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AIM SUMMIT INVESTORS PLANS II
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PROSPECTUS AIM --Registered Trademark--
JULY 24, 2000
AIM Summit Investors Plans II provides for the accumulation of
shares of AIM Summit Fund.
Shares of AIM Summit Fund are offered to and may be purchased by
the general public through AIM Summit Investors Plans I and AIM
Summit Investors Plans II. Details of AIM Summit Fund are found in
the AIM Summit Fund Prospectus located at the back of this
Prospectus. You should read both this Prospectus and the Prospectus
of AIM Summit Fund, Inc. and keep these Prospectuses for future
reference. Information concerning AIM Summit Investors Plans I can
be found in a separate Prospectus.
AS WITH ALL OTHER INVESTMENT COMPANY SECURITIES, THE SECURITIES AND
EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED WHETHER THE INFORMATION IN THIS PROSPECTUS
IS ADEQUATE OR ACCURATE. ANYONE WHO TELLS YOU OTHERWISE IS
COMMITTING A CRIME.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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TABLE OF CONTENTS
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PAGE
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Introduction................................................ 1
Purpose and Benefits of the Plans...................... 1
Description of Plans................................... 1
Investment Objective of the Fund....................... 1
Principal Risks of Investing in the Plans.............. 1
Cancellation and Refund Rights......................... 1
Termination of the Plan................................ 1
Fee Table................................................... 2
A Typical $50 Monthly Investment Plan....................... 3
Choosing Your Investment Amount............................. 4
Allocation of Investments and Deductions............... 4
Total 25 Year Allocations of Investments and Deductions
When Extended Investment Option
Is Used.............................................. 5
Investments................................................. 6
Making your Plan Investments........................... 6
By Check............................................. 6
Automatic Investment Program......................... 6
Extended Investment Option............................. 6
Creation and Sales Charges............................. 6
Rights of Accumulation................................. 6
Making Preinvestments to Complete the Plan Ahead of
Schedule.............................................. 7
Changing the Face Amount of a Plan..................... 7
Withdrawals and Termination................................. 7
Timing of Receipt of Proceeds on Redemptions of Fund
Shares................................................ 7
Partial Withdrawals Without Terminating a Plan......... 7
Complete Withdrawal or Termination..................... 8
Plan Reinstatement Privilege........................... 9
Planholder Options and Services............................. 9
Retirement Plans....................................... 9
Systematic Withdrawal Program.......................... 9
Federal Income Tax Withholding......................... 10
Statements, Reports and Notices........................ 10
Rights and Policies......................................... 10
Cancellation and Refund Rights......................... 10
Voting Rights.......................................... 11
Transfer or Assignment Rights.......................... 11
Termination of a Plan by the Sponsor or Custodian...... 11
Substitution of Shares................................. 12
Plan Completion........................................ 12
Service Charges and Other Fees.............................. 12
Dividends, Capital Gains and Taxes.......................... 13
Additional Information...................................... 13
The Custodian.......................................... 13
The Sponsor............................................ 14
General................................................ 16
Transcript of a Hypothetical Plan Account................... 17
Financial Statements........................................ 18
AIM Summit Fund Prospectus.................................. A-1
</TABLE>
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NO SALESMAN, DEALER OR OTHER PERSON IS AUTHORIZED BY THE SPONSOR OR AIM
SUMMIT FUND TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS OR IN THE PROSPECTUS OF THE AIM SUMMIT FUND OR IN
ANY OTHER PRINTED OR WRITTEN MATERIAL AUTHORIZED BY THE SPONSOR OR AIM SUMMIT
FUND, AND NO PERSON SHOULD RELY UPON ANY INFORMATION NOT CONTAINED IN THESE
MATERIALS.
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INTRODUCTION
PURPOSE AND BENEFITS OF THE PLANS
AIM Summit Investors Plans II (Plans) are designed to provide you an
effective and convenient method to create an investment fund for your future
capital or income needs by systematically investing a modest sum each month in
shares of a mutual fund. Many people recognize the desirability of accumulating
an investment portfolio through a planned long-range investment program, but
find it difficult to save the necessary money to make periodic stock purchases.
Payments under a Plan are applied, after authorized deductions, to the
purchase of shares of AIM Summit Fund (Fund) at net asset value. Ownership of
shares of the Fund through a Plan provides you with several advantages:
(1) Diversification -- By pooling the money invested by many
investors, AIM Summit Fund, Inc. (Fund) will be able to reduce (but not
eliminate) risk by diversifying its holdings among many securities in order
to minimize the portfolio impact of any single investment.
(2) Economics of Size -- Purchases and sales of securities often
entail disproportionately large unit costs on small transactions. The size
and volume of the Fund's portfolio transactions should enable it to effect
such transactions at better net unit prices than an individual could
achieve.
(3) Professional Management -- Investors may benefit from the
full-time skill and attention of professional managers.
DESCRIPTION OF PLANS
Plans for the accumulation of shares of the Fund are offered by A I M
Distributors, Inc., the sponsor and principal underwriter (AIM Distributors or
Sponsor). A Plan calls for fixed monthly investments for 15 years (180
investments). You have the option to make additional monthly investments for up
to a total of 25 years (300 investments).
Shares of the Fund should be considered a long-term investment and are not
suitable if you are seeking quick profits or if you might not be able to
complete a Plan. A sales load (Creation and Sales Charge) of up to 50% is
deducted from the first 12 investments and paid to the Sponsor. There is no
sales load on payments 13 through 300.
Investments made through a Plan will not result in direct ownership of
shares of the Fund. Your Plan represents an interest in a trust which has direct
ownership of such shares. You have a beneficial interest in the underlying
shares of the Fund.
INVESTMENT OBJECTIVE OF THE FUND
The Fund's investment objective is growth of capital.
PRINCIPAL RISKS OF INVESTING IN THE PLANS
The value of the shares of the Fund will change when the values of the
securities in the Fund's portfolio change. A Plan calls for monthly investments
at regular intervals regardless of the value of the Fund's shares. You should
therefore consider your financial ability to continue a Plan. A Plan offers no
assurance against loss in a declining market. Terminating a Plan at a time when
the value of the Fund's shares then held is less than their cost will result in
a loss. Prepayment of all or part of the first year's investments in a Plan
increases the possible loss in the event of early termination. Because of the
Creation and Sales Charge, you will probably lose money if you withdraw an
investment or terminate your Plan during the early years of your Plan.
CANCELLATION AND REFUND RIGHTS
You have the right to a 45 day and an 18 month refund as described in more
detail under "Rights and Policies."
TERMINATION OF THE PLAN
A Plan may be terminated by the Custodian or Sponsor if you fail to make
investments under your Plan for a period of 6 months or if shares of the Fund
are not available and a substitution is not made. See "Termination of a Plan by
the Sponsor or Custodian."
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FEE TABLE
These are the estimated fees and expenses, based on plan Creation and Sales
Charges, you may pay if you invest in a Plan.
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PLAN OWNER FEES PAID DIRECTLY FROM YOUR PLAN PAYMENT
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Creation and Sales Charges when you buy shares as a
percentage of net amount invested 50.00%(1)
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ANNUAL FUND OPERATING EXPENSES PAID FROM THE ASSETS OF THE
FUND
as a percentage of average daily net assets
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Management Fees 0.63%
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Distribution and/or Service (12b-1) Fees(2) 0.10%
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Other Expenses 0.12%
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Total Annual Fund Operating Expenses 0.85%
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1 Creation and Sales Charges of up to 50% will be deducted from your first 12
investments. If you complete scheduled payments over a 15-year plan, you will
pay Creation and Sales Charges of up to 3.33%.
2 The Distribution and/or Service Fees applicable to shares of the Fund are
0.30%, however AIM Distributors has contractually agreed to waive 0.20% of
these Distribution and/or Service Fees applicable to shares of the Fund
beneficially owned through AIM Summit Investors Plans I. Accruing fees at two
different rates results in a blended rate, which will increase as a percentage
of average daily net assets of the Fund as additional shares of the Fund are
acquired outside AIM Summit Investors Plans I.
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A TYPICAL $50 MONTHLY INVESTMENT PLAN
This table shows you the investments and deductions under a Plan for a
typical $50 monthly investment Plan. The 15-year schedule assumes that all
investments were made in accordance with the terms of the Plan. The 25-year
schedule reflects the changes applicable to a 15-year Plan that is continued
under the Extended Investment Option. The table does not reflect Fund
performance, Fund expenses, the payment of any dividends or distributions by the
Fund, or custodian fees. Custodian fees are voluntarily paid by the Fund and are
reflected under "Other Expenses" of the Fee Table.
