<PAGE>
As filed with the Securities and Exchange Commission on October 7, 1998
1933 Act Registration No. 333-47949
---------
1940 Act Registration No. 811-08697
---------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
---
Pre-Effective Amendment No.
--- ---
Post-Effective Amendment No. 1 X
--- ---
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No. 1 X
--- ---
(Check appropriate box or boxes.)
AIM SPECIAL OPPORTUNITIES FUNDS
------------------------------------------------------------
(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
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(Name and Address of Agent for Service)
Copy to:
Nancy L. Martin, 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 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this
Registration Statement
It is proposed that this filing will become effective (check appropriate box)
X immediately upon filing pursuant to paragraph (b)
----
on (date), pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(1)
----
on (date) pursuant to paragraph (a)(1)
----
75 days after filing pursuant to paragraph (a)(2)
----
on (date) pursuant to paragraph (a)(2) of rule 485.
----
(Continued on Next Page)
<PAGE>
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
---- a previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
[AIM LOGO APPEARS HERE]
THE AIM FAMILY OF FUNDS-Registered Trademark-
RETAIL CLASSES OF AIM SPECIAL OPPORTUNITIES FUNDS
AIM SMALL CAP OPPORTUNITIES FUND
(Capital Appreciation)
PROSPECTUS OCTOBER 7, 1998
This Prospectus contains information about the AIM SMALL CAP
OPPORTUNITIES FUND ("SMALL CAP" or the "Fund"), an investment
portfolio of AIM Special Opportunities Funds (the "Trust"), an
open-end, series, management investment company.
The Fund is a non-diversified portfolio with an objective of
long-term capital appreciation. The Fund seeks to achieve its
objective by investing primarily in common stocks, convertible
bonds, convertible preferred stocks and warrants of companies
with market capitalizations that are within the range of stocks
in the Russell 2000-Registered Trademark- Index.
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 October 7, 1998, has been filed
with the 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 Trust 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.
APPLICATION
INSIDE
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................................................... 2
THE FUND.................................................................. 4
Table of Fees and Expenses.............................................. 4
Financial Highlights.................................................... 5
Performance............................................................. 5
Investment Program...................................................... 6
Management.............................................................. 12
Organization of the Trust............................................... 14
Future Fund Closure..................................................... 15
INVESTOR'S GUIDE TO THE AIM SMALL CAP OPPORTUNITIES FUND.................. A-1
<CAPTION>
PAGE
----
<S> <C>
Introduction to The AIM Family of Funds-Registered Trademark-........... A-1
How to Purchase Shares.................................................. A-1
Terms and Conditions of Purchase of the AIM Funds....................... A-2
Special Plans........................................................... A-8
Exchange Privilege...................................................... A-9
How to Redeem Shares.................................................... A-13
Determination of Net Asset Value........................................ A-16
Dividends, Distributions and Tax Matters................................ A-17
General Information..................................................... A-18
APPLICATION INSTRUCTIONS.................................................. B-1
</TABLE>
SUMMARY
- ------------------------------------------------------------
THE FUND
AIM Special Opportunities Funds is a Delaware business trust organized as an
open-end series, management investment company. Currently, the Trust offers one
investment portfolio, Small Cap, a non-diversified portfolio which offers
multiple classes of shares to different types of investors. The Fund's
investment objective is long-term capital appreciation. The Fund seeks to
achieve its objective by investing primarily in common stocks, convertible
bonds, convertible preferred stocks and warrants of small capitalization
companies (companies with a market capitalization within the range of stocks in
the Russell 2000-Registered Trademark- Index at the time of purchase). 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."
MANAGEMENT. A I M Advisors, Inc. ("AIM") serves as the Fund's investment
advisor pursuant to a Master Investment Advisory Agreement. AIM, together with
its subsidiaries, manages or advises approximately 90 investment company
portfolios (including the Fund) encompassing a broad range of investment
objectives. Under the Master Investment 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 Trust and AIM, AIM, pursuant to
authorization by the Board of Trustees, receives 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.
CLASS C SHARES. CLASS C SHARES OF THE FUND ARE NOT CURRENTLY AVAILABLE. All
references to Class C shares of the Fund in this Prospectus will be effective
when a public offering of those shares commences.
MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A, Class B or Class
C shares of the Fund 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 of the date on
which a purchase was made. 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 of the date such shares
were purchased. Class C shares are subject to higher expenses than Class A
shares.
SUITABILITY FOR INVESTORS. The Multiple Distribution System permits an
investor to choose 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 shares to the
investor who qualifies for reduced initial
2
<PAGE>
sales charges, as described below. A I M Distributors, Inc. ("AIM Distributors")
intends to reject any order for purchase of more than $250,000.
PURCHASING SHARES. Initial investments in any class of shares must be at
least $10,000 and additional investments must be at least $1,000. The Fund will
not accept any single investments in excess of $250,000. Currently, only Class A
shares and Class B shares of the Fund are available for purchase. The
distributor of the Fund's shares is AIM Distributors, P.O. Box 4739, Houston, TX
77210-4739. See "How to Purchase Shares."
The Fund will discontinue public sales of its shares to new investors, as soon
as reasonably practicable, when its assets reach $500 million. See "Future Fund
Closure."
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds-Registered Trademark-" or
"AIM 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. Holders of Class A shares may redeem all or a portion of
their shares at net asset value on any business day, generally without charge. A
contingent deferred sales charge of 1% may apply to certain redemptions of Class
A shares, where purchases of $1 million or more are made at net asset value. See
"How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases of Class A Shares."
Holders of Class B shares may redeem all or a portion of their shares at net
asset value on any business day, less any applicable contingent deferred sales
charge for redemptions made within six years following the date on which a
purchase was made. Class B shares redeemed after six years following the date of
purchase will not be subject to any contingent deferred sales charge. See "How
to Redeem Shares -- Multiple Distribution System."
Holders of Class C shares 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. Class C shares redeemed after one year from the date such shares were
purchased will not be subject to any contingent deferred sales charge. See "How
to Redeem Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions on net 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."
RISK FACTORS. The Fund may invest in foreign securities, may employ leverage,
may invest in real estate investment trusts and may enter into repurchase
agreements. These practices entail certain risks. See "Certain Investment
Strategies and Policies."
NON-DIVERSIFIED FUND. The Fund is a non-diversified portfolio. For further
information see "Certain Investment Strategies and Policies -- Non-Diversified
Fund."
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,
INVEST WITH DISCIPLINE, LA FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS
AND DESIGN ARE REGISTERED SERVICE MARKS AND AIM BANK CONNECTION IS A SERVICE
MARK OF A I M MANAGEMENT GROUP INC.
3
<PAGE>
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 estimated average net
assets of the Fund for its 1999 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 "Terms and Conditions of
Purchase of the AIM Funds."
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------- --------- ---------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares (as
percentage of offering price)........................... 5.50% None None
Maximum sales load imposed on reinvested dividends and
distributions........................................... None None None
Deferred sales load (as a % of original purchase price or
redemption proceeds, whichever is lower)................ None 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 fee............................................ 1.00% 1.00% 1.00%
12b-1 fees................................................ 0.35% 1.00% 1.00%
Other expenses............................................ 0.24% 0.30% 0.30%
--------- --------- ---------
Total Fund Operating Expenses............................. 1.59% 2.30% 2.30%
--------- --------- ---------
--------- --------- ---------
</TABLE>
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............................................ $73
3 years........................................... $102
</TABLE>
The above examples assume payment of a sales charge at the time of 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............................................ $73
3 years........................................... $102
</TABLE>
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............................................ $23
3 years........................................... $72
</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............................................ $33
3 years........................................... $72
</TABLE>
An investor would pay the following expenses on the same $1,000 investment in
Class C shares of the Fund, assuming (1) a 5% annual return and (2) no
redemption at the end of each time period.
<TABLE>
<S> <C>
1 year............................................ $23
3 years........................................... $72
</TABLE>
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. and NASD
Regulation, Inc. Given the maximum front-end sales charge applicable to
Class A shares and the Rule 12b-1 fees applicable to Class A shares, Class B
shares and Class C shares, it is estimated that it would take a substantial
number of years for a shareholder to exceed the maximum permissible
front-end sales charges.
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF ACTUAL OR FUTURE
EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN. In addition, while each
example assumes a 5% annual return, actual performance will vary and may result
in an actual return that is greater or less than 5%. Each 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>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Shown below are per share data, ratios and supplemental data for a Class A
share of the Fund outstanding during the period June 29, 1998 (date operations
commenced) through July 31, 1998 and for a Class B share of the Fund outstanding
during the period July 13, 1998 (date sales commenced) through July 31, 1998.
The information has been audited by KPMG Peat Marwick LLP, independent auditors,
whose unqualified report on the Fund's financial statements and related notes
appears in the Statement of Additional Information.
AIM SMALL CAP OPPORTUNITIES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
--------- ---------
<S> <C> <C>
Net asset value, beginning of period.......................................................... $ 10.00 $ 10.07
--------- ---------
Income from investment operations:
Net investment income....................................................................... 0.02(a) 0.01(a)
Net gains (losses) on securities (both realized and unrealized)............................. (0.26) (0.32)
--------- ---------
Total from investment operations.......................................................... (0.24) (0.31)
--------- ---------
Net asset value, end of period................................................................ $ 9.76 $ 9.76
--------- ---------
Total return(b)............................................................................... (2.40)% (3.08)%
--------- ---------
--------- ---------
Ratios/supplemental data:
Net assets, end of period (000s omitted)...................................................... $ 107,540 $ 84,285
Ratio of expenses to average net assets....................................................... 1.59 (c) 2.30%(c)
Ratio of net investment income to average net assets.......................................... 2.00 (c) 1.29%(c)
Portfolio turnover rate....................................................................... 13% 13%
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are annualized and based on average net assets of $55,102,897 and
$40,760,109 for Class A and Class B shares, respectively.
- --------------------------------------------------------------------------------
PERFORMANCE
The Fund's performance may be quoted in advertising in terms of 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, 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.
Standardized total return for Class A shares reflects the deduction of the
maximum initial sales charge at the time of purchase. 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.
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 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.
5
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
Set forth in this section is a statement of the Fund's investment objective
along with a description of the investment policies, strategies and practices of
the Fund. The investment objective of the Fund is deemed to be a fundamental
policy and, therefore, unless permitted by law, may not be changed without the
approval of a majority of the Fund's outstanding shares (within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act")). The Fund's
investment policies, strategies and practices are not fundamental. The Board of
Trustees of the Trust reserves the right to change any of these non-fundamental
investment policies, strategies or practices without shareholder approval. The
Fund has adopted investment restrictions, some of which are fundamental and
cannot be changed without shareholder approval. See "Investment Restrictions" in
the Statement of Additional Information. Individuals considering the purchase of
shares of the Fund should recognize that there are risks in the ownership of any
security and that no assurance can be given that the Fund will achieve its
investment objective.
INVESTMENT OBJECTIVE. The Fund seeks long-term capital appreciation.
INVESTMENT POLICIES. The Fund is a non-diversified portfolio that seeks to
achieve its objective by investing primarily in securities of companies believed
by AIM to involve "special opportunities." The Fund's strategy is to take
advantage of market inefficiencies and proprietary information regarding
specific securities, industries, or market themes.
The Fund will, under normal conditions, invest at least 80% of its total
assets in securities of companies involving a special opportunity (as described
below). The Fund will invest primarily in equity securities or securities that
are convertible into equity securities. The Fund has no restrictions on the
market capitalization of the companies in which it will invest, and may invest,
except that under normal market conditions, the Fund intends to invest at least
80% of its total assets in the securities of small capitalization companies
(i.e., companies with a market capitalization that is within the range of stocks
of the Russell 2000-Registered Trademark- Index(1) at the time of purchase).
The term "special opportunities" refers to AIM's identification of an unusual
and possibly non-repetitive development taking place in a company or a group of
companies in an industry. A special opportunity may involve one or more of the
following:
- A technological advance or discovery, the offering of a new or unique
product or service, or changes in consumer demand or consumption forecasts.
- Changes in the competitive outlook or growth potential of an industry or a
company within an industry, including changes in the scope or nature of
foreign competition or the development of an emerging industry.
- New or changed management, or material changes in management policies or
corporate structure.
- Significant economic or political occurrences, including changes in foreign
or domestic import and tax laws or other regulations.
- Other events, including natural disasters, favorable litigation settlements,
or a major change in demographic patterns.
The Fund takes an aggressive investment approach and may be appropriate for
investors who seek potentially high long term returns, have an investment
horizon of at least three years, and are willing to accept certain risks,
including risks of short selling, futures and options, foreign securities,
leverage and potentially significant short-term fluctuations in market value.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objective and
policies, the Fund may employ one or more of the following strategies:
EQUITY SECURITIES. The Fund will invest primarily in equity securities. While
the Fund may invest in securities of companies of varying market capitalization,
it is anticipated that the Fund will be invested primarily in securities of
small capitalization companies. Small capitalization companies may be in the
early stages of development, have limited product lines, markets, or financial
resources, and/or lack management depth. These companies may be more impacted by
intense competition from larger companies, and the trading market for their
securities may be less liquid and more volatile. As a result, investments in
small companies involve greater risk than investments in larger, more
established companies, and the net asset value of funds that invest in small
companies may fluctuate more widely than other funds that do not so invest or
stock market indices such as the Dow Jones Industrial Average or the Standard &
Poor's 500 Stock Index.
- ------------
(1)The Russell 2000-Registered Trademark- Index measures the performance of the
smallest 2,000 companies in the Russell 3000-Registered Trademark- Index
which measures the performance of the largest 3,000 U.S. companies based on
total market capitalization and represents approximately 98% of the
investable U.S. equity market.
6
<PAGE>
OPTIONS. The Fund may write (sell) "covered" put and call options and buy put
and call options, including securities index and foreign currency options. A
call option is a contract that gives to the holder the right to buy a specified
amount of the underlying security at a fixed or determinable price (called the
exercise or strike price) upon exercise of the option. A put option is a
contract that gives the holder the right to sell a specified amount of the
underlying security at a fixed or determinable price upon exercise of the
option. In the case of index options, exercises are settled through the payment
of cash rather than the delivery of property. A call option is covered if, for
example, the Fund owns the underlying security covered by the call or, in the
case of a call option on an index, holds securities the price changes of which
are expected to substantially correlate with the movement of the index. A put
option is covered if, for example, the Fund segregates cash or liquid securities
with a value equal to the exercise price of the put option.
The Fund may write call options on securities or securities indexes for the
purpose of providing a partial hedge against a decline in the value of its
portfolio securities. The Fund may write put options on securities or securities
indexes in order to earn additional income or (in the case of put options
written on individual securities) to purchase the underlying security at a price
below the current market price. If the Fund writes an option which expires
unexercised or is closed out by the Fund at a profit, it will retain all or part
of the premium received for the option, which will increase its gross income. If
the price of the underlying security moves adversely to the Fund's position, the
option may be exercised and the Fund will be required to sell or purchase the
underlying security at a disadvantageous price, or, in the case of index
options, deliver an amount of cash, which loss may only be partially offset by
the amount of premium received.
The Fund may also purchase put or call options on securities and securities
indexes in order to hedge against changes in interest rates or stock prices
which may adversely affect the prices of securities that the Fund wants to
purchase at a later date, to hedge its existing investments against a decline in
value, or to attempt to reduce the risk of missing a market or industry segment
advance or decline. In the event that the expected changes in interest rates or
stock prices occur, the Fund may be able to offset the resulting adverse effect
on the Fund by exercising or selling the options purchased. The premium paid for
a put or call option plus any transaction costs will reduce the benefit, if any,
realized by the Fund upon exercise or liquidation of the option. Unless the
price of the underlying security or level of the securities index changes by an
amount in excess of the premium paid, the option may expire without value to the
Fund.
The Fund 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."
Options purchased or written by the Fund may be traded on the national
securities exchanges or negotiated with a dealer. Options traded in the
over-the-counter market may not be as actively traded as those on an exchange,
so it may be more difficult to value such options. In addition, it may be
difficult to enter into closing transactions with respect to such options. Such
options and the securities used as "cover" for such options, unless otherwise
indicated, would be considered illiquid securities.
In instances in which the Fund has entered into agreements with primary
dealers with respect to the over-the-counter options it has written, and such
agreements would enable the Fund to have an absolute right to repurchase at a
pre-established formula price the over-the-counter option written by it, the
Fund would treat as illiquid only securities equal in amount to the formula
price described above less the amount by which the option is "in-the-money,"
i.e., the price of the option exceeds the exercise price.
The Fund may purchase put and call options and write covered put and call
options on foreign currencies for the purpose of protecting against declines in
the dollar value of portfolio securities and against increases in the dollar
cost of securities to be acquired. Such investment strategies will be used as a
hedge and not for speculation. As in the case of other types of options, the
writing of an option on foreign currency will constitute a partial hedge, up to
the amount of the premium received. Moreover, the Fund could be required to
purchase or sell foreign currencies at disadvantageous exchange rates, thereby
incurring losses. The purchase of an option on foreign currency may constitute
an effective hedge against fluctuations in exchange rates although, in the event
of rate movements adverse to the Fund's position, it may forfeit the entire
amount of the premium plus related transaction costs. Options on foreign
currencies may be traded on the national securities exchanges or in the
over-the-counter market. As described above, options traded in the
over-the-counter market may not be as actively traded as those on an exchange,
so it may be more difficult to value such options. In addition, it may be
difficult to enter into closing transactions with respect to options traded
over-the-counter.
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 may not be a liquid secondary market for the option when the Fund
seeks to hedge against adverse market movements. This may cause the Fund to lose
the entire premium on purchased options or reduce its ability to effect closing
transactions at favorable prices.
The Fund will not write options if, immediately after such sale, the aggregate
value of the securities or obligations underlying the outstanding options
exceeds 50% of the Fund's total assets. The Fund will not purchase options if,
at the time of the investment, the aggregate premiums paid for outstanding
options will exceed 25% of the Fund's total assets.
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WARRANTS. The Fund may 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 the warrant, the current market value of the underlying security, the
life of the warrant and various other investment factors. The investment in
warrants by the Fund may not exceed 10% of the value of the Fund's net assets.
FUTURES AND FORWARD CONTRACTS. The Fund may purchase and sell stock index
futures contracts to hedge the value of the portfolio against changes in market
conditions. The Fund may also purchase put and call options on futures contracts
and write "covered" put and call options on futures contracts in order to hedge
against changes in stock prices. Although the Fund is authorized to invest in
futures contracts and related options with respect to non-U.S. instruments, it
will limit such investments to those which have been approved by the Commodity
Futures Trading Commission ("CFTC") for investment by U.S. investors. The Fund
may enter into futures contracts and buy and sell related options, provided that
the futures contracts and related options investments are made for "bona fide
hedging" purposes, as defined under CFTC regulations. No more than 25% of the
Fund's total assets will be committed to initial margin deposits required
pursuant to futures contracts. Percentage investment limitations on the Fund's
investment in options on futures contracts are set forth above under "Options."
SHORT SALES. The Fund intends from time to time to sell securities short. A
short sale is effected when it is believed that the price of a particular
security will decline, and involves the sale of a security which the Fund does
not own in the hope of purchasing the same security at a later date at a lower
price. To make delivery to the buyer, the Fund must borrow the security from a
broker-dealer through which the short sale is executed, and the broker-dealer
delivers such securities, on behalf of the Fund, to the buyer. The broker-dealer
is entitled to retain the proceeds from the short sale until the Fund delivers
to such broker-dealer the securities sold short. In addition, the Fund is
required to pay to the broker-dealer the amount of any dividends paid on shares
sold short.
To secure its obligation to deliver to such broker-dealer the securities sold
short, the Fund must segregate an amount of cash or liquid securities equal to
the difference between the market value of the securities sold short at the time
they were sold short and any cash or liquid securities deposited as collateral
with the broker in connection with the short sale (not including the proceeds of
the short sale). Furthermore, until the Fund replaces the borrowed security, it
must daily maintain the segregated assets at a level so that (1) the amount
deposited in it plus the amount deposited with the broker (not including the
proceeds from the short sale) will equal the current market value of the
securities sold short, and (2) the amount deposited in it plus the amount
deposited with the broker (not including the proceeds from the short sale) will
not be less than the market value of the securities at the time they were sold
short. As a result of these requirements, the Fund will not gain any leverage
merely by selling short, except to the extent that it earns interest on the
immobilized cash or liquid securities while also being subject to the
possibility of gain or loss from the securities sold short.
The Fund is said to have a short position in the securities sold until it
delivers to the broker-dealer the securities sold, at which time the Fund
receives the proceeds of the sale. The Fund will normally close out a short
position by purchasing on the open market and delivering to the broker-dealer an
equal amount of the securities sold short.
The amount of the Fund's net assets that will at any time be in the type of
deposits described above (that is, collateral deposits or segregated assets)
will not exceed 25%. These deposits do not have the effect of limiting the
amount of money that the Fund may lose on a short sale, as the Fund's possible
losses may exceed the total amount of deposits.
The Fund will realize a gain if the price of a security declines between the
date of the short sale and the date on which the Fund purchases a security to
replace the borrowed security. On the other hand, the Fund will incur a loss if
the price of the security increases between those dates. The amount of any gain
will be decreased and the amount of any loss increased by any premium or
interest that the Fund may be required to pay in connection with a short sale.
It should be noted that possible losses from short sales differ from those that
could arise from a cash investment in a security in that losses from a short
sale may be limitless, while the losses from a cash investment in a security
cannot exceed the total amount of the Fund's investment in the security. For
example, if the Fund purchases a $10 security, potential loss is limited to $10;
however, if the Fund sells a $10 security short, it may have to purchase the
security for return to the broker-dealer when the market value of that security
is $50, thereby incurring a loss of $40.
The Fund may also make short sales "against the box". A short sale is "against
the box" to the extent that the Fund contemporaneously owns or has the right to
obtain securities identical to those sold short without payment of further
consideration. Such short sales will also be subject to the limitations on short
sale transactions referred to above. Short sales "against the box" result in a
"constructive sale" and require the Fund to recognize any taxable gain unless an
exception to the constructive sale rule applies.
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In addition to enabling the Fund to hedge against market risk, short sales may
afford the Fund an opportunity to earn additional current income to the extent
the Fund is able to enter into arrangements with broker-dealers through which
the short sales are executed to receive income with respect to the proceeds of
the short sales during the period the Fund's short positions remain open. The
Fund believes that many broker-dealers will be willing to enter into such
arrangements, but there is no assurance that the Fund will be able to enter into
such arrangements to the desired degree.
BORROWING AND LEVERAGE. The Fund may borrow money from banks (including the
Fund's custodian bank), subject to the limitations under the 1940 Act. The Fund
will limit borrowings and reverse repurchase agreements to an aggregate of
33-1/3% of the Fund's total assets at the time of the transaction.
The Fund may employ "leverage" by borrowing money and using it to purchase
additional securities. Leverage increases both investment opportunity and
investment risk. If the investment gains on the securities purchased with
borrowed money exceed the interest paid on the borrowing, the net asset value of
the Fund's shares will rise faster than would otherwise be the case. On the
other hand, if the investment gains fail to cover the cost (including interest
on borrowings), or if there are losses, the net asset value of the Fund's shares
will decrease faster than would otherwise be the case. The Fund will maintain
asset coverage of at least 300% for all such borrowings, and should such asset
coverage at any time fall below 300%, the Fund will be required to reduce its
borrowing within three days to the extent necessary to satisfy this requirement.
To reduce its borrowing, the Fund might be required to sell securities at a
disadvantageous time. Interest on money borrowed is an expense the Fund would
not otherwise incur, and the Fund may therefore have little or no investment
income during periods of substantial borrowings.
CONVERTIBLE SECURITIES. To the extent consistent with its investment
objective, the Fund may invest in convertible securities. Convertible securities
usually consist of corporate debt securities or preferred stock that may in
certain circumstances be converted into or exchanged for a predetermined number
of shares of another type of security, usually common stock. Convertible
securities consequently often involve attributes of both debt and equity
instruments, and investment in such securities requires analysis of both credit
and stock market risks. 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 and in some instances may be subject to conversion into or
exchanged for another security at the option of an issuer. Although the 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, the Fund invests in such securities without regard
to corporate bond ratings.
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 Depository Receipts ("ADRs"), European Depository 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. 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 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.
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
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of the European Union and satisfies 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 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.
FOREIGN EXCHANGE TRANSACTIONS. The Fund may buy and sell currencies either in
the spot (cash) market or in the forward market (through forward contracts
generally expiring within one year). 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. Forward
contracts are traded over-the-counter, and not on organized commodities or
securities exchanges. As a result, it may be more difficult to value such
forward contracts, and it may be difficult to enter into closing transactions
with respect to them. 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 (or underlying portfolio security positions, such as in an ADR)
denominated or quoted in a foreign currency. The Fund 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 may invest in
foreign securities.
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 below under "Illiquid Securities," provided that a
determination is made that such securities have a readily available trading
market and that reliable price information is available. AIM will determine the
liquidity of Rule 144A securities under the supervision of the Trust's Board of
Trustees. 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.
ILLIQUID SECURITIES. The Fund will not invest more than 15% of its net assets
in illiquid securities, including restricted securities that are illiquid.
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INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Fund may invest in other
investment companies to the extent permitted by the 1940 Act and rules and
regulations thereunder, and, if applicable, exemptive orders granted by the SEC.
Currently, the 1940 Act allows the Fund to invest up to 10% of its total assets
in other investment companies.
LENDING OF PORTFOLIO SECURITIES. The Fund may, from time to time, lend
securities from its portfolio with a value not exceeding 33-1/3% of its total
assets, to banks, brokers and other financial institutions, and receive in
return collateral in the form of cash or securities issued or guaranteed by the
U.S. Government which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. During the
period of the loan, the Fund receives the income on both the loaned securities
and the collateral (or a fee) and thereby increases its yield. In the event that
the borrower defaults on its obligation to return loaned securities because of
insolvency or otherwise, the Fund could experience delays and costs in gaining
access to the collateral and could suffer a loss to the extent that the value of
the collateral falls below the market value of the loaned securities.
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.
governmental 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 security at a mutually agreed upon time and price, thereby determining the
yield during the Fund's holding period. If a seller of a repurchase agreement
defaults on its obligation to repurchase the security or goes into bankruptcy,
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. 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.
REAL ESTATE INVESTMENT TRUSTS ("REITS"). To the extent consistent with its
investment objective and policies, the Fund may invest in securities issued by
REITs. Such investments will not exceed 25% of the total assets of the Fund.
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. By investing in REITs indirectly
through the Fund, a shareholder will bear not only his/her proportionate share
of the expenses of the Fund, but also, indirectly, similar expenses of the REIT.
To the extent that the Fund has the ability to invest in REITs, the Fund could
conceivably own real estate directly as a result of a default on the securities
it owns. The 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 conditions, adverse changes in the climate for real
estate, environmental liability risks, increases in property taxes and operating
expenses, 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, REITs may be affected by any changes
in the value of the underlying property in their portfolios. 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. REITs are also subject
to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the
possibility of failing to maintain an exemption from the 1940 Act. Changes in
interest rates may also affect the value of debt securities held by the Fund. By
investing in REITs indirectly through the 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.
NON-DIVERSIFIED FUND. The Fund is a non-diversified portfolio (as defined in
the 1940 Act), which means that it may invest a greater proportion of its assets
in the securities of a smaller number of issuers and therefore may be subject to
greater market and credit risk than a more broadly diversified portfolio. (A
diversified portfolio may not, with respect to 75% of its total assets, invest
more than 5% of its assets in obligations of one issuer.) The Fund intends to
satisfy the diversification requirements of the Internal Revenue Code to qualify
as a regulated investment company. See "Dividends, Distributions and Tax
Matters" in the Statement of Additional Information.
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.
Under normal market conditions, the Fund expects that the portfolio turnover
rate will be no more than 150%. A higher rate of portfolio turnover may result
in higher transaction
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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 additional information regarding income taxes and brokerage
practices, see the Statement of Additional Information.
- --------------------------------------------------------------------------------
MANAGEMENT
The overall management of the business and affairs of the Fund is vested with
the Trust's Board of Trustees. The Board of Trustees approves all significant
agreements between the Trust and persons or companies furnishing services to the
Fund, including the Master Advisory Agreement with AIM, the Master
Administrative Services Agreement with AIM, the Master Distribution Agreement
with AIM Distributors as the distributor of the shares of the Fund, the
Custodian Agreement with State Street Bank and Trust Company as custodian and
the Transfer Agency and Service Agreement with AFS as transfer agent. The
day-to-day operations of the Fund are delegated to the officers of the Trust and
to AIM, subject always to the objectives and policies of the Fund and to the
general supervision of the Trust's Board of Trustees. Information concerning the
Board of Trustees may be found in the Statement of Additional Information.
Certain trustees and officers of the Trust are affiliated with AIM and A I M
Management Group Inc. ("AIM Management"), the parent of AIM. AIM Management 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
Investment Advisory Agreement (the "Master Advisory Agreement"). AIM, together
with its subsidiaries, advises or manages approximately 90 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 trustees, 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.
PORTFOLIO MANAGERS. AIM uses a team approach and a disciplined investment
process in providing investment advisory services to all of its accounts,
including the Fund. 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
accounts' and AIM's investment policies. The individuals who are primarily
responsible for the day-to-day management of the Fund 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.
Brant H. DeMuth, Robert M. Kippes, Charles D. Scavone and Kenneth A. Zschappel
are primarily responsible for the day-to-day management of the Fund. They all
have been responsible for the Fund since its inception. Mr. DeMuth is a
portfolio manager of A I M Capital Management, Inc. ("AIM Capital"), a wholly
owned subsidiary of AIM. He has been associated with AIM and/or its subsidiaries
since 1996 and became an investment professional in 1987. Prior to 1996, he was
a portfolio manager for the Colorado Public Employee Retirement Association. Mr.
Kippes is Vice President of AIM Capital. He has been associated with AIM and/or
its subsidiaries since he began working as an investment professional in 1989.
Mr. Scavone is Vice President of AIM Capital and has been associated with AIM
and/or its subsidiaries since 1996. He became an investment professional in
1990. Prior to 1996, he was Associate Portfolio Manager for Van Kampen American
Capital Asset Management, Inc. from 1994-1996. 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.
Zschappel is Assistant Vice President of AIM Capital. He has been associated
with AIM and/or its subsidiaries since he began working as an investment
professional in 1990.
ADMINISTRATOR AND TRANSFER AGENT. The Master Advisory Agreement provides
that, upon the request of the Board of Trustees, AIM may perform or arrange for
certain accounting and other administrative services for the Fund which are not
required to be performed by AIM under the Advisory Agreement. The Board of
Trustees has made such a request. As a result, AIM and the Trust have entered
into a Master Administrative Services Agreement. Under the Master Administrative
Services Agreement, AIM is entitled to receive from the Fund
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reimbursement of its costs or such reasonable compensation as may be approved by
the Board of Trustees. Currently, AIM is reimbursed for the services of the
Fund's principal financial officer and his staff, and any expenses related to
such services.
In addition, the Trust and AFS, 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 of the Fund. AFS' principle address
is P.O. Box 4739, Houston, TX 77210-4739.
FEES AND EXPENSES. For the period ended July 31, 1998, the Fund paid AIM an
amount for its advisory services which represented 1% of the Fund's average
daily net assets. AIM is also entitled to receive reimbursement of
administrative costs incurred on behalf of the Fund.
The Class A shares' total expenses for the period ended July 31, 1998 were
1.59% of the Class A shares' average daily net assets. The Class B shares' total
expenses for the period ended July 31, 1998 were 2.30% of the Class B shares'
average daily net assets.
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.
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, on
behalf of Class A and Class C shares of the Fund and has entered into a separate
Master Distribution Agreement, 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 Class A, Class B
and Class C shares of the Fund. The address of AIM Distributors is 11 Greenway
Plaza, Suite 100, Houston, TX 77046-1173. Certain trustees and officers of the
Trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right
to distribute Class A, Class B and Class C shares of the Fund directly and
through institutions with whom AIM Distributors has entered into selected dealer
agreements. The Distribution Agreements provide that AIM Distributors (or
dealers or financial institutions who offer and sell Class C shares) will be
deemed to have performed all services required to be performed in order to
receive an asset-backed sales charge on the average daily net assets
attributable to Class B or Class C shares upon settlement of each sale of a
Class B or Class C share.
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 dealers 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 attributable to the sales efforts of AIM
Distributors. In the event that 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 by the Fund 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 Trust 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 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 and paying service fees for maintaining and improving
services provided to shareholders by AIM Distributors and other providers of
shareholder services.
Under the Class A and C Plan, the Trust 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. Payments
can also be directed by AIM Distributors to selected institutions who have
entered into service agreements with respect to Class A and Class C shares of
the Fund and who provide continuing personal services to their customers who own
Class A and Class C shares of the Fund. The service fees payable to selected
institutions are calculated at the annual rate of 0.25% of the average daily net
asset value of those Fund shares that are held in such institution's customers'
accounts which were purchased on or after a prescribed date set forth in the
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
13
<PAGE>
payments to dealers and other financial institutions in excess of such amount
and payments to AIM Distributors would be characterized as an asset-based sales
charge pursuant to the Class A and C Plan. The Class A and C Plan also imposes a
cap on the total amount of sales charges, including asset-based sales charges,
that may be paid by the Trust with respect to the Fund.
CLASS B PLAN. The Trust 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 the Fund's Class B shares. Of such
amount the Fund pays a service fee of 0.25% of the average daily net assets
attributable to the 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 the Fund may be used to finance
any activity primarily intended to result in the sale of Class B shares of the
Fund.
BOTH PLANS. 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 Trust 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 Plan provides that no provision of the Plan will be interpreted to
prohibit payments during periods when sales of shares of the Fund have been
discontinued, suspended or otherwise limited.
Each of the Plans may be terminated at any time by a vote of the majority of
those trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares.
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 respective 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 different
classes.
For additional information concerning the operation of the Plans, see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust is organized as a Delaware business trust pursuant to an Agreement
and Declaration of Trust dated February 4, 1998, as amended (the "Trust
Agreement"). The Trust is an open-end series management investment company, and
may consist of one or more series portfolios with one or more classes as
authorized from time to time by the Board of Trustees. The Trustees have
established two portfolios, one of which, the Fund, is currently offering its
shares to the public.
The Trustees have designated three classes of shares representing an interest
in the Fund: Class A shares, Class B shares and Class C shares. Class A shares,
Class B shares and Class C shares of the Fund represent interests in the 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) and is subject to differing sales loads (which may affect
performance), conversion features and exchange privileges, and has exclusive
voting rights on matters pertaining to that class' distribution plan (although
holders of Class A and Class C shares and holders of Class B shares of the Fund
must approve any material increase in fees payable with respect to the Fund
under the Class A and C Plan).
Except as specifically noted above, shareholders of the Fund are entitled to
one vote per share (with proportionate voting for fractional shares),
irrespective of the relative net asset value of the Class A shares, Class B
shares and Class C shares of the Fund. However, on matters affecting one class
of shares, a separate vote of shareholders of that class is required.
Shareholders of a class are not entitled to vote on any matter which does not
affect that class but which requires a separate vote of another class. An
example of a matter which would be voted on
14
<PAGE>
separately by shareholders of a class of shares is approval of a distribution
plan. When issued, shares of the 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 trustees, holders of more than 50% of
the shares voting for the election of trustees can elect all of the trustees of
the Trust, and the holders of less than 50% of the shares voting for the
election of trustees will not be able to elect any trustees.
The Trust is not required to hold annual or regular meetings of shareholders.
Meetings of shareholders of the Fund will be held from time to time to consider
matters requiring a vote of such shareholders in accordance with the
requirements of the 1940 Act, state law or the provisions of the Trust
Agreement. It is not expected that shareholder meetings will be held annually.
The Trust Agreement provides that the trustees of the Trust shall hold office
during the existence of the Trust, except as follows: (a) any trustee may resign
or retire; (b) any trustee may be removed by a vote of the majority of the
outstanding shares of the Trust, or at any time by written instrument signed by
at least two-thirds of the trustees and specifying when such removal becomes
effective; or (c) any trustee who has died or become incapacitated and is unable
to serve may be removed by a written instrument signed by a majority of the
trustees.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, LLP,
Philadelphia, Pennsylvania, serves as counsel for the Fund and passes upon legal
matters.
- --------------------------------------------------------------------------------
FUTURE FUND CLOSURE
Due to the anticipated limited availability of common stocks of small
capitalized companies that meet the investment criteria for the Fund, the Fund
will be closed to new investors as soon as reasonably practicable after the Fund
has assets under management of $500 million. To the extent that the Fund is
closed, shareholders who maintain open accounts in the Fund will be able to
continue to make additional investments in the Fund. Minimum account balances as
noted in the Investor's Guide will be required to be maintained for an investor
to maintain an account in the Fund. In addition, once the Fund is closed,
notwithstanding the right to reinstatement described in the Investor's Guide, no
shareholder of the Fund who redeems his/her account in full will have the right
of reinstatement.
During those periods that the Fund is closed to new investors, the aggregate
amount payable for Class A shares under the Plan will be reduced from 0.35% to
0.25% of the average daily net assets of the Fund. The aggregate amount payable
for Class B and Class C shares under the Plans, will not be reduced when the
Fund is closed to new investors.
15
<PAGE>
THE TOLL-FREE MEMBER 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 AIM SMALL CAP OPPORTUNITIES FUND
- ------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
THE AIM FAMILY OF FUNDS (the "AIM Funds") consists of the following mutual
funds:
AIM Advisor Flex Fund AIM Global Infrastructure Fund
AIM Advisor International Value Fund AIM Global Resources Fund
AIM Advisor Large Cap Value Fund AIM Global Telecommunications Fund
AIM Advisor MultiFlex Fund AIM Global Trends Fund
AIM Advisor Real Estate Fund AIM Global Utilities Fund
AIM Aggressive Growth Fund AIM High Income Municipal Fund
AIM Asian Growth Fund AIM High Yield Fund
AIM Balanced Fund AIM High Yield Fund II
AIM Basic Value Fund AIM Income Fund
AIM Blue Chip Fund AIM Intermediate Government Fund
AIM Developing Markets Fund AIM International Equity Fund
AIM Dollar Fund(*) AIM International Growth Fund
AIM Emerging Markets Fund AIM Japan Growth Fund
AIM Emerging Markets Debt Fund AIM Latin American Growth Fund
AIM Europe Growth Fund AIM Limited Maturity Treasury Fund
AIM Capital Development Fund AIM Mid Cap Equity Fund
AIM Charter Fund AIM Money Market Fund(*)
AIM Constellation Fund AIM New Pacific Growth Fund
AIM European Development Fund AIM Municipal Bond Fund
AIM Global Aggressive Growth Fund AIM Select Growth Fund
AIM Global Consumer Products and AIM Small Cap Growth Fund
Services Fund AIM Small Cap Opportunities Fund
AIM Global Financial Services Fund AIM Strategic Income Fund
AIM Global Government Income Fund AIM Tax-Exempt Bond Fund of
AIM Global Growth Fund Connecticut
AIM Global Growth & Income Fund AIM Tax-Exempt Cash Fund(*)
AIM Global Health Care Fund AIM Tax-Free Intermediate Fund
AIM Global Income Fund AIM Value Fund
AIM Weingarten Fund
AIM Worldwide Growth Fund
(*) Class A shares of AIM DOLLAR FUND and 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,
incuding 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 OR THE SOLICITATION OF AN OFFER
TO BUY SHARES OF ANY FUND OTHER THAN THE FUND NAMED ON THE COVER PAGE OF THIS
PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of AIM Small Cap
Opportunities Fund (the "Fund") an investor must submit a fully completed New
Account Application form directly to AFS or through any dealer authorized by 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 Fund offers Class A and Class B shares;
Class C shares are not currently available. The minimum initial investment for
either class of the Fund is $10,000. For employees of A I M Management Group
Inc. ("AIM Management"), and its affiliates, the minimum initial investment is
$500. There are no minimum investment requirements applicable for investment of
dividends and distributions of the Fund into any existing AIM Funds account.
A-1
<PAGE>
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Fund other than the Fund 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. The minimum investment for subsequent
purchases of the Fund is $1,000. For employees of AIM Management and its
affiliates, the minimum investment for subsequent purchases of the Fund is $100.
There are no such minimum investment requirements for investment of dividends
and distributions of the Fund into the Fund or into any other existing AIM Funds
account.
Additional shares may be purchased directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors.
Direct investments may be made by mail or by wiring payment to AFS as follows:
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
transfer, please contact the Client Services Department of AFS for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Class A shares (the "Class A shares") of the AIM Funds (other than AIM
AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND 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
DOLLAR FUND and AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND are sold without a sales charge. In addition, under certain
circumstances Class A shares of the AIM Funds are sold without an initial sales
charge but are subject to a contingent deferred sales charge payable upon
certain redemptions. See "How to Redeem Shares -- Contingent Deferred Sales
Charge Program for Large Purchases of Class A Shares." Class B shares (the
"Class B shares") and Class C shares (the "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 an AIM 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.
A-2
<PAGE>
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 EUROPE GROWTH FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL EQUITY FUND, AIM
INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP EQUITY FUND, AIM
MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM
SMALL CAP GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM VALUE FUND, AIM
WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE -------------
------------------------------ AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION(1) PRICE INVESTED PRICE
- ---------------------------------------------------------- --------------- ------------- -------------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000(2) 2.00 2.04 1.60
</TABLE>
- ------------
(1) AIM Small Cap Opportunities Fund will not accept any single purchase in
excess of $250,000.
(2) There is no sales charge on purchases of $1,000,000 or more; however, except
with respect to AIM Small Cap Opportunities Fund, 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 OF CLASS A SHARES."
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 DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM LATIN AMERICAN FUND, AIM MUNICIPAL BOND FUND,
AIM STRATEGIC INCOME FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE -------------
------------------------------ AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
- ---------------------------------------------------------- --------------- ------------- -------------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000(1) 2.00 2.04 1.60
</TABLE>
- ------------
(1) 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 OF CLASS A SHARES."
A-3
<PAGE>
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 and 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, AIM
SMALL CAP OPPORTUNITIES 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 "How to Redeem Shares
- -- Contingent Deferred Sales Charge Program for Large Purchases of Class A
shares." 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 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, dealers and institutions will receive
on a quarterly basis, the full amount payable by the Fund with respect to Class
C shares based on the average net asset value of Class C shares which are
attributable to shareholders for whom
A-4
<PAGE>
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 AIM Funds on or after May 1, 1995, and in circumstances where AIM
Distributors grants an exemption on particular transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of the Fund
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 the 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 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
the 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 the 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 any applicable initial sales charges
described above and are subject to the other fees and expenses described
herein. In addition, under certain circumstances Class A shares of the AIM
Funds are sold without an initial sales charge but are subject to a
contingent deferred sales charge payable upon certain redemptions. See "How
to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases of Class A Shares."
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."
SHARE CERTIFICATES. Share certificates for the Fund will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, ownership of such shares will be recorded on the books of the Fund.
See "Exchange Privilege -- Exchanges by
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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 the 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 sixty (60) days' prior written notice, unless the
shareholder makes additional investments, subject to applicable minimums, within
the notice period to bring the account value up to $500. If the Fund determines
that a shareholder has provided incorrect information in opening an account with
the 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
DOLLAR FUND and 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 Individual Retirement Arrangement
("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 ("SAR-SEP"), a Savings Incentive Match
Plan 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 virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
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 DOLLAR
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FUND and 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 Fund (the
"Excluded Classes")) 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 twenty (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 the Excluded Classes)
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 the Excluded Classes) 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. An Investor may purchase shares of the Fund at
net asset value (without payment of an initial sales charge) in connection with:
(a) the reinvestment of dividends and distributions from a fund (see "Dividends,
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.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) 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
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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; (i) any employee or any member of the immediate family (including
spouse, children, parents, and parents of spouse) of any employee of Triformis,
Inc.; (j) shareholders of the AIM/GT Funds (those funds which are advised by AIM
and sub-advised by INVESCO (NY), Inc.), as of April 30, 1987, who since that
date continually have owned shares of one or more of the AIM/GT Funds; and (k)
certain former AMA Investment Advisers' shareholders who became shareholders of
the AIM Global Health Care Fund in October 1989, and who have continuously held
shares in the AIM/GT Funds since that time.
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 THE FUND. 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 Fund's prospectus, 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
The 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 checks in any amount (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 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 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 Class A
shares of the Fund it is disadvantageous to effect such purchases while a
Systematic Withdrawal Plan is in effect.
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The Systematic Withdrawal Plan may be terminated at any time upon ten (10)
days' prior notice to AFS. The Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. The 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. Shareholders selecting
this option must have established an account in the Fund with a minimum initial
investment of at least $10,000. Under this plan a draft is drawn on the
shareholder's bank account in the amount specified by the shareholder (minimum
$1,000 per investment, per account) and on a day or date(s) specified by the
shareholder. The proceeds of the draft are invested in shares of the Fund at the
applicable offering price determined on the date of the draft. 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 the Fund paid in cash or invested at net
asset value, without payment of an initial sales charge, either in shares of the
Fund or invested in shares of another AIM Fund. 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. In order
to qualify to have dividends and distributions of the Fund invested in shares of
another AIM Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the Fund of at least $5,000 and the
account must have been established with an initial investment of at least
$10,000; (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. Shares of the Fund will not be available for
automatic dividend reinvestments until August 10, 1998. An authorization may be
given on the account application or on an authorization form available from AIM
Distributors. An AIM Fund, other than the 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. To
reinvest dividends and distributions of another AIM Fund into the Fund,
shareholders must have an account in the Fund that was established with an
initial investment of at least $10,000.
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 their account 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. For exchanges from any AIM Fund into the Fund, the
exchange minimum is $1,000 per transaction. The Fund account must also have been
established with a minimum initial investment of at least $10,000. For exchanges
of the Fund into any AIM Fund, 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 TAX-FREE
INTERMEDIATE FUND, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND, AIM HIGH
INCOME MUNICIPAL 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 reserves 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, listed below and referred to herein
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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.
LOAD FUNDS:
AIM ADVISOR FLEX FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE FUND
-- CLASS A
AIM ADVISOR LARGE CAP VALUE FUND --
CLASS A
AIM ADVISOR MULTIFLEX FUND --
CLASS A
AIM ADVISOR REAL ESTATE FUND --
CLASS A
AIM AGGRESSIVE GROWTH FUND --
CLASS A
AIM ASIAN GROWTH FUND -- CLASS A
AIM BALANCED FUND -- CLASS A
AIM BASIC VALUE FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A
AIM CAPITAL DEVELOPMENT FUND --
CLASS A
AIM CHARTER FUND -- CLASS A
AIM CONSTELLATION FUND -- CLASS A
AIM DEVELOPING MARKETS FUND --
CLASS A
AIM EMERGING MARKETS FUND --
CLASS A
AIM EMERGING MARKETS DEBT FUND --
CLASS A
AIM EUROPE GROWTH FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT FUND --
CLASS A
AIM GLOBAL AGGRESSIVE GROWTH FUND
-- CLASS A
AIM GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND -- CLASS A
AIM GLOBAL FINANCIAL SERVICES FUND
-- CLASS A
AIM GLOBAL GOVERNMENT INCOME FUND
-- CLASS A
AIM GLOBAL GROWTH FUND -- CLASS A
AIM GLOBAL GROWTH & INCOME FUND --
CLASS A
AIM GLOBAL HEALTH CARE FUND --
CLASS A
AIM GLOBAL INCOME FUND -- CLASS A
AIM GLOBAL INFRASTRUCTURE FUND --
CLASS A
AIM GLOBAL RESOURCES FUND --
CLASS A
AIM GLOBAL TELECOMMUNICATIONS FUND
-- CLASS A
AIM GLOBAL TRENDS FUND -- CLASS A AIM GLOBAL UTILITIES FUND -- CLASS A
AIM HIGH INCOME MUNICIPAL FUND --
CLASS A
AIM HIGH YIELD FUND -- CLASS A
AIM HIGH YIELD FUND II -- CLASS A
AIM INCOME FUND -- CLASS A
AIM INTERMEDIATE GOVERNMENT FUND
-- CLASS A
AIM INTERNATIONAL EQUITY FUND --
CLASS A
AIM INTERNATIONAL GROWTH FUND --
CLASS A
AIM JAPAN GROWTH FUND -- CLASS A
AIM LATIN AMERICAN GROWTH FUND --
CLASS A
AIM MID CAP EQUITY FUND -- CLASS A
AIM MONEY MARKET FUND -- CLASS A
AIM MUNICIPAL BOND FUND -- CLASS A
AIM NEW PACIFIC GROWTH FUND --
CLASS A
AIM SELECT GROWTH FUND -- CLASS A
AIM SMALL CAP GROWTH FUND --
CLASS A
AIM SMALL CAP OPPORTUNITIES FUND --
CLASS A
AIM STRATEGIC INCOME FUND -- CLASS A
AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT -- CLASS A
AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
AIM WORLDWIDE GROWTH FUND --
CLASS A
LOWER LOAD FUNDS:
AIM LIMITED MATURITY TREASURY
FUND -- CLASS A
AIM TAX-FREE INTERMEDIATE FUND
-- CLASS A
NO LOAD FUNDS:
AIM DOLLAR FUND -- CLASS A
AIM MONEY MARKET FUND -- AIM
CASH RESERVE SHARES
AIM TAX-EXEMPT CASH FUND --
CLASS A
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described in 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 (except the Fund) 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;
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<PAGE>
(v) Class C shares may be exchanged only 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. In addition, Class A
shares of another AIM Fund may be exchanged for Class A shares of the Fund, on
the terms described in the chart below, except that the amount of such exchange
may not exceed $250,000, and must meet the $10,000 minimum initial purchase
requirement in such cases as the exchange creates a new account in the Fund.
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.
FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994, THE TERMS ARE AS FOLLOWS:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS
--------------------------------
FROM: TO: LOAD FUNDS LOWER LOAD FUNDS NO LOAD 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 Funds.... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds....... Offering Price if No Load Net Asset Value if No Load Net Asset Value Not Applicable Not Applicable
shares were directly shares were acquired upon
purchased. Net Asset Value exchange of shares of any
if No Load shares were Load Fund or any Lower Load
acquired upon exchange of Fund; otherwise, Offering
shares of any Load Fund or Price.
any Lower Load Fund.
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 TERMS ARE AS FOLLOWS:
Load Funds.......... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.... Net Asset Value if shares Net Asset Value Net Asset Value Not Applicable Not Applicable
were acquired upon exchange
of any Load Fund. Otherwise,
difference in sales charge
will apply.
No Load Funds....... Offering Price if No Load Net Asset Value if No Load Net Asset Value Not Applicable Not Applicable
shares were directly shares were acquired upon
purchased. Net Asset Value exchange of shares of any
if No Load shares were Load Fund or any Lower Load
acquired upon exchange of Fund; otherwise, Offering
shares of any Load Fund. Price.
Difference in sales charge
will apply if No Load shares
were 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 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
A-11
<PAGE>
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 after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. Orders for exchanges 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. 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 SHARES SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE. A
contingent deferred sales charge will not be imposed in connection with
exchanges among Class A shares or among Class B shares or among Class C shares.
For purposes of determining a
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<PAGE>
shareholder's holding period of Class A, Class B or Class C shares in the
calculation of the applicable contingent deferred sales charge, the period of
time during which Class A, Class B or Class C shares were held prior to an
exchange will be added to the holding period of the applicable Class A, Class B
or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the Fund to redeem shares, AIM Distributors also
repurchases shares. 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 attributable 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>
CONTINGENT DEFERRED
SALES CHARGE AS
YEAR SINCE % OF DOLLAR AMOUNT
PURCHASE MADE SUBJECT TO CHARGE
- ----------------------------- ---------------------
<S> <C>
First........................ 5%
Second....................... 4%
Third........................ 3%
Fourth....................... 3%
Fifth........................ 2%
Sixth........................ 1%
Seventh and Following........ None
</TABLE>
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; and (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares.
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 with respect to 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."
