<PAGE> 1
As filed with the Securities and Exchange Commission on March 9, 2000
1933 Act Registration No. 2-27334
1940 Act Registration No. 811-1540
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
-----
Pre-Effective Amendment No.
----- -----
Post-Effective Amendment No. 77 X
------ -----
and/or
X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 -----
Amendment No. 77 X
------ -----
(Check appropriate box or boxes.)
AIM FUNDS GROUP
-----------------------------------
(Exact name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 100, Houston, TX 77046
----------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
--------------
Charles T. Bauer
11 Greenway Plaza, Suite 100, Houston, TX 77046
-----------------------------------------------------
(Name and Address of Agent for Service)
Copy to:
<TABLE>
<CAPTION>
<S> <C>
Samuel D. Sirko, 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 Amendment
</TABLE>
It is proposed that this filing will become effective (check appropriate box)
X immediately upon filing pursuant to paragraph (b)
-----
on (date), pursuant to paragraph (b)
-----
60 days after filing pursuant to paragraph (a)(1)
-----
on (date), pursuant to paragraph (a)(1)
-----
75 days after filing pursuant to paragraph (a)(2)
-----
on (date) pursuant to paragraph (a)(2) of rule 485.
-----
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
<PAGE> 2
AIM BALANCED FUND
------------------------------------------------------------------------
AIM Balanced Fund seeks to achieve as high a total return as possible,
consistent with preservation of capital, by investing in a broadly
diversified portfolio of high-yielding securities, including common
stocks, preferred stocks, convertible securities and bonds.
PROSPECTUS AIM --Registered Trademark--
MARCH 9, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
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.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
The Board of Trustees voted to
request shareholder approval of
certain items. For further
information on these items, see
Submission of Matters to
Shareholders in this prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 3
-----------------
AIM BALANCED FUND
-----------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 5
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 5
Dividends and Distributions 5
Submission of Matters to Shareholders 5
FINANCIAL HIGHLIGHTS 6
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta Con
Disciplina and Invest with Discipline are registered service marks and AIM Bank
Connection, AIM Funds, AIM Funds and Design, AIM Investor and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 4
-----------------
AIM BALANCED FUND
-----------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to achieve as high a total return as
possible, consistent with preservation of capital, by investing in a broadly
diversified portfolio of high-yielding securities, including common stocks,
preferred stocks, convertible securities and bonds.
The fund seeks to meet this objective by investing, normally, a minimum of 30%
and a maximum of 70% of its total assets in equity securities and a minimum of
30% and a maximum of 70% of its total assets in non-convertible debt securities.
The fund may also invest up to 25% of its total assets in convertible
securities. The fund may invest up to 10% of its total assets in lower-quality
debt securities, i.e., "junk bonds," and debt securities deemed by the portfolio
managers to be of comparable quality. The fund may also invest up to 20% of its
total assets in foreign securities.
In selecting the percentages of assets to be invested in equity or debt
securities, the portfolio managers consider such factors as general market and
economic conditions, as well as trends, yields, interest rates and changes in
fiscal and monetary policies. The portfolio managers will primarily purchase
equity securities for growth of capital and debt securities for income purposes.
However, the portfolio managers will focus on companies whose securities have
the potential for both growth of capital and income generation. The portfolio
managers consider whether to sell a particular security when they believe that
security no longer has that potential.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from the fund may vary. The value of
your investment in the fund will go up and down with the prices of the
securities in which the fund invests. The prices of equity securities change in
response to many factors, including the historical and prospective earnings of
the issuer, the value of its assets, general economic conditions, interest
rates, investor perceptions and market liquidity. Interest rate increases may
cause the price of a debt security to decrease; the longer a debt security's
duration, the more sensitive it is to this risk. The issuer of a security may
default or otherwise be unable to honor a financial obligation.
The values of convertible securities in which the fund invests may also be
affected by market interest rates, the risk that the issuer may default on
interest or principal payments and the value of the underlying stock into which
these securities may be converted. Specifically, since these types of
convertible securities pay fixed interest or dividends, their values may fall if
interest rates rise. Additionally, an issuer may have the right to buy back
certain of the convertible securities at a time and at a price that is
unfavorable to the fund.
Foreign securities have additional risks, including exchange rate changes,
political and economic upheaval, the relative lack of information about these
companies, relatively low market liquidity and the potential lack of strict
financial and accounting controls and standards.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 5
-----------------
AIM BALANCED FUND
-----------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1990 ....................................... (4.00)%
1991 ....................................... 42.95%
1992 ....................................... 9.64%
1993 ....................................... 15.54%
1994 ....................................... (5.44)%
1995 ....................................... 34.97%
1996 ....................................... 19.25%
1997 ....................................... 24.41%
1998 ....................................... 12.46%
1999 ....................................... 19.04%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
16.88% (quarter ended March 31, 1991) and the lowest quarterly return was
- -16.57% (quarter ended September 30, 1990).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A 13.38% 20.62% 15.42% 12.24% 03/31/78
Class B 13.08% 20.63% -- 14.66% 10/18/93
Class C 17.09% -- -- 14.29% 08/04/97
S&P 500(1) 21.03% 28.54% 18.19% 17.85%(2) 03/31/78(2)
- ------------------------------------------------------------------------------------
</TABLE>
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
2
<PAGE> 6
-----------------
AIM BALANCED FUND
-----------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- -------------------------------------------------------------------
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 4.75% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever is less) None(1) 5.00% 1.00%
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------------------
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.51% 0.51% 0.51%
Distribution and/or
Service (12b-1) Fees 0.25 1.00 1.00
Other Expenses 0.18 0.24 0.24
Total Annual Fund
Operating Expenses 0.94 1.75 1.75
- -------------------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $566 $760 $ 970 $1,575
Class B 678 851 1,149 1,848
Class C 278 551 949 2,062
- -----------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $566 $760 $970 $1,575
Class B 178 551 949 1,848
Class C 178 551 949 2,062
- -----------------------------------------------------------
</TABLE>
3
<PAGE> 7
-----------------
AIM BALANCED FUND
-----------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.51% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Robert G. Alley, Senior Portfolio Manager, who has been responsible for the
fund since 1993 and has been associated with the advisor and/or its affiliates
since 1992.
- - Claude C. Cody IV, Senior Portfolio Manager, who has been responsible for the
fund since 1993 and has been associated with the advisor and/or its affiliates
since 1992.
- - Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1999. From 1997 to 1999, he was global fixed-income portfolio manager for
Nicholas-Applegate Capital Management. From 1994 to 1997, he was international
fixed-income trader and analyst for Strong Capital Management.
- - Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the
fund since 1998 and has been associated with the advisor and/or its affiliates
since 1992.
- - Craig A. Smith, Senior Portfolio Manager, who has been responsible for the
fund since 1996 and has been associated with the advisor and/or its affiliates
since 1989.
- - Meggan M. Walsh, Portfolio Manager, who has been responsible for the fund
since 1998 and has been associated with the advisor and/or its affiliates
since 1991.
4
<PAGE> 8
-----------------
AIM BALANCED FUND
-----------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Balanced Fund are subject to the maximum
4.75% initial sales charge as listed under the heading "CATEGORY II Initial
Sales Charges" in the "Shareholder Information--Choosing a Share Class" section
of this prospectus. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist of both capital
gains and ordinary income.
DIVIDENDS
The fund generally declares and pays dividends, if any, quarterly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Trustees of AIM Funds Group
(the trust), on behalf of the fund, voted to request shareholders to approve the
following items that will affect the fund:
- - A new advisory agreement between the trust and the advisor. The principal
changes to the advisory agreement are (i) the deletion of references to the
provision of administrative services and certain expense limitations that are
no longer applicable, and (ii) clarification of provisions relating to
delegations of responsibilities and the non-exclusive nature of the advisor's
services. The revised advisory agreement does not change the fees paid by the
fund (except that the agreement permits the fund to pay a fee to the advisor
in connection with any new securities lending program implemented in the
future);
- - Changing the fund's fundamental investment restrictions. The proposed
revisions to the fund's fundamental investment restrictions are described in
the fund's statement of additional information; and
- - Changing the fund's investment objective and making it non-fundamental. The
investment objective of the fund would be changed by deleting references to
the types of securities that the fund will purchase to achieve its objective.
If the investment objective of the fund becomes non-fundamental, it can be
changed in the future by the Board of Trustees of the trust without further
approval by shareholders. Pursuant to this proposal, the fund's investment
objective would read: "The fund's investment objective is to achieve as high a
total return as possible, consistent with the preservation of capital."
The Board of Trustees of the trust has called a meeting of the fund's
shareholders to be held on or about May 3, 2000 to vote on these and other
proposals. Only shareholders of record as of February 18, 2000 will be entitled
to vote at the meeting. Proposals that are approved are expected to become
effective on or about May 26, 2000.
5
<PAGE> 9
-----------------
AIM BALANCED FUND
-----------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------
YEAR ENDED DECEMBER 31,
1999(a) 1998(a) 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.23 $ 25.78 $ 21.84 $ 19.22 $ 14.62
Income from investment operations:
Net investment income 0.82 0.71 0.60 0.66 0.49
Net gains (losses) on securities (both
realized and unrealized) 4.46 2.45 4.66 2.99 4.57
Total from investment operations 5.28 3.16 5.26 3.65 5.06
Less distributions:
Dividends from net investment income (0.82) (0.65) (0.55) (0.55) (0.46)
Distributions from net realized gains -- (0.06) (0.77) (0.48) --
Total distributions (0.82) (0.71) (1.32) (1.03) (0.46)
Net asset value, end of period $ 32.69 $ 28.23 $ 25.78 $ 21.84 $ 19.22
Total return(b) 19.04% 12.46% 24.41% 19.25% 34.97%
- ----------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $1,800,350 $1,318,230 $683,633 $334,189 $92,241
Ratio of expenses to average net assets 0.94%(c) 0.95% 0.98% 1.15% 1.43%(d)
Ratio of net investment income to average net
assets 2.81%(c) 2.81% 2.48% 2.97% 2.81%(e)
Portfolio turnover rate 65% 43% 66% 72% 77%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $1,502,053,346.