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AT THE END OF AT THE END OF AT THE END OF
6 MONTHS 1 YEAR 2 YEARS
(6 INVESTMENTS) (12 INVESTMENTS) (24 INVESTMENTS)
-------------------- -------------------- --------------------
% OF TOTAL % OF TOTAL % OF TOTAL % OF TOTAL
AMOUNT INVESTMENTS AMOUNT INVESTMENTS AMOUNT INVESTMENTS AMOUNT INVESTMENTS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
15 YEARS (180 INVESTMENTS)
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Total Investments............. $ 9,000 100.00% $300 100% $600 100% $1,200 100%
Deduct:
Creation and Sales
Charge.................. $ 300 3.33% $150 50% $300 50% $ 300 25%
Net Amount Invested Under
Plan........................ $ 8,700 96.67% $150 50% $300 50% $ 900 75%
25 YEARS (300 INVESTMENTS)
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Total Investments............. $15,000 100.00% $300 100% $600 100% $1,200 100%
Deduct:
Creation and Sales
Charges................. $ 300 2.00% $150 50% $300 50% $ 300 25%
Net Amount Invested Under
Plan........................ $14,700 98.00% $150 50% $300 50% $ 900 75%
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CHOOSING YOUR INVESTMENT AMOUNT
Use the following tables to select among the range of available monthly
Plan investment options. Each table shows the face amount of the Plan and the
Creation and Sales Charges that will be charged and the total charges as a
percentage of the total amount invested under a Plan and as a percentage of the
net amount invested. This information is based solely on investments made under
a Plan and does not reflect any investment performance, dividend or income from
the Fund over the period of a Plan, or expenses of the Fund or any other
charges.
ALLOCATION OF INVESTMENTS AND DEDUCTIONS
15 YEAR PLANS
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% OF TOTAL DEDUCTIONS
CREATION AND SALES CHARGES ------------------------
------------------------------------- TO NET
MONTHLY PER PER INVESTMENT MONTHLY
INVESTMENT TOTAL INVESTMENT INVESTMENT TO TOTAL IN FUND INVESTMENT
UNIT INVESTMENTS 1 THRU 12 13 THRU 180 TOTAL INVESTMENTS SHARES UNIT
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$ 50.00 $ 9,000.00 $ 25.00 $0 $ 300.00 3.33% 3.45% $ 50.00
75.00 13,500.00 37.50 0 450.00 3.33% 3.45% 75.00
100.00 18,000.00 50.00 0 600.00 3.33% 3.45% 100.00
125.00 22,500.00 62.50 0 750.00 3.33% 3.45% 125.00
150.00 27,000.00 75.00 0 900.00 3.33% 3.45% 150.00
166.66 29,998.80 83.33 0 999.96 3.33% 3.45% 166.66
200.00 36,000.00 100.00 0 1,200.00 3.33% 3.45% 200.00
250.00 45,000.00 125.00 0 1,500.00 3.33% 3.45% 250.00
300.00 54,000.00 150.00 0 1,800.00 3.33% 3.45% 300.00
350.00 63,000.00 175.00 0 2,100.00 3.33% 3.45% 350.00
400.00 72,000.00 200.00 0 2,400.00 3.33% 3.45% 400.00
450.00 81,000.00 225.00 0 2,700.00 3.33% 3.45% 450.00
500.00 90,000.00 250.00 0 3,000.00 3.33% 3.45% 500.00
600.00 108,000.00 300.00 0 3,600.00 3.33% 3.45% 600.00
700.00 126,000.00 350.00 0 4,200.00 3.33% 3.45% 700.00
800.00 144,000.00 400.00 0 4,800.00 3.33% 3.45% 800.00
900.00 162,000.00 450.00 0 5,400.00 3.33% 3.45% 900.00
1,000.00 180,000.00 500.00 0 6,000.00 3.33% 3.45% 1,000.00
1,250.00 225,000.00 625.00 0 7,500.00 3.33% 3.45% 1,250.00
1,500.00 270,000.00 675.00 0 8,100.00 3.00% 3.09% 1,500.00
1,750.00 315,000.00 700.00 0 8,400.00 2.67% 2.74% 1,750.00
2,000.00 360,000.00 750.00 0 9,000.00 2.50% 2.56% 2,000.00
2,500.00 450,000.00 812.50 0 9,750.00 2.17% 2.21% 2,500.00
5,000.00 900,000.00 1,250.00 0 15,000.00 1.67% 1.69% 5,000.00
10,000.00 1,800,000.00 1,500.00 0 18,000.00 1.00% 1.01% 10,000.00
</TABLE>
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TOTAL 25 YEAR ALLOCATIONS OF INVESTMENTS AND DEDUCTIONS WHEN
EXTENDED INVESTMENT OPTION IS USED
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% OF TOTAL DEDUCTIONS
CREATION AND SALES CHARGE ---------------------------
MONTHLY ------------------------------------------- TO TO NET MONTHLY
INVESTMENT TOTAL PER INVESTMENT PER INVESTMENT TOTAL INVESTMENT IN INVESTMENT
UNIT INVESTMENTS 1 THRU 12 13 THRU 300 TOTAL INVESTMENTS FUND SHARES UNIT
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$ 50.00 $ 15,000.00 25.00 $0 300.00 2.00% 2.04% $ 50.00
75.00 22,500.00 37.50 0 450.00 2.00% 2.04% 75.00
100.00 30,000.00 50.00 0 600.00 2.00% 2.04% 100.00
125.00 37,500.00 62.50 0 750.00 2.00% 2.04% 125.00
150.00 45,000.00 75.00 0 900.00 2.00% 2.04% 150.00
166.66 49,998.00 83.33 0 999.96 2.00% 2.04% 166.66
200.00 60,000.00 100.00 0 1,200.00 2.00% 2.04% 200.00
250.00 75,000.00 125.00 0 1,500.00 2.00% 2.04% 250.00
300.00 90,000.00 150.00 0 1,800.00 2.00% 2.04% 300.00
350.00 105,000.00 175.00 0 2,100.00 2.00% 2.04% 350.00
400.00 120,000.00 200.00 0 2,400.00 2.00% 2.04% 400.00
450.00 135,000.00 225.00 0 2,700.00 2.00% 2.04% 450.00
500.00 150,000.00 250.00 0 3,000.00 2.00% 2.04% 500.00
600.00 180,000.00 300.00 0 3,600.00 2.00% 2.04% 600.00
700.00 210,000.00 350.00 0 4,200.00 2.00% 2.04% 700.00
800.00 240,000.00 400.00 0 4,800.00 2.00% 2.04% 800.00
900.00 270,000.00 450.00 0 5,400.00 2.00% 2.04% 900.00
1,000.00 300,000.00 500.00 0 6,000.00 2.00% 2.04% 1,000.00
1,250.00 375,000.00 625.00 0 7,500.00 2.00% 2.04% 1,250.00
1,500.00 450,000.00 675.00 0 8,100.00 1.80% 1.83% 1,500.00
1,750.00 525,000.00 700.00 0 8,400.00 1.60% 1.63% 1,750.00
2,000.00 600,000.00 750.00 0 9,000.00 1.50% 1.52% 2,000.00
2,500.00 750,000.00 812.50 0 9,750.00 1.30% 1.32% 2,500.00
5,000.00 1,500,000.00 1,250.00 0 15,000.00 1.00% 1.01% 5,000.00
10,000.00 3,000,000.00 1,500.00 0 18,000.00 0.60% 0.60% 10,000.00
</TABLE>
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INVESTMENTS
MAKING YOUR PLAN INVESTMENTS
To start a Plan, you must complete an application indicating your monthly
Plan investment amount. You may make Plan investments by check or automatically.
Plan investments after deduction of applicable creation and sales charges will
be invested in the Fund's shares at net asset value.
BY CHECK
Your check should be in the amount of your initial monthly investment
unit and made payable to State Street Bank and Trust Company, Custodian,
and mailed to, Boston Financial Data Services, Inc. (BFDS), P.O. Box
8300, Boston, Massachusetts 02266-8300.
AUTOMATIC INVESTMENT PROGRAM
If you wish to have investments in your Plan made automatically without
having to write a check each month, you may request that investments be
made by means of pre-authorized checks. Under this program, each month
BFDS will draft your bank account in the amount of the monthly
investment. You may also choose to have investments in your Plan made
automatically through a military or government allotment.
To initiate a Pre-Authorized Check Investment Program, you should
complete the appropriate forms and forward them to BFDS. You may
terminate a Pre-Authorized Check Investment Program at any time by
written notice to BFDS at least five days prior to the date of the next
scheduled draft.
After your Plan application has been accepted and initial investment has
been received, you will receive a statement showing the number of shares of the
Fund purchased for your account.
EXTENDED INVESTMENT OPTION
You may continue making monthly investments through an Extended Investment
Option after completing all scheduled investments under your Plan. These
additional investments are subject to the same deductions as applied to your
last scheduled investment. The Custodian, however, may increase the Custodian
fee applicable during this period to the rate then being charged for new Plans
of the same denomination, but not greater than 75% higher than the Custodian
fees detailed in this Prospectus. You may stop all future additional investments
under this option by notifying BFDS in writing.
When the Extended Investment Option is terminated for any reason, the
Custodian may increase its fee to the rate then currently being charged for new
Plans of the same denomination. In no case, however, will this new rate be more
than 75% higher than the current annual rate of the Custodian fees.
