<PAGE>
As filed with the Securities and Exchange Commission on May 21, 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
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Pre-Effective Amendment No. 1 X
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Post-Effective Amendment No.
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 1 X
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(Check appropriate box or boxes.)
AIM SPECIAL OPPORTUNITIES FUNDS
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(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
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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)
______ immediately upon filing pursuant to paragraph (b)
______ on [ ], 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>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
<TABLE>
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FORM N-1A ITEM PROSPECTUS CAPTION
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<S> <C> <C>
Part A
Item 1. Cover Page. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cover Page
Item 2. Synopsis. . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses
Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
Item 4. General Description of Registrant . . . . . . . . . . . . . .Cover Page; Investment Objectives;
Summary; Investment Program;
Management; General Information;
Item 5. Management of the Fund. . . . . . . . . . . . . . . . . . . . . . .Summary; Investment Program;
Management; General Information
Item 5A. Management's Discussion of Fund Performance . . . . . . . . . . . . . . . . . . .Not Applicable
Item 6. Capital Stock and Other Securities. . . . . . . . . . . . . . . . . . . . .Summary; Management;
Organization of the Trust; Special Plans;
Dividends, Distributions and Tax Matters;
General Information
Item 7. Purchase of Securities Being Offered. . . . . . . . . . . . . . . . . . . Summary; Management;
How to Purchase Shares;
Terms and Conditions of Purchase
of the AIM Funds; How to Redeem Shares;
Special Plans; Exchange Privilege;
Determination of Net Asset Value
Item 8. Redemption or Repurchase. . . . . . . . . . .Terms and Conditions of Purchase of the AIM Funds;
Exchange Privilege; How To Redeem Shares;
Special Plans
Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
STATEMENT OF ADDITIONAL INFORMATION CAPTION
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Part B
Item 10. Cover Page. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table of Contents
Item 12. General Information and History . . . . . . . . . . . . . . . Introduction; General Information
About the Trust
Item 13. Investment Objectives and Policies. . . . . . . . . . . . . Investment Objectives and Policies;
Investment Restrictions; Description
of Money Market Instruments;
Repurchase Agreements and Reverse
Repurchase Agreements; Ratings of Securities
Item 14. Management of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . Management of the Trust
Item 15. Control Persons and Principal Holders of Securities . . . . . . . Control Persons and Principal
Holders of Securities
Item 16. Investment Advisory and Other Services. . . . . . . . . Investment Advisory and Other Services;
The Distribution Plans; The Distributor
Item 17. Brokerage Allocation and Other Practices. . . . . . . . . .Portfolio Transactions and Brokerage
Item 18. Capital Stock and Other Securities. . . . . . . . . . . . . General Information About the Trust
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered. . . . . . . . . . . . . . . . . . .How to Purchase and Redeem Shares;
Qualifying for a Reduced Front-End
Sales Charge; Programs and Services
for Shareholders; Redemptions Paid in Cash
Item 20. Tax Status. . . . . . . . . . . . . . . . . . . . . . .Dividends, Distributions and Tax Matters
Item 21. Underwriters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Distributor
Item 22. Calculation of Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . Performance
Item 23. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . .Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION. DATED [ ]
[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 , 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 ____, 1998, has been filed with the
United States Securities and Exchange Commission (the "SEC") and
is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to
the 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.
<PAGE>
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TABLE OF CONTENTS
<TABLE>
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PAGE
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SUMMARY................................................................... 2
THE FUND.................................................................. 4
Table of Fees and Expenses.............................................. 4
Performance............................................................. 5
Investment Program...................................................... 5
Management.............................................................. 11
Organization of the Trust............................................... 14
Future Fund Closure..................................................... 15
Control Persons......................................................... 15
INVESTOR'S GUIDE TO THE AIM SMALL CAP OPPORTUNITIES FUND.................. A-1
<CAPTION>
PAGE
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<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
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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 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 over 50 investment company portfolios
(including the Fund) encompassing a broad range of investment objectives. Under
the Master Investment Advisory Agreement dated as of [ ] (the "Master
Advisory Agreement"), AIM receives a fee for its services based on the Fund's
average daily net assets. Under the Master Administrative Services Agreement
between the Trust and AIM dated as of [ ] (the "Master Administrative
Services Agreement"), 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.
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. 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-").
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 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, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE>
THE FUND
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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 the first period of operation. 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
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<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............................................ 0.22% 0.28% 0.28%
--------- --------- ---------
Total Fund Operating Expenses............................. 1.57% 2.28% 2.28%
--------- --------- ---------
--------- --------- ---------
</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............................................ $70
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........................................... $101
</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........................................... $ 71
</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........................................... $ 71
</TABLE>
An investor would pay the following expenses on the same $1,000 investment in
Class C shares of the Fund, assuming no redemption at the end of each time
period.
<TABLE>
<S> <C>
1 year............................................ $ 23
3 years........................................... $ 71
</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>
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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.
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.
- --------------------------------------------------------------------------------
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(s).
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.
- ------------
(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 US companies based on
total market capitalization and represents approximately 98% of the
investable US equity market.
5
<PAGE>
- 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.
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-
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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.
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."
To the extent that the Fund invests in securities denominated in foreign
currencies, the value of the Fund's portfolio will be affected by changes in
exchange rates between currencies (including the U.S. dollar), as well as by
changes in the market value of the securities themselves. In order to mitigate
the effects of such changes, the Fund may enter into futures contracts on
foreign currencies (and related options) and may enter into forward contracts
for the purchase or sale of a specific currency at a future date at a price set
at the time of the contract. 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 contracts, and it may be difficult to enter into
closing transactions with respect to them.
There are risks associated with hedging transactions. During certain market
conditions, a hedging transaction may not completely offset a decline or rise in
the value of the Fund's portfolio securities or currency being hedged. In
addition, changes in the market value of securities or currencies may differ
substantially from the changes anticipated by the Fund when hedged positions
were established. Successful use of hedging transactions is dependent upon AIM's
ability to predict correctly movements in the direction of the applicable
markets. No assurance can be given that AIM's judgment in this respect will be
correct. Accordingly, the Fund may lose the expected benefit of hedging if
markets move in an unanticipated manner. Moreover, in the futures and options on
futures markets, it may not always be possible to execute a put or sell at the
desired price, or to close out an open position due to market conditions, limits
on open positions, and/or daily price fluctuations.
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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.
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.
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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.
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. The Fund
may purchase and sell options on futures contracts or forward contracts which
are denominated in a particular
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foreign currency to hedge the risk of fluctuations in the value of another
currency. The Fund's dealings in foreign exchange will be limited to hedging
involving either specific transactions or portfolio positions. Transaction
hedging is the purchase or sale of foreign currency with respect to specific
receivables or payables of the Fund accruing in connection with the purchase or
sale of its portfolio securities, the sale and redemption of shares of the Fund,
or the payment of dividends and distributions by the Fund. Position hedging is
the purchase or sale of foreign currency with respect to portfolio security
positions denominated or quoted in a foreign currency. The Fund will not
speculate in foreign exchange, nor commit more than 10% of its total assets to
foreign exchange hedges.
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.
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 net 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,
10
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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 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
Advisory Agreement. AIM, together with its subsidiaries, advises or manages over
50 investment company portfolios (including the Fund) encompassing a broad range
of investment objectives. AIM is a wholly owned subsidiary of AIM Management.
Under the terms of the Master Advisory Agreement, AIM supervises all aspects
of the Fund's operations and provides investment advisory services to the Fund.
AIM obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Fund. AIM will not be liable
to the Fund or its shareholders except in the case of AIM's willful misfeasance,
bad faith, gross negligence or reckless disregard of duty; provided, however,
that AIM may be liable for certain breaches of duty under the 1940 Act.
For a discussion of AIM's brokerage allocation policies and practices, see
"Portfolio Transactions and Brokerage" in the Statement of Additional
Information. In accordance with policies established by the 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.
ADMINISTRATOR AND TRANSFER AGENT. The 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 dated as of [ ]. Under the Master
Administrative Services Agreement, AIM is entitled to receive from the Fund
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.
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In addition, the Trust and AFS, P.O. Box 4739, Houston, TX 77210-4739, a
wholly owned subsidiary of AIM and registered transfer agent, have entered into
the Transfer Agency and Service Agreement, pursuant to which AFS provides
transfer agency, dividend distribution and disbursement, and shareholder
services of the Fund.
FEES AND EXPENSES. Pursuant to the Master Advisory Agreement, AIM is entitled
to receive a fee from the Fund calculated at the annual rate of 1% of the Fund's
net assets. AIM is also entitled to receive reimbursement of administrative
costs incurred on behalf of the Fund.
The Master Advisory Agreement provides that the Fund will pay or cause to be
paid all expenses of the Fund not assumed by AIM, including without limitation:
brokerage commissions, taxes, legal, auditing or governmental fees, the cost of
preparing share certificates, custodian, transfer and shareholder service agent
costs, expenses of issue, sale, redemption, and repurchase of shares, expenses
of registering and qualifying shares for sale, expenses relating to 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.
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,
dated as of [ ], on behalf of Class A and Class C shares of the Fund and
has entered into a Master Distribution Agreement, dated , 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.
12
<PAGE>
Of the aggregate amount payable under the Class A and C Plan, payments to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 0.25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions, are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A and C Plan. The Class A and C
Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Trust with respect to the
Fund.
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.
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, AIM Distributors may in its discretion from time to time
agree to waive voluntarily all or any portion of its 12b-1 fee while retaining
its ability to be reimbursed for such fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the 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.
13
<PAGE>
PORTFOLIO MANAGERS
AIM uses a team approach and a disciplined investment process in providing
investment advisory services to all of its accounts, including the Funds. AIM's
investment staff consists of approximately 135 individuals. While individual
members of AIM's investment staff are assigned primary responsibility for the
day-to-day management of each of AIM's accounts, all accounts are reviewed on a
regular basis by AIM's Investment Policy Committee to ensure that they are being
invested in accordance with the 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.
- --------------------------------------------------------------------------------
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, (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 Trust currently consists of one portfolio
(the Fund).
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.
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 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.
14
<PAGE>
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
CONTROL PERSONS
AIM provided the initial capitalization of the Fund and, accordingly, as of
the date of this Prospectus, owned all the outstanding shares of the Fund.
Although the Fund expects the sale of its shares to the public pursuant to the
Prospectus will promptly reduce the percentage of such shares owned by AIM, as
long as AIM owns over 25% of the shares of the Fund that are outstanding, it may
be presumed to be in "control" of the Fund, as defined in the 1940 Act.
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 High Yield Fund
AIM Advisor International Value Fund AIM Income Fund
AIM Advisor Large Cap Value Fund AIM Intermediate Government Fund
AIM Advisor MultiFlex Fund AIM International Equity Fund
AIM Advisor Real Estate Fund AIM Limited Maturity Treasury Fund
AIM Aggressive Growth Fund AIM Money Market Fund*
AIM Asian Growth Fund AIM Municipal Bond Fund
AIM Balanced Fund AIM Select Growth Fund
AIM Blue Chip Fund AIM Small Cap Opportunities Fund
AIM Capital Development Fund AIM Tax-Exempt Bond Fund of
AIM Charter Fund Connecticut
AIM Constellation Fund AIM Tax-Exempt Cash Fund*
AIM European Development Fund AIM Tax-Free Intermediate Fund
AIM Global Aggressive Growth Fund AIM AIM Value Fund
Global Growth Fund AIM Weingarten Fund
AIM Global Income Fund
AIM Global Utilities Fund
AIM High Income Municipal Fund
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, 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 minimum initial investment for the Fund
is $10,000. For employees of AIM 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 113000609
ABA/Routing #:
Beneficiary Account 00100366807
Number:
Beneficiary Account A I M Fund Services, Inc.