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<PAGE>
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.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES OF CLASS A
SHARES. A CONTINGENT DEFERRED SALES CHARGE OF 1% APPLIES TO PURCHASES OF
$1,000,000 OR MORE OF CLASS A SHARES 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,
A-14
<PAGE>
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 the 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 as indicated on the account application; (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, Roth IRA,
SIMPLE IRA and SEP/SARSEP) 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. If a shareholder is unable to reach AFS by
telephone, he may also request redemptions by telegraph or use overnight courier
services to expedite redemptions 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 redemption request
effected in accordance with the authorization set forth in the appropriate form
if they reasonably believe such request 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.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the 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 of Class A Shares." Orders for the redemption
of shares received in proper form prior to NYSE Close on any business day of the
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 the Fund. 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 the Fund and will be confirmed at the price determined as
of the close of that day. The Fund will not accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally mailed within seven (7)
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 (10)
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 Fund, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of
the 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 by wire 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 thirty (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 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
A-15
<PAGE>
adopted by the SEC, and further provided that such guarantor institution is
listed in one of the reference guides contained in the Transfer Agent's current
Signature Guarantee Standards and Procedures, such as certain domestic banks,
credit unions, securities dealers, or securities exchanges. The Transfer Agent
will also accept signatures with either: (1) a signature guaranteed with a
medallion stamp of the STAMP program, or (2) a signature guaranteed with a
medallion stamp of the NYSE Medallion Signature Program, provided that in either
event, the amount of the transaction involved does not exceed the surety
coverage amount indicated on the medallion. For information regarding whether a
particular institution or organization qualifies as an "eligible guarantor
institution," an investor should contact the Client Services Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within ninety (90) days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund (subject to any minimum investment requirements)
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 in which the proceeds
are reinvested. Once the Fund is closed, no shareholder of the Fund who redeems
his/her account in full will have the right of reinstatement. 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
ninety (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
ninety (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 the Fund is determined as of
NYSE Close, which is typically 4:00 p.m. Eastern Time, on each "business day" of
the 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 the Fund's
share will be determined as of the NYSE Close on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued fifteen (15) minutes after the NYSE Close. The net asset value
per share is calculated by subtracting the Fund's liabilities from its assets
and dividing the result by the total number of its 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 Trustees. Short-term obligations with maturities of sixty
(60) days or less are valued at amortized cost as reflecting fair value.
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 NYSE Close. 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 NYSE Close. 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 the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities
will be valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees of the Fund. Securities listed primarily on
foreign exchanges may trade on days when the NYSE is closed (such as Saturday).
As a result, the net asset value of the Fund may be significantly affected by
such trading on days when shareholders cannot purchase or redeem shares of the
Fund.
A-16
<PAGE>
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Generally, the Fund intends to declare and pay dividends from net investment
income and make distributions of net realized long and short-term capital gains
annually.
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 the Fund are automatically reinvested on
the payment date in full and fractional shares of the 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 AIM 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 dividends and
distributions attributable to Class A shares may not be reinvested in 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
dividends on Class A shares because of higher distribution fees paid by Class B
and Class C shares. Dividends on all shares may also be affected by other
class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by the 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.
TAX MATTERS
The Fund 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. The Fund, for purposes
of determining taxable income distribution requirements and other requirements
of Subchapter M, is treated as a separate corporation. Therefore, the Fund may
not 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 the Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that the Fund will be
required to pay any federal income tax. The 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.
Dividends paid by the 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. 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 Fund will not be subject to federal income taxation to
the extent permitted under the applicable tax-exemption.
For each redemption of the 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.
A-17
<PAGE>
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF THE 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.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the Fund.
Chase Bank of Texas, N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as
Sub-Custodian for purchases of shares of the Fund.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as the Fund's transfer agent and dividend
payment agent.
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 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 second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that
investors should know about the Fund prior to investing. If several members of a
household own shares of the Fund, the Fund intends to mail 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 AIM Distributors, Inc., 11 Greenway
Plaza, Suite 100, Houston, Texas 77046-1173. 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 by visiting the
SEC and paying the charges prescribed under its rules and regulations or from
the SEC's web site referred to above.
A-18
<PAGE>
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, Trust, Estate,
Pension 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, Corporation,
Minors/Unif. Partnership, Partnership,
Transfers to Minors Other Organization Other Organization
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 Securities, 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
MCF-01/98
B-1
<PAGE>
false statement resulting in no backup withholding on an account which should be
subject to backup withholding, such investor may be subject to a $500 penalty
imposed by the IRS and to certain criminal penalties including fines and/or
imprisonment.
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
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. In the event any exchange 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. In
the event 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-01/98
B-2
<PAGE>
[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-I
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
AIM SMALL CAP OPPORTUNITIES FUND
(SERIES PORTFOLIO OF
AIM SPECIAL OPPORTUNITIES FUNDS)
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 FUND,
A COPY OF WHICH MAY BE OBTAINED FREE OF CHARGE
FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC.,
P.O. BOX 4739, HOUSTON, TX 77210-4739
OR BY CALLING (800) 347-4246.
------------------------------
STATEMENT OF ADDITIONAL INFORMATION DATED OCTOBER 7, 1998
RELATING TO THE AIM SMALL CAP OPPORTUNITIES FUND PROSPECTUS
DATED OCTOBER 7, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
GENERAL INFORMATION ABOUT THE TRUST. . . . . . . . . . . . . . . . . . . . . .1
The Trust and Its Shares. . . . . . . . . . . . . . . . . . . . . . . . .1
PERFORMANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Total Return Quotations . . . . . . . . . . . . . . . . . . . . . . . . .3
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . .3
General Brokerage Policy. . . . . . . . . . . . . . . . . . . . . . . . .3
Allocation of Portfolio Transactions. . . . . . . . . . . . . . . . . . .4
Section 28(e) Standards . . . . . . . . . . . . . . . . . . . . . . . . .5
Transactions with Regular Brokers . . . . . . . . . . . . . . . . . . . .5
Brokerage Commissions Paid. . . . . . . . . . . . . . . . . . . . . . . .5
Portfolio Turnover. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
INVESTMENT POLICIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Common Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Preferred Stocks. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Convertible Securities. . . . . . . . . . . . . . . . . . . . . . . . . .6
Foreign Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Foreign Exchange Transactions . . . . . . . . . . . . . . . . . . . . . .7
Rule 144A Securities. . . . . . . . . . . . . . . . . . . . . . . . . . .7
Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . .8
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . .8
Reverse Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . .8
Special Situations. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Investment in Unseasoned Issuers. . . . . . . . . . . . . . . . . . . . .9
Temporary Defensive Investments . . . . . . . . . . . . . . . . . . . . .9
HEDGING AND OTHER INVESTMENT TECHNIQUES. . . . . . . . . . . . . . . . . . . .9
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Fundamental Restrictions. . . . . . . . . . . . . . . . . . . . . . . . 12
Non-fundamental Restrictions. . . . . . . . . . . . . . . . . . . . . . 12
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . . 13
Remuneration of Trustees . . . . . . . . . . . . . . . . . . . . . 16
AIM Funds Retirement Plan for Eligible Directors/Trustees. . . . . 18
Deferred Compensation Agreements . . . . . . . . . . . . . . . . . 18
Investment Advisory and Administrative Services Agreements. . . . . . . 19
THE DISTRIBUTION PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
The Class A and C Plan. . . . . . . . . . . . . . . . . . . . . . . . . 20
The Class B Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Both Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
HOW TO PURCHASE AND REDEEM SHARES. . . . . . . . . . . . . . . . . . . . . . 24
i
<PAGE>
QUALIFYING FOR A REDUCED FRONT-END SALES CHARGE. . . . . . . . . . . . . . . 25
NET ASSET VALUE DETERMINATION. . . . . . . . . . . . . . . . . . . . . . . . 25
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . 26
Reinvestment of Dividends and Distributions . . . . . . . . . . . . . . 26
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Qualification as a Regulated Investment Company . . . . . . . . . . . . 26
Investment in Foreign Financial Instruments . . . . . . . . . . . . . . 28
Hedging Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . 28
Excise Tax on Regulated Investment Companies. . . . . . . . . . . . . . 29
Fund Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Sale or Redemption of Shares. . . . . . . . . . . . . . . . . . . . . . 31
Foreign Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . 31
Effect of Future Legislation; Local Tax Considerations. . . . . . . . . 32
PROGRAMS AND SERVICES FOR SHAREHOLDERS . . . . . . . . . . . . . . . . . . . 32
Dividend Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
MISCELLANEOUS INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . 32
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Custodian and Transfer Agent. . . . . . . . . . . . . . . . . . . . . . 32
Control Persons and Principal Holders of Securities . . . . . . . . . . 33
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Description of Commercial Paper Ratings . . . . . . . . . . . . . . . . 34
Description of Corporate Bond Ratings . . . . . . . . . . . . . . . . . 34
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
ii
<PAGE>
INTRODUCTION
AIM Special Opportunities Funds (the "Trust") is a series mutual fund. The
rules and regulations of the Securities and Exchange Commission (the "SEC")
require all mutual funds to furnish prospective investors certain information
concerning the activities of the fund being considered for investment. This
information is included in a Prospectus (the "Prospectus"), dated October 6,
1998, which relates to the AIM Small Cap Opportunities Fund series portfolio of
the Trust (the "Fund"). Copies of the Prospectus and additional copies of this
Statement of Additional Information may be obtained without charge by writing
the principal distributor of the Fund's shares, A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, TX 77210-4739 or by calling (800)
347-4246. Investors must receive a Prospectus before they invest in the Fund.
This Statement of Additional Information is intended to furnish prospective
investors with additional information concerning the Fund. Some of the
information required to be in this Statement of Additional Information is also
included in the Fund's current Prospectus, and in order to avoid repetition,
reference will be made herein to sections of the Prospectus. Additionally, the
Prospectus and this Statement of Additional Information omit certain information
contained in the Trust's Registration Statement filed with the SEC. Copies of
the Registration Statement, including items omitted from the Prospectus and this
Statement of Additional Information, may be obtained from the SEC by paying the
charges described under its rules and regulations.
GENERAL INFORMATION ABOUT THE TRUST
THE TRUST AND ITS SHARES
The Trust is organized as a Delaware business trust pursuant to an
Agreement and Declaration of Trust, dated February 4, 1998, as amended (the
"Trust Agreement"). The Fund is a series portfolio of the Trust. Under the
Trust Agreement, the Board of Trustees is authorized to create new series of
shares without the necessity of a vote of shareholders of the Trust.
Shares of beneficial interest of the Trust are redeemable at their net
asset value at the option of the shareholder or at the option of the Trust in
certain circumstances. For information concerning the methods of redemption and
the rights of share ownership, investors should consult the Prospectus under the
captions "Organization of the Trust" and "How to Redeem Shares."
The assets received by the Trust from the issue or sale of shares and all
income, earnings, profits and proceeds thereof, subject only to the rights of
creditors, are specifically allocated to the Fund. They constitute the
underlying assets of the Fund, are required to be segregated on the Trust's
books of account, and are to be charged with the expenses of the Fund. Any
general expenses of the Trust are allocated by or under the direction of the
Board of Trustees, primarily on the basis of relative net assets, or other
relevant factors.
The Fund offers three classes of 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). Each share of the Fund is entitled to one
vote, to participate equally (with respect to all shares of a class) in
dividends and distributions declared by the Fund's Board of Trustees 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.
Class C shares of the Fund are not currently available. All reference
to Class C shares of the Fund in this Statement of Additional Information
will be effective when a public offering of those shares commences.
The term "majority of the outstanding shares" of the Trust, of the Fund or
a particular class of the Fund means respectively, the vote of the lesser of (a)
67% or more of the shares of the Trust, Fund or such class
1
<PAGE>
present at a meeting of the Trust's shareholders, if the holders of more than
50% of the outstanding shares of the Trust, Fund or such class are present or
represented by proxy, or (b) more than 50% of the outstanding shares of the
Trust or Fund or such class.
Shareholders of the Fund do not have cumulative voting rights, and
therefore the holders of more than 50% of the outstanding shares of the Fund
voting together for election of trustees may elect all of the members of the
Board of Trustees of the Trust. In such event, the remaining holders cannot
elect any trustees of the Trust.
Both the Delaware Business Trust Act and the Trust Agreement provide that
shareholders of the Trust shall be entitled to the same limitation on personal
liability as is extended under the Delaware General Corporation Law to
stockholders of private corporations for profit. There is a remote possibility,
however, that, under certain circumstances, shareholders of a Delaware business
trust may be personally liable for that trust's obligations to the extent that
the courts of another state which does not recognize such limited liability were
to apply the laws of such state to controversy involving such obligations. If a
shareholder is held personally liable for the obligations of the Fund, the
Trust Agreement provides that the shareholder shall be entitled out of the
assets belonging to the Fund to be held harmless from and indemnified against
all loss and expense arising from such liability in accordance with the Trust's
Bylaws and applicable law. Therefore, the risk of any shareholder incurring
financial loss beyond his investment due to shareholder liability is limited to
circumstances in which the Fund itself is unable to meet its obligations and
the express disclaimer of shareholder liability is determined not to be
effective.
PERFORMANCE
Total returns quoted in advertising reflect all aspects of the Fund's
return, including the effect of reinvesting dividends and capital gain
distributions, and any change in the 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 the 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 the 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
the Fund.
In addition to average annual returns, the 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 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.
The 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 Fund may also advertise mutual fund
performance rankings which have been assigned to the Fund by such monitoring
services.
The 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.
2
<PAGE>
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. Shares of the Fund
are not insured and their value will vary with market conditions.
In addition, the Fund's long-term performance may be described in
advertising in relation to historical, political and/or economic events. The
Fund's advertising may from time to time include discussions of general economic
conditions and interest rates. The Fund's advertising may also include
references to the use of the Fund as part of an individual's overall retirement
investment program.
From time to time, Fund sales literature and/or advertisements may disclose
(i) top holdings included in the Fund's portfolio, (ii) certain selling group
members, and/or (iii) certain institutional shareholders.
From time to time, the Fund's 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.
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return, as described in the
Prospectus, is as follows:
n
P(1+T) = ERV
where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable maximum sales
load is deducted at the beginning of the 1, 5 or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the
end of the 1, 5 or 10 year periods (or fractional portion of such
period).
The average annual total return for the Class A and Class B shares of the
Fund were as follows:
<TABLE>
<CAPTION>
Average Annual
Class Period Total Return
- ----- ------ --------------
<S> <C> <C>
Class A June 29, 1998 (commencement -7.75%
of operations) through July 31, 1998
Class B July 13, 1998 (commencement
of operations) through July 31, 1998 -10.53%
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
A I M Advisors, Inc. ("AIM") makes decisions to buy and sell securities for
the Fund, selects broker-dealers, effects the Fund's 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 Fund may not pay the lowest commission or spread available. See
"Section 28(e) Standards" below.
3
<PAGE>
Some of the securities in which the Fund invests are traded in
over-the-counter markets. In such transactions, the 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 Fund) 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
Fund and other mutual funds advised by AIM or A I M Capital Management, Inc.
(collectively, the "AIM Funds") in particular, including sales of the Fund and
of the other AIM Funds. In connection with (3) above, the Fund's 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 the 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 the Fund's portfolio securities in a
tender or exchange offer.
The Fund may engage in certain principal and agency transactions with banks
and their affiliates that own 5% or more of the outstanding voting securities of
the Fund, provided the conditions of an exemptive order received by the Fund
from the SEC are met. In addition, the Fund may purchase or sell a security
from or to another AIM Fund provided the Fund follows procedures adopted by the
Board of Directors/Trustees of the various AIM Funds, including the Trust.
These inter-fund transactions do not generate brokerage commissions but may
result in custodial fees or taxes or other related expenses.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some of
these accounts may have investment objectives similar to the Fund.
Occasionally, identical securities will be appropriate for investment by the
Fund and by another AIM 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 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 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 the 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 the 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.
4
<PAGE>
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, the Fund may pay a broker higher commissions than
those available from another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Trust's Trustees with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally or in
written form. Research services may also include the providing of electronic
communication of trade information, 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 Fund. However, the Fund is 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 Fund 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.
TRANSACTIONS WITH REGULAR BROKERS
As of July 31, 1998, the Fund entered into repurchase agreements with the
following regular broker, Goldman Sachs & Co., as that term is defined in Rule
10b-1 under the 1940 Act, having the noted market value of $28,740,077.
BROKERAGE COMMISSIONS PAID
For the fiscal year ended July 31, 1998, Small Cap paid brokerage
commissions of $79,068. For the fiscal year ended July 31, 1998, AIM allocated
certain of Small Cap's brokerage transactions to certain broker-dealers that
provided AIM with certain research, statistical and other information. Such
transactions amounted to $6,931,651 and the related brokerage commissions were
$11,676.
5
<PAGE>
PORTFOLIO TURNOVER
Higher portfolio turnover involves corresponding greater transaction costs
which are borne directly by the Fund, and may increase capital gains which are
taxable as ordinary income when distributed to shareholders. Changes in the
portfolio holdings are made without regard to whether a sale would result in a
profit or loss.
INVESTMENT 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." Unless otherwise noted, the following policies
are non-fundamental policies and may be changed by the Board of Trustees of the
Trust without shareholder approval.
COMMON STOCKS
The Fund 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 Fund 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 Fund may invest up to 25% of its total assets 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 the
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.
6
<PAGE>
FOREIGN SECURITIES
The Fund may invest up to 25% of its total assets in foreign securities.
For purposes of computing such limitation, American Depository Receipts
("ADRs"), European Depository 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.
FOREIGN EXCHANGE TRANSACTIONS
Purchases and sales of foreign securities are usually made with foreign
currencies, and consequently the Fund 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 Fund. The Fund attempts 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 Fund changes 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 Fund
from transferring cash out of such countries, and the Fund may be affected
either favorably or unfavorably by fluctuations in relative exchange rates while
the Fund holds foreign currencies.
RULE 144A SECURITIES
The Fund may 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 the Fund, to trade in privately placed securities even though
such securities are not registered under the 1933 Act. AIM, under the
supervision of the Trust's Board of Trustees, 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.
7
<PAGE>
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. The Fund does not 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 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 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 (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.
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements, 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 when necessary to meet unanticipated net
redemptions so as to avoid liquidating other portfolio securities during
unfavorable market conditions and only in amounts up to 33 1/3% of the value of
the Fund's total assets at the time the Fund enters into a reverse repurchase
agreement. At the time it enters into a reverse repurchase agreement, the Fund
will segregate liquid assets having a dollar value equal to the repurchase
price. The segregated securities will be marked-to-market, and additional
securities will be segregated if necessary to maintain adequate coverage.
SPECIAL SITUATIONS
The Fund 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
8
<PAGE>
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 break throughs, 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.
INVESTMENT IN UNSEASONED ISSUERS
The Fund 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.
TEMPORARY DEFENSIVE INVESTMENTS
The Fund may invest, for temporary or defensive purposes, all or
substantially all of its assets in investment grade (high quality) corporate
bonds, commercial paper, or U.S. Government obligations. In addition, a portion
of the Fund's assets may be held, from time to time, in cash, repurchase
agreements or other 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 Fund may invest, see the Appendix to
this Statement of Additional Information.
HEDGING AND OTHER INVESTMENT TECHNIQUES
As described in the Prospectus under "Certain Investment Strategies and
Policies," the Fund may enter into transactions in options, futures and forward
contracts on a variety of instruments and indexes, in order to protect against
declines in the value of portfolio securities and increases in the cost of
securities to be acquired as well as to increase the Fund's return. The
discussion below supplements the discussion in the Prospectus.
OPTIONS. The Fund may write covered call options both to reduce the risks
associated with certain of its investments and to increase total investment
return through the receipt of premiums. In return for the premium income, the
Fund loses any opportunity to profit from an increase in the market price of the
underlying securities, above the exercise price, while the contract is
outstanding, except to the extent the premium represents a profit. The Fund
also retains the risk of loss if the price of the security declines, although
the premium is intended to offset that loss in whole or in part. As long as its
obligations under the option continue, the Fund must assume that the call may be
exercised at any time and that the net proceeds realized from the sale of the
underlying securities pursuant to the call may be substantially below the
prevailing market price.
The Fund may enter into a "closing purchase transaction", by purchasing an
option identical to the one it has written, and terminate its obligations under
the covered call. The Fund will realize a gain (or loss) from a closing
purchase transaction if the amount paid to purchase a call option is less (or
more) than the premium received upon writing the corresponding call option. Any
loss resulting from the exercise or closing out of a call option is likely to be
offset in whole or in part by unrealized appreciation of the underlying security
owned by the Fund primarily because a price increase of a call option generally
reflects an increase in the market price of the securities on which the option
is based. In order to sell portfolio securities that cover a call option, the
Fund will effect a closing purchase transaction so as to close out any existing
covered call option on those securities. A closing purchase transaction for
exchange-traded options may be made only on a national securities exchange. A
liquid secondary market on an exchange may not always exist for any particular
option, or at any particular time, and, for some options, such as
over-the-counter options, no secondary market
9
<PAGE>
on an exchange may exist. If the Fund is unable to effect a closing purchase
transaction, the Fund will not sell the underlying security until the option
expires or the Fund delivers the underlying security upon exercise.
The Fund may write put options to earn additional income in the form of
option premiums if it expects the price of the underlying securities to remain
stable or rise during the option period so that the option will not be
exercised. The Fund may also write put options if it expects a decline in the
price of the underlying securities and intends to exercise the option at a price
which, offset by the option premium, is less than the current price. The risk
of either strategy is that the price of the underlying securities may decline by
an amount greater than the premium received.
The Fund may effect a closing purchase transaction to realize a profit on
an outstanding put option or to prevent an outstanding put option from being
exercised. If the Fund is able to enter into a closing purchase transaction,
the Fund will realize a profit (or loss) from that transaction if the cost of
the transaction is less (or more) than the premium received from the writing of
the option. After writing a put option, the Fund may incur a loss equal to the
difference between the exercise price of the option and the sum of the market
value of the underlying securities plus the premiums received from the sale of
the option.
The purchase of put options on securities enables the Fund to preserve, at
least partially, unrealized gains in an appreciated security in its portfolio
without actually selling the security. In addition, the Fund may continue to
receive interest or dividend income on the security.
An option on a securities index, unlike a stock option (which gives the
holder the right to purchase or sell a specified stock at a specified price)
gives the holder the right to receive a cash "exercise settlement amount" equal
to (i) the difference between the exercise price of the option and the value of
the underlying stock index on the exercise date, multiplied by (ii) a fixed
"index multiplier." A securities index fluctuates with changes in the market
values of the securities included in the index. For example, some securities
index options are based on a broad market index such as the S&P 500 or the NYSE
Composite Index, or a narrower market index such as the S&P 100. Indexes may
also be based on an industry or market segment such as the AMEX Oil and Gas
Index or the Computer and Business Equipment Index. Options on stock indexes
are currently traded on the following exchanges, among others: The Chicago
Board Options Exchange, New York Stock Exchange, and American Stock Exchange.
Options on indexes of debt securities and other types of securities indexes are
not currently available. If such options are introduced and traded on exchanges
in the future, the Fund may use them.
The value of securities index options in any investment strategy depends
upon the extent to which price movements in the portion of the underlying
securities correlate with price movements in the selected securities index.
Perfect correlation is not possible because the securities held or to be
acquired by the Fund will not exactly match the composition of the securities
indexes on which options are written. In the purchase of securities index
options the principal risk is that the premium and transaction costs paid by the
Fund in purchasing an option will be lost if the changes (increase in the case
of a call, decrease in the case of a put) in the level of the index do not
exceed the cost of the option. In writing securities index options, the
principal risk is that the Fund could bear a loss on the options that would be
only partially offset (or not offset at all) by the increased value or reduced
cost of the hedged securities. Moreover, in the event the Fund were unable to
close an option it had written, it might be unable to sell the securities used
as cover.
The 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 whose risk and return characteristics are similar
to selling a futures contract. 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 put option.
Another possible combined position would involve writing a covered call option
at one strike price and buying a call option at a lower price, in order to
reduce the risk of the written covered call option in the event of a substantial
price increase. Because combined options
10
<PAGE>
positions involve multiple trades, they result in higher transaction costs
and may be more difficult to open and close out.
FUTURES CONTRACTS. A futures contract is a bilateral agreement to buy or
sell a security (or deliver a cash settlement price, in the case of an index
future) for a set price in the future. When the contract is entered into, a
good faith deposit, known as initial margin, is made with the broker.
Subsequent daily payments, known as variation margin, are made to and by the
broker reflecting changes in the value of the security or level of the index.
Futures contracts are authorized by boards of trade designated as "contracts
markets" by the Commodity Futures Trading Commission ("CFTC"). Certain results
may be accomplished more quickly, and with lower transaction costs, in the
futures market (because of its greater liquidity) than in the cash market.
The Fund will incur brokerage fees when it purchases and sells futures
contracts, and it will be required to maintain margin deposits. Positions taken
in the futures markets are typically liquidated through offsetting transactions,
which may result in a gain or a loss, before delivery or cash settlement is
required. However, the Fund may close out a position by making or taking
delivery of the underlying securities wherever it appears economically
advantageous to do so.
Purchases of options on futures contracts may present less risk than the
purchase and sale of the underlying futures contracts, since the potential
loss is limited to the amount of the premium plus related transaction costs.
A call option on a futures contract gives the purchaser the right, in return
for the premium paid, to purchase a futures contract (assume a "long"
position) at a specified exercise price at any time before the option
expires. A put option gives the purchaser the right, in return for the
premium paid, to sell a futures contract (assume a "short" position), for a
specified exercise price, at any time before the option expires.
Positions in futures contracts may be closed out only on an exchange or a
board of trade which provides the market for such futures. Although the Fund
intends to purchase or sell futures only on exchanges or boards of trade where
there appears to be an active market, there may not always be a liquid market,
and it may not be possible to close a futures position at that time; in the
event of adverse price movements, the Fund would continue to be required to make
daily cash payments of maintenance margin. Whenever futures positions are used
to hedge portfolio securities, however, any increase in the price of the
underlying securities held by the Fund may partially or completely offset losses
on the futures contracts.
If a broker or clearing member of an options or futures clearing
corporation were to become insolvent, the Fund could experience delays and might
not be able to trade or exercise options or futures purchased through that
broker. In addition, the Fund could have some or all of its positions closed
out without its consent. If substantial and widespread, these insolvencies
could ultimately impair the ability of the clearing corporations themselves.
While the principal purpose of engaging in these transactions is to limit the
effects of adverse market movements, the attendant expense may cause the Fund's
returns to be less than if the transactions had not occurred. Their overall
effectiveness, therefore, depends on AIM's accuracy in predicting future changes
in interest rate levels or securities price movements, as well as on the expense
of engaging in these transactions.
BONA FIDE HEDGING. The Fund will only enter into options and futures
transactions for bona fide hedging purposes. The Commodity Futures Trading
Commission ("CFTC") has defined bona fide hedging in its Rule 1.3(z) which
provides that the transaction must be "economically appropriate to the reduction
of risks in the conduct and management of a commercial enterprise." Common uses
of financial futures and related options by the Fund that would satisfy the Rule
include the following:
(1) to hedge various pertinent securities market risks (e.g. interest rate
movements, and broad based or specific equity or fixed-income market
movements);
(2) to establish a position as a temporary substitute for purchasing or
selling particular securities;
(3) to maintain liquidity while simulating full investment in the
securities markets.
11
<PAGE>
INVESTMENT RESTRICTIONS
FUNDAMENTAL RESTRICTIONS
The following restrictions are fundamental policies, and, unless permitted
by law, they will not be changed without approval of a majority of the Fund's
outstanding voting securities.
The Fund will not:
(1) 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;
(2) invest for the purpose of exercising control over or management over a
company except that the Fund may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order;
(3) act as an underwriter, except to the extent that, in connection with
the disposition of portfolio securities, the Fund may be deemed to be an
underwriter for purposes of the 1933 Act;
(4) purchase or sell real estate or any interest therein, except that the
Fund may, as appropriate and consistent with its investment policies and other
investment restrictions, invest in securities of entities secured by real estate
or marketable interests therein or securities of issuers that engage in real
estate operations or interests therein, and may hold and sell real estate
acquired as a result of ownership in such securities;
(5) purchase or sell commodity contracts, except that the Fund may, as
appropriate and consistent with its investment policies and other investment
restrictions, enter into futures contracts on securities, securities indices and
currency, options on such futures contracts, forward foreign currency exchange
contracts, forward commitments and repurchase agreements;
(6) make loans, except for collateralized loans of portfolio securities in
an amount not exceeding 33 1/3% of the Fund's total assets. This restriction
does not prevent the Fund from purchasing government obligations, short-term
commercial paper, master demand notes, or publicly traded debt, including bonds,
notes, debentures, certificates of deposit, bankers acceptances and equipment
trust certificates, nor does this restriction apply to loans made under
insurance policies, or through entry into repurchase agreements, to the extent
they may be viewed as loans; and
(7) issue senior securities, except to the extent permitted by the
Investment Company Act of 1940, as amended (the "1940 Act"), including permitted
borrowings.
In addition, the Fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same fundamental
investment objectives, policies and limitations as the Fund.
NON-FUNDAMENTAL RESTRICTIONS
The following investment restrictions are not fundamental. They may be
changed without approval of the Fund's voting securities.
(1) The Fund will not invest more than 15% of its assets in securities
considered illiquid or not readily marketable, including repurchase agreements
having a maturity of more than seven days.
(2) The Fund will not purchase or retain the securities of any issuer if,
to the knowledge of AIM, those officers and Trustees of the Trust, its adviser
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.
12
<PAGE>
(3) The Trust does not currently intend to invest all of the assets of the
Fund in the securities of a single open-end management investment company with
the same fundamental investment objectives, policies and limitations as the
Fund.
(4) The Fund may not invest in securities issued by other investment
companies except as part of a merger, reorganization or other acquisition and
except to the extent permitted by (i) the 1940 Act, as amended from time to
time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act,
as amended from time to time, or (iii) an exemption or other relief from the
provisions of the 1940 Act.
MANAGEMENT
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations
during the last five years are set forth below. Unless otherwise indicated, the
address of each trustee and officer is 11 Greenway Plaza, Suite 100, Houston, TX
77046-1173. All of the Trust's executive officers hold similar offices with
some or all of the other AIM Funds.
- --------------------------------------------------------------------------------
POSITIONS HELD PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE WITH REGISTRANT PAST 5 YEARS
- --------------------------------------------------------------------------------
*CHARLES T. BAUER (79) Trustee and Chairman of the Board of
Chairman Directors, A I M 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 (54) Trustee Director, ACE Limited (insurance
906 Frome Lane company). Formerly, Director,
McLean, VA 22102 President and Chief Executive
Officer, COMSAT Corporation; and
Chairman, Board of Governors of
INTELSAT (international
communications company).
- --------------------------------------------------------------------------------
OWEN DALY II (73) Trustee Director, Cortland Trust Inc.
Six Blythewood Road (investment company). Formerly,
Baltimore, MD 21210 Director, CF & I Steel Corp.,
Monumental Life Insurance Company
and Monumental General Insurance
Company; and Chairman of the
Board of Equitable
Bancorporation.
- --------------------------------------------------------------------------------
EDWARD K. DUNN, JR. (63) Trustee Chairman of the Board of
Mercantile Mortgage Corp. Directors, Mercantile Mortgage
P. O. Box 1477 Corp.; and Director, AEGON USA
Baltimore, MD 21203 (insurance company). Formerly,
Vice Chairman of the Board of
Directors and President,
Mercantile-Safe Deposit & Trust
Co.; and President, Mercantile
Bankshares.
- --------------------------------------------------------------------------------
- --------------------
* A director who is an "interested person" of A I M Advisors, Inc. and the
Trust as defined in the 1940 Act.
13
<PAGE>
- --------------------------------------------------------------------------------
POSITIONS HELD PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE WITH REGISTRANT PAST 5 YEARS
- --------------------------------------------------------------------------------
JACK FIELDS (46) Trustee Chief Executive Officer, Texana
Texana Global, Inc. Global, Inc. (foreign trading
8810 Will Clayton Pkwy. company). Formerly, Member of
Jetero Plaza, Suite E the U.S. House of
Humble, Texas 77338 Representatives.
- --------------------------------------------------------------------------------
**CARL FRISCHLING (61) Trustee Partner, Kramer, Levin, Naftalis
919 Third Avenue & Frankel (law firm). Director,
New York, NY 10022 ERD Waste, Inc. (waste management
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) Trustee and Director, President and Chief
President Executive Officer, A I M
Management Group Inc.; Director
and President, A I M Advisors,
Inc.; Director and Senior Vice
President, A I M Capital
Management, Inc., A I M
Distributors, Inc., A I M Fund
Services, Inc. and Fund
Management Company; and Director
AMVESCAP PLC;
Chairman of the Board of
Directors and President, INVESCO
Holdings Canada Inc.; and
Director, AIM Funds Group Canada
Inc. and INVESCO G.P. Canada Inc.
- --------------------------------------------------------------------------------
PREMA MATHAI-DAVIS (48) Trustee Chief Executive Officer, YWCA of
350 Fifth Avenue, Suite 301 the U.S.A.; Commissioner, New
New York, NY 10118 York City Department for the
Aging; and Member, Board of
Directors, Metropolitan
Transportation Authority of New
York State.
- --------------------------------------------------------------------------------
LEWIS F. PENNOCK (55) Trustee Attorney in private practice in
6363 Woodway, Suite 825 Houston, Texas.
Houston, TX 77057
- --------------------------------------------------------------------------------
IAN W. ROBINSON (75) Trustee Formerly, Executive Vice
183 River Drive President and Chief Financial
Tequesta, FL 33469 Officer, Bell Atlantic Management
Services, Inc. (provider of
centralized management services
to telephone companies);
Executive Vice President, Bell
Atlantic Corporation (parent of
seven telephone companies); and
Vice President and Chief
Financial Officer, Bell Telephone
Company of Pennsylvania and
Diamond State Telephone Company.
- --------------------------------------------------------------------------------
- --------------------
* A director who is an "interested person" of A I M Advisors, Inc. and the
Trust as defined in the 1940 Act.
** A director who is an "interested person" of the Trust as defined in the
1940 Act.
14
<PAGE>
- --------------------------------------------------------------------------------
POSITIONS HELD PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE WITH REGISTRANT PAST 5 YEARS
- --------------------------------------------------------------------------------
LOUIS S. SKLAR (58) Trustee Executive Vice President,
Transco Tower, 50th Floor Development and Operations, Hines
2800 Post Oak Blvd. Interests Limited Partnership
Houston, TX 77056 (real estate development).
- --------------------------------------------------------------------------------
***JOHN J. ARTHUR (53) Senior Vice Director, Senior Vice President
President and and Treasurer, A I M Advisors,
Treasurer Inc.; and Vice President and
Treasurer, A I M Management Group
Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A
I M Fund Services, Inc. and Fund
Management Company.
- --------------------------------------------------------------------------------
GARY T. CRUM (50) Senior Vice Director and President, A I M
President Capital Management, 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.
- --------------------------------------------------------------------------------
JONATHAN C. SCHOOLAR (36) Senior Vice Senior Vice President,
President A I M Capital Management, Inc.;
and Vice President,
A I M Advisors, Inc.
- --------------------------------------------------------------------------------
***CAROL F. RELIHAN (43) Senior Vice Director, Senior Vice President,
President General Counsel and Secretary, A
and Secretary I M Advisors, Inc.; Vice
President, General Counsel and
Secretary, A I M Management Group
Inc.; Director, Vice President
and General Counsel, Fund
Management Company; Vice
President and General Counsel,
AIM Fund Services, Inc.; and Vice
President, A I M Capital
Management, Inc. and A I M
Distributors, Inc.
- --------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President Vice President and Fund
and Assistant Controller, A I M Advisors, Inc.;
Treasurer and Assistant Vice President and
Assistant Treasurer, Fund
Management Company.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
- --------------------
*** Mr. Arthur and Ms. Relihan are married to each other.
The standing committees of the Board of Trustees are the Audit Committee,
the Investments Committee and the Nominating and Compensation Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Dunn,
Fields, Frischling, Pennock, Robinson (Chairman) and Sklar. The Audit Committee
is responsible for meeting with the Trust'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 Trust's fund
accounting or its internal accounting controls,
15
<PAGE>
and considering such matters as may from time to time be set forth in a
charter adopted by the Board of Trustees and such committee.
The members of the Investments Committee are Messrs. Bauer, Crockett, Daly,
Dunn, Fields, Frischling, Pennock, Robinson and Sklar (Chairman). 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 Trustees and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett (Chairman), Daly, Dunn, Fields, Pennock, Robinson and Sklar. The
Nominating and Compensation Committee is responsible for considering and
nominating individuals to stand for election as trustees who are not interested
persons as long as the Trust maintains a distribution plan pursuant to Rule
12b-1 under the 1940 Act, reviewing from time to time the compensation payable
to the disinterested trustees, and considering such matters as may from time to
time be set forth in a charter adopted by the Board of Trustees and such
committee.
All of the Trust's Trustees 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 Trust's executive officers hold similar offices with
some or all of the other AIM Funds.
REMUNERATION OF TRUSTEES
Each trustee is reimbursed for expenses incurred in connection with each
meeting of the Board of Trustees or any Committee attended. Each trustee who is
not also an officer of the Trust is compensated for his or her services
according to a fee schedule which recognizes the fact that such trustee also
serves as a director or trustee of other AIM Funds. Each such trustee 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.
16
<PAGE>
Set forth below is information regarding compensation paid or accrued for
each trustee of the Trust:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
RETIREMENT
AGGREGATE BENEFITS TOTAL
COMPENSATION ACCRUED COMPENSATION
FROM THE BY ALL AIM FROM ALL AIM
TRUSTEE TRUST(1) FUNDS(2) FUNDS(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
- --------------------------------------------------------------------------------
Bruce L. Crockett 275 67,774 84,000
- --------------------------------------------------------------------------------
Owen Daly II 275 103,542 84,000
- --------------------------------------------------------------------------------
Edward K. Dunn Jr.(4) 275 0 0
- --------------------------------------------------------------------------------
Jack Fields 275 0 71,000
- --------------------------------------------------------------------------------
Carl Frischling 275 96,520 84,000
- --------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- --------------------------------------------------------------------------------
John F. Kroeger(5) 295 94,132 82,500
- --------------------------------------------------------------------------------
Prema Mathai-Davis(4) 0 0 0
- --------------------------------------------------------------------------------
Lewis F. Pennock 275 55,777 84,000
- --------------------------------------------------------------------------------
Ian Robinson 275 85,912 84,000
- --------------------------------------------------------------------------------
Louis S. Sklar 275 84,370 83,500
- --------------------------------------------------------------------------------
</TABLE>
(1) The total amount of compensation deferred by all Trustees of the Trust
during the fiscal year ended July 31, 1998, including interest earned
thereon, was $1056.
(2) During the fiscal year ended July 31, 1998, the total amount of expenses
allocated to the company in respect of such retirement benefits was $85.
Data reflects compensation for the calendar year ended December 31, 1997.
(3) Each Trustee serves as director or trustee of a total of 12 registered
investment companies advised by AIM. Data reflects compensation for the
calendar year ended December 31, 1997.
(4) Mr. Dunn and Ms. Mathai-Davis were not serving as Trustees during the
fiscal year ended December 31, 1997.
(5) Mr. Kroeger resigned as a trustee on June 11, 1998 and on that date became
a consultant to the AIM Funds. Of the amount listed above, $294.77 was
compensation for services as a consultant. Mr. Kroeger will retire from
all positions with the AIM Funds on January 1, 2000, his normal retirement
date, and will receive his pension after that date as described below under
"AIM Funds Retirement Plan for Eligible Directors/Trustees."
17
<PAGE>
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each trustee (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 Trustees.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible trustee 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 trustee 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 trustee during the
twelve-month period immediately preceding the trustee's retirement (including
amounts deferred under a separate agreement between the Applicable AIM Funds and
the trustee) for the number of such trustee'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 trustee in quarterly installments. If
an eligible trustee dies after attaining the normal retirement date but before
receipt of any benefits under the Plan commences, the trustee's surviving spouse
(if any) shall receive a quarterly survivor's benefit equal to 50% of the amount
payable to the deceased trustee for no more than ten years beginning the first
day of the calendar quarter following the date of the trustee'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 trustee upon retirement assuming the retainer amount reflected
below and various years of service. The estimated credited years of service for
Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Mathai-Davis,
Pennock, Robinson and Sklar are 11, 11, 0, 1, 21, 20, 0, 16, 11 and 8 years,
respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
---------------------------------
Number of Annual Retainer
Years of Paid By All AIM
Service With Funds
the AIM
Funds $90,000
---------------------------------
<S> <C>
10 $67,500
---------------------------------
9 $60,750
---------------------------------
8 $54,000
---------------------------------
7 $47,250
---------------------------------
6 $40,500
---------------------------------
5 $33,750
---------------------------------
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this
paragraph only, the "deferring trustees") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring trustees may elect to defer receipt of up to 100% of
their compensation payable by the Trust, and such amounts are placed into a
deferral account. Currently, the deferring trustees may select various AIM
Funds in which all or part of their deferral accounts shall be deemed to be
invested. Distributions from the deferring trustees' deferral accounts will be
paid in cash, in generally equal
18
<PAGE>
quarterly installments over a period of five (5) or ten (10) years (depending on
the Agreement) beginning on the date the deferring trustee's retirement benefits
commence under the Plan. The Trust's Board of Trustees, in its sole discretion,
may accelerate or extend the distribution of such deferral accounts after the
deferring trustee's termination of service as a trustee of the Trust. If a
deferring trustee 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 trustee's death. The Agreements are not funded and, with respect
to the payments of amounts held in the deferral accounts, the deferring trustees
have the status of unsecured creditors of the Trust and of each other AIM Fund
from which they are deferring compensation.
INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES 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 approximately 90 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 business in the United States, Europe and the Pacific Region.
Certain directors and officers of AIM are also executive officers of the Trust
and their affiliations are shown under "Trustees and Officers".
AIM and the Trust 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) to 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 Trustees 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 Trust has entered into a Master Investment Advisory Agreement (the
"Master Advisory Agreement") and a Master Administrative Services Agreement
dated as of June 24, 1998 (the "Master Administrative Services Agreement") on
behalf of the Fund with AIM.
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 trustees and shareholder meetings, the cost of preparing and
distributing reports and notices to shareholders, the fees and other expenses
incurred by 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.
The Master Advisory Agreement became effective on June 24, 1998, and will
continue in effect until June 24, 2000 and from year to year thereafter only if
such continuance is specifically approved at least annually by (i) the Trust's
Board of Trustees or the vote of a "majority of the outstanding voting
securities" of the Fund (as defined in the 1940 Act), and (ii) the affirmative
vote of a majority of the trustees who are not parties to the agreements or
"interested persons" of any such party (the "Qualified Trustees") by votes cast
in person at a meeting called for such purpose. The Master Advisory Agreement
provides that the Board of Trustees of the Trust, a majority of the outstanding
voting securities of the Fund or AIM may terminate the agreement on 60 days'
written notice without penalty. The agreement terminates automatically in the
event of its assignment.
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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 receives a fee under the Master
Advisory Agreement calculated at an annual rate of 1% of the Fund's average
daily net assets.
For the fiscal period ended July 31, 1998, the Fund paid to AIM $86,671
in advisory fees net of any expense limitations (fee waivers). For the
fiscal period ended July 31, 1998, AIM did not waive any advisory fees for
Small Cap.
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 the Fund which are not required to be
performed by AIM under the Master Advisory Agreement. For such services, AIM
would be entitled to receive from the Fund reimbursement of its costs or such
reasonable compensation as may be approved by the Trust's Board of Trustees.
The Master Administrative Services Agreement became effective on June 24, 1998
and will continue in effect until June 24, 2000, and from year to year
thereafter only if such continuance is specifically approved at least annually
by (i) the Trust's Board of Trustees or the vote of a majority of the
outstanding voting securities of the Fund, and (ii) the affirmative vote of a
majority of the Qualified Trustees by votes cast in person at a meeting called
for such purpose. The Master Administrative Services Agreement will terminate
as to the Fund upon the termination of the Master Advisory Agreement with
respect to the Fund. The agreement terminates automatically in the event of its
assignment.
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 June 24, 1998.
The Fund paid AIM $3,400 as reimbursement of administrative services costs
for the fiscal period ended July 31, 1998. For the fiscal period ended July 31,
1998, AFS received an amount of $12,969 for transfer agency and shareholder
services fees with respect to Class A and Class B shares.
THE DISTRIBUTION PLAN
THE CLASS A AND C PLAN. The Trust has adopted a Master Distribution Plan
pursuant to Rule 12b-1 under the 1940 Act relating to the Class A and Class C
shares of the Fund (the "Class A and C Plan"). The Class A and C Plan provides
that the Class A shares pay 0.35% per annum of their daily average net assets as
compensation to AIM Distributors for the purpose of financing any activity which
is primarily intended to result in the sale of Class A shares. Under the Class
A and C Plan, Class C shares of the Fund pay compensation to AIM Distributors at
an annual rate of 1.00% of the average daily net assets attributable to Class C
shares. Activities appropriate for financing under the Class A and C Plan
include, but are not limited to, the following: printing of prospectuses and
statements of additional information and reports for other than existing
shareholders; overhead; preparation and distribution of advertising material and
sales literature; expenses of organizing and conducting sales seminars;
supplemental payments to dealers and other institutions such as asset-based
sales charges or as payments of service fees under shareholder service
arrangements; and costs of administering the Class A and C Plan.
THE CLASS B PLAN. The Trust has also adopted a Master Distribution Plan
pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of the Fund
(the "Class B Plan", and collectively with the Class A and C Plan, the "Plans").
Under the Class B Plan, the Fund pays compensation to AIM Distributors at an
annual rate of 1.00% of the average daily net assets attributable to Class B
shares. Of such amount, the Fund pays a service fee of 0.25% of the average
daily net assets attributable to Class B shares to selected dealers and other
institutions which furnish continuing personal shareholder services to their
customers who purchase
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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 Fund's shares to such dealers'
customers, and for the provision of continuing personal shareholder services to
customers who may from time to time directly or beneficially own shares of the
Fund. The distribution assistance and continuing personal shareholder services
to be rendered by dealers under the Shareholder Service Agreements may include,
but shall not be limited to, the following: distributing sales literature;
answering routine customer inquiries concerning the Fund; assisting customers in
changing dividend options, account designations and addresses, and in enrolling
in any of several special investment plans offered in connection with the
purchase of the Fund's shares; assisting in the establishment and maintenance of
customer accounts and records and in the processing of purchase and redemption
transactions; investing dividends and any capital gains distributions
automatically in the Fund's shares; and providing such other information and
services as the Fund or the customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plans to be made to banks
which provide services to their customers who have purchased shares. Services
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding the Fund and
the Trust; 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 Fund; and such other administrative services as the Fund
reasonably may request, to the extent permitted by applicable statute, rule or
regulation. Similar agreements may be permitted under the Plans for
institutions which provide record keeping for and administrative services to
401(k) plans.
The Trust may also enter into Variable Group Annuity Contractholder Service
Agreements ("Variable Contract Agreements") on behalf of the Fund 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 Trust; 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 the
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 Fund may receive different compensation
for selling shares of one particular class over another.
Under a Shareholder Service Agreement, the Fund agrees to pay periodically
fees to selected dealers and other institutions who render the foregoing
services to their customers. The fees payable under a Shareholder Service
Agreement generally will be calculated at the end of each payment period for
each business day of the Fund during such period at the annual rate of 0.25% of
the average daily net asset value of the Fund's
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<PAGE>
shares purchased or acquired through exchange. Fees calculated in this manner
shall be paid only to those selected dealers or other institutions who are
dealers or institutions of record at the close of business on the last business
day of the applicable payment period for the account in which the Fund's shares
are held.
The Plans are subject to any applicable limitations imposed from time to
time by rules of the National Association of Securities Dealers, Inc. ("NASD").
The Plans conform to rules of the NASD by limiting payments made to dealers and
other financial institutions who provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund to no more
than 0.25% per annum of the average daily net assets of the funds attributable
to the customers of such dealers or financial institutions, and by imposing a
cap on the total sales charges, including asset based sales charges, that may be
paid by the Fund and its classes.
AIM Distributors does not act as principal, but rather as agent for the
Fund, in making dealer incentive and shareholder servicing payments under the
Plans. These payments are an obligation of the Fund and not of AIM
Distributors.
For the period of June 29, 1998 through July 31, 1998, with respect to its
Class A Shares, the Fund paid AIM Distributors under the Plan $17,437, or an
amount equal to 0.35% of the Fund's average daily net assets. For the period of
June 29, 1998 through July 31, 198, with respect to its Class B Shares, the Fund
paid AIM Distributors under the Plan $36,852, or an amount equal to 1.00% of the
Fund's average daily net assets.
An estimate by category of the allocation of actual fees paid by Class A
Shares of the Fund during the year ended July 31, 1998, was as follows:
Advertising . . . . . . . . . . . . . .$-
Printing and Mailing. . . . . . . . . .$6,597
Seminars. . . . . . . . . . . . . . . .$-
Compensation to Dealers . . . . . . . .$10,840
Compensation to Sales Personnel . . . .$-
An estimate by category of the allocation of actual fees paid by Class B
Shares of the Fund during the year ended July 31, 1998, was as follows:
Advertising . . . . . . . . . . . . . .$-
Printing and Mailing. . . . . . . . . .$9,172
Seminars. . . . . . . . . . . . . . . .$-
Compensation to Underwriters. . . . . .$27,639
Compensation to Dealers . . . . . . . .$41
Compensation to Sales Personnel . . . .$-
The Plans require AIM Distributors to provide the Board of Trustees at
least quarterly with a written report of the amounts expended pursuant to the
Plans and the purposes for which such expenditures were made. The Board of
Trustees reviews these reports in connection with their decisions with respect
to the Plans.
Both Plans require that the Distribution Agreements provide that AIM
Distributors (or dealers of financial institutions who offer and sell Class C
shares) will be deemed to have performed all services required to be performed
in order to receive an asset-backed sales charge on the average daily net assets
attributable to Class B or Class C shares upon settlement of each sale of a
Class B or Class C share.
As required by Rule 12b-1, the Plans and related forms of Shareholder
Service Agreements were approved by the Board of Trustees, including a majority
of the trustees who are not "interested persons" (as defined in the 1940 Act) of
the Trust and who have no direct or indirect financial interest in the operation
of the Plans or in any agreements related to the Plans ("Independent Trustees").
In approving the Plans in accordance
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with the requirements of Rule 12b-1, the trustees considered various factors
and determined that there is a reasonable likelihood that the Plans would
benefit each class of the Fund and its 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,
they continue as long as such continuance is specifically approved at least
annually by the Board of Trustees, including a majority of the Independent
Trustees. The Plans may be terminated with respect to a Class by the vote of a
majority of the Independent Trustees, or by the vote of a majority of the
outstanding voting securities of such Class of the Fund.
Any change in the Plans that would increase materially the distribution
expenses paid by the applicable class requires shareholder approval; otherwise,
it may be amended by the trustees, including a majority of the Independent
Trustees, by votes cast in person at a meeting called for the purpose of voting
upon such amendment. As long as the Plans are in effect, the selection or
nomination of the Independent Trustees is committed to the discretion of the
Independent Trustees. In the event the Class A and C Plan is amended in a
manner which the Board of Trustees determines would materially increase the
charges paid 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 Trustees
will (i) create a new class of shares of the Fund which is identical in all
material respects to the Class A shares as they existed prior to the
implementation of the amendment, and (ii) ensure that the existing Class B
shares of the Fund will be exchanged or converted into such new class of shares
no later than the date the Class B shares were scheduled to convert into Class A
shares.
The principal differences between the Class A and C Plan 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
the Fund's Class A shares and up to 1.00% of such assets of the Fund's Class C
shares and the Class B Plan allows payments of up to 1.00% of the average daily
net assets of the 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
Fund's shares is set forth in the Prospectus under the headings "How to Purchase
Shares" and "Terms and Conditions of Purchase of the AIM Funds." A Master
Distribution Agreement with AIM Distributors relating to the Class A and C
shares of the Fund was approved by the Board of Trustees on May 12, 1998. A
Master Distribution Agreement with AIM Distributors relating to the Class B
shares of the Fund was also approved by the Board of Trustees on May 12, 1998.
Both such Master Distribution Agreements are hereinafter collectively referred
to as the "Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing prospectuses and
statements of additional information of the Fund relating to public offerings
made by AIM Distributors pursuant to the Distribution Agreements (other than
those prospectuses and statements of additional information distributed to
existing shareholders of the Fund), and any promotional or sales literature used
by AIM Distributors or furnished by AIM Distributors to dealers in connection
with the public
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<PAGE>
offering of the Fund's shares, including expenses of advertising in
connection with such public offerings. AIM Distributors has not undertaken
to sell any specified number of shares of any class of the Fund.
AIM Distributors expects to pay sales commissions from its own resources to
dealers and institutions who sell Class B shares of the Fund at the time of such
sales. Payments with respect to Class B shares will equal 4.0% of the purchase
price of the Class B shares sold by the dealer or institution, and will consist
of a sales commission equal to 3.75% of the purchase price of the Class B shares
sold plus an advance of the first year service fee of 0.25% with respect to such
shares. The portion of the payments to AIM Distributors under the Class B Plan
which constitutes an asset-based sales charge (0.75%) is intended in part to
permit AIM Distributors to recoup a portion of such sales commissions plus
financing costs. AIM Distributors anticipates that it will require a number of
years to recoup from Class B Plan payments the sales commissions paid to dealers
and institutions in connection with sales of Class B shares. In the future, if
multiple distributors serve the Fund, each such distributor (or its assignee or
transferee) would receive a share of the payments under the Class B Plan based
on the portion of the Fund's Class B shares sold by or attributable to the
distribution efforts of that distributor.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the 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 from the Fund 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, dealers and
institutions will receive on a quarterly basis the full amount payable by the
Fund with respect to Class C shares based on the average net asset value of
Class C shares which are attributable to shareholders for whom the dealers and
institutions are designated as dealers of record.