CREATION AND SALES CHARGES
The Sponsor receives Creation and Sales Charges as compensation for its
services and costs in creating the Plans and arranging for their administration,
for making the Fund's shares available to you at their net asset value and for
selling expenses and commissions with respect to the Plans. These charges are
deducted from each of the first 12 monthly investments. For example, on a $50
per month Plan, $25.00 is deducted from each of the first 12 investments.
During the period July 19, 1999 (date sales commenced) through October 31,
1999, total investments made by all planholders amounted to $971,918. The amount
of Creation and Sales Charges deducted from these investments was $263,504, of
which amount $20,151, was retained by the Sponsor and $243,353, was paid to
investment dealers who participated in the sale of Plans.
Directors, officers and full-time employees of the Fund and the Sponsor and
its affiliates may purchase and make investments in Plans directly through the
Sponsor without deduction of Creation and Sales Charges. Any expense incurred by
the Sponsor during such sales are expected to be minimal.
RIGHTS OF ACCUMULATION
You, your spouse, your children under the age of 21 and a trustee may
combine the face amounts of two or more Plans purchased at any time and the
value of any other AIM Funds or AIM Plans then owned to take advantage of the
lower Creation and Sales Charges available on larger sized investments.
You and the other persons listed in the preceding paragraph may also
qualify for a reduced Creation and Sales Charge on a new Plan purchase by
combining the face amount of any existing AIM Funds and AIM Plan(s) on which
investments are current with the face amount of the new purchase or when
increasing the face amount of any existing Plan(s) on which investments are
current.
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For rights of accumulation, a Plan is considered to be current if:
(a) it has been completed and not redeemed;
(b) it has not been completed but has at least as many investments
recorded as there are months elapsed since establishment or since
being increased; or
(c) it is a qualified retirement plan, including an IRA.
Reduced Creation and Sales Charges apply to investments made after the
Sponsor has been notified of the eligibility of such Plans for reduced Creation
and Sales Charges and has received the information necessary to confirm such
eligibility. In the case of existing IRA Plans at the $166.66 per month level,
reduced Creation and Sales Charges will apply to investments made on both the
existing Plan and the new Plan.
To qualify for reduced Creation and Sales Charges, you must submit all of
the applications for the Plans involved at the same time and include a letter
from you (or your dealer) requesting that the face amounts of your Plans be
aggregated for the purpose of determining applicable Creation and Sales Charges.
If you discontinue investments under one or more of your Plans, you will be
responsible for paying the Creation and Sales Charges previously avoided.
MAKING PREINVESTMENTS TO COMPLETE THE PLAN AHEAD OF SCHEDULE
You may complete a Plan ahead of schedule by making investments in advance
of their due dates, but you may make no more than 24 investments in any calendar
year, including any monthly investments. In addition to these advance
investments, you may make an additional 24 investments which may be made
initially or at any time during the life of the Plan. You may not make advanced
investments if doing so would cause your Plan to be more than 48 investments
ahead of schedule. You may accumulate and pay investments in a lump sum. These
preinvestments provisions may be waived only
(a) to make a Plan that is in arrears current,
(b) for a transfer of assets from a tax-sheltered retirement plan to a
Fund tax-sheltered retirement plan, or
(c) in the event of your death, to allow the Plan to be completed at
one time by the estate or beneficiary.
You will not avoid Creation and Sales Charges by making investments ahead
of schedule.
CHANGING THE FACE AMOUNT OF A PLAN
You may increase the amount of your Plan at any time. In addition, prior to
making the 12th investment under a Plan, you may decrease the amount of your
Plan by as much as 50% of the face amount. You should send requests for changes
in the face amount of your Plan and a completed Plan application for the new
face amount to AIM Distributors or BFDS. The revised Plan must be in one of the
denominations listed on page 4. The Creation and Sales Charges already paid on
the existing Plan will be recomputed and applied as a credit to the Creation and
Sales Charges due on the revised Plan at the time that it is established. For a
period of 12 months following an increase in the face value of a Plan, you may
reduce the face value of the Plan to an amount not less than the original face
value. Investments already made will be credited to the revised Plan.
WITHDRAWALS AND TERMINATION
TIMING OF RECEIPT OF PROCEEDS ON REDEMPTIONS OF FUND SHARES
You will be sent the proceeds of a partial or complete redemption of Fund
shares within seven days after BFDS receives all necessary documents in proper
order. However, if you redeem shares recently purchased by check, you may be
required to wait up to ten business days before BFDS will send your redemption
proceeds. This delay is necessary to ensure that the purchase check has cleared.
The payment period may be extended if the Custodian's right to redeem shares of
the Fund has been suspended or restricted because: (a) trading on the NYSE is
restricted, as determined by the applicable rules and regulations of the
Securities and Exchange Commission (SEC); (b) the NYSE 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.
PARTIAL WITHDRAWALS WITHOUT TERMINATING A PLAN
If you withdraw or sell all of the Fund shares in your Plan, your Plan will
normally be terminated. However, if you have owned your Plan for at least 45
days, you may request a partial withdrawal or sale of up to 90% of your shares
without terminating your Plan and keep your Plan in effect. If you withdraw your
shares from your Plan, you will own those shares directly. If you elect to sell
your shares, AFS, acting as your agent, will withdraw and sell the shares and
pay the proceeds to you. While there is no fee for a
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<PAGE> 10
partial withdrawal or sale, there may be federal income tax consequences to you
from engaging in a partial withdrawal or sale of your shares.
You may request a partial withdrawal or sale by writing BFDS at the address
listed in this prospectus or by calling BFDS at (617) 483-5000. You may withdraw
or sell your shares by telephone only if:
(a) the proceeds are made payable to you and mailed to your address of
record with us;
(b) there has been no change of address of record with us within the
proceeding 30 days;
(c) you can provide proper identification information;
(d) the proceeds of the withdrawal do not exceed $50,000; and
(e) your shares are not held in an IRA or other retirement plan.
Fund shares you elect to withdraw are redeemed at their net asset value
next determined after BFDS receives a request in proper form. You may withdraw
or sell your shares during the customary trading session of the NYSE. A dealer
who fails to submit a request for withdrawal within the prescribed time frame
will be responsible for any losses.
AIM Distributors has made arrangements with certain dealers to accept
telephone instructions for the withdrawal of Fund shares. AIM Distributors may
impose conditions on these dealers, including the condition that they enter into
agreements (which contain additional conditions with respect to the withdrawal
of shares) with AIM Distributors. The Fund, AIM Distributors, the Custodian, and
BFDS will not be liable for any loss, expense or cost arising out of any
telephone withdrawal request effected in accordance with the authorization set
forth in your account application if they reasonably believe such request to be
genuine.
While there is currently no limit to the number of partial withdrawals or
sales that you can make, the Sponsor could limit you to exercising the partial
withdrawal privilege once during each calendar year. Each partial withdrawal or
sale must be at least $100. No partial withdrawal will affect the total number
of Plan investments, the period in which such investments are to be made, or the
unpaid balance of Plan investments under your Plan.
After a partial withdrawal and sale of your shares, you may, but are not
required to, restore the value of your Plan by remitting to BFDS an amount equal
to the cash withdrawal. This amount will be used to purchase Fund shares for
your account at their next determined net asset value. You may make a repayment
of a partial cash withdrawal after a period of 90 days from the date of
redemption, except in the case of plan accounts that are IRAs, for which a
reinvestment may be made after a period of 45 days. All reinvestments must be at
least $500 or the unrestored amount of the cash withdrawal, whichever is less.
Restoration of a partial liquidation of Fund shares held in an IRA account must
be made within 60 days in order to avoid tax consequences, including early
withdrawal penalties. You must clearly identify replacements of partial cash
withdrawals to distinguish them from regular monthly plan investments.
See "Complete Withdrawal or Termination" below for information concerning
the method of providing written instructions to the Custodian to effect a
partial withdrawal or liquidation and the circumstances under which the
redemption of shares may be delayed.
COMPLETE WITHDRAWAL OR TERMINATION
You may terminate your Plan at any time by writing to BFDS. When you
terminate your Plan you may request that the Custodian deliver the Fund shares
you have accumulated (properly registered in your name) in book entry form or in
certificate form. You may instead direct the Custodian, as your agent, to
withdraw your shares, redeem them and send you the proceeds. If you direct the
delivery of your shares, sufficient shares will be redeemed to pay authorized
deductions and any applicable transfer taxes, with any net balance to be paid in
cash. The redemption of Fund shares is a taxable event. See "DIVIDENDS, CAPITAL
GAINS AND TAXES."