Name:
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
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 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 and 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 GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM MONEY MARKET FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
OPPORTUNITIES FUND, AIM VALUE FUND AND AIM WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE -----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION(1) PRICE INVESTED PRICE
- ----------------------------------------------------------------- ------------- ----------- -----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000(2) 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 GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND,
AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM
INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE -------------
------------------------------ AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
- ---------------------------------------------------------- --------------- ------------- -------------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000(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
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<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 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 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 be recorded on the books of the Fund. See
"Exchange Privilege -- Exchanges by
A-5
<PAGE>
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 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
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 TAX-
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<PAGE>
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 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
A-7
<PAGE>
benefit plan established for employees of AIM Management or its affiliates; (d)
any current or retired officer, director, trustee or employee, or any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, or of CIGNA Corporation or of any of its affiliated
companies, or of First Data Investor Services Group (formerly The Shareholders
Services Group, Inc.); (e) any investment company sponsored by CIGNA
Investments, Inc. or any of its affiliated companies for the benefit of its
directors' deferred compensation plans; (f) discretionary advised clients of AIM
or AIM Capital; (g) registered representatives and employees of dealers who have
entered into agreements with AIM Distributors (or financial institutions that
have arrangements with such dealers with respect to the sale of shares of the
AIM Funds) and any member of the immediate family (including spouse, children,
parents and parents of spouse) of any such person, provided that purchases at
net asset value are permitted by the policies of such person's employer; (h)
certain broker-dealers, investment advisers or bank trust departments that
provide asset allocation, similar specialized investment services or investment
company transaction services for their customers, that charge a minimum annual
fee for such services, and that have entered into an agreement with AIM
Distributors with respect to their use of the AIM Funds in connection with such
services; and (i) employees of Triformis, Inc.
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 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.
The Systematic Withdrawal Plan may be terminated at any time upon 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.
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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. 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).
- --------------------------------------------------------------------------------
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 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%
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of the public offering price of such shares; and Class A shares or shares of
certain other funds, listed below and referred to herein as the "No Load Funds,"
are sold at net asset value, without payment of a sales charge.
<TABLE>
<CAPTION>
LOAD FUNDS: LOWER LOAD FUNDS:
- ---------------------------------------------------------------- -------------------------------
<S> <C> <C>
AIM ADVISOR FLEX FUND -- CLASS AIM GLOBAL GROWTH FUND -- CLASS AIM LIMITED MATURITY TREASURY
A A FUND -- CLASS A
AIM ADVISOR INTERNATIONAL VALUE AIM GLOBAL INCOME FUND -- CLASS AIM TAX-FREE INTERMEDIATE FUND
FUND -- CLASS A A -- CLASS A
AIM ADVISOR LARGE CAP VALUE AIM GLOBAL UTILITIES FUND -- NO LOAD FUNDS:
FUND -- CLASS A CLASS A ------------------------------
AIM ADVISOR MULTIFLEX FUND -- AIM HIGH INCOME MUNICIPAL FUND AIM MONEY MARKET FUND -- AIM
CLASS A -- CLASS A CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE FUND -- AIM HIGH YIELD FUND -- CLASS A AIM TAX-EXEMPT CASH FUND --
CLASS A AIM INCOME FUND -- CLASS A CLASS A
AIM AGGRESSIVE GROWTH FUND -- AIM INTERMEDIATE GOVERNMENT
CLASS A FUND -- CLASS A
AIM ASIAN GROWTH FUND -- CLASS AIM INTERNATIONAL EQUITY FUND
A -- CLASS A
AIM BALANCED FUND -- CLASS A AIM MONEY MARKET FUND -- CLASS
AIM BLUE CHIP FUND -- CLASS A A
AIM CAPITAL DEVELOPMENT FUND -- AIM MUNICIPAL BOND FUND --
CLASS A CLASS A
AIM CHARTER FUND -- CLASS A AIM SELECT GROWTH FUND -- CLASS
AIM CONSTELLATION FUND -- CLASS A
A AIM SMALL CAP OPPORTUNITIES
AIM EUROPEAN DEVELOPMENT FUND FUND -- CLASS A
-- CLASS A AIM TAX-EXEMPT BOND FUND OF
AIM GLOBAL AGGRESSIVE GROWTH CONNECTICUT-- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM WEINGARTEN FUND -- CLASS A
</TABLE>
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; (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.
A-10
<PAGE>
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 Not Applicable Not Applicable
Value
Lower Load Funds..... Net Asset Value Net Asset Value Net Asset Not Applicable Not Applicable
Value
No Load Funds........ Offering Price if No Net Asset Value if No Net Asset Not Applicable Not Applicable
Load shares were Load shares were Value
directly purchased. Net acquired upon exchange
Asset Value if No Load of shares of any Load
shares were acquired Fund or any Lower Load
upon exchange of shares Fund; otherwise,
of any Load Fund or any Offering Price.
Lower Load Fund.
Multiple Class Funds:
Class B............ Not Applicable Not Applicable Not Applicable Net Asset Not Applicable
Value
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 Not Applicable Not Applicable
Value
Lower Load Funds..... Net Asset Value if Net Asset Value Net Asset Not Applicable Not Applicable
shares were acquired Value
upon exchange of any
Load Fund. Otherwise,
difference in sales
charge will apply.
No Load Funds........ Offering Price if No Net Asset Value if No Net Asset Not Applicable Not Applicable
Load shares were Load shares were Value
directly purchased. Net acquired upon exchange
Asset Value if No Load of shares of any Load
shares were acquired Fund or any Lower Load
upon exchange of shares Fund; otherwise,
of any Load Fund. Offering 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 Not Applicable
Value
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 solely for Class A shares of any AIM Fund
other than AIM Money Market Fund; (b) the dollar amount of the exchange must be
at least equal to the minimum investment applicable to the shares of the fund
acquired through such exchange; (c) the shares of the fund acquired through
exchange must be qualified for sale in the state in which the shareholder
resides; (d) the exchange must be made between accounts having identical
registrations and addresses; (e) the full amount of the purchase price for the
shares being exchanged must have already been received by the fund; (f) the
account from which shares have been exchanged must be coded as having a
certified taxpayer identification number on file or, in the alternative, an
appropriate Internal Revenue Service ("IRS") Form W-8 (certificate of foreign
status) or Form W-9 (certifying exempt status) must have been received by
A-11
<PAGE>
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 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.
A-12
<PAGE>
- --------------------------------------------------------------------------------
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."
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.
A-13
<PAGE>
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, 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.
A-14
<PAGE>
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
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the 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 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 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
A-15
<PAGE>
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 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 90
days of the payment of the sales charge, the shareholder's basis in the fund
shares redeemed may not include the amount of the sales charge paid, thereby
reducing the loss or increasing the gain recognized from the redemption;
however, the shareholder's basis in the fund shares purchased will include the
sales charge. Each AIM Fund may amend, suspend or cease offering this privilege
at any time as to shares redeemed after the date of such amendment, suspension
or cessation. This privilege may only be exercised once each year by a
shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of 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 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 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.
A-16
<PAGE>
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
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.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, LLP,
Philadelphia, Pennsylvania, serves as counsel to the Fund and passes upon legal
matters.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
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.
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 fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
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>
[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>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR ANY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE A
PROSPECTUS.
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 [ ]
RELATING TO THE AIM SMALL CAP OPPORTUNITIES FUND PROSPECTUS DATED [ ]
<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
Portfolio Turnover. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
INVESTMENT POLICIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Common Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Preferred Stocks. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Convertible Securities. . . . . . . . . . . . . . . . . . . . . . . . . .6
Foreign Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Foreign Exchange Transactions . . . . . . . . . . . . . . . . . . . . . .7
Rule 144A Securities. . . . . . . . . . . . . . . . . . . . . . . . . . .7
Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . .7
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . .7
Reverse Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . .8
Special Situations. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Investment in Unseasoned Issuers. . . . . . . . . . . . . . . . . . . . .8
Temporary Defensive Investments . . . . . . . . . . . . . . . . . . . . .8
HEDGING AND OTHER INVESTMENT TECHNIQUES. . . . . . . . . . . . . . . . . . . .8
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Fundamental Restrictions. . . . . . . . . . . . . . . . . . . . . . . . .11
Non-fundamental Restrictions. . . . . . . . . . . . . . . . . . . . . . .12
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . . .12
Remuneration of Trustees. . . . . . . . . . . . . . . . . . . . . . .16
AIM Funds Retirement Plan for Eligible Directors/Trustees . . . . . .17
Deferred Compensation Agreements. . . . . . . . . . . . . . . . . . .18
Investment Advisory and Administrative Services Agreements. . . . . . . .18
THE DISTRIBUTION PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
The Class A and C Plan. . . . . . . . . . . . . . . . . . . . . . . . . .20
The Class B Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Both Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
HOW TO PURCHASE AND REDEEM SHARES. . . . . . . . . . . . . . . . . . . . . . .23
NET ASSET VALUE DETERMINATION. . . . . . . . . . . . . . . . . . . . . . . . .24
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . .25
i
<PAGE>
Reinvestment of Dividends and Distributions . . . . . . . . . . . . . . .25
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Qualification as a Regulated Investment Company . . . . . . . . . . . . .25
Excise Tax on Regulated Investment Companies. . . . . . . . . . . . . . .28
Fund Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Sale or Redemption of Shares. . . . . . . . . . . . . . . . . . . . . . .30
Foreign Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . .30
Effect of Future Legislation; Local Tax Considerations. . . . . . . . . .31
MISCELLANEOUS INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . .31
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Custodian and Transfer Agent. . . . . . . . . . . . . . . . . . . . . . .31
Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . .32
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Description of Commercial Paper Ratings . . . . . . . . . . . . . . . . .32
Description of Corporate Bond Ratings . . . . . . . . . . . . . . . . . .32
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .FS
ii
<PAGE>
INTRODUCTION
AIM Special Opportunities Funds (the "Trust") is a series mutual fund. The
rules and regulations of the United States Securities and Exchange Commission
(the "SEC") require all mutual funds to furnish prospective investors certain
information concerning the activities of the fund being considered for
investment. This information is included in a Prospectus (the "Prospectus"),
dated [ ], 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 (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.
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 present at a meeting
of the Trust's shareholders, if the holders of more than 50% of the outstanding
shares
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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. The
Trust Agreement also provides for indemnification of Trust property for all loss
and expense of any shareholder held personally liable for the obligations of the
Trust. Therefore, the risk of any shareholder incurring financial loss beyond
his investment due to shareholder liability is limited to circumstances in which
the Trust 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.
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
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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).
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.
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,
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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.
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
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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.
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.
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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.
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)
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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.
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
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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 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
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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 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
9
<PAGE>
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 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.
10
<PAGE>
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.
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
11
<PAGE>
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.
(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.
12
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- --------------- ----------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*CHARLES T. BAUER (78) Trustee and Chairman of the Board of Directors, A I M Management
Chairman Group Inc.; A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company; and Vice
Chairman and Director, AMVESCAP PLC.
- ----------------------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (53) Trustee Director, ACE Limited (insurance company). Formerly,
906 Frome Lane Director, President and Chief Executive Officer, COMSAT
McLean, VA 22102 Corporation; and Chairman, Board of Governors of
INTELSAT (international communications company).
- ----------------------------------------------------------------------------------------------------------------------------------
OWEN DALY II (73) Trustee Director, Cortland Trust Inc. (investment company).
Six Blythewood Road Formerly, Director, CF & I Steel Corp., Monumental Life
Baltimore, MD 21210 Insurance Company and Monumental General Insurance
Company; and Chairman of the Board of Equitable
Bancorporation.
- ----------------------------------------------------------------------------------------------------------------------------------
EDWARD K. DUNN, JR. (62) Trustee Chairman of the Board of Directors, Mercantile Mortgage
Mercantile Mortgage Corp. Corp.; and Director, AEGON USA (insurance company).
P. O. Box 1477 Formerly, Vice Chairman of the Board of Directors and
Baltimore, MD 21203 President, Mercantile-Safe Deposit & Trust Co.; and
President, Mercantile Bankshares.
- ----------------------------------------------------------------------------------------------------------------------------------
JACK FIELDS (45) Trustee Chief Executive Officer, Texana Global, Inc. (foreign
8810 Will Clayton Pkwy. trading company). Formerly, Member of the U.S. House of
Jetero Plaza, Suite E Representatives.
Humble, Texas 77338
- ----------------------------------------------------------------------------------------------------------------------------------
**CARL FRISCHLING (61) Trustee Partner, Kramer, Levin, Naftalis & Frankel (law firm).
919 Third Avenue Director, ERD Waste, Inc. (waste management company),
New York, NY 10022 Aegis Consumer Finance (auto leasing company) and Lazard
Funds, Inc. (investment companies). Formerly Partner,
Reid & Priest (law firm); and prior thereto, Partner,
Spengler Carlson Gubar Brodsky & Frischling (law firm).
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------
* 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.