The Trust (on behalf of any class of the Fund), or AIM Distributors may
terminate the Distribution Agreements on sixty (60) days' written notice without
penalty. The Distribution Agreements will terminate automatically in the event
of their assignment. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset-based
distribution fees in respect of the outstanding Class B shares attributable to
the distribution efforts of AIM Distributors; 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 affect the obligations of Class B shareholders to pay
contingent deferred sales charges.
For the period ended July 31, 1998, the total sales charge paid in
connection with the sale of Class A shares of the Fund was $4,614,153 and the
amount retained by AIM Distributors was $626,915. For the period ended July 31,
1998, the contingent deferred sales charge paid by Class A and Class B
shareholders was $0.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which shares of the Fund may be
purchased appears in the Prospectus under the caption "How to Purchase Shares,"
"Terms and Conditions of Purchase of the AIM Funds" and "Special Plans."
The sales charge normally deducted on purchases of Class A shares of the
Fund is used to compensate AIM Distributors and participating dealers for their
expenses incurred in connection with the distribution of such shares. Since
there is little expense associated with unsolicited orders placed directly with
AIM Distributors by persons, who because of their relationship with the Fund or
with AIM and its affiliates, are familiar with the Fund, or whose programs for
purchase involve little expense (e.g., because of the size of the transaction
and shareholder records required), AIM Distributors believes that it is
appropriate and in the Fund's best interests that such persons be permitted to
purchase Class A shares of the Fund through AIM Distributors without
24
<PAGE>
payment of a sales charge. The persons who may purchase Class A shares of
the Fund without a sales charge are shown in the Prospectus.
The following formula may be used by an investor to determine the public
offering price per Class A share of an investment:
Net Asset Value / ( 1 - Sales Charge as % of Offering Price) = Offering
Price
Complete information concerning the method of exchanging shares of the Fund
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 Fund's shares is set forth in the
Prospectus under the caption "How to Redeem Shares." AIM intends to redeem all
shares of the Fund in cash. In addition to the Fund's obligation to redeem
shares, AIM Distributors may also repurchase shares as an accommodation to
shareholders. To effect a repurchase, those dealers who have executed Selected
Dealer Agreements with AIM Distributors must phone orders to the order desk of
the Fund telephone: (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 Fund or by AIM Distributors (other than any applicable contingent
deferred sales charge) when shares are redeemed or repurchased, dealers may
charge a fair service fee for handling the transaction.
The right of redemption may be suspended or the date of payment postponed
when (a) trading on the New York Stock Exchange is restricted, as determined by
applicable rules and regulations of the SEC, (b) the New York Stock Exchange is
closed for other than customary weekend and holiday closings, (c) the SEC has by
order permitted such suspension, or (d) an emergency as determined by the SEC
exists making disposition of portfolio securities or the valuation of the net
assets of the Fund not reasonably practicable.
QUALIFYING FOR A REDUCED FRONT-END SALES CHARGE
As described in the Prospectus, the front-end sales charge for Class A
shares is calculated by multiplying an investor's total investment by the
applicable sales charge rate. The applicable rate varies with the amount
invested. The Fund offers programs such as Right of Accumulation and Letter of
Intent, which are described in the Prospectus, and are designed to permit
investors to aggregate purchases of different funds, or separate purchases over
time, in order to qualify for a lower sales charge rate. See "Terms and
Conditions of Purchase of the AIM Funds -- Reductions in Initial Sales Charge"
in the Prospectus.
NET ASSET VALUE DETERMINATION
In accordance with the current rules and regulations of the SEC, the net
asset value of a share of the 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 value per share is
determined by subtracting the liabilities (e.g., the expenses) of the Fund from
the assets of the Fund and dividing the result by the total number of shares
outstanding. Determination of the Fund's net asset value per share is made in
accordance with generally accepted accounting principles.
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
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bid and asked prices based upon quotes furnished by market makers for such
securities. Option contracts are valued at the mean between 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 lacking a last sale, at the mean
between the last bid and asked price on that day; securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees of the
Trust. 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 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 Trustees.
Fund securities primarily traded in foreign markets may be traded in such
markets on days which are not business days of the Fund. Because the net asset
value per share of each Fund is determined only on business days of the Fund,
the net asset value per share of a Fund may be significantly affected on days
when an investor can not exchange or redeem shares of the Fund.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
Income dividends and capital gains distributions are automatically
reinvested in additional shares of the Fund unless the shareholder has requested
in writing to receive such dividends and distributions in cash or that they be
invested in shares of another AIM Fund, subject to the terms and conditions set
forth in 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 Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The 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, the 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) and
90% of its tax-exempt income for the taxable year (the "Distribution
Requirement"), and satisfies certain other requirements of the Code that are
described below. Distributions by the Fund made during the taxable year or,
under specified circumstances, within twelve months after the close of the
taxable
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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 general, gain or loss recognized by the 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 the 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 to satisfying the requirements described above, the Fund
must satisfy an asset diversification test (the "Asset Diversification Test")
in order to qualify as a regulated investment company. Under this test, at
the close of each quarter of the 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 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.
For purposes of the Asset Diversification Test, the Internal Revenue
Service ("IRS") has ruled that the issuer of a purchased listed call option on
stock is the issuer of the stock underlying the option. The IRS has also
informally ruled that, in general, the issuers of purchased or written call and
put options on securities, of long and short positions on futures contracts on
securities and of options on such future contracts are the issuers of the
securities underlying such financial instruments where the instruments are
traded on an exchange. The IRS has informally suggested, however, that the
issuer of certain purchased over-the-counter options may be the writer of such
options.
Where the writer of a listed call option owns the underlying securities,
the IRS has ruled that the Asset Diversification Test will be applied solely to
such securities and not to the value of the option itself. With respect to
options on securities indexes, futures contracts on securities indexes and
options on such futures contracts, the IRS has informally ruled that the issuers
of such options and futures contracts are the separate entities whose securities
are listed on the index, in proportion to the weighing of securities in the
computation of the index. It is unclear under present law who should be treated
as the issuer of forward foreign currency exchange contracts, of options on
foreign currencies, or of foreign currency futures and related options. It has
been suggested that the issuer in each case may be the foreign central bank or
the foreign government backing the particular currency. Due to this uncertainty
and because the Fund may not rely on informal rulings of the IRS, the Fund may
find it necessary to seek a ruling from the IRS as to the application of the
Asset Diversification Test to certain of the foregoing types of financial
instruments or to limit its holdings of some or all such instruments in order to
stay within the limits of such test.
If for any taxable year the 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 the 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.
27
<PAGE>
INVESTMENT IN FOREIGN FINANCIAL INSTRUMENTS
Under Code Section 988, gains or losses from certain foreign currency
forward contracts or fluctuations in exchange rates will generally be treated
as ordinary income or loss. Such Code Section 988 gains or losses will
increase or decrease the amount of the Fund's investment company taxable
income available to be distributed to shareholders as ordinary income, rather
than increasing or decreasing the amount of the Fund's net capital gains.
Additionally, if Code Section 988 losses exceed other investment company
taxable income during a taxable year, the Fund would not be able to pay any
ordinary income dividends, and any such dividends paid before the losses were
realized, but in the same taxable year, would be recharacterized as a return
of capital to shareholders, thereby reducing the tax basis of Fund shares.
HEDGING TRANSACTIONS
Some of the forward foreign currency exchange contracts, options and
futures contracts that the Fund may enter into 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. Any gain or loss recognized as a
consequence of the year-end deemed disposition of Section 1256 contracts is
combined with any other gain or loss that was previously recognized upon the
termination of Section 1256 contracts during that taxable year. The net amount
of such gain or loss for the entire taxable year (including gain or loss arising
as a consequence of the year-end deemed sale of such contracts) is deemed to be
60% long-term (taxable at 20%) and 40% short-term gain or loss. However, in the
case of Section 1256 contracts that are forward foreign currency exchange
contracts, the net gain or loss is separately determined and (as discussed
above) generally treated as ordinary income or loss.
The Fund may engage in certain hedging transactions (such as short sales
"against the box") that 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, the Fund will generally 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 in the taxable year which includes such
date).
Other hedging transactions in which the Fund may engage may result in
"straddles" or "conversion transactions" for U.S. federal income tax purposes.
The straddle and conversion transaction rules may affect the character of gains
(or in the case of the straddle rules, losses) realized by the Fund. In
addition, losses realized by the Fund on positions that are part of a straddle
may be deferred under the straddle rules, rather than being taken into account
in calculating the taxable income for the taxable year in which the losses are
realized. Because only a few regulations implementing the straddle rules and
the conversion transaction rules have been promulgated, the tax consequences to
the Fund of hedging transactions are not entirely clear. The hedging
transactions may increase the amount of short-term capital gain realized by the
Fund (and, if they are conversion transactions, the amount of ordinary income)
which is taxed as ordinary income when distributed to shareholders.
The Fund may make one or more of the elections available under the Code
which are applicable to straddles. If the Fund makes any of the elections, the
amount, character, and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
may operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because application of any of the foregoing rules governing Section 1256
contracts, constructive sales and straddle and conversion transactions may
affect the character of gains or losses, defer losses and/or accelerate the
recognition of gains or losses from the affected investment or straddle
positions, the amount
28
<PAGE>
which must be distributed to shareholders and which will be taxed to
shareholders as ordinary income or long-term capital gain may be increased or
decreased as compared to a fund that did not engage in such transactions.
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).
The 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 the Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
FUND DISTRIBUTIONS
The 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.
The Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. The 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 IRS is
authorized to issue regulations that will enable shareholders to determine the
tax rates applicable to such capital gain distributions. Conversely, if the
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 the 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),
during the 90-day period beginning on the date which is 45 days before the date
on which the
29
<PAGE>
stock becomes ex-dividend (during the 180-day period beginning on the date
which is 90 days before such date, in the case of certain preferred stock),
and (ii) any period during which the Fund has an option to sell, is under a
contractual obligation to sell, has made and not closed a short sale of, has
granted certain options to buy or has otherwise diminished its risk of loss
by holding other positions with respect to, such (or substantially identical)
stock; (b) to the extent that the Fund is under an obligation (pursuant to a
short sale or otherwise) to make related payments with respect to positions
in substantially similar or related property; or (c) to the extent the stock
on which the dividend is paid is treated as debt-financed under the rules of
Code Section 246A. Moreover, the dividends received deduction for a
corporate shareholder may be disallowed or reduced (a) if the corporate
shareholder fails to satisfy the foregoing requirements with respect to its
shares of the Fund, or (b) by application of Code Section 246(b) which in
general limits the dividends received deduction to 70% of the shareholder's
taxable income (determined without regard to the dividends received deduction
and certain other items).
Alternative minimum tax ("AMT") is imposed in addition to, but only to the
extent it exceeds, the regular tax and is computed at a maximum rate of 28% for
non-corporate taxpayers and 20% for corporate taxpayers on the excess of the
taxpayer's alternative minimum taxable income ("AMTI") over an exemption amount.
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 the Fund 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 the 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 the Fund's assets to be invested in various countries is not
known.
Distributions by the 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 the 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 the 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 the 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 IRS.
The Fund 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
30
<PAGE>
(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 the 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 the 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 the 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
IRS is authorized to issue appropriate regulations 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 the 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 the Fund
is "effectively connected" with a U.S. trade or business carried on by such
shareholder. If the income from the 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 the Fund, capital gain dividends and amounts retained by the
Fund that are designated as undistributed net capital gains.
If the income from the 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, the 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
31
<PAGE>
with respect to the particular tax consequences to them of an investment in
the 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
October 1, 1998. 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 Fund.
PROGRAMS AND SERVICES FOR SHAREHOLDERS
The Fund provides certain services for shareholders and certain investment
or redemption programs. See "Exchange Privilege" and "How to Redeem Shares" in
the Prospectus. All inquiries concerning these programs should be made directly
to A I M Fund Services, Inc., P. O. Box 4739, Houston, Texas 77210-4739, toll
free at (800) 959-4246.
DIVIDEND ORDER
Dividends may be paid to someone other than the registered owner, or
sent to an address other than the address of record. (Please note that
signature guarantees are required to effect this option.) An investor also
may direct that his or her dividends be invested in one of the other AIM
Funds provided however, that dividends attributable to Class A shares may not
be reinvested in Class B or Class C shares, dividends attributable to Class B
shares may only be reinvested in Class B shares, and dividends attributable
to Class C shares may only be reinvested in Class C shares. There is no
charge for these investments; initial investment minimums apply. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" in
the Prospectus. To effect this option, please contact your authorized
dealer. For more information concerning other AIM Funds please obtain a
current prospectus by contacting your authorized dealer, by writing to A I M
Fund Services, Inc., P. O. Box 4739, Houston, Texas 77210-4739, or by calling
toll free at (800) 959-4246.
MISCELLANEOUS INFORMATION
AUDIT REPORTS
The Board of Trustees will issue semi-annual reports of the financial
statements of the Fund to the shareholders. Financial statements, audited by
independent auditors, will be issued annually. The firm of KPMG Peat Marwick
LLP, 700 Louisiana, Houston, Texas 77002, will serve as the auditors for the
fiscal year ending July 31, 1999.
LEGAL MATTERS
Legal matters for the Trust have been passed upon by Ballard Spahr
Andrews & Ingersoll, LLP.
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
Fund. The custodian attends to the collection of principal and income, pays and
collects all monies for securities bought and sold by the Fund and performs
certain other ministerial duties. A I M Fund Services, Inc.,11 Greenway Plaza,
Suite 100, Houston, Texas 77046-1173 (the
32
<PAGE>
"Transfer Agent"), acts as transfer and dividend disbursing agent for the
Fund. These services do not include any supervisory function over management
or provide any protection against any possible depreciation of assets. The
Fund pays the Custodian and the Transfer Agent such compensation as may be
agreed upon from time to time.
Chase Bank of Texas, N.A., 712 Main, Houston, Texas 77002, serves as
Sub-Custodian for purchases of the Fund.
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") has entered
into an agreement with the Trust (and certain other AIM Funds), First Data
Investor Service Group 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.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of September 21, 1998, the trustees and officers of the Trust, as a
group, owned less than 1% of all classes of outstanding shares of the Trust. To
the best knowledge of the Trust, the name and addresses of the holders of 5% or
more of the outstanding shares of each class of the Trust's equity securities as
of September 21, 1998, and the percentage of the outstanding shares held by such
holders are set forth below:
<TABLE>
<CAPTION>
Percentage
Name and Address Percentage Owned Owned of Record
Fund of Owner of Record* and Beneficially
- ---- ----------------------------------- ---------------- ----------------
<S> <C> <C> <C>
AIM Small Cap Merrill Lynch Pierce Fenner & Smith 8.44% -0-
Opportunities Fund- FBO The Sole Benefit of Customers
Class A Shares Attn: Fund Administration
4800 Deer Lake Dr., East 2nd Floor
Jacksonville, FL 32246
AIM Small Cap Merrill Lynch Pierce Fenner & Smith 23.50% -0-
Opportunities Fund FBO The Sole Benefit of Customers
Class B Shares Attn: Fund Administration
4800 Deer Lake Dr., East 2nd Floor
Jacksonville, FL 32246
</TABLE>
- --------------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
OTHER INFORMATION
The Prospectus and this Statement of Additional Information omit certain
information contained in the Registration Statement which the Trust 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 Fund and
the securities offered pursuant to prospectus. The Registration Statement is
available for inspection by the public at the SEC in Washington, D.C.
33
<PAGE>
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.
34
<PAGE>
FINANCIAL STATEMENTS
FS
<PAGE>
SCHEDULE OF INVESTMENTS
July 31, 1998
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-44.21%
AEROSPACE/DEFENSE-0.35%
AAR Corp. 26,700 $ 675,844
- --------------------------------------------------------------
AIR FREIGHT-0.01%
Eagle USA Airfreight, Inc.(a) 600 16,650
- --------------------------------------------------------------
AIRLINES-0.46%
ASA Holdings, Inc. 5,800 246,500
- --------------------------------------------------------------
Atlantic Coast Airlines
Holdings(a) 400 10,550
- --------------------------------------------------------------
COMAIR Holdings, Inc. 20,000 631,250
- --------------------------------------------------------------
888,300
- --------------------------------------------------------------
BANKS (REGIONAL)-1.89%
Bank United Corp.-Class A 17,000 758,625
- --------------------------------------------------------------
First Virginia Banks, Inc. 11,000 604,313
- --------------------------------------------------------------
Golden State Bancorp, Inc.(a) 25,000 689,063
- --------------------------------------------------------------
Southwest Bancorporation of Texas,
Inc.(a) 50,000 893,750
- --------------------------------------------------------------
Sterling Bancshares, Inc. 45,000 675,000
- --------------------------------------------------------------
3,620,751
- --------------------------------------------------------------
BIOTECHNOLOGY-0.10%
ICON plc-ADR(a) (United Kingdom) 5,900 184,375
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-0.57%
Citadel Communications Corp.(a) 12,500 275,000
- --------------------------------------------------------------
Heftel Broadcasting Corp.(a) 20,000 815,000
- --------------------------------------------------------------
1,090,000
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.02%
OM Group, Inc. 1,000 37,063
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.62%
Anixter International, Inc.(a) 1,000 18,188
- --------------------------------------------------------------
Comverse Technology, Inc.(a) 14,000 714,875
- --------------------------------------------------------------
Dycom Industries, Inc.(a) 13,300 457,188
- --------------------------------------------------------------
1,190,251
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-0.59%
IDX Systems Corp.(a) 20,000 992,500
- --------------------------------------------------------------
Splash Technology Holdings,
Inc.(a) 5,900 134,594
- --------------------------------------------------------------
1,127,094
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-0.65%
Broadcom Corp.(a) 20,000 1,255,000
- --------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.78%
MICROS Systems, Inc.(a) 27,100 1,016,250
- --------------------------------------------------------------
SMART Modular Technologies,
Inc.(a) 25,000 478,125
- --------------------------------------------------------------
1,494,375
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-4.95%
Aspect Development, Inc.(a) 300 18,300
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Aspen Technology, Inc.(a) 1,700 $ 45,050
- --------------------------------------------------------------
AVT Corp.(a) 40,800 933,300
- --------------------------------------------------------------
Business Objects S.A.-ADR(a)
(France) 57,100 849,363
- --------------------------------------------------------------
Computer Management Sciences,
Inc.(a) 7,800 189,150
- --------------------------------------------------------------
Concord Communications, Inc. 100 3,450
- --------------------------------------------------------------
Concord EFS, Inc.(a) 30,000 735,000
- --------------------------------------------------------------
Datastream Systems, Inc.(a) 12,700 198,438
- --------------------------------------------------------------
HNC Software, Inc.(a) 20,000 821,250
- --------------------------------------------------------------
Jack Henry & Associates, Inc. 20,000 811,250
- --------------------------------------------------------------
Learning Company, Inc. (The)(a) 30,000 798,750
- --------------------------------------------------------------
Legato Systems, Inc.(a) 30,000 1,305,000
- --------------------------------------------------------------
QRS Corp.(a) 14,300 450,450
- --------------------------------------------------------------
QuadraMed Corp.(a) 35,700 1,044,225
- --------------------------------------------------------------
Rational Software Corp.(a) 65,000 1,072,500
- --------------------------------------------------------------
Secure Computing Corp.(a) 17,300 211,925
- --------------------------------------------------------------
9,487,401
- --------------------------------------------------------------
CONSUMER FINANCE-0.01%
AmeriCredit Corp.(a) 600 20,250
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.09%
Patterson Dental Co.(a) 5,000 181,250
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.69%
Oak Industries, Inc.(a) 4,800 178,200
- --------------------------------------------------------------
Sanmina Corp.(a) 25,000 1,140,625
- --------------------------------------------------------------
1,318,825
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-1.87%
Applied Micro Circuits Corp.(a) 25,000 567,188
- --------------------------------------------------------------
Artisan Components, Inc.(a) 35,000 450,625
- --------------------------------------------------------------
Dallas Semiconductor Corp. 200 6,425
- --------------------------------------------------------------
Level One Communications, Inc.(a) 20,400 453,900
- --------------------------------------------------------------
Micrel, Inc.(a) 15,000 450,000
- --------------------------------------------------------------
Microchip Technology, Inc.(a) 41,900 1,284,497
- --------------------------------------------------------------
PMC-Sierra, Inc.(a) 500 20,438
- --------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 11,000 361,625
- --------------------------------------------------------------
3,594,698
- --------------------------------------------------------------
ENTERTAINMENT-0.36%
SFX Entertainment, Inc.-Class A(a) 16,000 688,000
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-0.55%
NCO Group, Inc.(a) 50,000 1,056,250
- --------------------------------------------------------------
FOODS-0.27%
American Italian Pasta Co.-Class
A(a) 200 6,900
- --------------------------------------------------------------
Earthgrains Co. (The) 15,000 513,750
- --------------------------------------------------------------
520,650
- --------------------------------------------------------------
</TABLE>
FS-1
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOOTWEAR-0.54%
Stride Rite Corp. 18,300 $ 221,888
- --------------------------------------------------------------
Wolverine World Wide, Inc. 50,000 812,500
- --------------------------------------------------------------
1,034,388
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.87%
Alpharma, Inc.-Class A 40,000 990,000
- --------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 36,000 927,000
- --------------------------------------------------------------
Jones Pharma, Inc. 30,000 954,375
- --------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class
A(a) 20,000 715,000
- --------------------------------------------------------------
3,586,375
- --------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-1.06%
Concentra Managed Care, Inc.(a) 50,000 1,150,000
- --------------------------------------------------------------
Express Scripts, Inc.-Class A(a) 12,000 882,375
- --------------------------------------------------------------
2,032,375
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.98%
Hooper Holmes, Inc. 35,000 700,000
- --------------------------------------------------------------
Superior Consultant Holdings
Corp.(a) 30,000 1,155,000
- --------------------------------------------------------------
Veterinary Centers of America,
Inc.(a) 1,000 18,875
- --------------------------------------------------------------
1,873,875
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-1.45%
Henry Schein, Inc.(a) 21,000 1,010,625
- --------------------------------------------------------------
Hologic, Inc.(a) 15,100 250,094
- --------------------------------------------------------------
MiniMed, Inc.(a) 20,400 1,035,300
- --------------------------------------------------------------
ResMed, Inc.(a) 500 22,437
- --------------------------------------------------------------
VISX, Inc.(a) 7,500 468,750
- --------------------------------------------------------------
2,787,206
- --------------------------------------------------------------
HOMEBUILDING-0.32%
American Homestar Corp.(a) 30,800 604,450
- --------------------------------------------------------------
HOUSEWARES-1.01%
Helen of Troy Ltd.(a) 55,600 1,257,950
- --------------------------------------------------------------
Windmere-Durable Holdings Inc.(a) 25,000 684,375
- --------------------------------------------------------------
1,942,325
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.01%
Penn Treaty American Corp.(a) 600 16,950
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.79%
EVEREN Capital Corp. 31,000 862,187
- --------------------------------------------------------------
Hambrecht & Quist Group 20,700 657,225
- --------------------------------------------------------------
1,519,412
- --------------------------------------------------------------
INVESTMENT MANAGEMENT-0.01%
Knight/Trimark Group, Inc.(a) 700 12,075
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.39%
Bally Total Fitness Holding
Corp.(a) 30,000 744,375
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.35%
Applied Power, Inc.-Class A 20,000 662,500
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MANUFACTURING (SPECIALIZED)-0.37%
Zebra Technologies Corp.(a) 22,000 $ 713,625
- --------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.43%
Mail-Well, Inc.(a) 45,000 832,500
- --------------------------------------------------------------
PERSONAL CARE-0.51%
Twinlab Corp.(a) 23,500 975,250
- --------------------------------------------------------------
PUBLISHING-0.25%
IDG Books Worldwide, Inc.(a) 30,300 484,800
- --------------------------------------------------------------
RESTAURANTS-1.30%
Apple South, Inc. 20,000 250,000
- --------------------------------------------------------------
CEC Entertainment, Inc.(a) 10,000 267,500
- --------------------------------------------------------------
CKE Restaurants, Inc. 25,000 934,375
- --------------------------------------------------------------
Papa John's International, Inc.(a) 30,000 1,038,750
- --------------------------------------------------------------
2,490,625
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.62%
Eagle Hardware & Garden, Inc.(a) 55,000 1,182,500
- --------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-0.29%
Rex Stores Corp.(a) 50,000 565,625
- --------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.76%
Ames Department Stores, Inc.(a) 25,000 534,375
- --------------------------------------------------------------
99 Cents Only Stores(a) 22,500 922,500
- --------------------------------------------------------------
1,456,875
- --------------------------------------------------------------
RETAIL (HOME SHOPPING)-0.00%
DM Management Co.(a) 400 7,350
- --------------------------------------------------------------
RETAIL (SPECIALTY)-4.06%
Finish Line, Inc. (The)-Class A(a) 50,700 1,096,387
- --------------------------------------------------------------
Footstar, Inc.(a) 12,600 466,988
- --------------------------------------------------------------
Hibbett Sporting Goods, Inc.(a) 5,000 173,750
- --------------------------------------------------------------
Just for Feet, Inc.(a) 24,100 557,312
- --------------------------------------------------------------
Linens 'n Things, Inc.(a) 30,000 843,750
- --------------------------------------------------------------
Lithia Motors, Inc.-Class A(a) 50,000 850,000
- --------------------------------------------------------------
Michaels Stores, Inc.(a) 500 16,375
- --------------------------------------------------------------
Musicland Stores Corp.(a) 36,300 537,694
- --------------------------------------------------------------
O'Reilly Automotive, Inc.(a) 30,000 1,061,250
- --------------------------------------------------------------
Party City Corp.(a) 600 13,575
- --------------------------------------------------------------
Pier 1 Imports, Inc. 63,000 980,437
- --------------------------------------------------------------
Renters Choice, Inc.(a) 12,700 328,613
- --------------------------------------------------------------
Sunglass Hut International,
Inc.(a) 1,700 13,600
- --------------------------------------------------------------
Trans World Entertainment Corp.(a) 500 19,687
- --------------------------------------------------------------
Williams-Sonoma, Inc.(a) 25,000 826,562
- --------------------------------------------------------------
7,785,980
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-1.98%
Abercrombie & Fitch Co.-Class A(a) 7,900 366,856
- --------------------------------------------------------------
AnnTaylor Stores Corp.(a) 20,200 425,462
- --------------------------------------------------------------
Buckle, Inc. (The)(a) 34,200 825,075
- --------------------------------------------------------------
</TABLE>
FS-2
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-(CONTINUED)
Chico's Fas, Inc.(a) 25,000 $ 362,500
- --------------------------------------------------------------
Goody's Family Clothing, Inc.(a) 29,900 773,662
- --------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 23,600 746,350
- --------------------------------------------------------------
Pacific Sunwear of California,
Inc.(a) 10,000 295,000
- --------------------------------------------------------------
3,794,905
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-1.44%
Abacus Direct Corp.(a) 15,400 662,200
- --------------------------------------------------------------
Acxiom Corp.(a) 400 9,150
- --------------------------------------------------------------
ADVO, Inc.(a) 5,500 169,812
- --------------------------------------------------------------
Catalina Marketing Corp.(a) 5,000 246,875
- --------------------------------------------------------------
Healthworld Corp.(a) 30,000 465,000
- --------------------------------------------------------------
Lamar Advertising Co.(a) 25,000 951,562
- --------------------------------------------------------------
Metris Companies Inc. 300 22,200
- --------------------------------------------------------------
Professional Detailing, Inc.(a) 10,000 230,000
- --------------------------------------------------------------
2,756,799
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.04%
ABR Information Services, Inc.(a) 25,000 437,500
- --------------------------------------------------------------
Cerner Corp.(a) 700 19,862
- --------------------------------------------------------------
G & K Services, Inc.-Class A 10,000 497,500
- --------------------------------------------------------------
MSC Industrial Direct Co.,
Inc.-Class A(a) 25,000 746,875
- --------------------------------------------------------------
Sylvan Learning Systems, Inc.(a) 10,000 283,750
- --------------------------------------------------------------
1,985,487
- --------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-1.64%
Insight Enterprises, Inc.(a) 20,000 965,000
- --------------------------------------------------------------
InterVoice, Inc.(a) 1,900 35,269
- --------------------------------------------------------------
Leasing Solutions, Inc.(a) 25,600 795,200
- --------------------------------------------------------------
Shared Medical Systems Corp. 20,000 1,357,500
- --------------------------------------------------------------
3,152,969
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.64%
CSG Systems International, Inc.(a) 23,000 983,250
- --------------------------------------------------------------
FactSet Research Systems, Inc.(a) 20,000 735,000
- --------------------------------------------------------------
MedQuist, Inc.(a) 30,000 693,750
- --------------------------------------------------------------
National Data Corp. 18,000 741,375
- --------------------------------------------------------------
3,153,375
- --------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.34%
Labor Ready, Inc.(a) 20,400 650,250
- --------------------------------------------------------------
On Assignment, Inc.(a) 100 3,587
- --------------------------------------------------------------
653,837
- --------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.41%
Cornell Corrections, Inc.(a) 30,000 461,250
- --------------------------------------------------------------
Tetra Tech, Inc.(a) 15,000 322,500
- --------------------------------------------------------------
783,750
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SPECIALTY PRINTING-0.01%
Consolidated Graphics, Inc.(a) 400 $ 23,525
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.43%
Amdocs Limited(a) 17,300 236,794
- --------------------------------------------------------------
International Telecommunication Data Systems,
Inc.(a) 20,000 588,750
- --------------------------------------------------------------
825,544
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.55%
ITC DeltaCom, Inc.(a) 22,000 1,050,500
- --------------------------------------------------------------
TELEPHONE-0.36%
GeoTel Communications Corp.(a) 15,500 689,750
- --------------------------------------------------------------
TEXTILES (APPAREL)-0.76%
Nautica Enterprises, Inc.(a) 13,800 355,782
- --------------------------------------------------------------
Quicksilver, Inc.(a) 30,100 538,037
- --------------------------------------------------------------
Russell Corp. 17,400 568,762
- --------------------------------------------------------------
1,462,581
- --------------------------------------------------------------
TEXTILES (HOME FURNISHINGS)-0.32%
Mohawk Industries, Inc.(a) 20,000 622,500
- --------------------------------------------------------------
WIRELESS EQUIPMENT-0.27%
Carrier Access Corp. 32,000 516,000
- --------------------------------------------------------------
WASTE MANAGEMENT-0.82%
American Disposal Services,
Inc.(a) 20,000 767,500
- --------------------------------------------------------------
KTI, Inc.(a) 33,800 811,200
- --------------------------------------------------------------
1,578,700
- --------------------------------------------------------------
Total Common Stocks (Cost $88,796,847) 84,808,685
- --------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
OPTIONS PURCHASED-0.08%
COMMUNICATIONS EQUIPMENT-0.04%
Ciena, Corp.-Sept. 90 calls 77,500 70,234
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-0.04%
America Online Inc.-Aug. 120 calls 10,000 73,125
- --------------------------------------------------------------
Yahoo!, Inc.-Aug. 185 calls 300 3,300
- --------------------------------------------------------------
76,425
- --------------------------------------------------------------
Total Options Purchased (Cost
$243,882) 146,659
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY SECURITIES-36.32%
U.S. TREASURY BILLS-36.32%(b)
4.835%, 09/24/98(c) $51,565,000 51,195,816
- --------------------------------------------------------------
4.862%, 09/24/98(c) 18,605,000 18,482,951
- --------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $69,668,674) 69,678,767
- --------------------------------------------------------------
Total Investments, Excluding
Repurchase Agreements (Cost
$158,709,403) 154,634,111
- --------------------------------------------------------------
</TABLE>
FS-3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENTS-28.02%(d)
Dean Witter Reynolds, Inc., 5.67%,
08/03/98(e) $25,000,000 $ 25,000,000
- --------------------------------------------------------------
Goldman, Sachs & Co., 5.66%,
08/03/98(f) 28,740,077 28,740,077
- --------------------------------------------------------------
Total Repurchase Agreements
(Cost $53,740,077) 53,740,077
- --------------------------------------------------------------
TOTAL INVESTMENTS-108.63% 208,374,188
- --------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS-(8.63)% (16,550,005)
- --------------------------------------------------------------
NET ASSETS-100.00% $191,824,183
==============================================================
</TABLE>
SECURITIES SOLD SHORT
July 31, 1998
<TABLE>
<CAPTION>
SHARES
SOLD MARKET
SECURITIES SOLD SHORT(g) SHORT VALUE
- ------------------------ ------ ----------
<S> <C> <C>
Aetna, Inc. 7,500 $ 519,844
Cybercash, Inc. 35,000 395,937
Lernout & Hauspie Speech Products
N.V. 10,000 516,250
Melita International Corp. 30,000 361,875
Tektronix, Inc. 19,000 520,125
Tenet Healthcare Corp. 20,000 598,750
----------
$2,912,781
----------
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing securities.
(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 future 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 is at least 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 07/31/98, with a maturing value of
$300,141,750. Collateralized by $306,718,000 U.S. Treasury obligations 0% to
8.00% due 08/06/98 to 06/15/44 with an aggregate market value at 07/31/98 of
$306,000,958.
(f) Joint repurchase agreement entered into 07/31/98, with a maturing value of
$800,377,333. Collateralized by $657,534,000 U.S. Treasury obligations 0% to
14.25% due 10/31/98 to 02/15/27 with an aggregate market value at 07/31/98
of $816,817,098.
(g) Collateral on short sales was segregated by the Fund in the amount of
$4,423,077 which represents 152% of market value.
Abbreviation:
ADR - American Depositary Receipt
See Notes to Financial Statements.
FS-4
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase
agreements, at market value (cost
$158,709,403) $154,634,111
- ---------------------------------------------------------
Repurchase agreements 53,740,077
- ---------------------------------------------------------
Cash 1,443,012
- ---------------------------------------------------------
Receivables for:
Investments sold 254,792
- ---------------------------------------------------------
Investments sold short 2,979,830
- ---------------------------------------------------------
Fund shares sold 6,763,892
- ---------------------------------------------------------
Dividends and interest 13,581
- ---------------------------------------------------------
Investment for deferred compensation plan 751
- ---------------------------------------------------------
Other assets 26,129
- ---------------------------------------------------------
Total assets 219,856,175
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 22,943,225
- ---------------------------------------------------------
Fund shares reacquired 572,146
- ---------------------------------------------------------
Options written 70,781
- ---------------------------------------------------------
Deferred compensation plan 751
- ---------------------------------------------------------
Variation margin 1,374,450
- ---------------------------------------------------------
Market value of securities sold short
(proceeds from sales $2,979,830) 2,912,781
- ---------------------------------------------------------
Accrued advisory fees 86,671
- ---------------------------------------------------------
Accrued administrative services fees 3,400
- ---------------------------------------------------------
Accrued distribution fees 54,253
- ---------------------------------------------------------
Accrued trustees' fees 842
- ---------------------------------------------------------
Accrued transfer agent fees 10,291
- ---------------------------------------------------------
Accrued operating expenses 2,401
- ---------------------------------------------------------
Total liabilities 28,031,992
- ---------------------------------------------------------
Net assets applicable to shares outstanding $191,824,183
=========================================================
NET ASSETS:
Class A $107,539,648
=========================================================
Class B $ 84,284,535
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 11,018,174
=========================================================
Class B 8,638,461
=========================================================
Class A:
Net asset value and redemption price per
share $ 9.76
=========================================================
Offering price per share:
(Net asset value of $9.76 divided by
94.50%) $ 10.33
=========================================================
Class B:
Net asset value and offering price per
share $ 9.76
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the period June 29, 1998
(date operations commenced)
through July 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 306,109
- ---------------------------------------------------------
Dividends 4,870
- ---------------------------------------------------------
Total investment income 310,979
- ---------------------------------------------------------
EXPENSES:
Advisory fees 86,671
- ---------------------------------------------------------
Administrative services fees 3,400
- ---------------------------------------------------------
Custodian fees 528
- ---------------------------------------------------------
Transfer agent fees-Class A 5,743
- ---------------------------------------------------------
Transfer agent fees-Class B 6,496
- ---------------------------------------------------------
Trustees' fees 2,618
- ---------------------------------------------------------
Distribution fees-Class A 17,437
- ---------------------------------------------------------
Distribution fees-Class B 36,852
- ---------------------------------------------------------
Other 4,248
- ---------------------------------------------------------
Total expenses 163,993
- ---------------------------------------------------------
Less: Expenses paid indirectly (1,563)
- ---------------------------------------------------------
Net expenses 162,430
- ---------------------------------------------------------
Net investment income 148,549
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, SECURITIES SOLD SHORT, FUTURES AND OPTION
CONTRACTS:
Net realized gain (loss) from:
Investment securities 1,182,721
- ---------------------------------------------------------
Option contracts purchased 34,658
- ---------------------------------------------------------
1,217,379
- ---------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities (4,075,292)
- ---------------------------------------------------------
Securities sold short 67,049
- ---------------------------------------------------------
Futures contracts (3,348,202)
- ---------------------------------------------------------
Option contracts written 64,440
- ---------------------------------------------------------
(7,292,005)
- ---------------------------------------------------------
Net gain (loss) from investment
securities, securities sold short,
futures and option contracts (6,074,626)
- ---------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(5,926,077)
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD JUNE 29, 1998 (DATE OPERATIONS COMMENCED) THROUGH JULY 31, 1998
<TABLE>
<S> <C>
OPERATIONS:
Net investment income $ 148,549
- --------------------------------------------------------------------------
Net realized gain from investment securities and option
contracts purchased 1,217,379
- --------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities, securities sold short, futures and option
contracts written (7,292,005)
- --------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (5,926,077)
- --------------------------------------------------------------------------
Share transactions-net:
Class A 110,724,862
- --------------------------------------------------------------------------
Class B 86,925,398
- --------------------------------------------------------------------------
Net increase in net assets 191,724,183
- --------------------------------------------------------------------------
NET ASSETS:
Beginning of period 100,000
- --------------------------------------------------------------------------
End of period $191,824,183
==========================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $197,747,885
- --------------------------------------------------------------------------
Undistributed net investment income 150,924
- --------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, securities sold short, futures and option
contracts purchased 1,217,379
- --------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, securities sold short, futures and option
contracts written (7,292,005)
- --------------------------------------------------------------------------
$191,824,183
==========================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
July 31, 1998
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Small Cap Opportunities Fund (the "Fund") is a series portfolio of AIM
Special Opportunities Funds (the "Trust"). The Trust is a Delaware business
trust registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of one
investment portfolio. The Fund commenced operations on June 29, 1998. The Fund
currently offers two different classes of shares: Class A shares and Class B
shares. Class A shares are sold with a front-end sales charge. Class B shares
are sold with a contingent deferred sales charge. Matters affecting each
portfolio or class are 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 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 significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the 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 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 either are not readily available or are questionable are valued at
fair value as determined in good faith by or under the supervision of the
Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value.
B. Accounting for Securities Sold Short -- When the Fund sells common stock
short, an amount equal to the proceeds of the sale is recorded as an asset.
This asset is offset by a liability
FS-6
<PAGE>
(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 is
required to segregate cash or securities as collateral to secure its
obligation to the broker who delivered such securities to the buyer on behalf
of the Fund. The amount of the Fund's net assets that will at any time be
segregated as collateral deposits will not exceed 25%.
C. 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, dividend expense on
short sales and distributions to shareholders are recorded on the ex-dividend
date. On July 31, 1998, $2,375 was reclassified from undistributed net
investment income to paid in capital. The reclassification was 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 reclassification discussed above.
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. Call Options -- The Fund may write and buy call options, including securities
index options. 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 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.
An option on a securities index gives the holder the right to receive a
cash "exercise settlement amount" equal to the difference between the
exercise price of the option and the value of the underlying stock index on
the exercise date, multiplied by a fixed "index multiplier." A securities
index fluctuates with changes in the market values of the securities included
in the index. In the purchase of securities index options the principal risk
is that the premium and transaction costs paid by the Fund in purchasing an
option will be lost if the changes in the level of the index do not exceed
the cost of the option. In writing securities index options, the principal
risk is that the Fund could bear a loss on the options that would be only
partially offset (or not offset at all) by the increased value or reduced
cost of hedged securities. Moreover, in the event the Fund were unable to
close an option it had written, it might be unable to sell the securities
used as cover.
The Fund will not write options if, immediately thereafter, the aggregate
value of the securities underlying all such options, determined as of the
dates such options were written, would exceed 50% of the total assets of the
Fund.
The Fund will not purchase options if, at the time of the investment, the
aggregate premiums paid for outstanding options will exceed 25% of the Fund's
total assets.
F. Put Options -- The Fund may purchase and write put options including
securities index options. By purchasing a put option, the Fund obtains the
right (but not the obligation) to sell the options' 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, securities
index, 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 hedge. The Fund may write put options to earn
additional income in the form of option premiums if it expects the price of
the underlying securities to remain stable or rise during the option period
so that the option will not be exercised. The risk in this strategy is that
the price of the underlying securities may decline by an amount greater than
the premium received. The Fund will not write options if, immediately
thereafter, the aggregate value of the
FS-7
<PAGE>
securities underlying all such options, determined as of the dates such
options were written, would exceed 50% of the total assets of the Fund. The
Fund will not purchase options if, at the time of the investment, the
aggregate premiums paid for outstanding options will exceed 25% of the Fund's
total assets.
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 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 Fund's portfolio being hedged.
H. 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 Trust 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 an annual rate of 1% of the
Fund's average daily net assets.
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 period June 29, 1998 (date
operations commenced) through July 31, 1998, AIM was reimbursed $3,400 for such
services.
The Fund, pursuant to a transfer agency and shareholder service agreement, has
agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer
agency shareholder services to the Fund. During the period June 29, 1998 (date
operations commenced) through July 31, 1998, AFS was paid $12,969 for such
services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted
distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and Class C shares (the "Class A and C Plan"), and the
Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The
Fund, pursuant to the Class A and C Plan, pays AIM Distributors compensation at
an annual rate of 0.35% of the average daily net assets attributable to the
Class A shares and 1.00% of the average daily net assets attributable to the
Class C shares. 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 these amounts, the Fund may pay a service
fee of 0.25% of the average daily net assets of the Class A, Class B or Class C
shares to selected dealers and financial institutions who furnish continuing
personal shareholder services to their customers who purchase and own the
appropriate class of shares of the Fund. Any amounts not paid as a service fee
under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. As of July 31, 1998, Class C shares
are not currently available. During the period June 29, 1998 (date operations
commenced) through July 31, 1998, the Class A and Class B shares paid AIM
Distributors $17,437 and $36,852, respectively, as compensation under the Plans.
AIM Distributors received commissions of $626,915 from sales of the Class A
shares of the Fund during the period June 29, 1998 (date operations commenced)
through July 31, 1998. Such commissions are not an expense of the Fund. They are
deducted from, and are not included in, the proceeds from sales of Class A
shares. Certain officers and trustees of the Trust are officers and directors of
AIM, AIM Distributors and AFS.
NOTE 3-INDIRECT EXPENSES
During the period June 29, 1998 (date operations commenced) through July 31,
1998, the Fund received reductions in transfer agency fees from AFS (an
affiliate of AIM) and reductions in custodian fees of $69 and $1,494,
respectively under expense offset arrangements. The effect of the above
arrangements resulted in a reduction of the Fund's total expenses of $1,563
during the period June 29, 1998 (date operations commenced) through July 31,
1998.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the period June 29, 1998 (date operations
commenced) through July 31, 1998 was $91,439,138 and $3,825,012, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of July 31, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of:
Investment securities $ 1,263,811
- ---------------------------------------------------------
Securities sold short 79,716
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of:
Investment securities (5,340,929)
- ---------------------------------------------------------
Securities sold short (12,667)
- ---------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities $(4,010,069)
=========================================================
</TABLE>
Cost of investments for tax purposes is $158,711,229.
Proceeds from securities sold short for tax purposes is $2,979,830.
FS-8
<PAGE>
NOTE 6-SHARE INFORMATION
Changes in shares outstanding during the period June 29, 1998 (date operations
commenced) through July 31, 1998 were as follows:
<TABLE>
<CAPTION>
JULY 31, 1998
-------------------------
SHARES AMOUNT
---------- ------------
<S> <C> <C>
Sold:
Class A 11,173,989 $112,285,297
- -------------------------------------------------------------------
Class B 8,700,960 87,549,103
- -------------------------------------------------------------------
Reacquired:
Class A (155,815) (1,560,435)
- -------------------------------------------------------------------
Class B (62,499) (623,705)
- -------------------------------------------------------------------
19,656,635 $197,650,260
===================================================================
</TABLE>
NOTE 7-FUTURES CONTRACTS
On July 31, 1998, $3,294,000 principal amount of U.S. Treasury obligations were
pledged as collateral to cover margin requirements for open futures contracts.
Open futures contracts at July 31, 1998 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NO. OF APPRECIATION
CONTRACT CONTRACTS MONTH COMMITMENT (DEPRECIATION)
-------- --------- ----- ---------- --------------
<S> <C> <C> <C> <C>
S&P 500 Index 238 Sept. Buy $(3,348,202)
- ------------------------------------------------------------------
</TABLE>
NOTE 8-CALL OPTION CONTRACTS
Transactions in call options written during the period June 29, 1998 (date
operations commenced) through July 31, 1998 are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
---------- ---------
<S> <C> <C>
Beginning of period -- $ --
- -------------------------------------------------------------
Written 775 71,774
- -------------------------------------------------------------
Closed -- --
- -------------------------------------------------------------
Expired -- --
- -------------------------------------------------------------
End of period 775 $71,774
- -------------------------------------------------------------
</TABLE>
Open call option contracts written at July 31, 1998 are summarized as follows:
<TABLE>
<CAPTION>
JULY 31,
1998
CONTRACT STRIKE NUMBER OF PREMIUM MARKET UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE APPRECIATION
----- -------- ------ --------- -------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
Tellabs, Inc. Aug. 90 775 $71,774 $14,531 $57,243
- --------------------------------------------------------------------------------------------
</TABLE>
NOTE 9-PUT OPTION CONTRACTS
Transactions in put options contracts written during the period June 29, 1998
(date operations commenced) through July 31, 1998 are summarized as follows:
<TABLE>
<CAPTION>
PUT OPTION CONTRACTS
--------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
<S> <C> <C>
Beginning of period -- $ --
- -----------------------------------------------------------
Written 100 63,448
- -----------------------------------------------------------
End of period 100 $63,448
- -----------------------------------------------------------
</TABLE>
Open put option contracts written at July 31, 1998 were as follows:
<TABLE>
<CAPTION>
JULY 31,
1998
CONTRACT STRIKE NUMBER OF PREMIUM MARKET UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE APPRECIATION
----- -------- ------ --------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Index Aug. 1040 100 $63,448 $56,251 $7,197
- ------------------------------------------------------------------------------------------
</TABLE>
FS-9
<PAGE>
NOTE 10-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and Class B
outstanding during the period June 29, 1998 (date operations commenced) through
July 31, 1998.
<TABLE>
<CAPTION>
CLASS A CLASS B
-------- -------
<S> <C> <C>
Net asset value, beginning of period $ 10.00 $ 10.00
- ------------------------------------------------------------ -------- -------
Income from investment operations:
Net investment income 0.02(a) 0.01(a)
- ------------------------------------------------------------ -------- -------
Net gains (losses) on securities (both realized and
unrealized) (0.26) (0.25)
- ------------------------------------------------------------ -------- -------
Total from investment operations (0.24) (0.24)
- ------------------------------------------------------------ -------- -------
Net asset value, end of period $ 9.76 $ 9.76
============================================================ ======== =======
Total return(b) (2.40)% (2.40)%
============================================================ ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $107,540 $84,285
============================================================ ======== =======
Ratio of expenses to average net assets 1.59%(c) 2.30%(c)
============================================================ ======== =======
Ratio of net investment income to average net assets 2.00%(c) 1.29%(c)
============================================================ ======== =======
Portfolio turnover rate 13% 13%
============================================================ ======== =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are annualized and based on average net assets of $55,102,897 and
$40,760,109 for Class A and Class B shares, respectively.
FS-10
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Small Cap Opportunities Fund:
We have audited the accompanying statement of assets and liabilities of the AIM
Small Cap Opportunities Fund (a series of AIM Special Opportunities Funds)
including the schedule of investments, as of July 31, 1998, and the related
statement of operations, changes in net assets, and financial highlights for the
period June 29, 1998 (date operations commenced) through July 31, 1998. 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 audit 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 July
31, 1998, 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 Small Cap Opportunities Fund as of July 31, 1998, the results of its
operations, changes in its net assets and financial highlights for the period
June 29, 1998 (date operations commenced) through July 31, 1998, in conformity
with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
September 4, 1998
Houston, Texas
FS-11
<PAGE>
PART C
OTHER INFORMATION
Item 24. (a) Financial Statements:
Class A shares, Class B shares and Class C shares of AIM Small
Cap Opportunities Fund
In Part A: Financial Highlights
In Part B: (1) Schedule of Investments as of July 31, 1998
(2) Statement of Assets and Liabilities as of July
31, 1998
(3) Statement of Operations for the year ended
July 31, 1998
(4) Statement of Changes in Net Assets for the
year ended July 31, 1998
In Part C: None
----------------------
(b) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
(1) (a) - Agreement and Declaration of Trust of Registrant was filed as an
Exhibit to the Registration Statement filed March 13, 1998, and
is incorporated herewith by reference.
(b) - First Amendment to Agreement and Declaration of Trust of
Registrant is filed herewith electronically.
(2) - By-Laws of Registrant were filed as an Exhibit to the
Registration Statement filed March 13, 1998, and is herewith
incorporated by reference.
(3) - Voting Trust Agreements - None.
(4) (a) - Specimen Certificate for Class A Shares of AIM Small Cap
Opportunities Fund was filed as an Exhibit to Pre-Effective
Amendment No. 1 on May 21, 1998, and is incorporated herewith by
reference.
(b) - Specimen Certificate for Class B Shares of AIM Small Cap
Opportunities Fund was filed as an Exhibit to Pre-Effective
Amendment No. 1 on May 21, 1998, and is incorporated herewith by
reference.
(c) - Specimen Certificate for Class C Shares of AIM Small Cap
Opportunities Fund was filed as an Exhibit to Pre-Effective
Amendment No. 1 on May 21, 1998, and is incorporated herewith by
reference.
(5) (a) - Master Investment Advisory Agreement, dated June 24, 1998,
between Registrant and A I M Advisors, Inc. is filed herewith
electronically.
C-1
<PAGE>
(b) - Foreign Country Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement, dated September 9, 1998,
between Registrant and A I M Advisors, Inc. is filed herewith
electronically.
(6) (a) - Master Distribution Agreement (Class A and Class C shares), dated
June 24, 1998, between Registrant and A I M Distributors, Inc. is
filed herewith electronically.
(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.
(d) - Master Distribution Agreement (Class B shares), dated June 24,
1998, between Registrant and A I M Distributors, Inc. is filed
herewith electronically.
(7) (a) - AIM Funds Retirement Plan for Eligible Directors/Trustees
effective as of March 8, 1994, as restated September 18, 1995,
was filed as an Exhibit to the Registration Statement filed
March 13, 1998, and is incorporated herewith by reference.
(b) - Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Directors was filed as an Exhibit to the
Registration Statement filed March 13, 1998, and is incorporated
herewith by reference.
(8) (a) - (1) Custodian Contract, dated June 26, 1998, between Registrant
and State Street Bank and Trust Company is filed herewith
electronically.
- (2) Amendment, dated September 9, 1998, to the Custodian
Contract, dated June 26, 1998, between Registrant and State
Street Bank and Trust Company, is filed herewith
electronically.
(b) - (1) Subcustodian Agreement with Chase Bank of Texas, N.A.
(formerly, Texas Commerce Bank, National Association) was
filed as an Exhibit to the Registration Statement filed
March 13, 1998, and is incorporated herewith by reference.
- (2) Amendment No. 1, dated October 2, 1998, to the Subcustodian
Agreement among Chase Bank of Texas, N.A. (formerly, Texas
Commerce Bank, National Association), State Street Bank and
Trust Company, A I M Fund Services, Inc., is filed herewith
electronically.
(9) (a) - Transfer Agency and Service Agreement, dated June 24, 1998,
between Registrant and A I M Fund Services, Inc. is filed
herewith electronically.
(b) - (1) Remote Access and Related Services Agreement, dated as of
December 23, 1994, was filed as an Exhibit to the
Registration Statement filed March 13, 1998, and is
incorporated herewith by reference.