(d) After fee waivers and/or expense reimbursements. The ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.46% for 1995.
(e) After fee waivers and/or expense reimbursements. The ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements was 2.78% for 1995.
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------
YEAR ENDED DECEMBER 31,
1999(A) 1998(A) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.18 $ 25.75 $ 21.83 $ 19.22 $ 14.62
Income from investment operations:
Net investment income 0.58 0.42 0.38 0.48 0.31
Net gains (losses) on securities (both
realized and unrealized) 4.45 2.51 4.68 2.99 4.61
Total from investment operations 5.03 2.93 5.06 3.47 4.92
Less distributions:
Dividends from net investment income (0.60) (0.44) (0.37) (0.38) (0.32)
Distributions from net realized gains -- (0.06) (0.77) (0.48) --
Total distributions (0.60) (0.50) (1.14) (0.86) (0.32)
Net asset value, end of period $ 32.61 $ 28.18 $ 25.75 $ 21.83 $ 19.22
Total return(b) 18.08% 11.53% 23.42% 18.28% 33.93%
- -------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $1,183,215 $894,165 $486,506 $237,082 $72,634
Ratio of expenses to average net assets 1.75%(c) 1.76% 1.79% 1.97% 2.21%(d)
Ratio of net investment income to average net
assets 2.00%(c) 2.00% 1.67% 2.15% 2.03%(e)
Portfolio turnover rate 65% 43% 66% 72% 77%
- -------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $1,001,369,340.
(d) After fee waivers and/or expense reimbursements. The ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.23% for 1995.
(e) After fee waivers and/or expense reimbursements. The ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements was 2.01% for 1995.
6
<PAGE> 10
-----------------
AIM BALANCED FUND
-----------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------
FOR THE PERIOD
YEAR ENDED DECEMBER 31, AUGUST 4, THROUGH
---------------------------------- DECEMBER 31,
1999(a) 1998(a) 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 28.21 $ 25.76 $25.55
Income from investment operations:
Net investment income 0.58 0.42 0.16
Net gains on securities (both realized and
unrealized) 4.46 2.53 1.01
Total from investment operations 5.04 2.95 1.17
Less distributions:
Dividends from net investment income (0.60) (0.44) (0.19)
Distributions from net realized gains -- (0.06) (0.77)
Total distributions (0.60) (0.50) (0.96)
Net asset value, end of period $ 32.65 $ 28.21 $25.76
Total return(b) 18.09% 11.60% 4.67%
- -----------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -----------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $200,585 $114,163 $9,394
Ratio of expenses to average net assets 1.75%(c) 1.73% 1.78%(d)
Ratio of net investment income to average net
assets 2.00%(c) 2.03% 1.68%(d)
Portfolio turnover rate 65% 43% 66%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $146,419,005.
(d) Annualized.
7
<PAGE> 11
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29,
1998 and continue to hold them, those shares will convert to
Class A shares of that fund seven years after your date of
purchase. If you exchange those shares for Class B shares of
another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until eight years after your
date of purchase of the original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 12
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 13
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 14
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 15
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 16
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 17
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 18
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 19
-----------------
AIM BALANCED FUND
-----------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77046-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- -------------------------------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- -----------------------------------
AIM Balanced Fund
SEC 1940 Act file number: 811-1540
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com BAL-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 20
AIM GLOBAL UTILITIES FUND
-------------------------------------------------------------------------
AIM Global Utilities Fund seeks to achieve a high level of current income
and secondarily, growth of capital, by investing primarily in the common
and preferred stocks of public utility companies.
PROSPECTUS
MARCH 9, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
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.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
The Board of Trustees voted to
request shareholder approval of
certain items. For further
information on these items, see
Submission of Matters to
Shareholders in this prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 21
-------------------------
AIM GLOBAL UTILITIES FUND
-------------------------
Table of Contents
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVES AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 5
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 5
Dividends and Distributions 5
Submission of Matters to Shareholders 5
FINANCIAL HIGHLIGHTS 6
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta Con
Disciplina and Invest with Discipline are registered service marks and AIM Bank
Connection, AIM Funds, AIM Funds and Design, AIM Investor and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representation other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 22
-------------------------
AIM GLOBAL UTILITIES FUND
-------------------------
INVESTMENT OBJECTIVES AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objectives are to achieve a high level of current income
and secondarily, growth of capital, by investing primarily in the common and
preferred stocks of public utility companies.
The fund seeks to meet these objectives by investing, normally, at least 65%
of its total assets in securities of domestic and foreign public utility
companies. Public utility companies include companies that provide electricity,
natural gas, water and sanitary services to the public, telephone or telegraph
companies, and other companies providing public communications services. The
fund may also invest in developing utility technology companies and in holding
companies which derive a substantial portion of their revenues from
utility-related activities.
The fund may invest up to 80% of its total assets in foreign securities,
including securities of issuers located in developing countries, i.e., those
that are in the initial stages of their industrial cycles. The fund will
normally invest in the securities of companies located in at least four
different countries, including the United States. The fund may invest up to 25%
of its total assets in convertible securities. The fund may also invest up to
25% of its total assets in non-convertible bonds issued by public utility
companies and holding companies which derive at least 40% of their revenues from
utility related activities. The fund may invest up to 10% of its total assets in
lower-quality debt securities, i.e., "junk bonds," and debt securities deemed by
the portfolio managers to be of comparable quality.
The portfolio managers focus on securities that have favorable prospects for
high current income and growth of capital. The portfolio managers consider
whether to sell a particular security when any of those factors materially
changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily invest
up to 100% of its total assets in securities of U.S. issuers. During these
periods the fund may also hold all or a portion of its assets in cash, money
market instruments, shares of affiliated money market funds, bonds or other debt
securities. As a result, the fund may not achieve its investment objectives.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from the fund may vary. The value of
your investment in the fund will go up and down with the prices of the
securities in which the fund invests. The prices of equity securities change in
response to many factors, including the historical and prospective earnings of
the issuer, the value of its assets, general economic conditions, interest
rates, investor perceptions and market liquidity. Interest rate increases may
cause the price of a debt security to decrease; the longer a debt security's
duration, the more sensitive it is to this risk. The issuer of a security may
default or otherwise be unable to honor a financial obligation.
The value of the fund's shares is particularly vulnerable to factors affecting
the utility company industry, such as substantial economic, operational,
competitive, or regulatory changes. Such changes may, among other things,
increase compliance costs or the costs of doing business. In addition, increases
in fuel, energy and other prices have historically limited the growth potential
of utility companies. Because the fund focuses its investments in the public
utility industry, the value of your shares may rise and fall more than the value
of shares of a fund that invests more broadly.
The prices of foreign securities may be further affected by other factors
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are valued.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in other
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devalued their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures.
The fund currently participates in the initial public offering (IPO) market,
and a significant portion of the fund's returns currently are attributable to
its investment in IPOs, which have a magnified impact due to the fund's small
asset base. As the fund's assets grow, it is probable that the effect of the
fund's investment in IPOs on its total returns will decline, which may reduce
the fund's total returns.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 23
-------------------------
AIM GLOBAL UTILITIES FUND
-------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance. Total return information in the bar chart
and table below may be affected by special market factors, including the fund's
investments in initial public offerings, which may have a magnified impact on
the fund due to its small asset base. There is no guarantee that, as the fund's
assets grow, it will continue to experience substantially similar performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1990 -2.99%
1991 23.65%
1992 7.92%
1993 12.32%
1994 -11.57%
1995 28.07%
1996 13.88%
1997 23.70%
1998 16.01%
1999 34.15%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
26.35% (quarter ended December 31, 1999) and the lowest quarterly return was
- -8.95% (quarter ended September 30, 1990).
PERFORMANCE TABLE
The following performance table compares the fund's average performance to that
of a broad-based securities market index. The fund's performance reflects
payment of sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------------------------
(for the periods ended
December 31, 1999) 1 YEAR 5 YEARS
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A 26.79% 21.55%
Class B 28.16% 21.83%
Class C 32.18% --
S&P 500(1) 21.03% 28.54%
Lipper Utility Fund Index(3) 14.53% 18.83%
- --------------------------------------------------------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 10 YEARS INCEPTION DATE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A 13.06% 15.19% 01/19/88
Class B -- 13.61% 09/01/93
Class C -- 24.10% 08/04/97
S&P 500(1) 18.19% 18.86%(2) 01/31/88(2)
Lipper Utility Fund Index(3) 12.15% 13.58%(2) 12/31/88(2)
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
earliest date the index became available.
(3) The Lipper Utility Fund Index measures the performance of the 30 largest
utilities funds chartered by Lipper Inc., an independent mutual funds
performance monitor.