13
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- --------------- ----------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*ROBERT H. GRAHAM (51) Trustee and Director, President and Chief Executive Officer, A I M
President Management Group Inc.; Director and President, A I M
Advisors, Inc.; Director and Senior Vice President,
A I M Capital Management, Inc., A I M Distributors,
Inc., A I M Fund Services, Inc. and Fund Management
Company; and Director and Chief Executive Officer,
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.
- ----------------------------------------------------------------------------------------------------------------------------------
JOHN F. KROEGER (73) Trustee Director, Flag Investors International Fund, Inc., Flag
37 Pippins Way Investors Emerging Growth Fund, Inc., Flag Investors
Morristown, NJ 07960 Telephone Income Fund, Inc., Flag Investors Equity
Partners Fund, Inc., Total Return U.S. Treasury Fund,
Inc., Flag Investors Intermediate Term Income Fund,
Inc., Managed Municipal Fund, Inc., Flag Investors Value
Builder Fund, Inc., Flag Investors Maryland Intermediate
Tax-Free Income Fund, Inc., Flag Investors Real Estate
Securities Fund, Inc., Alex. Brown Cash Reserve Fund,
Inc. and North American Government Bond Fund, Inc.
(investment companies). Formerly, Consultant, Wendell &
Stockel Associates, Inc. (consulting firm).
- ----------------------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (55) Trustee Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
- ----------------------------------------------------------------------------------------------------------------------------------
IAN W. ROBINSON (74) Trustee Formerly, Executive Vice President and Chief Financial
183 River Drive Officer, Bell Atlantic Management Services, Inc.
Tequesta, FL 33469 (provider of centralized management services to
telephone companies); Executive Vice President, Bell
Atlantic Corporation (parent of seven telephone
companies); and Vice President and Chief Financial
Officer, Bell Telephone Company of Pennsylvania and
Diamond State Telephone Company.
- ----------------------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (58) Trustee Executive Vice President, Development and Operations,
Transco Tower, 50th Floor Hines Interests Limited Partnership (real
2800 Post Oak Blvd. estate development).
Houston, TX 77056
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------
* A director who is an "interested person" of A I M Advisors, Inc. and the
Trust as defined in the 1940 Act.
14
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- --------------- ----------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
***JOHN J. ARTHUR (53) Senior Vice Senior Vice President and Treasurer, A I M Advisors,
President and Inc.; and Vice President and Treasurer, A I M Management
Treasurer Group Inc., A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc. and Fund
Management Company.
- ----------------------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (50) Senior Vice Director and President, A I M Capital Management, Inc.;
President 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 Director and Senior Vice President, A I M Capital
President Management, Inc.; and Vice President, A I M Advisors,
Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
***CAROL F. RELIHAN (43) Senior Vice Senior Vice President, General Counsel and Secretary,
President A I M Advisors, Inc.; Vice President, General Counsel and
and Secretary Secretary, A I M Management Group Inc.; Director, Vice
President and General Counsel, Fund Management Company;
and Vice President, A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services, Inc. and
A I M Institutional Fund Services, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (38)
Vice President and Vice President and Fund Controller, A I M Advisors,
Assistant Inc.; and Assistant Vice President and Assistant
Treasurer 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.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------
***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, Kroeger (Chairman), Pennock, Robinson 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, 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
(Chairman), Dunn, Fields, Frischling, Kroeger, Pennock, Robinson and Sklar. The
Investment Committee is responsible for reviewing portfolio compliance,
brokerage allocation, portfolio investment pricing issues, interim dividend and
distribution
15
<PAGE>
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, Daly, Dunn, Fields, Kroeger, Pennock (Chairman), 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 FUNDS(1) FUNDS(2)
<S> <C> <C> <C>
- --------------------------------------------------------------------------
Charles T. Bauer $ 0 $ 0 $ 0
- --------------------------------------------------------------------------
Bruce L. Crockett 0 67,774 84,000
- --------------------------------------------------------------------------
Owen Daly II 0 103,542 84,000
- --------------------------------------------------------------------------
Edward K. Dunn Jr.(3) 0 0 0
- --------------------------------------------------------------------------
Jack Fields 0 0 71,000
- --------------------------------------------------------------------------
Carl Frischling 0 96,520 84,000
- --------------------------------------------------------------------------
Robert H. Graham 0 0 0
- --------------------------------------------------------------------------
John F. Kroeger 0 94,132 82,500
- --------------------------------------------------------------------------
Lewis F. Pennock 0 55,777 84,000
- --------------------------------------------------------------------------
Ian Robinson 0 85,912 84,000
- --------------------------------------------------------------------------
Louis S. Sklar 0 84,370 83,500
- --------------------------------------------------------------------------
</TABLE>
(1) Data reflects compensation for the calendar year ended December 31, 1997.
(2) 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.
(3) Mr. Dunn was not serving as a Trustee during the fiscal year ended December
31, 1997.
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
17
<PAGE>
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, Pennock, Robinson and
Sklar are 10, 10, 0, 0, 20, 19, 16, 10 and 8 years, respectively.
<TABLE>
<CAPTION>
ESTIMATED BENEFITS UPON RETIREMENT
Number of
Years of Annual Retainer
Service With Paid By All AIM Funds
the AIM Funds $80,000
---------------------------------------------------------
<S> <C>
10 $60,000
---------------------------------------------------------
9 $54,000
---------------------------------------------------------
8 $48,000
---------------------------------------------------------
7 $42,000
---------------------------------------------------------
6 $36,000
---------------------------------------------------------
5 $30,000
---------------------------------------------------------
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this
paragraph only, the "deferring 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 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 over 50 investment company portfolios
encompassing a broad range of
18
<PAGE>
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 trustees 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 Fund has entered into a Master Investment Advisory Agreement dated as
of [ ] (the "Master Advisory Agreement") and a Master Administrative
Services Agreement dated as of [ ] (the "Master Administrative
Services Agreement") 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 [ ], and
will continue in effect until [ ], 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.
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 net assets.
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 [ ]
and will continue in effect until [ ], 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
19
<PAGE>
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 [ ].
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 Company has also adopted a Master Distribution Plan
pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of the Fund
(the "Class B Plan", and collectively with the Class A and C Plan, the "Plans").
Under the Class B Plan, the Fund pays compensation to AIM Distributors at an
annual rate of 1.00% of the average daily net assets attributable to Class B
shares. Of such amount, the Fund pays a service fee of 0.25% of the average
daily net assets attributable to Class B shares to selected dealers and other
institutions which furnish continuing personal shareholder services to their
customers who purchase and own Class B shares. Amounts paid in accordance with
the Class B Plan may be used to finance any activity primarily intended to
result in the sale of Class B shares, including, but not limited to, printing of
prospectuses and statements of additional information and reports for other than
existing shareholders; overhead; preparation and distribution of advertising
material and sales literature; expenses of organizing and conducting sales
seminars; supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements; and costs of administering the Class B Plan. 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
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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 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.
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.
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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 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,
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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 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.
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
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persons, who because of their relationship with the Fund or with AIM and its
affiliates, are familiar with the Fund, or whose programs for purchase involve
little expense (e.g., because of the size of the transaction and shareholder
records required), AIM Distributors believes that it is appropriate and in the
Fund's best interests that such persons be permitted to purchase Class A shares
of the Fund through AIM Distributors without payment of a sales charge. The
persons who may purchase Class A shares of the Fund without a sales charge are
shown in the Prospectus.
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 CDSC) when shares
are redeemed or repurchased, dealers may charge a fair service fee for handling
the transaction.
The right of redemption may be suspended or the date of payment postponed
when (a) trading on the New York Stock Exchange is restricted, as determined by
applicable rules and regulations of the SEC, (b) the New York Stock Exchange is
closed for other than customary weekend and holiday closings, (c) the SEC has by
order permitted such suspension, or (d) an emergency as determined by the SEC
exists making disposition of portfolio securities or the valuation of the net
assets of the Fund not reasonably practicable.
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 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;
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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) 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 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
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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 companies, and securities of other issuers,
the Fund has not invested more than 5% of the value of the Fund's total assets
in securities of such issuer and as to which the Fund does not hold more than
10% of the outstanding voting securities of such issuer), and no more than 25%
of the value of its total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which the Fund controls and
which are engaged in the same or similar trades or businesses.
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.
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
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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 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 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.
27
<PAGE>
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 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
28
<PAGE>
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 (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."
29
<PAGE>
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 with
respect to the particular tax consequences to them of an investment in the Fund,
including the applicability of foreign taxes.
30
<PAGE>
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 March
15, 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.
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
The validity of the issuance of the shares of beneficial interest offered
hereby is being passed upon by Ballard Spahr Andrews & Ingersoll, LLP, 1735
Market Street, Philadelphia, Pennsylvania.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company (the "Custodian"), 225 Franklin Street,
Boston, Massachusetts 02110, is custodian of all securities and cash of the
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 "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.
PRINCIPAL HOLDERS OF SECURITIES
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas, 77046, has provided 100%
of the initial capitalization of the Trust and, as of the date of this Statement
of Additional Information, owned all of the outstanding shares of common stock
of the Trust. Consequently, the directors and officers as a group do not own
any shares of the Fund. The sale of shares of the Fund to the public pursuant
to the Prospectus will reduce the percentage of such shares owned by AIM over
time; however, as long as AIM individually owns over 25%
31
<PAGE>
of the shares of the Trust that are outstanding, it may be presumed to be in
"control" of the Trust, as defined in the 1940 Act.
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 hereby. The Registration Statement is available for inspection by the
public at the SEC in Washington, D.C.
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.
32
<PAGE>
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.
33
<PAGE>
FINANCIAL STATEMENTS
FS
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholder
AIM Small Cap Opportunities Fund
We have audited the accompanying statement of assets and liabilities of AIM
Small Cap Opportunities Fund (a portfolio of AIM Special Opportunities Funds) as
of May 8, 1998. This financial statement is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this financial
statement 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 statement is free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of AIM Small Cap Opportunities
Fund as of May 8, 1998, in conformity with generally accepted accounting
principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
May 8, 1998
FS-1
<PAGE>
AIM SMALL CAP OPPORTUNITIES FUND
Statement of Assets and Liabilities
May 8, 1998
<TABLE>
<S> <C>
Assets:
Cash $100,000
Organizational Costs 32,130
--------
Total Assets $132,130
--------
Liabilities:
Organizational Costs Payable 32,130
--------
Net assets applicable to shares outstanding $100,000
--------
--------
Capital shares, $.001 par value per share:
Authorized unlimited
Outstanding 10,000
---------
---------
Net asset value, offering and redemption price per share $10.00
--------
--------
</TABLE>
See Notes to Financial Statements
FS-2
<PAGE>
AIM SMALL CAP OPPORTUNITIES FUND
Notes to Financial Statement
May 8, 1998
Note 1 - Significant Accounting Policies
AIM Small Cap Opportunities Fund (the "Fund") is a series of AIM Special
Opportunities Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940 amended, as a non-dividend,
open-end, series, management investment company currently consisting of only one
portfolio. The Fund's investment objective is long-term capital appreciation.
The Fund had operations for May 8, 1998, which included organizational matters,
including the issuance of 10,000 shares of capital stock to A I M Advisors, Inc.
("AIM") for cash.
(A) Organizational Costs - Organizational costs expecting to amount to
approximately $32,130 will be borne by the Fund. Such costs will be
amortized to operations over sixty months. Prior to full amortization of
the organizational costs, the proceeds of any redemption of the shares
related to the Fund's initial formation (10,000 shares) will be reduced by
a pro rata share of such unamortized organizational expenses. The pro rata
share of organizational expenses will be calculated by dividing the number
of initial shares redeemed by the remaining number of initial shares
outstanding at the time of redemption and multiplying the result by the
unamortized organizational expenses.
In April 1998, the Accounting Standards Executive Committee (AcSEC) of the
AICPA issued Statement of Position 98-5 (SOP 98-5), Reporting on the Costs
of Start-Up Activities. If the Fund's shares cannot be sold prior to June
30, 1998, SOP 98-5 would require that the fund write-off these
organizational costs. In the event the Fund's shares are not qualified for
sale prior to June 30, 1998, A I M Advisors, Inc., will absorb these costs.
(B) Federal Income Taxes - The Fund intends to comply in its initial year and
thereafter with the requirements of Section 851-855 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.
Note 2 - Advisory Fees and Other Transactions with Affiliates
The Trust has entered into an investment advisory agreement with AIM to serve as
the Fund's advisor. Under the terms of the advisory agreement, the Fund pays an
advisory fee to AIM at an annual rate of 1.00% of the Fund's net assets.