- (2) Amendment No. 1, dated October 4, 1995, to the Remote Access
and First Data Investor Services Group, Inc. was filed as
an Exhibit to the Registration Statement filed March 13,
1998, and is incorporated herewith by reference.
C-2
<PAGE>
- (3) Addendum No. 2, dated October 12, 1995, to the Remote Access
and Related Services Agreement, dated December 23, 1994, was
filed as an Exhibit to the Registration Statement filed
March 13, 1998, and is incorporated herewith by reference.
- (4) Amendment No. 3, dated as of February 1, 1997, to the Remote
Access and Related Services Agreement, dated December 23,
1994, was filed as an Exhibit to the Registration Statement
filed March 13, 1998, and is incorporated herewith by
reference.
- (5) Exhibit 1, effective as of August 4, 1997, to the Remote
Access and Related Services Agreement, dated December 23,
1994, was filed as an Exhibit to the Registration Statement
filed March 13, 1998, and is incorporated herewith by
reference.
- (6) Preferred Registration Technology Escrow Agreement, dated
September 10, 1997, was filed as an Exhibit to the
Registration Statement filed March 13, 1998, and is
incorporated herewith by reference.
- (7) Form of Revised Exhibit 1, to the Remote Access and Related
Services Agreement, dated December 23, 1994, was filed as an
Exhibit to Pre-Effective Amendment No. 1 on May 21, 1998,
and is incorporated herewith by reference.
- (8) Amendment No. 4, dated June 30, 1998, to the Remote Access
and Related Services Agreement, dated December 23, 1994, is
filed herewith electronically.
- (9) Amendment No. 5, dated July 1, 1998, to the Remote Access
and Related Services Agreement, dated December 23, 1994, is
filed herewith electronically.
(c) - Master Administrative Services Agreement, dated June 24, 1998,
between Registrant and A I M Advisors, Inc. is filed herewith
electronically.
(d) - Shareholder Sub-Accounting Services Agreement, dated as of
October 1, 1993, was filed as an Exhibit to the Registration
Statement filed March 13, 1998, and is incorporated herewith by
reference.
(10) - Consent of Ballard Spahr Andrews & Ingersoll, LLP is filed
herewith electronically.
(11) - Consent of KPMG Peat Marwick LLP is filed herewith
electronically.
(12) - Financial Statements - None.
(13) - Initial Capitalization Agreement of Registrant's AIM Small Cap
Opportunities Fund was filed as an Exhibit to Pre-Effective
Amendment No. 1 on May 21, 1998, and is incorporated herewith
by reference.
(14) (a) - Form of Registrant's IRA Documents were filed as an Exhibit to
the Registration Statement filed March 13, 1998, and is
incorporated herewith by reference.
(b) - Form of Registrant's Simplified Employee Pension - Individual
Retirement Accounts Contribution Agreement was filed as an
Exhibit to the Registration Statement filed March 13, 1998, and
is incorporated herewith by reference.
(c) - Forms of Registrant's Money Purchase Pension and Profit Sharing
Plan (and applicable Adoption Agreements) and Registrant's Profit
Sharing/401(k) Trust were filed as an Exhibit to the Registration
Statement filed March 13, 1998, and is incorporated herewith by
reference.
C-3
<PAGE>
(d) - Form of Registrant's 403(b) Plan was filed as an Exhibit to the
Registration Statement filed March 13, 1998, and is incorporated
herewith by reference.
(e) - Form of Registrant's SIMPLE Plan was filed as an Exhibit to the
Registration Statement filed March 13, 1998, and is incorporated
herewith by reference.
(f) - Form of Registrant's Roth IRA Documents were filed as an Exhibit
to the Registration Statement filed March 13, 1998, and is
incorporated herewith by reference.
(15) (a) - Master Distribution Plan for Registrant's Class A and Class C
shares is filed herewith electronically.
(b) - Form of Shareholder Service Agreement to be used in connection
with Registrant's Master Distribution Plan is filed herewith
electronically.
(c) - Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan is filed
herewith electronically.
(d) - Form of Variable Group Annuity Contractholder Service Agreement
to be used in connection with Registrant's Master Distribution
Plan is filed herewith electronically.
(e) - Form of Agency Pricing Agreement (for Class A Shares) to be used
in connection with Registrant's Master Distribution Plan is filed
herewith electronically.
(f) - Forms of Service Agreement for Brokers for Bank Trust Departments
and for Bank Trust Departments to be used in connection with
Registrant's Master Distribution Plan are filed herewith
electronically.
(g) - Master Distribution Plan for Registrant's Class B shares is filed
herewith electronically.
(16) - Schedule of Performance Quotations - None
(18) - Second Amended and Restated Multiple Class Plan (Rule 18f-3) was
filed as an Exhibit to Pre-Effective Amendment No. 1 on
May 21, 1998, and is incorporated herewith by reference.
(27) - Financial Data Schedule is 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.
Not Applicable
C-4
<PAGE>
Item 26. NUMBER OF HOLDERS OF SECURITIES
STATE IN SUBSTANTIALLY THE TABULAR FORM INDICATED, AS OF A SPECIFIED DATE
WITHIN 90 DAYS PRIOR TO THE DATE OF FILING, THE NUMBER OF RECORD HOLDERS OF EACH
CLASS OF SECURITIES OF THE REGISTRANT.
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of September 21, 1998
-------------- ------------------------
<S> <C>
AIM Small Cap Opportunities Fund - Class A shares 7,104
AIM Small Cap Opportunities Fund - Class B shares 4,386
AIM Small Cap Opportunities Fund - Class C shares -0-
</TABLE>
Item 27. INDEMNIFICATION
STATE THE GENERAL EFFECT OF ANY CONTRACT, ARRANGEMENTS OR STATUTE UNDER
WHICH ANY DIRECTOR, OFFICER, UNDERWRITER OR AFFILIATED PERSON OF THE REGISTRANT
IS INSURED OR INDEMNIFIED IN ANY MANNER AGAINST ANY LIABILITY WHICH MAY BE
INCURRED IN SUCH CAPACITY, OTHER THAN INSURANCE PROVIDED BY ANY DIRECTOR,
OFFICER, AFFILIATED PERSON OR UNDERWRITER FOR THEIR OWN PROTECTION.
The Registrant's Agreement and Declaration of Trust (the "Agreement"),
dated February 4, 1998, as amended, provides, among other things (i)
that trustees shall not be liable for any act or omission or any
conduct whatsoever (except for liabilities to the Registrant or
its shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of duty); (ii) for the
indemnification by the Registrant of the trustees and officers to the
fullest extent permitted by the Delaware Business Trust Act; and (iii)
that the shareholders and former shareholders of the Registrant are
held harmless by the Registrant (or applicable portfolio or class)
from personal liability arising from their status as such, and are
indemnified by the Registrant (or applicable portfolio or class)
against all loss and expense arising from such personal liability in
accordance with the Registrant's Bylaws and applicable law.
A I M Advisors, Inc., the Registrant and other investment companies
managed by A I M Advisors, Inc., their respective officers, trustees,
directors and employees (the "Insured Parties") are insured under an
investment Advisory Professional and Directors and 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 LAST 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-5
<PAGE>
Item 29. PRINCIPAL UNDERWRITERS
(a) A I M Distributors, Inc., the Registrant's principal underwriter, also
acts as a principal underwriter to the following investment companies:
AIM Advisor Funds, Inc.
AIM Eastern Europe
AIM Equity Funds, Inc. (Retail Classes)
AIM Floating Rate Fund, Inc.
AIM Funds Group
AIM Growth Series
AIM Investment Funds
AIM International Funds, Inc.
AIM Investment Portfolios
AIM Investment Securities Funds
AIM Series Trust
AIM Summit Fund, Inc.
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds, Inc.
(b)
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
Charles T. Bauer Chairman of the Chairman of the
Board of Directors Board of Trustees
Michael J. Cemo President & Director None
Gary T. Crum Director Senior Vice President
Robert H. Graham Senior Vice President President & Trustee
& Director
W. Gary Littlepage Senior Vice President None
& Director
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
- ----------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-6
<PAGE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
Kathleen J. Pflueger Secretary Assistant Secretary
John J. Arthur Vice President & Treasurer Senior Vice President
& Treasurer
Ofelia M. Mayo Vice President, Assistant Assistant Secretary
Secretary & General Counsel
Melville B. Cox Vice President & Vice President
Chief Compliance Officer
James R. Anderson Vice President None
Mary K. Coleman Vice President None
Charles R. Dewey Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
William H. Kleh Vice President None
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
David E. Hessel Assistant Vice President, None
Controller & Assistant
Treasurer
Luke P. Beausoleil Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
- ----------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-7
<PAGE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
Glenda Dayton Assistant Vice President None
Kathleen M. Douglas Assistant Vice President None
Terri N. Fielder Assistant Vice President None
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
Wayne W. LaPlante Assistant Vice President None
Kim T. Lankford Assistant Vice President None
Ivy B. McLemore Assistant Vice President None
David B. O'Neal 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>
(c) Not Applicable
- ----------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-8
<PAGE>
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, maintains 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 A OR PART B OF THIS FORM (BECAUSE THE
CONTRACT WAS NOT BELIEVED TO BE OF INTEREST 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.
Not Applicable
Item 32. UNDERTAKINGS
Not Applicable
C-9
<PAGE>
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 7th day of
October, 1998.
REGISTRANT: AIM SPECIAL OPPORTUNITIES FUNDS
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 & Trustee October 7, 1998
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM
------------------------- Trustee & President
(Robert H. Graham) (Principal Executive Officer) October 7, 1998
/s/ BRUCE L. CROCKETT
------------------------- Trustee October 7, 1998
(Bruce L. Crockett)
/s/ OWEN DALY II
------------------------- Trustee October 7, 1998
(Owen Daly II)
/s/ EDWARD K. DUNN, JR.
------------------------- Trustee October 7, 1998
(Edward K. Dunn, Jr.)
/s/ JACK FIELDS
------------------------- Trustee October 7, 1998
(Jack Fields)
/s/ CARL FRISCHLING
------------------------- Trustee October 7, 1998
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS
------------------------- Trustee October 7, 1998
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK
------------------------- Trustee October 7, 1998
(Lewis F. Pennock)
/s/ IAN W. ROBINSON
------------------------- Trustee October 7, 1998
(Ian W. Robinson)
/s/ LOUIS S. SKLAR
------------------------- Trustee October 7, 1998
(Louis S. Sklar)
/s/ JOHN J. ARTHUR Senior Vice President &
------------------------- Treasurer (Principal Financial October 7, 1998
(John J. Arthur) and Accounting Officer)
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
1(b) First Amendment of Agreement and Declaration of Trust of
Registrant
5(a) Master Investment Advisory Agreement, dated June 24, 1998,
between Registrant and A I M Advisors, Inc.
5(b) Foreign Country Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement, dated September 9, 1998,
between Registrant and A I M Advisors, Inc.
6(a) Master Distribution Agreement (Class A and Class C shares), dated
June 24, 1998, between Registrant and A I M Distributors, Inc.
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
6(d) Master Distribution Agreement (Class B shares), dated June 24,
1998, between Registrant and A I M Distributors, Inc.
8(a)(1) Custodian Agreement, dated June 26, 1998, between Registrant and
State Street Bank and Trust Company
8(a)(2) Amendment, dated September 9, 1998, to the Custodian Contract,
dated June 26, 1998, between Registrant and State Street Bank and
Trust Company
8(b)(2) Amendment No. 1, dated October 2, 1998, to the Subcustodian
Agreement among Chase Bank of Texas, N.A. (formerly, Texas
Commerce Bank, National Association), State Street Bank and Trust
Company, A I M Fund Services, Inc.
9(a) Transfer Agency and Service Agreement, dated June 24, 1998,
between Registrant and A I M Fund Services, Inc.
9(b)(8) Amendment No. 4, dated June 30, 1998, to the Remote Access and
Related Services Agreement, dated December 23, 1994.
9(b)(9) Amendment No. 5, dated July 1, 1998, to the Remote Access and
Related Services Agreement, dated December 23, 1994.
9(c) Master Administrative Services Agreement, dated June 24, 1998,
between Registrant and A I M Advisors, Inc.
10 Consent of Ballard Spahr Andrews & Ingersoll, LLP
11 Consent of KPMG Peat Marwick LLP
15(a) Master Distribution Plan for Registrant's Class A and Class C
shares
<PAGE>
15(b) Form of Shareholder Service Agreement to be used in connection
with Registrant's Master Distribution Plan
15(c) Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan
15(d) Form of Variable Group Annuity Contractholder Service Agreement
to be used in connection with Registrant's Master Distribution
Plan
15(e) Form of Agency Pricing Agreement (for Class A Shares) to be used
in connection with Registrant's Master Distribution Plan
15(f) Forms of Service Agreement for Brokers for Bank Trust Departments
and for Bank Trust Departments to be used in connection with
Registrant's Master Distribution Plan
15(g) Master Distribution Plan for Registrant's Class B shares
27 Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 1(b)
FIRST AMENDMENT
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM SPECIAL OPPORTUNITIES FUNDS
THIS FIRST AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST OF AIM SPECIAL
OPPORTUNITIES FUNDS (the "Amendment") is entered into the __th day of ___, 1998,
among Charles T. Bauer, Bruce L. Crockett, Owen Daly II, Edward K. Dunn, Jr.,
Jack Fields, Carl Frischling, Robert H. Graham, Lewis F. Pennock, Ian W.
Robinson and Louis S. Sklar, as Trustees, and each person who became or
becomes a Shareholder in accordance with the terms set forth in that certain
Agreement and Declaration of Trust of AIM Special Opportunities Funds entered
into as of February 4, 1998, as amended (the "Agreement").
WHEREAS, the Trustees of the Trust desire to establish two new Classes of
AIM Small Cap Opportunities Fund, the sole Portfolio of the Trust: the Class B
Shares and the Class C Shares; and
WHEREAS, Section 2.3.1 of the Agreement permits the Trustees to establish
such Classes and Section 9.7 of the Agreement authorizes the Trustees to amend
or otherwise supplement the Agreement by making an amendment, all without prior
Shareholder authorization or vote; and
WHEREAS, at a meeting duly called and held on the 12th day of May, 1998,
the Trustees have resolved to amend the Agreement as hereinafter set forth.
NOW, THEREFORE, the Trustees hereby amend the Agreement as herein set forth
below:
1. Capitalized terms not specifically defined in this Amendment shall
have the meanings ascribed to them in the Agreement.
2. Section 2.3 of the Agreement shall be deleted in its entirety and the
following new Section shall be substituted in lieu thereof:
"SECTION 2.3. ESTABLISHMENT OF PORTFOLIOS AND CLASSES. The
Trust shall initially be created with one Portfolio, the AIM
Small Cap Opportunities Fund. Such Portfolio shall have three
Classes, the Class A Shares, the Class B Shares and the Class C
Shares. The establishment and designation of any additional
Class or Classes to such Portfolio or any additional Portfolio or
Class of such additional Portfolio, or, subject to Section 6.1
hereof, any change to any then existing Portfolio or Class
thereof, shall be effective upon the adoption by a majority of
the then Trustees of a resolution which sets forth such
establishment, designation or change."
The foregoing shall not be construed to amend or replace Sections 2.3.1 and
2.3.2 of the Agreement.
<PAGE>
3. A new Section 2.3.3 shall be added to the Agreement which Section
2.3.3 shall read in full as follows:
"SECTION 2.3.3. In addition to the relative rights and
preferences set forth in Section 2.3.2 of this Trust
Agreement and all other provisions of this Trust Agreement
relating to Shares of the Trust generally, the Class B
Shares shall have the following rights and preferences:
(1) Subject to the provisions of paragraph (c) below,
all Class B Shares other than those purchased through the
reinvestment of dividends and distributions shall
automatically convert to Class A Shares eight (8) years
after the end of the calendar month in which a shareholder's
order to purchase such shares was accepted.
(2) Subject to the provisions of paragraph (c) below,
Class B Shares purchased through the reinvestment of
dividends and distributions paid in respect of Class B
Shares will be considered held in a separate sub-account,
and will automatically convert to Class A Shares in the same
proportion as any Class B Shares (other than those in the
sub-account) convert to Class A Shares. Other than this
conversion feature, the Class B Shares purchased through the
reinvestment of dividends and distributions paid in respect
of Class B Shares shall have all the rights and preferences,
restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of Class B Shares
generally.
(3) If a Portfolio of the Trust implements any
amendment to a Plan of Distribution adopted under Rule 12b-1
promulgated under the 1940 Act (or, if presented to
shareholders, adopts or implements a non-Rule 12b-1
shareholder services plan) that the Trustees determine would
materially increase the charges that may be borne by the
Class A Shareholders under such plan, the Class B Shares
will stop converting to the Class A Shares unless the
Class B Shares, voting separately, approve the amendment or
adoption. The Trustees shall have sole discretion in
determining whether such amendment or adoption is submitted
to a vote of the Class B Shareholders. Should such
amendment or adoption not be submitted to a vote of the
Class B Shareholders or, if submitted, should the Class B
Shareholders fail to approve such amendment or adoption, the
Trustees shall take such action as is necessary to: (1)
create a new class (the "New Class A Shares") which shall be
identical in all material respects to the Class A Shares as
they existed prior to the implementation of the amendment or
adoption; and (2) ensure that the existing Class B Shares
will be exchanged or converted into New Class A Shares no
later than the date such Class B Shares were scheduled to
convert to Class A Shares. If deemed advisable by the
Trustees to implement the foregoing, and at the sole
discretion of the Trustees, such action may include the
2
<PAGE>
exchange of all Class B Shares for a new class (the "New Class B
Shares"), identical in all material respects to the Class B Shares
except that the New Class B Shares will automatically convert into the
New Class A Shares. Such exchanges or conversions shall be effected
in a manner that the Trustees reasonably believe will not be subject
to federal taxation."
4. With the exception of the amendment to Section 2.3 of the Agreement as
set forth in paragraph 2 of this Amendment and the addition of Section 2.3.3 to
the Agreement as set forth in paragraph 3 of this Amendment, the Agreement, as
amended, shall in all other respects remain in full force and effect.
5. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same Amendment.
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this First Amendment to Agreement and Declaration of Trust
of AIM Special Opportunities Funds as of the day first above written.
/s/ Charles T. Bauer /s/ Bruce L. Crockett
- ----------------------------------- -----------------------------------
Charles T. Bauer, Trustee Bruce L. Crockett, Trustee
/s/ Owen Daly II /s/ Edward K. Dunn, Jr.
- ----------------------------------- -----------------------------------
Owen Daly II, Trustee Edward K. Dunn, Jr., Trustee
/s/ Jack Fields /s/ Carl Frischling
- ----------------------------------- -----------------------------------
Jack Fields, Trustee Carl Frischling, Trustee
/s/ Robert H. Graham /s/ Ian W. Robinson
- ----------------------------------- -----------------------------------
Robert H. Graham, Trustee Ian W. Robinson, Trustee
/s/ Lewis F. Pennock
- -----------------------------------
Lewis F. Pennock, Trustee
/s/ Louis S. Sklar
- -----------------------------------
Louis S. Sklar, Trustee
3
<PAGE>
EXHIBIT 5(a)
AIM SPECIAL OPPORTUNITIES FUNDS
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 24th day of June, 1998, by and between
AIM Special Opportunities Funds, a Delaware business trust (the "Company") with
respect to its series of shares shown on the Appendix A attached hereto, as the
same may be amended from time to time, and A I M Advisors, Inc., a Delaware
corporation (the "Advisor").
RECITALS
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company;
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment advisor and engages in
the business of acting as an investment advisor;
WHEREAS, the Company's Agreement and Declaration of Trust authorizes the
Board of Trustees of the Company to classify shares of the Company, and as of
the date of this Agreement, the Company's Board of Trustees has authorized
the issuance of one series of shares representing interests in one investment
portfolio (such portfolio and any other portfolios hereafter added to the
Company being referred to collectively herein as the "Funds"); and
WHEREAS, the Company and the Advisor desire to enter into an agreement to
provide for investment advisory services to the Funds upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. ADVISORY SERVICES. The Advisor shall act as investment advisor for the
Funds and shall, in such capacity, supervise all aspects of the Funds'
operations, including the investment and reinvestment of cash, securities or
other properties comprising the Funds' assets, subject at all times to the
policies and control of the Company's Board of Trustees. The Advisor shall give
the Company and the Funds the benefit of its best judgment, efforts and
facilities in rendering its services as investment advisor.
2. INVESTMENT ANALYSIS AND IMPLEMENTATION. In carrying out its
obligations under Section 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Funds;
(b) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Funds,
and whether concerning the individual issuers whose
<PAGE>
securities are included in the assets of the Funds or the activities in
which such issuers engage, or with respect to securities which the Advisor
considers desirable for inclusion in the Funds' assets;
(c) determine which issuers and securities shall be represented in
the Funds' investment portfolios and regularly report thereon to the
Company's Board of Trustees; and
(d) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report thereon to the
Company's Board of Trustees;
and take, on behalf of the Company and the Funds, all actions which appear to
the Company and the Funds necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid, including but not limited to
the placing of orders for the purchase and sale of securities for the Funds.
3. DELEGATION OF RESPONSIBILITIES. Subject to the approval of the
Board of Trustees and, if required by law, the shareholders of the Funds, the
Advisor may delegate to a sub-advisor certain of its duties enumerated in
Section 2 hereof, provided that the Advisor shall continue to supervise the
performance of any such sub-advisor.
4. CONTROL BY BOARD OF TRUSTEES. Any investment program undertaken by
the Advisor pursuant to this Agreement, as well as any other activities
undertaken by the Advisor on behalf of the Funds, shall at all times be subject
to any directives of the Board of Trustees of the Company.
5. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its
obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the Advisers Act
and any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Company, as
the same may be amended from time to time under the Securities Act of 1933
and the 1940 Act;
(c) the provisions of the Agreement and Declaration of Trust of the
Company, as the same may be amended from time to time;
(d) the provisions of the by-laws of the Company, as the same may be
amended from time to time; and
(e) any other applicable provisions of state, federal or foreign law.
6. BROKER-DEALER RELATIONSHIPS. The Advisor is responsible for decisions
to buy and sell securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The Advisor's primary consideration
in effecting a security transaction will be to obtain execution at the most
favorable price. In selecting a broker-dealer to execute each particular
transaction, the Advisor will take the following into consideration: the best
net price available; the reliability, integrity and financial condition of the
broker-dealer; the size of and the difficulty in executing the order; and the
value of the expected contribution of the broker-dealer to the investment
performance of the Funds on a continuing basis. Accordingly, the price to the
Funds in any transaction may be less
2
<PAGE>
favorable than that available from another broker-dealer if the difference is
reasonably justified by other aspects of the fund execution services offered.
Subject to such policies as the Board of Trustees may from time to time
determine, the Advisor shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Funds to pay a broker or dealer that provides brokerage and
research services to the Advisor an amount of commission for effecting a fund
investment transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the Advisor
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities with respect to a particular Fund, other
Funds of the Company, and to other clients of the Advisor as to which the
Advisor exercises investment discretion. The Advisor is further authorized to
allocate the orders placed by it on behalf of the Funds to such brokers and
dealers who also provide research or statistical material, or other services to
the Funds, to the Advisor, or to any sub-advisor. Such allocation shall be in
such amounts and proportions as the Advisor shall determine and the Advisor will
report on said allocations regularly to the Board of Trustees of the Company
indicating the brokers to whom such allocations have been made and the basis
therefor. In making decisions regarding broker-dealer relationships, the
Advisor may take into consideration the recommendations of any sub-advisor
appointed to provide investment research or advisory services in connection with
the Funds, and may take into consideration any research services provided to
such sub-advisor by broker-dealers.
7. COMPENSATION. The Company shall pay the Advisor as compensation for
services rendered hereunder an annual fee, payable monthly, based upon the
average daily net assets of the Funds as the same is set forth in Appendix A
attached hereto. The average daily net asset value of the Funds shall be
determined in the manner set forth in the Agreement and Declaration of Trust and
registration statement of the Company, as amended from time to time.
8. ADDITIONAL SERVICES. Upon the request of the Company's Board of
Trustees, the Advisor may perform certain accounting, shareholder servicing or
other administrative services on behalf of the Funds which are not required by
this Agreement. Such services will be performed on behalf of the Funds and the
Advisor may receive from the Funds such reimbursement for costs or reasonable
compensation for such services as may be agreed upon between the Advisor and the
Company's Board of Trustees based on a finding by the Board of Trustees that the
provision of such services by the Advisor is in the best interests of the
Company and its shareholders. Payment or assumption by the Advisor of any fund
expense that the Advisor is not otherwise required to pay or assume under this
Agreement shall not relieve the Advisor of any of its obligations to the Funds
nor obligate the Advisor to pay or assume any similar fund expense on any
subsequent occasions. Such services may include, but are not limited to:
(a) the services of a principal financial officer of the Company
(including applicable office space, facilities and equipment) whose normal
duties consist of maintaining the financial accounts and books and records
of the Company and the Funds, including the review and calculation of daily
net asset value and the preparation of tax returns; and the services
(including applicable office space, facilities and equipment) of any of the
personnel operating under the direction of such principal financial
officer;
(b) the services of staff to respond to shareholder inquiries
concerning the status of their accounts; providing assistance to
shareholders in exchanges among the mutual funds
3
<PAGE>
managed or advised by the Advisor; changing account designations or
changing addresses; assisting in the purchase or redemption of shares;
supervising the operations of the custodian, transfer agent(s) or dividend
disbursing agent(s) for the Funds; or otherwise providing services to
shareholders of the Funds; and
(c) such other administrative services as may be furnished from time
to time by the Advisor to the Company or the Funds at the request of the
Company's Board of Trustees.
9. EXPENSES OF THE FUNDS. All of the ordinary business expenses incurred
in the operations of the Funds and the offering of their shares shall be borne
by the Funds unless specifically provided otherwise in this Agreement. These
expenses borne by the Funds include but are not limited to brokerage
commissions, taxes, legal, accounting, auditing, or governmental fees, the cost
of preparing share certificates, custodian, transfer and shareholder service
agent costs, expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale, expenses relating to
directors and shareholder meetings, the cost of preparing and distributing
reports and notices to shareholders, the fees and other expenses incurred by the
Company on behalf of the Funds in connection with membership in investment
company organizations and the cost of printing copies of prospectuses and
statements of additional information distributed to the Funds' shareholders.
10. NON-EXCLUSIVITY. The services of the Advisor to the Company and the
Funds are not to be deemed to be exclusive, and the Advisor shall be free to
render investment advisory and administrative or other services to others
(including other investment companies) and to engage in other activities. It is
understood and agreed that officers or directors of the Advisor may serve as
officers or directors of the Company, and that officers or directors of the
Company may serve as officers or directors of the Advisor to the extent
permitted by law; and that the officers and directors of the Advisor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
11. TERM AND APPROVAL. This Agreement shall become effective with respect
to a Fund if approved by the shareholders of such Fund, and if so approved, this
Agreement shall thereafter continue in force for an initial period of two years
and may be continued from year to year thereafter, provided that the
continuation of the Agreement is specifically approved at least annually:
(a) (i) by the Company's Board of Trustees or (ii) by the vote of "a
majority of the outstanding voting securities" of such Fund (as defined in
Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the trustees who are not
parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Company trustees), by
votes cast in person at a meeting specifically called for such purpose.
12. TERMINATION. This Agreement may be terminated as to the Company or as
to any one or more of the Funds at any time, without the payment of any penalty,
by vote of the Company's Board of Trustees or by vote of a majority of the
outstanding voting securities of the applicable Fund, or by the Advisor, on
sixty (60) days' written notice to the other party. The notice provided for
herein may be waived by the party entitled to receipt thereof. This Agreement
shall automatically
4
<PAGE>
terminate in the event of its assignment, the term "assignment" for purposes of
this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act.
13. LIABILITY OF ADVISOR AND INDEMNIFICATION. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Advisor or any of its officers, directors or
employees, the Advisor shall not be subject to liability to the Company or to
the Funds or to any shareholder of the Funds for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
14. LIABILITY OF SHAREHOLDERS. Notice is hereby given that, as provided
by applicable law, the obligations of or arising out of this Agreement are not
binding upon any of the shareholders of the Company individually but are binding
only upon the assets and property of the Company and that the shareholders shall
be entitled, to the fullest extent permitted by applicable law, to the same
limitation on personal liability as stockholders of private corporations for
profit.
15. NOTICES. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the other party
entitled to receipt thereof at such address as such party may designate for the
receipt of such notice. Until further notice to the other party, it is agreed
that the address of the Company shall be and that of the Advisor shall be Eleven
Greenway Plaza, Suite 100, Houston, Texas 77046.
16. QUESTIONS OF INTERPRETATION. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act or the Advisers Act shall be resolved
by reference to such term or provision of the 1940 Act or the Advisers Act and
to interpretations thereof, if any, by the United States Courts or in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission issued pursuant to said Acts.
In addition, where the effect of a requirement of the 1940 Act or the Advisers
Act reflected in any provision of the Agreement is revised by rule, regulation
or order of the Securities and Exchange Commission, such provision shall be
deemed to incorporate the effect of such rule, regulation or order. Subject to
the foregoing, this Agreement shall be governed by and construed in accordance
with the laws (without reference to conflicts of law provisions) of the State of
Delaware.
17. LICENSE AGREEMENT. The Company shall have the non-exclusive right to
use the name "AIM" to designate any current or future series of shares only so
long as A I M Advisors, Inc. serves as investment manager or advisor to the
Company with respect to such series of shares.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
AIM SPECIAL OPPORTUNITIES FUNDS
(a Delaware business trust)
Attest:
/s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
- ------------------------------------- -------------------------------------
ASSISTANT SECRETARY PRESIDENT
(SEAL)
A I M ADVISORS, INC.
Attest:
/s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
- ------------------------------------- -------------------------------------
ASSISTANT SECRETARY PRESIDENT
(SEAL)
6
<PAGE>
APPENDIX A
TO
MASTER INVESTMENT ADVISORY AGREEMENT
OF
AIM SPECIAL OPPORTUNITIES FUNDS
The Company shall pay the Advisor, out of the assets of a Fund, as full
compensation for all services rendered and all facilities furnished hereunder, a
management fee for such Fund set forth below. Such fees shall be calculated by
applying the following annual rates to the average daily net assets of such Fund
for the calendar year computed in the manner used for the determination of the
net asset value of shares of such Fund.
FUND ANNUAL RATE
- ---- -----------
AIM Small Cap Opportunities Fund . . . . . . . . . . . . . . . . . . . 1.00%
7
<PAGE>
EXHIBIT 5(B)
FOREIGN COUNTRY SELECTION
AND MANDATORY SECURITIES DEPOSITORY RESPONSIBILITIES
DELEGATION AGREEMENT
This FOREIGN COUNTRY SELECTION AND MANDATORY SECURITIES DEPOSITORY
RESPONSIBILITIES DELEGATION AGREEMENT (the "Agreement") is made this 9th day of
September, 1998 by and between A I M ADVISORS, INC., a Delaware corporation
("AIM") and each registered investment company (the "Investment Companies") and
its respective portfolios (the "Funds") listed on the signature page hereof.
W I T N E S S E T H:
WHEREAS, AIM has agreed to accept responsibility for selecting and
monitoring relationships with compulsory depositories; and
WHEREAS, AIM has agreed to accept responsibility for the selection of
foreign countries in which the Funds may invest;
NOW, THEREFORE, AIM hereby agrees to exercise reasonable care, prudence and
diligence such as a person having safekeeping of fund assets would exercise in
performing the following responsibilities:
1. DEFINITIONS.
A. "FOREIGN ASSETS" means any of a Fund's investments (including foreign
currencies) for which the primary market is outside the United States,
currency contracts that are settled outside the United States, and
such cash and cash equivalents as are reasonably necessary to effect
the Fund's transactions in such investments.
B. "FOREIGN CUSTODY MANAGER" means State Street Bank and Trust Company.
C. "MANDATORY SECURITIES DEPOSITORY" means a foreign securities
depository or clearing agency that, either as a legal or practical
matter, must be used if a Fund determines to place Foreign Assets in a
country outside the United States (i) because required by law or
regulation; (ii) because securities cannot be withdrawn from such
foreign securities depository or clearing agency; or (iii) because
maintaining or effecting trades in securities outside the foreign
securities depository or clearing agency is not consistent with
prevailing or developing custodial or market practices.
D. "PREVAILING COUNTRY RISKS" means all factors reasonably related to the
systemic risk of holding Foreign Assets in a particular country,
including but not limited to, such country's political environment;
economic and financial infrastructure (including any Mandatory
Securities Depositories operating in the country); prevailing or
developing custody and settlement practices; laws and regulations
applicable to the safekeeping and recovery of Foreign Assets held in
custody in that country; and factors comprising "prevailing country
risk", including the effects of foreign law on the safekeeping of Fund
assets, the likelihood of expropriation, nationalization, freezing or
confiscation of the Fund's assets and any reasonably foreseeable
difficulties in repatriating the Fund's assets.
<PAGE>
E. "SECURITIES DEPOSITORY" means a system for the central handling of
securities where all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical
delivery of the securities. A Securities Depository includes a
Mandatory Securities Depository.
2. FOREIGN COUNTRY SELECTION. Selection of foreign countries in which a Fund
invests. AIM may determine that an issuer is located in a particular
country based on various factors, including the following: (i) the issuer
is organized under the laws of and maintains a principal office in that
country; (ii) the issuer derives 50% or more of its total revenues from
business in that country; or (iii) the primary market for the issuer's
securities is in that country. In addition, in determining whether to
maintain assets of a Fund in a foreign country, AIM shall consider
Prevailing Country Risks. AIM may rely on information provided by
computerized information services, such as Bloomberg terminals, in making
the foregoing determinations. AIM may also rely on information and
opinions provided by the Foreign Custody Manager in making such
determinations. AIM may add or delete foreign countries to or from the
list of approved foreign countries from time to time, as determined by the
AIM employees who are portfolio managers of the Funds.
3. MANDATORY SECURITIES DEPOSITORIES SELECTION. Selection of Mandatory
Securities Depositories for the placement and maintenance of Foreign
Assets. AIM shall not make any such selection unless and until it has
complied with the terms of paragraphs 4 through 6 of this Agreement.
4. DETERMINATION OF REASONABLE CARE. Determinations by AIM that the Foreign
Assets will be subject to reasonable care, based on the standards
applicable to custodians in the relevant market, if such Assets are held
with a Mandatory Securities Depository. In making such determinations, AIM
shall consider all factors relevant to the safekeeping of such Foreign
Assets, including without limitation:
A. The practices, procedures, and internal controls of the Mandatory
Securities Depository, including, but not limited to, the physical
protections available for certificated securities (if applicable), the
method of keeping custodial records, and the security and data
protection practices;
B. Whether the Mandatory Securities Depository has the requisite
financial strength to provide reasonable care for the Foreign Assets;
C. The general reputation and standing of the Mandatory Securities
Depository and its operating history and number of participants; and
D. Whether the Fund will have jurisdiction over and be able to enforce
judgments against the Mandatory Securities Depository, such as by
virtue of the existence of any offices of the Mandatory Securities
Depository in the United States or the consent by the Mandatory
Securities Depository to service of process in the United States.
5. FOREIGN CUSTODY ARRANGEMENTS. Implementation of the Funds' foreign custody
arrangements pursuant to written contracts, by the rules or established
practices or
<PAGE>
procedures of the Mandatory Securities Depository, or by any combination of the
foregoing that AIM determines will provide reasonable care for the Funds'
Foreign Assets based on the standards specified in paragraph A.2. above. Any
such contracts shall include provisions that provide:
A. For indemnification or insurance arrangements (or any combination of
the foregoing) such that the Funds will be adequately protected
against the risk of loss of Foreign Assets held in accordance with
such contracts;
B. That the Funds' Foreign Assets will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the
custodian or its creditors except a claim of payment for their safe
custody or administration or, in the case of cash deposits, liens or
rights in favor of creditors of the custodian arising under
bankruptcy, insolvency, or similar laws;
C. That beneficial ownership for the Funds' Foreign Assets will be freely
transferable without the payment of money or value other than for safe
custody or administration;
D. That adequate records will be maintained identifying the Foreign
Assets as belonging to a Fund or as being held by a third party for
the benefit of the Fund;
E. That each Fund's independent public accountants will be given access
to those records or confirmation of the content of those records; and
F. That a Fund will receive periodic reports with respect to the
safekeeping of the Fund's Foreign Assets, including, but not limited
to, notification of any transfer to or from the Fund's accounts or a
third party account containing Foreign Assets held for the benefit of
the Fund.
In lieu of any or all of the provisions specified in a. through f.
above, such contracts may contain such other provisions that AIM
determines will provide, in their entirety, the same or a greater
level of care and protection for Fund Foreign Assets as the specified
provisions, in their entirety.
6. MONITORING MANDATORY SECURITIES DEPOSITORIES. Establishment of a system
(a) to monitor the appropriateness of maintaining the Fund's Foreign Assets
with a particular Mandatory Securities Depository under Section 4 above,
and the contracts governing the Funds' arrangements under Section 5 above;
and (b) to notify the Funds promptly if an arrangement no longer meets the
requirements of [this section B] and to withdraw promptly the Funds'
Foreign Assets from such Mandatory Securities Depository in such event.
7. REPORTS AND OTHER INFORMATION.
A. ANNUAL REPORTS AND OTHER INFORMATION. AIM shall furnish annually to
the Boards of Directors/Trustees information regarding the factors
used in its system to monitor Mandatory Securities Depositories.
B. QUARTERLY REPORTS. AIM will submit to the Boards of
Directors/Trustees a quarterly report listing all newly approved
countries and all countries in which a Fund invested
<PAGE>
for the first time during the preceding quarter. Such report shall
include a revised Appendix 1 to the Foreign Custody and Country
Selection Procedures, if applicable, listing the approved countries.
AIM will submit to the Boards of Directors/Trustees a quarterly report
indicating changes to Mandatory Securities Depositories to the extent
such report is not provided by the Foreign Custody Manager.
C. OTHER REPORTS. AIM will notify the Boards of Directors/Trustees in
writing of any material change in the Mandatory Securities
Depositories for a Fund that has not been reported by the Foreign
Custody Manager promptly after the occurrence of the material change.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.
A I M ADVISORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
------------------------ -------------------------
Assistant Secretary Name:
Title:
(SEAL)
AIM ADVISOR FUNDS, INC. AIM SUMMIT FUND, INC.
AIM Advisor Flex Fund
AIM Advisor International Value Fund AIM INTERNATIONAL FUNDS, INC.
AIM Advisor Large Cap Value Fund AIM Asian Growth Fund
AIM Advisor MultiFlex Fund AIM European Development Fund
AIM Advisor Real Estate Fund AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM EQUITY FUNDS, INC. AIM Global Growth Fund
AIM Aggressive Growth Fund AIM Global Income Fund
AIM Blue Chip Fund
AIM Capital Development Fund AIM VARIABLE INSURANCE FUNDS, INC.
AIM Charter Fund AIM V.I. Aggressive Growth Fund
AIM Constellation Fund AIM V.I. Balanced Fund
AIM Weingarten Fund AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM FUNDS GROUP AIM V.I. Diversified Income Fund
AIM Balanced Fund AIM V.I. Global Utilities Fund
AIM Global Utilities Fund AIM V.I. Government Securities Fund
AIM High Yield Fund AIM V.I. Growth Fund
AIM Income Fund AIM V.I. Growth & Income Fund
AIM Money Market Fund AIM V.I. High Yield Fund
AIM Select Growth Fund AIM V.I. International Equity Fund
AIM Value Fund AIM V.I. Money Market Fund
AIM V.I. Value Fund
AIM SPECIAL OPPORTUNITIES FUNDS
AIM Small Cap Opportunities Fund
Attest: /s/ P. MICHELLE GRACE By: /s/ JOHN J. ARTHUR
------------------------ ---------------------------
Assistant Secretary Name: John J. Arthur
Title: Senior Vice President
(SEAL)
<PAGE>
EXHIBIT 6(a)
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM SPECIAL OPPORTUNITIES FUNDS
(CLASS A AND CLASS C SHARES)
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT is made this 24 day of June, 1998, by and between
AIM SPECIAL OPPORTUNITIES FUNDS, a Delaware business trust (the "Company"), with
respect to each of the Class A and Class C Shares (the "Shares") of each series
of shares of beneficial interest set forth in Appendix A to this agreement (the
"Portfolio") and A I M DISTRIBUTORS, INC., a Delaware corporation (the
"Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other good
and valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:
FIRST: The Company hereby appoints the Distributor as its exclusive agent
for the sale of shares of each series portfolio of the Company set forth in
Appendix A attached hereto amended from time to time (collectively, the "Funds"
and each separately a "Fund"), and any applicable classes thereof, to the public
directly and through investment dealers and financial institutions in the United
States and throughout the world in accordance with the terms of the Company's
current prospectus applicable to the Funds.
SECOND: The Company shall not sell any shares of a Fund except through the
Distributor and under the terms and conditions set forth in paragraph FOURTH
below. Notwithstanding the provisions of the foregoing sentence, however:
(A) the Company may issue shares of a Fund to any other investment company
or personal holding company, or to the shareholders thereof, in exchange for all
or a majority of the shares or assets of any such company; and
(B) the Company may issue shares of a Fund at their net asset value in
connection with certain classes of transactions or to certain categories of
persons, in accordance with Rule 22d-1 under the Investment Company Act of 1940,
as amended (the "1940 Act"), provided that any such category is specified in the
then current prospectus of the Funds.
THIRD: The Distributor hereby accepts appointment as exclusive agent for
the sale of the shares of the Funds and agrees that it will use its best efforts
to sell such shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on behalf of
each Fund shall, suspend its efforts to effectuate such sales at any time when,
in the opinion of the Distributor or of the Company, no sales should be made
because of market or other economic considerations or abnormal circumstances of
any kind; and
-1-
<PAGE>
(B) the Company may withdraw the offering of the shares of a Fund (i) at
any time with the consent of the Distributor, or (ii) without such consent when
so required by the provisions of any statute or of any order, rule or regulation
of any governmental body having jurisdiction. It is mutually understood and
agreed that the Distributor does not undertake to sell any specific amount of
the shares of a Fund. The Company shall have the right to specify minimum
amounts for initial and subsequent orders for the purchase of Fund shares.
FOURTH:
(A) The public offering price of the Class A shares of a Fund (the
"offering price") shall be the net asset value per share plus a sales charge, if
any. Net asset value per share shall be determined in accordance with the
provisions of the then current prospectus and statement of additional
information of the Funds. The sales charge shall be established by the
Distributor. The Distributor may establish a schedule of contingent deferred
sales charges to be imposed at the time of redemption of certain Class A shares
and such schedule of contingent deferred sales charges shall be disclosed in the
current prospectus or statement of additional information of each Fund. The
sales charge and contingent deferred sales charges may reflect scheduled
variations in, or the elimination of, sales charges on sales of a Fund's Class A
shares or contingent deferred sales charges on redemptions of a Fund's Class A
shares either generally to the public, or to any specified class of investors or
in connection with any specified class of transactions, in accordance with
Rule 22d-1 and as set forth in the then current prospectus and statement of
additional information of the Funds. The Distributor shall apply any scheduled
variation in, or elimination of, the selling commission or contingent deferred
sales charges uniformly to all offerees in the class specified.
The public offering price of the Class C shares shall be the net asset
value per share of the applicable Class C shares. Net asset value per shares
shall be determined in accordance with the provisions of the then current
prospectus and statement of additional information of the applicable Fund. The
Distributor may establish a schedule of contingent deferred sales charges to be
imposed at the time of redemption of the Shares, and such schedule shall be
disclosed in the current prospectus or statement of additional information of
each Fund. Such schedule of contingent deferred sales charges may reflect
variations in or waivers of such charges on redemptions of Class C shares,
either generally to the public or to any specified class of shareholders and/or
in connection with any specified class of transactions, in accordance with
applicable rules and regulations and exemptive relief granted by the Securities
and Exchange Commission, and as set forth in the Funds' current prospectus(es)
or statement(s) of additional information. The Distributor and the Company
shall apply any then applicable scheduled variation in or waiver of contingent
deferred sales charges uniformly to all shareholders and/or all transactions
belonging to a specified class.
(B) The Funds shall allow directly to investment dealers and other
financial institutions through whom Class A shares of each Fund are sold such
portion of the sales charge as may be payable to them and specified by the
Distributor up to but not exceeding the amount of the total sales charge. The
difference between any commissions so payable and the total sales charges
included in the offering price shall be paid to the Distributor.
(C) No provision of this Agreement shall be deemed to prohibit any
payments by a Fund to the Distributor or by a Fund or the Distributor to
investment dealers, financial institutions and 401(k)
-2-
<PAGE>
plan service providers where such payments are made under a distribution plan
adopted by the Company on behalf of each Fund pursuant to Rule 12b-1 under the
1940 Act.
(D) The Company shall redeem Shares from shareholders in accordance with
the terms set forth from time to time in the current prospectus and statement of
additional information of each Fund. The price to be paid to a shareholder to
redeem Shares shall be equal to the net asset value of Shares being redeemed,
less any applicable contingent deferred sales charge. The Distributor shall be
entitled to receive the amount of any applicable contingent deferred sales
charge that has been subtracted from gross redemption proceeds. The Company
shall pay or cause the Company's transfer agent to pay the applicable contingent
deferred sales charge to the Distributor on the date net redemption proceeds are
payable to the redeeming shareholder.
FIFTH: The Distributor shall act as agent of the Company on behalf of each
Fund in connection with the sale and repurchase of shares of a Fund. Except
with respect to such sales and repurchases, the Distributor shall act as
principal in all matters relating to the promotion or the sale of shares of the
Funds and shall enter into all of its own engagements, agreements and contracts
as principal on its own account. The Distributor shall enter into agreements
with investment dealers and financial institutions selected by the Distributor,
authorizing such investment dealers and financial institutions to offer and sell
shares of each Fund to the public upon the terms and conditions set forth
therein, which shall not be inconsistent with the provisions of this Agreement.
Each agreement shall provide that the investment dealer and financial
institution shall act as a principal, and not as an agent, of the Company on
behalf of the Funds. The Distributor or such investment dealers or financial
institutions will be deemed to have performed all services required to be
performed in order to be entitled to receive the asset based sales charge
portion of any amounts payable with respect to Class C shares to the Distributor
pursuant to a distribution plan adopted by the Company on behalf of each Fund
pursuant to Rule 12b-1 under the 1940 Act upon the settlement of each sale of a
Share (or share of another portfolio from which the Class C share derives).
SIXTH: The Funds shall bear:
(A) the expenses of qualification of shares of a Fund for sale in
connection with such public offerings in such states as shall be selected by the
Distributor, and of continuing the qualification therein until the Distributor
notifies the Company that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the final
proof and distributing the Funds' prospectuses and statements of additional
information (including supplements thereto) relating to public offerings made by
the Distributor pursuant to this Agreement (which shall not include those
prospectuses and statements of additional information, and supplements thereto,
to be distributed to shareholders of each Fund), and any other promotional or
sales literature used by the Distributor or furnished by the Distributor to
dealers in connection with such public offerings, and expenses of advertising in
connection with such public offerings.
-3-
<PAGE>
(B) The Distributor may be reimbursed for all or a portion of such
expenses, or may receive reasonable compensation for distribution related
services, to the extent permitted by a distribution plan adopted by the Company
on behalf of the Funds pursuant to Rule 12b-1 under the 1940 Act.
EIGHTH: The Distributor will accept orders for the purchase of shares of
each Fund only to the extent of purchase orders actually received and not in
excess of such orders, and it will not avail itself of any opportunity of making
a profit by expediting or withholding orders. It is mutually understood and
agreed that the Company may reject purchase orders where, in the judgment of the
Company, such rejection is in the best interest of the Company.
NINTH: The Company, on behalf of the Funds, and the Distributor shall each
comply with all applicable provisions of the 1940 Act, the Securities Act of
1933 and of all other federal and state laws, rules and regulations governing
the issuance and sale of shares of each Fund.
TENTH:
(A) In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of the
Distributor, the Company on behalf of the Funds agrees to indemnify the
Distributor against any and all claims, demands, liabilities and expenses which
the Distributor may incur under the Securities Act of 1933, or common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or prospectus of the
Funds, or any omission to state a material fact therein, the omission of which
makes any statement contained therein misleading, unless such statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Company or Fund in connection therewith by or on behalf of the
Distributor. The Distributor agrees to indemnify the Company and the Funds
against any and all claims, demands, liabilities and expenses which the Company
or the Funds may incur arising out of or based upon any act or deed of the
Distributor or its sales representatives which has not been authorized by the
Company or the Funds in its prospectus or in this Agreement.
(B) The Distributor agrees to indemnify the Company and the Funds against
any and all claims, demands, liabilities and expenses which the Company or the
Funds may incur under the Securities Act of 1933, or common law or otherwise,
arising out of or based upon any alleged untrue statement of a material fact
contained in any registration statement or prospectus of the Funds, or any
omission to state a material fact therein if such statement or omission was made
in reliance upon, and in conformity with, information furnished to the Company
or the Funds in connection therewith by or on behalf of the Distributor.
(C) Notwithstanding any other provision of this Agreement, the Distributor
shall not be liable for any errors of the Funds' transfer agent(s), or for any
failure of any such transfer agent to perform its duties.
ELEVENTH: Nothing herein contained shall require the Company to take any
action contrary to any provision of its Agreement and Declaration of Trust, as
amended, or to any applicable statute or regulation.
TWELFTH: This Agreement shall become effective as of the date hereof,
shall continue in force for an initial period of two years and shall continue in
force and effect from year to year
-4-
<PAGE>
thereafter, provided, that such continuance is specifically approved at least
annually (a)(i) by the Board of Trustees of the Company or (ii) by the vote of a
majority of the Funds' outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), and (b) by vote of a majority of the Company's
trustees who are not parties to this Agreement or "interested persons" (as
defined in Section 2(a)(19) of the 1940 Act) of any party to this Agreement cast
in person at a meeting called for such purpose.
THIRTEENTH:
(A) This Agreement may be terminated with respect to any Fund at any time,
without the payment of any penalty, by vote of the Board of Trustees of the
Company or by vote of a majority of the outstanding voting securities of the
applicable Fund, or by the Distributor, on sixty (60) days' written notice to
the other party.
(B) This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" having the meaning set forth in Section
2(a)(4) of the 1940 Act.
FOURTEENTH: Any notice under this Agreement shall be in writing, addressed
and delivered, or mailed postage prepaid, to the other party at such address as
the other party may designate for the receipt of notices. Until further notice
to the other party, it is agreed that the addresses of both the Company and the
Distributor shall be Eleven Greenway Plaza, Suite 100, Houston, Texas 77046.
FIFTEENTH: Notice is hereby given that, as provided by applicable law, the
obligations of or arising out of this Agreement are not binding upon any of the
shareholders of the Company individually, but are binding only upon the assets
and property of the Company and that the shareholders shall be entitled, to the
fullest extent permitted by applicable law, to the same limitation on personal
liability as stockholders of private corporations for profit.
SIXTEENTH: This Agreement shall be governed by and construed in accordance
with the laws (without reference to conflicts of law provisions) of the State of
Delaware.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate on the day and year first above written.
AIM SPECIAL OPPORTUNITIES FUNDS
By: /s/ ROBERT H. GRAHAM
-------------------------------------
Name: Robert H. Graham
Title: President
Attest:
/s/ NANCY L. MARTIN
- -----------------------------------
Name: Nancy L. Martin
Title: Assistant Secretary
A I M DISTRIBUTORS, INC.
By: /s/ MICHAEL J. CEMO
-------------------------------------
Name: Michael J. Cemo
Title: President
Attest:
/s/ NANCY L. MARTIN
- -----------------------------------
Name: Nancy L. Martin
Title: Assistant Secretary
-6-
<PAGE>
APPENDIX A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM SPECIAL OPPORTUNITIES FUNDS
CLASS A SHARES
- --------------
AIM Small Cap Opportunities Fund
Class A Shares
CLASS C SHARES
- --------------
AIM Small Cap Opportunities Fund
Class C Shares
-7-
<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 (the
"Shares") of the registered investment companies for which we now or in the
future act as underwriter, as disclosed in each Fund's prospectus, 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 (the "Sales Charge")), as determined in accordance with the
then effective prospectus or Statement of Additional Information used in
connection with the offer and sale of Shares (collectively, 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 in that Fund's
Prospectus 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 and/or periodic instruction from us. With respect to the
Funds, the Shares of which are indicated in that Fund's Prospectus as being
sold with a contingent deferred sales charge or early withdrawal charge (the
"CDSC Funds"), you will be paid a commission or concession as disclosed in
the CDSC Fund's Prospectus and/or periodic instructions from us. With
respect to the Funds whose Shares are indicated 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 term Dealer Commission means commissions or concessions
payable to you as disclosed in the Fund's Prospectuses and the terms "Sales
Charge" and "Dealer Commission" apply only to the Load Funds and the CDSC
Funds. All Dealer Commissions 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 or where
applicable, through tender offers. 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.