2
<PAGE> 24
-------------------------
AIM GLOBAL UTILITIES FUND
-------------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 5.50% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is less) None(1) 5.00% 1.00%
- -------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.56% 0.56% 0.56%
Distribution and/or
Service (12b-1) Fees 0.25 1.00 1.00
Other Expenses 0.29 0.28 0.28
Total Annual Fund
Operating Expenses 1.10 1.84 1.84
- -------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $656 $880 $1,123 $1,816
Class B 687 879 1,196 1,965
Class C 287 579 996 2,159
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $656 $880 $1,123 $1,816
Class B 187 579 996 1,965
Class C 187 579 996 2,159
- ----------------------------------------------
</TABLE>
3
<PAGE> 25
-------------------------
AIM GLOBAL UTILITIES FUND
-------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.56% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Robert G. Alley, Senior Portfolio Manager, who has been responsible for the
fund since 1992 and has been associated with the advisor and/or its affiliates
since 1992.
- - Claude C. Cody IV, Senior Portfolio Manager, who has been responsible for the
fund since 1992 and has been associated with the advisor and/or its affiliates
since 1992.
- - Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the
fund since 1998 and has been associated with the advisor and/or its affiliates
since 1992.
- - Craig A. Smith, Senior Portfolio Manager, who has been responsible for the
fund since 1996 and has been associated with the advisor and/or its affiliates
since 1989.
- - Meggan M. Walsh, Portfolio Manager, who has been responsible for the fund
since 1998 and has been associated with the advisor and/or its affiliates
since 1991.
4
<PAGE> 26
-------------------------
AIM GLOBAL UTILITIES FUND
-------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Global Utilities Fund are subject to the
maximum 5.50% initial sales charge as listed under the heading "CATEGORY I
Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class"
section of this prospectus. Purchases of Class B and Class C shares are subject
to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
ordinary income.
DIVIDENDS
The fund generally declares and pays dividends, if any, quarterly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Trustees of AIM Funds Group
(the trust), on behalf of the fund, voted to request shareholders to approve the
following items that will affect the fund:
- - A new advisory agreement between the trust and the advisor. The principal
changes to the advisory agreement are (i) the deletion of references to the
provision of administrative services and certain expense limitations that are
no longer applicable, and (ii) the clarification of provisions relating to
delegations of responsibilities and the non-exclusive nature of the advisor's
services. The revised advisory agreement does not change the fees paid by the
fund (except that the agreement permits the fund to pay a fee to the advisor
in connection with any new securities lending program implemented in the
future);
- - Changing the fund's fundamental investment restrictions. The proposed
revisions to the fund's fundamental investment restrictions are described in
the fund's statement of additional information; and
- - Changing the fund's investment objective and making it non-fundamental. The
investment objective of the fund would be changed so that the primary
investment objective is total return, and by deleting references to the types
of securities that the fund will purchase to achieve its objective. If the
investment objective of the fund becomes non-fundamental, it can be changed in
the future by the Board of Trustees of the trust without further approval by
shareholders. Pursuant to this proposal, the fund's investment objective would
read: "The fund's investment objective is to achieve a high total return."
The Board of Trustees of the trust has called a meeting of the fund's
shareholders to be held on or about May 3, 2000 to vote on these and other
proposals. Only shareholders of record as of February 18, 2000 will be entitled
to vote at the meeting. Proposals that are approved are expected to become
effective on or about May 26, 2000.
5
<PAGE> 27
-------------------------
AIM GLOBAL UTILITIES FUND
-------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
Total return information in this table may have been affected by special
market factors, including the fund's investments in initial public offerings,
which have had a magnified impact on the fund due to its small asset base. There
is no guarantee that, as the fund's assets grow, it will continue to experience
substantially similar performance.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.01 $ 19.26 $ 16.01 $ 14.59 $ 11.85
Income from investment operations:
Net investment income 0.38 0.48 0.47 0.55 0.55
Net gains on securities (both realized and
unrealized) 6.60 2.53 3.26 1.43 2.71
Total from investment operations 6.98 3.01 3.73 1.98 3.26
Less distributions:
Dividends from net investment income (0.35) (0.46) (0.47) (0.56) (0.52)
Distributions from net realized gains (1.56) (0.80) (0.01) -- --
Total distributions (1.91) (1.26) (0.48) (0.56) (0.52)
Net asset value, end of period $ 26.08 $ 21.01 $ 19.26 $ 16.01 $ 14.59
Total return(a) 34.15% 16.01% 23.70% 13.88% 28.07%
- ------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $238,432 $196,665 $179,456 $164,001 $170,624
Ratio of expenses to average net assets 1.10%(b) 1.06% 1.13% 1.17% 1.21%
Ratio of net investment income to average net
assets 1.69%(b) 2.39% 2.79% 3.62% 4.20%
Portfolio turnover rate 37% 38% 26% 48% 88%
- ------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $200,042,322.
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.98 $ 19.24 $ 16.01 $ 14.60 $ 11.84
Income from investment operations:
Net investment income 0.21 0.33 0.34 0.42 0.44
Net gains on securities (both realized and
unrealized) 6.59 2.53 3.25 1.44 2.73
Total from investment operations 6.80 2.86 3.59 1.86 3.17
Less distributions:
Dividends from net investment income (0.19) (0.32) (0.35) (0.45) (0.41)
Distributions from net realized gains (1.56) (0.80) (0.01) -- --
Total distributions (1.75) (1.12) (0.36) (0.45) (0.41)
Net asset value, end of period $ 26.03 $ 20.98 $ 19.24 $ 16.01 $ 14.60
Total return(a) 33.16% 15.14% 22.74% 12.98% 27.16%
- --------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- --------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $142,632 $11,866 $94,227 $79,530 $70,693
Ratio of expenses to average net assets 1.84%(b) 1.81% 1.91% 1.96% 1.97%
Ratio of net investment income to average net
assets 0.95%(b) 1.64% 2.01% 2.83% 3.44%
Portfolio turnover rate 37% 38% 26% 48% 88%
- --------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges.
(b) Ratios are based on average net assets of $116,599,341.
6
<PAGE> 28
-------------------------
AIM GLOBAL UTILITIES FUND
-------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------------
FOR THE PERIOD
YEAR ENDED DECEMBER 31, AUGUST 4, THROUGH
-------------------------------- DECEMBER 31,
1999(A) 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $20.97 $19.24 $17.67
Income from investment operations:
Net investment income 0.21 0.33 0.13
Net gains on securities (both realized and
unrealized) 6.59 2.52 1.58
Total from investment operations 6.80 2.85 1.71
Less distributions:
Dividends from net investment income (0.19) (0.32) (0.13)
Distributions from net realized gains (1.56) (0.80) (0.01)
Total distributions (1.75) (1.12) (0.14)
Net asset value, end of period $26.02 $20.97 $19.24
Total return(b) 33.18% 15.09% 9.74%
- ---------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $6,702 $2,994 $1,183
Ratio of expenses to average net assets 1.84%(c) 1.81% 1.90%(d)
Ratio of net investment income to average net
assets 0.95%(c) 1.64% 2.02%(d)
Portfolio turnover rate 37% 38% 26%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $3,903,633.
(d) Annualized.
7
<PAGE> 29
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29,
1998 and continue to hold them, those shares will convert to
Class A shares of that fund seven years after your date of
purchase. If you exchange those shares for Class B shares of
another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until eight years after your
date of purchase of the original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 30
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 31
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 32
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 33
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 34
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 35
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 36
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 37
-------------------------
AIM GLOBAL UTILITIES FUND
-------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds-- Registered Trademark -- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
- -----------------------------------------------------
</TABLE>
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
----------------------------------
AIM Global Utilities Fund
SEC 1940 Act file number: 811-1540
----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com GLU-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 38
AIM HIGH YIELD FUND
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
AIM High Yield Fund seeks to achieve a high level of current income by
investing primarily in publicly traded non-investment grade debt
securities.
AIM --Registered Trademark--
PROSPECTUS
MARCH 9, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
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.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
The Board of Trustees voted to
request shareholder approval of
certain items. For further
information on these items, see
Submission of Matters to
Shareholders in this prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 39
-------------------
AIM HIGH YIELD FUND
-------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE
FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 5
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 5
Dividends and Distributions 5
Submission of Matters to Shareholders 5
FINANCIAL HIGHLIGHTS 6
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back
Cover
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta Con
Disciplina and Invest with Discipline are registered service marks and AIM Bank
Connection, AIM Funds, AIM Funds and Design, AIM Investor and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 40
-------------------
AIM HIGH YIELD FUND
-------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to achieve a high level of current income by
investing primarily in publicly traded, non-investment grade debt securities.
The fund's investment objective may be changed by the Board of Trustees without
shareholder approval.
The fund seeks to meet this objective by investing at least 65% of the value
of its assets in lower-quality debt securities, i.e., "junk bonds." The fund
will principally invest in junk bonds rated B or above by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Services or deemed by the portfolio
managers to be of comparable quality. The fund will invest at least 80% of its
total assets in debt securities, including convertible debt securities and/or
cash or cash equivalents. The fund may also invest in preferred stock. The fund
may invest up to 25% of its total assets in foreign securities.
Although the portfolio managers focus on debt securities that they believe
have favorable prospects for high current income, they also consider the
possibility of growth of capital of the security. The portfolio managers
consider whether to sell a particular security when any of those factors
materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. Debt securities are particularly
vulnerable to credit risk and interest rate fluctuations. Interest rate
increases can cause the price of a debt security to decrease; junk bonds are
less sensitive to this risk than are higher-quality bonds. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
Compared to higher-quality debt securities, junk bonds involve greater risk of
default or price changes due to changes in the credit quality of the issuer and
because they are generally unsecured and may be subordinated to other creditors'
claims. The value of junk bonds often fluctuates in response to company,
political or economic developments and can decline significantly over short
periods of time or during periods of general or regional economic difficulty.
