently used in your business, or all or
any personnel employed by you) 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
Distributors and you, neither you nor any of your 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 prospectus applicable to
the Fund(s). Neither the Funds, A I M Advisors, Inc. ("Advisors"),
Distributors nor any of their affiliates will be a party, nor will they be
represented as a party, to any Group Annuity Contract agreement between you
and the Contractholders nor shall the Funds, Advisors, Distributors or any
of their affiliates participate, directly or indirectly, in any
compensation that you may receive from Contractholders and their Plans'
participants.
6. In consideration of the services and facilities described herein,
you shall receive an annual fee, payable quarterly, as set forth in
Appendix A, of the aggregate average net asset value of shares of the
Fund(s) owned by you during each quarterly period for the benefit of
Contractholders' Plans' participants. You understand that this Agreement
and the payment of such distribution fees have been authorized and approved
by the Boards of Directors/Trustees of the Fund(s). You 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 Funds reserve the right, at their discretion and without
notice, to suspend the sale of their shares or to withdraw the sale of
their shares.
8. This Agreement may be amended at any time without your consent by
mailing a copy of an amendment to you at the address set forth below. Such
amendment shall become effective on the date set forth in such amendment
unless you terminate this Agreement as set forth below within thirty (30)
days of your receipt of such amendment.
9. This Agreement may be terminated at any time by us on not less than
60 days' written notice to you at your principal place of business. You
may terminate this Agreement on 60 days' written notice addressed to us at
our principal place of business. We may also terminate this Agreement for
cause on violation by you of any of the provisions of this Agreement, said
termination to become effective on the date of mailing notice to you of
such termination. Our failure to terminate for any cause shall not
constitute a waiver of our right to terminate at a later date for any such
cause.
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/trustees of such Fund who are Dis-interested Directors/Trustees,
as defined in 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 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.
C-2
<PAGE> 3
10. All communications to us shall be sent to 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Any notice to you shall be duly given if
mailed, telegraphed or sent by facsimile to you at the address shown on
this Agreement.
11. This Agreement shall become effective as of the date when it is
executed and dated below by us. 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.
Date: By:
------------------- ----------------------------
Signature
----------------------------
Print Name
The undersigned agrees to abide by the foregoing terms and conditions.
Date:
------------------- ----------------------------
(Firm Name)
----------------------------
(Address)
----------------------------
(City) / (State) / (County)
By:
-------------------------
Name:
-----------------------
Title:
-----------------------
C-3
<PAGE> 4
APPENDIX A
TO
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
<TABLE>
<CAPTION>
Fund Fee Rate*
- ---- ---------
<S> <C>
AIM Advisor Funds, Inc. (Class A Shares Only)
- ---------------------------------------------
AIM Advisor Flex Fund .25%
AIM Advisor International Value Fund .25%
AIM Advisor Large Cap Value Fund .25%
AIM Advisor MultiFlex Fund .25%
AIM Advisor Real Estate Fund .25%
AIM Equity Funds, Inc. (Class A Shares Only)
- --------------------------------------------
AIM Aggressive Growth Fund** .25%
AIM Blue Chip Fund .25%
AIM Capital Development 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 Asian Growth Fund .25%
AIM European Development Fund .25%
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 (Class A Shares)
- ------------------------------------------------
AIM Limited Maturity Treasury Fund .15%
</TABLE>
*Frequency of Payments: Quarterly
**AIM Aggressive Growth Fund is currently closed to new investors.
C-4
<PAGE> 1
EXHIBIT 15(e)(1)
AGENCY PRICING AGREEMENT
(THE AIM FAMILY OF FUNDS--Registered Trademark--)
This Agreement is entered into as of the____ of ____________, 1997,
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 advisor, 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. SERVICES
Plan Provider shall provide shareholder and administration services
for the Plans and/or their Participants, including, without
limitation: answering questions about the Funds; assisting in changing
dividend options, account designations and addresses; establishing and
maintaining shareholder accounts and records; and assisting in
processing purchase and redemption transactions (the "Services").
Plan Provider shall comply with all applicable laws, rules and
regulations, including requirements regarding prospectus delivery and
maintenance and preservation of records. To the extent allowed by
law, Plan Provider shall provide Distributor with copies of all
records that Distributor may reasonably request. Distributor or its
affiliate will recognize each Plan as an unallocated account in each
Fund, and will not maintain separate accounts in each Fund for each
Participant. Except to the extent provided in Section 3, all Services
performed by Plan Provider shall be as an independent contractor and
not as an employee or agent of Distributor or any of the Funds. Plan
Provider and Plan Representatives, and not Distributor, shall take all
necessary action so that the transactions contemplated by this
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.
2. 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 4:00 p.m. Eastern Time) on the New York
<PAGE> 2
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.
Distributor or its affiliate 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.
3. ORDERS AND SETTLEMENT
If Plan Provider receives instructions in proper form from
Participants or Plan Representatives before the Close of Trading on a
Business Day, Plan Provider will process such instructions that same
evening. On the next Business Day, Plan Provider will transmit orders
for net purchases or redemptions of Shares to Distributor or its
designee by 9:00 a.m. Central Time and wire payment for net purchases
by 2:00 p.m. Central Time. Distributor or its affiliate will wire
payment for net redemptions on the Business Day following the day the
order is executed for the Accounts. In doing so, Plan Provider will
be considered the Funds' agent, and Shares will be purchased and
redeemed as of the Business Day on which Plan Provider receives the
instructions. Plan Provider will record time and date of receipt of
instructions and will, upon request, provide such instructions and
other records relating to the Services to Distributor's auditors. If
Plan Provider receives instructions in proper form after the Close of
Trading on a Business Day, Plan Provider will treat the instructions
as if received on the next Business Day.