5/98
<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 Commission
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 Dealer Commission plus interest thereon.
9 You and we agree to abide by the Conduct Rules 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 Dealer Commission 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.
5/98
<PAGE>
3
16 We will supply you with copies of the Prospectuses 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 within the time dictated by
regulatory requirements, as they may be amended from time to time.
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
5/98
<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 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 for which we now or in the future act as
underwriter, as disclosed in each Fund's prospectus, 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 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 or Statement of Additional Information, (collectively, the
"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 in the Fund's Prospectus 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 and/or periodic instructions
from us. 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 or
early withdrawal 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.
5/98
<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
5/98
<PAGE>
EXHIBIT 6(d)
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM SPECIAL OPPORTUNITIES FUNDS
(CLASS B SHARES)
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT made as of this 12th day of May, 1998, by and between
AIM Special Opportunities Funds, a Delaware business trust (the "Company"), with
respect to each of the Class B shares (the "Shares") of each series of shares of
common stock set forth on Schedule A to this agreement (the "Portfolios"), and
A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other good
and valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:
FIRST: The Company hereby appoints the Distributor as its exclusive agent
for the sale of the Shares to the public directly and through investment dealers
in the United States and throughout the world. If subsequent to the termination
of the Distributor's services to the Company pursuant to this Agreement, the
Company retains the services of another distributor, the distribution agreement
with such distributor shall contain provisions comparable to Clauses FOURTH and
SEVENTH hereof and Exhibit A hereto, and without limiting the generality of the
foregoing, will require such distributor to maintain and make available to the
Distributor records regarding sales, redemptions and reinvestments of Shares
necessary to implement the terms of Clauses FOURTH, SEVENTH and EIGHTH hereof.
SECOND: The Company shall not sell any Shares except through the
Distributor and under the terms and conditions set forth in paragraph FOURTH
below. Notwithstanding the provisions of the foregoing sentence, however:
(A) the Company may issue Shares to any other investment company or
personal holding company, or to the shareholders thereof, in exchange for all or
a majority of the shares or assets of any such company;
(B) the Company may issue Shares at their net asset value in connection
with certain classes of transactions or to certain classes of persons, in
accordance with Rule 22d-1 under the Investment Company Act of 1940, as amended
(the "1940 Act"), provided that any such class is specified in the then current
prospectus of the applicable Shares; and
<PAGE>
(C) the Company shall have the right to specify minimum amounts for
initial and subsequent orders for the purchase of Shares.
THIRD: The Distributor hereby accepts appointment as exclusive agent for
the sale of the Shares and agrees that it will use its best efforts to sell such
Shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on behalf of
the Shares shall, suspend its efforts to effectuate such sales at any time when,
in the opinion of the Distributor or of the Company, no sales should be made
because of market or other economic considerations or abnormal circumstances of
any kind;
(B) the Company may withdraw the offering of the Shares (i) at any time
with the consent of the Distributor, or (ii) without such consent when so
required by the provisions of any statute or of any order, rule or regulation of
any governmental body having jurisdiction; and
(C) the Distributor, as agent, does not undertake to sell any specific
amount of the Shares.
FOURTH:
(A) The public offering price of the Shares shall be the net asset value
per share of the applicable Shares. Net asset value per share shall be
determined in accordance with the provisions of the then current prospectus and
statement of additional information of the applicable Portfolio. The
Distributor may establish a schedule of contingent deferred sales charges to be
imposed at the time of redemption of the Shares, and such schedule shall be
disclosed in the current prospectus or statement of additional information of
each Portfolio. Such schedule of contingent deferred sales charges may reflect
variations in or waivers of such charges on redemptions of Shares, either
generally to the public or to any specified class of shareholders and/or in
connection with any specified class of transactions, in accordance with
applicable rules and regulations and exemptive relief granted by the Securities
and Exchange Commission, and as set forth in the Portfolios' current
prospectus(es) or statement(s) of additional information. The Distributor and
the Company shall apply any then applicable scheduled variation in or waiver of
contingent deferred sales charges uniformly to all shareholders and/or all
transactions belonging to a specified class.
(B) The Distributor may pay to investment dealers and other financial
institutions through whom Shares are sold, such sales commission as the
Distributor may specify from time to time. Payment of any such sales
commissions shall be the sole obligation of the Distributor.
(C) No provision of this Agreement shall be deemed to prohibit any
payments by the Company to the Distributor or by the Company or the Distributor
to investment dealers, financial institutions and 401(k) plan service providers
where such payments are made under a distribution plan adopted by the Company
pursuant to Rule 12b-1 under the 1940 Act.
(D) The Company shall redeem the Shares from shareholders in accordance
with the terms set forth from time to time in the current prospectus and
statement of additional information of each Portfolio. The price to be paid to
a shareholder to redeem the Shares shall be equal to the net asset value of the
Shares being redeemed ("gross redemption proceeds"), less any applicable
contingent deferred sales charge, calculated pursuant to the then applicable
schedule of contingent deferred sales charges ("net redemption proceeds"). The
Distributor shall be entitled to receive the
2
<PAGE>
amount of the contingent deferred sales charge that has been subtracted from
gross redemption proceeds (the "CDSC"), provided that the Shares being redeemed
were (i) issued by a Portfolio during the term of this Agreement and any
predecessor Agreement between the Company and the Distributor or (ii) issued by
a Portfolio during or after the term of this Agreement or any predecessor
Agreement between the Company and the Distributor in one or a series of free
exchanges of Shares for class B shares of another portfolio, which can be traced
to Shares or class B shares of another portfolio initially issued by a Portfolio
or such other portfolio during the term of this Agreement, any predecessor
Agreement or any other distribution agreement with the Distributor with respect
to such other portfolio (the "Distributor's Earned CDSC"). The Company shall
pay or cause the Company's transfer agent to pay the Distributor's Earned CDSC
to the Distributor on the date net redemption proceeds are payable to the
redeeming shareholder.
(E) The Distributor shall maintain adequate books and records to identify
Shares (i) issued by a Portfolio during the term of this Agreement and any
predecessor Agreement between the Company and the Distributor or (ii) issued by
a Portfolio during or after the term of this Agreement or any predecessor
Agreement between the Company and the Distributor in one or a series of free
exchanges of Shares for class B shares of another portfolio, which can be traced
to Shares or class B shares of another portfolio initially issued by a Portfolio
or such other portfolio during the term of this Agreement, any predecessor
Agreement or any other distribution agreement with the Distributor with respect
to such other portfolio and shall calculate the Distributor's Earned CDSC, if
any, with respect to such Shares, upon their redemption. The Company shall be
entitled to rely on Distributor's books, records and calculations with respect
to Distributor's Earned CDSC.
FIFTH: The Distributor shall act as an agent of the Company in connection
with the sale and redemption of Shares. Except with respect to such sales and
redemptions, the Distributor shall act as principal in all matters relating to
the promotion of the sale of Shares and shall enter into all of its own
engagements, agreements and contracts as principal on its own account. The
Distributor shall enter into agreements with investment dealers and financial
institutions selected by the Distributor, authorizing such investment dealers
and financial institutions to offer and sell the Shares to the public upon the
terms and conditions set forth therein, which shall not be inconsistent with the
provisions of this Agreement. Each agreement shall provide that the investment
dealer or financial institution shall act as a principal, and not as an agent,
of the Company.
SIXTH: The Shares shall bear:
(A) the expenses of qualification of Shares for sale in connection with
such public offerings in such states as shall be selected by the Distributor,
and of continuing the qualification therein until the Distributor notifies the
Company that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the final
proof and distributing the prospectuses and statements of additional information
for the Shares (including supplements thereto) relating to public offerings made
by the Company pursuant to such prospectuses (which shall not include those
prospectuses and statements of additional information, and supplements thereto,
to be distributed to existing shareholders of the Shares), and any other
promotional or sales
3
<PAGE>
literature used by the Distributor or furnished by the Distributor to dealers in
connection with such public offerings, and expenses of advertising in connection
with such public offerings.
(B) Subject to the limitations, if any, of applicable law including the
NASD Conduct Rules (formerly, the NASD Rules of Fair Practice) regarding
asset-based sales charges, the Company shall pay to the Distributor as a
reimbursement for all or a portion of such expenses, or as reasonable
compensation for distribution of the Shares, an asset-based sales charge in an
amount equal to 0.75% per annum of the average daily net asset value of the
Shares of each Portfolio from time to time (the "Distributor's 12b-1 Share"),
such sales charge to be payable pursuant to the distribution plan adopted
pursuant to Rule 12b-1 under the 1940 Act (the "Plan"). The Distributor will be
deemed to have performed all services required to be performed in order to be
entitled to receive the Distributor's 12b-1 Share with respect to Shares upon
the settlement of each sale of a Share (or share of another portfolio from which
the Share derives) taken into account in determining such Distributor's 12b-1
Share (including other shares that derive from such Share). The Distributor's
12b-1 Share shall be a percentage, which shall be recomputed periodically (but
not less than monthly) in accordance with Exhibit A to this Agreement. The
Distributor's 12b-1 Share shall accrue daily and be paid to the Distributor as
soon as practicable after the end of each calendar month within which it accrues
but in any event within 10 business days after the end of each such calendar
month (unless the Distributor shall specify a later date in written instructions
to the Company) provided, however, that any notices and calculation required by
Section EIGHTH: (B) and (C) have been received by the Company.
(C) The Distributor shall maintain adequate books and records to permit
calculations periodically (but not less than monthly) of, and shall calculate on
a monthly basis, the Distributor's 12b-1 Share to be paid to the Distributor.
The Company shall be entitled to rely on Distributor's books, records and
calculations relating to Distributor's 12b-1 Share.
EIGHTH:
(A) The Distributor may, from time to time, assign, transfer or pledge
("Transfer") to one or more designees (each an "Assignee"), its rights to all or
a designated portion of (i) the Distributor's 12b-1 Share (but not the
Distributor's duties and obligations pursuant hereto or pursuant to the Plan),
and (ii) the Distributor's Earned CDSC, free and clear of any offsets or claims
the Company may have against the Distributor. Each such Assignee's ownership
interest in a Transfer of a designated portion of a Distributor's 12b-1 Share
and a Distributor's Earned CDSC is hereinafter referred to as an "Assignee's
12b-1 Portion" and an "Assignee's CDSC Portion," respectively. A Transfer
pursuant to this Section EIGHTH: (A) shall not reduce or extinguish any claim of
the Company against the Distributor.
(B) The Distributor shall promptly notify the Company in writing of each
Transfer pursuant to Section EIGHTH: (A) by providing the Company with the name
and address of each such Assignee.
(C) The Distributor may direct the Company to pay directly to an Assignee
such Assignee's 12b-1 Portion and Assignee's CDSC Portion. In such event,
Distributor shall provide the Company with a monthly calculation of (i) the
Distributor's Earned CDSC and Distributor's 12b-1 Share and (ii) each Assignee's
12b-1 Portion and Assignee's CDSC Portion, if any, for such month (the "Monthly
Calculation"). The Monthly Calculation shall be provided to the Company by the
Distributor promptly after the close of each month or such other time as agreed
to by the Company
4
<PAGE>
and the Distributor which allows timely payment of the Distributor's 12b-1 Share
and Distributor's Earned CDSC and/or the Assignee's 12b-1 Portion and Assignee's
CDSC Portion. The Company shall not be liable for any interest on such payments
occasioned by delayed delivery of the Monthly Calculation by the Distributor.
In such event following receipt from the Distributor of (i) notice of Transfer
referred to in Section EIGHTH: (B) and (ii) each Monthly Calculation, the
Company shall make all payments directly to the Assignee or Assignees in
accordance with the information provided in such notice and Monthly Calculation,
on the same terms and conditions as if such payments were to be paid directly to
the Distributor. The Company shall be entitled to rely on Distributor's
notices, and Monthly Calculations in respect of amounts to be paid pursuant to
this Section EIGHTH: (B).
(D) Alternatively, in connection with a Transfer the Distributor may
direct the Company to pay all of such Distributor's 12b-1 Share and
Distributor's Earned CDSC from time to time to a depository or collection agent
designated by any Assignee, which depository or collection agent may be
delegated the duty of dividing such Distributor's 12b-1 Share and Distributor's
Earned CDSC between the Assignee's 12b-1 Portion and Assignee's CDSC Portion and
the balance of the Distributor's 12b-1 Share (such balance, when distributed to
the Distributor by the depository or collection agent, the "Distributor's 12b-1
Portion") and of the Distributor's Earned CDSC (such balance, when distributed
to the Distributor by the depository or collection agent, the "Distributor's
Earned CDSC Portion"), in which case only the Distributor's 12b-1 Portion and
Distributor's Earned CDSC Portion may be subject to offsets or claims the
Company may have against the Distributor.
(E) The Company shall not amend the Plan to reduce the amount payable to
the Distributor or any Assignee under Section SEVENTH: (B) hereof with respect
to the Shares for any Shares which have been issued prior to the date of such
amendment.
NINTH: The Distributor will accept orders for the purchase of Shares only
to the extent of purchase orders actually received and not in excess of such
orders, and it will not avail itself of any opportunity of making a profit by
expediting or withholding orders.
TENTH:
(A) Pursuant to the Plan and this Agreement, the Distributor, as agent,
shall enter into Shareholder Service Agreements with investment dealers,
financial institutions and certain 401(K) plan service providers (collectively
"Service Providers") selected by the Distributor for the provision of certain
continuing personal services to customers of such Service Providers who have
purchased Shares. Such agreements shall authorize Service Providers to provide
continuing personal shareholder services to their customers upon the terms and
conditions set forth therein, which shall not be inconsistent with the
provisions of this Agreement. Each Shareholder Service Agreement shall provide
that the Service Provider shall act as principal, and not as an agent of the
Company.
(B) Shareholder Service Agreements may provide that the Service Providers
may receive a service fee in the amount of .25% of the average daily net assets
of the Shares held by customers of such Service Providers provided that such
Service Providers furnish continuing personal shareholder services to their
customers in respect of such Shares. The continuing personal services to be
rendered by Service Providers under the Shareholder Service Agreements may
include, but shall not be limited to, some or all of the following:
distributing sales literature; answering routine customer inquiries concerning
the Company; assisting customers in changing dividend elections, options,
account designations and addresses, and in enrolling in any of several
5
<PAGE>
special investment plans offered in connection with the purchase of Shares;
assisting in the establishment and maintenance of or establishing and
maintaining customer accounts and records and the processing of purchase and
redemption transactions; performing subaccounting; investing dividends and any
capital gains distributions automatically in the Company's shares; providing
periodic statements showing a customer's account balance and the integration of
such statements with those of other transactions and balances in the customer's
account serviced by the Service Provider; forwarding applicable prospectus,
proxy statements, reports and notices to customers who hold Shares and providing
such other information and services as the Company or the customers may
reasonably request.
(C) The Distributor may advance service fees payable to Service Providers
pursuant to the Plan or any other distribution plan adopted by the Company with
respect to Shares of one or more of the Portfolios pursuant to Rule 12b-1 under
the 1940 Act; and thereafter the Distributor may be reimbursed for such advances
through retention of service fee payments during the period for which the
service fees were advanced.
ELEVENTH: The Company and the Distributor shall each comply with all
applicable provisions of the 1940 Act, the Securities Act of 1933, as amended,
and of all other federal and state laws, rules and regulations governing the
issuance and sale of the Shares.
TWELFTH:
(A) In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of the
Distributor, the Company shall indemnify the Distributor against any and all
claims, demands, liabilities and expenses which the Distributor may incur under
the Securities Act of 1933, or common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in any
registration statement or prospectus of the Shares, or any omission to state a
material fact therein, the omission of which makes any statement contained
therein misleading, unless such statement or omission was made in reliance upon,
and in conformity with, information furnished to the Company in connection
therewith by or on behalf of the Distributor. The Distributor shall indemnify
the Company and the Shares against any and all claims, demands, liabilities and
expenses which the Company or the Shares may incur arising out of or based upon
(i) any act or deed of the Distributor or its sales representatives which has
not been authorized by the Company in its prospectus or in this Agreement and
(ii) the Company's reliance on the Distributor's books, records, calculations
and notices in Sections FOURTH: (E), SEVENTH: (C), EIGHTH: (B), EIGHTH: (C) and
EIGHTH: (D).
(B) The Distributor shall indemnify the Company and the Shares against any
and all claims, demands, liabilities and expenses which the Company or the
Shares may incur under the Securities Act of 1933, as amended, or common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or prospectus of the
Shares, or any omission to state a material fact therein if such statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Company in connection therewith by or on behalf of the
Distributor.
(C) Notwithstanding any other provision of this Agreement, the Distributor
shall not be liable for any errors of the transfer agent(s) of the Shares, or
for any failure of any such transfer agent to perform its duties.
6
<PAGE>
THIRTEENTH: Nothing herein contained shall require the Company to take any
action contrary to any provision of its Agreement and Declaration of Trust, as
amended, or to any applicable statute or regulation.
FOURTEENTH: This Agreement shall become effective with respect to the
Shares of each Portfolio upon its approval by the Board of Trustees of the
Company and by vote of a majority of the Company's trustees who are not
interested parties to this Agreement or "interested persons" (as defined in
Section 2(a)(19) of the 1940 Act) of any party to this Agreement cast in person
at a meeting called for such purpose, shall continue in force and effect until
May 12, 2000, and from year to year thereafter, provided, that such continuance
is specifically approved with respect to the Shares of each Portfolio at least
annually (a)(i) by the Board of Trustees of the Company or (ii) by the vote of a
majority of the outstanding Shares of such class of such Portfolio, and (b) by
vote of a majority of the Company's trustees who are not parties to this
Agreement or "interested persons" (as defined in Section 2(a)(19) of the 1940
Act) of any party to this Agreement cast in person at a meeting called for such
purpose.
FIFTEENTH:
(A) This Agreement may be terminated with respect to the Shares of any
Portfolio, at any time, without the payment of any penalty, by vote of the Board
of Trustees of the Company or by vote of a majority of the outstanding Shares of
such Portfolio, or by the Distributor, on sixty (60) days' written notice to the
other party; and
(B) This Agreement shall also automatically terminate in the event of its
assignment, the term "assignment" having the meaning set forth in Section
2(a)(4) of the 1940 Act; PROVIDED, that, subject to the provisions of the
following sentence, if this Agreement is terminated for any reason, the
obligations of the Company and the Distributor pursuant to Sections FOURTH: (D),
FOURTH: (E), SEVENTH: (B), SEVENTH: (C), EIGHTH: (A) through (E) and
TWELFTH: (A) of this Agreement will continue and survive any such termination.
Notwithstanding the foregoing, upon Complete Termination of the Plan (as such
term is defined in Section 8 of the Plan in effect at the date of this
Agreement), the obligations of the Company pursuant to the terms of Sections
SEVENTH: (B), EIGHTH: (A), EIGHTH: (C), EIGHTH: (D) and EIGHTH: (E) (with
respect to payments of Distributor's 12b-1 Share and Assignee's 12b-1 Portion)
of this Agreement shall terminate. A termination of the Plan with respect to
any or all Shares of any or all Portfolios shall not affect the obligations of
the Company pursuant to Sections FOURTH: (D), EIGHTH: (A), EIGHTH: (C), EIGHTH:
(D) and EIGHTH: (E) (with respect to payments of Distributor's Earned CDSC or
Assignee's CDSC Portion) hereof or of the obligations of the Distributor
pursuant to Section FOURTH: (E) or EIGHTH: (B) hereof.
(C) The Transfer of the Distributor's rights to Distributor's 12b-1 Share
or Distributor's Earned CDSC shall not cause a termination of this Agreement or
be deemed to be an assignment for purposes of Section FIFTEENTH: (B) above.
SIXTEENTH: Any notice under this Agreement shall be in writing, addressed
and delivered, or mailed postage prepaid, to the other party at such address as
the other party may designate for the receipt of notices. Until further notice
to the other party, the addresses of both the Company and the Distributor shall
be 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
7
<PAGE>
SEVENTEENTH: Notice is hereby given that, as provided by applicable law,
the obligations of or arising out of this Agreement are not binding upon any of
the shareholders of the Company or any Portfolio individually, but are binding
only upon the assets and property of the Company or such Portfolio and that the
shareholders shall be entitled, to the fullest extent permitted by applicable
law, to the same limitation on personal liability as stockholders of private
corporations for profit.
EIGHTEENTH: This Agreement shall be governed by and construed in accordance
with the laws (without reference to conflicts of law provisions) of the State of
Delaware.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate on the day and year first above written.
AIM SPECIAL OPPORTUNITIES FUNDS
By: /s/ ROBERT H. GRAHAM
--------------------------------
Name: Robert H. Graham
Title: President
Attest:
/s/ NANCY L. MARTIN
- ---------------------------------
Name: Nancy L. Martin
Title: Asst. Secretary
A I M DISTRIBUTORS, INC.
By: /s/ MICHAEL J. CEMO
--------------------------------
Name: Michael J. Cemo
Title: President
Attest:
/s/ NANCY L. MARTIN
- ---------------------------------
Name: Nancy L. Martin
Title: Asst. Secretary
8
<PAGE>
SCHEDULE A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM SPECIAL OPPORTUNITIES FUNDS
CLASS B SHARES
AIM Small Cap Opportunities Fund
9
<PAGE>
EXHIBIT A
The Distributor's 12b-1 Share in respect of each Portfolio shall be
100 percent until such time as the Distributor shall cease to serve as exclusive
distributor of the Shares of such Portfolio and thereafter shall be a
percentage, recomputed first on the date of any termination of the Distributor's
services as exclusive distributor of Shares of any Portfolio and thereafter
periodically (but not less than monthly), representing the percentage of Shares
of such Portfolio outstanding on each such computation date allocated to the
Distributor in accordance with the following rules:
1. DEFINITIONS. For purposes of this Exhibit A defined terms used
herein shall have the meaning assigned to such terms in the Distribution
Agreement and the following terms shall have the following meanings:
"COMMISSION SHARES" shall mean shares of the Portfolio or another
portfolio the redemption of which would, in the absence of the application of
some standard waiver provision, give rise to the payment of a CDSC and shall
include Commission Shares which due to the expiration of the CDSC period no
longer bear a CDSC.
"DISTRIBUTOR" shall mean the Distributor.
"OTHER DISTRIBUTOR" shall mean each person appointed as the
exclusive distributor for the Shares of the Portfolio after the Distributor
ceases to serve in that capacity.
2. ALLOCATION RULES. In determining the Distributor's 12b-1 Share
in respect of a particular Portfolio:
(a) There shall be allocated to the Distributor and each Other
Distributor all Commission Shares of such Portfolio which were sold while such
Distributor or such Other Distributor, as the case may be, was the exclusive
distributor for the Shares of the Portfolio, determined in accordance with the
transfer records maintained for such Portfolio.
(b) REINVESTED SHARES: On the date that any Shares are issued
by a Portfolio as a result of the reinvestment of dividends or other
distributions, whether ordinary income, capital gains or exempt-interest
dividend or distributions ("Reinvested Shares"), Reinvested Shares shall be
allocated to the Distributor and each Other Distributor in a number obtained by
multiplying the total number of Reinvested Shares issued on such date by a
fraction, the numerator of which is the total number of all Shares outstanding
in such Fund as of the opening of business on such date and allocated to the
Distributor or Other Distributor as of such date of determination pursuant to
these allocation procedures and the denominator is the total number of Shares
outstanding as of the opening of business on such date.
(c) EXCHANGE SHARES: There shall be allocated to the
Distributor and each Other Distributor, as the case may be, all Commission
Shares of such Portfolio which were issued during or after the period referred
to in (a) as a consequence of one or more free exchanges of Commission Shares of
the Portfolio or of another portfolio (other than Free Appreciation Shares) (the
"Exchange Shares"), which in accordance with the transfer records maintained for
such Portfolio can be traced to Commission Shares of the Portfolio or another
portfolio initially issued by
A-1
<PAGE>
the Company or such other portfolio during the time the Distributor or such
Other Distributor, as the case may be, was the exclusive distributor for the
Shares of the Portfolio or such other portfolio.
(d) FREE APPRECIATION SHARES: Shares (other than Exchange
Shares) that were acquired by the holders of such Shares in a free exchange of
Shares of any other Portfolio, which represent the appreciated value of the
Shares of the exiting portfolio over the initial purchase price paid for the
Shares being redeemed and exchanged and for which the original purchase date and
the original purchase price are not identified on an on-going basis, shall be
allocated to the Distributor and each Other Distributor ("Free Appreciation
Shares") daily in a number obtained by multiplying the total number of Free
Appreciation Shares issued by the exiting portfolio on such date by a fraction,
the numerator of which is the total number of all Shares outstanding as of the
opening of business on such date allocated to the Distributor or such Other
Distributor as of such date of determination pursuant to these allocation
procedures and the denominator is the total number of Shares outstanding as of
the opening of business on such date.
(e) REDEEMED SHARES: Shares (other than Reinvested Shares and
Free Appreciation Shares) that are redeemed will be allocated to the Distributor
and each Other Distributor to the extent such Share was previously allocated to
the Distributor or such Other Distributor in accordance with the rules set forth
in 2(a) or (c) above. Reinvested Shares and Free Appreciation Shares that are
redeemed will be allocated to the Distributor and each Other Distributor daily
in an amount equal to the number of Free Appreciation Shares and Reinvested
Shares of such Portfolio being redeemed on such date, which amount is obtained
by multiplying the total number of Free Appreciation Shares and Reinvested
Shares being redeemed by such Portfolio on such date by a fraction, the
numerator of which is the total number of all Free Appreciation Shares and
Reinvested Shares of such Portfolio outstanding as of the opening of business on
such date and the denominator is the total number of Free Appreciation Shares
and Reinvested Shares of such Portfolio outstanding as of the opening of
business on such date.
The Fund shall use its best efforts to assure that the transfer agents and
sub-transfer agents for each Portfolio maintain the data necessary to implement
the foregoing rules. If, notwithstanding the foregoing, the transfer agents or
sub-transfer agents for such Portfolio are unable to maintain the data necessary
to implement the foregoing rules as written, and if the Distributor shall cease
to serve as exclusive distributor of the Shares of the Portfolio, the
Distributor and the Portfolio agree to negotiate in good faith with each other,
with the transfer agents and sub-transfer agents for such Portfolio and with any
third party that has obtained an interest in the Distributor's 12b-1 Share in
respect of such Portfolio with a view to arriving at mutually satisfactory
modifications to the foregoing rules designed to accomplish substantially
identical results on the basis of data which can be made available.
A-2
<PAGE>
EXHIBIT 8(a)(1)
CUSTODIAN CONTRACT
This Contract between AIM Special Opportunities Funds, a business trust
organized and existing under the laws of Delaware, having its principal place
of business at 11 Greenway Plaza, Suite 100, Houston, Texas 77046,
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in one series, the
AIM Small Cap Opportunities Fund (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with paragraph 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United
States ("domestic securities") and securities it desires to be held outside
the United States ("foreign securities") pursuant to the provisions of the
Agreement and Declaration of Trust. The Fund on behalf of the Portfolio(s)
agrees to deliver to the Custodian all securities and cash of the Portfolios,
and all payments of income, payments of principal or capital distributions
received by it with respect to all securities owned by the Portfolio(s) from
time to time, and the cash consideration received by it for such new or
treasury shares of capital stock of the Fund representing interests in the
Portfolios, ("Shares") as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of a Portfolio held or
received by the Portfolio and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, located in the United States but only
in accordance with an applicable vote by the Board of Trustees of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of
any actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as
sub-custodian for the Fund's foreign securities on behalf of the applicable
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedule A hereto but only in accordance with the
provisions of Article 3.
<PAGE>
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY THE
CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, to be held by it in
the United States including all domestic securities owned by such Portfolio,
other than (a) securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury and certain
federal agencies (each, a "U.S. Securities System") and (b) commercial
paper of an issuer for which State Street Bank and Trust Company acts as
issuing and paying agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian (the "Direct Paper
System") pursuant to Section 2.11.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System Account")
only upon receipt of Proper Instructions from the Fund on behalf of the
applicable Portfolio, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System,
in accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided that,
in any such case, the cash or other consideration is to be delivered to
the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Portfolio or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
PROVIDED that, in any such case, the new securities are to be
delivered to the Custodian;
2
<PAGE>
7) Upon the sale of such securities for the account of the Portfolio, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that in any
such case, the Custodian shall have no responsibility or liability
for any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from the
Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such case,
the new securities and cash, if any, are to be delivered to the
Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, BUT ONLY against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund on behalf of
the Portfolio, which may be in the form of cash or obligations
issued by the United States government, its agencies or
instrumentalities, except that in connection with any loans for
which collateral is to be credited on the Custodian's account in the
book-entry system authorized by the U.S. Department of the Treasury,
the Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the receipt
of such collateral;
11) For delivery as security in connection with any borrowings by the
Fund on behalf of the Portfolio requiring a pledge of assets by the
Fund on behalf of the Portfolio, BUT ONLY against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934
(the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian, and a
Futures Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the
3
<PAGE>
rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by the
Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may
be described from time to time in the currently effective
prospectus and statement of additional information of the Fund,
related to the Portfolio ("Prospectus"), in satisfaction of
requests by holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, BUT ONLY upon receipt of,
in addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board
of Trustees or of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Portfolio to be delivered, setting
forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the
person or persons to whom delivery of such securities shall be
made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, UNLESS the Fund has authorized in
writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment Advisor as
the Portfolio, or in the name or nominee name of any agent appointed
pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian on behalf of the Portfolio under the terms of this
Contract shall be in "street name" or other good delivery form. If,
however, the Fund directs the Custodian to maintain securities in
"street name", the Custodian shall utilize its best efforts only to
timely collect income due the Fund on such securities and to notify the
Fund on a best efforts basis only of relevant corporate actions
including, without limitation, pendency of calls, maturities, tender or
exchange offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio
of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained by
the Portfolio in a bank account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for a Portfolio may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; PROVIDED, however, that
4
<PAGE>
every such bank or trust company shall be qualified to act as a
custodian under the Investment Company Act of 1940 and that each such
bank or trust company and the funds to be deposited with each such bank
or trust company shall on behalf of each applicable Portfolio be
approved by vote of a majority of the Board of Trustees of the Fund.
Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that
capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the Fund on behalf
of a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares of such
Portfolio which are deposited into the Portfolio's account.
2.6 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which
each Portfolio shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely basis all income
and other payments with respect to bearer domestic securities if, on
the date of payment by the issuer, such securities are held by the
Custodian or its agent thereof and shall credit such income, as collected,
to such Portfolio's custodian account. Without limiting the generality of
the foregoing, the Custodian shall detach and present for payment all
coupons and other income items requiring presentation as and when they
become due and shall collect interest when due on securities held
hereunder. Income due each Portfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the Fund.
The Custodian will have no duty or responsibility in connection therewith,
other than to provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the
Portfolio but only (a) against the delivery of such securities or
evidence of title to such options, futures contracts or options on
futures contracts to the Custodian (or any bank, banking firm or
trust company doing business in the United States or abroad which
is qualified under the Investment Company Act of 1940, as amended,
to act as a custodian and has been designated by the Custodian as
its agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian referred to
in Section 2.3 hereof or in proper form for transfer; (b) in the
case of a purchase effected through a U.S. Securities System, in
accordance with the conditions set forth in Section 2.10 hereof;
(c) in the case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.11; (d) in
the case of
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repurchase agreements entered into between the Fund on behalf of the
Portfolio and the Custodian, or another bank, or a broker-dealer
which is a member of NASD, (i) against delivery of the securities
either in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such securities
or (ii) against delivery of the receipt evidencing purchase by the
Portfolio of securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase such
securities from the Portfolio or (e) for transfer to a time deposit
account of the Fund in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation from a
broker and/or the applicable bank pursuant to Proper Instructions
from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio as
set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for
the account of the Portfolio: interest, taxes, management, accounting,
transfer agent and legal fees, and operating expenses of the Fund
whether or not such expenses are to be in whole or part capitalized
or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio declared
pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of, in addition
to Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Trustees or of the
Executive Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written instructions
from the Fund on behalf of such Portfolio to so pay in advance, the
Custodian shall be absolutely liable to the Fund for such securities to
the same extent as if the securities had been received by the Custodian.
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2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; PROVIDED, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.
2.10 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "U.S. Securities System" in
accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and subject to the
following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in
an account ("Account") of the Custodian in the U.S. Securities
System which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Portfolio.
The Custodian shall transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the U.S. Securities
System that payment for such securities has been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of
the Portfolio. Copies of all advices from the U.S. Securities System
of transfers of securities for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request. Upon request,
the Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio in the form of a written advice or notice and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Portfolio.
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4) The Custodian shall provide the Fund for the Portfolio with any
report obtained by the Custodian on the U.S. Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting from
use of the U.S. Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents or
of any of its or their employees or from failure of the Custodian
or any such agent to enforce effectively such rights as it may have
against the U.S. Securities System; at the election of the Fund, it
shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of any
such loss or damage if and to the extent that the Portfolio has not
been made whole for any such loss or damage.
2.11 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The Custodian
may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions from the
Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct
Paper System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the
account of the Portfolio. The Custodian shall transfer securities
sold for the account of the Portfolio upon the making of an entry
on the records of the Custodian to reflect such transfer and
receipt of payment for the account of the Portfolio;
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5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio, in the form of a written advice or notice, of Direct
Paper on the next business day following such transfer and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transaction in the U.S.
Securities System for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio
with any report on its system of internal accounting control as the
Fund may reasonably request from time to time.
2.12 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may
be transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to Section 2.10
hereof, (i) in accordance with the provisions of any agreement among the
Fund on behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market),
or of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the Portfolio,
(ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Portfolio or
commodity futures contracts or options thereon purchased or sold by the
Portfolio, (iii) for the purposes of compliance by the Portfolio with
the procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, BUT ONLY, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board of
Trustees or of the Executive Committee signed by an officer of the Fund
and certified by the Secretary or an Assistant Secretary, setting forth
the purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Portfolio held by
it and in connection with transfers of securities.
2.14 PROXIES. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are to be voted,
and shall
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promptly deliver to the Portfolio such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.15 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the
provision of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without
limitation, pendency of calls and maturities of domestic securities
and expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund on behalf of the
Portfolio and the maturity of futures contracts purchased or sold by
the Portfolio) received by the Custodian from issuers of the
securities being held for the Portfolio. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the
Portfolio all written information received by the Custodian from
issuers of the securities whose tender or exchange is sought and from
the party (or his agents) making the tender or exchange offer. If the
Portfolio desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the Portfolio shall
notify the Custodian at least three business days prior to the date on
which the Custodian is to take such action.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
OUTSIDE OF THE UNITED STATES
3.1 APPOINTMENTS OF FOREIGN SUB-CUSTODIANS. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the
Portfolio's securities and other assets maintained outside the United
States the foreign banking institutions and foreign securities
depositaries designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as defined in
Section 5 of this Contract, together with a certified resolution of
the Fund's Board of Trustees, the Custodian and the Fund may agree to
amend Schedule A hereto from time to time to designate additional
foreign banking institutions and foreign securities depositories to
act as sub-custodian. Upon receipt of Proper Instructions, the Fund
may instruct the Custodian to cease the employment of any one or more
such sub-custodians for maintaining custody of the Portfolio's assets.
3.2 ASSETS TO BE HELD. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5
under the Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Fund may determine
to be reasonably necessary to effect the Portfolio's foreign
securities transactions. The Custodian shall identify on its books as
belonging to the Fund, the foreign securities of the Fund held by each
foreign sub-custodian.
3.3 FOREIGN SECURITIES SYSTEM. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolios shall
be maintained in a clearing agency which acts as a securities
depository or in a book-entry system for the central handling of
securities located outside of the United States (each a "Foreign
Securities System") only through arrangements implemented by the
foreign banking institutions serving as sub-custodians pursuant to the
terms hereof (Foreign Securities Systems and U.S. Securities
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Systems are collectively referred to herein as the "Securities
Systems"). Where possible, such arrangements shall include entry into
agreements containing the provisions set forth in Section 3.5 hereof.
3.4 [Reserved]
3.5 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall provide that: (a) the assets of
each Portfolio will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking
institution or its creditors or agent, except a claim of payment for
their safe custody or administration; (b) beneficial ownership for the
assets of each Portfolio will be freely transferable without the
payment of money or value other than for custody or administration;
(c) adequate records will be maintained identifying the assets as
belonging to each applicable Portfolio; (d) officers of or auditors
employed by, or other representatives of the Custodian, including to
the extent permitted under applicable law the independent public
accountants for the Fund, will be given access to the books and records
of the foreign banking institution relating to its actions under its
agreement with the Custodian; and (e) assets of the Portfolios held by
the foreign sub-custodian will be subject to only to the instructions
of the Custodian or its agents.
3.6 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books
and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
3.7 REPORTS BY CUSTODIAN. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio(s) held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio(s) securities and other
assets and advices or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of each applicable Portfolio
indicating, as to securities acquired for a Portfolio, the identity of
the entity having physical possession of such securities.
3.8 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Except as otherwise
provided in paragraph (b) of this Section 3.8, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, MUTATIS MUTANDIS to
the foreign securities of the Fund held outside the United States by
foreign sub-custodians. (b) Notwithstanding any provision of this
Contract to the contrary, settlement and payment for securities
received for the account of each applicable Portfolio and delivery of
securities maintained for the account of each applicable Portfolio may
be effected in accordance with the customary established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof or
to a dealer therefor (or an agent for such purchaser or dealer)
against a receipt with the
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expectation of receiving later payment for such securities from such
purchaser or dealer. (c) Securities maintained in the custody of a
foreign sub-custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of this Contract,
and the Fund agrees to hold any such nominee harmless from any liability
as a holder of record of such securities.
3.9 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the instruction to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless,
the Custodian and each Fund from and against any loss, damage, cost,
expense, liability or claim arising out of or in connection with the
institution's performance of such obligations. At the election of the
Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Fund has not been made
whole for any such loss, damage, cost, expense, liability or claim.
3.10 LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. bank as contemplated by paragraph 3.13 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or
acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.10, in delegating custody duties to State
Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except
such loss as may result from (a) political risk (including, but not
limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or
(b) other losses (excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due to Acts of God, nuclear
incident or other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.
3.11 REIMBURSEMENT FOR ADVANCES. If the Fund requires the Custodian to advance
cash or securities for any purpose for the benefit of a Portfolio
including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the applicable Portfolio
shall be security therefor and should the Fund fail to repay the
Custodian promptly, the Custodian shall be entitled to utilize available
cash and to dispose of such Portfolios assets to the extent necessary to
obtain reimbursement.
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3.12 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the
Custodian will promptly inform the Fund in the event that the Custodian
learns of a material adverse change in the financial condition of a
foreign sub-custodian or any material loss of the assets of the Fund or
in the case of any foreign sub-custodian not the subject of an exemptive
order from the Securities and Exchange Commission is notified by such
foreign sub-custodian that there appears to be a substantial likelihood
that its shareholders' equity will decline below $200 million (U.S.
dollars or the equivalent thereof) or that its shareholders' equity has
declined below $200 million (in each case computed in accordance with
generally accepted U.S. accounting principles).
3.13 BRANCHES OF U.S. BANKS. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract. (b)
Cash held for each Portfolio of the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with
the Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.
3.14 TAX LAW. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the obligations
imposed on the Fund or the Custodian as custodian of the Fund by the tax
law of jurisdictions other than those mentioned in the above sentence,
including responsibility for withholding and other taxes, assessments or
other governmental charges, certifications and governmental reporting.
The sole responsibility of the Custodian with regard to such tax law
shall be to use reasonable efforts to assist the Fund with respect to any
claim for exemption or refund under the tax law of jurisdictions for
which the Fund has provided such information.
4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and deposit into the account of the
appropriate Portfolio such payments as are received for Shares of that
Portfolio issued or sold from time to time by the Fund. The Custodian will
provide timely notification to the Fund on behalf of each such Portfolio and
the Transfer Agent of any receipt by it of payments for Shares of such
Portfolio.
From such Funds as may be available for the purpose but subject to the
limitations of the Agreement and Declaration of Trust and any applicable votes
of the Board of Trustees of the Fund pursuant thereto, the Custodian shall,
upon receipt of instructions from the Transfer Agent, make
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funds available for payment to holders of Shares who have delivered to the
Transfer Agent a request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of a Portfolio, the
Custodian is authorized upon receipt of instructions from the Transfer Agent
to wire funds to or through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or repurchase of Shares of
the Fund, the Custodian shall honor checks drawn on the Custodian by a holder
of Shares, which checks have been furnished by the Fund to the holder of
Shares, when presented to the Custodian in accordance with such procedures
and controls as are mutually agreed upon from time to time between the Fund
and the Custodian.
5. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Contract includes the
following:
(a) a writing signed or initialed by one or more person or persons as
the Board of Trustees shall have from time to time authorized. Each such
writing shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such action
is requested;
(b) communications effected directly between electro-mechanical or
electronic devices provided that the Fund and the Custodian agree to
securities procedures, including but not limited to, the security procedures
listed on the Funds Transfer Addendum hereto;
(c) oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person authorized
to give such instructions with respect to the transaction involved. The Fund
shall cause all oral instructions to be confirmed in writing or through
electro-mechanical or electronic devices; or
(d) Proper Instructions in connection with a segregated asset account
which has been established pursuant to Section 2.12, hereof, shall include
instructions received by the Custodian in accordance with the provisions of
any three-party agreement, to which the Fund and the Custodian are each a
party, governing such account or accounts.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from
the Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, PROVIDED that all such payments
shall be accounted for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
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3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property of
the Portfolio except as otherwise directed by the Board of
Trustees of the Fund.
7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed
by it to be genuine and to have been properly executed by or on behalf of the
Fund. The Custodian may receive and accept a certified copy of a vote of the
Board of Trustees of the Fund as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any determination or
of any action by the Board of Trustees pursuant to the Agreement and
Declaration of Trust as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of
written notice to the contrary.
8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information
to the entity or entities appointed by the Board of Trustees of the Fund to
keep the books of account of each Portfolio and/or compute the net asset
value per share of the outstanding shares of each Portfolio or, if directed
in writing to do so by the Fund on behalf of the Portfolio, shall itself keep
such books of account and/or compute such net asset value per share. If so
directed, the Custodian shall also calculate daily the net income of the
Portfolio as described in the Fund's currently effective prospectus related
to such Portfolio and shall advise the Fund and the Transfer Agent daily of
the total amounts of such net income and, if instructed in writing by an
officer of the Fund to do so, shall advise the Transfer Agent periodically of
the division of such net income among its various components. The
calculations of the net asset value per share and the daily income of each
Portfolio shall be made at the time or times described from time to time in
the Fund's currently effective prospectus related to such Portfolio.
9. RECORDS
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under the Investment
Company Act of 1940, with particular attention to Section 31 thereof and
Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of
the Fund and shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the Securities and Exchange
Commission. The Custodian shall, at the Fund's request, supply the Fund with
a tabulation of securities owned by each Portfolio and held by the Custodian
and shall, when
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requested to do so by the Fund and for such compensation as shall be agreed
upon between the Fund and the Custodian, include certificate numbers in
such tabulations.
10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with
respect to its activities hereunder in connection with the preparation of the
Fund's Form N-1A, and Form N-SAR or other annual reports to the Securities
and Exchange Commission and with respect to any other requirements of such
Commission.
11. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or
maintained in a Securities System, relating to the services provided by the
Custodian under this Contract; such reports, shall be of sufficient scope and
in sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by
such examination, and, if there are no such inadequacies, the reports shall
so state.
12. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between
the Fund on behalf of each applicable Portfolio and the Custodian.
13. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in
acting upon any notice, request, consent, certificate or other instrument
reasonably believed by it to be genuine and to be signed by the proper party
or parties, including any futures commission merchant acting pursuant to the
terms of a three-party futures or options agreement. The Custodian shall be
held to the exercise of reasonable care in carrying out the provisions of
this Contract, but shall be kept indemnified by and shall be without
liability to the Fund for any action taken or omitted by it in good faith
without negligence. It shall be entitled to rely on and may act upon advice
of counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or
agent, the Custodian shall be without liability to the Fund for any loss,
liability, claim or expense resulting from or caused by; (i) events
16
<PAGE>
or circumstances beyond the reasonable control of the Custodian or any
sub-custodian or Securities System or any agent or nominee of any of the
foregoing, including, without limitation, nationalization or expropriation,
imposition of currency controls or restrictions, the interruption, suspension
or restriction of trading on or the closure of any securities market, power
or other mechanical failures or interruptions, communications disruptions,
acts of war or terrorism, riots, revolutions, work stoppages, natural
disasters or other similar events or acts; (ii) errors by the Fund or the
Investment Advisor in their instructions to the Custodian provided such
instructions have been in accordance with this Contract; (iii) the insolvency
of or acts or omissions by a Securities System; (iv) any delay or failure of
any broker, agent or intermediary, central bank or other commercially
prevalent payment or clearing system that is not an affiliate of the
Custodian to deliver to the Custodian's sub-custodian or agent securities
purchased or in the remittance or payment made in connection with securities
sold; (v) any delay or failure of any company, corporation, or other body in
charge of registering or transferring securities in the name of the
Custodian, the Fund, the Custodian's sub-custodians, nominees or agents or
any consequential losses arising out of such delay or failure to transfer
such securities including non-receipt of bonus, dividends and rights and
other accretions or benefits; (vi) delays or inability to perform its duties
due to any disorder in market infrastructure with respect to any particular
security or Securities System; and (vii) any provision of any present or
future law or regulation or order of the United States of America, or any
state thereof, or any other country, or political subdivision thereof or of
any court of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-custodians generally in this Contract.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money
or which action may, in the opinion of the Custodian, result in the Custodian
or its nominee assigned to the Fund or the Portfolio being liable for the
payment of money or incurring liability of some other form, the Fund on
behalf of the Portfolio, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement) for the benefit of a Portfolio or in the event that the Custodian
or its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, any property at any
time held for the account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
14. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement
17
<PAGE>
of the parties hereto and may be terminated by either party by an instrument
in writing delivered or mailed, postage prepaid to the other party, such
termination to take effect not sooner than thirty (30) days after the date of
such delivery or mailing; PROVIDED, however that the Custodian shall not with
respect to a Portfolio act under Section 2.10 hereof in the absence of receipt
of an initial certificate of the Secretary or an Assistant Secretary that
the Board of Trustees of the Fund has approved the initial use of a
particular Securities System by such Portfolio, as required by Rule 17f-4
under the Investment Company Act of 1940, as amended and that the Custodian
shall not with respect to a Portfolio act under Section 2.11 hereof in the
absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees has approved the initial use
of the Direct Paper System by such Portfolio; PROVIDED FURTHER, however, that
the Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Agreement
and Declaration of Trust, and further provided, that the Fund on behalf of
one or more of the Portfolios may at any time by action of its Board of
Trustees (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) immediately
terminate this Contract in the event of the appointment of a conservator or
receiver for the Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each Portfolio
shall pay to the Custodian such compensation as may be due as of the date of
such termination and shall likewise reimburse the Custodian for its costs,
expenses and disbursements.
15. SUCCESSOR CUSTODIAN
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination; (i) deliver to such successor custodian at the office of
the Custodian, duly endorsed and in the form for transfer, all securities of
each applicable Portfolio then held by it hereunder; (ii) transfer to an
account of the successor custodian all of the securities of each such
Portfolio held in a Securities System; and (iii) transfer to the successor
custodian all records created and maintained by the Custodian with respect to
each such Portfolio pursuant to Section 9.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Fund, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written under designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or
trust company, which is a "bank" as defined in the Investment Company Act of
1940, doing business in Boston, Massachusetts, of its own selection, having
an aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and
other properties held by the Custodian on behalf of each applicable Portfolio
and all instruments held by the Custodian relative thereto and all other
property held by it under this
18
<PAGE>
Contract on behalf of each applicable Portfolio and to transfer to an account
of such successor custodian all of the securities of each such Portfolio held in
any Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or
of the Board of Trustees to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Custodian retains possession of such securities, funds and other
properties and the provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force and effect.
16. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract
as may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provision shall be in a writing
signed by both parties and shall be annexed hereto, PROVIDED that no such
interpretive or additional provisions shall contravene any applicable federal
or state regulations or any provision of the Agreement and Declaration of
Trust. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.
17. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to the AIM Small Cap Opportunities Fund with respect to which the
Fund desires to have the Custodian render services as custodian under the
term hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such series of Shares
shall become a Portfolio hereunder.
18. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of the Commonwealth of Massachusetts.
19. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Funds's assets.
20. REPRODUCTION OF DOCUMENTS
This contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, microfilm, micro-card,
miniature photographic or
19
<PAGE>
other similar process. The parties hereto all/each agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
21. SHAREHOLDER COMMUNICATIONS
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether the Fund
authorizes the Custodian to provide the Fund's name, address, and share
position to requesting companies whose stock the Fund owns. If the Fund tells
the Custodian "no", the Custodian will not provide this information to
requesting companies. If the Fund tells the Custodian "yes" or do not check
either "yes" or "no" below, the Custodian is required by the rule to treat
the Fund as consenting to disclosure of this information for all securities
owned by the Fund or any funds or accounts established by the Fund. For the
Fund's protection, the Rule prohibits the requesting company from using the
Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consent or object by checking one of
the alternatives below.
YES / / The Custodian is authorized to release the Fund's name,
address, and share positions.
NO /X/ The Custodian is not authorized to release the Fund's name,
address, and share positions.
22. DATA ACCESS SERVICES ADDENDUM
The Custodian and the Fund agree to be bound by the terms of the Data
Access Services Addendum attached hereto.
20
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed as of the 26th day of June, 1998.
ATTEST AIM SPECIAL OPPORTUNITIES FUNDS
/s/ Nancy L. Martin By /s/ Robert H. Graham
- ---------------------------- ---------------------------------
Name: Name: Robert H. Graham
Title: President
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Thomas M. Lenz By /s/ Ronald E. Logue
- ---------------------------- ---------------------------------
Thomas M. Lenz Ronald E. Logue
Vice President Executive Vice President
<PAGE>
SCHEDULE A
----------
17f-5 APPROVAL
The Board of Trustees of AIM Special Opportunities Funds has approved
certain foreign banking institutions and foreign securities depositories
within State Street's Global Custody Network for use as subcustodians for the
Fund's securities, cash and cash equivalents held outside of the United
States. Board approval is as indicated by the Fund's Authorized Officer:
<TABLE>
<CAPTION>
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- -------- ------- ------------ ------------------
<S> <C> <C> <C>
- ------- State Street's entire Global Custody Network listed below
NLM Argentina Citibank, N.A. Caja de Valores S.A.
- -------
NLM Australia Westpac Banking Corporation Austraclear Limited;
- -------
Reserve Bank Information and
Transfer System (RITS)
NLM Austria Erste Bank der oesterreichischen Oesterreichische Kontrollbank AG
- ------- Sparkasen AG (Wertpapiersammelbank Division)
- ------- Bahrain The British Bank of the Middle East None
(as delegate of the Hongkong and
Shanghai Banking Corporation
Limited)
NLM Bangladesh Standard Chartered Bank None
- -------
NLM Belgium Generale Bank Caisse Interprofessionnelle de Depots
- ------- et de Virements de Titres S.A. (CIK)
Banque Nationale de Belgique
NLM Bermuda The Bank of Bermuda Limited None
- -------
- ------- Botswana Barclays Bank of Botswana Limited None
NLM Brazil Citibank, N.A. Camera de Liquidacio de Sao Paulo;
- -------
Banco Central do Brasil,
Systema Especial de Liquidacio e
Custodia (SELIC)
- ------- Bulgaria ING Bank N.V. Central Depository AD
NLM Canada Canada Trustco Mortgage Company The Canadian Depository
- ------- for Securities Limited (CDS)
<PAGE>
SCHEDULE A: 17f-5 APPROVAL
PAGE 2
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- -------- ------- ------------ ------------------
NLM Chile Citibank, N.A. None
- -------
NLM People's The Hongkong and Shanghai Shanghai Securities Central Clearing and
- ------- Republic Banking Corporation Limited, Registration Corporation (SSCCRC);
of China Shanghai and Shenzhen branches
Shenzheu Securities Central Clearing
Co., Ltd. (SSCC)
NLM Colombia Cititrust Colombia S.A. None
- ------- Sociedad Fiduciaria
NLM Croatia Privredna Banka Zagreb d.d. Ministry of Finance
- -------
NLM Cyprus Barclays Bank PLC None
- ------- Cyprus Offshore Banking Unit
NLM Czech Ceskoslovenska Obchodni Stredisko cennych papirfi (SCP);
- ------- Republic Banks A.S.