Certain officers and a trustee of the Trust are officers and directors of AIM
and A I M Distributors, Inc., the Fund's distributor.
FS-3
<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: None
In Part B: (1) Report of Independent Auditors
(2) Balance Sheet with Notes
In Part C: None
----------------------
(b) Exhibits
Exhibit
Number Description
- ------ -----------
(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) - Form of 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 is filed herewith electronically.
(b) - Specimen Certificate for Class B Shares of AIM Small Cap
Opportunities Fund is filed herewith electronically.
(c) - Specimen Certificate for Class C Shares of AIM Small Cap
Opportunities Fund is filed herewith electronically.
(5) - Form of Master Investment Advisory Agreement between Registrant
and A I M Advisors, Inc. was filed as an Exhibit to the
Registration Statement filed March 13, 1998 and is incorporated
herewith by reference.
(6) (a) - Form of Master Distribution Agreement (Class A and Class C
shares) 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.
C-1
<PAGE>
(d) - Form of Master Distribution Agreement (Class B shares) 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) - Form of Custodian Agreement between Registrant and State Street
Bank and Trust Company was filed as an Exhibit to the
Registration Statement filed March 13, 1998 and is incorporated
herewith by reference.
(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) Form of Amendment No. 1 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., and Registrant was filed as an
Exhibit to the Registration Statement filed March 13, 1998
and is incorporated herewith by reference.
(9) (a) - Form of Transfer Agency and Service Agreement between Registrant
and A I M Fund Services, Inc. was filed as an Exhibit to the
Registration Statement filed March 13, 1998 and is incorporated
herewith by reference.
(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.
- (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 is filed
herewith electronically.
C-2
<PAGE>
(c) - Form of Master Administrative Services Agreement between
Registrant and A I M Advisors, Inc. was filed as an Exhibit to
the Registration Statement filed March 13, 1998 and is
incorporated herewith by reference.
(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) - Opinion and 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 is filed herewith electronically.
(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.
(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) - Form of 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.
C-3
<PAGE>
(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) - Form of 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) is
filed herewith electronically.
(27) - Financial Data Schedule - None
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
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 [ ]
---------------- --------------------------
<S> <C>
AIM Small Cap Opportunities Fund - Class A shares -0-
AIM Small Cap Opportunities Fund - Class B shares -0-
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, 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.
C-4
<PAGE>
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 Equity Funds, Inc. (Retail Classes)
AIM Funds Group
AIM International Funds, Inc.
AIM Investment Securities Funds
AIM Summit Fund, Inc.
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds, Inc.
(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
Kathleen J. Pflueger Secretary Assistant Secretary
John J. Arthur Vice President & Treasurer Senior Vice President
& Treasurer
</TABLE>
- -----------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-6
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address * with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
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
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
</TABLE>
- -----------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-7
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address * with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
Jeffrey L. Horne Assistant Vice President None
Melissa E. Hudson Assistant Vice President None
Jodie L. Johnson Assistant Vice President None
Kathren 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
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
- -----------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-8
<PAGE>
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 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 21st day of May,
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:
SIGNATURES TITLE DATE
---------- ----- -----
/s/ CHARLES T. BAUER Chairman & Trustee May 21, 1998
---------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Trustee & President May 21, 1998
--------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Trustee May 21, 1998
----------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Trustee May 21, 1998
-----------------
(Owen Daly II)
/s/ EDWARD K. DUNN, JR. Trustee May 21, 1998
------------------------
(Edward K. Dunn, Jr.)
/s/ JACK FIELDS Trustee May 21, 1998
----------------
(Jack Fields)
/s/ CARL FRISCHLING Trustee May 21, 1998
--------------------
(Carl Frischling)
/s/ LEWIS F. PENNOCK Trustee May 21, 1998
---------------------
(Lewis F. Pennock)
/s/ IAN W. ROBINSON Trustee May 21, 1998
--------------------
(Ian W. Robinson)
/s/ LOUIS S. SKLAR Trustee May 21, 1998
-------------------
(Louis S. Sklar)
Senior Vice President &
/s/ JOHN J. ARTHUR Treasurer (Principal Financial May 21, 1998
------------------- and Accounting Officer)
(John J. Arthur)
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
1(b) Form of First Amendment of Agreement and Declaration of Trust of
Registrant
4(a) Specimen Certificate for Class A Shares of Registrant
4(b) Specimen Certificate for Class B Shares of Registrant
4(c) Specimen Certificate for Class C Shares of Registrant
6(a) Form of Master Distribution Agreement for Registrant's Class A
and Class C shares
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) Form of Master Distribution Agreement for Registrant's Class B
shares
9(b)(7) Form of Revised Exhibit 1 to the Remote Access and Related
Services Agreement
10 Opinion and Consent of Ballard Spahr Andrews & Ingersoll, LLP
11 Consent of KPMG Peat Marwick LLP
13 Initial Capitalization Agreement of Registrant's
AIM Small Cap Opportunities Fund
15(a) Form of Master Distribution Plan for Registrant's Class A and
Class C shares
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) Form of Master Distribution Plan for Registrant's Class B shares
18 Second Amended and Restated Multiple Class Plan (Rule 18f-3)
<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.
- ----------------------------------- -----------------------------------
Charles T. Bauer, Trustee Bruce L. Crockett, Trustee
- ----------------------------------- -----------------------------------
Owen Daly II, Trustee Edward K. Dunn, Jr., Trustee
- ----------------------------------- -----------------------------------
Jack Fields, Trustee Carl Frischling, Trustee
- ----------------------------------- -----------------------------------
Robert H. Graham, Trustee Ian W. Robinson, Trustee
- -----------------------------------
Lewis F. Pennock, Trustee
- -----------------------------------
Louis S. Sklar, Trustee
3
<PAGE>
EXHIBIT 4(a)
NO. ______________ SHARES
AIM SMALL CAP OPPORTUNITIES FUND - CLASS A SHARES
OF
AIM SPECIAL OPPORTUNITIES FUNDS
A DELAWARE BUSINESS TRUST
THIS CERTIFIES THAT: SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
CUSIP
is the holder of
FULLY-PAID AND NON-ASSESSABLE SHARES OF BENEFICIAL INTEREST (par value $.01
per share) of the above named Portfolio and Class of AIM SPECIAL OPPORTUNITIES
FUNDS (the "Trust"), transferable on the books of the Trust by the registered
holder hereof in person or by duly authorized attorney upon surrender of the
certificate properly endorsed.
This Certificate and the shares represented hereby are issued and shall be
held subject to the provisions of the Agreement and Declaration of Trust and By-
Laws of the Trust and all amendments thereof, copies of which are on file at the
office of the Trust, to all of which the holder, by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by a Trustee and to be sealed with its Seal.
AIM SPECIAL OPPORTUNITIES FUNDS
Dated Countersigned:
SEAL A I M
Transfer Agent
(Houston, Texas)
Trustee
By________________________
Authorized Signature
<PAGE>
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT TEN -as joint tenants with right of survivorship and
not as tenants in common
UNIF GIFT MIN ACT - --------- Custodian ------------- under Uniform Gifts
(Cust) (Minor)
to Minors Act ----------------
(State)
Additional abbreviations may also be used though not in the above
list.
For value received,------------------------------ hereby sell,
assign and
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
transfer unto |------------------------------------------|
Please print or type name and address including zip code of
assignee.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------ shares
of beneficial interest represented by the within certificate, and hereby
irrevocably constitute and appoint
- ----------------------------------------------------------------------- attorney
to transfer the said shares on the books of the within mentioned Trust with full
power of substitution in the premises.
Dated
-------------------------
- ------------------------------------------------------------------------------
Signature guaranteed:
- ------------------------------------------------------------------------------
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 in defined in rules adopted by
the Securities and Exchange Commission, 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 New York
Stock Exchange 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.
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the certificate, in every particular, without
alteration or enlargement, or any change whatever.
<PAGE>
EXHIBIT 4(b)
NO. ______________SHARES
AIM SMALL CAP OPPORTUNITIES FUND - CLASS B SHARES
OF
AIM SPECIAL OPPORTUNITIES FUNDS
A DELAWARE BUSINESS TRUST
THIS CERTIFIES THAT: SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
CUSIP
is the holder of
FULLY-PAID AND NON-ASSESSABLE SHARES OF BENEFICIAL INTEREST (par value $.01
per share) of the above named Portfolio and Class of AIM SPECIAL OPPORTUNITIES
FUNDS (the "Trust"), transferable on the books of the Trust by the registered
holder hereof in person or by duly authorized attorney upon surrender of the
certificate properly endorsed.
This Certificate and the shares represented hereby are issued and shall be
held subject to the provisions of the Agreement and Declaration of Trust and By-
Laws of the Trust and all amendments thereof, copies of which are on file at the
office of the Trust, to all of which the holder, by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by a Trustee and to be sealed with its Seal.
AIM SPECIAL OPPORTUNITIES FUNDS
Dated Countersigned:
SEAL A I M
Transfer Agent
(Houston, Texas)
Trustee
By________________________
Authorized Signature
<PAGE>
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT TEN -as joint tenants with right of survivorship and
not as tenants in common
UNIF GIFT MIN ACT - --------- Custodian ------------- under Uniform Gifts
(Cust) (Minor)
to Minors Act ----------------
(State)
Additional abbreviations may also be used though not in the above
list.
For value received,------------------------------ hereby sell,
assign and
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
transfer unto |------------------------------------------|
Please print or type name and address including zip code of
assignee.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------ shares
of beneficial interest represented by the within certificate, and hereby
irrevocably constitute and appoint
- ----------------------------------------------------------------------- attorney
to transfer the said shares on the books of the within mentioned Trust with full
power of substitution in the premises.
Dated
-------------------------
- ------------------------------------------------------------------------------
Signature guaranteed:
- ------------------------------------------------------------------------------
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 in defined in rules adopted by
the Securities and Exchange Commission, 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 New York
Stock Exchange 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.
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the certificate, in every particular, without
alteration or enlargement, or any change whatever.
<PAGE>
EXHIBIT 4(c)
NO. ______________SHARES
AIM SMALL CAP OPPORTUNITIES FUND - CLASS C SHARES
OF
AIM SPECIAL OPPORTUNITIES FUNDS
A DELAWARE BUSINESS TRUST
THIS CERTIFIES THAT: SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
CUSIP
is the holder of
FULLY-PAID AND NON-ASSESSABLE SHARES OF BENEFICIAL INTEREST (par value $.01
per share) of the above named Portfolio and Class of AIM SPECIAL OPPORTUNITIES
FUNDS (the "Trust"), transferable on the books of the Trust by the registered
holder hereof in person or by duly authorized attorney upon surrender of the
certificate properly endorsed.
This Certificate and the shares represented hereby are issued and shall be
held subject to the provisions of the Agreement and Declaration of Trust and By-
Laws of the Trust and all amendments thereof, copies of which are on file at the
office of the Trust, to all of which the holder, by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by a Trustee and to be sealed with its Seal.
AIM SPECIAL OPPORTUNITIES FUNDS
Dated Countersigned:
SEAL A I M
Transfer Agent
(Houston, Texas)
Trustee
By________________________
Authorized Signature
<PAGE>
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT TEN -as joint tenants with right of survivorship and
not as tenants in common
UNIF GIFT MIN ACT - --------- Custodian ------------- under Uniform Gifts
(Cust) (Minor)
to Minors Act ----------------
(State)
Additional abbreviations may also be used though not in the above
list.
For value received,------------------------------ hereby sell,
assign and
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
transfer unto |------------------------------------------|
Please print or type name and address including zip code of
assignee.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------ shares
of beneficial interest represented by the within certificate, and hereby
irrevocably constitute and appoint
- ----------------------------------------------------------------------- attorney
to transfer the said shares on the books of the within mentioned Trust with full
power of substitution in the premises.
Dated
-------------------------
- ------------------------------------------------------------------------------
Signature guaranteed:
- ------------------------------------------------------------------------------
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 in defined in rules adopted by
the Securities and Exchange Commission, 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 New York
Stock Exchange 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.
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the certificate, in every particular, without
alteration or enlargement, or any change whatever.
<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 ___ day of ___________, 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:
-------------------------------------
Name: Robert H. Graham
Title: President
Attest:
- -----------------------------------
Name:
Title:
A I M DISTRIBUTORS, INC.
