<PAGE> 1
AIM EQUITY
FUNDS, INC.
Prospectus
- --------------------------------------------------------------------------------
INSTITUTIONAL
CLASSES AIM CHARTER FUND, AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND (collectively, the "Funds") are
AIM CHARTER three investment portfolios comprising series of AIM
FUND Equity Funds, Inc. (the "Company"), an open-end,
series, management investment company. Each Fund offers
AIM WEINGARTEN different classes of shares. The Company also offers
FUND shares of other investment portfolios, AIM Aggressive
Growth Fund ("Aggressive Growth"), AIM Blue Chip Fund
AIM CONSTELLATION ("Blue Chip"), AIM Capital Development Fund ("Capital
FUND Development"). Shares of Aggressive Growth, Blue Chip
and Capital Development and other classes of the Funds
FEBRUARY 27, 1998 are sold pursuant to separate prospectuses. This
AS REVISED of the Funds.
OCTOBER 12, 1998
to provide growth of capital, with current income as a
secondary objective. To accomplish its objectives, the
Fund invests primarily in dividend-paying common stocks
which have prospects for both growth of capital and
dividend income.
AIM WEINGARTEN FUND is a diversified portfolio which
seeks to provide growth of capital through investments
primarily in common stocks of leading U.S. companies
considered by management to have strong earnings
momentum.
AIM CONSTELLATION FUND is a diversified portfolio which
seeks to provide capital appreciation through
investments in common stocks, with emphasis on
medium-sized and smaller emerging growth companies.
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> 2
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> 3
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 generally 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, LA FAMILIA AIM DE FONDOS AND DESIGN AND INVEST WITH
DISCIPLINE ARE REGISTERED SERVICE MARKS AND AIM BANK CONNECTION IS A SERVICE
MARK OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 4
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> 5
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 net realized
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> 6
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> 7
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> 8
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> 9
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 ON SECURITIES INDEXES. In addition, Charter and Weingarten may
purchase put options, and each of the Funds may write covered call options, on
securities indexes for the purpose of providing a partial hedge against a
decline in the value of their respective portfolio securities. The premium paid
for a put option plus any transaction costs for a put or call option will reduce
the benefit, if any, realized by the Fund upon exercise or liquidation of the
option. Unless the level of the securities index changes by an amount in excess
of the premium paid, the put option may expire without value to the Fund.
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.
REAL ESTATE INVESTMENT TRUSTS ("REITS"). To the extent consistent with their
respective investment objectives and policies, Charter, Weingarten and
Constellation (the "Funds") may invest in equity and/or debt securities issued
by REITs. Such investments will not exceed 25% of the total assets of any of the
Funds.
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REITs are trusts which sell equity or debt securities to investors and use the
proceeds to invest in real estate or interests therein. A REIT may focus on
particular projects, such as apartment complexes, or geographic regions, such as
the Southeastern United States, or both.
To the extent that a Fund has the ability to invest in REITs, such Fund could
conceivably own real estate directly as a result of a default on the securities
it owns. A Fund, therefore, may be subject to certain risks associated with the
direct ownership of real estate including difficulties in valuing and trading
real estate, declines in the value of real estate, risks related to general and
local economic condition, adverse change in the climate for real estate,
increases in property taxes and operating expense, changes in zoning laws,
casualty or condemnation losses, limitations on rents, changes in neighborhood
values, the appeal of properties to tenants, and increases in interest rates.
In addition to the risks described above, equity REITs may be affected by any
changes in the value of the underlying property owned by the trusts, while
mortgage REITs may be affected by the quality of any credit extended. Equity and
mortgage REITs are dependent upon management skill, are not diversified, and are
therefore subject to the risk of financing single or a limited number of
projects. Such trusts are also subject to heavy cash flow dependency, defaults
by borrowers, self-liquidation, and the possibility of failing to maintain
exemption from the 1940 Act. Changes in interest rates may also affect the value
of debt securities held by a Fund. By investing in REITs indirectly through a
Fund, a shareholder will bear not only his/her proportionate share of the
expenses of the Fund, but also, indirectly, similar expenses of the REITs.
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 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 exchanges or traded in a foreign over-the-counter market. Each of the
Funds may also invest in foreign securities listed on recognized U.S. securities
exchanges or traded in the U.S. over-the-counter market. Such foreign securities
may be issued by foreign companies located in developing countries in various
regions of the world. A "developing country" is a country in the initial stages
of its industrial cycle. As compared to investment in the securities markets of
developed countries, investment in the securities markets of developing
countries involves exposure to markets that may have substantially less trading
volume and greater price volatility, economic structures that are less diverse
and mature, and political systems that may be less stable. For a discussion of
the risks pertaining to investments in foreign obligations, see "Risk Factors"
below.