4. REPRESENTATIONS WITH RESPECT TO THE DISTRIBUTOR AND THE FUNDS
Plan Provider and its agents shall limit representations concerning a
Fund or Shares to 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 and Morningstar, and in current
sales literature created by Plan Provider and submitted to and
approved in writing by Distributor prior to its use.
5. 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 Distributor for written approval prior to use.
Plan Provider shall provide copies of its regulatory filings that
include any reference to A I M Management Group Inc. or its
subsidiaries or the Funds to Distributor. 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
-2-
<PAGE> 3
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.
6. TERMINATION
(a) This Agreement may be terminated with respect to any Fund at
any time without 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 Plan, 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 ninety (90)
days' prior written notice to the other party at the address
specified below.
7. INDEMNIFICATION
(a) Plan Provider agrees to indemnify and hold harmless the
Distributor, its affiliates, the Funds, the Funds' investment
advisors, 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 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
-3-
<PAGE> 4
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.
8. 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.
9. 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. Each party represents that 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. Additionally, each party represents that this
Agreement, when executed and delivered, shall constitute its valid,
legal and binding obligation, enforceable in accordance with its
terms.
Plan Provider further represents, warrants, and covenants that:
(a) 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 not required to be registered as such;
(b) the arrangements provided for in this Agreement will be
disclosed to the Plan Representatives; and
(c) 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 not required to be registered as such.
-4-
<PAGE> 5
Distributor further represents, warrants and covenants, that:
(a) it is registered as a broker-dealer under the 1934 Act and any
applicable state securities laws; and
(b) the Funds' advisors are registered as investment advisors
under the Investment Advisers Act of 1940, the Funds are
registered as investment companies under the 1940 Act and Fund
Shares are registered under the Securities Act.
10. MODIFICATION
This Agreement and Exhibit A may be amended at any time by Distributor
without Plan Provider's consent by Distributor mailing a copy of an
amendment to Plan Provider at the address set forth below. Such
amendment shall become effective thirty (30) days from the date of
mailing unless this Agreement is terminated by the Plan Provider
within such thirty (30) days.
11. 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.
12. SURVIVAL
The provisions of Sections 1, 5 and 7 shall survive termination of
this Agreement.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Agreement by
their duly authorized officers as of the date first above written.
______________________________________
(PLAN PROVIDER)
By:___________________________________
Print Name:___________________________
Title:________________________________
Address: _____________________________
______________________________________
______________________________________
A I M DISTRIBUTORS, INC.
(DISTRIBUTOR)
By:___________________________________
Print Name:___________________________
Title:________________________________
11 Greenway Plaza
Suite 100
Houston, Texas 77210
-6-
<PAGE> 7
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 Class A Shares of the
Plans' balances for the prior quarter:
<TABLE>
<CAPTION>
FUND ANNUAL FEE
- ---------- ----------
<S> <C>
AIM Advisor Funds, Inc.
- -----------------------
AIM Advisor Flex Fund .25%
AIM Advisor Income Fund .25%
AIM Advisor International Value Fund .25%
AIM Advisor Large Cap Value Fund .25%
AIM Advisor MultiFlex Fund .25%
AIM Advisor Real Estate Fund .25%
AIM Equity Funds, Inc.
- ----------------------
AIM Aggressive Growth Fund * .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Weingarten Fund .25%
AIM Funds Group
- ---------------
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.
- -----------------------------
AIM Asian Growth Fund .25%
AIM European Development Fund .25%
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
- -------------------------------
AIM Limited Maturity Treasury Fund .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. Distributor
reserves the right at any time to impose minimum fee payment requirements
before any quarterly payments will be made 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.
Minimum Payments: $50 (with respect to all Funds in the aggregate.)
** AIM Aggressive Growth Fund is currently closed to new investors.
<PAGE> 1
EXHIBIT 15(f)(1)
A I M DISTRIBUTORS, INC.
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
(BROKERS FOR BANK TRUST DEPARTMENTS)
_____________, 19___
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
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
<PAGE> 2
Shareholder Service Agreement Page 2
(Brokers for Bank Trust Departments)
shareholder reports and other communications received from AIM
Distributors by 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 100, 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 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 100
Houston, Texas 77046-1173
<PAGE> 5
Shareholder Service Agreement Page 5
(Brokers for Bank Trust Departments)
SCHEDULE A
Funds Fees
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
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 Asian Growth Fund
AIM European Development Fund
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
- ---------
* Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 6
A I M DISTRIBUTORS, INC.