Czech National Bank (CNB)
NLM Denmark Den Danske Bank Vacrdipapircentralen - The Danish
- ------- Securities Center (VP)
Ecuador Citibank, N.A. None
- -------
NLM Egypt National Bank of Egypt Misr Company for Clearing, Settlement,
- ------- and Central Depository (MCSD)
NLM Finland Merita Bank Ltd. The Finnish Central Securities
- ------- Depository (CSD)
NLM France Banque Paribas Societe Interprofessionnelle
- ------- pour la Compensation des
Valeurs Mobilieres (SICOVAM);
Banque de France,
Saturne System
NLM Germany Dresdner Bank AG The Deutscher Kassenverein AG
- -------
- ------- Ghana Barclays Bank of Ghana Limited None
</TABLE>
<PAGE>
SCHEDULE A: 17F-5 APPROVAL
PAGE 3
<TABLE>
<CAPTION>
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- -------- ------- ------------ ------------------
<S> <C> <C> <C>
NLM Greece National Bank of Greece S.A The Central Securities Depository
- ------- (Apothertirion Titlon A.B.);
Bank of Greece
NLM Hong Kong Standard Chartered Bank The Central Clearing and Settlement System
- ------- (CCASS); The Central Money Markets Unit (CMU)
NLM Hungary Citibank Rt. Budapest The Central Depository and Clearing
- ------- House (Budapest Ltd. (KELER Ltd.)
NLM India Deutsche Bank AG The National Securities Depository Limited
- -------
NLM The Hongkong and Shanghai The National Securities Depository Limited
- ------- Banking Corporation Limited
NLM Indonesia Standard Chartered BAnk None
- -------
NLM Ireland Bank of Ireland None
- -------
The Central Bank of Ireland,
The Gilt Settlement Office (GSO)
NLM Israel Bank Hapoalim B.M. The Clearing House of the
- ------- Tel Aviv Stock Exchange;
Bank of Israel
NLM Italy Banque Paribas Monte Titoli S.p.A.;
- -------
Banca d'Italia
- ------- Ivory Coast Societe Generale de Banques None
en Cote d'Ivoire
NLM Japan The Daiwa Bank, Limited Japan Securities Depository
- ------- Center (JASEDEC);
NLM The Fuji Bank, Limited Japan Securities Depository
- ------- Center (JASDEC);
Bank of Japan Net System
<PAGE>
SCHEDULE A: 17F-5 APPROVAL
PAGE 4
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- -------- ------- ------------ ------------------
<S> <C> <C> <C>
Jordan The British Bank of the Middle East None
- ------- (as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited None
- -------
NLM Republic of Korea Hongkong & Shanghai Korea Securities Depository (KSD)
- ------- Banking Corporation
Lebanon The British Bank of the Middle East Custodian and Clearing Center of
- ------- (as delegate of the Hongkong and Financial Instruments for Lebanon
Shanghai Banking Corporation Ltd.) (MIDCLEAR) S.A.L.;
The Central Bank of Lebanon
NLM Malaysia Standard Chartered Bank Malaysian Central Depository Sdn.
- ------- Malaysia Berhad Bhd. (MCD);
Bank Negara Malaysia,
Scripless Securities Trading and
Safekeeping Systems (SSTS)
Mauritius The Hongkong and Shanghai The Central Depository & Settlement
- ------- Banking Corporation Limited System (CDS)
NLM Mexico Citibank Mexico, S.A. S.D. INDEVAL, S.A. de C.V.
- ------- (Instituto para el Deposito de
Valores)
Morocco Banque Commerciale du Maroc None
- -------
NLM The Netherlands MessPierson, N.V. Nederlands Centraal Instituut voor
- ------- Gireal Effectenverkeer B.V. (NECIGEF);
NLM New Zealand ANZ Banking Group New Zealand Central Securities
- ------- (New Zealand) Limited Depository Limited (NZCSD)
NLM Norway Christiania Bank og Verdipapirsentralen - The Norwegian
- ------- Kreditkasse Registry of Securities (VPS)
Oman The British Bank of the Middle East Muscat Securities Market (MSM)
- ------- (as delegate of the Hongkong and
Shanghai Banking Corporation Limited
</TABLE>
<PAGE>
SCHEDULE A: 171-5 APPROVAL
PAGE 5
<TABLE>
<CAPTION>
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- -------- ------- ------------ ------------------
<S> <C> <C> <C>
NLM Pakistan Deutsche Bank AG Central Depository Company of
- ------- Pakistan Ltd.
NLM Peru Citibank, N.A. Caja de Valores y Liquidaciones
- ------- (CAVALI, S.A.)
NLM Philippines Standard Chartered Bank The Philippines Central Depository Inc.
- ------- (PCD);
The Book-Entry-System (BES) of Bangko
Sentral ng Pilipinas; The Registry of
Scripless Securities (ROSS) of the Bureau
of Treasury
NLM Poland Citibank Poland S.A. The National Depository of Securities
- ------- (Krajowy Depozyt Papierow
Wartosciowych);
National Bank of Poland
NLM Portugal Bankco Comercial Portugues Central de Valores Mobiliarios (Central)
- -------
NLM Romainia ING Bank N.V.-Bucharest National Securities Clearing, Settlement
- ------- and Depository Company
Bucharest Stock Exchange
NLM Russia Credit Suisse First Boston, Zurich None
- ------- via Credit Suisse First Boston
Limited, Moscow
NLM Singapore The Development Bank The Central Depository (Pte)
- ------- of Singapore Ltd. Limited (CDP)
NLM Slovak Republic Ceskoslovenska Obchodna Stredisko Cennych Papierov (SCP);
- ------- Banka A.S.
National Bank of Slovakia
NLM Slovenia Banka Creditanstalt d.d. Klirinsko Depotna Bruzba
- -------
NLM South Africa Standard Bank of South Africa The Central Depository Limited
- ------- Limited
NLM Spain Banco Santander, S.A. Servicio de Compensacion y
- ------- Liquidacion de Valores, S.A. (SCLV);
Banco de Espana,
Anotaciones en Cuenta
<PAGE>
SCHEDULE A: 171-5 APPROVAL
PAGE 6
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- -------- ------- ------------ ------------------
<S> <C> <C> <C>
NLM Sri Lanka The Hongkong and Shanghai Central Depository System
- ----- Banking Corporation Limited (Pvt) Limited
NLM Swaziland Stanbic Bank of Swaziland Limited None
- -------
NLM Sweden Skandinaviska Enskilda Banken Vardepapperscentralen VPC AB-
- ------- The Swedish Central Securities
Depository
NLM Switzerland Union Bank of Switzerland Schweizerische Effekten-Giro AG
- ------- (SEGA);
INTERSETTLE
NLM Taiwan - R.O.C. Central Trust of China The Taiwan Securities Central
- ------- or Depository Company, Ltd. (TSCD)
- ------- ------------------------------
(Client Designated Subcustodian)
NLM Thailand Standard Chartered Bank Thailand Securities Depository
- ------- Company Limited (TSD)
NLM Turkey Citibank, N.A. Takas ve Saklama Bankasi A.S.
- ------- (TAKASBANK):
Central Bank of Turkey
NLM United Kingdom State Street Bank and Trust Company None;
- -------
The Bank of England,
The Central Gilts Office (CGO);
The Central Moneymarkets Office (CMO);
NLM Uruguay Citibank, N.A. None
- -------
NLM Venezuela Citibank, N.A. None
- -------
Zambia Barclays Bank of Zambia Limited Lusaka Central Depository (LCD)
- -------
Zimbabwe Barclays Bank of Zimbabwe Limited None
- -------
Euroclear (The Euroclear System)/State Street London Limited
- -------
Cedel (Cedel Bank, societe anonyme)/State Street London Limited
- -------
</TABLE>
CERTIFIED BY:
/s/ Nancy L. Martin June 26, 1998
- ---------------------------------------------- -----------------
Nancy L. Martin, ASSISTANT SECRETARY DATE
<PAGE>
[LOGO]
FUNDS TRANSFER ADDENDUM
OPERATING GUIDELINES
1. OBLIGATION OF THE SENDER: State Street is authorized to promptly debit
Client's (as named below) account(s) upon the receipt of a payment order in
compliance with the selected Security Procedure chosen for funds transfer
and in the amount of money that State Street has been instructed to transfer.
State Street shall execute payment orders in compliance with the Security
Procedure and with the Client's instructions on the execution date provided
that such payment order is received by the customary deadline for processing
such a request, unless the payment order specifies a later time. All payment
orders and communications received after this time will be deemed to have
been received on the next business day.
2. SECURITY PROCEDURE: The Client acknowledges that the Security Procedure
it has designated on the Selection Form was selected by the Client from
Security Procedures offered by State Street. The Client shall restrict access
to confidential information relating to the Security Procedure to authorized
persons as communicated in writing to State Street. The Client must notify
State Street immediately if it has reason to believe unauthorized persons may
have obtained access to such information or of any change in the Client's
authorized personnel. State Street shall verify the authenticity of all
instructions according to the Security Procedure.
3. ACCOUNT NUMBERS: State Street shall process all payment orders on the
basis of the account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the account
number, the account number shall take precedence and govern.
4. REJECTION: State Street reserves the right to decline to process or
delay the processing of a payment order which (a) is in excess of the
collected balance in the account to be charged at the time of State Streets's
receipt of such payment order; (b) if initiating such payment order would
cause State Street, in State Street's sole judgment, to exceed any volume,
aggregate dollar, network, time, credit or similar limits upon wire transfers
which are applicable to State Street, or (c) if State Street, in good faith,
is unable to satisfy itself that the transaction has been properly authorized.
5. CANCELLATION OR AMENDMENT: State Street shall use reasonable efforts to
act on all authorized requests to cancel or amend payment orders received in
compliance with the Security Procedure provided that such requests are
received in a timely manner affording State Street reasonable opportunity to
act. However, State Street assumes no liability if the request for amendment
or cancellation cannot be satisfied.
6. ERRORS: State Street shall assume no responsibility for failure to
detect any erroneous payment order provided that State Street complies with
the payment order instructions as received and State Street complies with the
Security Procedure. The Security Procedure is established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.
7. INTEREST AND LIABILITY LIMITS: State Street shall assume no
responsibility for lost interest with respect to the refundable amount of any
unauthorized payment order, unless State Street is notified of the
unauthorized payment order within thirty (30) days of notification by State
Street of the acceptance of such payment order. In no event shall State
Street be liable for special, indirect or consequential damages, even if
advised of the possibility of such damages and even for failure to execute a
payment order.
8. AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS:
When a Client initiates or receives ACH credit and debit entries pursuant to
these Guidelines and the rules of the National Automated Clearing House
Association and the New England Clearing House Association. State Street will
act as an Originating Depository Financial Institution and/or Receiving
Depository Institution, as the case may be, with respect to such entries.
Credits given by State Street with respect to an ACH credit entry are
provisional until State Street receives final settlement for such entry from
the Federal Reserve Bank. If State Street does not receive such final
settlement, the Client agrees that State Street shall receive a refund of the
amount credited to the Client in connection with such entry, and the party
making payment to the Client via such entry shall not be deemed to have paid
the amount of the entry.
9. CONFIRMATION STATEMENTS: Confirmation of State Street's execution of
payment orders shall ordinarily be provided within 24 hours notice which may
be delivered through State Street's proprietary information systems, such as,
but not limited to Horizon and GlobalQuest-Registered Trademark-, or by
facsimile or callback. The Client must report any objections to the execution
of a payment order within 30 days.
<PAGE>
[LOGO]
FUNDS TRANSFER ADDENDUM
SELECTION FORM
Please select one or more of the funds transfer security procedures indicated
below.
/ / SWIFT
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a
cooperative society owned and operated by member financial institutions that
provides telecommunication services for its membership. Participation is
limited to securities brokers and dealers, clearing and depository
institutions, recognized exchanges for securities, and investment management
institutions. SWIFT provides a number of security features through encryption
and authentication to protect against unauthorized access, loss or wrong
delivery of messages, transmission errors, loss of confidentiality and
fraudulent changes to messages. SWIFT is considered to be one of the most
secure and efficient networks for the delivery of funds transfer instructions.
SELECTION OF THIS SECURITY PROCEDURE WOULD BE MOST APPROPRIATE FOR EXISTING
SWIFT MEMBERS.
/x/ STANDING INSTRUCTIONS
Standing Instructions may be used where funds are transferred to a broker on
the Client's established list of brokers with which it engages in foreign
exchange transactions. Only the date, the currency and the currency amount are
variable. In order to establish this procedure, State Street will send to the
Client a list of the brokers that State Street has determined are used by the
Client. The Client will confirm the list in writing, and State Street will
verify the written confirmation by telephone. Standing Instructions will be
subject to a mutually agreed upon limit. If the payment order exceeds the
established limit, the Standing Instruction will be confirmed by telephone
prior to execution.
/ / REMOTE BATCH TRANSMISSION
Wire transfer instructions are delivered via Computer-to-Computer (CPU-CPU)
data communications between the Client and State Street. Security procedures
include encryption and or the use of a test key by those individuals
authorized as Automated Batch Verifiers.
CLIENTS SELECTING THIS OPTION SHOULD HAVE AN EXISTING FACILITY FOR COMPLETING
CPU-CPU TRANSMISSIONS. THIS DELIVERY MECHANISM IS TYPICALLY USED FOR
HIGH-VOLUME BUSINESS.
/ / GLOBAL HORIZON INTERCHANGE-SM- FUNDS TRANSFER SERVICE
Global Horizon Interchange Funds Transfer Service (FTS) is a State Street
proprietary microcomputer-based wire initiation system. FTS enables Clients
to electronically transmit authenticated Fedwire, CHIPS or internal book
transfer instructions to State Street.
THIS DELIVERY MECHANISM IS MOST APPROPRIATE FOR CLIENTS WITH A LOW-TO-MEDIUM
NUMBER OF TRANSACTIONS (5-75 PER DAY), ALLOWING CLIENTS TO ENTER, BATCH, AND
REVIEW WIRE TRANSFER INSTRUCTIONS ON THEIR PC PRIOR TO RELEASE TO STATE STREET.
/x/ TELEPHONE CONFIRMATION (CALLBACK)
Telephone confirmation will be used to verify all non-repetitive funds
transfer instructions received via untested facsimile or phone. This
procedure requires Clients to designate individuals as authorized initiators
and authorized verifiers. State Street will verify that the instruction
contains the signature of an authorized person and prior to execution, will
contact someone other than the originator at the Client's location to
authenticate the instruction.
SELECTION OF THIS ALTERNATIVE IS APPROPRIATE FOR CLIENTS WHO DO NOT HAVE THE
CAPABILITY TO USE OTHER SECURITY PROCEDURES.
/x/ REPETITIVE WIRES
For situations where funds are transferred periodically (minimum of one
instruction per calendar quarter) from an existing authorized account to the
same payee (destination bank and account number) and only the date and
currency amount are variable, a repetitive wire may be implemented. Repetitive
wires will be subject to a mutually agreed upon limit. If the payment order
exceeds the established limit, the instruction will be confirmed by telephone
prior to execution. Telephone confirmation is used to establish this process.
Repetitive wire instructions must be reconfirmed annually.
THIS ALTERNATIVE IS RECOMMENDED WHENEVER FUNDS ARE FREQUENTLY TRANSFERRED
BETWEEN THE SAME TWO ACCOUNTS.
/x/ TRANSFERS INITIALED BY FACSIMILE
The Client faxes wire transfer instructions directly to State Street Mutual
Fund Services. Standard security procedure requires the use of a random
number test key for all transfers. Every six months the Client receives test
key logs from State Street. The test key contains alpha-numeric characters,
which the Client puts on each document faxed to State Street. This procedure
ensures all wire instructions received via fax are authorized by the Client.
WE PROVIDE THIS OPTION FOR CLIENTS WHO WHICH TO BATCH WIRE INSTRUCTIONS AND
TRANSMIT THESE AS A GROUP TO STATE STREET MUTUAL FUND SERVICES ONCE OR
SEVERAL TIMES A DAY.
/ / AUTOMATED CLEARING HOUSE (ACH)
State Street receives an automated transmission or a magnetic tape from a
Client for the initiation of payment (credit) or collection (debit)
transactions through the ACH network. The transactions contained on each
transmission or tape must be authenticated by the Client, Clients using ACH
must select one or more of the following delivery options:
<PAGE>
FUNDS TRANSFER ADDENDUM [LOGO]
/ / Global Horizon Interchange Automated Clearing House Service Transactions
are created on a microcomputer, assembled into batches and delivered to State
Street via fully authenticated electronic transmissions in standard NACHA
formats.
/ / Transmission from Client PC to State Street Mainframe with Telephone
Callback
/ / Transmission from Client Mainframe to State Street Mainframe with
Telephone Callback
/ / Transmission from DST Systems to State Street Mainframe with Encryption
/ / Magnetic Tape Delivered to State Street with Telephone Callback
State Street is hereby instructed to accept funds transfer instructions only
via the delivery methods and security procedures indicated. The selected
delivery methods and security procedure(s) will be effective June 26, 1998
for payment orders initiated by our organization.
Key Contact Information
Whom shall we contact to implement your selection(s)?
<TABLE>
<CAPTION>
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
<S> <C>
Sharon A. Lester Brian Smith
- -------------------------------------- ------------------------------------
Name Name
11 Greenway Plaza, Suite 100 11 Greenway Plaza, Suite 100
- -------------------------------------- ------------------------------------
Address Address
Houston, Texas 77046-1173 Houston, Texas 77046-1173
- -------------------------------------- ------------------------------------
City/State/Zip Code City/State/Zip Code
(713) 214-1738 (713) 214-1841
- -------------------------------------- ------------------------------------
Telephone Number Telephone Number
(713) 623-0832 (713) 623-0832
- -------------------------------------- ------------------------------------
Facsimile Number Facsimile Number
- --------------------------------------
SWIFT Number
- --------------------------------------
Telex Number
</TABLE>
<PAGE>
FUNDS TRANSFER ADDENDUM [LOGO]
TELEPHONE CONFIRMATION
Client AIM Special Opportunities Funds
-----------------------------------------------------------------
Investment Manager AIM Advisors, Inc.
------------------------------------------------------
AUTHORIZED INITIATORS
Please Type or Print
Please provide a listing of your staff members who are currently authorized
to INITIATE wire transfer instructions to State Street:
<TABLE>
<CAPTION>
NAME TITLE (Specify whether position SPECIMEN SIGNATURE
is with Client or investment
Manager)
<S> <C> <C>
See attached list of authorized signers.
- --------------------- --------------------- ---------------------
- --------------------- --------------------- ---------------------
- --------------------- --------------------- ---------------------
- --------------------- --------------------- ---------------------
- --------------------- --------------------- ---------------------
</TABLE>
AUTHORIZED VERIFIERS
Please Type or Print
Please provide a listing of your staff members who will be CALLED BACK to
verify the initiation of repetitive wires of $10 million or more and all non
repetitive wire instructions:
<TABLE>
<CAPTION>
NAME CALLBACK PHONE NUMBER DOLLAR LIMITATION (IF ANY)
<S> <C> <C>
Sharon A. Lester (713) 214-1738
- --------------------- --------------------- ---------------------
Brian Smith (713) 214-1841
- --------------------- --------------------- ---------------------
Michele Harrison (713) 214-1163
- --------------------- --------------------- ---------------------
Stacey Frakes (713) 214-1319
- --------------------- --------------------- ---------------------
- --------------------- --------------------- ---------------------
</TABLE>
<PAGE>
DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
----------------------------------------------------
AGREEMENT between AIM Special Opportunities Funds (the "Customer") and
State Street Bank and Trust Company ("State Street").
PREAMBLE
WHEREAS, State Street has been appointed as custodian of certain assets
of the Customer pursuant to a certain Custodian Agreement (the "Custodian
Agreement") dated as of June 26, 1998;
WHEREAS, State Street has developed and utilizes proprietary accounting
and other systems, including State Street's proprietary Multicurrency
HORIZON-SM- Accounting System, in its role as custodian of the Customer, and
maintains certain Customer-related data ("Customer Data") in databases under
the control and ownership of State Street (the "Data Access Services"); and
WHEREAS, State Street makes available to the Customer certain Data
Access Services solely for the benefit of the Customer, and intends to
provide additional services, consistent with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the parties
agree as follows:
1. SYSTEM AND DATA ACCESS SERVICES
(a) SYSTEM. Subject to the terms and conditions of this Agreement,
State Street hereby agrees to provide the Customer with access to State
Street's Multicurrency HORIZON-SM- Accounting System and the other
information systems (collectively, the "System") as described in Attachment
A, on a remote basis for the purpose of obtaining reports and information,
solely on computer hardware, system software and telecommunication links as
listed in Attachment B (the "Designated Configuration") of the Customer, or
certain third parties approved by State Street that serve as investment
advisors or investment managers ("Investment Advisor") of the Customer or
other third parties such as the Customer's independent auditors, solely with
respect to the Customer or on any designated substitute or back-up equipment
configuration with State Street's written consent, such consent not to be
unreasonably withheld.
(b) DATA ACCESS SERVICES. State Street agrees to make available to
the Customer the Data Access Services subject to the terms and conditions of
this Agreement and data access operating standards and procedures as may be
issued by State Street from time to time. The ability of the Customer to
originate electronic instructions to State Street on behalf of the Customer
in order to (i) effect the transfer or movement of cash or securities held
under custody by State Street or (ii) transmit accounting or other
information (such transactions are referred to herein as "Client Originated
Electronic Financial Instructions"), and (iii) access data for the purpose of
reporting and analysis, shall be deemed to be Data Access Services for
purposes of this Agreement.
(c) ADDITIONAL SERVICES. State Street may from time to time agree to
make available to the Customer additional Systems that are not described in
the attachments to this Agreement. In the absence of any other written
agreement concerning such additional systems, the term "System" shall
include, and this Agreement shall govern, the Customer's access to and use of
any additional System made available by State Street and/or accessed by the
Customer.
2. NO USE OF THIRD PARTY SYSTEMS-LEVEL SOFTWARE
State Street and the Customer acknowledge that in connection with the
Data Access Services provided under this Agreement, the Customer will have
access, through the Data Access Services, to Customer Data and to functions
of State Street's proprietary systems; provided, however that in no event
will the Customer have direct access to any third party systems-level
software that retrieves data for, stores data from, or otherwise supports the
System.
3. LIMITATION ON SCOPE OF USE
a. DESIGNATED EQUIPMENT; DESIGNATED LOCATION. The System and the
Data Access Services shall be used and accessed solely on and through the
Designated Configuration at the offices of the Customer or the Investment
Advisor located in Houston, Texas ("Designated Location").
b. DESIGNATED CONFIGURATION; TRAINED PERSONNEL. State Street shall
be responsible for supplying, installing and maintaining the Designated
Configuration at the Designated Location. State Street and the Customer agree
that each will engage or retain the services of trained personnel to enable
both parties to perform their respective obligations under this Agreement.
State Street agrees to use commercially reasonable efforts to maintain the
System so that it remains serviceable, provided, however, that State Street
does not guarantee or assure uninterrupted remote access use of the System.
<PAGE>
c. SCOPE OF USE. The Customer will use the System and the Data Access
Services only for the processing of securities transactions, the keeping of
books of account for the Customer and accessing data for purposes of
reporting and analysis. The Customer shall not, and shall cause its employees
and agents not to (i) permit any third party to use the System or the Data
Access Services, (ii) sell, rent, license or otherwise use the System or the
Data Access Services in the operation of a service bureau or for any purpose
other than as expressly authorized under this Agreement, (iii) use the System
or the Data Access Services for any fund, trust or other investment vehicle
without the prior written consent of State Street, (iv) allow access to the
System or the Data Access Services through terminals or any other computer or
telecommunications facilities located outside the Designated Locations,
(v) allow or cause any information (other than portfolio holdings, valuations
of portfolio holdings, and other information reasonably necessary for the
management or distribution of the assets of the Customer) transmitted from
State Street's databases, including data from third party sources, available
through use of the System or the Data Access Services to be redistributed or
retransmitted to another computer, terminal or other device for other than
use for or on behalf of the Customer or (vi) modify the System in any way,
including without limitation, developing any software for or attaching any
devices or computer programs to any equipment, system, software or database
which forms a part of or is resident on the Designated Configuration.
d. OTHER LOCATIONS. Except in the event of an emergency or of a
planned System shutdown, the Customer's access to services performed by the
System or to Data Access Services at the Designated Location may be
transferred to a different location only upon the prior written consent of
State Street. In the event of an emergency or System shutdown, the Customer
may use any back-up site included in the Designated Configuration or any
other back-up site agreed to by State Street, which agreement will not be
unreasonably withheld. The Customer may secure from State Street the right to
access the System or the Data Access Services through computer and
telecommunications facilities or devices complying with the Designated
Configuration at additional locations only upon the prior written consent of
State Street and on terms to be mutually agreed upon by the parties.
e. TITLE. Title and all ownership and proprietary rights to the
System, including any enhancements or modifications thereto, whether or not
made by State Street, are and shall remain with State Street.
f. NO MODIFICATION. Without the prior written consent of State Street,
the Customer shall not modify, enhance or otherwise create derivative works
based upon the System, nor shall the Customer reverse engineer, decompile or
otherwise attempt to secure the source code for all or any part of the System.
g. SECURITY PROCEDURES. The Customer shall comply with data access
operating standards and procedures and with user identification or other
password control requirements and other security procedures as may be issued
from time to time by State Street for use of the System on a remote basis and
to access the Data Access Services. The Customer shall have access only to
the Customer Data and authorized transactions agreed upon from time to time
by State Street and, upon notice from State Street, the Customer shall
discontinue remote use of the System and access to Data Access Services for
any security reasons cited by State Street; provided, that, in such event,
State Street shall, for a period not less than 180 days (or such other
shorter period specified by the Customer) after such discontinuance, assume
responsibility to provide accounting services under the terms of the
Custodian Agreement.
h. INSPECTIONS. State Street shall have the right to inspect the use
of the System and the Data Access Services by the Customer and the Investment
Advisor to ensure compliance with this Agreement. The on-site inspections
shall be upon prior written notice to the Customer and the Investment Advisor
and at reasonably convenient times and frequencies so as not to result in an
unreasonable disruption of the Customer's or the Investment Advisor's
business.
4. PROPRIETARY INFORMATION
a. PROPRIETARY INFORMATION. The Customer acknowledges and State Street
represents that the System and the databases, computer programs, screen
formats, report formats, interactive design techniques, documentation and
other information made available to the Customer by State Street as part of
the Data Access Services and through the use of the System constitute
copyrighted, trade secret, or other proprietary information of substantial
value to State Street. Any and all such information provided by State Street
to the Customer shall be deemed proprietary and confidential information of
State Street (hereinafter "Proprietary Information"). The Customer agrees
that it will hold such Proprietary Information in the strictest confidence
and secure and protect it in a manner consistent with its own procedures for
the protection of its own confidential information and to take appropriate
action by instruction or agreement with its employees who are permitted
access to the Proprietary Information to satisfy its obligations hereunder.
The Customer further acknowledges that State Street shall not be required to
provide the Investment Advisor with access to the System unless it has first
received from the Investment Advisor an undertaking with respect to State
Street's Proprietary Information in the form of Attachment C to this
Agreement. The Customer shall use all commercially reasonable efforts to
assist State Street in identifying and preventing any unauthorized use,
copying or disclosure of the Proprietary Information or any portions thereof
or any of the logic, formats or designs contained therein.
b. COOPERATION. Without limitation of the foregoing, the Customer
shall advise State Street immediately in the event the Customer learns or has
reason to believe that any person to whom the Customer has given access to
the Proprietary Information, or any portion thereof, has violated or intends
to violate the terms of this Agreement, and the Customer will, at its
<PAGE>
expense, co-operate with State Street in seeking injunctive or other
equitable relief in the name of the Customer or State Street against any such
person.
c. INJUNCTIVE RELIEF. The Customer acknowledges that the disclosure
of any Proprietary Information, or of any information which at law or equity
ought to remain confidential, will immediately give rise to continuing
irreparable injury to State Street inadequately compensable in damages at
law. In addition, State Street shall be entitled to obtain immediate
injunctive relief against the breach or threatened breach of any of the
foregoing undertakings, in addition to any other legal remedies which may be
available.
d. SURVIVAL. The provisions of this Section 4 shall survive the
termination of this Agreement.
5. LIMITATION ON LIABILITY
a. LIMITATION ON AMOUNT AND TIME FOR BRINGING ACTION. The Customer
agrees that any liability of State Street to the Customer or any third party
arising out of State Street's provision of Data Access Services or the System
under this Agreement shall be limited to the amount paid by the Customer for
the preceding 24 months for such services. In no event shall State Street be
liable to the Customer or any other party for any special, indirect, punitive
or consequential damages even if advised of the possibility of such damages.
No action, regardless of form, arising out of this Agreement may be brought
by the Customer more than two years after the Customer has knowledge that the
cause of action has arisen.
b. LIMITED WARRANTIES. NO OTHER WARRANTIES, WHETHER EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE MADE BY STATE
STREET.
c. THIRD-PARTY DATA. Organizations from which State Street may obtain
certain data included in the System or the Data Access Services are solely
responsible for the contents of such data, and State Street shall have no
liability for claims arising out of the contents of such third-party data,
including, but not limited to, the accuracy thereof.
d. REGULATORY REQUIREMENTS. As between State Street and the Customer,
the Customer shall be solely responsible for the accuracy of any accounting
statements or reports produced using the Data Access Services and the System
and the conformity thereof with any requirements of law.
e. FORCE MAJEURE. Neither party shall be liable for any costs or
damages due to delay or nonperformance under this Agreement arising out of
any cause or event beyond such party's control, including without limitation,
cessation of services hereunder or any damages resulting therefrom to the
other party, or the Customer as a result of work stoppage, power or other
mechanical failure, computer virus, natural disaster, governmental action, or
communication disruption.
6. INDEMNIFICATION
The Customer agrees to indemnify and hold State Street harmless from any
loss, damage or expense including reasonable attorney's fees, (a "loss")
suffered by State Street arising from (i) the negligence or willful
misconduct in the use by the Customer of the Data Access Services or the
System, including any loss incurred by State Street resulting from a security
breach at the Designated Location or committed by the Customer's employees or
agents or the Investment Advisor and (ii) any loss resulting from incorrect
Client Originated Electronic Financial Instructions. State Street shall be
entitled to rely on the validity and authenticity of Client Originated
Electronic Financial Instructions without undertaking any further inquiry as
long as such instruction is undertaken in conformity with security procedures
established by State Street from time to time.
7. FEES
Fees and charges for the use of the System and the Data Access Services
and related payment terms shall be as set forth in the Custody Fee Schedule
in effect from time to time between the parties (the "Fee Schedule"). Any
tariffs, duties or taxes imposed or levied by any government or governmental
agency by reason of the transactions contemplated by this Agreement,
including, without limitation, federal, state and local taxes, use, value
added and personal property taxes (other than income, franchise or similar
taxes which may be imposed or assessed against State Street) shall be borne
by the Customer. Any claimed exemption from such tariffs, duties or taxes
shall be supported by proper documentary evidence delivered to State Street.
8. TRAINING, IMPLEMENTATION AND CONVERSION
a. TRAINING. State Street agrees to provide training, at a designated
State Street training facility or at the Designated Location, to the
Customer's personnel in connection with the use of the System on the
Designated Configuration. The Customer agrees that it will set aside, during
regular business hours or at other times agreed upon by both parties,
sufficient time to enable all operators of the System and the Data Access
Services, designated by the Customer, to receive the training offered by
State Street pursuant to this Agreement.
<PAGE>
b. INSTALLATION AND CONVERSION. State Street shall be responsible for
the technical installation and conversion ("Installation and Conversion") of
the Designated Configuration. The Customer shall have the following
responsibilities in connection with Installation and Conversion of the System:
(i) The Customer shall be solely responsible for the timely acquisition
and maintenance of the hardware and software that attach to the
Designated Configuration in order to use the Data Access Services
at the Designated Location.
(ii) State Street and the Customer each agree that they will assign
qualified personnel to actively participate during the Installation
and Conversion phase of the System implementation to enable both
parties to perform their respective obligations under this
Agreement.
9. SUPPORT
During the term of this Agreement, State Street agrees to provide the
support services set out in Attachment D to this Agreement.
10. TERM OF AGREEMENT
a. TERM OF AGREEMENT. This Agreement shall become effective on the
date of its execution by State Street and shall remain in full force and
effect until terminated as herein provided.
b. TERMINATION OF AGREEMENT. Either party may terminate this Agreement
(i) for any reason by giving the other party at least one-hundred and eighty
days' prior written notice in the case of notice of termination by State
Street to the Customer or thirty days' notice in the case of notice from the
Customer to State Street of termination; or (ii) immediately for failure of
the other party to comply with any material term and condition of the
Agreement by giving the other party written notice of termination. In the
event the Customer shall cease doing business, shall become subject to
proceedings under the bankruptcy laws (other than a petition for
reorganization or similar proceeding) or shall be adjudicated bankrupt, this
Agreement and the rights granted hereunder shall, at the option of State
Street, immediately terminate with notice to the Customer. This Agreement
shall in any event terminate as to any Customer within 90 days after the
termination of the Custodian Agreement applicable to such Customer.
c. TERMINATION OF THE RIGHT TO USE. Upon termination of this Agreement
for any reason, any right to use the System and access to the Data Access
Services shall terminate and the Customer shall immediately cease use of the
System and the Data Access Services. Immediately upon termination of this
Agreement for any reason, the Customer shall return to State Street all
copies of documentation and other Proprietary Information in its possession;
provided, however, that in the event that either party terminates this
Agreement or the Custodian Agreement for any reason other than the Customer's
breach, State Street shall provide the Data Access Services for a period of
time and at a price to be agreed upon by the parties.
11. MISCELLANEOUS
a. ASSIGNMENT; SUCCESSORS. This Agreement and the rights and
obligations of the Customer and State Street hereunder shall not be assigned
by either party without the prior written consent of the other party, except
that State Street may assign this Agreement to a successor of all or a
substantial portion of its business, or to a party controlling, controlled
by, or under common control with State Street.
b. SURVIVAL. All provisions regarding indemnification, warranty,
liability and limits thereon, and confidentiality and/or protection of
proprietary rights and trade secrets shall survive the termination of this
Agreement.
c. ENTIRE AGREEMENT. This Agreement and the attachments hereto
constitute the entire understanding of the parties hereto with respect to the
Data Access Services and the use of the System and supersedes any and all
prior or contemporaneous representations or agreements, whether oral or
written, between the parties as such may relate to the Data Access Services
or the System, and cannot be modified or altered except in a writing duly
executed by the parties. This Agreement is not intended to supersede or
modify the duties and liabilities of the parties hereto under the Custodian
Agreement or any other agreement between the parties hereto except to the
extent that any such agreement specifically refers to the Data Access
Services or the System. No single waiver of any right hereunder shall be
deemed to be a continuing waiver.
d. SEVERABILITY. If any provision or provisions of this Agreement
shall be held to be invalid, unlawful, or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way
be affected or impaired.
e. GOVERNING LAW. This Agreement shall be interpreted and construed
in accordance with the internal laws of The Commonwealth of Massachusetts
without regard to the conflict of laws provisions thereof.
<PAGE>
ATTACHMENT A
Multicurrency HORIZON-SM- Accounting System
SYSTEM PRODUCT DESCRIPTION
I. The Multicurrency HORIZON-SM- Accounting System is designed to provide
lot level portfolio and general ledger accounting for SEC and ERISA type
requirements and includes the following services: 1) recording of general
ledger entries; 2) calculation of daily income and expense; 3) reconciliation
of daily activity with the trial balance, and 4) appropriate automated
feeding mechanisms to (i) domestic and international settlement systems, (ii)
daily, weekly and monthly evaluation services, (iii) portfolio performance
and analytic services, (iv) customer's internal computing systems and (v)
various State Street provided information services products.
II. GlobalQuest-Registered Trademark- is designed to provide customer
access to the following information maintained on The Multicurrency
HORIZON-SM- Accounting System: 1) cash transactions and balances; 2)
purchases and sales; 3) income receivables; 4) tax refund receivables; 5)
daily priced positions; 6) open trades; 7) settlement status; 8) foreign
exchange transactions; 9) trade history, and 10) daily, weekly and monthly
evaluation services.
<PAGE>
ATTACHMENT B
ADVISOR/SUBADVISOR
STATE STREET Software is installed for access.
BANK AND TRUST COMPANY Click on icon for access.
Multicurrency Horizon-Registered Trademark-
and Global Quest-Registered Trademark-
[GRAPHIC]
DIAL UP ACCESS
CONFIGURATION
<PAGE>
ATTACHMENT C
Undertaking
The undersigned understands that in the course of its employment as
Investment Advisor to AIM Special Opportunities Funds (the "Customer") it
will have access to State Street Bank and Trust Company's ("State Street")
Multicurrency HORIZON-SM- Accounting System and other information systems
(collectively, the "System").
The undersigned acknowledges that the System and the databases, computer
programs, screen formats, report formats, interactive designs techniques,
documentation and other information made available to the undersigned by
State Street as part of the Data Access Services provided to the Customer and
through the use of the System constitute copyrighted, trade secret, or other
proprietary information of substantial value to State Street. Any and all
such information provided by State Street to the Undersigned shall be deemed
proprietary and confidential information of State Street (hereinafter
"Proprietary Information"). The undersigned agrees that it will hold such
Proprietary Information in confidence and secure and protect it in a manner
consistent with its own procedures for the protection of its own confidential
information and to take appropriate action by instruction or agreement with
its employees who are permitted access to the Proprietary Information to
satisfy its obligations hereunder.
The undersigned will not attempt to intercept data, gain access to data
in transmission, or attempt entry into any system or files for which it is
not authorized. It will not intentionally adversely affect the integrity of
the System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the System
and access to the Data Access Services shall terminate and the undersigned
shall immediately cease use of the System and the Data Access Services.
Immediately upon notice by State Street for any reason, the undersigned shall
return to State Street all copies of documentation and other Proprietary
Information in its possession.
AIM ADVISORS, INC.
By: /s/ ROBERT H. GRAHAM
-------------------------------
Title: President
----------------------------
Date: June 26, 1998
-----------------------------
<PAGE>
ATTACHMENT D
Support
During the term of this Agreement, State Street agrees to provide the
following on-going support services:
a. TELEPHONE SUPPORT. The Customer Designated Persons may contact
State Street's Multicurrency HORIZON-SM- Help Desk and Customer Assistance
Center between the hours of 8 a.m. and 6 p.m. (Eastern time) on all business
days for the purpose of obtaining answers to questions about the use of the
System, or to report apparent problems with the System. From time to time,
the Customer shall provide to State Street a list of persons, not to exceed
five in number, who shall be permitted to contact State Street for assistance
(such persons being referred to as "the Customer Designated Persons").
b. TECHNICAL SUPPORT. State Street will provide technical support
to assist the Customer in using the System and the Data Access Services. The
total amount of technical support provided by State Street shall not exceed
10 resource days per year. State Street shall provide such additional
technical support as is expressly set forth in the fee schedule in effect
from time to time between the parties (the "Fee Schedule"). Technical
support, including during installation and testing, is subject to the fees
and other terms set forth in the Fee Schedule.
c. MAINTENANCE SUPPORT. State Street shall use commercially
reasonable efforts to correct system functions that do not work according
to the System Product Description as set forth on Attachment A in priority
order in the next scheduled delivery release or otherwise as soon as is
practicable.
d. SYSTEM ENHANCEMENTS. State Street will provide to the Customer
any enhancements to the System developed by State Street and made a part of
the System; provided that, sixty (60) days prior to installing any such
enhancement, State Street shall notify the Customer and shall offer the
Customer reasonable training on the enhancement. Charges for system
enhancements shall be as provided in the Fee Schedule. State Street retains
the right to charge for related systems or products that may be developed and
separately made available for use other than through the System.
e. CUSTOM MODIFICATIONS. In the event the Customer desires custom
modifications in connection with its use of the System, the Customer shall
make a written request to State Street providing specifications for the
desired modification. Any custom modifications may be undertaken by State
Street in its sole discretion in accordance with the Fee Schedule.
f. LIMITATION ON SUPPORT. State Street shall have no obligation to
support the Customer's use of the System: (i) for use on any computer
equipment or telecommunication facilities which does not conform to the
Designated Configuration or (ii) in the event the Customer has modified the
Sustem in breach of this Agreement.
<PAGE>
- -------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
- -------------------------------------------------------------------------------
CUSTODIAN FEE SCHEDULE
AIM SPECIAL OPPORTUNITIES FUND
AIM SMALL CAP OPPORTUNITIES FUND
- -------------------------------------------------------------------------------
I. ADMINISTRATION
- -------------------------------------------------------------------------------
CUSTODY SERVICE - Maintain custody of fund assets. Settle portfolio
purchases and sales. Report buy and sell fails. Determine and collect
portfolio income. Make cash disbursements and report cash transactions.
Monitor corporate actions. Withhold foreign taxes. File foreign tax
reclaims.
The administration fee shown below is an annual charge, billed and
payable monthly, based on GROSS ASSETS. Fees in basis points per
portfolio.
ANNUAL FEES PER PORTFOLIO
<TABLE>
<CAPTION>
Fund Net Assets Custody Only
--------------- ------------
<S> <C>
First $50 Million 1/30 of 1%
Next $50 Million 1/60 of 1%
Next $175 Million 1/100 of 1%
Next $1,725 Million 1/150 of 1%
Over $2,000 Million 1/250 of 1%
</TABLE>
- -------------------------------------------------------------------------------
II. PORTFOLIO TRADES -- FOR EACH LINE ITEM PROCESSED (DOMESTIC)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $ 7.00
New York Physical Settlements $16.00
PTC Purchase, Sale, Deposit or Withdrawal $ 6.00
</TABLE>
1
<PAGE>
- -------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Option Charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration/Option exercised $15.00
Interest Rate Futures-no security movement $8.00
</TABLE>
- -------------------------------------------------------------------------------
III. GLOBAL CUSTODY HOLDINGS FEES (BASIS POINTS PER PORTFOLIO PER ANNUM)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROUP I GROUP II GROUP III GROUP IV GROUP V
------- -------- --------- -------- -------
<S> <C> <C> <C> <C>
3 BP 6 BP 12 BP 25 BP 50 BP
Australia Austria Bermuda Argentina Bahrain Lithuania
Canada Brazil Bolivia Belgium Bangladesh Luxembourg
Euroclear Denmark Czech Rep China Botswana Mauritius
Germany France Ecuador Finland Bulgaria Morocco
Ireland Indonesia Egypt Israel Chile Oman
Japan Netherlands Hong Kong Jordan Colombia Pakistan
New Zealand Italy Korea Croatia Peru
Singapore Norway Malaysia Cyprus Poland
South Africa Philippines Mexico Estonia Romania
Sweden Thailand Namibia Ghana Russia
Switzerland Venezuela Portugal Greece Slovenia
U.K. Slovak Rep Hungary Uruguay
Spain India Zambia
Sri Lanka Ivory Coast Zimbabwe
Swaziland Jamaica
Taiwan Kenya
Tunisia Latvia
Turkey Lebanon
</TABLE>
2
<PAGE>
- -------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
IV. GLOBAL TRANSACTION CHARGES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROUP I GROUP II GROUP III GROUP IV GROUP V
------- -------- --------- -------- -------
<S> <C> <C> <C> <C>
$30 $60 $80 $100 $200
Australia Argentina Botswana Bahrain Bangladesh
Bermuda Austria Brazil China Bulgaria
Bolivia Belgium Chile Colombia Cyprus
Canada France Finland Croatia Hungary
Czech Rep Hong Kong Ghana Estonia Indonesia
Denmark Italy Israel Greece Latvia
Ecuador Jamaica Kenya India Lebanon
Egypt Jordan Malaysia Ireland Lithuania
Euroclear Morocco Mauritius Ivory Coast Luxembourg
Germany Namibia Mexico Oman Peru
Japan Netherlands New Zealand Pakistan Philippines
Korea Poland Norway Portugal Romania
Slovak Rep Spain Russia Singapore Slovenia
South Africa Sri Lanka Swaziland Turkey
Taiwan Switzerland Sweden
U.K. Thailand
Uruguay Tunisia
Venezuela
Zambia
Zimbabwe
</TABLE>
- --------------------------------------------------------------------------------
V. SPECIAL SERVICES
- --------------------------------------------------------------------------------
Fees for activities of a non-recurring nature such as fund
consolidation or reorganizations, extraordinary security shipments and
the preparation of special reports will be subject to negotiation.
Fees for tax accounting/recordkeeping for options, financial futures,
and other special items will be negotiated separately.
3
<PAGE>
- -------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
VI. HOLDINGS CHARGES
- -------------------------------------------------------------------------------
PTC Paydowns, per issue per month $3.00
- -------------------------------------------------------------------------------
VII. OUT-OF-POCKET EXPENSES
- -------------------------------------------------------------------------------
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but
are not limited to the following:
Telephone
Wire Charges ($4.70 per wire in and $4.55 out)
Postage and Insurance
Courier Service
Duplication
Legal Fees
Supplies Related to Fund Records
Rush Transfer - $8.00 each
Transfer Fees
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 - $4.25
GNMA Transfer - $15.00
- -------------------------------------------------------------------------------
VIII. BALANCE CREDIT
- -------------------------------------------------------------------------------
A credit will be applied to each portfolio's monthly custody bill
(excluding out-of-pocket custody expenses) based on the average
custody Demand Deposit Account (DDA) balance during the month. This
credit will be calculated by applying 90% of the 90-day Treasury Bill
rate in effect at month-end. Any excess balance credits may be carried
forward and applied to successive bills incurred in the same calendar
year.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
AIM SMALL CAP OPPORTUNITIES STATE STREET BANK TRUST COMPANY
<S> <C>
By /s/ ROBERT H. GRAHAM By /s/ [illegible]
-------------------------- -----------------------------
Title President Title Vice President
----------------------- -----------------------------
Date June 26, 1998 Date June 15, 1998
----------------------- -----------------------------
- -------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
EXHIBIT 8(a)(2)
AMENDMENT TO CUSTODIAN CONTRACT
This Amendment to the Custodian Contract is made as of September 9, 1998 by
and between AIM Special Opportunities Funds (the "Fund") and State Street Bank
and Trust Company (the "Custodian"). Capitalized terms used in this Amendment
without definition shall have the respective meanings ascribed to such terms in
the Custodian Contract referred to below.
WHEREAS, the Fund and the Custodian entered into a Custodian Contract dated
as of June 26, 1998 (as amended and in effect from time to time, the
"Contract"); and
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets, and the Fund has made AIM Small Cap Opportunities Fund subject
to the Contract (each such series, together with all other series subsequently
established by the Fund and made subject to the Contract in accordance with the
terms thereof, shall be referred to as a "Portfolio", and, collectively, the
"Portfolios"); and
WHEREAS, the Fund and the Custodian desire to amend certain provisions of
the Contract to reflect revisions to Rule 17f-5 ("Rule 17f-5") promulgated under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund and the Custodian desire to amend and restate certain
other provisions of the Contract relating to the terms and conditions of the
custody of assets of each of the Portfolios held outside of the United States.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter contained, the parties hereby agree to amend the
Contract, pursuant to the terms thereof, as follows:
I. Article 3 of the Contract is hereby deleted, and Articles 4 through 17 of
the Contract are hereby amended, as of the effective date of this
Amendment, by renumbering same as Articles 5 though 18, respectively.
II. New Articles 3 and 4 of the Contract are hereby added, as of the effective
date of this Amendment, as set forth below.
3. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
3.1. DEFINITIONS.
Capitalized terms in this Article 3 of the Contract shall have the following
meanings:
"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment; economic and financial infrastructure
(including any Mandatory Securities Depositories operating in the country);
prevailing or developing custody and
<PAGE>
settlement practices; laws and regulations applicable to the safekeeping and
recovery of Foreign Assets held in custody in that country; and factors
comprising the "prevailing country risk", including the effects of foreign law
on the safekeeping of Portfolio assets, the likelihood of expropriation,
nationalization, freezing, or confiscation of a Portfolio's assets and any
reasonably foreseeable difficulties in repatriating a Portfolio's assets.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the SEC, or a foreign branch of a Bank (as defined in Section 2(a)(5)
of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of
the 1940 Act, except that the term does not include Mandatory Securities
Depositories.
"Foreign Assets" means any of the Portfolio's investments (including foreign
currencies) far which the primary market is outside the United States, currency
contracts that are settled outside the United States and such cash and cash
equivalents as are reasonably necessary to effect the Portfolio's transactions
in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule
17f-5.
"Mandatory Securities Depository" means a foreign securities depository or
clearing agency that, either as a legal or practical matter; must be used if the
Fund determines to place Foreign Assets in a country outside The United States
(i) because required by law or regulation; (ii) because securities cannot be
withdrawn from such foreign securities depository or clearing agency; or (iii)
because maintaining or effecting trades in securities outside the foreign
securities depository or clearing agency is not consistent with prevailing or
developing custodial or market practices.
3.2. DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
The Fund, by resolution adopted by its Board of Trustees (the "Board"), hereby
delegates to the Custodian, subject to Section (b) of Rule 17f-5, the
responsibilities set forth in this Article 3 with respect to Foreign Assets held
outside the United States, and the Custodian hereby accepts such delegation, as
Foreign Custody Manager of each Portfolio.
3.3. COUNTRIES COVERED.
The Foreign Custody Manager shall be responsible for perfoming the delegated
responsibilities defined below only with respect to (a) the countries listed on
Schedule A hereto as approved by the Board, which list of Board-approved
countries may be amended from time to time by the Fund with the agreement of the
Foreign Custody Manager, and (b) the custody arrangements set forth on such
Schedule A. The Foreign Custody Manager shall list on Schedule A the Eligible
Foreign Custodians selected by the Foreign Custody Manager to maintain the
assets of each Portfolio, which list of Eligible Foreign Custodians may be
amended from time to time in the sole discretion of the Foreign Custody Manager.
Mandatory Securities Depositories are listed on Schedule B to this Contract,
which Schedule B may be amended from time to time by the Foreign
<PAGE>
Custody Manager. The Foreign Custody Manager will provide amended versions of
Schedules A and B in accordance with Section 3.7 of this Article 3.
Upon the receipt by Foreign Custody Manager of Proper Instructions to open an
account, or to place or maintain Foreign Assets, in a country listed on Schedule
A, and the fulfillment by the Fund of the account opening requirements for such
country (if any), the Foreign Custody Manager shall be deemed to have been
appointed by the Board as Foreign Custody Manager with respect to that country
and to have accepted the delegation. Execution of this Amendment by the Fund
shall be deemed to be a Proper Instruction to open an account, or to place or
maintain Foreign Assets, in each Board-approved country listed on Schedule A in
which the Custodian has previously placed or currently maintains Foreign Assets
pursuant to the terms of the Contract. Following the receipt of Proper
Instructions directing the Foreign Custody Manager to close the account of a
Portfolio with the Eligible Foreign Custodian selected by the Foreign
Custody Manager in a designated country, the delegation by the Board to the
Custodian as Foreign Custody Manager for that country shall be deemed to have
been withdrawn and the Custodian shall immediately cease to be the Foreign
Custody Manager of the Portfolio with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to the
Fund. Thirty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Fund, the Custodian shall have
no further responsibility as Foreign Custody Manager to a Portfolio with respect
to the country as to which the Custodian s acceptance of delegation is
withdrawn.
3.4. SCOPE OF DELEGATED RESPONSIBILITIES.
3.4.1. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS.
Subject to the provisions of this Article 3, the Foreign Custody Manager may
place and maintain the Foreign Assets in the care of the Eligible Foreign
Custodians selected by the Foreign Custody Manager in each country listed as
"approved" on Schedule A, as such Schedule is amended from time to time.
In performing its delegated responsibilities as Foreign Custody Manager to place
or maintain the Foreign Assets with an Eligible Foreign Custodian, the Foreign
Custody Manager shall determine that the Foreign Assets will be subject to
reasonable care, based on the standards applicable to custodians in the country
in which the Foreign Assets will be held by that Eligible Foreign Custodian,
after considering all factors relevant to the safekeeping of such assets,
including, without limitation, the factors specified in Rule 17f-5(c)(1).
3.4.2. CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS.
The Foreign Custody Manager shall determine that the contract (or the rules or
established practices or procedures in the case of an Eligible Foreign Custodian
that is a foreign securities depository or clearing agency) governing the
foreign custody
<PAGE>
arrangements with each Eligible Foreign Custodian selected by the Foreign
Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
3.4.3. MONITORING.
In each case in which the Foreign Custody Manager maintains Foreign Assets with
an Eligible Foreign Custodian, selected by the Foreign Custody Manager, the
Foreign Custody Manager shall maintain a system to monitor (i) the
appropriateness of maintaining the Foreign Assets with such Eligible Foreign
Custodian, and (ii) the contract governing the custody arrangements established
by the Foreign Custody Manager with the Eligible Foreign Custodian (or the rules
or established practices and procedures in the case of an Eligible Foreign
Custodian selected by the Foreign Custody Manager which is a foreign securities
depository or clearing agency that is not a Mandatory Securities Depository).