By:
-------------------------------------
Name: Michael J. Cemo
Title: President
Attest:
- -----------------------------------
Name:
Title:
-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>
EXHIBIT 6(b)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SELECTED DEALER AGREEMENT
FOR INVESTMENT COMPANIES MANAGED
BY A I M ADVISORS, INC.
TO THE UNDERSIGNED SELECTED DEALER:
Gentlemen:
A I M Distributors, Inc., as the exclusive national distributor of shares of
the common stock (the "Shares") of the registered investment companies listed
on Schedule A attached hereto which may be amended from time to time by us (the
"Funds"), understands that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), or, if a foreign dealer, that
you agree to abide by all of the rules and regulations of the NASD for purposes
of this Agreement (which you confirm by your signature below). In consideration
of the mutual covenants stated below, you and we hereby agree as follows:
1 Sales of Shares through you will be at the public offering price of such
Shares (the net asset value of the Shares plus any sales charge applicable
to such Shares), as determined in accordance with the then effective
prospectus used in connection with the offer and sale of Shares
(the "Prospectus"), which public offering price may reflect scheduled
variations in, or the elimination of, the Sales Charge on sales of the
Funds' Shares either generally to the public or in connection with special
purchase plans, as described in the Prospectus. You agree that you will
apply any scheduled variation in, or elimination of, the Sales Charge
uniformly to all offerees in the class specified in the Prospectus.
2 You agree to purchase Shares solely through us and only for the purpose of
covering purchase orders already received from customers or for your own
bona fide investment. You agree not to purchase for any other securities
dealer unless you have an agreement with such other dealer or broker to
handle clearing arrangements and then only in the ordinary course of
business for such purpose and only if such other dealer has executed a
Selected Dealer Agreement with us. You also agree not to withhold any
customer order so as to profit therefrom.
3 The procedures relating to the handling of orders shall be subject to
instructions which we will forward from time to time to all selected
dealers with whom we have entered into a Selected Dealer Agreement. The
minimum initial order shall be specified in the Funds' then current
prospectuses. All purchase orders are subject to receipt of Shares by us
from the Funds concerned and to acceptance of such orders by us. We reserve
the right in our sole discretion to reject any order.
4 With respect to the Funds the Shares of which are indicated on the attached
Schedule as being sold with a Sales Charge (the "Load Funds"), you will be
allowed the concessions from the public offering price provided in the
Load Funds' prospectus. With respect to the Funds, the Shares of which are
indicated on the attached Schedule A as being sold with a contingent
deferred sales charge (the "CDSC Funds"), you will be paid a commission or
concession as disclosed in the CDSC Fund's then current prospectus. With
respect to the Funds whose Shares are indicated on the attached Schedule as
being sold without a Sales Charge or a contingent deferred sales charge
(the "No-Load Funds"), you may charge a reasonable administrative fee. For
the purpose of this Agreement the terms "Sales Charge" and "Dealer
Commission" apply only to the Load Funds and the CDSC Funds. All commissions
and concessions are subject to change without notice by us and will comply
with any changes in regulatory requirements. You agree that you will not
combine customer orders to reach breakpoints in commissions for any purpose
whatsoever unless authorized by the Prospectus or by us in writing.
5 You agree that your transactions in shares of the Funds will be limited to
(a) the purchase of Shares from us for resale to your customers at the
public offering price then in effect or for your own bona fide investment,
(b) exchanges of Shares between Funds, as permitted by the Funds' then
current registration statement (which includes the Prospectus) and in
accordance with procedures as they may be modified by us from time to time,
and (c) transactions involving the redemption of Shares by a Fund or the
repurchase of Shares by us as an accommodation to shareholders. Redemptions
by a Fund and repurchases by us will be effected in the manner and upon the
terms described in the Prospectus. We will, upon your request, assist you
in processing such orders for redemptions or repurchases. To facilitate
prompt payment following a redemption or repurchase of Shares, the owner's
signature shall appear as registered on the Funds' records and, as
described in the Prospectus, it may be required to be guaranteed by a
commercial bank, trust company or a member of a national securities
exchange.
3/98
<PAGE>
6 Sales and exchanges of Shares may only be made in those states and
jurisdictions where the Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for sale,
and you agree to indemnify us and/or the Funds for any claim, liability,
expense or loss in any way arising out of a sale of Shares in any state or
jurisdiction in which such Shares are not so registered or qualified.
7 We shall accept orders only on the basis of the then current offering
price. You agree to place orders in respect of Shares immediately upon the
receipt of orders from your customers for the same number of shares. Orders
which you receive from your customers shall be deemed to be placed with us
when received by us. Orders which you receive prior to the close of
business, as defined in the Prospectus, and placed with us within the time
frame set forth in the Prospectus shall be priced at the offering price
next computed after they are received by you. We will not accept from you
a conditional order on any basis. All orders shall be subject to
confirmation by us.
8 Your customer will be entitled to a reduction in the Sales Charge on
purchases made under a Letter of Intent or Right of Accumulation described
in the Prospectus. In such case, your Dealer's Concession will be based
upon such reduced Sales Charge; however, in the case of a Letter of Intent
signed by your customer, an adjustment to a higher Dealer's Concession
will thereafter be made to reflect actual purchases by your customer if he
should fail to fulfil his Letter of Intent. When placing wire trades, you
agree to advise us of any Letter of Intent signed by your customer or of
any Right of Accumulation available to him of which he has made you aware.
If you fail to so advise us, you will be liable to us for the return of
any commissions plus interest thereon.
9 You and we agree to abide by the Rules of Fair Practice of the NASD and all
other federal and state rules and regulations that are now or may become
applicable to transactions hereunder. Your expulsion from the NASD will
automatically terminate this Agreement without notice. Your suspension from
the NASD or a violation by you of applicable state and federal laws and
rules and regulations of authorized regulatory agencies will terminate this
Agreement effective upon notice received by you from us. You agree that it
is your responsibility to determine the suitability of any Shares as
investments for your customers, and that AIM Distributors has no
responsibility for such determination.
10 With respect to the Load Funds and the CDSC Funds, and unless otherwise
agreed, settlement shall be made at the offices of the Funds' transfer
agent within three (3) business days after our acceptance of the order. With
respect to the No-Load Funds, settlement will be made only upon receipt by
the Fund of payment in the form of federal funds. If payment is not so
received or made within ten (10) business days of our acceptance of the
order, we reserve the right to cancel the sale or, at our option, to sell
the Shares to the Funds at the then prevailing net asset value. In this
event, or in the event that you cancel the trade for any reason, you agree
to be responsible for any loss resulting to the Funds or to us from your
failure to make payments as aforesaid. You shall not be entitled to any
gains generated thereby.
11 If any Shares of any of the Load Funds sold to you under the terms of this
Agreement are redeemed by the Fund or repurchased for the account of the
Funds or are tendered to the Funds for redemption or repurchase within
seven (7) business days after the date of our confirmation to you of your
original purchase order therefore, you agree to pay forthwith to us the
full amount of the concession allowed to you on the original sale and we
agree to pay such amount to the Fund when received by us. We also agree to
pay to the Fund the amount of our share of the Sales Charge on the original
sale of such Shares.
12 Any order placed by you for the repurchase of Shares of a Fund is subject
to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a
reasonable time after the order is placed, the order is subject to
cancellation, in which case you agree to be responsible for any loss
resulting to the Fund or to us from such cancellation.
13 We reserve the right in our discretion without notice to you to suspend
sales or withdraw any offering of Shares entirely, to change the offering
prices as provided in the Prospectus or, upon notice to you, to amend or
cancel this Agreement. You agree that any order to purchase Shares of the
Funds placed by you after notice of any amendment to this Agreement has
been sent to you shall constitute your agreement to any such amendment.
14 In every transaction, we will act as agent for the Fund and you will act as
principal for your own account. You have no authority whatsoever to act as
our agent or as agent for the Funds, any other Selected Dealer or the
Funds' transfer agent and nothing in this Agreement shall serve to appoint
you as an agent of any of the foregoing in connection with transactions
with your customers or otherwise.
15 No person is authorized to make any representations concerning the Funds or
their Shares except those contained in the Prospectus and any such
information as may be released by us as information supplemental to the
Prospectus. If you should make such unauthorized representation, you agree
to indemnify the Funds and us from and against any and all claims,
liability, expense or loss in any way arising out of or in any way
connected with such representation.
3/98
<PAGE>
16 We will supply you with copies of the Prospectuses and Statements of
Additional Information of the Funds (including any amendments thereto) in
reasonable quantities upon request. You will provide all customers with a
Prospectus prior to or at the time such customer purchases Shares. You will
provide any customer who so requests a copy of the Statement of Additional
Information on file with the U.S. Securities and Exchange Commission.
17 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
18 No advertising or sales literature, as such terms are defined by the NASD,
of any kind whatsoever will be used by you with respect to the Funds or us
unless first provided to you by us or unless you have obtained our prior
written approval.
19 All expenses incurred in connection with your activities under this
Agreement shall be borne by you.
20 This Agreement shall not be assignable by you. This Agreement shall be
constructed in accordance with the laws of the State of Texas.
21 Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
22 This Agreement constitutes the entire agreement between the undersigned and
supersedes all prior oral or written agreements between the parties hereto.
A I M DISTRIBUTORS, INC.
Date: By: X
------------------ ---------------------------------------
The undersigned accepts your invitation to become a Selected Dealer and agrees
to abide by the foregoing terms and conditions. The undersigned acknowledges
receipt of prospectuses for use in connection with offers and sales of the
Funds.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
3/98
<PAGE>
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
SELECTED DEALER AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Asian Growth Fund Yes Yes
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM European Development Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM High Income Municipal Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM High Income Municipal Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Fund Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Select Growth Fund Yes Yes
AIM Small Cap Opportunities Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Fund Yes No
</TABLE>
3/98
<PAGE>
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Cash Reserve Shares, AIM Limited Maturity Treasury Fund, AIM
Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Fund.
**For all Funds sold with CDSC (includes Class B and Class C shares).
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
3/98
<PAGE>
EXHIBIT 6(c)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
BANK ACTING AS AGENT
FOR ITS CUSTOMERS
Agreement Relating to Shares
of AIM Family of Mutual Funds
(Confirmation and Prospectus to be sent by A I M Distributors,
Inc. to Customer)
A I M Distributors, Inc. is the exclusive national distributor of the shares of
the registered investment companies listed on Schedule A hereto which may be
amended from time to time by us (the "Funds"). As exclusive agent for the
Funds, we are offering to make available shares of common stock or of
beneficial interest, as the case may be, of the Funds (the "Shares") for
purchase by your customers on the following terms:
1 In all sales of Shares you shall act as agent for your customers, and in no
transaction shall you have any authority to act as agent for any Fund or
for us.
2 The customers in question are, for all purposes, your customers and not
customers of A I M Distributors, Inc. In receiving orders from your
customers who purchase Shares, A I M Distributors, Inc. is not soliciting
such customers and, therefore, has no responsibility for determining
whether Shares are suitable investments for such customers.
3 It is hereby understood that in all cases in which you place orders with us
for the purchase of Shares (a) you are acting as agent for the customer;
(b) the transactions are without recourse against you by the customer; (c)
as between you and the customer, the customer will have full beneficial
ownership of the securities; (d) each such transaction is initiated solely
upon the order of the customer; and (e) each such transaction is for the
account of the customer and not for your account.
4 Orders received from you will be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts (defined
below) provided in such Prospectus. Following receipt from you of any order
to purchase Shares for the account of a customer, we shall confirm such
order to you in writing. We shall be responsible for sending your customer
a written confirmation of the order with a copy of the appropriate Fund's
current Prospectus. We shall send you a copy of such confirmation.
Additional instructions may be forwarded to you from time to time. All
orders are subject to acceptance or rejection by us in our sole discretion.
5 Members of the general public, including your customers, may purchase
Shares only at the public offering price determined in the manner described
in the current Prospectus of the appropriate Fund. With respect to the
Funds, the Shares of which are indicated on the attached Schedule A as
being sold with a sales charge (i.e. the "Load Funds"), you will be allowed
to retain a commission or concession from the public offering price
provided in such Load Funds' current Prospectus. With respect to the Funds,
the Shares of which are indicated on the attached Schedule A as being sold
with a contingent deferred sales charge (the "CDSC Funds"), you will be
paid a commission or concession as disclosed in the CDSC Fund's then
current prospectus. With respect to the Funds whose Shares are indicated on
the attached Schedule as being sold without a sales charge or a contingent
deferred sales charge, (i.e. the "No-Load Funds"), you will not be allowed
to retain any commission or concession. All commissions or concessions set
forth in any of the Load Funds' or CDSC Funds' Prospectus are subject to
change without notice by us and will comply with any changes in regulatory
requirements.