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE]
A I M Distributors, Inc. (BANK TRUST DEPARTMENTS)
_________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
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 us relating
<PAGE> 7
Shareholder Service Agreement Page 2
(Bank Trust Departments)
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 100, 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 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
<PAGE> 8
Shareholder Service Agreement Page 3
(Bank Trust Departments)
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 the Agreement for Purchase of
Shares of The AIM Family of Funds--Registered Trademark-- 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--Registered Trademark-- 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 100
Houston, Texas 77046-1173
<PAGE> 10
Shareholder Service Agreement Page 5
(Bank Trust Departments)
SCHEDULE A
Funds Fees
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
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 Asian Growth Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM International Equity Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
- ----------
* Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Weingarten
Fund Class A Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 1
<NAME> AIM WEINGARTEN FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 4878060355
<INVESTMENTS-AT-VALUE> 6347262658
<RECEIVABLES> 48737932
<ASSETS-OTHER> 213361
<OTHER-ITEMS-ASSETS> 23692
<TOTAL-ASSETS> 6396237643
<PAYABLE-FOR-SECURITIES> 19092775
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16007549
<TOTAL-LIABILITIES> 35100324
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3937446869
<SHARES-COMMON-STOCK> 280351236
<SHARES-COMMON-PRIOR> 262925039
<ACCUMULATED-NII-CURRENT> 28516289
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 925614568
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1469559593
<NET-ASSETS> 6361137319
<DIVIDEND-INCOME> 53208013
<INTEREST-INCOME> 14062704
<OTHER-INCOME> 0
<EXPENSES-NET> (66169824)
<NET-INVESTMENT-INCOME> 1100893
<REALIZED-GAINS-CURRENT> 933882009
<APPREC-INCREASE-CURRENT> 438536902
<NET-CHANGE-FROM-OPS> 1373519804
<EQUALIZATION> 408150
<DISTRIBUTIONS-OF-INCOME> (15132904)
<DISTRIBUTIONS-OF-GAINS> (591355228)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 45963360
<NUMBER-OF-SHARES-REDEEMED> (59981657)
<SHARES-REINVESTED> 31444494
<NET-CHANGE-IN-ASSETS> 1055702232
<ACCUMULATED-NII-PRIOR> 44516626
<ACCUMULATED-GAINS-PRIOR> 580711311
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 37487692
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 68473620
<AVERAGE-NET-ASSETS> 5466375838
<PER-SHARE-NAV-BEGIN> 20.19
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 4.82
<PER-SHARE-DIVIDEND> (0.06)
<PER-SHARE-DISTRIBUTIONS> (2.24)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.72
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Weingarten
Fund Class B Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 2
<NAME> AIM WEINGARTEN FUND CLASS B SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 4878060355
<INVESTMENTS-AT-VALUE> 6347262658
<RECEIVABLES> 48737932
<ASSETS-OTHER> 213361
<OTHER-ITEMS-ASSETS> 23692
<TOTAL-ASSETS> 6396237643
<PAYABLE-FOR-SECURITIES> 19092775
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16007549
<TOTAL-LIABILITIES> 35100324
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3937446869
<SHARES-COMMON-STOCK> 280351236
<SHARES-COMMON-PRIOR> 262925039
<ACCUMULATED-NII-CURRENT> 28516289
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 925614568
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1469559593
<NET-ASSETS> 6361137319
<DIVIDEND-INCOME> 53208013
<INTEREST-INCOME> 14062704
<OTHER-INCOME> 0
<EXPENSES-NET> (66169824)
<NET-INVESTMENT-INCOME> 1100893
<REALIZED-GAINS-CURRENT> 933882009
<APPREC-INCREASE-CURRENT> 438536902
<NET-CHANGE-FROM-OPS> 1373519804
<EQUALIZATION> 408150
<DISTRIBUTIONS-OF-INCOME> (15132904)
<DISTRIBUTIONS-OF-GAINS> (591355228)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 45963360
<NUMBER-OF-SHARES-REDEEMED> (59981657)
<SHARES-REINVESTED> 31444494
<NET-CHANGE-IN-ASSETS> 1055702232
<ACCUMULATED-NII-PRIOR> 44516626
<ACCUMULATED-GAINS-PRIOR> 580711311
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 37487692
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 68473620
<AVERAGE-NET-ASSETS> 383198900
<PER-SHARE-NAV-BEGIN> 19.98
<PER-SHARE-NII> (0.15)
<PER-SHARE-GAIN-APPREC> 4.75
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (2.24)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.34
<EXPENSE-RATIO> 1.87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Weingarten
Fund Class C Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 3
<NAME> AIM WEINGARTEN FUND CLASS C SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 4878060355
<INVESTMENTS-AT-VALUE> 6347262658
<RECEIVABLES> 48737932
<ASSETS-OTHER> 213361
<OTHER-ITEMS-ASSETS> 23692
<TOTAL-ASSETS> 6396237643
<PAYABLE-FOR-SECURITIES> 19092775
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16007549
<TOTAL-LIABILITIES> 35100324
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3937446869
<SHARES-COMMON-STOCK> 280351236
<SHARES-COMMON-PRIOR> 262925039
<ACCUMULATED-NII-CURRENT> 28516289