During those times, the bonds could be difficult to value or to sell at a fair
price. Credit ratings on junk bonds do not necessarily reflect their actual
market risk.
Foreign securities have additional risks, including exchange rate changes,
political and economic upheaval, the relative lack of information about issuers,
relatively low market liquidity and the potential lack of strict financial and
accounting controls and standards.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 41
-------------------
AIM HIGH YIELD FUND
-------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1990 ....................................... -9.04%
1991 ....................................... 42.50%
1992 ....................................... 18.34%
1993 ....................................... 18.40%
1994 ....................................... -1.68%
1995 ....................................... 16.86%
1996 ....................................... 15.44%
1997 ....................................... 12.52%
1998 ....................................... -5.10%
1999 ....................................... 2.08%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
14.35% (quarter ended March 31, 1991) and the lowest quarterly return was -9.71%
(quarter ended September 30, 1990).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended
December 31, 1999) 1 YEAR 5 YEARS
- ------------------------------------------------------------------
<S> <C> <C>
Class A (2.80)% 6.96%
Class B (3.14)% 6.96%
Class C 0.54% --
Lehman High Yield Index(1) 2.39% 9.31%
- ------------------------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 1999) 10 YEARS INCEPTION DATE
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A 9.60% 10.24% 07/11/78
Class B -- 5.90% 09/01/93
Class C -- (0.11)% 08/04/97
Lehman High Yield Index(1) 10.72% 10.87%(2) 06/30/83(2)
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) The Lehman Bros. High Yield Index is a rules-based index that includes all
fixed-income securities having a maximum quality rating of Ba1 (including
defaulted issues), a minimum amount outstanding of $100mm, and at least one
year to maturity.
(2) The average annual total return given is since the earliest date the index
became available.
2
<PAGE> 42
-------------------
AIM HIGH YIELD FUND
-------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- ------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 4.75% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is less) None(1) 5.00% 1.00%
- ------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees 0.48% 0.48% 0.48%
Distribution and/or
Service (12b-1) Fees 0.25 1.00 1.00
Other Expenses 0.19 0.20 0.20
Total Annual Fund
Operating Expenses 0.92 1.68 1.68
- -------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $564 $754 $ 960 $1,553
Class B 671 830 1,113 1,785
Class C 271 530 913 1,987
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $564 $754 $960 $1,553
Class B 171 530 913 1,785
Class C 171 530 913 1,987
- ----------------------------------------------
</TABLE>
3
<PAGE> 43
-------------------
AIM HIGH YIELD FUND
-------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.48% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Robert G. Alley, Senior Portfolio Manager, who has been responsible for the
fund since 2000 and has been associated with the advisor and/or its affiliates
since 1992.
- - Jan. H. Friedli, Portfolio Manager, who has been responsible for the fund
since 2000 and has been associated with the advisor and/or its affiliates
since 1999. From 1997 to 1999, he was global fixed-income portfolio manager
for Nicholas-Applegate Capital Management. From 1994 to 1997, he was
international fixed-income trader and analyst for Strong Capital Management.
- - Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the
fund since 2000 and has been associated with the advisor and/or its affiliates
since 1992.
- - Craig A. Smith, Senior Portfolio Manager, who has been responsible for the
fund since 2000 and has been associated with the advisor and/or its affiliates
since 1989.
4
<PAGE> 44
-------------------
AIM HIGH YIELD FUND
-------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM High Yield Fund are subject to the maximum
4.75% initial sales charge as listed under the heading "CATEGORY II Initial
Sales Charges" in the "Shareholder Information--Choosing a Share Class" section
of this prospectus. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
ordinary income.
DIVIDENDS
The fund generally declares any dividends daily and pays dividends monthly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Trustees of AIM Funds Group
(the trust), on behalf of the fund, voted to request shareholders to approve the
following items that will affect the fund:
- - An Agreement and Plan of Reorganization which provides for the reorganization
of the fund into a new series portfolio of AIM Investment Securities Funds
having the same investment objectives and policies;
- - A new advisory agreement between the trust and the advisor. The principal
changes to the advisory agreement are (i) the deletion of references to the
provision of administrative services and certain expense limitations that are
no longer applicable, and (ii) the clarification of provisions relating to
delegations of responsibilities and the non-exclusive nature of the advisor's
services. The revised advisory agreement does not change the fees paid by the
fund (except that the agreement permits the fund to pay a fee to the advisor
in connection with any new securities lending program implemented in the
future); and
- - Changing the fund's fundamental investment restrictions. The proposed
revisions to the fund's fundamental investment restrictions are described in
the fund's statement of additional information.
The Board of Trustees of the trust has called a meeting of the fund's
shareholders to be held on or about May 3, 2000 to vote on these and other
proposals. Only shareholders of record as of February 18, 2000 will be entitled
to vote at the meeting. Proposals that are approved are expected to become
effective on or about May 26, 2000.
In addition, the Board of Trustees of the trust approved on February 3, 2000 a
change to the fund's investment objective. The change would delete references to
the types of securities that the fund will purchase to achieve its objective.
Pursuant to this change, the fund's investment objective will read: "The fund's
investment objective is to achieve a high level of current income." This change
will become effective on or about May 26, 2000.
5
<PAGE> 45
-------------------
AIM HIGH YIELD FUND
-------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.77 $ 10.16 $ 9.88 $ 9.43 $ 8.93
Income from investment operations:
Net investment income 0.85 0.92 0.90 0.92 0.93
Net gains (losses) on securities (both
realized and unrealized) (0.66) (1.40) 0.28 0.46 0.52
Total from investment operations 0.19 (0.48) 1.18 1.38 1.45
Less distributions:
Dividends from net investment income (0.87) (0.91) (0.90) (0.93) (0.95)
Return of capital (0.02) -- -- -- --
Total distributions (0.89) (0.91) (0.90) (0.93) (0.95)
Net asset value, end of period $ 8.07 $ 8.77 $ 10.16 $ 9.88 $ 9.43
Total return(a) 2.21% (5.10)% 12.52% 15.44% 16.86%
- --------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $1,364,502 $1,670,863 $1,786,352 $1,272,974 $886,106
Ratio of expenses to average net assets 0.92%(b) 0.85% 0.90% 0.97% 0.96%
Ratio of net investment income to average net
assets 10.06%(b) 9.45% 9.08% 9.67% 9.95%
Portfolio turnover rate 79% 76% 80% 77% 61%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $1,554,341,715.
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.76 $ 10.16 $ 9.88 $ 9.42 $ 8.92
Income from investment operations:
Net investment income 0.79 0.84 0.83 0.85 0.85
Net gains (losses) on securities (both
realized and unrealized) (0.66) (1.40) 0.28 0.47 0.52
Total from investment operations 0.13 (0.56) 1.11 1.32 1.37
Less distributions:
Dividends from net investment income (0.80) (0.84) (0.83) (0.86) (0.87)
Return of capital (0.02) -- -- -- --
Total distributions (0.82) (0.84) (0.83) (0.86) (0.87)
Net asset value, end of period $ 8.07 $ 8.76 $ 10.16 $ 9.88 $ 9.42
Total return(a) 1.46% (5.90)% 11.71% 14.68% 15.91%
- --------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $1,559,864 $1,820,899 $1,647,801 $1,068,060 $557,926
Ratio of expenses to average net assets 1.68%(b) 1.61% 1.65% 1.68% 1.73%
Ratio of net investment income to average net
assets 9.30%(b) 8.69% 8.33% 8.95% 9.18%
Portfolio turnover rate 79% 76% 80% 77% 61%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges.
(b) Ratios are based on average net assets of $1,758,603,534.
6
<PAGE> 46
-------------------
AIM HIGH YIELD FUND
-------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
FOR THE PERIOD
YEAR ENDED DECEMBER 31, AUGUST 4, THROUGH
----------------------------------- DECEMBER 31,
1999 1998(A) 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 8.74 $ 10.14 $ 10.04
Income from investment operations:
Net investment income 0.78 0.82 0.35
Net gains (losses) on securities (both
realized and unrealized) (0.65) (1.38) 0.10
Total from investment operations 0.13 (0.56) 0.45
Less distributions:
Dividends from net investment income (0.80) (0.84) (0.35)
Return of capital (0.02) -- --
Total distributions (0.82) (0.84) (0.35)
Net asset value, end of period $ 8.05 $ 8.74 $ 10.14
Total return(b) 1.46% (5.92)% 4.49%
- ------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $129,675 $113,246 $26,117
Ratio of expenses to average net assets 1.68%(c) 1.61% 1.68%(d)
Ratio of net investment income to average net
assets 9.30%(c) 8.69% 8.30%(d)
Portfolio turnover rate 79% 76% 80%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $130,765,409.
(d) Annualized.
7
<PAGE> 47
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29,
1998 and continue to hold them, those shares will convert to
Class A shares of that fund seven years after your date of
purchase. If you exchange those shares for Class B shares of
another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until eight years after your
date of purchase of the original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 48
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 49
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 50
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 51
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 52
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 53
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 54
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 55
-------------------
AIM HIGH YIELD FUND
-------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4739
Houston, TX 77046-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- -----------------------------------
AIM High Yield Fund
SEC 1940 Act file number: 811-1540
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com HYI-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 56
AIM INCOME FUND
------------------------------------------------------------------------
AIM Income Fund seeks to achieve a high level of current income
consistent with reasonable concern for safety of principal by investing
primarily in fixed-rate corporate debt and U.S. Government obligations.