6 The tables of sales charges and discounts set forth in the current
Prospectus of each Fund are applicable to all purchases made at any one
time by any "purchaser", as defined in the current Prospectus. For this
purpose, a purchaser may aggregate concurrent purchases of securities of
any of the Funds.
7 Reduced sales charges may also be available as a result of quantity
discounts, rights of accumulation or letters of intent. Further information
as to such reduced sales charges, if any, is set forth in the appropriate
Fund Prospectus. In such case, your discount will be based upon such
reduced sales charge; however, in the case of a letter of intent signed by
your customer, an adjustment to a higher discount will thereafter be made
to reflect actual purchases by your customer if he should fail to fulfill
his letter of intent. You agree to advise us promptly as to the amounts of
any sales made by you to your customers qualifying for reduced sales
charges. If you fail to so advise us of any letter of intent signed by your
customer or of any right of accumulation available to him of which he has
made you aware, you will be liable to us for the return of any discount
plus interest thereon.
8 By accepting this Agreement you agree:
a. that you will purchase Shares only from us;
b. that you will purchase Shares from us only to cover purchase orders
already received from your customers; and
c. that you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholdings.
9 We will not accept from you a conditional order for Shares on any basis.
10 Payment for Shares ordered from us shall be in the form of a wire transfer
or a cashiers check mailed to us. Payment shall be made within three (3)
business days after our acceptance of the order placed on behalf of your
customer. Payment shall be equal to the public offering price less the
discount retained by you hereunder.
3/98
<PAGE>
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
3/98
<PAGE>
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
BANK SELLING GROUP AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Asian Growth Fund Yes Yes
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM European Development Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM High Income Municipal Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Fund Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Select Growth Fund Yes Yes
AIM Small Cap Opportunities Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Fund Yes No
</TABLE>
3/98
<PAGE>
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Cash Reserve Shares, AIM Limited Maturity Treasury Fund, AIM
Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Fund.
**For all Funds sold with CDSC (includes Class B and Class C shares).
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
3/98
<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
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<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:
-------------------------------
Name: Robert H. Graham
Title: President
Attest:
- -----------------------------------
Name:
Title:
A I M DISTRIBUTORS, INC.
By:
-------------------------------
Name: Michael J. Cemo
Title: President
Attest:
- -----------------------------------
Name:
Title:
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 dividends 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
Portfolio as of the opening of business on such date and
<PAGE>
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"), traced to Commission Shares of the Portfolio or another portfolio
initially issued by the Company or such other portfolio during the time the
Distributor or such Other Distributor, as the case may be, was the exclusive
distributor for the Shares of the Portfolio or such other portfolio.
(d) Free Appreciate 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 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 a number 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 allocated to the Distributor or such Distributor as of
such date of determination pursuant to these allocation procedures 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.
2
<PAGE>
The Company 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, or if the Distributor
shall cease to serve as exclusive distributor of the Shares of the Portfolio,
the Distributor and the Company 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.
3
<PAGE>
EXHIBIT 9(b)(7)
REVISED EXHIBIT 1
LIST OF FUNDS
AIM ADVISOR FUNDS, INC.
Portfolios: Classes:
AIM Advisor Flex Fund Class A, Class B and Class C Shares
AIM Advisor International Value Fund Class A, Class B and Class C Shares
AIM Advisor Large Cap Value Fund Class A, Class B and Class C Shares
AIM Advisor MultiFlex Fund Class A, Class B and Class C Shares
AIM Advisor Real Estate Fund Class A, Class B and Class C Shares
AIM EQUITY FUNDS, INC.
Portfolios: Classes:
AIM Aggressive Growth Fund Class A Shares
AIM Blue Chip Fund Class A, Class B and Class C Shares
AIM Capital Development Fund Class A, Class B and Class C Shares
AIM Charter Fund Class A, Class B and Class C Shares
AIM Constellation Fund Class A, Class B and Class C Shares
AIM Weingarten Fund Class A, Class B and Class C Shares
AIM FUNDS GROUP
Portfolios: Classes:
AIM Balanced Fund Class A, Class B and Class C Shares
AIM Global Utilities Fund Class A, Class B and Class C Shares
AIM High Yield Fund Class A, Class B and Class C Shares
AIM Income Fund Class A, Class B and Class C Shares
AIM Intermediate Government Fund Class A, Class B and Class C Shares
AIM Money Market Fund Class A, Class B, Class C and AIM
Cash Reserve Shares
AIM Municipal Bond Fund Class A, Class B and Class C Shares
AIM Select Growth Fund Class A, Class B and Class C Shares
AIM Value Fund Class A, Class B and Class C Shares
AIM INTERNATIONAL FUNDS, INC.
Portfolios: Classes:
AIM Asian Growth Fund Class A, Class B and Class C Shares
AIM European Development Fund Class A, Class B and Class C Shares
AIM Global Aggressive Growth Fund Class A, Class B and Class C Shares
AIM Global Growth Fund Class A, Class B and Class C Shares
AIM Global Income Fund Class A, Class B and Class C Shares
AIM International Equity Fund Class A, Class B and Class C Shares
AIM INVESTMENT SECURITIES FUNDS
Portfolio: Classes:
AIM Limited Maturity Treasury Fund Class A Shares
<PAGE>
AIM SPECIAL OPPORTUNITIES FUNDS
Portfolio: Classes:
AIM Small Cap Opportunities Fund Class A, Class B and Class C Shares
AIM TAX-EXEMPT FUNDS, INC.
Portfolios: Classes:
AIM High Income Municipal Fund Class A, Class B and Class C Shares
AIM Tax-Exempt Bond Fund Class A Shares
Of Connecticut
AIM Tax-Exempt Cash Fund Class A Shares
AIM Tax-Free Intermediate Fund Class A Shares
On behalf of the Funds and respective Portfolios and Classes as set forth in
this Exhibit 1, which may be amended from time to time.
By:
----------------------------------
Title:
-------------------------------
FIRST DATA INVESTOR SERVICES GROUP, INC.
By:
----------------------------------
Title:
-------------------------------
Effective as of .
---------------------
<PAGE>
Exhibit 10
LAW OFFICES
BALLARD SPAHR ANDREWS & INGERSOLL, LLP BALTIMORE, MD
1735 MARKET STREET, 51ST FLOOR CAMDEN, NJ
PHILADELPHIA, PENNSYLVANIA 19103-7599 DENVER, CO
215-665-8500 SALT LAKE CITY, UT
FAX: 215-864-8999 WASHINGTON, DC
[email protected]
May 19, 1998
AIM Special Opportunities Funds
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Re: AIM Special Opportunities Funds
Registration Statement on Form N1-A
-----------------------------------
Gentlemen:
We have acted as counsel to AIM Special Opportunities Funds (the
"Trust"), a business trust organized under the laws of the State of Delaware
registered under the Investment Company Act of 1940 (the "1940 Act") as an open-
end series management investment company.
This opinion is given in connection with the filing by the Trust of
its Registration Statement on Form N-1A ("Registration Statement") under the
Securities Act of 1933 and under the 1940 Act relating to the registration of an
indefinite number of Class A, Class B and Class C shares of beneficial interest,
par value $.01 per share (the "Shares"), representing interests in the AIM Small
Cap Opportunities Fund (the "Fund"), currently the only portfolio of the Trust.
In connection with our giving this opinion, we have examined a copy of
the Trust's Agreement and Declaration of Trust, as amended, resolutions of the
Board of Trustees dated May 12, 1998 and originals or copies, certified or
otherwise identified to our satisfaction, of such other documents, records and
other instruments as we have deemed necessary or advisable for purposes of this
opinion. We have also examined the prospectus included in the Registration
Statement substantially in the form in which it is to become effective (the
"Prospectus"). As to various questions of fact material to our opinion, we have
relied upon information provided by officers of the Trust.
<PAGE>
AIM Special Opportunities Funds
May 18, 1998
Page 2
Based on the foregoing, we are of the opinion that the Shares to be
offered for sale pursuant to the Prospectus are duly authorized and, when sold,
issued and paid for as described in the Prospectus, will have been legally
issued, fully paid and non-assessable.
We express no opinion concerning the laws of any jurisdiction other
than the federal law of the United States of America and the Delaware Business
Trust Act of the State of Delaware.
Both the Delaware Business Trust Act and the Trust's Agreement and
Declaration of Trust, as amended (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 held 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 a controversy involving such
obligations. The Trust Agreement also provides for indemnification out of Trust
property for all loss and expense of any shareholder held personally liable for
the obligations of the Trust. Therefore, the risk of any shareholder incurring
financial loss beyond his investment due to shareholder liability is limited to
circumstances in which the Trust itself is unable to meet its obligations and
the express disclaimer of shareholder liabilities is determined not to be
effective.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name and to the references to our
firm under the caption "General Information - Legal Counsel" in the Prospectus
and under the caption "Miscellaneous Information - Legal Matters" in the
Statement of Additional Information for the Fund, which are included in the
Registration Statement.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll, LLP
------------------------------------------
<PAGE>
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees and Shareholder
AIM Small Cap Opportunities Fund:
We consent to the use of our report on the AIM Small Cap Opportunities Fund (a
portfolio of AIM Special Opportunities Funds) dated May 8, 1998 included herein
and the references to our firm under the heading "Audit Reports" in the
Statement of Additional Information.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
May 8, 1998
<PAGE>
EXHIBIT 13
INITIAL CAPITALIZATION AGREEMENT
May 20, 1998
Board of Trustees
AIM Special Opportunities Funds
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Gentlemen:
AIM Special Opportunities Fund (the "Corporation"), a newly-organized
open-end management investment company, proposes to make a continuous public
offering of its shares of common stock, par value $ .001 per share, pursuant to
a registration statement on Form N-1A as from time to time amended (the
"Registration Statement"), filed with the Securities and Exchange Commission.
In order to provide the Corporation with a net worth sufficient to commence
operations and to meet the requirements of Section 14 of the Investment Company
of Act of 1940, as amended, A I M Advisors, Inc. ("AIM") agrees to purchase
shares of the Corporation in accordance with the terms and conditions set forth
below.
1. PURCHASE OF SHARES. AIM hereby agrees to purchase from the
Corporation 10,000 shares of its common stock (the "Shares") at a price per
share of $10.00 (except that the price per share of the AIM Small Cap
Opportunities Fund shall be $1.00) for an aggregate purchase price of
$100,000.00 allocable as follows:
2. PAYMENT OF PURCHASE PRICE. AIM will pay to the Corporation by wire
transfer, at least two business days prior to the date specified by a the
Corporation as the effective date of the Registration Statement, $100,000.00,
to be allocated to each of the Funds as set forth above.
3. AGREEMENT NOT TO SELL SHARES. AIM hereby agrees not to sell,
hypothecate or otherwise dispose of any of the Shares unless the Shares have
been registered under the Securities Act of 1933, as amended, and any
applicable state securities laws or, in the opinion of counsel for the
Corporation, valid exemptions from the registration requirements of said Act
and those state laws are available.
4. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS. AIM represents
and warrants that it is acquiring the Shares for its own account for
investment and not with any view to resale or further distribution thereof,
and that it has no present intention to redeem any of the Shares. AIM
acknowledges and agrees that in the event any of the Shares are redeemed
prior to complete amortization by the Funds of their deferred organization
expenses, the amount payable by the Corporation upon redemption of such
Shares shall be reduced by the pro rata share (based on the number of Shares
redeemed and the total number of Shares then outstanding) of the unamortized
organization expenses as of the date of such redemption.
5. GOVERNING LAW. This Agreement and the rights and obligations of
the parties hereunder shall be governed by and construed under the laws
(without reference to conflicts of law provisions) of the State of Delaware.
<PAGE>
If the foregoing letter is in accordance with your understanding of our
agreement, please so indicate in the space provided below for that purpose,
whereupon this letter will become a binding agreement between us in accordance
with its terms.
Very truly yours,
A I M Advisors, Inc.
BY: /s/ CAROL F. RELIHAN
-----------------------------
The foregoing Initial Capitalization
Agreement is hereby confirmed and
first above written.