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 925614568
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1469559593
<NET-ASSETS> 6361137319
<DIVIDEND-INCOME> 53208013
<INTEREST-INCOME> 14062704
<OTHER-INCOME> 0
<EXPENSES-NET> (66169824)
<NET-INVESTMENT-INCOME> 1100893
<REALIZED-GAINS-CURRENT> 933882009
<APPREC-INCREASE-CURRENT> 438536902
<NET-CHANGE-FROM-OPS> 1373519804
<EQUALIZATION> 408150
<DISTRIBUTIONS-OF-INCOME> (15132904)
<DISTRIBUTIONS-OF-GAINS> (591355228)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 45963360
<NUMBER-OF-SHARES-REDEEMED> (59981657)
<SHARES-REINVESTED> 31444494
<NET-CHANGE-IN-ASSETS> 1055702232
<ACCUMULATED-NII-PRIOR> 44516626
<ACCUMULATED-GAINS-PRIOR> 580711311
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 37487692
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 68473620
<AVERAGE-NET-ASSETS> 958881
<PER-SHARE-NAV-BEGIN> 22.83
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> (0.45)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.34
<EXPENSE-RATIO> 1.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Weingarten
Fund Institutional Class October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 4
<NAME> AIM WEINGARTEN FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 4878060355
<INVESTMENTS-AT-VALUE> 6347262658
<RECEIVABLES> 48737932
<ASSETS-OTHER> 213361
<OTHER-ITEMS-ASSETS> 23692
<TOTAL-ASSETS> 6396237643
<PAYABLE-FOR-SECURITIES> 19092775
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16007549
<TOTAL-LIABILITIES> 35100324
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3937446869
<SHARES-COMMON-STOCK> 280351236
<SHARES-COMMON-PRIOR> 262925039
<ACCUMULATED-NII-CURRENT> 28516289
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 925614568
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1469559593
<NET-ASSETS> 6361137319
<DIVIDEND-INCOME> 53208013
<INTEREST-INCOME> 14062704
<OTHER-INCOME> 0
<EXPENSES-NET> (66169824)
<NET-INVESTMENT-INCOME> 1100893
<REALIZED-GAINS-CURRENT> 933882009
<APPREC-INCREASE-CURRENT> 438536902
<NET-CHANGE-FROM-OPS> 1373519804
<EQUALIZATION> 408150
<DISTRIBUTIONS-OF-INCOME> (15132904)
<DISTRIBUTIONS-OF-GAINS> (591355228)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 45963360
<NUMBER-OF-SHARES-REDEEMED> (59981657)
<SHARES-REINVESTED> 31444494
<NET-CHANGE-IN-ASSETS> 1055702232
<ACCUMULATED-NII-PRIOR> 44516626
<ACCUMULATED-GAINS-PRIOR> 580711311
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 37487692
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 68473620
<AVERAGE-NET-ASSETS> 66222553
<PER-SHARE-NAV-BEGIN> 20.46
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> 4.90
<PER-SHARE-DIVIDEND> (0.15)
<PER-SHARE-DISTRIBUTIONS> (2.24)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.05
<EXPENSE-RATIO> 0.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM
Constellation Fund Class A Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 5
<NAME> AIM CONSTELLATION FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 10410065063
<INVESTMENTS-AT-VALUE> 14412396246
<RECEIVABLES> 216468542
<ASSETS-OTHER> 155340
<OTHER-ITEMS-ASSETS> 45707
<TOTAL-ASSETS> 14629065835
<PAYABLE-FOR-SECURITIES> 56413158
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43593705
<TOTAL-LIABILITIES> 10006863
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9520633579
<SHARES-COMMON-STOCK> 496914432
<SHARES-COMMON-PRIOR> 453018553
<ACCUMULATED-NII-CURRENT> (270243)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1022762877
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3985932759
<NET-ASSETS> 14529058972
<DIVIDEND-INCOME> 32008695
<INTEREST-INCOME> 61609664
<OTHER-INCOME> 0
<EXPENSES-NET> (145244971)
<NET-INVESTMENT-INCOME> (51626612)
<REALIZED-GAINS-CURRENT> 1046160029
<APPREC-INCREASE-CURRENT> 1234273644
<NET-CHANGE-FROM-OPS> 2228807061
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (411872922)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 217644354
<NUMBER-OF-SHARES-REDEEMED> (189665029)
<SHARES-REINVESTED> 15916554
<NET-CHANGE-IN-ASSETS> 2980518010
<ACCUMULATED-NII-PRIOR> (124538)
<ACCUMULATED-GAINS-PRIOR> 388200602
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 82922239
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 148340992
<AVERAGE-NET-ASSETS> 12953471546
<PER-SHARE-NAV-BEGIN> 25.48
<PER-SHARE-NII> (0.11)
<PER-SHARE-GAIN-APPREC> 4.75
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.89)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 29.23
<EXPENSE-RATIO> 1.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM
Constellation Fund Class C Shares October 31, 1997 annual reports.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 6
<NAME> AIM CONSTELLATION FUND CLASS C SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 10410065063
<INVESTMENTS-AT-VALUE> 14412396246
<RECEIVABLES> 216468542
<ASSETS-OTHER> 155340
<OTHER-ITEMS-ASSETS> 45707
<TOTAL-ASSETS> 14629065835
<PAYABLE-FOR-SECURITIES> 56413158
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43593705
<TOTAL-LIABILITIES> 100006863
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9520633579
<SHARES-COMMON-STOCK> 496914432
<SHARES-COMMON-PRIOR> 453018553
<ACCUMULATED-NII-CURRENT> (270243)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1022762877
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3985932759