AIM--Registered Trademark--
PROSPECTUS
MARCH 9, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
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.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
The Board of Trustees voted to
request shareholder approval of
certain items. For further
information on these items, see
Submission of Matters to
Shareholders in this prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 57
---------------
AIM INCOME FUND
---------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 5
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 5
Dividends and Distributions 5
Submission of Matters to Shareholders 5
FINANCIAL HIGHLIGHTS 6
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta Con
Disciplina and Invest with Discipline are registered service marks and AIM Bank
Connection, AIM Funds, AIM Funds and Design, AIM Investor and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, sales person or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 58
---------------
AIM INCOME FUND
---------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to achieve a high level of current income
consistent with reasonable concern for safety of principal by investing
primarily in fixed-rate corporate debt and U.S. Government obligations.
The fund may invest up to 40% of its total assets in foreign securities. The
fund may invest up to 35% of its net assets in lower-quality debt securities,
i.e., "junk bonds," and unrated debt securities deemed by the portfolio managers
to be of comparable quality. The fund may also invest in preferred stock issues
and convertible corporate debt.
The portfolio managers focus on securities that they believe have favorable
prospects for current income, consistent with their concerns for safety of
principal. The portfolio managers consider whether to sell a particular security
when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. Debt securities are particularly
vulnerable to credit risk and interest rate fluctuations. Interest rate
increases can cause the price of a debt security to decrease. The longer a debt
security's duration, the more sensitive it is to this risk. Junk bonds are less
sensitive to this risk than are higher-quality bonds. The issuer of a security
may default or otherwise be unable to honor a financial obligation.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are valued.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
Compared to higher-quality debt securities, junk bonds involve a greater risk
of default or price changes due to changes in the credit quality of the issuer
because they are generally unsecured and may be subordinated to other creditors'
claims. The value of junk bonds debt securities often fluctuates in response to
company, political or economic developments and can decline significantly over
short periods of time or during periods of general or regional economic
difficulty. During those times the bonds could be difficult to value or sell at
a fair price. Credit ratings on junk bonds do not necessarily reflect their
actual market risk.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 59
---------------
AIM INCOME FUND
---------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1990 ....................................... 3.65%
1991 ....................................... 18.01%
1992 ....................................... 7.28%
1993 ....................................... 15.38%
1994 ....................................... (7.65)%
1995 ....................................... 22.77%
1996 ....................................... 8.58%
1997 ....................................... 11.92%
1998 ....................................... 4.94%
1999 ....................................... (2.92)%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
8.10% (quarter ended June 30, 1989) and the lowest quarterly return was -5.88%
(quarter ended March 31, 1994).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A -7.55% 7.68% 7.31% 7.45% 05/03/68
Class B -8.25% 7.58% -- 4.32% 09/07/93
Class C -4.62% -- -- 2.17% 08/04/97
Lehman Bros. Aggregate Bond Index(1) -0.82% 7.73% 7.70% 9.24%(2) 12/31/75(2)
- -------------------------------------------------------------------------------------------
</TABLE>
(1) The Lehman Bros. Aggregate Bond Index is an unmanaged index generally
considered representative of treasury issues, agency issues, corporate bond
issues and mortgage-backed securities.
(2) The average annual total return given is since the date closest to the
earliest date the index became available.
2
<PAGE> 60
---------------
AIM INCOME FUND
---------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- ----------------------------------------------------------
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 4.75% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever is less) None(1) 5.00% 1.00%
- ---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- ---------------------------------------------------------
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- ---------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.42% 0.42% 0.42%
Distribution and/or
Service (12b-1) Fees 0.25 1.00 1.00
Other Expenses 0.24 0.24 0.24
Total Annual Fund
Operating Expenses 0.91 1.66 1.66
- ---------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------
<S> <C> <C> <C> <C>
Class A $563 $751 $ 955 $1,541
Class B 669 823 1,102 1,766
Class C 269 523 902 1,965
- ----------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------
<S> <C> <C> <C> <C>
Class A $563 $751 $955 $1,541
Class B 169 523 902 1,766
Class C 169 523 902 1,965
- ----------------------------------------------------
</TABLE>
3
<PAGE> 61
---------------
AIM INCOME FUND
---------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.42% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Robert G. Alley, Senior Portfolio Manager, who has been responsible for the
fund since 1992 and has been associated with the advisor and/or its affiliates
since 1992.
- - Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1999. From 1997 to 1999, he was global fixed-income portfolio manager for
Nicholas-Applegate Capital Management. From 1994 to 1997, he was international
fixed-income trader and analyst for Strong Capital Management.
- - Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the
fund since 1995 and has been associated with the advisor and/or its affiliates
since 1992.
4
<PAGE> 62
---------------
AIM INCOME FUND
---------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Income Fund are subject to the maximum 4.75%
initial sales charge as listed under the heading "CATEGORY II Initial Sales
Charges" in the "Shareholder Information--Choosing a Share Class" section of
this prospectus. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
ordinary income.
DIVIDENDS
The fund generally declares dividends daily and pays dividends, if any, monthly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Trustees of AIM Funds Group
(the trust), on behalf of the fund, voted to request shareholders to approve the
following items that will affect the fund:
- - An Agreement and Plan of Reorganization which provides for the reorganization
of the fund into a new series portfolio of AIM Investment Securities Funds
having the same investment objective and policies;
- - A new advisory agreement between the trust and the advisor. The principal
changes to the advisory agreement are (i) the deletion of references to the
provision of administrative services and certain expense limitations that are
no longer applicable, and (ii) the clarification of provisions relating to
delegations of responsibilities and the non-exclusive nature of the advisor's
services. The revised advisory agreement does not change the fees paid by the
fund (except that the agreement permits the fund to pay a fee to the advisor
in connection with any new securities lending program implemented in the
future);
- - Changing the fund's fundamental investment restrictions. The proposed
revisions to the fund's fundamental investment restrictions are described in
the fund's statement of additional information; and
- - Changing the fund's investment objective and making it non-fundamental. The
investment objective of the fund would be changed by deleting references to
the types of securities that the fund will purchase to achieve its objective.
If the investment objective of the fund becomes non-fundamental, it can be
changed in the future by the Board of Trustees of the trust without further
approval by shareholders. Pursuant to this proposal, the fund's investment
objective would read: "The fund's investment objective is to achieve a high
level of current income consistent with reasonable concern for safety of
principal."
The Board of Trustees of the trust has called a meeting of the fund's
shareholders to be held on or about May 3, 2000 to vote on these and other
proposals. Only shareholders of record as of February 18, 2000 will be entitled
to vote at the meeting. Proposals that are approved are expected to become
effective on or about May 26, 2000.
5
<PAGE> 63
---------------
AIM INCOME FUND
---------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.38 $ 8.57 $ 8.24 $ 8.17 $ 7.20
Income from investment operations:
Net investment income 0.57 0.57 0.55 0.57 0.58
Net gains (losses) on securities (both
realized and unrealized) (0.81) (0.16) 0.39 0.09 1.00
Total from investment operations (0.24) 0.41 0.94 0.66 1.58
Less distributions:
Dividends from net investment income (0.55) (0.55) (0.52) (0.59) (0.61)
Distributions from net realized gains -- (0.05) (0.09) -- --
Total distributions (0.55) (0.60) (0.61) (0.59) (0.61)
Net asset value, end of period $ 7.59 $ 8.38 $ 8.57 $ 8.24 $ 8.17
Total return(a) (2.92)% 4.94% 11.92% 8.58% 22.77%
- ---------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ---------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $393,414 $399,701 $340,608 $286,183 $251,280
Ratio of expenses to average net assets 0.91%(b) 0.91% 0.94% 0.98% 0.98%
Ratio of net investment income to average net
assets 7.11%(b) 6.69% 6.55% 7.13% 7.52%
Portfolio turnover rate 78% 41% 54% 80% 227%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $402,647,801.
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.37 $ 8.55 $ 8.23 $ 8.15 $ 7.18
Income from investment operations:
Net investment income 0.50 0.50 0.48 0.50 0.53
Net gains (losses) on securities (both
realized and unrealized) (0.80) (0.15) 0.38 0.11 0.98
Total from investment operations (0.30) 0.35 0.86 0.61 1.51
Less distributions:
Dividends from net investment income (0.49) (0.48) (0.45) (0.53) (0.54)
Distributions from net realized gains -- (0.05) (0.09) -- --
Total distributions (0.49) (0.53) (0.54) (0.53) (0.54)
Net asset value, end of period $ 7.58 $ 8.37 $ 8.55 $ 8.23 $ 8.15
Total return(a) (3.72)% 4.20% 10.89% 7.87% 21.72%
- ------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $244,713 $219,033 $125,871 $85,343 $44,304
Ratio of expenses to average net assets 1.66%(b) 1.66% 1.69% 1.80% 1.79%
Ratio of net investment income to average net
assets 6.36%(b) 5.94% 5.80% 6.30% 6.71%
Portfolio turnover rate 78% 41% 54% 80% 227%
- ------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges.
(b) Ratios are based on average net assets of $240,134,478.