The Foreign Custody Manager shall provide the Board with information at least
annually as to the factors used in such monitoring system. In the event the
Foreign Custody Manager determines that the custody arrangements with an
Eligible Foreign Custodian that it has selected are no longer appropriate, the
Foreign Custody Manager shall promptly transfer the Fund's Foreign Assets to
another Eligible Foreign Custodian in the market and shall notify the Board in
accordance with Section 3.7 hereunder.
3.5. GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY.
For purposes of this Article 3, the Board shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and maintaining
the Foreign Assets in each country for which the Custodian is serving as Foreign
Custody Manager of a Portfolio, and the Board shall be deemed to be monitoring
on a continuing basis such Country Risk to the extent that the Board considers
necessary or appropriate.
Notwithstanding any provision of this Contract to the contrary, the Fund on
behalf of the Portfolios and the Custodian expressly acknowledge and agree that
the Foreign Custody Manager shall not be delegated any responsibilities under
this Article 3 with respect to Mandatory Securities Depositories, and that the
determination by or on behalf of the Board to place the Foreign Assets in a
particular country shall be deemed to include the determination to place such
Foreign Assets eligible for any Mandatory Securities Depository with such
Mandatory Securities Depository, whether the Mandatory Securities Depository
exists at the time the Foreign Assets are acquired, or after the acquisition
thereof.
3.6. STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A PORTFOLIO.
In performing the responsibilities delegated to it, the Foreign Custody Manager
shall exercise reasonable care, prudence and diligence such as a person having
responsibility for the safekeeping of assets of management investment companies
registered under the 1940 Act would exercise.
<PAGE>
3.7. REPORTING REQUIREMENTS.
The Foreign Custody Manager shall report at least quarterly on the Foreign
Assets held with each Eligible Foreign Custodian and in connection therewith if
applicable, provide to the Board amended Schedules A or B at the end of the
calendar quarter in which an amendment to either Schedule has occurred. The
Foreign Custody Manager will make written reports notifying the Board of any
other material change in the foreign custody arrangements of the Portfolios
described in this Article 3 promptly after the occurrence of the material
change.
3.8. REPRESENTATIONS WITH RESPECT TO RULE 17f-5.
The Foreign Custody Manager represents to the Fund that it is a U.S. Bank as
defined in section (a)(7) of Rule 17f-5.
The Fund represents to the Custodian that the Board has determined that it is
reasonable for the Board to rely on the Custodian to perform the
responsibilities delegated pursuant to this Contract to the Custodian as the
Foreign Custody Manager of each Portfolio.
3.9. EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN CUSTODY
MANAGER.
The Board's delegation to the Custodian as Foreign Custody Manager of a
Portfolio shall be effective as of the date hereof and shall remain in effect
until terminated at any time, without penalty, by written notice from the
terminating party to the non-terminating party. Termination will become
effective thirty days after receipt by the non-terminating party of such notice.
The provisions of Section 3.3 hereof shall govern the delegation to and
termination of the Custodian as Foreign Custody Manager of the Fund with respect
to designated countries.
3.10 FUTURE NEGOTIATIONS.
If at any time prior to termination of this Amendment the Custodian as a matter
of standard business practice, accepts delegation as Foreign Custody Manager for
its U.S. mutual fund clients on terms materially different than set forth in
this Amendment, the Custodian hereby agrees to negotiate with the fund in good
faith with respect thereto.
4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIOS HELD
OUTSIDE THE UNITED STATES.
4.1 DEFINITIONS.
Terms used in this Article 4 and not defined below shall have the meanings
ascribed them in the Contract or in this Amendment:
"Foreign Securities System" means either a clearing agency or a securities
depository which is listed on Schedule A hereto or a Mandatory Securities
Depository.
<PAGE>
"Foreign Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
4.2. HOLDING SECURITIES.
The Custodian shall identify on its books as belonging to the Portfolios the
foreign securities held by each Foreign Sub-Custodian or Foreign Securities
System. The Custodian may hold foreign securities for all of its customers,
including the Portfolios, with any Foreign Sub-Custodian in an account that is
identified as belonging to the Custodian for the benefit of its customers,
PROVIDED HOWEVER, that (i) the records of the
Custodian with respect to foreign securities of the Portfolios which are
maintained in such account shall identify those securities as belonging to the
Portfolios and (ii), to the extent permitted and customary in the market in
which the account is maintained, the Custodian shall require that securities so
held by the Foreign Sub-Custodian be held separately from any assets of such
Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.
4.3. FOREIGN SECURITIES SYSTEMS.
Foreign securities shall be maintained in a Foreign Securities System in a
designated country only through arrangements implemented by the Foreign
Sub-Custodian in such country pursuant to the terms of this Contract.
4.4. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1. DELIVERY OF FOREIGN ASSETS.
The Custodian or a Foreign Sub-Custodian shall release and deliver foreign
securities of a Portfolio held by such Foreign Sub-Custodian, or in a Foreign
Securities System account, only upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, and only in
the following cases:
(i) upon sale of such foreign securities for the Portfolio in accordance
with reasonable market practice in the country where such Foreign
Assets are held or traded, including, without limitation: (A) delivery
against expectation of receiving later payment; or (B), in the case of
a sale effected through a Foreign Securities System, in accordance
with the rules governing the operation of the Foreign Securities
System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other similar
offers for foreign securities of the Portfolio;
(iv) to the issuer thereof or its agent when such foreign securities are
called, redeemed, retired or otherwise become payable;
<PAGE>
(v) to the issuer thereof, or its agent, for transfer into the name of
the Custodian (or the name of the respective Foreign Sub-Custodian
or of any nominee of the Custodian (or such Foreign Sub-Custodian))
or for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or
number of units;
(vi) to brokers, clearing banks or other clearing agents for examination
or trade execution in accordance with reasonable market practices
in the country where such securities are held or traded;
PROVIDED that in any such case the Sub-Custodian shall have no
responsibility or liability for any loss arising from the delivery
of such securities prior to receiving payment for such securities
except as may arise from the Sub-Custodian's own negligence or
willful misconduct;
(vii) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities;
(ix) for delivery as security in connection with any borrowing by the
Fund requiring a pledge of assets by the Portfolio;
(x) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper corporate purpose, BUT ONLY upon receipt of,
in addition to Proper Instructions, a copy of a resolution of the
Board or of an Executive Committee of the Board so authorized by
the Board, signed by an officer of the Fund and certified by its
Secretary or an Assistant Secretary that the resolution was duly
adopted and is in full force and effect (a "Certified Resolution"),
specifying the Foreign Assets to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or
persons to whom delivery of such Foreign Assets shall be made.
4.4.2. PAYMENT OF PORTFOLIO MONIES
Upon receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out, or direct the
respective Foreign Sub-Custodian or the respective Foreign Securities System to
pay out, moneys of a Portfolio in the following cases only:
<PAGE>
(i) upon the purchase of foreign securities for the Portfolio, unless
otherwise directed by Proper Instructions, in accordance with
reasonable market settlement practice in the country where such
foreign securities are held or traded, including, without
limitation: (A) delivering money to the seller thereof or to a
dealer therefor (or an agent for such seller or dealer) against
expectation of receiving later delivery of such foreign securities;
or (B) in the case of a purchase effected through a Foreign
Securities System, in accordance with the rules governing the
operation of such Foreign Securities System;
(ii) in connection with the conversion, exchange or surrender of foreign
securities of the Portfolio;
(iii) for the payment of any expense or liability of the Portfolio
including but not limited to the following payments: interest,
taxes, investment advisory fees, transfer agency fees, fees under
this Contract, legal fees, accounting fees, and other operating
expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange
contracts for the Portfolio, including transactions executed with
or through the Custodian or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vii) in connection with the borrowing or lending of foreign securities;
and
(viii) for any other proper purpose, BUT ONLY upon receipt of, in addition
to Proper Instructions, a Certified Resolution specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom such payment is
to be made.
4.4.3. MARKET CONDITIONS; MARKET INFORMATION.
Notwithstanding any provision of this Contract to the contrary, settlement and
payment for Foreign Assets received for the account of a Portfolio and delivery
of Foreign Assets maintained for the account of a Portfolio may be effected in
accordance with the customary established securities trading or processing
practices and procedures in the country or market in which the transaction
occurs generally accepted by Institutional Clients, including, without
limitation, delivering Foreign Assets to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such Foreign Assets from such
purchaser or dealer. For purposes of this Contract, "Institutional Clients"
means U.S. registered investment companies or major U.S. based commercial banks,
insurance companies, pension funds or substantially similar institutions which,
as a part of their ordinary business operations, purchase or sell securities and
make use of global custody services.
<PAGE>
The Custodian shall provide to the Board the information with respect to custody
and settlement practices in countries in which the Custodian employs a Foreign
Sub-Custodian, including without limitation information relating to Foreign
Securities Systems, described on Schedule C hereto at the time or times set
forth on such Schedule. The Custodian may revise Schedule C from time to time,
provided that no such revision shall result in the Board being provided with
substantively less information than had been previously provided hereunder and,
provided further, that the Custodian shall in any event provide to the Board and
to A I M Advisors, Inc. annually the following information and opinions with
respect to the Board-approved countries listed on Schedule A:
(i) legal opinions relating to whether local law restricts with respect
to U.S. registered mutual funds (a) access of a fund's independent
public accountants to books and records of a Foreign Sub-Custodian
or Foreign Securities System, (b) a fund's ability to recover in
the event of bankruptcy or insolvency of a Foreign Sub-Custodian or
Foreign Securities System, (c) a fund's ability to recover in the
event of a loss by a Foreign Sub-Custodian or Foreign Securities
System, and (d) the ability of a foreign investor to convert cash
and cash equivalents to U.S. dollars;
(ii) summary of information regarding Foreign Securities Systems; and
(iii) country profile information containing market practice for (a)
delivery versus payment, (b) settlement method, (c) currency
restrictions, (d) buy-in practices, (e) foreign ownership limits,
and (f) unique market arrangements.
4.5. REGISTRATION OF FOREIGN SECURITIES.
The foreign securities maintained in the custody of a Foreign Custodian
(other than bearer securities) shall be registered in the name of the Fund
(on behalf of the applicable Portfolio) or in the name of the Custodian or in
the name of any Foreign Sub-Custodian or in the name of any nominee of the
foregoing, and the Fund agrees to hold any such nominee harmless from any
liability as a holder of record of such foreign securities, except to the
extent that the Fund incurs loss or damage due to failure of such nominee to
meet its standard of care as set forth in the Contract. The Custodian or a
Foreign Sub-Custodian shall not be obligated to accept securities on behalf
of the Fund (on behalf of the applicable Portfolio) under the terms of this
Contract unless the form of such securities and the manner in which they are
delivered are in accordance with reasonable market practice.
4.6. BANK ACCOUNTS.
The Custodian shall identify on its books as belonging to a Portfolio cash
(including cash denominated in foreign currencies) deposited with the Custodian.
Where the Custodian is unable to maintain, or market practice does not
facilitate the maintenance of, cash on the books of the Custodian, a bank
account or bank accounts opened and maintained outside
<PAGE>
the United States on behalf of a Portfolio with a Foreign Sub-Custodian shall be
subject only to draft or order by the Custodian or such Foreign Sub-Custodian,
acting pursuant to the terms of this Contract to hold cash received by or from
or for the account of the Portfolio.
4.7. COLLECTION OF INCOME.
The Custodian shall use reasonable commercial efforts to collect all dividends,
income and other payments with respect to the Foreign Assets held hereunder to
which a Portfolio shall be entitled and shall credit such income, as collected,
to the Portfolio. In the event the Custodian or a Foreign Sub-Custodian must use
measures beyond those which are customary in a particular country to collect
such payments, the Fund and the Custodian shall consult as to such measures and
as to the compensation and expenses of the Custodian attendant thereto.
4.8. SHAREHOLDER RIGHTS.
With respect to the foreign securities held under this Article 4, the Custodian
will use commercially reasonable efforts to facilitate the exercise by the Fund
on behalf of the Portfolios of voting and other shareholder rights, subject
always to the laws, regulations and practical constraints that may obtain in the
country where such securities are issued. The Fund acknowledges that local
conditions, including lack of regulation, onerous procedural obligations, lack
of notice and other factors may have the effect of severely limiting the ability
of the Fund to exercise shareholder rights.
4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES.
The Custodian shall transmit promptly to the Fund written information
(including, without limitation, pendency of calls and maturities of foreign
securities and expirations of rights in connection therewith) received by the
Custodian via the Foreign Sub-Custodians from issuers of the foreign securities
being held for the account of a Portfolio. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Fund written information so
received by the Custodian from issuers of the foreign securities whose tender or
exchange is sought or from the party (or its agents) making the tender or
exchange offer. Subject to the standard of care to which the Custodian is held
under this Contract, the Custodian shall not be liable for any untimely exercise
of any tender, exchange or other right or power in connection with foreign
securities or other property of the Portfolio at any time held by it unless (i)
the Custodian or the respective Foreign Sub-Custodian is in actual possession of
such foreign securities or property and (ii) the Custodian receives Proper
Instructions with regard to the exercise of any such right or power, and both
(i) and (ii) occur at least two New York business days prior to the date on
which the Custodian is to take action to exercise such right or power.
4.10. LIABILITY OF FOREIGN SUB-CUSTODIANS AND FOREIGN SECURITIES SYSTEMS.
Each agreement pursuant to which the Custodian employs a Foreign Sub-Custodian
shall, to the extent possible consistent with prevailing market practice,
require the Foreign Sub-Custodian to exercise reasonable care in the performance
of its duties and to indemnify, and hold harmless, the Custodian from and
against any loss, damage, cost, expense,
<PAGE>
liability or claim arising out of or in connection with such Foreign
Sub-Custodian's performance of such obligations. At the election of the
Fund, the Fund shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a Foreign Sub-Custodian as a
consequence of any such loss, damage, cost, expense, liability or claim if
and to the extent that the Fund and any applicable Portfolio has not been
made whole for any such loss, damage, cost, expense, liability or claim.
4.11. TAX LAW.
The Custodian shall have no responsibility or liability for any obligations
now or hereafter imposed on the Fund or the Custodian as custodian of the
Portfolios by the tax law of the United States or of any state or political
subdivision thereof. With respect to jurisdictions other than the United
States, the sole responsibility of the Custodian with regard to the tax law
of any such jurisdiction shall be to use reasonable efforts to (a) notify the
Fund of the obligations imposed on the Fund with respect to the Portfolios or
the Custodian as custodian of such Portfolios by the tax law of such
jurisdictions, including responsibility for withholding and other taxes,
assessment or other governmental charges, certifications and government
reporting and (b) perform such ministerial steps as are required to collect
any tax refund, to ascertain the appropriate rate of tax withholding and to
provide such documents as may be required to enable each Fund to receive
appropriate tax treatment under applicable tax laws and any applicable treaty
provisions. The Custodian, in performance of its duties under this Section,
shall be entitled to treat each Fund as a Delaware business trust which is a
"registered investment company" under the laws of the United States, and it
shall be the duty of each Fund to inform the Custodian of any change in the
organization, domicile or, to the extent within the knowledge of the Fund,
other relevant facts concerning tax treatment of the Fund and further to
inform the Custodian if the Fund is or becomes the beneficiary of any special
ruling or treatment not applicable to the general nationality and category of
entity of which the Fund is a part under general laws and treaty provisions.
The Custodian shall be entitled to rely on any information supplied by the
Fund. The Custodian may engage reasonable professional advisors disclosed to
the Fund by the Custodian, which may include attorneys, accountants or
financial institutions in the regular business of investment administration
and may rely upon advice received therefrom.
4.12. LIABILITY OF CUSTODIAN.
Except as may arise from the Custodian's own negligence or willful misconduct or
the negligence or willful misconduct of a Sub-Custodian, the Custodian shall be
without liability to the Fund for any loss, liability, claim or expense
resulting from or caused by Country Risk (as such term is defined in Article 3
hereof), regardless of whether assets are maintained in the custody of a Foreign
Sub-Custodian or a Foreign Securities Depository, the Custodian shall be without
liability for any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism, or any other similar loss beyond the reasonable control of the
Custodian or the Sub-Custodian.
The Custodian shall be liable to the Fund on account of any actions or omissions
of any Foreign Sub-Custodian to the same extent as such Foreign Sub-Custodian
shall be liable to the Custodian.
<PAGE>
4.13 USE OF TERM "FUND"; ASSETS AND LIABILITIES
All references in this Article 4 or in Article 3 of this Agreement to "Fund"
shall mean the Fund, or a Portfolio of the Fund, as the context requires or as
applicable.
The Custodian shall maintain separate and distinct records for each Portfolio
and the assets allocated solely with such Portfolio shall be held and accounted
for separately from the assets of the Fund associated solely with any other
Portfolio. The debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Portfolio shall be
enforceable against the assets of such Portfolio only, and not against the
assets of the Fund generally or the assets of any other Portfolio.
III. Except as specifically superseded or modified herein, the terms and
provisions of the Contract shall continue to apply with full force and effect.
In the event of any conflict between the terms of the Contract prior to this
Amendment and this Amendment, the terms of this Amendment shall prevail. If the
Custodian is delegated the responsibilities of Foreign Custody Manager pursuant
to the terms of Article 3 hereof, in the event of any conflict between the
provisions of Articles 3 and 4 hereof, the provisions of Article 3 shall
prevail.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and behalf by its duly authorized representative as of the
date first above written.
WITNESSED BY: STATE STREET BANK AND TRUST COMPANY
/s/ Marc L. Parsons
- ------------------------------
Marc L. Parsons By: /s/ Ronald E. Logue
Associate Counsel ----------------------------
Name: Ronald E. Logue
Title: Executive Vice President
WITNESSED BY: AIM SPECIAL OPPORTUNITIES FUNDS
/s/ P. Michelle Grace
- ------------------------------
Name: P. Michelle Grace By: /s/ John J. Arthur
Title: Assistant Secretary ----------------------------
Name: John J. Arthur
Title: Senior Vice President
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der Oesterreichischen --
Sparkassen AG
Bahrain British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Generale de Banque --
Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano S.A. --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada Canada Trustco Mortgage Company --
Chile Citibank, N.A. --
People's Republic The Hongkong and Shanghai --
of China Banking Corporation Limited,
Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
</TABLE>
8/13/98 1
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Croatia Privredna Banka Zagreb d.d --
Cyprus Barclays Bank Plc. --
Cyprus Offshore Banking Unit
Czech Republic Ceskoslovenska Obchodni --
Banka, A.S.
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
Egypt National Bank of Egypt --
Estonia Hansabank --
Finland Merita Bank Limited --
France Banque Paribas --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A. The Bank of Greece,
System for Monitoring Transactions in
Securities in Book-Entry Form
Hong Kong Standard Chartered Bank --
Hungary Citibank Budapest Rt. --
Iceland Icebank Ltd. --
</TABLE>
8/13/98 2
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
India Deutsche Bank AG --
The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Banque Paribas --
Ivory Coast Societe Generale de Banques --
en Cote d'Ivoire
Jamaica Scotiabank Jamaica Trust and Merchant --
Bank Ltd.
Japan The Daiwa Bank, Limited Japan Securities Depository
Center
The Fuji Bank, Limited
Jordan British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited --
Republic of Korea The Hongkong and Shanghai Banking --
Corporation Limited
Latvia JSC Hansabank-Latvija --
Lebanon British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
</TABLE>
8/13/98
3
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Lithuania Vilniaus Bankas AB --
Malaysia Standard Chartered Bank --
Malaysia Berhad
Mauritius The Hongkong and Shanghai --
Banking Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa --
The Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group --
(New Zealand) Limited
Norway Christiania Bank og --
Kreditkasse
Oman British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG --
Peru Citibank, N.A. --
Philippines Standard Chartered Bank --
Poland Citibank (Poland) S.A. --
Bank Polska Kasa Opieki S.A.
Portugal Banco Comercial Portugues --
</TABLE>
8/13/98
4
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Romania ING Bank N.V. --
Russia Credit Suisse First Boston AO, Moscow --
(as delegate of Credit Suisse
First Boston, Zurich)
Singapore The Development Bank --
of Singapore Limited
Slovak Republic Ceskoslovenska Obchodna --
Banka, A.S.
Slovenia Banka Creditanstalt d.d. --
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander, S.A. --
Sri Lanka The Hongkong and Shanghai --
Banking Corporation Limited
Swaziland Standard Bank Swaziland Limited --
Sweden Skandinaviska Enskilda Banken
Switzerland UBS AG --
Taiwan - R.O.C. Central Trust of China --
Thailand Standard Chartered Bank --
Trinidad & Tobago Republic Bank Limited --
Tunisia Banque Internationale Arabe de Tunisie --
</TABLE>
8/13/98
5
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Turkey Citibank, N.A. --
Ottoman Bank
Ukraine ING Bank, Ukraine --
United Kingdom State Street Bank and Trust Company, --
London Branch
Uruguay Citibank, N.A. --
Venezuela Citibank, N-A. --
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
</TABLE>
Euroclear (The Euroclear System)/State Street London Limited
Cedel, S.A. (Cedel Bank, societe anonyme)/State Street London Limited
INTERSETTLE (for EASDAQ Securities)
6
8/13/98
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDITORY DEPOSITORIES
Argentina Caja de Valores S.A.
Australia Austraclear Limited
Reserve Bank Information and
Transfer System
Austria Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Belgium Caisse Interprofessionnelle de Depot et
de Virement de Titres S.A.
Banque Nationale de Belgique
Brazil Companhia Brasileira de Liquidacao e
Custodia (CBLC)
Bolsa de Valores de Rio de Janeiro
All SSB CLIENTS PRESENTLY USE CBLC
Central de Custodia e de Liquidacao Financeira
de Titulos
Banco Central do Brasil,
Sistema Especial de Liquidacao de
Custodia
Bulgaria Central Depository AD
Bulgarian National Bank
Canada The Canadian Depository
for Securities Limited
People's Republic Shanghai Securities Central Clearing and
of China Registration Corporation
Shenzhen Securities Central Clearing
Co., Ltd.
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
1
8/13/98
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Croatia Ministry of Finance
National Bank of Croatia
Czech Republic Stredisko cennych papiru
Czech National Bank
Denmark Vaerdipapircentralen (the Danish
Securities Center)
Egypt Misr Company for Clearing, Settlement,
and Central Depository
Estonia Eesti Vaartpaberite Keskdepositoorium
Finland The Finnish Central Securities
Depository
France Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM)
Germany Deutsche Borse Clearing AG
Greece The Central Securities Depository
(Apothetirion Titlon AE)
Hong Kong The Central Clearing and
Settlement System
Central Money Markets Unit
Hungary The Central Depository and Clearing
House (Budapest) Ltd. (KELER)
[MANDATORY FOR GOV'T BONDS ONLY;
SSB DOES NOT USE FOR OTHER SECURITIES]
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
2
8/13/98
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
India The National Securities Depository Limited
Indonesia Bank Indonesia
Ireland Central Bank of Ireland
Securities Settlement Office
Israel The Tel Aviv Stock Exchange Clearing
House Ltd.
Bank of Israel
Italy Monte Titoli S.p.A.
Banca d'Italia
Jamaica The Jamaican Central Securities Depository
Japan Bank of Japan Net System
Kenya Central Bank of Kenya
Republic of Korea Korea Securities Depository Corporation
Latvia The Latvian Central Depository
Lebanon The Custodian and Clearing Center of
Financial Instruments for Lebanon
and the Middle East (MIDCLEAR) S.A.L.
The Central Bank of Lebanon
Lithuania The Central Securities Depository of Lithuania
Malaysia The Malaysian Central Depository Sdn. Bhd.
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
3
8/13/98
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Bank Negara Malaysia,
Scripless Securities Trading and Safekeeping
System
Mauritius The Central Depository & Settlement
Co. Ltd.
Mexico S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito de
Valores)
Morocco Maroclear
(pending publication of enabling legislation
in the Moroccan government Gazette)
The Netherlands Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V. (NECIGEF)
De Nederlandsche Bank N.V.
New Zealand New Zealand Central Securities
Depository Limited
Norway Verdipapirsentralen (the Norwegian
Registry of Securities)
Oman Muscat Securities Market
Pakistan Central Depository Company of Pakistan Limited
Peru Caja de Valores y Liquidaciones S.A.
(CAVALI)
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
4
8/13/98
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Philippines The Philippines Central Depository, Inc.
The Registry of Scripless Securities
(ROSS) of the Bureau of the Treasury
Poland The National Depository of Securities
(Krajowy Depozyt Papierow Wartosciowych)
Central Treasury Bills Registrar
Portugal Central de Valores Mobiliarios (Central)
Romania National Securities Clearing, Settlement and
Depository Co.
Bucharest Stock Exchange Registry Division
Singapore The Central Depository (Pte)
Limited
Monetary Authority of Singapore
Slovak Republic Stredisko Cennych Papierov
National Bank of Slovakia
Slovenia Klirinsko Depotna Druzba d.d.
South Africa The Central Depository Limited
Spain Servicio de Compensacion y
Liquidacion de Valores, S.A.
Banco de Espana,
Central de Anotaciones en Cuenta
Sri Lanka Central Depository System
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
5
8/13/98
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
(Pvt) Limited
Sweden Vardepapperscentralen AB
(the Swedish Central Securities Depository)
Switzerland Schweizerische Effekten - Giro AG
INTERSETTLE
Taiwan - R.O.C. The Taiwan Securities Central
Depository Co., Ltd.
Thailand Thailand Securities Depository
Company Limited
Tunisia Societe Tunisienne Interprofessionelle de
Compensation et de Depot de
Valeurs Mobilieres
Central Bank of Tunisia
Tunisian Treasury
Turkey Takas ve Saklama Bankasi A.S.
(TAKASBANK)
Central Bank of Turkey
Ukraine The National Bank of Ukraine
United Kingdom The Bank of England,
The Central Gilts Office and
The Central Moneymarkets Office
Uruguay Central Bank of Uruguay
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
8/13/98 6
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Venezuela Central Bank of Venezuela
Zambia Lusaka Central Depository Limited
Bank of Zambia
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
8/13/98 7
<PAGE>
SCHEDULE C
MARKET INFORMATION
<TABLE>
<CAPTION>
PUBLICATION/TYPE OF INFORMATION BRIEF DESCRIPTION
(FREQUENCY)
<S> <C>
THE GUIDE TO CUSTODY IN WORLD MARKETS An overview of safekeeping and settlement practices and
(annually) procedures in each market in which State Street Bank and
Trust Company offers custodial services.
GLOBAL CUSTODY NETWORK REVIEW Information relating to the operating history and structure of
(annually) depositories and subcustodians located in the markets in
which State Street Bank and Trust Company offers custodial
services, including transnational depositories.
GLOBAL LEGAL SURVEY With respect to each market in which State Street Bank and
(annually) Trust Company offers custodial services, opinions relating to
whether local law restricts (i) access of a fund's independent
public accountants to books and records of a Foreign Sub-
Custodian or Foreign Securities System, (ii) the Fund's ability
to recover in the event of bankruptcy or insolvency of a
Foreign Sub-Custodian or Foreign Securities System, (iii) the
Fund's ability to recover in the event of a loss by a Foreign
Sub-Custodian or Foreign Securities System, and (iv) the
ability of a foreign investor to convert cash and cash
equivalents to U.S. dollars.
SUBCUSTODIAN AGREEMENTS Copies of the subcustodian contracts State Street Bank and
(annually) Trust Company has entered into with each subcustodian in the
markets in which State Street Bank and Trust Company offers
subcustody services to its US mutual fund clients.
NETWORK BULLETINS (weekly): Developments of interest to investors in the markets in which
State Street Bank and Trust Company offers custodial
services.
FOREIGN CUSTODY ADVISORIES (as
necessary): With respect to markets in which State Street Bank and Trust
Company offers custodial services which exhibit special
custody risks, developments which may impact State Street's
ability to deliver expected levels of service.
</TABLE>
<PAGE>
EXHIBIT 8(b)(2)
AMENDMENT NO. 1
SUBCUSTODIAN AGREEMENT
WITH
TEXAS COMMERCE BANK
(NOW KNOWN AS CHASE BANK OF TEXAS, N.A.)
The Subcustodian Agreement with Texas Commerce Bank (now known as Chase
Bank of Texas, N.A.) (the "Agreement"), dated September 9, 1994, is hereby
amended as follows (terms used herein but not otherwise defined herein have the
meaning ascribed them in the Agreement):
1) Section 7 - Communications is hereby deleted in its entirety and replaced
with the following:
COMMUNICATIONS. All communications required or permitted to be given under
this Agreement shall be in writing (including telex, telegraph or telefax,
facsimile or similar electronic transmittal device) and shall be deemed
given (a) upon delivery in person to the persons indicated below, or (b)
three days after deposit in the United States postal service, postage
prepaid, registered or certified mail, return receipt requested, or (c)
upon receipt by facsimile (provided that receipt of such facsimile is
confirmed telephonically by the addressee) or (d) by overnight delivery
service (with receipt of delivery) sent to the address shown below, or to
such different address(es) as such party shall designate by written notice
to the other parties hereto at least ten days in advance of the date on
which such change of address shall be effective. All communications
required or permitted to be given under this Agreement shall be addressed
as follows:
(i) to the Subcustodian: Chase Bank of Texas, N.A.
P. O. Box 2558
Houston, Texas 77252-8391
Attn: Kathy Wallace
(ii) to the Custodian: State Street Bank and Trust Company
Mutual Fund Services
Boston, Massachusetts 02105
Attn: AIM Funds
(iii) to the Transfer Agent: A I M Fund Services, Inc.
11 Greenway Plaza
Suite 100
Houston, Texas 77046
Attn: Robert Frazer
<PAGE>
2) Schedule A to the Agreement is hereby deleted in its entirety and replaced
with the following:
AIM Advisor Funds, Inc.
AIM Equity Funds, Inc.
AIM Funds Group
AIM International Funds, Inc.
AIM Investment Securities Funds
AIM Special Opportunities Funds
AIM Tax-Exempt Funds, Inc.
3) Schedule 2 to the Agreement is hereby deleted in its entirety and replaced
with the following:
Authorized Officers
-------------------
Jack Caldwell President
Mary A. Corcoran Senior Vice President
Sidney M. Dilgren Senior Vice President
Tony D. Green Senior Vice President
Lois S. Murphy Senior Vice President
Linda L. Wariner Senior Vice President
Ira P. Cohen Vice President
Mary E. Gentempo Vice President
Kim T. Lankford Vice President
Robert A. Frazer Assistant Vice President
Authorized Representatives
--------------------------
Sherri Arbour
Debi Folse
Robert Thompson
<PAGE>
All other terms and provisions of the Agreement not amended herein shall
remain in full force and effect.
Dated: 10-2-98
------------------
CHASE BANK OF TEXAS, N.A.
(as Subcustodian)
By: /s/ KATHY WALLACE
--------------------------------------
Title: Vice President
-----------------------------------
STATE STREET BANK AND TRUST COMPANY
(as Custodian)
By: /s/ ILLEGIBLE
--------------------------------------
Title: Executive Vice President
-----------------------------------
A I M FUND SERVICES, INC.
(as Transfer Agent)
By: /s/ JOHN CALDWELL
--------------------------------------
Title: President
-----------------------------------
EACH OF THE FUNDS LISTED ON AMENDED SCHEDULE A
HERETO
By: /s/ ROBERT H. GRAHAM
--------------------------------------
Title: President
-----------------------------------
<PAGE>
EXHIBIT 9(a)
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
AIM SPECIAL OPPORTUNITIES FUNDS
AND
A I M FUND SERVICES, INC.
<PAGE>
TABLE OF CONTENTS
PAGE
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 11 TEXAS LAW TO APPLY. . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 12 MERGER OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 13 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 14 LIMITATION OF SHAREHOLDER LIABILITY . . . . . . . . . . . . . . 7
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 24th day of June, 1998, by and between AIM
SPECIAL OPPORTUNITIES FUNDS, as Delaware business trust, 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 each portfolio 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 beneficial interest of the Fund representing interests 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 Agreement and Declaration of Trust and Bylaws 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;
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(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. 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.
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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 trust duly organized and existing and in good
standing under the laws of Delaware.
4.02 It is empowered under applicable laws and by its Agreement and
Declaration of Trust and Bylaws to enter into and perform this Delaware.
4.03 All corporate proceedings required by said Agreement and
Declaration of Trust and Bylaws have been taken to authorize it to enter into
and perform this Agreement.
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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
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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 Trustees of the
Fund authorizing the appointment of the Transfer Agent and the execution and
delivery of this Agreement; and
(b) a copy of the Agreement and Declaration of Trust and Bylaws 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
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negotiation or the carrying out of this Agreement shall remain confidential, and
shall not be voluntarily disclosed to any other person, except as may be
required by law.
6.04 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Transfer Agent will endeavor to notify the
Fund and to secure instructions from an authorized officer of the Fund as to
such inspection. The Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
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.
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<PAGE>
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 Trustees of the Fund.
ARTICLE 11
TEXAS LAW TO APPLY
11.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Texas.
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.
ARTICLE 14
LIMITATION OF SHAREHOLDER LIABILITY
14.01 Notice is hereby given that this Agreement is being executed by
the Fund by a duly authorized officer thereof acting as such and not
individually. The obligations of this Agreement are not binding upon any of the
Trustees, officers, shareholders or the investment advisor of the Fund
individually but are binding only upon the assets and property belonging to the
Fund, on its own behalf or on behalf of a Portfolio, for the benefit of which
the Trustees or officers have caused this Agreement to be executed.
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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 SPECIAL OPPORTUNITIES FUNDS
By: /s/ ROBERT H. GRAHAM
----------------------------------------
President
ATTEST:
/s/ NANCY L. MARTIN
- -----------------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By: /s/ JOHN CALDWELL
----------------------------------------
President
ATTEST:
/s/ NANCY L. MARTIN
- -----------------------------------
Assistant Secretary
8
<PAGE>
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 various mutual funds that are advised
by A I M Advisors, Inc. Or its affiliates and distributed by A I M
Distributors, Inc. (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>
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>
EXHIBIT 9(b)(8)
AMENDMENT NUMBER 4 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
THIS AMENDMENT, dated as of June 30, 1998 is made to the Remote Access and
Related Services Agreement dated December 23, 1994, as amended (the
"Agreement") between each registered investment company listed on Exhibit 1
of the Agreement (the "Fund") and First Data Investor Services Group, Inc.
("FDISG").
WITNESSETH
WHEREAS, the Fund and FDISG desire to further amend the Agreement to
reflect certain changes thereto.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree that as of the date first referenced above, the Agreement
shall be amended as follows:
1. Section 14(a) of the Agreement (as amended by Amendment Number 3) is
hereby deleted in its entirety and replaced with the following new Section
14(a):
"(a) This Agreement which became effective as of December 23, 1994 is
hereby extended and shall continue through December 31, 2002 (the
"Initial Term"). Upon the expiration of the Initial Term, this
Agreement shall automatically renew for successive terms of one
(1) year ("Renewal Terms") each, unless the Fund or FDISG
provides written notice to the other of its intent not to renew.
Such notice must be received not less than one-hundred and eighty
(180) days prior to the expiration of the Initial Term or the
then current Renewal Term."
2. Effective January 1, 1999, Section I "Shareholder Account Fees" of
Schedule C "Fee Schedule" (as amended by Amendment Number 3) is amended by
deleting Section I in its entirety and adding the following new Section I:
"I. SHAREHOLDER ACCOUNT FEES. The Fund shall pay the following fees:
For the period beginning on January 1, 1999, and continuing through
December 31, 2002, the Fund shall pay FDISG an annualized fee for
shareholder accounts open during any monthly period ("Open Account Fee")
as follows:
<TABLE>
Account Volume Fee per shareholder account
-------------- ----------------------------
<S> <C>
1-1.5 million $3.50
1.5-3 million $2.40
3-4 million $2.00
<PAGE>
4-5 million $1.90
Exceeding 5 million $1.80
</TABLE>
The Fund also shall pay FDISG Group an annualized fee of $1.60 per
shareholder account that is closed during any monthly period
("Closed Account Fee")(The Open Account Fees and Closed
Account Fees hereafter collectively referred to as "Shareholder
Account Fees"). The Shareholder Account Fees shall be billed by
FDISG monthly in arrears on a prorated basis of 1/12 of the
annualized fee for all such accounts.
In addition, on January 1 of the years 2001 and 2002 the
Shareholder Account fees may be increased by FDISG in an amount
equal to the lesser of (i) the cumulative percentage increase in
the Consumer Price Index for all Urban Consumers (CPI-U) U.S.
City Average, All Items (unadjusted - (1982-84 + 100), published
by the U.S. Department of Labor, or (ii) seven percent (7%) of
the Shareholder Account Fees charged by FDISG to the Fund for the
preceding twelve (12) month period.
In return for the Shareholder Account Fees, FDISG agrees to
provide the following to the Fund:
- Remote Access to FDISG's FSR System
- License for 512 IMPRESS Plus seats. Includes six weeks of
technical training (Completed)
- Conversion of the GT Global Funds into the AIM Family of Funds.
Conversion estimated at 4500 hours of systems development.
- License for up to 15 copies of FDISG's ACE+ (Automate Control
Environment) software as further defined in Schedule H.
- Dedicated Programming Support equivalent to 1 Systems Manager,
4 Programmers, and 2 Business Systems Analysts.
- Separate FSR processing cycle
- Implementation of a Separate FSR processing cycle by September
15, 1997, as more fully described in the attached Exhibit 3 of
this Schedule C (Completed)
- Implementation of the core TA system functionality identified
in Exhibit 1 of this Schedule C (Completed)
- Implementation of IWT Release 5.x functionality as identified in
Exhibit 2 of this Schedule C (Completed)
- Continued use of FDISG's Price/Rate Transmission (PRAT)
application. The PRAT Application will accept prices and
dividend rates from the Fund Accounting Department of the Fund
electronically and post them to the FDISG Pricing System. The
PRAT application will run interconnected via Local Area Network
hardware and software."
The Agreement, as previously amended and as amended by this Amendment,
("Modified Agreement") constitutes the entire agreement between the parties
with respect to the subject matter hereof. The Modified Agreement supersedes
all prior and contemporaneous agreements between the parties in connection
with the subject matter hereof. No officer, employee, servant
<PAGE>
or other agent of either party is authorized to make any representation,
warranty, or other promises not expressly contained herein with respect to
the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers, as of the day and year first
above written.
On behalf of the Funds and respective Portfolios and Classes set forth in
Exhibit 1 of the Agreement, as amended and as may be amended in the future
from time to time.
By: /s/ JOHN CALDWELL
----------------------
Title: A I M Fund Services, Inc.
-------------------------
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ ILLEGIBLE
---------------
Title: Executive VP
--------------
<PAGE>
EXHIBIT 9(b)(9)
AMENDMENT NUMBER 5 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
THIS AMENDMENT, dated as of July 1, 1998 is made to the Remote Access and
Related Services Agreement dated December 23, 1994, as amended (the "Agreement")
between each registered investment company listed on Exhibit 1 of the Agreement
(the "Fund") and First Data Investor Services Group, Inc. ("FDISG").
WITNESSETH
WHEREAS, the Fund and FDISG desire to further amend the Agreement to
reflect certain changes thereto.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree that as of the date first referenced above, the Agreement
shall be amended as follows:
1. Exhibit 1 of the Agreement is hereby deleted and replaced with the Attached
revised Exhibit 1.
2. Section III "Additional Fees" of Schedule C "Fee Schedule" is hereby
amended to add the following new subsection h:
"h. Fees for IMPRESS Plus COLD:
(i) IMPRESS Plus COLD Software License Fees - The Fund shall pay an
initial license fee of $302,469 (the "License Fee") based on 512
IMPRESS Plus COLD seats licensed, which includes the use of the INSCI
Software. The initial License Fee shall be financed over a period of
36 months and be payable monthly in arrears in amounts of $8,401.66.
Thereafter, the then current monthly License Fee payments shall
continue so long as the Fund continues to license and use the IMPRESS
Plus COLD Software. License Fee payments shall commence on the
earlier of a) first production usage of IMPRESS Plus COLD software or
b) September 1, 1998.
(ii) IMPRESS Plus Software Usage Fees. In addition to the License Fee
set forth above, the Fund shall pay a monthly usage fee of $9,728.00
(the "Usage Fee") based on 512 IMPRESS Plus COLD seats licensed, which
includes the use of the INSCI Software. The Usage Fee shall commence
on the earlier of a) first production usage of IMPRESS Plus COLD
software or b) September 1, 1998.
(iii) IMPRESS Plus COLD Installation Fees. - Thirty (30) days
following the execution of Amendment Number 4 to the Agreement and
receipt of an invoice, the Fund shall pay to FDISG one-time
installation fee of $140,000. Installation
<PAGE>
covers 3 line data application and 1 Intelligent Data Stream
application. Installation activities include:
* Hardware installation at FDISG site
* IMPRESS Plus COLD application installation
* IMPRESS Plus COLD third party software installation
* Network Design Assistance
* Project Management
* Post Installation Support
(iv) Additional IMPRESS Plus COLD Fees:
* One-time fee for each additional Line Data Application - $10,000
* One-time fee for each additional Intelligent Data Stream
Application - $20,000
* Application Enhancements - $150/hr
(v) Maintenance and Support for IMPRESS Plus COLD includes items
listed in Section III.b above and the following:
* Report conversion to Express Delivery/IMPRESS Plus COLD
* Hardware support and maintenance
(v) IMPRESS Plus COLD License and Usage and IMPRESS Plus COLD
Installation Fees do not include the following:
* Hardware
* Network and Server Software not listed in Exhibit 1 of Schedule G
* Customization or application integration
* Support for IMPRESS Plus COLD applications customized or built by
the Fund (see Section 3 of Exhibit 3 of Schedule G)
* Installation, Integration and On-going Support of hardware,
network, and software components not included in Schedule G
* Travel Expenses for install and support staff for on-site visits
(billed separately per Schedule D)
* Application Source Code
(vi) IMPRESS Plus COLD Hardware and Network Fees:
<TABLE>
<CAPTION>
One-Time* Monthly Support Fee*
-------- -------------------
(Due Upon Execution)
<S> <C> <C>
Hardware $308,729.52 $3276.27
</TABLE>
*Fee is subject to change based on actual vendor costs"
<PAGE>
3. Section 1.3 of Schedule G is amended by adding the following:
"Notwithstanding the foregoing provisions of this Section 1.3 to the
contrary, FDISG shall install and maintain the equipment associated with
FDISG's IMPRESS Plus COLD product set forth in Exhibit 2.3 of this Schedule
G at its facility for the fees set forth in Section III. h. of Schedule C.
At the expense of the Fund, upon termination of the Agreement or at the
request of the Fund, FDISG shall deliver to the Fund such equipment."
4. Exhibit 1 of Schedule G is hereby amended as follows:
(a) Section 1.1 is amended by adding "IMPRESS Plus COLD Release 6.0" to the
list of IMPRESS Plus software products.
(b) Section 2.1 "FDISG Provided Third Party Software" is amended by adding
the following new section 2.1.3:
"2.1.3 INSCI SOFTWARE. The following Third Party Software is licensed
directly to the Fund by FDISG subject to the terms and conditions set
forth in this Agreement:
Advanced COINSERV Software w/Hierarchical Storage Mgr.
WINCOINS Software
Vector Forms Software
Jukebox Driver Software, Two, 12" Drives
Metacode Server License
CDP Metacode Viewer, 300 Concurrent Users
Metacode Desktop & Converter
Operating Kit (Includes Dial-In for Trouble Shooting)"
5. Exhibit 1.1 of Schedule G "Specifications" is hereby amended to add the
IMPRESS Plus COLD Specifications attached hereto as Exhibit 1.1a of Schedule G.
The Agreement, as previously amended and as amended by this Amendment,
("Modified Agreement") constitutes the entire agreement between the parties with
respect to the subject matter hereof. The Modified Agreement supersedes all
prior and contemporaneous agreements between the parties in connection with the
subject matter hereof. No officer, employee, servant or other agent of either
party is authorized to make any representation, warranty, or other promises not
expressly contained herein with respect to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers, as of the day and year first above
written.
On behalf of the Funds and respective Portfolios and Classes set forth in
Exhibit 1 attached hereto as may be amended from time to time.
By: /s/ TONY D. GREEN
-------------------------
Title: Senior Vice President
----------------------
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ ILLEGIBLE
-------------------------
Title: Executive VP
----------------------
<PAGE>
EXHIBIT 1
List of Funds
Fund # Fund Name
1 AIM WEINGARTEN FUND - CLASS A
2 AIM CONSTELLATION FUND - CLASS A
6 AIM BALANCED FUND - CLASS A
7 AIM LIMITED MATURITY TREASURY FUND - CL
8 AIM TAX-FREE INTERMEDIATE SHARES
10 AIM CHARTER FUND - CLASS A
16 AIM INTERNATIONAL EQUITY FUND - CLASS A
17 AIM HIGH INCOME MUNICIPAL FUND - CLASS
30 AIM EUROPEAN DEVELOPMENT FUND - CLASS A
31 AIM ASIAN GROWTH FUND - CLASS A
34 AIM SMALL CAP OPPORTUNITIES FUND - CLAS
81 AIM GLOBAL AGGRESSIVE GROWTH FUND - CLA
82 AIM GLOBAL GROWTH FUND - CLASS A
83 AIM GLOBAL INCOME FUND - CLASS A
301 AIM WEINGARTEN FUND - CLASS C
302 AIM CONSTELLATION FUND - CLASS C
303 AIM MUNICIPAL BOND FUND - CLASS C
305 AIM VALUE FUND - CLASS C
306 AIM BALANCED FUND - CLASS C
308 AIM GLOBAL UTILITIES FUND - CLASS C
310 AIM CHARTER FUND - CLASS C
314 AIM CAPITAL DEVELOPMENT FUND - CLASS C
315 AIM BLUE CHIP FUND - CLASS C
316 AIM INTERNATIONAL EQUITY FUND - CLASS C
317 AIM HIGH INCOME MUNICIPAL FUND - CLASS
320 AIM ADVISOR LARGE CAP VALUE FUND - CLAS
321 AIM ADVISOR INCOME FUND - CLASS C
322 AIM ADVISOR FLEX FUND - CLASS C
323 AIM ADVISOR CASH MANAGEMENT FUND - CLAS
324 AIM ADVISOR MULTIFLEX FUND - CLASS C
325 AIM ADVISOR REAL ESTATE FUND - CLASS C
326 AIM ADVISOR INTERNATIONAL VALUE FUND -
330 AIM EUROPEAN DEVELOPMENT FUND - CLASS C
331 AIM ASIAN GROWTH FUND - CLASS C
350 AIM SELECT GROWTH FUND - CLASS C
360 AIM INTERMEDIATE GOVERNMENT FUND - CLAS
365 AIM INCOME FUND - CLASS C
375 AIM HIGH YIELD FUND - CLASS C
380 AIM MONEY MARKET FUND - CLASS C
381 AIM GLOBAL AGGRESSIVE GROWTH FUND - CLA
382 AIM GLOBAL GROWTH FUND - CLASS C
383 AIM GLOBAL INCOME FUND - CLASS C
384 AIM NEW DIMENSION FUND - CLASS C
401 AIM MONEY MARKET FUND - CLASS A
402 AIM INCOME FUND - CLASS A
403 AIM MUNICIPAL BOND FUND - CLASS A
404 AIM INTERMEDIATE GOVERNMENT FUND - CLAS
405 AIM VALUE FUND - CLASS A
Page 1
<PAGE>
EXHIBIT 1
List of Funds
406 AIM SELECT GROWTH FUND - CLASS A
407 AIM AGGRESSIVE GROWTH FUND - CLASS A
408 AIM GLOBAL UTILITIES FUND - CLASS A
421 AIM CASH RESERVE SHARES
422 AIM TAX-EXEMPT CASH FUND
425 AIM HIGH YIELD FUND - CLASS A
430 CG GUARANTEED ACCT 71-73
431 CG GUARANTEED ACCT 74-77
432 CG GUARANTEED ACCT 1978
433 CG GUARANTEED ACCT 1979
434 CG GUARANTEED ACCT 1980
435 CG GUARANTEED ACCT 1981
436 CG GUARANTEED ACCT 1982
437 CG GUARANTEED ACCT 1983
438 CG GUARANTEED ACCT 1984
439 CG GUARANTEED ACCT 1985
440 CG GUARANTEED ACCT 1985A
441 CG GUARANTEED ACCT 1985B
442 CG GUARANTEED ACCT 1986
443 CG GUARANTEED ACCT 1986A
444 CG GUARANTEED ACCT 1987
445 CG GUARANTEED ACCT 1988
446 CG GUARANTEED ACCT 1989
447 CG GUARANTEED ACCT 1990
448 CG GUARANTEED ACCT 1991
449 CG GUARANTEED ACCT 1992
460 AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
514 AIM CAPITAL DEVELOPMENT FUND - CLASS A
515 AIM BLUE CHIP FUND - CLASS A
520 AIM ADVISOR LARGE CAP VALUE FUND - CLAS
521 AIM ADVISOR INCOME FUND - CLASS A
522 AIM ADVISOR FLEX FUND - CLASS A
523 AIM ADVISOR CASH MANAGEMENT FUND - CLAS
524 AIM ADVISOR MULTIFLEX FUND - CLASS A
525 AIM ADVISOR REAL ESTATE FUND - CLASS A
526 AIM ADVISOR INTERNATIONAL VALUE FUND -
541 AIM DOLLAR FUND CLASS A
542 AIM NEW PACIFIC GROWTH FUND CLASS A
543 AIM EUROPE GROWTH FUND CLASS A
544 AIM JAPAN GROWTH FUND CLASS A
546 AIM MID CAP GROWTH FUND CLASS A
547 AIM WORLDWIDE GROWTH FUND CLASS A
548 AIM STRATEGIC INCOME FUND CLASS A
549 AIM GLOBAL GOVERNMENT INCOME FUND CLASS
551 AIM GLOBAL HEALTH CARE FUND CLASS A
553 AIM LATIN AMERICAN GROWTH FUND CLASS A
556 AIM EMERGING MARKETS FUND CLASS A
557 AIM FINANCIAL SERVICES FUND CLASS A
558 AIM GLOBAL HIGH INCOME - CLASS A
Page 2
<PAGE>
EXHIBIT 1
List of Funds
559 AIM GLOBAL INFRASTRUCTURE - CLASS A
561 AIM GLOBAL RESOURCES - CLASS A
562 AIM GLOBAL CONSUMER PRODUCTS & SERVICES
563 AIM AMERICA VALUE FUND - CLASS A
564 AIM SMALL CAP EQUITY FUND - CLASS A
576 AIM DEVELOPING MARKETS FUND - CLASS A
577 AIM INTERNATIONAL GROWTH FUND - CLASS A
578 AIM GLOBAL GROWTH AND INCOME FUND - CLA
579 AIM GLOBAL TELECOMMUNICATIONS FUND - CL
584 AIM NEW DEVELOPING MARKETS FUND - CLASS
602 AIM CONSTELLATION FUND - CLASS B
614 AIM CAPITAL DEVELOPMENT FUND - CLASS B
615 AIM BLUE CHIP FUND - CLASS B
617 AIM HIGH INCOME MUNICIPAL FUND - CLASS
620 AIM ADVISOR LARGE CAP VALUE FUND - CLAS
622 AIM ADVISOR FLEX FUND - CLASS B
624 AIM ADVISOR MULTIFLEX FUND - CLASS B
625 AIM ADVISOR REAL ESTATE FUND - CLASS B
626 AIM ADVISOR INTERNATIONAL VALUE FUND -
630 AIM EUROPEAN DEVELOPMENT FUND - CLASS B
631 AIM ASIAN GROWTH FUND - CLASS B
634 AIM SMALL CAP OPPORTUNITIES - CLASS B
640 AIM WEINGARTEN FUND - CLASS B
641 AIM DOLLAR FUND - CLASS B
642 AIM NEW PACIFIC GROWTH FUND CLASS B
643 AIM EUROPE GROWTH FUND CLASS B
644 AIM JAPAN GROWTH FUND CLASS B
645 AIM CHARTER FUND - CLASS B
646 AIM MID CAP GROWTH FUND CLASS B
647 AIM WORLDWIDE GROWTH FUND CLASS B
648 AIM STRATEGIC INCOME FUND CLASS B
649 AIM GLOBAL GOVERNMENT INCOME FUND CLASS
650 AIM SELECT GROWTH FUND - CLASS B
651 AIM GLOBAL HEALTH CARE FUND CLASS B
653 AIM LATIN AMERICAN GROWTH FUND CLASS B
655 AIM GLOBAL UTILITIES FUND - CLASS B
656 AIM EMERGING MARKETS FUND CLASS B
657 AIM GLOBAL FINANCIAL SERVICES FUND CLAS
658 AIM GLOBAL HIGH INCOME FUND CLASS B
659 AIM GLOBAL INFRASTRUCTURE FUND CLASS B
660 AIM INTERMEDIATE GOVERNMENT FUND - CLAS
661 AIM GLOBAL RESOURCES FUND CLASS B
662 AIM GLOBAL CONSUMER PRODUCTS AND SERVIC
663 AIM AMERICA VALUE FUND CLASS B
664 AIM SMALL CAP EQUITY FUND - CLASS B
665 AIM INCOME FUND - CLASS B
670 AIM MUNICIPAL BOND FUND - CLASS B
675 AIM HIGH YIELD FUND - CLASS B
676 AIM DEVELOPING MARKETS FUND CLASS B
Page 3
<PAGE>
EXHIBIT 1
List of Funds
677 AIM INTERNATIONAL GROWTH FUND CLASS B
678 AIM GLOBAL GROWTH AND INCOME FUND CLASS
679 AIM GLOBAL TELECOMMUNICATIONS FUND CLAS
680 AIM MONEY MARKET FUND - CLASS B
684 AIM NEW DIMENSION FUND CLASS B
685 AIM BALANCED FUND - CLASS B
690 AIM VALUE FUND - CLASS B
691 AIM GLOBAL AGGRESSIVE GROWTH FUND - CLA
692 AIM GLOBAL INCOME FUND - CLASS B
693 AIM GLOBAL INCOME FUND - CLASS B
694 AIM INTERNATIONAL EQUITY FUND - CLASS B
695 AIM FLOATING RATE FUND
800 SHORT-TERM INVESTMENTS TRUST - TREASURY
841 AIM DOLLAR FUND ADVISOR CLASS
842 AIM NEW PACIFIC GROWTH ADVISOR CLASS
843 AIM EUROPE GROWTH ADVISOR CLASS
844 AIM JAPAN GROWTH ADVISOR CLASS
846 AIM MID CAP GROWTH ADVISOR CLASS
847 AIM WORLDWIDE GROWTH ADVISOR CLASS
848 AIM STRATEGIC INCOME ADVISOR CLASS
849 AIM GLOBAL GOVT INCOME ADVISOR CLASS
851 AIM GLOBAL HEALTH CARE ADVISOR CLASS
853 AIM LATIN AMERICAN GROWTH ADVISOR CLASS
856 AIM EMERGING MARKETS ADVISOR CLASS
857 AIM GLOBAL FINANCIAL SERVICES ADVISOR C
858 AIM GLOBAL HIGH INCOME ADVISOR CLASS
859 AIM GLOBAL INFRASTRUCTURE ADVISOR CLASS
861 AIM GLOBAL RESOURCES ADVISOR CLASS
862 AIM GLOBAL CONSUMER PRODUCTS & SERVICES
863 AIM AMERICAN VALUE FUND ADVISOR CLASS
864 AIM SMALL CAP EQUITY ADVISOR CLASS
876 AIM DEVELOPING MARKETS ADVISOR CLASS
877 AIM INTERNATIONAL GROWTH ADVISOR CLASS
878 AIM GLOBAL GROWTH & INCOME ADVISOR CLAS
879 AIM GLOBAL TELECOMMUNICATIONS ADVISOR C
884 AIM NEW DIMENSION ADVISOR CLASS
Page 4
<PAGE>
EXHIBIT 1.1a OF SCHEDULE G
SPECIFICATIONS
TABLE OF CONTENTS
III. HIGH LEVEL OVERVIEW OF IMPRESS PLUS FUNCTIONALITY
E. Computer Output to Laser Disc (COLD)
----------------------------------------------------------------------
This item is the property of First Data Investor Services Group (First
Data) of Boston, Massachusetts, and contains confidential and trade
secret information. This item may not be transferred from the custody
or control of First Data except as authorized by, and then only by way
of loan for limited purposes. It must be returned to First Data upon
request and, in all events, upon completion of the purpose of the loan.