<NET-ASSETS> 14529058972
<DIVIDEND-INCOME> 32008695
<INTEREST-INCOME> 61609664
<OTHER-INCOME> 0
<EXPENSES-NET> (145244971)
<NET-INVESTMENT-INCOME> (51626612)
<REALIZED-GAINS-CURRENT> 1046160029
<APPREC-INCREASE-CURRENT> 1234273644
<NET-CHANGE-FROM-OPS> 2228807061
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (411872922)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 217644354
<NUMBER-OF-SHARES-REDEEMED> (189665029)
<SHARES-REINVESTED> 15916554
<NET-CHANGE-IN-ASSETS> 2980518010
<ACCUMULATED-NII-PRIOR> (124538)
<ACCUMULATED-GAINS-PRIOR> 388200602
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 82922239
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 148340992
<AVERAGE-NET-ASSETS> 10863777
<PER-SHARE-NAV-BEGIN> 30.32
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> (1.10)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 29.18
<EXPENSE-RATIO> 1.83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM
Constellation Fund Institutional Class October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 7
<NAME> AIM CONSTELLATION FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 10410065063
<INVESTMENTS-AT-VALUE> 14412396246
<RECEIVABLES> 216468542
<ASSETS-OTHER> 155340
<OTHER-ITEMS-ASSETS> 45707
<TOTAL-ASSETS> 14629065835
<PAYABLE-FOR-SECURITIES> 56413158
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43593705
<TOTAL-LIABILITIES> 10006863
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9520633579
<SHARES-COMMON-STOCK> 496914432
<SHARES-COMMON-PRIOR> 453018553
<ACCUMULATED-NII-CURRENT> (270243)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1022762877
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3985932759
<NET-ASSETS> 14529058972
<DIVIDEND-INCOME> 32008695
<INTEREST-INCOME> 61609664
<OTHER-INCOME> 0
<EXPENSES-NET> (145244971)
<NET-INVESTMENT-INCOME> (51626612)
<REALIZED-GAINS-CURRENT> 1046160029
<APPREC-INCREASE-CURRENT> 1234273644
<NET-CHANGE-FROM-OPS> 2228807061
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (411872922)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 217644354
<NUMBER-OF-SHARES-REDEEMED> (189665029)
<SHARES-REINVESTED> 15916554
<NET-CHANGE-IN-ASSETS> 2980518010
<ACCUMULATED-NII-PRIOR> (124538)
<ACCUMULATED-GAINS-PRIOR> 388200602
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 82922239
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 148340992
<AVERAGE-NET-ASSETS> 271723352
<PER-SHARE-NAV-BEGIN> 26.01
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 4.86
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.89)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 30.00
<EXPENSE-RATIO> 0.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Charter
Fund Class A Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 8
<NAME> AIM CHARTER FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 3678855389
<INVESTMENTS-AT-VALUE> 4587548825
<RECEIVABLES> 82067376
<ASSETS-OTHER> 177896
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4669794097
<PAYABLE-FOR-SECURITIES> 82481133
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18446798
<TOTAL-LIABILITIES> 100927931
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3199855109
<SHARES-COMMON-STOCK> 340900606
<SHARES-COMMON-PRIOR> 285238663
<ACCUMULATED-NII-CURRENT> 2895981
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 456189864
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 909925212
<NET-ASSETS> 4568866166
<DIVIDEND-INCOME> 54637403
<INTEREST-INCOME> 20413876
<OTHER-INCOME> 0
<EXPENSES-NET> (49335124)
<NET-INVESTMENT-INCOME> 25716155
<REALIZED-GAINS-CURRENT> 471905541
<APPREC-INCREASE-CURRENT> 453826181
<NET-CHANGE-FROM-OPS> 951447877
<EQUALIZATION> 489236
<DISTRIBUTIONS-OF-INCOME> (32195666)
<DISTRIBUTIONS-OF-GAINS> (198459159)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 102706481
<NUMBER-OF-SHARES-REDEEMED> (66955760)
<SHARES-REINVESTED> 19911222
<NET-CHANGE-IN-ASSETS> 1376394751
<ACCUMULATED-NII-PRIOR> 8877492
<ACCUMULATED-GAINS-PRIOR> 182752246
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 25224069
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50051889
<AVERAGE-NET-ASSETS> 3153317435
<PER-SHARE-NAV-BEGIN> 11.19
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 2.91
<PER-SHARE-DIVIDEND> (0.12)
<PER-SHARE-DISTRIBUTIONS> (0.67)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.41
<EXPENSE-RATIO> 1.09
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Charter
Fund Class B Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 9
<NAME> AIM CHARTER FUND CLASS B SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 3678855389
<INVESTMENTS-AT-VALUE> 4587548825
<RECEIVABLES> 82067376
<ASSETS-OTHER> 177896
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4669794097
<PAYABLE-FOR-SECURITIES> 82481133
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18446798
<TOTAL-LIABILITIES> 100927931
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3199855109
<SHARES-COMMON-STOCK> 340900606
<SHARES-COMMON-PRIOR> 285238663
<ACCUMULATED-NII-CURRENT> 2895981
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 456189864
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 909925212
<NET-ASSETS> 4568866166
<DIVIDEND-INCOME> 54637403
<INTEREST-INCOME> 20413876
<OTHER-INCOME> 0
<EXPENSES-NET> (49335124)