FOREIGN EXCHANGE TRANSACTIONS. The Funds have authority to deal in foreign
exchange between currencies of the different countries in which they will invest
either for the settlement of transactions or as a hedge against possible
variations in the foreign exchange rates between those currencies. This may be
accomplished through direct purchases or sales of foreign currency, purchases of
futures contracts with respect to foreign currency (and options there on), 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 Funds 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 Funds' dealings in foreign exchange may involve specific
transactions or portfolio positions. Transaction hedging is the purchase or sale
of foreign currency with respect to specific receivables or payables of the
Funds accruing in connection with the purchase or sale of their portfolio
securities, the sale and redemption of shares of the Funds, or the payment of
dividends and distributions by the Funds. Position hedging is the purchase or
sale of foreign currency with respect to portfolio security positions (or
underlying portfolio security positions, such as in an ADR) denominated or
quoted in a foreign currency. The Funds will not speculate in foreign exchange,
nor commit a larger percentage of its total assets to foreign exchange hedges
than the percentage of its total assets that it could invest in foreign
securities.
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.
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Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, and Spain are members of the European Economic and
Monetary Union (the "EMU"). The EMU intends to establish a common European
currency for participating countries which will be known as the "euro." It is
anticipated that each participating country will supplement its existing
currency with the euro on January 1, 1999, and will replace its existing
currency with the euro on July 1, 2002. Any other European country that is a
member of the European Union and satisfies the criteria for participation in the
EMU may elect to participate in the EMU and may supplement its existing currency
with the euro after January 1, 1999.
The expected introduction of the euro presents unique risks and uncertainties,
including whether the payment and operational systems of banks and other
financial institutions will be ready by January 1, 1999; how outstanding
financial contracts will be treated after January 1, 1999; the establishment of
exchange rates for existing currencies and the euro; and the creation of
suitable clearing and settlement systems for the euro. These and other factors
could cause market disruptions before or after the introduction of the euro and
could adversely affect the value of securities held by the Fund.
Political and Economic Risk. The economies of many of the countries in which
the Funds may invest are not as developed as the United States economy and may
be subject to significantly different forces. Political or social instability,
expropriation or confiscatory taxation, and limitations on the removal of funds
or other assets could also adversely affect the value of each Fund's
investments.
Regulatory Risk. Foreign companies are not registered with the SEC and are
generally not subject to the regulatory controls imposed on United States
issuers and, as a consequence, there is generally less publicly available
information about foreign securities than is available about domestic
securities. Foreign companies are not subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to domestic companies. Income from foreign securities owned by
the Funds may be reduced by a withholding tax at the source, which tax would
reduce dividend income payable to the Funds' shareholders.
Market Risk. The securities markets in many of the countries in which the
Funds invest will have substantially less trading volume than the major United
States markets. As a result, the securities of some foreign companies may be
less liquid and experience more price volatility than comparable domestic
securities. Increased custodian costs as well as administrative costs (such as
the need to use foreign custodians) may be associated with the maintenance of
assets in foreign jurisdictions. There is generally less government regulation
and supervision of foreign stock exchanges, brokers and issuers which may make
it difficult to enforce contractual obligations. In addition, transaction costs
in foreign securities markets are likely to be higher, since brokerage
commission rates in foreign countries are likely to be higher than in the United
States.
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.
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
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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.
15
<PAGE> 16
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
16
<PAGE> 17
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
17
<PAGE> 18
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
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<PAGE> 19
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.
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================================================================================
AIM EQUITY FUNDS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 659-1005
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
INVESTMENT SUB-ADVISOR
A I M CAPITAL MANAGEMENT, INC.
11 Greenway Plaza, Suite 100
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
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, Massachusetts 02110
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
================================================================================
================================================================================
PROSPECTUS
February 27, 1998
AIM EQUITY FUNDS, INC.
(INSTITUTIONAL CLASSES)
AIM CHARTER FUND
AIM WEINGARTEN FUND
AIM CONSTELLATION FUND
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 4
Financial Highlights.............................. 5
Suitability For Investors......................... 8
Investment Programs............................... 8
Purchase of Shares................................ 13
Redemption of Shares.............................. 14
Dividends and Distributions....................... 14
Federal Taxes..................................... 14
Determination of Net Asset Value.................. 15
Performance....................................... 15
Reports to Shareholders........................... 16
Management........................................ 16
General Information............................... 18
</TABLE>
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