6
<PAGE> 64
---------------
AIM INCOME FUND
---------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------
FOR THE PERIOD
YEAR ENDED DECEMBER 31, AUGUST 4, THROUGH
--------------------------------- DECEMBER 31,
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 8.36 $ 8.54 $ 8.38
Income from investment operations:
Net investment income 0.50 0.50 0.19
Net gains (losses) on securities (both
realized and unrealized) (0.80) (0.15) 0.22
Total from investment operations (0.30) 0.35 0.41
Less distributions:
Dividends from net investment income (0.49) (0.48) (0.16)
Distributions from net realized gains -- (0.05) (0.09)
Total distributions (0.49) (0.53) (0.25)
Net asset value, end of period $ 7.57 $ 8.36 $ 8.54
Total return(a) (3.71)% 4.21% 4.96%
- -----------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $28,202 $19,332 $2,552
Ratio of expenses to average net assets 1.66%(b) 1.66% 1.69%(c)
Ratio of net investment income to average net
assets 6.36%(b) 5.94% 5.80%(c)
Portfolio turnover rate 78% 41% 54%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are based on average net assets of $24,457,067.
(c) Annualized.
7
<PAGE> 65
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29,
1998 and continue to hold them, those shares will convert to
Class A shares of that fund seven years after your date of
purchase. If you exchange those shares for Class B shares of
another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until eight years after your
date of purchase of the original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 66
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THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 67
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THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 68
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 69
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 70
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 71
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 72
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 73
---------------
AIM INCOME FUND
---------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- -------------------------------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- -----------------------------------
AIM Income Fund
SEC 1940 Act file number: 811-1540
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INC-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 74
AIM INTERMEDIATE
GOVERNMENT FUND
-------------------------------------------------------------------------
AIM Intermediate Government Fund seeks to achieve a high level of current
income consistent with reasonable concern for safety of principal by
investing in debt securities issued, guaranteed or otherwise backed by the
U.S. Government.
PROSPECTUS AIM --Registered Trademark--
MARCH 9, 2000
This prospectus contains important
information about
Class A, B and C shares of the fund.
Please read it before
investing and keep it for future
reference.
As with all other mutual fund
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.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
The Board of Trustees voted to
request shareholder approval of
certain items. For further
information on these items, see
Submission of Matters to
Shareholders in this prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 75
--------------------------------
AIM INTERMEDIATE GOVERNMENT FUND
--------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 5
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 5
Dividends and Distributions 5
Submission of Matters to Shareholders 5
FINANCIAL HIGHLIGHTS 6
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta Con
Disciplina and Invest with Discipline are registered service marks and AIM Bank
Connection, AIM Funds, AIM Funds and Design, AIM Investor and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representation other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 76
--------------------------------
AIM INTERMEDIATE GOVERNMENT FUND
--------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to achieve a high level of current income
consistent with reasonable concern for safety of principal by investing in debt
securities issued, guaranteed or otherwise backed by the U.S. Government.
The fund seeks to meet this objective by investing, normally, at least 65% of
its total assets in debt securities issued, guaranteed or otherwise backed by
the U.S. Government. The fund may invest in securities of all maturities issued
or guaranteed by the U.S. Government or its agencies and instrumentalities,
including: (1) U.S. Treasury obligations, and (2) obligations issued or
guaranteed by U.S. Government agencies and instrumentalities and supported by
(a) the full faith and credit of the U.S. Treasury, (b) the right of the issuer
to borrow from the U.S. Treasury, or (c) the credit of the agency or
instrumentality. The fund will maintain a dollar-weighted average portfolio
maturity of between three and ten years. The fund invests primarily in
fixed-rate securities such as high-coupon U.S. Government agency mortgage-backed
securities, which consist of interests in underlying mortgages with maturities
of up to thirty years.
The portfolio managers focus on securities that they believe have favorable
prospects for current income, consistent with their reasonable concern for
safety of principal. The portfolio managers consider whether to sell a
particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to
achieve its investment objective. If the fund does trade in this way, it may
incur increased transaction costs, which can lower the actual return on your
investment. Active trading may also increase short-term gains and losses, which
may affect the taxes you have to pay.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. Debt securities are particularly
vulnerable to credit risk and interest rate fluctuations. Interest rate
increases can cause the price of a debt security to decrease. The longer a debt
security's duration, the more sensitive it is to this risk. The prices of
high-coupon U.S. Government agency mortgage-backed securities fall more slowly
when interest rates rise than do prices of traditional fixed-rate securities.
Some of the securities purchased by the fund are not guaranteed by the U.S.
Government. The agency or instrumentality issuing a security may default or
otherwise be unable to honor a financial obligation.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
High-coupon U.S. Government agency mortgage-backed securities provide a higher
coupon at the time of purchase than current prevailing market interest rates.
The fund may purchase such securities at a premium. If these securities
experience a faster principal prepayment rate than expected, both the market
value of and income from such securities will decrease.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 77
--------------------------------
AIM INTERMEDIATE GOVERNMENT FUND
--------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1990 9.39%
1991 12.98%
1992 6.26%
1993 7.07%
1994 -3.44%
1995 16.28%
1996 2.35%
1997 9.07%
1998 8.17%
1999 -1.87%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
5.49% (quarter ended June 30, 1995) and the lowest quarterly return was -2.92%
(quarter ended March 31, 1994).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A -6.55% 5.59% 5.95% 6.41% 04/28/87
Class B -7.16% 5.48% -- 3.78% 09/07/93
Class C -3.49% -- -- 3.39% 08/04/97
Lehman Bros. Intermediate Government Bond
Index(1) 0.49% 6.93% 7.10% 7.44%(2) 04/30/87(2)
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) The Lehman Bros. Intermediate Government Bond Index is an unmanaged
composite generally considered representative of intermediate publicly
issued debt of U.S. Government agencies and quasi-federal corporations, and
corporate debt guaranteed by the U.S. Government.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
2
<PAGE> 78
--------------------------------
AIM INTERMEDIATE GOVERNMENT FUND
--------------------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -----------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 4.75% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever is less) None(1) 5.00% 1.00%
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -----------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.43% 0.43% 0.43%
Distribution and/or
Service (12b-1) Fees 0.25 1.00 1.00
Other Expenses 0.21 0.23 0.23
Interest 0.19 0.19 0.19
Total Other Expenses 0.40 0.42 0.42
Total Annual Fund
Operating Expenses 1.08 1.85 1.85
- -----------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $580 $802 $1,042 $1,730
Class B 688 882 1,201 1,968
Class C 288 582 1,001 2,169
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $580 $802 $1,042 $1,730
Class B 188 582 1,001 1,968
Class C 188 582 1,001 2,169
- ----------------------------------------------
</TABLE>
3
<PAGE> 79
--------------------------------
AIM INTERMEDIATE GOVERNMENT FUND
--------------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment and is
responsible for its day-to-day management. The advisor is located at 11 Greenway
Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects
of the fund's operations and provides investment advisory services to the fund,
including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976,
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.43% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Laurie F. Brignac, Portfolio Manager, who has been responsible for the fund
since 1999 and has been associated with the advisor and/or its affiliates
since 1992.
- - Scot W. Johnson, Senior Portfolio Manager, who has been responsible for the
fund since 1998 and has been associated with the advisor and/or its affiliates
since 1994.
- - Karen Dunn Kelley, Senior Portfolio Manager, who has been responsible for the
fund since 1992 and has been associated with the advisor and/or its affiliates
since 1989.
4
<PAGE> 80
--------------------------------
AIM INTERMEDIATE GOVERNMENT FUND
--------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Intermediate Government Fund are subject to
the maximum 4.75% initial sales charge as listed under the heading "CATEGORY II
Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class"
section of this prospectus. Purchases of Class B and Class C shares are subject
to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
ordinary income.
DIVIDENDS
The fund generally declares dividends daily and pays dividends, if any, monthly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Trustees of AIM Funds Group
(the trust), on behalf of the fund, voted to request shareholders to approve the
following items that will affect the fund:
- - An Agreement and Plan of Reorganization which provides for the reorganization
of the fund into a new series portfolio of AIM Investment Securities Funds
having the same investment objective and policies;
- - A new advisory agreement between the company and the advisor. The principal
changes to the advisory agreement are (i) the deletion of references to the
provision of administrative services and certain expense limitations that are
no longer applicable, and (ii) the clarification of provisions relating to
delegations of responsibilities and the non-exclusive nature of the advisor's
services. The revised advisory agreement does not change the fees paid by the
fund (except that the agreement permits the fund to pay a fee to the advisor
in connection with any new securities lending program implemented in the
future);
- - Changing the fund's fundamental investment restrictions. The proposed
revisions to the fund's fundamental investment restrictions are described in
the fund's statement of additional information; and
- - Changing the fund's investment objective and making it non-fundamental. The
investment objective of the fund would be changed by deleting references to
the types of securities that the fund will purchase to achieve its objective.
If the investment objective of the fund becomes non-fundamental, it can be
changed in the future by the Board of Trustees of the trust without further
approval by shareholders. Pursuant to this proposal, the fund's investment
objectives would read: "The fund's investment objective is to achieve a high
level of current income consistent with reasonable concern for safety of
principal."
The Board of Trustees of the trust has called a meeting of the fund's
shareholders to be held on or about May 3, 2000 to vote on these and other
proposals. Only shareholders of record as of February 18, 2000 will be entitled
to vote at the meeting. Proposals that are approved are expected to become
effective on or about May 26, 2000.