<NET-INVESTMENT-INCOME> 25716155
<REALIZED-GAINS-CURRENT> 471905541
<APPREC-INCREASE-CURRENT> 453826181
<NET-CHANGE-FROM-OPS> 951447877
<EQUALIZATION> 489236
<DISTRIBUTIONS-OF-INCOME> (32195666)
<DISTRIBUTIONS-OF-GAINS> (198459159)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 102706481
<NUMBER-OF-SHARES-REDEEMED> (66955760)
<SHARES-REINVESTED> 19911222
<NET-CHANGE-IN-ASSETS> 1376394751
<ACCUMULATED-NII-PRIOR> 8877492
<ACCUMULATED-GAINS-PRIOR> 182752246
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 25224069
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50051889
<AVERAGE-NET-ASSETS> 804618145
<PER-SHARE-NAV-BEGIN> 11.18
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 2.89
<PER-SHARE-DIVIDEND> (0.04)
<PER-SHARE-DISTRIBUTIONS> (0.67)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.37
<EXPENSE-RATIO> 1.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Charter
Fund Class C Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 10
<NAME> AIM CHARTER FUND CLASS C SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 3678855389
<INVESTMENTS-AT-VALUE> 4587548825
<RECEIVABLES> 82067376
<ASSETS-OTHER> 177896
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4669794097
<PAYABLE-FOR-SECURITIES> 82481133
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18446798
<TOTAL-LIABILITIES> 100927931
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3199855109
<SHARES-COMMON-STOCK> 340900606
<SHARES-COMMON-PRIOR> 285238663
<ACCUMULATED-NII-CURRENT> 2895981
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 456189864
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 909925212
<NET-ASSETS> 4568866166
<DIVIDEND-INCOME> 54637403
<INTEREST-INCOME> 20413876
<OTHER-INCOME> 0
<EXPENSES-NET> (49335124)
<NET-INVESTMENT-INCOME> 25716155
<REALIZED-GAINS-CURRENT> 471905541
<APPREC-INCREASE-CURRENT> 453826181
<NET-CHANGE-FROM-OPS> 951447877
<EQUALIZATION> 489236
<DISTRIBUTIONS-OF-INCOME> (32195666)
<DISTRIBUTIONS-OF-GAINS> (198459159)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 102706481
<NUMBER-OF-SHARES-REDEEMED> (66955760)
<SHARES-REINVESTED> 19911222
<NET-CHANGE-IN-ASSETS> 1376394751
<ACCUMULATED-NII-PRIOR> 8877492
<ACCUMULATED-GAINS-PRIOR> 182752246
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 25224069
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50051889
<AVERAGE-NET-ASSETS> 2493136
<PER-SHARE-NAV-BEGIN> 13.86
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> (0.45)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.02)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.39
<EXPENSE-RATIO> 1.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Charter
Fund Institutional Class October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 11
<NAME> AIM CHARTER FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 3678855389
<INVESTMENTS-AT-VALUE> 4587548825
<RECEIVABLES> 82067376
<ASSETS-OTHER> 177896
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4669794097
<PAYABLE-FOR-SECURITIES> 82481133
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18446798
<TOTAL-LIABILITIES> 100927931
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3199855109
<SHARES-COMMON-STOCK> 340900606
<SHARES-COMMON-PRIOR> 285238663
<ACCUMULATED-NII-CURRENT> 2895981
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 456189864
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 909925212
<NET-ASSETS> 4568866166
<DIVIDEND-INCOME> 54637403
<INTEREST-INCOME> 20413876
<OTHER-INCOME> 0
<EXPENSES-NET> (49335124)
<NET-INVESTMENT-INCOME> 25716155
<REALIZED-GAINS-CURRENT> 471905541
<APPREC-INCREASE-CURRENT> 453826181
<NET-CHANGE-FROM-OPS> 951447877
<EQUALIZATION> 489236
<DISTRIBUTIONS-OF-INCOME> (32195666)
<DISTRIBUTIONS-OF-GAINS> (198459159)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 102706481
<NUMBER-OF-SHARES-REDEEMED> (66955760)
<SHARES-REINVESTED> 19911222
<NET-CHANGE-IN-ASSETS> 1376394751
<ACCUMULATED-NII-PRIOR> 8877492
<ACCUMULATED-GAINS-PRIOR> 182752246
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 25224069
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50051889
<AVERAGE-NET-ASSETS> 35307526
<PER-SHARE-NAV-BEGIN> 11.24
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> 2.92
<PER-SHARE-DIVIDEND> (0.16)
<PER-SHARE-DISTRIBUTIONS> (0.67)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.48
<EXPENSE-RATIO> 0.67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM
Aggressive Growth Fund Class A Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 12
<NAME> AIM AGGRESSIVE GROWTH FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 2754095749
<INVESTMENTS-AT-VALUE> 3854615788
<RECEIVABLES> 45745824
<ASSETS-OTHER> 135905
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3900497517
<PAYABLE-FOR-SECURITIES> 25526261
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10713947
<TOTAL-LIABILITIES> 36240208
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2631139285
<SHARES-COMMON-STOCK> 77337382
<SHARES-COMMON-PRIOR> 61224358
<ACCUMULATED-NII-CURRENT> (81400)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 138417475
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1094781949
<NET-ASSETS> 3864257309
<DIVIDEND-INCOME> 3185128
<INTEREST-INCOME> 8960543
<OTHER-INCOME> 0
<EXPENSES-NET> (31886001)
<NET-INVESTMENT-INCOME> (19740330)