The Custodian requires that instructions in writing for both partial or
full redemption of Fund shares held in a Plan be in the form of a signed letter
with your signature guaranteed. A signature guarantee is designed to protect
you, the Plan, the Sponsor and the Custodian. Acceptable guarantors are banks,
broker-dealers, savings and loan associations, credit unions, national
securities exchanges and any other "eligible guarantor institution" as defined
in rules adopted by the SEC. A notary public is not an acceptable guarantor. The
Sponsor currently does not require signature guarantees for redemption requests
of $50,000 or less unless the proceeds are to be paid to a person other than the
record owner or are to be sent to an address other than the one of record. You
will be given notice if this policy is changed. Currently, in addition to these
requirements, if you have invested in the Plan to establish an IRA, you should
include the following information along with your written request for either
partial or full redemption of your shares: (a) a statement as to whether or not
you have attained age 59 1/2; (b) a statement as to whether or not you are
legally disabled; (c) a statement as to whether or not you elect to have federal
income tax withheld from the proceeds of the redemption; and (d) your Social
Security number along with the following statement: "I certify under penalties
of perjury that the Social Security number provided is correct and that I am not
subject to backup withholding either because I am exempt from backup
withholding, I
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<PAGE> 11
have not been notified by the Internal Revenue Service that I am subject to
backup withholding, or the Internal Revenue Service has notified me that I am no
longer subject to backup withholding." If you have been notified by the Internal
Revenue Service that you are currently subject to backup withholding, then you
should modify the preceding statement accordingly. Even if you elect not to have
federal income tax withheld, you are liable for federal income tax on the
taxable portion of the redemption. You may also be subject to tax penalties
under the estimated tax payment rules if your payments of estimated tax and
withholding, if any, are not adequate. All documents must be in proper order
before any redemption can be executed. You should send redemption requests to
BFDS. The redemption price will be the net asset value of your shares next
determined after BFDS receives such documents in proper order.
PLAN REINSTATEMENT PRIVILEGE
You may, within 90 days after you have completely terminated your Plan, by
written request to BFDS, reinstate your Plan without any additional sales
charge, subject to certain restrictions:
(a) By including with the request an amount which is 10% or more of
the redemption proceeds, if no refunded sales charges were provided in the
termination.
(b) By including with the request the full amount of all refunded
sales charges, plus an amount equal to 10% or more of the shares redeemed,
if the termination was done under the privileges described under
"Cancellation and Refund Rights."
You may not reinstate a terminated plan if you have ever exercised the
privilege previously. If you exercise the Plan Reinstatement Privilege, neither
the total number of monthly investments to be made nor the unpaid balance of
monthly Plan investments under the Plan will be changed.
The complete termination of your Plan will normally result in the
realization of gain or loss for federal income tax purposes. Any gain will be
recognized and subject to the applicable capital gains tax. If a loss is
realized, reinstatement of your Plan could effect a "wash sale," meaning that
the loss will not be recognized for tax purposes. The amount of the
non-recognized loss will, however, be added to the cost of the reinstated Plan
to determine your basis for tax purposes.
In addition to the Plan Reinstatement Privilege described above, the
Sponsor may from time to time permit planholders who have previously terminated
their Plans to establish new Plans on the following terms:
(a) The Planholder must open the new Plan with an investment equal to
or less than the amount of the redemption proceeds received upon redemption
of the former Plan. No Creation and Sales Charges or Custodian fees will be
subtracted from the initial investment.
(b) The number of the next investment due on the new Plan will be the
number of the next investment due on the former Plan at the time it was
terminated.
(c) Creation and Sales Charges on the new Plan will be the Creation
and Sales Charges that would currently be applicable to the former Plan.
The ability to establish such new Plans will not be generally available,
but will be available only during such limited time periods as may be specified
by the Sponsor from time to time.
PLANHOLDER OPTIONS AND SERVICES
RETIREMENT PLANS
You may use a Plan to establish tax-deferred qualified retirement plans
such as IRAs, IRA-SEPs, Profit Sharing Plans and Money Purchase Plans. The
Sponsor has detailed information about such plans, including service fees
charged. The annual maintenance fee charged by the Custodian for plans offered
by the Sponsor is found under "Service Charges and Other Fees." This fee will be
deducted from plan shares unless it is paid in advance. In addition, IRA
rollover or transfer contributions can be accepted into a Plan from qualified
individuals. However, a tax-deferred qualified retirement plan may not be
established by changing the registration of an existing plan.
SYSTEMATIC WITHDRAWAL PROGRAM
When you complete all regularly scheduled investments, you may choose to
establish a Systematic Withdrawal Program. If you are holding Plans in IRAs,
Keogh plans, or other retirement plans you may choose to establish a Systematic
Withdrawal Program prior to Plan completion by notifying the Sponsor that you do
not intend to make any further Plan investments. Under this program, you
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<PAGE> 12
may choose to receive monthly or quarterly checks in any amount of $50 or more.
To provide funds for these payments, the Custodian, as your agent, will redeem
shares held in your account on the first business day of each month or quarter,
at the Fund's current net asset value. You may cancel, or change the amount of
payments made to you under a Systematic Withdrawal Program at any time.
Following 90 days' notice to you, the Sponsor may discontinue offering
Systematic Withdrawal Programs.
While a Systematic Withdrawal Program is in effect, you may not elect to
receive dividends and distributions in cash on shares of the Fund held in your
account. If you have not completed a Plan, except if you are holding Plans in
IRAs, Keogh plans or other retirement plans, you may not establish Systematic
Withdrawal Program.
The IRS considers payments you receive under a Systematic Withdrawal
Program as a taxable transaction. Since such payments are funded by the
redemption of shares of the Fund, they will be treated for tax purposes as a
sale or exchange of a capital asset. The payments will result in the recognition
of a capital gain or loss, rather than ordinary income.
FEDERAL INCOME TAX WITHHOLDING
As an additional service, BFDS may withhold 28% of any income dividend or
capital gains distribution by the Fund and send that amount to the Internal
Revenue Service as a credit against your tax liability, if any. The amount
withheld may or may not be equal to the additional taxes you may owe due to the
dividend or distribution. The withholding service, however, is only available to
you if you reinvest your distributions in full. If you elect to authorize this
withholding, the number of Fund shares purchased with the remainder of the
income dividend or capital gains distribution will be less than would have
otherwise been the case.
This service is available with respect to all Plans except qualified
retirement plans, including IRAs. You may initiate this option by writing to
BFDS. Once initiated, the withholding remains in effect until you notify BFDS in
writing to terminate the withholding.
STATEMENTS, REPORTS AND NOTICES
BFDS will mail a statement to you for each investment stating the price per
Fund shares purchased, the number of shares purchased after applicable
deductions and the total number of Fund shares held for your account. A notice
of the next investment due is included. You will also receive at least annually
a current Fund prospectus and audited financial statements of the Fund,
including a complete list of all securities held in the Fund's portfolio, and
copies of all other reports sent by the Fund to its shareholders. You will be
sent notices of all income dividends and capital gains distributions made with
respect to Fund shares, together with tax reporting information relating to such
dividends and distributions. Any notices, reports or documents required to be
given to you under this Prospectus will be conclusively deemed to have been
given upon mailing to your address of record, and the date of such mailing will
be deemed the date such notice was given.
RIGHTS AND POLICIES
CANCELLATION AND REFUND RIGHTS
You have certain rights of cancellation as follows:
(a) You have the right to cancel your Plan within 45 days after you
have received notice of your cancellation rights. You will receive notice
regarding your cancellation rights within 60 days after issuance of the
Plan. If you elect to cancel your Plan, you must submit a written request
to Boston Financial Data Services, Inc., P.O. Box 8300, Boston,
Massachusetts 02266-8300. You will receive a cash refund equal to the
current net asset value of the Fund shares credited to your Plan account on
the date that the cancellation request is received by BFDS plus all
Creation and Sales Charges previously paid. BFDS must receive your written
request on or before the 45th day.
(b) You have the right to cancel your Plan within 18 months beginning
on the date of the issuance of the Plan. You will receive from the Sponsor
a cash payment equal to the sum of (1) the current net asset value of the
Fund shares credited to the account on the date of redemption and (2) the
amount by which the Creation and Sales Charges deducted from your
investments exceed 15% of the investments made up to the date of
redemption. Service charges and other fees are not refundable.
You will be sent a written notice of the 18-month right of cancellation:
(a) if during the first 15 months after the date of issuance of the Plan, you
have missed three investments or more; or (b) if following the first 15 months
after the date of issuance of the Plan (but prior to 18 months after such date),
you have missed one investment or more. If the Sponsor has previously sent a
notice in connection with event (a) above, a second notice will not be sent even
if additional investments are missed.
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These notices will inform you of your rights, and will also include the
value of the account and the amount you would be entitled to receive upon
cancellation, as of the date of the notice. For a cancellation request above
$50,000 your signature must be guaranteed.
VOTING RIGHTS
You will receive a notice and proxy statement for each shareholder meeting
of the Fund. The Custodian will vote the shares held in your account as you
instruct on the voting instructions card which will accompany the notice and
proxy statement. If the voting instructions card is validly executed and
returned without specification of a choice, the shares will be voted in favor of
the proposals of the Fund's management. The Custodian will vote shares for which
no valid voting instructions have been received in the same proportion as it
votes shares for which it has received instructions. You may attend any such
meetings, and if you desire to vote in person the shares held in your account,
you may make a written request to the Custodian for a proxy prior to the meeting
which will permit the shares to be voted in person.