Neither this item nor the information it contains may be used or
disclosed to persons not having a need for such use or disclosure
consistent with the purpose of the loan, without the prior written
consent of First Data.
Copyright First Data Investor Services Group
1994, 1995, 1996, 1997
ALL RIGHTS RESERVED
This media contains unpublished confidential, and proprietary
information of First Data Investor Services Group. No disclosure or
use of any portion of these materials may be made without the express
written consent of First Data Investor Services Group.
----------------------------------------------------------------------
<PAGE>
COMPUTER OUTPUT TO LASER DISC (COLD)
IMPRESSPlus
Computer Output The IMPRESS Plus COLD module is a client/server based,
to Laser Disc (COLD) graphical user interface (GUI) system designed to provide
an intelligent real-time application to enable clients to
improve the quality of the service provided to both
shareholders and broker dealers. This system provides
functionality in the following areas:
Statements and Taxforms
IMPRESS Plus COLD provides the client with on-line
access to shareholder and broker statements and tax
forms. The print mail output stream is stored on
optical platters for retrieval and printing later. The
forms and statements can be searched for on-line
through a common browse window integrated with the
IMPRESS Plus Imaging application. Daily output
journals can also be migrated to on-line access
eliminating microfiche.
Technical Overview
IMPRESS Plus COLD is a high-speed, electronic document
storage and retrieval system which utilizes the
high-density, low-cost storage capabilities of optical and
RAID disks. IMPRESS Plus COLD operates in a true
client/server environment and has the capability to
simultaneously store multiple document types in a single
system. Among these document types are traditional Line
Data; AFP; MetaCode; DJDE; Scanned Images, etc. Each of
these data types can be stored on a single system and are
all viewed with a common viewer.
IMPRESS Plus utilizes third-party Metacode composition
software from Gentext, Inc. and third-party viewing
software from CDP for local viewing and Adobe
Intranet/Internet viewing.
<PAGE>
EXHIBIT 2.3 OF SCHEDULE C
IMPRESS PLUS COLD
EQUIPMENT LIST AND NETWORK CONFIGURATION
<TABLE>
<CAPTION>
QUANTITY CATEGORY DESCRIPTION
----------------------------------------------------------------------------------------------------
<S> <C> <C>
1 JUKEBOX Phillips 12Gb Tower Drive w/onsite installation
----------------------------------------------------------------------------------------------------
2 JUKEBOX Phillips 6000 series media (10 to a box)
----------------------------------------------------------------------------------------------------
1 JUKEBOX Cygnet 1802-2 with Philips Drives and SCSI Robotics
----------------------------------------------------------------------------------------------------
1 JUKEBOX COLD Feet
----------------------------------------------------------------------------------------------------
1 SUN CPU SUN Ultra 3000 base, CD-ROM, Solaris license, Cooling package,
(2) 250MHZ Cpu's 4mb Cache, (1) CPU/Memory Board/SharedApp
----------------------------------------------------------------------------------------------------
2 SUN CPU SUN Sbus I/O Board
----------------------------------------------------------------------------------------------------
2 SUN CPU SUN 256Mb RAM Kit
----------------------------------------------------------------------------------------------------
2 SUN CPU SUN 7200 RPM 9.1Gb Internal Hard Drive
----------------------------------------------------------------------------------------------------
2 SUN CPU Enterprise Power/Cooling Module 300W
----------------------------------------------------------------------------------------------------
1 SUN CPU Second Peripheral Power Supply
----------------------------------------------------------------------------------------------------
2 SUN CPU X1052A Fast Differential/Buffered E-Net Card (SCSI Controller)
----------------------------------------------------------------------------------------------------
2 SUN CPU X1062A fast Wide Differential/Sbus Card (SCSI Controller)
----------------------------------------------------------------------------------------------------
1 SUN CPU SUN 17" Color Monitor and TGX Card
----------------------------------------------------------------------------------------------------
1 SUN CPU SUN DLT7000 35-70Gb External Tape Drive w/50-68 pin cable
----------------------------------------------------------------------------------------------------
1 IBM Netfinity Rack Cabinet with Power Supply
----------------------------------------------------------------------------------------------------
1 DISK SUB Data General Clarion 2900D Raid Array w/2 SP's, and 3 PS's
(20) Drive Chassis
----------------------------------------------------------------------------------------------------
1 DISK SUB DG Clarion 64mb mirrored cache upgrade
----------------------------------------------------------------------------------------------------
2 DISK SUB Solaris Interface Kit
----------------------------------------------------------------------------------------------------
5 DISK SUB Data General 7200 RPM 18Gb Disc Drives
----------------------------------------------------------------------------------------------------
1 UPS Exide Electronics Powerware Plus 12 10 Kva UPS for SUN
CPU, DISK SUB and JUKEBOX
----------------------------------------------------------------------------------------------------
1 UPS Exide Power Distribution Module for Powerware Plus 12
w/(1) L5-30 and (3) 5-15 receptacles
----------------------------------------------------------------------------------------------------
1 NDM NDM TCP-IP 2 Concurrent Sessions SUN
----------------------------------------------------------------------------------------------------
3 PREPRO PC Config #1
----------------------------------------------------------------------------------------------------
1 SUPPORT PC Config #1/software/modem
----------------------------------------------------------------------------------------------------
2 CABLES 25' Differential SCSI Cables (M) HD68 Thumbscrews (M)
----------------------------------------------------------------------------------------------------
2 CABLES Active Differential Terminators Min DB-50
----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 9(c)
MASTER ADMINISTRATIVE SERVICES AGREEMENT
This MASTER ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is made
this 24th day of June, 1998 by and between A I M ADVISORS, INC., a Delaware
corporation (the "Administrator") and AIM SPECIAL OPPORTUNITIES FUNDS, a
Delaware business trust (the "Company") with respect to the separate series
set forth in Appendix A to this Agreement, as the same may be amended from
time to time (the "Portfolios").
W I T N E S S E T H:
WHEREAS, the Company is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Company, on behalf of the Portfolios, has retained the
Administrator to provide investment advisory services pursuant to a Master
Investment Advisory Agreement which provides that the Administrator may perform
(or arrange for the performance of) accounting, shareholder servicing and other
administrative services as well as investment advisory services to the
Portfolios, and that the Administrator may receive reasonable compensation or
may be reimbursed for its costs in providing such additional services, upon the
request of the Board of Trustees and upon a finding by the Board of Trustees
that the provision of such services is in the best interest of the Portfolios
and their shareholders; and
WHEREAS, the Board of Trustees has found that the provision of such
administrative services is in the best interest of the Portfolios and their
shareholders, and has requested that the Administrator perform such services;
NOW, THEREFORE, the parties hereby agree as follows:
1. The Administrator hereby agrees to provide, or arrange for the
provision of, any or all of the following services by the Administrator or its
affiliates:
(a) the services of a principal financial officer of the Company
(including related office space, facilities and equipment) whose
normal duties consist of maintaining the financial accounts and books
and records of the Company and the Portfolios, including the review of
daily net asset value calculations and the preparation of tax returns;
and the services (including related office space, facilities and
equipment) of any of the personnel operating under the direction of
such principal financial officer;
(b) the services of staff to respond to shareholder inquiries
concerning the status of their accounts; providing assistance to
shareholders in exchanges among the mutual funds managed or advised by
the Administrator; changing account designations or changing
addresses; assisting in the purchase or redemption of shares of the
Portfolios; supervising the operations of the custodian(s), transfer
agent(s) or dividend agent(s) for the Portfolios; or otherwise
providing services to shareholders of the Portfolios; and
<PAGE>
(c) such other administrative services as may be furnished from time
to time by the Administrator to the Company or the Portfolios at the
request of the Company's Board of Trustees.
2. The services provided hereunder shall at all times be subject to the
direction and supervision of the Company's Board of Trustees.
3. As full compensation for the services performed and the facilities
furnished by or at the direction of the Administrator, the Portfolios shall
reimburse the Administrator for expenses incurred by them or their affiliates in
accordance with the methodologies established from time to time by the Company's
Board of Trustees. Such amounts shall be paid to the Administrator on a
quarterly basis.
4. The Administrator shall not be liable for any error of judgment or for
any loss suffered by the Company or the Portfolios in connection with any matter
to which this Agreement relates, except a loss resulting from the
Administrator's willful misfeasance, bad faith or gross negligence in the
performance of its duties or from reckless disregard of its obligations and
duties under this Agreement.
5. The Company and the Administrator each hereby represent and warrant,
but only as to themselves, that each has all requisite authority to enter into,
execute, deliver and perform its obligations under this Agreement and that this
Agreement is legal, valid and binding, and enforceable in accordance with its
terms.
6. Nothing in this Agreement shall limit or restrict the rights of any
director, officer or employee of the Administrator who may also be a trustee,
officer or employee of the Company to engage in any other business or to devote
his time and attention in part to the management or other aspects of any
business, whether of a similar or a dissimilar nature, nor limit or restrict the
right of the Administrator to engage in any other business or to render services
of any kind to any other corporation, firm, individual or association.
7. This Agreement shall continue in effect with respect to a Fund for
an initial period of two years and may be continued from year to year
thereafter; provided that the continuation of the Agreement is specifically
approved at least annually:
(a) (i) by the Company's Board of Trustees or (ii) by the vote
of a majority of the outstanding voting securities of the Company (as
defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the trustees who are
not parties to this Agreement or "interested persons" (as defined in the
1940 Act) of a party to this Agreement (other than as Company trustees),
by votes cast in person at a meeting specifically called for such purpose.
This Agreement shall terminate automatically in the event of its assignment
(as defined in Section 2(a) (4) of the 1940 Act) or, with respect to one or more
Portfolios in the event of termination of the Master Investment Advisory
Agreement relating to such Portfolio(s) between the Company and the
Administrator.
2
<PAGE>
8. This Agreement may be amended or modified with respect to one or more
Portfolios, but only by a written instrument signed by both the Company and the
Administrator.
9. Notice is hereby given that, as provided by applicable law, the
obligations of or arising out of this Agreement are not binding upon any of
the shareholders of the Company individually but are binding only upon the
assets and property of the Company and that the shareholders shall be
entitled, to the fullest extent permitted by applicable law, to the same
limitation on personal liability as stockholders of private corporations for
profit.
11. Any notice or other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (a) to the Administrator at Eleven Greenway Plaza, Suite
100, Houston, Texas 77046, Attention: President, with a copy to the General
Counsel, or (b) to the Company at Eleven Greenway Plaza, Suite 100, Houston,
Texas 77046, Attention: President, with a copy to the General Counsel.
12. This Agreement contains the entire agreement between the parties
hereto and supersedes all prior agreements, understandings and arrangements with
respect to the subject matter hereof.
13. This Agreement shall be governed by and construed in accordance with
the laws (without reference to conflicts of law provisions) of the State of
Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
A I M ADVISORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
----------------------------- -----------------------------
Assistant Secretary President
(SEAL)
AIM SPECIAL OPPORTUNITIES FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
----------------------------- -----------------------------
Assistant Secretary President
(SEAL)
3
<PAGE>
APPENDIX A
TO
MASTER ADMINISTRATIVE SERVICES AGREEMENT
OF
AIM SPECIAL OPPORTUNITIES FUNDS
AIM Small Cap Opportunities Fund
Dated: June 24, 1998
4
<PAGE>
EXHIBIT 10
CONSENT OF COUNSEL
AIM SPECIAL OPPORTUNITIES FUNDS
We hereby consent to the use of our name and to the references to our
firm under the caption "Organization of the Trust - Legal Counsel" in the
Prospectus for AIM Small Cap Opportunities Fund and under the caption
"Miscellaneous Information - Legal Matters" in the Statement of Additional
Information for such Fund, which are included in Post-Effective Amendment No. 1
to the Registration Statement under the Securities Act of 1933 (No. 333-47949)
and Amendment No. 2 to the Registration Statement under the Investment Company
Act of 1940 (No. 811-08697) on Form N-1A of AIM Special Opportunities Funds.
/s/ Ballard Spahr Andrews & Ingersoll, LLP
------------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
October 2, 1998
<PAGE>
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees and Shareholders of
AIM Small Cap Opportunities Fund:
We consent to the use of our report on the AIM Small Cap Opportunities Fund (a
series of AIM Special Opportunities Funds) dated September 4, 1998 included
herein and the references to our firm under the headings "Financial Highlights"
in the AIM Small Cap Opportunities Fund Prospectus and "Audit Reports" in the
Statement of Additional Information.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
<PAGE>
EXHIBIT 15(a)
MASTER DISTRIBUTION PLAN
OF
AIM SPECIAL OPPORTUNITIES FUNDS
(CLASS A SHARES AND CLASS C SHARES)
SECTION 1. AIM Special Opportunities Funds, a Delaware business
trust (the "Fund"), on behalf of the series of the Shares of beneficial
interest set forth in Appendix A attached hereto (the "Portfolios") may act
as a distributor of the Class A Shares and Class C Shares of such Portfolios
(the "Shares") of which the Fund is the issuer, pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended (the "1940 Act"), according to
the terms of this Distribution Plan (the "Plan").
SECTION 2. The Fund may incur pursuant to the terms of this Master
Distribution Plan, expenses at the rates set forth in Appendix A per annum of
the average daily net assets of the Fund attributable to the Shares, subject
to any applicable limitations imposed from time to time by applicable rules
of the National Association of Securities Dealers, Inc. and NASD Regulation,
Inc.
SECTION 3. Amounts set forth in Appendix A may be used to finance
any activity which is primarily intended to result in the sale of the Shares,
including, but not limited to, expenses of organizing and conducting sales
seminars, advertising programs, finders fees, printing of prospectuses and
statements of additional information (and supplements thereto) and reports
for other than existing shareholders, preparation and distribution of
advertising material and sales literature, overhead, supplemental payments to
dealers and other institutions as asset-based sales charges. Amounts set
forth in Appendix A may also be used to finance payments of service fees
under a shareholder service arrangement to be established by A I M
Distributors, Inc. ("Distributors") as the Fund's distributor in accordance
with Section 4, and the costs of administering the Plan. To the extent that
amounts paid hereunder are not used specifically to reimburse Distributors
for any such expense, such amounts may be treated as compensation for
Distributors' distribution-related services. All amounts expended pursuant
to the Plan shall be paid to Distributors and are the legal obligation of the
Fund and not of Distributors. That portion of the amounts paid under the Plan
that is not paid or advanced by Distributors to dealers or other institutions
that provide personal continuing shareholder service as a service fee
pursuant to Section 4 shall be deemed an asset-based sales charge. The
distribution agreement with any Distributor shall provide that the portion of
the amounts set forth in Appendix A that is an asset based sales charge with
respect to Class C Shares shall be deemed to be paid for services rendered by
the Distributor or any Dealers in placing the Class C Shares, which services
are fully performed upon the settlement of each sale of a Class C Share (or
share of another portfolio from which the Class C Share derives.) No
provision of this Plan shall be interpreted to prohibit any payments by the
Fund during periods when the Fund has suspended or otherwise limited sales.
SECTION 4.
(a) Amounts expended by the Fund under the Plan shall be used in part
for the implementation by Distributors of shareholder service arrangements
with respect to the Shares. The maximum service fee paid to any service
provider shall be twenty-five one-hundredths of one percent (0.25%) per annum
of the average daily net assets of the Fund attributable to the Shares owned
by the customers of such service provider.
<PAGE>
(b) Pursuant to this program, Distributors may enter into agreements
substantially in the form attached hereto as Exhibit A ("Service Agreements")
with such broker-dealers ("Dealers") as may be selected from time to time by
Distributors for the provision of distribution-related personal shareholder
services in connection with the sale of Shares to the Dealers' clients and
customers
("Customers") to Customers who may from time to time directly or beneficially
own Shares. The distribution-related personal continuing shareholder
services to be rendered by Dealers under the Service Agreements may include,
but shall not be limited to, the following: (i) distributing sales
literature; (ii) answering routine Customer inquiries concerning the Fund and
the Shares; (iii) assisting Customers in changing dividend options, account
designations and addresses, and in enrolling into any of several retirement
plans offered in connection with the purchase of Shares; (iv) assisting in
the establishment and maintenance of customer accounts and records, and in
the processing of purchase and redemption transactions; (v) investing
dividends and capital gains distributions automatically in Shares; and (vi)
providing such other information and services as the Fund or the Customer may
reasonably request.
(c) Distributors may also enter into Bank Shareholder Service
Agreements substantially in the form attached hereto as Exhibit B ("Bank
Agreements") with selected banks acting in an agency capacity for their
customers ("Banks"). Banks acting in such capacity will provide some or all
of the shareholder services to their customers as set forth in the Bank
Agreements from time to time.
(d) Distributors may also enter into Variable Group Annuity
Contractholder Service Agreements substantially in the form attached hereto
as Exhibit C ("Variable Contract Agreements") with selected insurance
companies ("Companies") offering variable annuity contracts to employers as
funding vehicles for retirement plans qualified under Section 401(a) of the
Internal Revenue Code, where amounts contributed under such plans are
invested pursuant to such variable annuity contracts in Shares of the Fund.
The Companies receiving payments under such Variable Contract Agreements will
provide specialized services to contractholders and plan participants, as set
forth in the Variable Contract Agreements from time to time.
(e) Distributors may also enter into Agency Pricing Agreements
substantially in the form attached hereto as Exhibit D ("Pricing Agreements")
with selected retirement plan service providers acting in an agency capacity
for their customers ("Retirement Plan Providers"). Retirement Plan Providers
acting in such capacity will provide some or all of the shareholder services
to their customers as set forth in the Pricing Agreements from time to time.
(f) Distributors may also enter into Shareholder Service Agreements
substantially in the form attached hereto as Exhibit E ("Bank Trust
Department Agreements and Brokers for Bank Trust Department Agreements") with
selected bank trust departments and brokers for bank trust departments. Such
bank trust departments and brokers for bank trust departments will provide
some or all of the shareholder services to their customers as set forth in
the Bank Trust Department Agreements and Brokers for Bank Trust Department
Agreements.
SECTION 5. Any amendment to this Plan that requires the approval of
the shareholders of a Class pursuant to Rule 12b-1 under the 1940 Act shall
become effective as to such Class upon the approval of such amendment by a
"majority of the outstanding voting securities" (as defined in the 1940 Act)
of such Class, PROVIDED that the Board of Trustees of the Fund has approved
such amendment in accordance with the provisions of Section 6 of this Plan.
-2-
<PAGE>
SECTION 6. This Plan, any amendment to this Plan and any agreements
related to this Plan shall become effective with respect to any Class of any
Portfolio immediately upon the receipt by the Fund of both (a) the
affirmative vote of a majority of the Board of Trustees of the Fund, and (b)
the affirmative vote of a majority of those trustees of the Fund who are not
"interested persons" of the Fund (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of this Plan or any
agreements related to it (the "Dis-interested Trustees"), cast in person at a
meeting called for the purpose of voting on this Plan or such agreements.
Notwithstanding the foregoing, no such amendment that requires the approval
of the shareholders of a Class of a Portfolio shall become effective as to
such Class until such amendment has been approved by the shareholders of such
Class in accordance with the provisions of Section 5 of this Plan.
SECTION 7. Unless sooner terminated pursuant to Section 9, this Plan
shall continue in effect until June 30, 1999 and thereafter shall continue in
effect so long as such continuance is specifically approved, at least annually,
in the manner provided for approval of this Plan in Section 6.
SECTION 8. Distributors shall provide to the Fund's Board of
Trustees and the Board of Trustees shall review, at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 9. This Plan may be terminated with respect to the shares of
a Class of any Portfolio at any time by vote of a majority of the
Dis-interested Trustees, or by vote of a majority of the outstanding shares
of such Class of such Portfolio. Upon termination of this Plan with respect
to any or all such Classes, the obligation of the Fund to make payments
pursuant to this Plan with respect to such Classes shall terminate, and the
Fund will not be required to make any payments beyond the termination date
even with respect to expenses incurred prior to the termination date.
SECTION 10. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated with respect to the shares of
any Class of any Portfolio at any time, without payment of any penalty, by
vote of a majority of the Dis-interested Trustees or by a vote of the
majority of the outstanding shares of such Class of such Portfolio, on not
more than sixty (60) days' written notice to any other party to the
agreement; and
(b) that such agreement shall terminate automatically in the event of
its assignment.
SECTION 11. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved in the manner provided in Section 5 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for in Section 6 hereof.
-3-
<PAGE>
AIM SPECIAL OPPORTUNITIES FUNDS
(on behalf of its Class A Shares and
Class C Shares)
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
------------------------------- -------------------------------
Assistant Secretary President
Effective Date: June 24 , 1998
------------------
-4-
<PAGE>
APPENDIX A
TO
MASTER DISTRIBUTION PLAN
OF
AIM SPECIAL OPPORTUNITIES FUNDS
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all services
rendered and all facilities furnished under the Distribution Plan for each
Portfolio as designated below, a Distribution Fee* determined by applying the
annual rate set forth below as to each Portfolio (or Class A and Class C
thereof) to the average daily net assets of the Portfolio (or Class A and
Class C thereof) for the plan year, computed in a manner used for the
determination of the offering price of shares of the Portfolio (or Class A
and Class C thereof).
<TABLE>
<CAPTION>
MINIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO CHARGE FEE FEE
- --------- ------ --- ---
(Class A Shares)
<S> <C> <C> <C>
AIM Small Cap Opportunities Fund 0.10% 0.25% 0.35%
<CAPTION>
PORTFOLIO
- ---------
(Class C Shares)
<S> <C> <C> <C>
AIM Small Cap Opportunities Fund 0.75% 0.25% 1.00%
</TABLE>
- ------------------------------------
* The Distribution Fee is payable apart from the sales charge, if any, as
stated in the current prospectus for the Portfolio.
-5-
<PAGE>
1 EXHIBIT 15(b)
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 such Funds (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 and Schedule A 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 or Statement of Additional Information for the
Funds, and you shall have no authority to act as agent for the Funds
or for Distributors.
09/98
<PAGE>
2
9 We may enter into other similar Shareholder Service Agreements with any
other person without your consent.
10 This Agreement 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
09/98
<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>
09/98
<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 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 High Yield Fund II A Shares 0.25 October 1, 1998
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 Select Growth Fund A Shares 0.25 July 1, 1992
AIM Select Growth Fund B Shares 0.25 September 1, 1993
AIM Select Growth Fund C Shares 1.00** August 4, 1997
AIM Small Cap Opportunities Fund A Shares 0.25 June 29, 1998
AIM Small Cap Opportunities Fund B Shares 0.25 July 13, 1998
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>
09/98
<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 the
remainder 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.
THE FOLLOWING FUNDS ARE ADDED AS OF THE CLOSE OF BUSINESS MAY 29, 1998:
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM America Value Fund A Shares 0.25 May 29, 1998
AIM America Value Fund B Shares 0.25 May 29, 1998
AIM Developing Markets Fund A Shares 0.25 May 29, 1998
AIM Developing Markets Fund B Shares 0.25 May 29, 1998
AIM Emerging Markets Fund A Shares 0.40** May 29, 1998
AIM Emerging Markets Fund B Shares 0.25 May 29, 1998
AIM Europe Growth Fund A Shares 0.25 May 29, 1998
AIM Europe Growth Fund B Shares 0.25 May 29, 1998
AIM Global Consumer Products and
Services Fund A Shares 0.40** May 29, 1998
AIM Global Consumer Products and
Services Fund B Shares 0.25 May 29, 1998
AIM Global Financial Services Fund A Shares 0.40** May 19, 1998
AIM Global Financial Services Fund B Shares 0.25 May 19, 1998
AIM Global Government Income Fund A Shares 0.25 May 29, 1998
AIM Global Government Income Fund B Shares 0.25 May 29, 1998
AIM Global Growth & Income Fund A Shares 0.25 May 29, 1998
AIM Global Growth & Income Fund B Shares 0.25 May 29, 1998
AIM Global Health Care Fund A Shares 0.40** May 29, 1998
AIM Global Health Care Fund B Shares 0.25 May 29, 1998
AIM Global High Income Fund A Shares 0.25 May 29, 1998
AIM Global High Income Fund B Shares 0.25 May 29, 1998
AIM Global Infrastructure Fund A Shares 0.40** May 29, 1998
AIM Global Infrastructure Fund B Shares 0.25 May 29, 1998
AIM Global Resources Fund A Shares 0.40** May 29, 1998
AIM Global Resources Fund B Shares 0.25 May 29, 1998
AIM Global Telecommunications Fund A Shares 0.40** May 29, 1998
AIM Global Telecommunications Fund B Shares 0.25 May 29, 1998
AIM International Growth Fund A Shares 0.25 May 29, 1998
AIM International Growth Fund B Shares 0.25 May 29, 1998
AIM Japan Growth Fund A Shares 0.25 May 29, 1998
AIM Japan Growth Fund B Shares 0.25 May 29, 1998
AIM Latin American Growth Fund A Shares 0.40** May 29, 1998
AIM Latin American Growth Fund B Shares 0.25 May 29, 1998
AIM Mid Cap Growth Fund A Shares 0.25 May 29, 1998
AIM Mid Cap Growth Fund B Shares 0.25 May 29, 1998
AIM New Dimension Fund A Shares 0.40** May 29, 1998
AIM New Dimension Fund B Shares 0.25 May 29, 1998
AIM New Dimension Fund C Shares 1.00** May 29, 1998
AIM New Pacific Growth Fund A Shares 0.25 May 29, 1998
AIM New Pacific Growth Fund B Shares 0.25 May 29, 1998
AIM Small Cap Equity Fund A Shares 0.25 May 29, 1998
AIM Small Cap Equity Fund B Shares 0.25 May 29, 1998
AIM Strategic Income Fund A Shares 0.25 May 29, 1998
AIM Strategic Income Fund B Shares 0.25 May 29, 1998
AIM Worldwide Growth Fund A Shares 0.25 May 29, 1998
AIM Worldwide Growth Fund B Shares 0.25 May 29, 1998
</TABLE>
* Frequency of Payments:
EFFECTIVE UNTIL JUNE 30, 1998: Class A and B share payments commence immediately
and are paid quarterly. Class C share payments commence after an initial twelve
month holding period and are paid quarterly.
** Of this amount, 0.25% is paid as a shareholder servicing fee and the
remainder is paid as an asset-based sales charge, as those terms are defined
under the rules of the National Association of Securities Dealers, Inc.
EFFECTIVE JULY 1, 1998: B share payments, like C share payments, will begin
after an initial 12 month holding period and are paid quarterly. 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 the
remainder 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.
09/98
<PAGE>
1 EXHIBIT 15(c)
EXHIBIT B
[LOGO APPEARS HERE] BANK SHAREHOLDER
AIM 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 three (3) 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.
09/98
<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, which may be amended from time to time by the Company.
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 Company 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 100, 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.
AIM 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:
AIM Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
09/98
<PAGE>
3
BANK SHAREHOLDER SERVICE AGREEMENT
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
AIM 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 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 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>
09/98
<PAGE>
4
BANK SHAREHOLDER SERVICE AGREEMENT
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
AIM 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 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 High Yield Fund II A Shares 0.25 October 1, 1998
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 Select Growth Fund A Shares 0.25 July 1, 1992
AIM Select Growth Fund B Shares 0.25 September 1, 1993
AIM Select Growth Fund C Shares 1.00** August 4, 1997
AIM Small Cap Opportunities Fund A Shares 0.25 June 29, 1998
AIM Small Cap Opportunities Fund B Shares 0.25 July 13, 1998
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>
09/98
<PAGE>
5
BANK SHAREHOLDER SERVICE AGREEMENT
<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 the
remainder 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.
THE FOLLOWING FUNDS ARE ADDED AS OF THE CLOSE OF BUSINESS MAY 29, 1998:
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM America Value Fund A Shares 0.25 May 29, 1998
AIM America Value Fund B Shares 0.25 May 29, 1998
AIM Developing Markets Fund A Shares 0.25 May 29, 1998
AIM Developing Markets Fund B Shares 0.25 May 29, 1998
AIM Emerging Markets Fund A Shares 0.40** May 29, 1998
AIM Emerging Markets Fund B Shares 0.25 May 29, 1998
AIM Europe Growth Fund A Shares 0.25 May 29, 1998
AIM Europe Growth Fund B Shares 0.25 May 29, 1998
AIM Global Consumer Products and
Services Fund A Shares 0.40** May 29, 1998
AIM Global Consumer Products and
Services Fund B Shares 0.25 May 29, 1998
AIM Global Financial Services Fund A Shares 0.40** May 19, 1998
AIM Global Financial Services Fund B Shares 0.25 May 19, 1998
AIM Global Government Income Fund A Shares 0.25 May 29, 1998
AIM Global Government Income Fund B Shares 0.25 May 29, 1998
AIM Global Growth & Income Fund A Shares 0.25 May 29, 1998
AIM Global Growth & Income Fund B Shares 0.25 May 29, 1998
AIM Global Health Care Fund A Shares 0.40** May 29, 1998
AIM Global Health Care Fund B Shares 0.25 May 29, 1998
AIM Global High Income Fund A Shares 0.25 May 29, 1998
AIM Global High Income Fund B Shares 0.25 May 29, 1998
AIM Global Infrastructure Fund A Shares 0.40** May 29, 1998
AIM Global Infrastructure Fund B Shares 0.25 May 29, 1998
AIM Global Resources Fund A Shares 0.40** May 29, 1998
AIM Global Resources Fund B Shares 0.25 May 29, 1998
AIM Global Telecommunications Fund A Shares 0.40** May 29, 1998
AIM Global Telecommunications Fund B Shares 0.25 May 29, 1998
AIM International Growth Fund A Shares 0.25 May 29, 1998
AIM International Growth Fund B Shares 0.25 May 29, 1998
AIM Japan Growth Fund A Shares 0.25 May 29, 1998
AIM Japan Growth Fund B Shares 0.25 May 29, 1998
AIM Latin American Growth Fund A Shares 0.40** May 29, 1998
AIM Latin American Growth Fund B Shares 0.25 May 29, 1998
AIM Mid Cap Growth Fund A Shares 0.25 May 29, 1998
AIM Mid Cap Growth Fund B Shares 0.25 May 29, 1998
AIM New Dimension Fund A Shares 0.40** May 29, 1998
AIM New Dimension Fund B Shares 0.25 May 29, 1998
AIM New Dimension Fund C Shares 1.00** May 29, 1998
AIM New Pacific Growth Fund A Shares 0.25 May 29, 1998
AIM New Pacific Growth Fund B Shares 0.25 May 29, 1998
AIM Small Cap Equity Fund A Shares 0.25 May 29, 1998
AIM Small Cap Equity Fund B Shares 0.25 May 29, 1998
AIM Strategic Income Fund A Shares 0.25 May 29, 1998
AIM Strategic Income Fund B Shares 0.25 May 29, 1998
AIM Worldwide Growth Fund A Shares 0.25 May 29, 1998
AIM Worldwide Growth Fund B Shares 0.25 May 29, 1998
</TABLE>
* Frequency of Payments:
EFFECTIVE UNTIL JUNE 30, 1998: Class A and B share payments commence immediately
and are paid quarterly. Class C share payments commence after an initial twelve
month holding period and are paid quarterly.
** Of this amount, 0.25% is paid as a shareholder servicing fee and the
remainder is paid as an asset-based sales charge, as those terms are defined
under the rules of the National Association of Securities Dealers, Inc.
EFFECTIVE JULY 1, 1998: B share payments, like C share payments, will beginning
after an initial 12 month holding period and are paid quarterly. 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 the
remainder 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.
09/98
<PAGE>
EXHIBIT 15(d)
EXHIBIT C
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
This Variable Group Annuity Conractholder 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>
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>
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>
APPENDIX A
TO
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
<TABLE>
<CAPTION>
Fund Fee Rate*
- ---- ---------
<S> <C>
AIM Advisor Funds, Inc. (Class A Shares and Class C Shares)
- -----------------------------------------------------------
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 and Class C Shares)
- ----------------------------------------------------------
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 and Class C Shares)
- ---------------------------------------------------
AIM Balanced Fund .25%
AIM Global Utilities Fund .25%
AIM Select 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 and Class C Shares)
- -----------------------------------------------------------------
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 High Yield Fund II .25%
AIM Limited Maturity Treasury Fund .15%
AIM Special Opportunities Funds (Class A Shares and Class C Shares)
- -------------------------------------------------------------------
AIM Small Cap Opportunities Fund .25%
</TABLE>
*Frequency of Payments: Quarterly
**AIM Aggressive Growth Fund is currently closed to new investors.
C-4
<PAGE>
EXHIBIT 15(e)
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
which may be amended from time to time by Distributor (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>
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>
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>
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>
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>
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>
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 and Class C Shares of the
Plans' balances for the prior quarter:
<TABLE>
<CAPTION>
FUND ANNUAL FEE
- ---- ----------
<S> <C>
AIM ADVISOR FUNDS, INC.
AIM Advisor Income Fund* .25%
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.
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 High Yield Fund II .25%
AIM Limited Maturity Treasury Fund .15%
</TABLE>
-7-
<PAGE>
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 Advisor Income Fund was closed to new investments on October 3, 1997.
** AIM Aggressive Growth Fund is currently closed to new investors.
-8-
<PAGE>
EXHIBIT 15(f)
EXHIBIT E
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>
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>
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>
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>
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 Select 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 High Yield Fund II
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Special Opportunities Funds
AIM Small Cap Opportunities Fund
- ---------
* Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE>
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>
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>
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>
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>
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 Select 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 High Yield Fund II
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Special Opportunities Funds
AIM Small Cap Opportunities Fund
- ----------
* Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE>
EXHIBIT 15(g)
MASTER DISTRIBUTION PLAN
OF
AIM SPECIAL OPPORTUNITIES FUNDS
(CLASS B SHARES)
(SECURITIZATION FEATURE)
SECTION 1. AIM Special Opportunities Funds, a Delaware business trust
(the "Fund"), on behalf of the series of beneficial interest set forth in
Schedule A to this plan (the "Portfolios"), may pay for distribution of the
Class B Shares of such Portfolios (the "Shares") which the Fund issues from time
to time, pursuant to Rule 12b-1 under the Investment Company Act of 1940 as
amended (the "1940 Act"), according to the terms of this Distribution Plan (the
"Plan").
SECTION 2. The Fund may incur expenses for and pay any institution
selected to act as the Fund's agent for distribution of the Shares of any
Portfolio from time to time (each, a "Distributor") at the rates set forth on
Schedule A hereto based on the average daily net assets of each class of Shares
subject to any applicable limitations imposed by the Conduct Rules of the
National Association of Securities Dealers, Inc. and NASD Regulation, Inc. in
effect from time to time (the "Conduct Rules"). All such payments are the legal
obligation of the Fund and not of any Distributor or its designee.
SECTION 3.
(a) Amounts set forth in Section 2 may be used to finance any
activity which is primarily intended to result in the sale of the
Shares, including, but not limited to, expenses of organizing and
conducting sales seminars and running advertising programs, payment of
finders fees, printing of prospectuses and statements of additional
information (and supplements thereto) and reports for other than
existing shareholders, preparation and distribution of advertising
material and sales literature, payment of overhead and supplemental
payments to dealers and other institutions as asset-based sales
charges. Amounts set forth in Section 2 may also be used to finance
payments of service fees under a shareholder service arrangement,
which may be established by each Distributor in accordance with
Section 4, and the costs of administering the Plan. To the extent
that amounts paid hereunder are not used specifically to reimburse the
Distributor for any such expense, such amounts may be treated as
compensation for the Distributor's distribution-related services. No
provision of this Plan shall be interpreted to prohibit any payments
by the Fund during periods when the Fund has suspended or otherwise
limited sales.
(b) Subject to the provisions of Sections 8 and 9 hereof,
amounts payable pursuant to Section 2 in respect of Shares of each
Portfolio shall be paid by the Fund to the Distributor in respect of
such Shares or, if more than one institution has acted or is acting as
Distributor in respect of such Shares, then amounts payable pursuant
to Section 2 in respect of such Shares shall be paid to each such
Distributor in proportion to the number of such Shares sold by or
attributable to such Distributor's distribution efforts in respect of
such Shares in accordance with allocation provisions of each
Distributor's distribution agreement (the "Distributor's
<PAGE>
12b-1 Share") notwithstanding that such Distributor's distribution
agreement with the Fund may have been terminated. That portion of the
amounts paid under the Plan that is not paid or advanced by the
Distributor to dealers or other institutions that provide personal
continuing shareholder service as a service fee pursuant to Section 4
shall be deemed an asset-based sales charge.
(c) Any Distributor may assign, transfer or pledge ("Transfer")
to one or more designees (each an "Assignee"), its rights to all or a
designated portion of its Distributor's 12b-1 Share from time to time
(but not such Distributor's duties and obligations pursuant hereto or
pursuant to any distribution agreement in effect from time to time, if
any, between such Distributor and the Fund), free and clear of any
offsets or claims the Fund may have against such Distributor. Each
such Assignee's ownership interest in a Transfer of a specific
designated portion of a Distributor's 12b-1 Share is hereafter
referred to as an "Assignee's 12b-1 Portion." A Transfer pursuant to
this Section 3(c) shall not reduce or extinguish any claims of the
Fund against the Distributor.
(d) Each Distributor shall promptly notify the Fund in writing
of each such Transfer by providing the Fund with the name and address
of each such Assignee.
(e) A Distributor may direct the Fund to pay an Assignee's 12b-1
Portion directly to such Assignee. In such event, the Distributor
shall provide the Fund with a monthly calculation of the amount of (i)
the Distributor's 12b-1 Share, and (ii) each Assignee's 12b-1 Portion,
if any, for such month (the "Monthly Calculation"). In such event,
the Fund shall, upon receipt of such notice and Monthly Calculation
from the Distributor, make all payments required under such
distribution agreement directly to the Assignee in accordance with the
information provided in such notice and Monthly Calculation upon the
same terms and conditions as if such payments were to be paid to the
Distributor.
(f) Alternatively, in connection with a Transfer, a Distributor
may direct the Fund to pay all of such Distributor's 12b-1 Share from
time to time to a depository or collection agent designated by any
Assignee, which depository or collection agent may be delegated the
duty of dividing such Distributor's 12b-1 Share between the Assignee's
12b-1 Portion and the balance of the Distributor's 12b-1 Share (such
balance, when distributed to the Distributor by the depository or
collection agent, the "Distributor's 12b-1 Portion"), in which case
only the Distributor's 12b-1 Portion may be subject to offsets or
claims the Fund may have against such Distributor.
(g) The distribution agreement with any Distributor shall
provide that the Distributor will be deemed to have performed all
services required to be performed in order to be entitled to receive
the Distributor's 12b-1 Share in respect of Shares upon the settlement
of each sale of a Share (or share of another portfolio from which the
Share derives) taken into account in determining such Distributor's
12b-1 Share (including other Shares that derive from such Share or
from shares of another portfolio).
-2-
<PAGE>
SECTION 4.
(a) Amounts expended by the Fund under the Plan shall be used in
part for the implementation by the Distributor of shareholder service
arrangements with respect to the Shares. The maximum service fee
payable to any provider of such shareholder service shall be
twenty-five one-hundredths of one percent (0.25%) per annum of the
average daily net assets of the Shares attributable to the customers
of such service provider. All such payments are the legal obligation
of the Fund and not of any Distributor or its designee.
(b) Pursuant to this Plan, the Distributor may enter into
agreements substantially in the form attached hereto as Exhibit A
("Service Agreements") with such broker-dealers ("Dealers") as may be
selected from time to time by the Distributor for the provision of
continuing shareholder services in connection with Shares held by such
Dealers' clients and customers ("Customers") who may from time to time
directly or beneficially own Shares. The personal continuing
shareholder services to be rendered by Dealers under the Service
Agreements may include, but shall not be limited to, some or all of
the following: (i) distributing sales literature; (ii) answering
routine Customer inquiries concerning the Fund and the Shares; (iii)
assisting Customers in changing dividend options, account designations
and addresses, and enrolling in any of several retirement plans
offered in connection with the purchase of Shares; (iv) assisting in
the establishment and maintenance of Customer accounts and records,
and in the processing of purchase and redemption transactions; (v)
investing dividends and capital gains distributions automatically in
Shares; (vi) performing sub-accounting; (vii) providing periodic
statements showing a Customer's shareholder account balance and the
integration of such statements with those of other transactions and
balances in the Customer's account serviced by such institution;
(viii) forwarding applicable prospectuses, proxy statements, reports
and notices to Customers who hold Shares; and (ix) providing such
other information and administrative services as the Fund or the
Customer may reasonably request.
(c) The Distributor may also enter into Bank Shareholder Service
Agreements substantially in the form attached hereto as Exhibit B
("Bank Agreements") with selected banks and financial institutions
acting in an agency capacity for their customers ("Banks"). Banks
acting in such capacity will provide some or all of the shareholder
services to their customers as set forth in the Bank Agreements from
time to time.
(d) The Distributor may also enter into Agency Pricing
Agreements substantially in the form attached hereto as Exhibit C
("Pricing Agreements") with selected retirement plan service providers
acting in an agency capacity for their customers ("Retirement Plan
Providers"). Retirement Plan Providers acting in such capacity will
provide some or all of the shareholder services to their customers as
set forth in the Pricing Agreements from time to time.
(e) The Distributor may also enter into Shareholder Service
Agreements substantially in the form attached hereto as Exhibit D
("Bank Trust Department Agreements and Brokers for Bank Trust
Department Agreements") with selected
-3-
<PAGE>
bank trust departments and brokers for bank trust departments. Such
bank trust departments and brokers for bank trust departments will
provide some or all of the shareholder services to their customers as
set forth in the Bank Trust Department Agreements and Brokers for Bank
Trust Department Agreements from time to time.
SECTION 5. This Plan , any amendment to this Plan and any agreements
related to this Plan shall not take effect with respect to any Shares of any
Portfolio until (i) it has been approved, together with any related agreements,
by votes of the majority of both (a) the Board of Trustees of the Fund, and (b)
those trustees of the Fund who are not "interested persons" of the Fund (as
defined in the 1940 Act) and have no direct or indirect financial interest in
the operation of this Plan or any agreements related to it (the "Disinterested
Trustees"), cast in person at a meeting called for the purpose of voting on this
Plan or such agreements, and (ii) the execution by the Fund and
A I M Distributors, Inc. of a Master Distribution Agreement in respect of the
Shares of such Portfolio.
SECTION 6. Unless sooner terminated pursuant to Section 8, this Plan
shall continue in effect until June 30, 1999 and thereafter shall continue in
effect so long as such continuance is specifically approved, at least annually,
in the manner provided for approval of this Plan in Section 5.
SECTION 7. Each Distributor shall provide to the Fund's Board of
Trustees and the Board of Trustees shall review, at least quarterly, a written
report of the amounts expended for distribution of the Shares and the purposes
for which such expenditures were made.
SECTION 8. This Plan may be terminated with respect to the Shares of
any Portfolio at any time by vote of a majority of the Disinterested Trustees,
or by vote of a majority of outstanding Shares of such Portfolio. Upon
termination of this Plan with respect to any or all such classes, the obligation
of the Fund to make payments pursuant to this Plan with respect to such classes
shall terminate, and the Fund shall not be required to make payments hereunder
beyond such termination date with respect to expenses incurred in connection
with Shares sold prior to such termination date, PROVIDED, in each case that
each of the requirements of a Complete Termination of this Plan in respect of
such class, as defined below, are met. A termination of this Plan with respect
to any or all Shares of any or all Portfolios shall not affect the obligation of
the Fund to withhold and pay to any Distributor contingent deferred sales
charges to which such distributor is entitled pursuant to any distribution
agreement. For purposes of this Section 8, a "Complete Termination" of this
Plan in respect of any Portfolio shall mean a termination of this Plan in
respect of such Portfolio, PROVIDED that: (i) the Disinterested Trustees of the
Fund shall have acted in good faith and shall have determined that such
termination is in the best interest of the Fund and the shareholders of such
Portfolio; (ii) the Fund does not alter the terms of the contingent deferred
sales charges applicable to Shares outstanding at the time of such termination;
and (iii) unless the applicable Distributor at the time of such termination was
in material breach under the distribution agreement in respect of such
Portfolio, the Fund shall not, in respect of such Portfolio, pay to any person
or entity, other than such Distributor or its designee, either the asset-based
sales charge or the service fee (or any similar fee) in respect of the Shares
sold by such Distributor prior to such termination.
SECTION 9. Any agreement related to this Plan shall be made in writing,
and shall provide:
(a) that such agreement may be terminated with respect to the
Shares of any or all Portfolios at any time, without payment of any
penalty, by vote of a
-4-
<PAGE>
majority of the Disinterested Trustees or by a vote of the majority of
the outstanding Shares of such Portfolio, on not more than sixty (60)
days' written notice to any other party to the agreement; and
(b) that such agreement shall terminate automatically in the
event of its assignment; PROVIDED, however, that, subject to the
provisions of Section 8 hereof, if such agreement is terminated for
any reason, the obligation of the Fund to make payments of (i) the
Distributor's 12b-1 Share in accordance with the directions of the
Distributor pursuant to Section 3(e) or (f) hereof if there exist
Assignees for all or any portion of such Distributor's 12b-1 Share,
and (ii) the remainder of such Distributor's 12b-1 Share to such
Distributor if there are no Assignees for such Distributor's 12b-1
Share, pursuant to such agreement and this Plan will continue with
respect to the Shares until such Shares are redeemed or automatically
converted into another class of shares of the Fund.
SECTION 10. This Plan may not be amended with respect to the Shares of
any Portfolio to increase materially the amount of distribution expenses
provided for in Section 2 hereof unless such amendment is approved by a vote of
at least a "majority of the outstanding voting securities" (as defined in the
1940 Act) of the Shares of such Portfolio, and no material amendment to the Plan
with respect to the Shares of any Portfolio shall be made unless approved in the
manner provided for in Section 5 hereof.
AIM SPECIAL OPPORTUNITIES FUNDS
(on behalf of its Class B Shares)
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
------------------------- --------------------------------
Assistant Secretary President
Effective Date: June 24 , 1998.
----------
-5-
<PAGE>
SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM SPECIAL OPPORTUNITIES FUNDS
(DISTRIBUTION FEE)
<TABLE>
<CAPTION>
MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE FEE
---- ------------ --- ---
<S> <C> <C> <C>
AIM Small Cap Opportunities Fund 0.75% 0.25% 1.00%
(Class B Shares)
</TABLE>
-6-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Small
Cap Opportunities Fund Class A Shares July 31, 1998 annual report.
</LEGEND>
<CIK> 0001054647
<NAME> AIM SPECIAL OPPORTUNITIES FUNDS
<SERIES>
<NUMBER> 1
<NAME> AIM SMALL CAP OPPORTUNITIES FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JUL-31-1998
<INVESTMENTS-AT-COST> 212449480
<INVESTMENTS-AT-VALUE> 208374188
<RECEIVABLES> 10158754
<ASSETS-OTHER> 1469892
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 219856175
<PAYABLE-FOR-SECURITIES> 22943225
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5088767
<TOTAL-LIABILITIES> 28031992
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 197747885
<SHARES-COMMON-STOCK> 19546439
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 150924
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1217379
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (7292005)
<NET-ASSETS> 191824183
<DIVIDEND-INCOME> 4870
<INTEREST-INCOME> 306109
<OTHER-INCOME> 0
<EXPENSES-NET> (162430)
<NET-INVESTMENT-INCOME> 148549
<REALIZED-GAINS-CURRENT> 1217379
<APPREC-INCREASE-CURRENT> (7292005)
<NET-CHANGE-FROM-OPS> (5926077)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 203892000
<NUMBER-OF-SHARES-REDEEMED> (2184000)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (5926077)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 86671
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 163993
<AVERAGE-NET-ASSETS> 55102897
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> (0.26)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.76
<EXPENSE-RATIO> 1.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the AIM Small
Cap Opportunities Fund Class B Shares July 31, 1998 annual report.
</LEGEND>
<CIK> 0001054647
<NAME> AIM SPECIAL OPPORTUNITIES FUNDS
<SERIES>
<NUMBER> 2
<NAME> AIM SMALL CAP OPPORTUNITIES FUND CLASS B SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JUL-31-1998
<INVESTMENTS-AT-COST> 212449480
<INVESTMENTS-AT-VALUE> 208371188
<RECEIVABLES> 10158754
<ASSETS-OTHER> 1469892
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 219856175
<PAYABLE-FOR-SECURITIES> 22943225
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5088767
<TOTAL-LIABILITIES> 28031992
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 197747885
<SHARES-COMMON-STOCK> 19546439
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 150924
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1217379
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (7292005)
<NET-ASSETS> 191824183
<DIVIDEND-INCOME> 4870
<INTEREST-INCOME> 306109
<OTHER-INCOME> 0
<EXPENSES-NET> (162430)
<NET-INVESTMENT-INCOME> 148549
<REALIZED-GAINS-CURRENT> 1217379
<APPREC-INCREASE-CURRENT> (7292005)
<NET-CHANGE-FROM-OPS> (5926077)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 203892000
<NUMBER-OF-SHARES-REDEEMED> (2184000)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (5926077)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 86671
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 163993
<AVERAGE-NET-ASSETS> 40760109
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> (0.25)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.76
<EXPENSE-RATIO> 2.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