<REALIZED-GAINS-CURRENT> 143240683
<APPREC-INCREASE-CURRENT> 435818451
<NET-CHANGE-FROM-OPS> 559318804
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (138552707)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41558826
<NUMBER-OF-SHARES-REDEEMED> (28514602)
<SHARES-REINVESTED> 3068800
<NET-CHANGE-IN-ASSETS> 1113693366
<ACCUMULATED-NII-PRIOR> (44163)
<ACCUMULATED-GAINS-PRIOR> 133729499
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19244957
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 32013717
<AVERAGE-NET-ASSETS> 3037859800
<PER-SHARE-NAV-BEGIN> 44.93
<PER-SHARE-NII> (0.26)
<PER-SHARE-GAIN-APPREC> 7.60
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.30)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 49.97
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Blue Chip
Fund Class A Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC
<SERIES>
<NUMBER> 13
<NAME> AIM BLUE CHIP FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 649808633
<INVESTMENTS-AT-VALUE> 760808677
<RECEIVABLES> 9762494
<ASSETS-OTHER> 70729
<OTHER-ITEMS-ASSETS> 9027
<TOTAL-ASSETS> 770650927
<PAYABLE-FOR-SECURITIES> 1692125
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2496189
<TOTAL-LIABILITIES> 4188314
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 638472344
<SHARES-COMMON-STOCK> 24814268
<SHARES-COMMON-PRIOR> 4929503
<ACCUMULATED-NII-CURRENT> 1185397
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16786046
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 110018826
<NET-ASSETS> 766462613
<DIVIDEND-INCOME> 5144832
<INTEREST-INCOME> 2993589
<OTHER-INCOME> 0
<EXPENSES-NET> (6875113)
<NET-INVESTMENT-INCOME> 1263308
<REALIZED-GAINS-CURRENT> 16831389
<APPREC-INCREASE-CURRENT> 82786779
<NET-CHANGE-FROM-OPS> 100881476
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (295688)
<DISTRIBUTIONS-OF-GAINS> (13660984)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25404143
<NUMBER-OF-SHARES-REDEEMED> (6055054)
<SHARES-REINVESTED> 535676
<NET-CHANGE-IN-ASSETS> 637914259
<ACCUMULATED-NII-PRIOR> 209005
<ACCUMULATED-GAINS-PRIOR> 13624413
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3254853
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6986215
<AVERAGE-NET-ASSETS> 322318404
<PER-SHARE-NAV-BEGIN> 26.08
<PER-SHARE-NII> 0.17
<PER-SHARE-GAIN-APPREC> 6.93
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> (2.17)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 30.96
<EXPENSE-RATIO> 1.31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Blue Chip
Fund Class B Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC
<SERIES>
<NUMBER> 14
<NAME> AIM BLUE CHIP FUND CLASS B Shares
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 649808633
<INVESTMENTS-AT-VALUE> 760808677
<RECEIVABLES> 9762494
<ASSETS-OTHER> 70729
<OTHER-ITEMS-ASSETS> 9027
<TOTAL-ASSETS> 770650927
<PAYABLE-FOR-SECURITIES> 1692125
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2496189
<TOTAL-LIABILITIES> 4188314
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 638472344
<SHARES-COMMON-STOCK> 24814268
<SHARES-COMMON-PRIOR> 4929503
<ACCUMULATED-NII-CURRENT> 1185397
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16786046
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 110018826
<NET-ASSETS> 766462613
<DIVIDEND-INCOME> 5144832
<INTEREST-INCOME> 2993589
<OTHER-INCOME> 0
<EXPENSES-NET> (6875113)
<NET-INVESTMENT-INCOME> 1263308
<REALIZED-GAINS-CURRENT> 16831389
<APPREC-INCREASE-CURRENT> 82786779
<NET-CHANGE-FROM-OPS> 100881476
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (295688)
<DISTRIBUTIONS-OF-GAINS> (13660984)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25404143
<NUMBER-OF-SHARES-REDEEMED> (6055054)
<SHARES-REINVESTED> 535676
<NET-CHANGE-IN-ASSETS> 637914259
<ACCUMULATED-NII-PRIOR> 209005
<ACCUMULATED-GAINS-PRIOR> 13624413
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3254853
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6986215
<AVERAGE-NET-ASSETS> 126850228
<PER-SHARE-NAV-BEGIN> 26.07
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 6.92
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> (2.17)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 30.76
<EXPENSE-RATIO> 2.09
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Blue Chip
Fund Class C Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC
<SERIES>
<NUMBER> 15
<NAME> AIM BLUE CHIP FUND CLASS C Shares
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 649808633
<INVESTMENTS-AT-VALUE> 760808677
<RECEIVABLES> 9762494
<ASSETS-OTHER> 70729
<OTHER-ITEMS-ASSETS> 9027
<TOTAL-ASSETS> 770650927
<PAYABLE-FOR-SECURITIES> 1692125
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2496189
<TOTAL-LIABILITIES> 4188314
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 638472344
<SHARES-COMMON-STOCK> 24814268
<SHARES-COMMON-PRIOR> 4929503
<ACCUMULATED-NII-CURRENT> 1185397
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16786046
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 110018826
<NET-ASSETS> 766462613
<DIVIDEND-INCOME> 5144832
<INTEREST-INCOME> 2993589
<OTHER-INCOME> 0
<EXPENSES-NET> (6875113)
<NET-INVESTMENT-INCOME> 1263308
<REALIZED-GAINS-CURRENT> 16831389
<APPREC-INCREASE-CURRENT> 82786779
<NET-CHANGE-FROM-OPS> 100881476
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (295688)