5
<PAGE> 81
--------------------------------
AIM INTERMEDIATE GOVERNMENT FUND
--------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.58 $ 9.46 $ 9.28 $ 9.70 $ 8.99
Income from investment operations:
Net investment income 0.60 0.62 0.63 0.63 0.69
Net gains (losses) on securities (both
realized and unrealized) (0.78) 0.13 0.18 (0.42) 0.73
Total from investment operations (0.18) 0.75 0.81 0.21 1.42
Less distributions:
Dividends from net investment income (0.60) (0.63) (0.61) (0.59) (0.67)
Return of capital -- -- (0.02) (0.04) (0.04)
Total distributions (0.60) (0.63) (0.63) (0.63) (0.71)
Net asset value, end of period $ 8.80 $ 9.58 $ 9.46 $ 9.28 $ 9.70
Total return(a) (1.87)% 8.17% 9.07% 2.35% 16.28%
- ------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $238,957 $245,613 $167,427 $174,344 $176,318
Ratio of expenses to average net assets
(including interest expense) 1.08%(b) 1.20% 1.11% 1.08% 1.19%
Ratio of expenses to average net assets
(exclusive of interest expense) 0.89%(b) 0.96% 1.00% 1.00% 1.08%
Ratio of interest expense to average net assets 0.19%(b) 0.24% 0.11% 0.08% 0.11%
Ratio of net investment income to average net
assets 6.60%(b) 6.43% 6.77% 6.76% 7.36%
Portfolio turnover rate 141% 147% 99% 134% 140%
- ------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $248,968,723.
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.59 $ 9.46 $ 9.28 $ 9.69 $ 8.99
Income from investment operations:
Net investment income 0.53 0.55 0.56 0.55 0.63
Net gains (losses) on securities (both
realized and unrealized) (0.77) 0.13 0.17 (0.41) 0.70
Total from investment operations (0.24) 0.68 0.73 0.14 1.33
Less distributions:
Dividends from net investment income (0.53) (0.55) (0.53) (0.51) (0.59)
Return of capital -- -- (0.02) (0.04) (0.04)
Total distributions (0.53) (0.55) (0.55) (0.55) (0.63)
Net asset value, end of period $ 8.82 $ 9.59 $ 9.46 $ 9.28 $ 9.69
Total return(a) (2.56)% 7.40% 8.16% 1.61% 15.22%
- ---------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ---------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $228,832 $237,919 $89,265 $79,443 $61,300
Ratio of expenses to average net assets
(including interest expense) 1.85%(b) 1.96% 1.87% 1.84% 1.97%
Ratio of expenses to average net assets
(exclusive of interest expense) 1.66%(b) 1.72% 1.76% 1.76% 1.86%
Ratio of interest expense to average net assets 0.19%(b) 0.24% 0.11% 0.08% 0.11%
Ratio of net investment income to average net
assets 5.83%(b) 5.68% 6.01% 6.00% 6.58%
Portfolio turnover rate 141% 147% 99% 134% 140%
- ---------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges.
(b) Ratios are based on average net assets of $241,488,881.
6
<PAGE> 82
--------------------------------
AIM INTERMEDIATE GOVERNMENT FUND
--------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------
FOR THE PERIOD
YEAR ENDED DECEMBER 31, AUGUST 4, THROUGH
---------------------------------- DECEMBER 31,
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.56 $ 9.44 $ 9.33
Income from investment operations:
Net investment income 0.53 0.56 0.24
Net gains (losses) on securities (both
realized and unrealized) (0.77) 0.11 0.10
Total from investment operations (0.24) 0.67 0.34
Less distributions:
Dividends from net investment income (0.53) (0.55) (0.22)
Return of capital -- -- (0.01)
Total distributions (0.53) (0.55) (0.23)
Net asset value, end of period $ 8.79 $ 9.56 $ 9.44
Total return(a) (2.57)% 7.31% 3.64%
- -----------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -----------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $39,011 $38,026 $1,851
Ratio of expenses to average net assets
(including interest expense) 1.85%(b) 1.96% 1.87%(c)
Ratio of expenses to average net assets
(exclusive of interest expense) 1.66%(b) 1.72% 1.76%(c)
Ratio of interest expense to average net assets 0.19%(b) 0.24% 0.11%(c)
Ratio of net investment income to average net
assets 5.83%(b) 5.68% 6.01%(c)
Portfolio turnover rate 141% 147% 99%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are based on average net assets of $41,148,444.
(c) Annualized.
7
<PAGE> 83
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29,
1998 and continue to hold them, those shares will convert to
Class A shares of that fund seven years after your date of
purchase. If you exchange those shares for Class B shares of
another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until eight years after your
date of purchase of the original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 84
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THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 85
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 86
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 87
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 88
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 89
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 90
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 91
--------------------------------
AIM INTERMEDIATE GOVERNMENT FUND
--------------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77046-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
----------------------------------
AIM Intermediate Government Fund
SEC 1940 Act file number: 811-1540
----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com GOV-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 92
AIM MONEY MARKET FUND
--------------------------------------------------------------------------
AIM Money Market Fund seeks to provide as high a level of current income
as is consistent with the preservation of capital and liquidity.
AIM -- Registered Trademark --
PROSPECTUS
MARCH 9, 2000
This prospectus contains important
information about the Class B and C
shares and AIM Cash Reserve Shares
of the fund. Please read it before
investing and keep it for future
reference.
As with all other mutual fund
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.
There can be no assurance that the
fund will be able to maintain a
stable net asset value of $1.00 per
share.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
The Board of Trustees voted to
request shareholder approval of
certain items. For further
information on these items, see
Submission of Matters to
Shareholders in this prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
-- Registered Trademark --
<PAGE> 93
---------------------
AIM MONEY MARKET FUND
---------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 4
Dividends and Distributions 4
Submission of Matters to Shareholders 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta Con
Disciplina and Invest with Discipline are registered service marks and AIM Bank
Connection, AIM Funds, AIM Funds and Design, AIM Investor and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 94
---------------------
AIM MONEY MARKET FUND
---------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to provide as high a level of current income
as is consistent with the preservation of capital and liquidity.
The fund attempts to meet this objective by investing only in high-quality
U.S. dollar-denominated short-term obligations, including
- - securities issued by the U.S. Government or its agencies
- - bankers' acceptances, certificates of deposit, and time deposits from U.S. or
foreign banks
- - repurchase agreements
- - commercial paper
- - taxable municipal securities
- - master notes
- - cash equivalents
The fund may invest up to 50% of its assets in U.S. dollar-denominated foreign
securities.
The portfolio managers focus on securities that they believe have favorable
prospects for current income, consistent with their concerns for preservation of
capital and liquidity. The portfolio managers usually hold portfolio securities
to maturity, but may sell a particular security when they deem it advisable,
such as when any of the factors above materially changes.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising interest rates;
- - downgrades of credit ratings or default of any of the fund's holdings;
- - the risks generally associated with concentrating investments in the banking
industry, such as interest rate risk, credit risk and regulatory developments
relating to the banking and financial services industries; or
- - the risks generally associated with U.S. dollar-denominated foreign
investments, including political and economic upheaval, seizure or
nationalization of deposits, imposition of taxes or other restrictions on the
payment of principal and interest.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
1
<PAGE> 95
---------------------
AIM MONEY MARKET FUND
---------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the fund's AIM Cash
Reserve Shares from year to year. AIM Cash Reserve Shares do not have sales
loads.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1994 .................................................... 3.42%
1995 .................................................... 5.04%
1996 .................................................... 4.41%
1997 .................................................... 4.66%
1998 .................................................... 4.62%
1999 .................................................... 4.22%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
1.27% (quarters ended March 31, 1995 and June 30, 1995) and the lowest quarterly
return was 0.59% (quarter ended March 31, 1994).
PERFORMANCE TABLE
The following performance table reflects the fund's performance over the period
indicated. The fund's performance reflects payment of sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AIM Cash Reserve Shares 4.22% 4.59% -- 4.33% 10/16/93
Class B -1.55% 3.45% -- 3.53% 10/16/93
Class C 2.44% -- -- 3.67% 08/04/97
- --------------------------------------------------------------------------------
</TABLE>
AIM Cash Reserve Shares', Class B shares' and Class C shares' seven day yields
on December 31, 1999 were 4.43%, 3.69% and 3.68%, respectively. For the current
seven day yield, call (800) 347-4246.
2
<PAGE> 96
---------------------
AIM MONEY MARKET FUND
---------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- -------------------------------------------------------------------
(fees paid directly from AIM CASH
your investment) RESERVE SHARES CLASS B CLASS C
- -------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of offering
price) None None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever is less) None 5.00% 1.00%
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------------------
(expenses that are deducted AIM CASH
from fund assets) RESERVE SHARES CLASS B CLASS C
- -------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.54% 0.54% 0.54%
Distribution and/or Service
(12b-1) Fees 0.25 1.00 1.00
Other Expenses 0.25 0.25 0.25
Total Annual Fund Operating
Expenses 1.04 1.79 1.79
- -------------------------------------------------------------------
</TABLE>
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Cash Reserve
Shares $106 $331 $ 574 $1,271
Class B 682 863 1,170 1,908
Class C 282 563 970 2,105
- ----------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Cash Reserve
Shares $106 $331 $574 $1,271
Class B 182 563 970 1,908
Class C 182 563 970 2,105
- ----------------------------------------------------------
</TABLE>
3
<PAGE> 97
---------------------
AIM MONEY MARKET FUND
---------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.54% of average daily net assets.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchase of Class B and Class C Shares of AIM Money Market Fund are subject to
the contingent deferred sales charges listed in the "Shareholder
Information -- Choosing a Share Class" section of this prospectus.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
ordinary income.
DIVIDENDS
The fund generally declares dividends daily and pays dividends, if any, monthly.