TRANSFER OR ASSIGNMENT RIGHTS
To secure a loan, you may assign your right, title and interest in a Plan
to a bank or other lending institution. (Qualified retirement plans, including
IRAs, are required by federal tax law to be non-assignable.) The bank or other
lending institution, however, will not be entitled to exercise the right of
partial withdrawal or partial liquidation. During the term of the assignment,
you will be entitled to all dividends and distributions on your shares. In
addition, you may:
(a) transfer your right, title and interest to another person whose
only right shall be the privilege of complete withdrawal from the Plan; or
(b) transfer your right, title and interest to another person, trustee
or custodian acceptable to the Sponsor, who has made application to the
Sponsor for a similar Plan.
The Custodian will, at the request of the assignee, record an assignment
until such time as the assignee notifies BFDS that the assignment has been
released. No such assignment will be binding on the Custodian until it is
recorded. Until the Custodian and the Sponsor have permitted such assignment to
be recorded, they may treat you as the sole and absolute owner of the Plan and
the related Fund shares.
TERMINATION OF A PLAN BY THE SPONSOR OR CUSTODIAN
A Plan normally remains in existence until you have made 300 investment
units into your Plan. Neither the Sponsor nor the Custodian can terminate a Plan
unless you have failed to make investments for a period of 6 consecutive months
from the scheduled due date of the last investment made (including any
investments made in advance of their scheduled due dates). For example, if you
have made all investments due under your Plan through June 30th of a given year
(regardless of when such investments were made) and you make no further
investments, your Plan may not be terminated before December 31st of that same
year. Any scheduled investment made prior to the termination of a Plan extends
the due dates of all future investments for a period equal to the period during
which no investments were made. Accordingly, you need only make one investment
during each 6-month period to prevent your Plan from being terminated.
A Plan may also be terminated prior to the accumulation of 300 investment
units if shares of the Fund are not available and a substitution is not made.
After 300 investment units have been made, or on the happening of any of the
other events justifying termination, the Sponsor or the Custodian may terminate
a Plan 60 days after mailing to you a written notice of the termination.
On termination, the Custodian, acting as your agent, must withdraw the
shares from the Custodianship and, as your agent, may surrender for sale all of
your Fund shares, or sufficient Fund shares to pay all authorized deductions.
Any adjustment in Creation and Sales Charges or other charges occasioned by
virtue of your termination through the exercise of one of the refund privileges
will be made at the same time. The shares and/or cash, after payment of all
authorized deductions, will be held by the Custodian as your agent for delivery
to you upon your instruction. No interest will be paid on any cash balances
held. If the Custodian does not receive a response within 60 days after mailing
the notice of termination to you, the Custodian, in its discretion, may mail the
shares and/or check payable to you, to your last known address of record, and
you will be deemed to have no further rights under your Plan. In all events,
terminated Plans will not be resold. Undeliverable shares and cash will be held
by the Custodian in trust for your account, subject to applicable abandoned
property laws.
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<PAGE> 14
SUBSTITUTION OF SHARES
The Sponsor may substitute shares of another investment as the underlying
investment if it deems such action to be in the best interests of the
Planholders. Substituted shares generally will be comparable in character and
quality to the Fund's shares, and will be registered with the SEC under the
Securities Act of 1933, as amended. Before any substitution can be made, the
Sponsor must:
(a) Obtain an order from the SEC approving such substitution under the
provisions of Section 26(b) of the Investment Company Act of 1940, as
amended (the 1940 Act);
(b) Give written notice of the proposed substitution to the Custodian;
(c) Give written notice of the proposed substitution to you, giving a
reasonable description of the substituted fund shares, disclosing that,
unless you respond within 30 days of the date of mailing of such notice,
you will be considered to have agreed to bear your pro rata share of
expenses and taxes in connection with the substitution. The pro rata share
of expenses and taxes are payable from any income dividends and any capital
gains distributions, but if such dividends and distributions are
insufficient, the pro rata share of expenses and taxes are collectable by
the Custodian from the proceeds of the sale of Fund shares held for your
account; and
(d) Provide the Custodian with a signed certificate stating that such
notice has been given to you.
If you do not respond within the 30-day notice period, the Custodian will
purchase shares of the substituted fund with your subsequent investments and any
dividends and distributions which may be reinvested for your account. If shares
of the substituted fund are also to be substituted for the shares already held,
the Sponsor must arrange for the Custodian to be furnished, without payment of a
sales charge of any kind, with shares of the substituted fund having an
aggregate value equal to the value of shares of the Fund for which they are to
be substituted.
If Fund shares are not available for purchase for a period of 90 days or
longer, and the Sponsor fails to substitute other shares, the Custodian may, but
is not required to, select another underlying investment. If the Custodian
selects a substitute investment, it shall first obtain an order from the SEC
approving such substitution as specified above and then shall notify you, and
if, within 30 days after mailing such notice, you give your written approval of
the substitution and agree to bear your pro rata share of actual expenses,
including any tax liability sustained by the Custodian, the Custodian may
thereafter purchase such substituted shares. Your failure to give such written
approval within the 30-day period shall give the Custodian authority to
terminate your Plan.
If Fund shares are not available for purchase for a period of 90 days or
longer, and neither the Sponsor nor the Custodian substitutes other shares, the
Custodian has the authority, without further action on its part, to terminate
the Plans.
PLAN COMPLETION
After you have completed your Plan investments, you have the following
options:
(a) Have the Custodian hold your Fund shares until after the 300th
investment has been made;
(b) Register your Fund shares in your name;
(c) Sell your Fund shares and receive the cash proceeds; or
(d) Establish a Systematic Withdrawal Program.
You may also continue the Custodianship after the 300th investment under
the Plan, subject to the right of the Sponsor or Custodian to terminate the
Plan.
SERVICE CHARGES AND OTHER FEES
There are currently no deductions against Planholders' accounts or against
Fund dividends and/or distributions to compensate the Sponsor or the Custodian
for its services except the fees and charges described below.
If your Plan is not current and you have not made any Plan investments for
a 12-month period, the Custodian will deduct from your account a fee of $12 per
year for its services. If you send a Plan investment by check or other order for
the payment of money which is not honored by the bank on which it is drawn, the
Custodian will deduct $5.00 from your account for each monthly Plan investment.
The Custodian will charge you $2.50 for terminating a Plan.
If you establish your Plan as an IRA, the Custodian will deduct an annual
IRA custodial fee of $10 from your account. You may pay this annual fee in
advance by sending a separate check clearly identified as an IRA custodial fee
payment to the Custodian.
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<PAGE> 15
The Fund and the Sponsor reserve the right to impose a processing fee of
$1.50 for each monthly Plan investment received by check (up to a maximum of $5
per event). You do not pay a fee for your initial investment to establish a
Plan. There is no processing fee on monthly Plan investments made through an
automatic investment option. The check processing fee is not currently in
effect.
The aggregate amount of Custodian fees deducted by the Custodian with
respect to the Plan during the period July 19, 1999 (date sales commenced)
through October 31, 1999 was $0.
A Planholder will be charged for reproduction of account history at the
rate of $5.00 for each year researched.
All other Custodian fees which would otherwise be charged to the Plan or
the Planholders, or deducted from Fund dividends and/or distributions, may be
paid by the Fund or the Sponsor. Although there is no current intention to do
so, the Fund reserves the right to cease paying such fees, and the Sponsor
reserves the right to cause deductions in the future against the Plans, the
Planholders, and Fund dividends and/or distributions to compensate the Custodian
for its services.
There were no aggregate annual charges and deductions for maintenance and
other expenses assessed to planholders for the period July 19, 1999 (date sales
commenced) through October 31, 1999. Distributions, if any, are normally
declared in December of each year.
DIVIDENDS, CAPITAL GAINS AND TAXES
Unless otherwise directed by you, the net amount of all income dividends
and capital gains distributions, are automatically used to purchase additional
Fund shares at net asset value. No Creation and Sales Charges will be deducted
from any such reinvestment. You may instruct BFDS by written notice, received at
least seven days prior to the record date of an income dividend or capital gains
distribution, to remit the net amount of such dividend or distribution to you.
You may change these directions at any time.
You are deemed for federal income tax purposes to be the owner of the
underlying Fund shares accumulated in your account. Dividends and distributions
on such shares paid to you in cash or reinvested in additional Fund shares are
taxable to you. See "Taxes" in the accompanying Fund prospectus for a discussion
of the tax treatment of such dividends and distributions. As soon as practicable
after the close of each calendar year, you will be advised of the amount and
nature of the ordinary income dividends and capital gains distributions received
on your behalf during such year. Qualified retirement plans, including IRAs, may
be entitled to defer taxes until some later date. Participants should consult
their tax advisors.
The Creation and Sales Charges deducted from your investments in your Plan
are not deductible for tax purposes by you, but are included in your tax basis
for the Fund shares in your account. Any Custodian fee and service charge you
may have paid (whether as a deduction from your investments in your Plan or as a
deduction from the distributions made on the Fund shares in your account) may be
deductible for tax purposes by you dependent on whether you itemize deductions,
the total amount of your miscellaneous itemized deductions and the level of your
adjusted gross income.
Under provisions of the Code, the Custodian may be required to withhold
from dividends and liquidations 31% of all amounts otherwise payable to you if
you have not provided the Custodian with a correct certified tax identification
number or if you have been notified by the Internal Revenue Service that you are
subject to "backup withholding" because of underreporting of reportable
payments. The amounts withheld will be credited against your federal income tax
liability, and, if withholding results in an overpayment of taxes, you may
obtain a refund from the Internal Revenue Service.