AIM Special Opportunities Funds
BY: /s/ CAROL F. RELIHAN
----------------------------
<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: By:
------------------------------- -------------------------------
Assistant Secretary President
Effective Date: , 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>
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 the Funds, and the undersigned authorized
dealer, defines the services to be provided by the authorized dealer for which
it is to receive payments pursuant to the Plan adopted by each of the Funds.
The Plan and the Agreement have been approved by a majority of the directors of
each of the Funds, including a majority of the directors who are not interested
persons of such Funds, and who have no direct or indirect financial interest in
the operation of the Plan or related agreements (the "Dis-interested
Directors"), by votes cast in person at a meeting called for the purpose of
voting on the Plan. Such approval included a determination that in the exercise
of their reasonable business judgement and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit such Fund and its
shareholders.
1 To the extent that you provide distribution-related continuing personal
shareholder services to customers who may, from time to time, directly or
beneficially own shares of the Funds, including but not limited to,
distributing sales literature, answering routine customer inquiries
regarding the Funds, assisting customers in changing dividend options,
account designations and addresses, and in enrolling into any of several
special investment plans offered in connection with the purchase of the
Fund's shares, assisting in the establishment and maintenance of customer
accounts and records and in the processing of purchase and redemption
transactions, investing dividends and capital gains distributions
automatically in shares and providing such other services as the Funds or
the customer may reasonably request, we, solely as agent for the Funds,
shall pay you a fee periodically or arrange for such fee to be paid to you.
2 The fee paid with respect to each Fund will be calculated at the end of each
payment period (as indicated in Schedule A) for each business day of the
Fund during such payment period at the annual rate set forth in Schedule A
as applied to the average net asset value of the shares of such Fund
purchased or acquired through exchange on or after the Plan Calculation
Date shown for such Fund on Schedule A. Fees calculated in this manner
shall be paid to you only if your firm is the dealer of record at the close
of business on the last business day of the applicable payment period, for
the account in which such shares are held (the "Subject Shares"). In cases
where Distributors has advanced payment to you of the first year's fee for
shares sold at net asset value and subject to contingent deferred sales
charge, no additional payments will be made to you during the first year
the Subject Shares are held.
3 The total of the fees calculated for all of the Funds listed on Schedule A
for any period with respect to which calculations are made shall be paid
to you within 45 days after the close of such period.
4 We reserve the right to withhold payment with respect to the Subject Shares
purchased by you and redeemed or repurchased by the Fund or by us as Agent
within seven (7) business days after the date of our confirmation of such
purchase. We reserve the right at any time to impose minimum fee payment
requirements before any periodic payments will be made to you hereunder.
5 This Agreement does not require any broker-dealer to provide transfer
agency and recordkeeping related services as nominee for its customers.
6 You shall furnish us and the Funds with such information as shall
reasonably be requested either by the directors of the Funds or by us with
respect to the fees paid to you pursuant to this Agreement.
7 We shall furnish the directors of the Funds, for their review on a
quarterly basis, a written report of the amounts expended under the Plan by
us and the purposes for which such expenditures were made.
8 Neither you nor any of your employees or agents are authorized to make any
representation concerning shares of the Funds except those contained in
the then current Prospectus for the Funds, and you shall have no authority
to act as agent for the Funds or for Distributors.
3/98
<PAGE>
9 We may enter into other similar Shareholder Service Agreements with any
other person without your consent.
10 This Agreement and Schedule A may be amended at any time without your
consent by Distributors mailing a copy of an amendment to you at the address
set forth below. Such amendment shall become effective on the date
specified in such amendment unless you elect to terminate this Agreement
within thirty (30) days of your receipt of such amendment.
11 This Agreement may be terminated with respect to any class of 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
3/98
<PAGE>
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>
3/98
<PAGE>
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 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 High Income Municipal Fund A Shares 0.25 December 22, 1997
AIM High Income Municipal Fund B Shares 0.25 December 22, 1997
AIM High Income Municipal Fund C Shares 1.00** December 22, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Fund 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Small Cap Opportunities Fund A Shares 0.25 ______, 1998
AIM Small Cap Opportunities Fund B Shares 0.25 ______, 1998
AIM Small Cap Opportunities Fund C Shares 1.00** ______, 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>
3/98
<PAGE>
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
is paid as an asset-based sales charge, as those terms are defined under
the rules of the National Association of Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
3/98
<PAGE>
EXHIBIT 15(c)
EXHIBIT B
[LOGO APPEARS HERE] BANK SHAREHOLDER
A I M Distributors, Inc. SERVICE AGREEMENT
We desire to enter into an Agreement with A I M Distributors, Inc. (the
"Company") acting as agent for the "AIM Funds", for servicing of our agency
clients who are shareholders of, and the administration of such shareholder
accounts in the shares of the AIM Funds (hereinafter referred to as the
"Shares"). Subject to the Company's acceptance of this Agreement, the terms and
conditions of this Agreement shall be as follows:
1 We shall provide continuing personal shareholder and administration
services for holders of the Shares who are also our clients. Such services
to our clients may include, without limitation, some or all of the
following: answering shareholder inquiries regarding the Shares and the AIM
Funds; performing subaccounting; establishing and maintaining shareholder
accounts and records; processing and bunching customer purchase and
redemption transactions; providing periodic statements showing a
shareholder's account balance and the integration of such statements with
those of other transactions and balances in the shareholder's other
accounts serviced by us; forwarding applicable AIM Funds prospectuses, proxy
statements, reports and notices to our clients who are holders of Shares;
and such other administrative services as you reasonably may request, to
the extent we are permitted by applicable statute, rule or regulations to
provide such services. We represent that we shall accept fees hereunder
only so long as we continue to provide personal shareholder services to our
clients.
2 Shares purchased by us as agents for our clients will be registered (choose
one) (in our name or in the name of our nominee) (in the names of our
clients). The client will be the beneficial owner of the Shares purchased
and held by us in accordance with the client's instructions and the client
may exercise all applicable rights of a holder of such Shares. We agree to
transmit to the AIM Funds' transfer agent in a timely manner, all purchase
orders and redemption requests of our clients and to forward to each
client any proxy statements, periodic shareholder reports and other
communications received from the Company by us on behalf of our clients.
The Company agrees to pay all out-of-pocket expenses actually incurred by
us in connection with the transfer by us of such proxy statements and
reports to our clients as required by applicable law or regulation. We
agree to transfer record ownership of a client's Shares to the client
promptly upon the request of a client. In addition, record ownership will
be promptly transferred to the client in the event that the person or
entity ceases to be our client.
3 Within five (5) business days of placing a purchase order we agree to send
(i) a cashiers check to the Company, or (ii) a wire transfer to the AIM
Funds' transfer agent, in an amount equal to the amount of all purchase
orders placed by us on behalf of our clients and accepted by the Company.
4 We agree to make available to the Company, upon the Company's request, such
information relating to our clients who are beneficial owners of Shares and
their transactions in such Shares as may be required by applicable laws and
regulations or as may be reasonably requested by the Company. The names of
our customers shall remain our sole property and shall not be used by the
Company for any other purpose except as needed for servicing and
information mailings in the normal course of business to holders of the
Shares.
5 We shall provide such facilities and personnel (which may be all or any
part of the facilities currently used in our business, or all or any
personnel employed by us) as may be necessary or beneficial in carrying out
the purposes of this Agreement.
6 Except as may be provided in a separate written agreement between the
Company and us, neither we nor any of our employees or agents are
authorized to assist in distribution of any of the AIM Funds' shares except
those contained in the then current Prospectus applicable to the Shares;
and we shall have no authority to act as agent for the Company or the AIM
Funds. Neither the AIM Funds, A I M Advisors, Inc. nor A I M Distributors,
Inc. will be a party, nor will they be represented as a party, to any
agreement that we may enter into with our clients.
3/98
<PAGE>
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 us of such termination. The
Company's failure to terminate for any cause shall not constitute a waiver
of the Company's right to terminate at a later date for any such cause.
This Agreement shall terminate automatically in the event of its assignment,
the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940, as amended.
11 All communications to the Company shall be sent to it at Eleven Greenway
Plaza, Suite 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.
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
3/98
<PAGE>
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund 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>
2/98
<PAGE>
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ----------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM 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 High Income Municipal Fund A Shares 0.25 December 22, 1997
AIM High Income Municipal Fund B Shares 0.25 December 22, 1997
AIM High Income Municipal Fund C Shares 1.00** December 22, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Fund 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Small Cap Opportunities Fund A Shares 0.25 ________, 1998
AIM Small Cap Opportunities Fund B Shares 0.25 ________, 1998
AIM Small Cap Opportunities Fund C Shares 0.25 ________, 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>
2/98
<PAGE>
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
is paid as an asset-based sales charge, as those terms are defined under
the rules of the National Association of Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
2/98
<PAGE>
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 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)
EXHIBIT D
AGENCY PRICING AGREEMENT
(THE AIM FAMILY OF FUNDS--Registered Trademark--)
This Agreement is entered into as of the____ of ____________, 1997,
between _______________________(the "Plan Provider") and A I M Distributors,
Inc. (the "Distributor").
RECITAL
Plan Provider acts as a trustee and/or servicing agent for defined
contribution plans and/or deferred compensation plans (the "Plans") and invests
and reinvests such Plans' assets as specified by an investment advisor, sponsor
or administrative committee of the Plan (a "Plan Representative") generally
upon the direction of Plan beneficiaries (the "Participants").
Plan Provider and Distributor desire to facilitate the purchase and
redemption of shares (the "Shares") of the funds listed on Exhibit A hereto
(the "Fund" or "Funds"), registered investment companies distributed by
Distributor, on behalf of the Plans, through one or more accounts (not to
exceed one per Plan) in each Fund (individually an "Account" and collectively
the "Accounts"), subject to the terms and conditions of this Agreement.
Distributor shall, on behalf of the Funds, pay to Plan Provider a fee in
accordance with Exhibit A hereto.
AGREEMENT
1. SERVICES
Plan Provider shall provide shareholder and administration services
for the Plans and/or their Participants, including, without
limitation: answering questions about the Funds; assisting in changing
dividend options, account designations and addresses; establishing and
maintaining shareholder accounts and records; and assisting in
processing purchase and redemption transactions (the "Services").
Plan Provider shall comply with all applicable laws, rules and
regulations, including requirements regarding prospectus delivery and
maintenance and preservation of records. To the extent allowed by
law, Plan Provider shall provide Distributor with copies of all
records that Distributor may reasonably request. Distributor or its
affiliate will recognize each Plan as an unallocated account in each
Fund, and will not maintain separate accounts in each Fund for each
Participant. Except to the extent provided in Section 3, all Services
performed by Plan Provider shall be as an independent contractor and
not as an employee or agent of Distributor or any of the Funds. Plan
Provider and Plan Representatives, and not Distributor, shall take all
necessary action so that the transactions contemplated by this
Agreement shall not be "Prohibited Transactions" under section 406 of
the Employee Retirement Income Security Act of 1974, or section 4975
of the Internal Revenue Code.
2. PRICING INFORMATION
Each Fund or its designee will furnish Plan Provider on each business
day that the New York Stock Exchange is open for business ("Business
Day"), with (i) net asset value information as of the close of trading
(currently 4:00 p.m. Eastern Time) on the New York
<PAGE>
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 Shares of the
Plans' balances for the prior quarter:
<TABLE>
<CAPTION>
FUND ANNUAL FEE
- ---------- ----------
<S> <C>
AIM Advisor Funds, Inc. (Class A Shares Only)
- ---------------------------------------------
AIM Advisor Flex Fund .25%
AIM Advisor Income Fund .25%
AIM Advisor International Value Fund .25%
AIM Advisor Large Cap Value Fund .25%
AIM Advisor MultiFlex Fund .25%
AIM Advisor Real Estate Fund .25%
AIM Equity Funds, Inc. (Class A Shares Only)
- --------------------------------------------
AIM Aggressive Growth Fund * .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Weingarten Fund .25%
AIM Funds Group (Class A Shares Only)
- -------------------------------------
AIM Balanced Fund .25%
AIM Global Utilities Fund .25%
AIM 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 Only)
- ---------------------------------------------------
AIM Asian Growth Fund .25%
AIM European Development Fund .25%
AIM Global Aggressive Growth Fund .25%
AIM Global Growth Fund .25%
AIM Global Income Fund .25%
AIM International Equity Fund .25%
AIM Investment Securities Funds (Class A Shares Only)
- -----------------------------------------------------
AIM Limited Maturity Treasury Fund .15%
</TABLE>
Distributor or its affiliates shall calculate the amount of quarterly
payment and shall deliver to Plan Provider a quarterly statement showing the
calculation of the quarterly amounts payable to Plan Provider. Distributor
reserves the right at any time to impose minimum fee payment requirements
before any quarterly payments will be made to Plan Provider. Payment to Plan
Provider shall occur within 30 days following the end of each quarter. All
parties agree that the payments referred to herein are for record keeping and
administrative services only and are not for legal, investment advisory or
distribution services.