<DISTRIBUTIONS-OF-GAINS> (13660984)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25404143
<NUMBER-OF-SHARES-REDEEMED> (6055054)
<SHARES-REINVESTED> 535676
<NET-CHANGE-IN-ASSETS> 637914259
<ACCUMULATED-NII-PRIOR> 209005
<ACCUMULATED-GAINS-PRIOR> 13624413
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3254853
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6986215
<AVERAGE-NET-ASSETS> 1985899
<PER-SHARE-NAV-BEGIN> 31.72
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> (0.96)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 30.75
<EXPENSE-RATIO> 2.09
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Capital
Development Fund Class A Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 16
<NAME> AIM CAPITAL DEVELOPMENT FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 692268731
<INVESTMENTS-AT-VALUE> 884511676
<RECEIVABLES> 23764470
<ASSETS-OTHER> 53037
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 908329183
<PAYABLE-FOR-SECURITIES> 18162308
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2663056
<TOTAL-LIABILITIES> 20825364
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 706543586
<SHARES-COMMON-STOCK> 61092700
<SHARES-COMMON-PRIOR> 24683802
<ACCUMULATED-NII-CURRENT> (10996)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (11586991)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 192558220
<NET-ASSETS> 887503819
<DIVIDEND-INCOME> 980386
<INTEREST-INCOME> 1528919
<OTHER-INCOME> 0
<EXPENSES-NET> (7765456)
<NET-INVESTMENT-INCOME> (5256151)
<REALIZED-GAINS-CURRENT> (6205853)
<APPREC-INCREASE-CURRENT> 159137915
<NET-CHANGE-FROM-OPS> 147675911
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 55325193
<NUMBER-OF-SHARES-REDEEMED> (18916295)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 613816210
<ACCUMULATED-NII-PRIOR> (1524)
<ACCUMULATED-GAINS-PRIOR> (5381138)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3633989
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8073614
<AVERAGE-NET-ASSETS> 377577393
<PER-SHARE-NAV-BEGIN> 11.09
<PER-SHARE-NII> (0.10)
<PER-SHARE-GAIN-APPREC> 3.58
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.57
<EXPENSE-RATIO> 1.32
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Capital
Development Class B Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 17
<NAME> AIM CAPITAL DEVELOPMENT CLASS B SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 692268731
<INVESTMENTS-AT-VALUE> 884511676
<RECEIVABLES> 23764470
<ASSETS-OTHER> 53037
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 908329183
<PAYABLE-FOR-SECURITIES> 18162308
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2663056
<TOTAL-LIABILITIES> 20825364
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 706543586
<SHARES-COMMON-STOCK> 61092700
<SHARES-COMMON-PRIOR> 24683802
<ACCUMULATED-NII-CURRENT> (10996)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (11586991)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 192558220
<NET-ASSETS> 887503819
<DIVIDEND-INCOME> 980386
<INTEREST-INCOME> 1528919
<OTHER-INCOME> 0
<EXPENSES-NET> (7765456)
<NET-INVESTMENT-INCOME> (5256151)
<REALIZED-GAINS-CURRENT> (6205853)
<APPREC-INCREASE-CURRENT> 159137915
<NET-CHANGE-FROM-OPS> 147675911
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 55325193
<NUMBER-OF-SHARES-REDEEMED> (18916295)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 613816210
<ACCUMULATED-NII-PRIOR> (1524)
<ACCUMULATED-GAINS-PRIOR> (5381138)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3633989
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8073614
<AVERAGE-NET-ASSETS> 132588760
<PER-SHARE-NAV-BEGIN> 11.08
<PER-SHARE-NII> (0.20)
<PER-SHARE-GAIN-APPREC> 3.58
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.46
<EXPENSE-RATIO> 2.08
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Capital
Development Fund Class B Shares October 31, 1997 annual report.
</LEGEND>
<CIK> 0000105377
<NAME> AIM EQUITY FUNDS, INC.
<SERIES>
<NUMBER> 18
<NAME> AIM CAPITAL DEVELOPMENT FUND CLASS C SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
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<INVESTMENTS-AT-VALUE> 884511676
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<TOTAL-LIABILITIES> 20825364
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 706543586
<SHARES-COMMON-STOCK> 61092700
<SHARES-COMMON-PRIOR> 24683802
<ACCUMULATED-NII-CURRENT> (10996)
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 192558220
<NET-ASSETS> 887503819
<DIVIDEND-INCOME> 980386
<INTEREST-INCOME> 1528919
<OTHER-INCOME> 0
<EXPENSES-NET> (7765456)
<NET-INVESTMENT-INCOME> (5256151)
<REALIZED-GAINS-CURRENT> (6205853)
<APPREC-INCREASE-CURRENT> 159137915
<NET-CHANGE-FROM-OPS> 147675911
<EQUALIZATION> 0
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<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 55325193
<NUMBER-OF-SHARES-REDEEMED> (18916295)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 613816210
<ACCUMULATED-NII-PRIOR> (1524)
<ACCUMULATED-GAINS-PRIOR> (5381138)
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<GROSS-EXPENSE> 8073614
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<PER-SHARE-NAV-BEGIN> 13.48
<PER-SHARE-NII> (0.06)
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<PER-SHARE-NAV-END> 14.45
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