Neither the Custodian, BFDS, nor the Sponsor bears any taxes arising from
the custody of the Fund shares or the operations of the Custodianship under the
Plans. The Custodian, BFDS, and the Sponsor are authorized to incur any expenses
deemed necessary or appropriate in connection with any claim or possible claim
for taxes against the Custodianship or the accounts of Planholders. The Sponsor
or the Custodian may, in its discretion, deduct charges against your account on
a pro rata basis (determined by reference to the total number of Fund shares
affected) in order to pay or set up reserves for such claims and related
expenses.
ADDITIONAL INFORMATION
THE CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02101, acts as Custodian for the Plans pursuant to a custodian
agreement, dated April 29, 1999 (Custodian Agreement). The Custodian is a
corporation organized under the laws of the Commonwealth of Massachusetts and is
subject to supervision by the Massachusetts Commissioner of Banks. The
Custodian's Internal Revenue Service Employer Identification Number is
04-1867445.
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The duties of the Custodian under the Custodian Agreement include the
receipt of all of your investments and income dividends and capital gain
distributions on Fund shares, the processing of all authorized deductions
therefrom and the purchase and retention of Fund shares for your accounts. The
Custodian also effects partial or complete liquidations of Plans in connection
with withdrawals or terminations and the various other functions discussed
above.
The Custodian receives and holds in trust without interest all cash and
Fund shares held by a Plan until completion and/or termination of the Plan. BFDS
keeps a complete record of your account and mails receipts for each of your
investments showing the number of shares held for your account, notices
(including distribution notices and tax statements), reports to shareholders,
prospectuses and proxy material. The Custodian causes periodic audits to be
taken of the records it maintains relating to the Plans, unless such audits are
arranged for by the Sponsor, and prepares and files tax returns and other
reports required by law. The Custodian assumes only those responsibilities
specifically imposed on it under its Custodian Agreement with the Sponsor. The
Custodian has no responsibility for the choice of the underlying investment, for
the investment policies and practices of the management of the Fund, for the
acts or omissions of the Sponsor, for compliance by the Sponsor with the laws of
the United States, any state or other jurisdiction relating to the sale,
registration or qualification of securities, or for the Sponsor's compliance
with any rules, regulations or orders of any regulatory agencies or commissions,
for the validity of written designations of beneficiaries executed by
planholders, or for signatures guaranteed by persons other than banks or members
of national securities exchanges.
The Custodian is authorized to commingle only those payments, dividends and
certificates of Fund shares which are held for or received from the various
planholders of Plans which are subject to this Prospectus. While the Custodian
does not assert a lien in general terms on the property held by it, the
authorization conferred on the Custodian to make the various deductions
discussed above, and in certain cases to sell Fund shares, may be considered
authorization to the Custodian to create such liens.
The Custodian Agreement cannot be amended in such a manner as to adversely
affect your material rights and privileges without your written consent.
An unlimited number of Plans may be issued under the Custodian Agreement.
Under certain circumstances as provided in the Custodian Agreement, the
Sponsor or the Custodian has the right to terminate the services of the
Custodian. However, no such termination or resignation may be made as to the
Plans then in force unless all Fund shares have been liquidated and the proceeds
distributed to you, or unless a successor custodian has been designated and has
accepted the custodianship. Any successor custodian must be a bank or trust
company having at all times aggregate capital, surplus and undivided profits in
excess of $1,000,000. Notice of such a change will be sent to you, but your
consent is not required.
THE SPONSOR
A I M Distributors, Inc., (11 Greenway Plaza, Houston, Texas 77046) is a
Delaware corporation organized on November 18, 1976. It is a wholly owned
subsidiary of A I M Advisors, Inc. (AIM). AIM is a wholly owned subsidiary of
A I M Management Group Inc. (AIM Management), the parent corporation of AIM. AIM
Management is a holding company engaged in the financial services business and
is an indirect wholly owned subsidiary of AMVESCAP PLC, a publicly-traded
holding company that, through its subsidiaries, is engaged in institutional
investment management and retail mutual fund businesses in the United States,
Europe and the Pacific region. AIM and AIM Management have the same address as
AIM Distributors. The address of AMVESCAP PLC is 11 Devonshire Square, London
EC2M 4YR, England. AIM Distributors is a member of the National Association of
Securities Dealers, Inc. The Sponsor's directors and principal officers, all of
whom have the same business address as the Sponsor, are listed below. AIM
Distributors' Internal Revenue Service Employer Identification Number is
74-1894784.
Charles T. Bauer is Director and Chairman, A I M Management Group Inc.,
A I M Advisors, Inc., A I M Capital Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc. and Fund Management Company; and Director and
Executive Vice Chairman, AMVESCAP PLC.
Michael J. Cemo is Director and President, A I M Distributors, Inc.;
Director and Executive Vice President, A I M Management Group Inc.; and
Director, A I M Fund Services, Inc., Director, AMVESCAP PLC.
Robert H. Graham is Director, President and Chief Executive Officer, A I M
Management Group Inc.; Director and President, A I M Advisors, Inc.; Director
and Senior Vice President, A I M Capital Management, Inc., A I M Distributors,
Inc., A I M Fund Services, Inc., and Fund Management Company; Director, and CEO,
Managed Products AMVESCAP PLC.
Gary T. Crum is Director and President, A I M Capital Management, Inc.;
Director and Executive Vice President, A I M Management Group Inc.; Director and
Senior Vice President, A I M Advisors, Inc.; and Director, A I M Distributors,
Inc. and AMVESCAP PLC.
W. Gary Littlepage is Director and Senior Vice President, A I M
Distributors, Inc., and Vice President, A I M Management Group Inc.
James L. Salners is Executive Vice President, A I M Distributors, Inc.
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<PAGE> 17
John Caldwell is Senior Vice President, A I M Distributors, Inc., A I M
Management Group Inc.; Director and President, A I M Fund Services, Inc.
Marilyn M. Miller is Senior Vice President, A I M Distributors, Inc.
Formerly, Senior Vice President and Director of Marketing, Oppenheimer Funds,
Inc.
Gordon J. Sprague is Senior Vice President, A I M Distributors, Inc.
Michael C. Vessels is Senior Vice President, A I M Distributors, Inc.
Gene L. Needles is Senior Vice President, A I M Distributors, Inc.
Carol F. Relihan is Director, Senior Vice President, General Counsel and
Secretary, A I M Advisors, Inc.; Senior Vice President, General Counsel and
Secretary, A I M Management Group Inc.; Director, Vice President and General
Counsel, Fund Management Company; General Counsel and Vice President, A I M Fund
Services, Inc.; and Vice President, A I M Capital Management, Inc. and A I M
Distributors, Inc.
Dawn Hawley is Chief Financial Officer, Treasurer and Senior Vice President
of A I M Management Group Inc.; Director, Senior Vice President and Treasurer of
A I M Advisors, Inc.; Vice President and Treasurer of A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management
Company.
B. J. Thompson is First Vice President, A I M Distributors, Inc.
Mary A. Corcoran is Senior Vice President, A I M Fund Services, Inc. and
Vice President of A I M Distributors, Inc.
James R. Anderson is Vice President, A I M Distributors, Inc. and Fund
Management Company. Formerly, Vice President, EQ Financial Consultants, Inc.
Mary K. Coleman is Vice President, A I M Distributors, Inc.
Melville B. Cox is 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.
Glenda A. Dayton is Vice President, A I M Distributors, Inc. Formerly,
Financial Planner, American Express.
Sidney M. Dilgren is Vice President, A I M Distributors, Inc.; and Senior
Vice President, A I M Fund Services, Inc.
Tony D. Green is Vice President, A I M Distributors, Inc.; and Senior Vice
President, A I M Fund Services, Inc.
Charles H. McLaughlin is Vice President, A I M Distributors, Inc. Formerly,
Vice President, GT Global Mutual Funds.
Ivy B. McLemore is Vice President, A I M Distributors, Inc.
Ofelia M. Mayo is General Counsel, Vice President and Assistant Secretary,
A I M Distributors, Inc.; Assistant General Counsel and Assistant Secretary,
A I M Capital Management, Inc., A I M Fund Services, Inc. and Fund Management
Company and Assistant General Counsel, Assistant Secretary and Vice President,
A I M Advisors, Inc.
Terri L. Randsell is Vice President, A I M Distributors, Inc.
Kamala C. Sachidanandan is Vice President, A I M Distributors, Inc.
Formerly, Manager of Retirement Technical Marketing, Variable Annuity Life
Insurance Company.
Christopher T. Simutis is Vice President, A I M Distributors, Inc.
Gary K. Wendler is Vice President, A I M Distributors, Inc. Formerly,
Assistant Vice President and Assistant Portfolio Manager, Transamerica Fund
Management, Fixed Income.
Norman W. Woodson is Vice President, A I M Distributors, Inc. Formerly,
Manager, Print Communications, American Capital Management.