Minimum Payments: $50 (with respect to all Funds in the aggregate.)
* AIM Aggressive Growth Fund is currently closed to new investors.
<PAGE>
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 Special Opportunities Funds
AIM Small Cap Opportunities Fund
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
- ---------
* Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE>
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)
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(Address)
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City/State/Zip/County
By:
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Name:
-----------------------------
Title:
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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 Special Opportunities Funds
AIM Small Cap Opportunities Fund
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
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* 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
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<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
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<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: By:
------------------------- --------------------------------
Assistant Secretary President
Effective Date: , 1998.
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<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-
<PAGE>
EXHIBIT 18
SECOND AMENDED AND RESTATED MULTIPLE CLASS PLAN
OF
THE AIM FAMILY OF FUNDS
1. This Second Amended and Restated Multiple Class Plan (the "Plan") adopted
in accordance with Rule 18f-3 under the Act shall govern the terms and
conditions under which the Funds may issue separate Classes of Shares
representing interests in one or more Portfolios of each Fund.
2. DEFINITIONS. As used herein, the terms set forth below shall have the
meanings ascribed to them below.
a. ACT - Investment Company Act of 1940, as amended.
b. CDSC - contingent deferred sales charge.
c. CDSC PERIOD - the period of years following acquisition of Shares
during which such Shares may be assessed a CDSC upon redemption.
d. CLASS - a class of Shares of a Fund representing an interest in a
Portfolio.
e. CLASS A SHARES - shall mean those Shares designated as Class A Shares
in the Fund's organizing documents, as well as those Shares deemed to
be Class A Shares for purposes of this Plan.
f. CLASS B SHARES - shall mean those Shares designated as Class B Shares
in the Fund's organizing documents.
g. CLASS C SHARES - shall mean those Shares designated as Class C Shares
in the Fund's organizing documents, as well as those Shares deemed to
be Class C Shares for purposes of this Plan.
h. DIRECTORS - the directors or trustees of a Fund.
i. DISTRIBUTION EXPENSES - expenses incurred in activities which are
primarily intended to result in the distribution and sale of Shares as
defined in a Plan of Distribution and/or agreements relating thereto.
j. DISTRIBUTION FEE - a fee paid by a Fund to the Distributor to
compensate the Distributor for Distribution Expenses.
k. DISTRIBUTOR - A I M Distributors, Inc. or Fund Management Company, as
applicable.
l. FUND - those investment companies advised by A I M Advisors, Inc.
which have adopted this Plan.
1
<PAGE>
m. INSTITUTIONAL SHARES - shall mean Shares of a Fund representing an
interest in a Portfolio offered for sale to institutional customers as
may be approved by the Directors from time to time and as set forth in
the Fund's prospectus.
n. PLAN OF DISTRIBUTION - Any plan adopted under Rule 12b-1 under the Act
with respect to payment of a Distribution Fee.
o. PORTFOLIO - a series of the Shares of a Fund constituting a separate
investment portfolio of the Fund.
p. SERVICE FEE - a fee paid to financial intermediaries for the ongoing
provision of personal services to Fund shareholders and/or the
maintenance of shareholder accounts.
q. SHARE - a share of common stock of or beneficial interest in a Fund,
as applicable.
3. ALLOCATION OF INCOME AND EXPENSES.
a. DISTRIBUTION AND SERVICE FEES - Each Class shall bear directly any and
all Distribution Fees and/or Service Fees payable by such Class
pursuant to a Plan of Distribution adopted by the Fund with respect to
such Class.
b. TRANSFER AGENCY AND SHAREHOLDER RECORDKEEPING FEES - Each Class shall
bear directly the transfer agency fees and expenses and other
shareholder recordkeeping fees and expenses specifically attributable
to that Class; provided, however, that where two or more Classes of a
Portfolio pay such fees and/or expenses at the same rate or in the
same amount, those Classes shall bear proportionately such fees and
expenses based on the relative net assets attributable to each such
Class.
c. ALLOCATION OF OTHER EXPENSES - Each Class shall bear proportionately
all other expenses incurred by a Fund based on the relative net assets
attributable to each such Class.
d. ALLOCATION OF INCOME, GAINS AND LOSSES - Except to the extent provided
in the following sentence, each Portfolio will allocate income and
realized and unrealized capital gains and losses to a Class based on
the relative net assets of each Class. Notwithstanding the foregoing,
each Portfolio that declares dividends on a daily basis will allocate
income on the basis of settled shares.
e. WAIVER AND REIMBURSEMENT OF EXPENSES - A Portfolio's adviser,
underwriter or any other provider of services to the Portfolio may
waive or reimburse the expenses of a particular Class or Classes.
4. DISTRIBUTION AND SERVICING ARRANGEMENTS. The distribution and servicing
arrangements identified below will apply for the following Classes offered
by a Fund with respect to a Portfolio. The provisions of the Fund's
prospectus describing the distribution and servicing arrangements in detail
are incorporated herein by this reference.
2
<PAGE>
a. CLASS A SHARES. Class A Shares shall be offered at net asset value
plus a front-end sales charge as approved from time to time by the
Directors and set forth in the Fund's prospectus, may be reduced or
eliminated for certain money market fund shares, for larger purchases,
under a combined purchase privilege, under a right of accumulation,
under a letter of intent or for certain categories of purchasers as
permitted by Rule 22(d) of the Act and as set forth in the Fund's
prospectus. Class A Shares that are not subject to a front-end sales
charge as a result of the foregoing shall be subject to a CDSC for the
CDSC Period set forth in Section 5(a) of this Plan if so provided in
the Fund's prospectus. The offering price of Shares subject to a
front-end sales charge shall be computed in accordance with Rule 22c-1
and Section 22(d) of the Act and the rules and regulations thereunder.
Class A Shares shall be subject to ongoing Service Fees and/or
Distribution Fees approved from time to time by the Directors and set
forth in the Fund's prospectus. Although AIM Cash Reserve Shares, AIM
Limited Maturity Treasury Shares, AIM Tax-Free Intermediate Shares and
shares of AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax Exempt
Cash Fund are not designated as "Class A", they are substantially
similar to Class A Shares as defined herein and shall be deemed to be
Class A Shares for the purposes of this Plan.
b. CLASS B SHARES. Class B Shares shall be (i) offered at net asset
value, (ii) subject to a CDSC for the CDSC Period set forth in
Section 5(b), (iii) subject to ongoing Service Fees and Distribution
Fees approved from time to time by the Directors and set forth in the
Fund's prospectus, and (iv) converted to Class A Shares eight years
from the end of the calendar month in which the shareholder's order to
purchase was accepted as set forth in the Fund's prospectus.
c. CLASS C SHARES. Class C Shares shall be (i) offered at net asset
value, (ii) subject to a CDSC for the CDSC Period set forth in Section
5(c), and (iii) subject to ongoing Service Fees and Distribution Fees
approved from time to time by the Directors and set forth in the
Fund's prospectus.
d. INSTITUTIONAL SHARES. Institutional Shares shall be (i) offered at
net asset value, (ii) offered only to certain categories of
institutional customers as approved from time to time by the Directors
and as set forth in the Fund's prospectus and (iii) may be subject to
ongoing Service Fees and/or Distribution Fees as approved from time to
time by the Directors and set forth in the Fund's prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that do
not incur a front-end sales charge and of Class B Shares and Class C Shares
as follows:
a. CLASS A SHARES. The CDSC Period for Class A Shares shall be 18
months. The CDSC Rate shall be as set forth in the Fund's prospectus,
the relevant portions of which are incorporated herein by this
reference. No CDSC shall be imposed on Class A Shares unless so
provided in a Fund's prospectus.
b. CLASS B SHARES. The CDSC Period for the Class B Shares shall be six
years. The CDSC Rate for the Class B Shares shall be as set forth in
the Fund's prospectus, the relevant portions of which are incorporated
herein by this reference.
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c. CLASS C SHARES. The CDSC Period for the Class C Shares shall be one
year. The CDSC Rate for the Class C Shares shall be as set forth in
the Fund's prospectus, the relevant portions of which are incorporated
herein by reference.
d. METHOD OF CALCULATION. The CDSC shall be assessed on an amount equal
to the lesser of the then current market value or the cost of the
Shares being redeemed. No sales charge shall be imposed on increases
in the net asset value of the Shares being redeemed above the initial
purchase price. No CDSC shall be assessed on Shares derived from
reinvestment of dividends or capital gains distributions. The order
in which Shares are to be redeemed when not all of such Shares would
be subject to a CDSC shall be determined by the Distributor in
accordance with the provisions of Rule 6c-10 under the Act.
e. WAIVER. The Distributor may in its discretion waive a CDSC otherwise
due upon the redemption of Shares and disclosed in the Fund's
prospectus or statement of additional information and, for the Class A
Shares, as allowed under Rule 6c-10 under the Act.
6. EXCHANGE PRIVILEGES. Exchanges of Shares shall be permitted between Funds
as follows:
a. Class A Shares may be exchanged for Class A Shares of another
Portfolio, subject to certain limitations set forth in the Fund's
prospectus as it may be amended from time to time, relevant portions
of which are incorporated herein by this reference.
b. Class B Shares may be exchanged for Class B Shares of another
Portfolio at their relative net asset value.
c. Class C Shares may be exchanged for Class C Shares of any other
Portfolio at their relative net asset value.
d. Depending upon the Portfolio from which and into which an exchange is
being made and when the shares were purchased, shares being acquired
in an exchange may be acquired at their offering price, at their net
asset value or by paying the difference in sales charges, as disclosed
in the Fund's prospectus and statement of additional information.
e. CDSC Computation. The CDSC payable upon redemption of Class A
Shares, Class B Shares and Class C Shares subject to a CDSC shall be
computed in the manner described in the Fund's prospectus.
7. SERVICE AND DISTRIBUTION FEES. The Service Fee and Distribution Fee
applicable to any Class shall be those set forth in the Fund's prospectus,
relevant portions of which are incorporated herein by this reference. All
other terms and conditions with respect to Service Fees and Distribution
Fees shall be governed by the Plan of Distribution adopted by the Fund with
respect to such fees and Rule 12b-1 of the Act.
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8. CONVERSION OF CLASS B SHARES.
a. SHARES RECEIVED UPON REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS -
Shares purchased through the reinvestment of dividends and
distributions paid on Shares subject to conversion shall be treated as
if held in a separate sub-account. Each time any Shares in a
Shareholder's account (other than Shares held in the sub-account)
convert to Class A Shares, a proportionate number of Shares held in
the sub-account shall also convert to Class A Shares.
b. CONVERSIONS ON BASIS OF RELATIVE NET ASSET VALUE - All conversions
shall be effected on the basis of the relative net asset values of the
two Classes without the imposition of any sales load or other charge.
c. AMENDMENTS TO PLAN OF DISTRIBUTION FOR CLASS A SHARES - If any
amendment is proposed to the Plan of Distribution under which Service
Fees and Distribution Fees are paid with respect to Class A Shares of
a Fund that would increase materially the amount to be borne by those
Class A Shares, then no Class B Shares shall convert into Class A
Shares of that Fund until the holders of Class B Shares of that Fund
have also approved the proposed amendment. If the holders of such
Class B Shares do not approve the proposed amendment, the Directors of
the Fund and the Distributor shall take such action as is necessary to
ensure that the Class voting against the amendment shall convert into
another Class identical in all material respects to Class A Shares of
the Fund as constituted prior to the amendment.
9. This Plan shall not take effect until a majority of the Directors of a
Fund, including a majority of the Directors who are not interested persons
of the Fund, shall find that the Plan, as proposed and including the
expense allocations, is in the best interests of each Class individually
and the Fund as a whole.
10. This Plan may not be amended to materially change the provisions of this
Plan unless such amendment is approved in the manner specified in Section 9
above.
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