Mr. Bauer and Mr. Graham are directors or trustees of, and Messrs. Bauer,
Graham and Ms. Relihan are officers of, some or all of the investment companies
advised or managed by AIM. Directors of the Sponsor do not receive any
compensation for their services. Officers and employees of the Sponsor receive
no compensation from the Sponsor, but are compensated by AIM Management. All
officers and employees of the Sponsor are currently covered by a fidelity bond
in the amount of $35,000,000. AIM, a wholly owned subsidiary of AIM Management,
acts as investment advisor of the Fund and receives a fee from the Fund for its
services.
15
<PAGE> 18
The Sponsor is the principal underwriter of the Fund and the following
other open-end investment companies advised or managed by AIM: AIM Advisor
Funds, Inc., AIM Equity Funds, AIM Funds Group, AIM Growth Series, AIM
International Mutual Funds, AIM Investment Funds, AIM Investment Securities
Funds, AIM Series Trust, AIM Special Opportunities Funds, AIM Tax-Exempt Funds
and AIM Variable Insurance Funds.
GENERAL
The Plans are organized under and are governed by the laws of the
Commonwealth of Massachusetts. The Plans are considered to be a unit investment
trust under the 1940 Act and are so registered with the SEC. Such registration
does not imply supervision of management or investment practices or policies by
the SEC.
AIM Summit Investors Plans II are presently offered in all states.
This Prospectus omits some of the information contained in the registration
statement filed with the SEC. You may obtain copies of the registration
statement, including items omitted herein, from the SEC by paying the charges
prescribed under its rules and regulations.
16
<PAGE> 19
TRANSCRIPT OF A HYPOTHETICAL PLAN ACCOUNT(1)
<TABLE>
<CAPTION>
Amount of Payment Deductions from Payments on Principal
------------------------------------------------------------------------
(1) (2) (3)
------------------------------------------
UNDERWRITING
MONTHLY FOR COMMISSIONS,
FIRST YEAR AND LOADING FEES AND
ANNUALLY ALL OTHER SIMILAR INSURANCE OTHER
DATE OF PAYMENT THEREAFTER CUMULATIVE CHARGES PREMIUMS DEDUCTIONS
--------------- -------------- ---------- ----------------- --------- ----------
<S> <C> <C> <C> <C> <C>
July 1, 2008......... 600 6,000 0 0 0
July 1, 2007......... 600 5,400 0 0 0
July 1, 2006......... 600 4,800 0 0 0
July 1, 2005......... 600 4,200 0 0 0
July 1, 2004......... 600 3,600 0 0 0
July 1, 2003......... 600 3,000 0 0 0
July 1, 2002......... 600 2,400 0 0 0
July 1, 2001......... 600 1,800 0 0 0
July 1, 2000......... 600 1,200 0 0 0
June 1, 2000......... 50 600 25 0 0
May 1, 2000.......... 50 550 25 0 0
April 1, 2000........ 50 500 25 0 0
March 1, 2000........ 50 450 25 0 0
February 1, 2000..... 50 400 25 0 0
January 1, 2000...... 50 350 25 0 0
December 1, 1999..... 50 300 25 0 0
November 1, 1999..... 50 250 25 0 0
October 1, 1999...... 50 200 25 0 0
September 1, 1999.... 50 150 25 0 0
August 1, 1999....... 50 100 25 0 0
July 19, 1999........ 50 50 25 0 0
<CAPTION>
Balance of payments on
principal available for investment
in trust property
-----------------------------------
MONTHLY FOR
FIRST YEAR AND LIQUIDATING
ANNUALLY VALUE OF
DATE OF PAYMENT THEREAFTER CUMULATIVE CERTIFICATE(2)
--------------- ------------------ -------------- --------------
<S> <C> <C> <C>
July 1, 2008......... 600 5,700 --
July 1, 2007......... 600 5,100 --
July 1, 2006......... 600 4,500 --
July 1, 2005......... 600 3,900 --
July 1, 2004......... 600 3,300 --
July 1, 2003......... 600 2,700 --
July 1, 2002......... 600 2,100 --
July 1, 2001......... 600 1,500 --
July 1, 2000......... 600 900 --
June 1, 2000......... 25 300 --
May 1, 2000.......... 25 275 --
April 1, 2000........ 25 250 --
March 1, 2000........ 25 225 418.95
February 1, 2000..... 25 200 379.38
January 1, 2000...... 25 175 306.78
December 1, 1999..... 25 150 272.70
November 1, 1999..... 25 125 227.50
October 1, 1999...... 25 100 173.12
September 1, 1999.... 25 75 124.65
August 1, 1999....... 25 50 98.40
July 19, 1999........ 25 25 48.23
</TABLE>
---------------
(1) The transcript assumes that there has been no lapse or cancellation of your
Plan.
(2) The inception date of Class II Shares is July 19, 1999. Liquidation value is
determined the last day of each month.
17
<PAGE> 20
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
A I M Distributors, Inc. and Planholders
of AIM Summit Investors Plans II:
We have audited the accompanying statement of assets and liabilities of AIM
Summit Investors Plans II as of October 31, 1999, and the related statements of
operations and changes in net assets for the period July 19, 1999 (date sales
commenced) through October 31, 1999. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities held as trust property as of October 31, 1999 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AIM Summit Investors Plans II
as of October 31, 1999, the results of its operations, and the changes in its
net assets for the period July 19, 1999 (date sales commenced) through October
31, 1999 in conformity with generally accepted accounting principles.
KPMG LLP
Houston, Texas
February 11, 2000
18
<PAGE> 21
AIM SUMMIT INVESTORS PLANS II
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
AIM Summit Fund, Inc. shares, at value (Plans' investment
$680,255).............................................. $714,342
Cash...................................................... 22,781
--------
Total assets........................................... 737,123
--------
LIABILITIES:
Custodian charges payable................................. 22,356
Creation and sales charges payable........................ 0
Due to AIM Summit Fund, Inc. ............................. 425
--------
Total liabilities...................................... 22,781
--------
NET ASSETS (Equivalent to $20.12 per share based on 35,504
shares of capital stock owned on outstanding plans)....... $714,342
========
</TABLE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED OCTOBER 31, 1999
<TABLE>
<S> <C>
Investment income:
Dividends received on shares of AIM Summit Fund, Inc...... $ 0
Expenses.................................................... 0
-------
Net investment income....................................... 0
-------
Realized gain (loss) and unrealized appreciation on
investments:
Net realized gain (loss) on plan liquidations............. (114)
Unrealized appreciation of investments.................... 34,088
-------
Net increase in net assets resulting from operations........ $33,974
=======
</TABLE>
See Notes to Financial Statements.
19
<PAGE> 22
AIM SUMMIT INVESTORS PLANS II
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD JULY 19, 1999 (DATE SALES COMMENCED) TO OCTOBER 31, 1999
<TABLE>
<CAPTION>
1999
------------------
AMOUNT SHARES
--------- ------
<S> <C> <C>
Net asset value at beginning of
period.................................................... $ 0 0
Planholders investments:
Additions from Planholder Payments........................ 971,918
Less:
Creation and sales charges............................. (263,504)
Custodian charges...................................... 0
---------
Amount invested in AIM Summit Fund, Inc. shares........... 708,414 36,977
Net investment income reinvested:
Net investment income..................................... 0
Less: Amount paid in cash................................. 0
--------- ------
0 0
Net realized gain (loss) on plan
liquidations.............................................. (114)
Unrealized appreciation (depreciation) of investments....... 34,088
Planholder liquidations..................................... (28,046) (1,473)
--------- ------
Net asset value at end of period............................ $ 714,342 35,504
========= ======
</TABLE>
See Notes to Financial Statements.
20
<PAGE> 23
AIM SUMMIT INVESTORS PLANS II
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
AIM Summit Investors Plans II is a unit investment trust registered under
the Investment Company Act of 1940 with the Securities and Exchange Commission.
The following significant accounting policies are in conformity with generally
accepted accounting principles for unit investment trusts.
A. Security Valuation:
The investment, which consists exclusively of shares of AIM Summit Fund,
Inc., is valued at the net asset value of AIM Summit Fund, Inc. shares on
October 31, 1999.
B. Federal Income Taxes:
No provision is made for Federal income taxes as all income dividends
and capital gain distributions received by Planholders are treated as if
received directly from the underlying Fund.
C. Transaction Dates:
Share transactions are recorded on a trade date basis. Dividend income
and capital gain distributions are recorded on the ex-dividend date.
NOTE 2 -- PLANHOLDERS' COST OF AIM SUMMIT FUND, INC. AND VALUE OF PLANS
OUTSTANDING
The investment in AIM Summit Fund, Inc. is carried at identified cost,
which represents the amount available for investment (including reinvested
dividends of net investment income and realized gains) in such shares after
deduction of sales charges and custodian fees, if applicable, and unrealized
market appreciation. The net value of Plans outstanding is as follows:
PLANS OUTSTANDING
OCTOBER 31, 1999
<TABLE>
<S> <C>
Total payments made by Planholders on Plans outstanding
(net of liquidations)..................................... $ 943,758
Net investment income dividends reinvested.................. 0
---------
Total............................................. 943,758
Less:
Creation and Sales Charges................................ (263,504)
Custodian charges......................................... 0
---------
Net investment in AIM Summit Fund, Inc. shares (identified
cost)..................................................... 680,254
Unrealized appreciation of investments...................... 34,088
---------
Value of Plans outstanding.................................. $ 714,342
=========
</TABLE>
21
<PAGE> 24
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
A I M Distributors, Inc.:
We have audited the accompanying statement of financial condition of A I M
Distributors, Inc. (the Company), as of December 31, 1999, and the related
statements of operations, changes in stockholder's equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of A I M Distributors, Inc., as of
December 31, 1999, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
January 24, 2000
22
<PAGE> 25
A I M DISTRIBUTORS, INC.
STATEMENT OF FINANCIAL CONDITION
AS OF DECEMBER 31, 1999
<TABLE>
<S> <C> <C>
ASSETS
CASH EQUIVALENTS, affiliated registered investment companies............ $ 5,012,253
ACCOUNTS RECEIVABLE:
Due from dealers for sales of capital stock of affiliated
registered investment companies........................ $1,803,252
Due from affiliated registered investment companies....... 3,683,507
Commissions receivable.................................... 1,509,287
Other accounts receivable................................. 2,461 6,998,507
----------
SEGREGATED TRUST........................................................ 1,122,274
OTHER ASSETS............................................................ 32,141
-----------
$13,165,175
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Due to affiliated registered investment companies for sales of capital
stock.............................................................. $ 1,801,834
Due to dealers for redemptions from affiliated registered investment
companies.......................................................... 976,465
Due to affiliated companies........................................... 2,093,208
Deferred tax payable.................................................. 2,375,669
State taxes payable................................................... 19,213
Accounts payable and accrued expenses................................. 169,530
-----------
Total liabilities............................................. 7,435,919
STOCKHOLDER'S EQUITY:
Common stock, $1 par value, 1,000 shares authorized, 10
shares issued and outstanding.......................... $ 10
Additional paid-in capital................................ 1,378,990
Retained earnings......................................... 4,350,256
==========
Total stockholder's equity.................................... 5,729,256
-----------
$13,165,175
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE> 26
A I M DISTRIBUTORS, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C> <C>
INCOME:
Underwriting income, net of dealers' concessions........................ $ 15,776,857
Marketing servicing fees................................................ 134,700,000
Distribution fees....................................................... 27,894,225
Sponsor fees on periodic payment investment plans,
net of commissions paid.............................................. 689,566
Interest income......................................................... 414,224
------------
Total operating income.......................................... 179,474,872
------------
EXPENSES:
Allocations from parent company........................... $105,285,482
Compensation allocation from parent company............... 71,294,554
------------
Total operating expenses........................................ 176,580,036
------------
Income before income taxes...................................... 2,894,836
INCOME TAX EXPENSE (BENEFIT):
Current................................................... $ (1,166,934)
Deferred.................................................. 2,456,586 1,289,652
------------ ------------
Net income...................................................... $ 1,605,184
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE> 27
A I M DISTRIBUTORS, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED STOCKHOLDER'S
STOCK CAPITAL EARNINGS EQUITY
------ ---------- ----------- -------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1998........................... $10 $1,378,990 $ 7,737,072 $ 9,116,072
Net income......................................... -- -- 1,605,184 1,605,184
Dividends paid..................................... -- -- (4,992,000) (4,992,000)
--- ---------- ----------- -----------
BALANCE, December 31, 1999........................... $10 $1,378,990 $ 4,350,256 $ 5,729,256
=== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE> 28
A I M DISTRIBUTORS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 1,605,184
Deferred tax provision.................................... 2,456,586
Change in operating assets and liabilities --
Increase in accounts receivable...................... $(1,373,859)
Decrease in other assets............................. 427
Increase in segregated trust account................. (201,729)
Decrease in amounts due to affiliated registered
investment companies for sales of capital stock..... (16,145)
Increase in due to dealers for redemptions from
affiliated registered investment companies.......... 215,376
Decrease in due to affiliated companies.............. (746,118)
Decrease in state taxes payable...................... (185,328)
Decrease in accounts payable and accrued expenses.... (18,757)
-----------
Total change in operating assets and
liabilities.............................................. (2,326,133)
-----------
Net cash provided by operating activities................. 1,735,637
-----------
CASH FLOWS FROM FINANCING ACTIVITIES -- Dividends paid................... (4,992,000)
-----------
Net cash used in financing activities..................... (4,992,000)
-----------
NET DECREASE IN CASH EQUIVALENTS......................................... (3,256,363)
CASH EQUIVALENTS, beginning of year...................................... 8,268,616
-----------
CASH EQUIVALENTS, end of year............................................ $ 5,012,253
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE> 29
A I M DISTRIBUTORS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
A I M Distributors, Inc. (the Company), is a wholly owned subsidiary of
A I M Advisors, Inc. (Advisors). Advisors is owned by A I M Management Group
Inc., which in turn is owned by AVZ, Inc. (AVZ), the ultimate U.S. parent of the
Company. AVZ is owned by AMVESCAP PLC, a publicly traded holding company that,
through its subsidiaries, is engaged in institutional investment management and
retail mutual fund businesses in the United States, Europe and the Pacific
Region.
The Company acts as the principal underwriter and distributor for
affiliated registered investment companies.
Cash Equivalents
The Company considers all highly liquid assets such as cash in banks and
amounts in affiliated money market funds to be cash equivalents.
Securities Transactions
Securities transactions are recorded on a settlement date basis which is
normally the third business day following the trade date (settlement date basis
as compared to trade date basis has no material effect on the Company's
financial position or results of operations). The Company accounts for its
investments at fair market value.
Concentration of Credit Risk
The Company is engaged in brokerage activities in which counterparties
primarily include broker-dealers. In the event that counterparties do not
fulfill their obligations, the Company may be exposed to risk. The risk of
default depends on the creditworthiness of the counterparty. It is the Company's
policy to review, as necessary, the credit standing of each counterparty.
Segregated Trust Account
The segregated trust account represents a U.S. Government agency discount
note on deposit in a segregated trust account as required by the Investment
Company Act of 1940. The required amount is determined in accordance with the
requirements of the Investment Company Act of 1940 to provide cash reserves for
refunds that may be required if investors in a unit investment trust exercise
their right to surrender or withdraw. This note is recorded at fair market value
at December 31, 1999.
Underwriting Income
Underwriting income represents sales charges on sales of capital stock of
affiliated registered investment companies, net of concessions paid to other
dealers in the amount of $9,841,870.
Distribution Fees
The Company receives fees from affiliated registered investment companies
pursuant to 12b-1 plans (Investment Company Act of 1940) adopted by the
affiliated registered investment companies. Such fees are paid to the Company as
compensation for expenses incurred by the Company for the distribution of shares
of the affiliated registered investment companies. The fees are based on a
specified annual percentage of a fund's average daily net assets.
Transactions With Affiliated Companies
The Company is allocated expenses by an affiliated company based upon
estimates of time devoted to the operations of the Company by personnel of the
affiliated company and usage of shared facilities. The Company is also allocated
revenue from affiliated companies for services performed in marketing efforts
for affiliated registered investment companies managed by those companies.
The Company has entered into an agreement with A I M Management Group Inc.
(Management), whereby Management provides funding to the Company for payment of
Class B and Class C share commissions. Management obtains the rights to certain
future revenues to be generated by the Class B and Class C shares under the
respective fund's 12b-1 plan provisions and contingent
27
<PAGE> 30
A I M DISTRIBUTORS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
deferred sales charge (CDSC) provisions for a purchase price equal to a
percentage of the price at which each Class B and Class C share is sold. Such
transactions occur daily and have been accounted for as sale transactions. No
gain or loss from this arrangement is reflected in the Company's financial
statements since the amount paid by Management equals the commissions paid by
the Company relating to the sale of Class B and Class C shares. Accordingly,
amounts received from the respective funds under the 12b-1 plan provisions and
CDSC provisions are not recorded as revenue by the Company as Management owns
the rights to such fees.
Federal Income Taxes
For federal income tax purposes, the Company's income is included in the
consolidated income tax return filed by AVZ. Deferred and current taxes are
provided at the statutory rate in effect during the year (35 percent) by the
members of the consolidated group based on the amount that the respective member
would pay or have refunded if it were to file a separate return. The effective
tax rate was 44.6 percent due primarily to the effect of state taxes and other
nondeductible items.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. NET CAPITAL REQUIREMENTS
In accordance with regulations of the Securities and Exchange Commission,
the Company must maintain minimum net capital, as defined, and a ratio of
aggregate indebtedness to net capital that does not exceed 15 to 1, as defined.
At December 31, 1999, the Company had net capital of $1,722,419 which exceeded
required net capital of $235,246 by $1,487,173. The ratio of aggregate
indebtedness to net capital was 2.05 to 1 at December 31, 1999.
3. SUBORDINATED DEBT
The Company had no subordinated debt at December 31, 1999, or at any time
during the year then ended.
28