In order to earn dividends on a purchase of fund shares on the day of the
purchase, the transfer agent must receive payment in federal funds before 12:00
noon Eastern Time on that day. Purchases made by payments in other forms, or
payments in federal funds received after 12:00 noon Eastern Time but before the
close of the customary trading session of the New York Stock Exchange, will
begin to earn dividends on the next business day.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Trustees of AIM Funds Group
(the trust), on behalf of the fund, voted to request shareholders to approve the
following items that will affect the fund:
- - An Agreement and Plan of Reorganization which provides for the reorganization
of the fund into a new series portfolio of AIM Investment Securities Funds
having the same investment objectives and policies;
- - A new advisory agreement between the trust and the advisor. The principal
changes to the advisory agreement are (i) the deletion of references to the
provision of administrative services and certain expense limitations that are
no longer applicable, and (ii) the clarification of provisions relating to
delegations of responsibilities and the non-exclusive nature of the advisor's
services. The revised advisory agreement does not change the fees paid by the
fund (except that the agreement permits the fund to pay a fee to the advisor
in connection with any new securities lending program implemented in the
future);
- - Changing the fund's fundamental investment restrictions. The proposed
revisions to the fund's fundamental investment restrictions are described in
the fund's statement of additional information; and
- - Changing the fund's investment objective so that it is non-fundamental. If the
investment objective of the fund becomes non-fundamental, it can be changed in
the future by the Board of Trustees of the trust without further approval by
shareholders.
The Board of Trustees of the trust has called a meeting of the fund's
shareholders to be held on or about May 3, 2000 to vote on these and other
proposals. Only shareholders of record as of February 18, 2000 will be entitled
to vote at the meeting. Proposals that are approved are expected to become
effective on or about May 26, 2000.
4
<PAGE> 98
---------------------
AIM MONEY MARKET FUND
---------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
AIM CASH RESERVE SHARES
------------------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.0414 0.0453 0.0456 0.0433 0.0493
Less distributions:
Dividends from net investment income (0.0414) (0.0453) (0.0456) (0.0433) (0.0493)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total return(a) 4.22% 4.62% 4.66% 4.41% 5.04%
- --------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $989,478 $1,179,072 $344,117 $315,470 $293,450
Ratio of expenses to average net assets 1.04%(b) 0.99% 1.05% 1.08% 1.04%
Ratio of net investment income to average net
assets 4.16%(b) 4.53% 4.55% 4.32% 4.92%
- --------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges where applicable.
(b) Ratios are based on average daily net assets of $977,518,910.
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.0339 0.0371 0.0378 0.0360 0.0419
Less distributions:
Dividends from net investment income (0.0339) (0.0371) (0.0378) (0.0360) (0.0419)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total return(a) 3.45% 3.78% 3.84% 3.66% 4.27%
- ------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $404,911 $310,534 $116,058 $ 91,148 $ 69,857
Ratio of expenses to average net assets 1.79%(b) 1.81% 1.80% 1.81% 1.78%
Ratio of net investment income to average net
assets 3.41%(b) 3.71% 3.80% 3.60% 4.14%
- ------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges where applicable.
(b) Ratios are based on average net assets of $368,065,266.
5
<PAGE> 99
---------------------
AIM MONEY MARKET FUND
---------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
FOR THE PERIOD
YEAR ENDED DECEMBER 31, AUGUST 4, THROUGH
----------------------------------- DECEMBER 31,
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.0339 0.0371 0.0158
Less distributions:
Dividends from net investment income (0.0339) (0.0371) (0.0158)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
Total return(a) 3.44% 3.78% 3.92%
- ------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $ 56,636 $ 27,391 $ 8,287
Ratio of expenses to average net assets 1.79%(b) 1.81% 1.80%(c)
Ratio of net investment income to average net
assets 3.41%(b) 3.71% 3.80%(c)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges where applicable, and is
annualized for periods less than one year.
(b) Ratios are based on average net assets of $44,090,340.
(c) Annualized.
6
<PAGE> 100
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29,
1998 and continue to hold them, those shares will convert to
Class A shares of that fund seven years after your date of
purchase. If you exchange those shares for Class B shares of
another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until eight years after your
date of purchase of the original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 101
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 102
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 103
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 104
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 105
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 106
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 107
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 108
---------------------
AIM MONEY MARKET FUND
---------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
----------------------------------
AIM Money Market Fund
SEC 1940 Act file number: 811-1540
----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com MKT-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 109
AIM MUNICIPAL BOND FUND
-----------------------------------------------------------------------
AIM Municipal Bond Fund seeks to achieve a high level of current income
exempt from federal income taxes, consistent with the preservation of
principal, by investing in a diversified portfolio of municipal bonds.
AIM--Registered Trademark--
PROSPECTUS
MARCH 9, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
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.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
The Board of Trustees voted to
request shareholder approval of
certain items. For further
information on these items, see
Submission of Matters to
Shareholders in this prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 110
-----------------------
AIM MUNICIPAL BOND FUND
-----------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 5
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 5
Dividends and Distributions 5
Special Tax Information Regarding the Fund 5
Submission of Matters to Shareholders 5
FINANCIAL HIGHLIGHTS 6
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta Con
Disciplina and Invest with Discipline are registered service marks and AIM Bank
Connection, AIM Funds, AIM Funds and Design, AIM Investor and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 111
-----------------------
AIM MUNICIPAL BOND FUND
-----------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to achieve a high level of current income
exempt from federal income taxes, consistent with the preservation of principal,
by investing in a diversified portfolio of municipal bonds.
The fund attempts to meet this objective by investing at least 80% of its
total invested assets in securities that pay interest exempt from all federal
taxes and which does not constitute an item of preference for purposes of the
alternative minimum tax. The fund will invest at least 80% of its total invested
assets in municipal bonds. Municipal bonds include debt obligations of varying
maturities issued to obtain funds for various public purposes by or on behalf of
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies, authorities and
instrumentalities. Certain types of industrial development bonds, such as
private activity bonds, that meet certain standards, are treated as municipal
bonds.
The fund will also invest at least 80% of its total assets in investment-grade
municipal securities rated by Moody's Investors Service, Inc., Standard & Poor's
Ratings Services or any other nationally recognized statistical rating
organization. Other securities meeting certain standards set by the fund are
included in this category. The fund may invest up to 20% of its total assets in
lower-quality municipal securities, i.e. "junk bonds," or unrated municipal
securities.
The portfolio managers focus on municipal securities they believe have
favorable prospects for current income consistent with the fund's objective of
preservation of principal. The portfolio managers consider whether to sell a
particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. Such investments
may or may not be subject to federal taxes. As a result, the fund may not
achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. Interest rate increases can cause the
price of a debt security to decrease. The longer a debt security's duration, the
more sensitive it is to this risk. Junk bonds are less sensitive to this risk
than are higher-quality bonds. A municipality may default or otherwise be unable
to honor a financial obligation. Private activity bonds are not backed by the
taxing power of the issuing municipality.
The value of, payment of interest and repayment of principal by, and the
ability of the fund to sell, a municipal security may also be affected by
constitutional amendments, legislative enactments, executive orders,
administrative regulations and voter initiatives as well as the economies of the
regions in which the fund invests.
Compared to higher quality debt securities, junk bonds involve greater risk of
default or price changes due to changes in the credit quality of the issuer
because they are generally unsecured and may be subordinated to other creditors'
claims. The value of junk bonds often fluctuates in response to company,
political or economic developments and can decline significantly over short
periods of time or during periods of general or regional economic difficulty.
During those times the bonds could be difficult to value or sell at a fair
price. Credit ratings on junk bonds do not necessarily reflect their actual
market risk.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 112
-----------------------
AIM MUNICIPAL BOND FUND
-----------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31, RETURNS
- ------------ -------
<S> <C>
1990 .................................................... 5.27%
1991 .................................................... 13.30%
1992 .................................................... 9.10%
1993 .................................................... 11.66%
1994 .................................................... -3.79%
1995 .................................................... 13.04%
1996 .................................................... 3.90%
1997 .................................................... 7.27%
1998 .................................................... 5.28%
1999 .................................................... -2.45%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
5.82% (quarter ended June 30, 1989) and the lowest quarterly return was -4.22%
(quarter ended March 31, 1994).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
(for the periods ended
December 31, 1999) 1 YEAR 5 YEARS
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A -7.12% 4.26%
Class B -7.91% 4.13%
Class C -4.09% --
Lehman Municipal Bond Index(1) -2.06% 6.91%
- --------------------------------------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 10 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A 5.59% 6.27% 03/28/77
Class B -- 3.06% 09/01/93
Class C -- 1.42% 08/04/97
Lehman Municipal Bond Index(1) 6.89% 8.11%(2) 12/31/79(2)
- --------------------------------------------------------------------------------
</TABLE>
(1) The Lehman Municipal Bond Index is a broad-based, total return index
comprised of 8000 actual bonds, all of which are investment grade, fixed
rate, long term maturities (greater than two years) and are selected from
issues larger than $50 million dated since January 1984.
(2) The average annual total return given is since the earliest date the index
became available.
2
<PAGE> 113
-----------------------
AIM MUNICIPAL BOND FUND
-----------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- --------------------------------------------------------------------------------
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 4.75% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever is less) None(1) 5.00% 1.00%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.45% 0.45% 0.45%
Distribution and/or
Service (12b-1) Fees 0.25 1.00 1.00
Other Expenses 0.14 0.14 0.14
Total Annual Fund
Operating Expenses 0.84 1.59 1.59
- --------------------------------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $557 $730 $ 919 $1,463
Class B 662 802 1,066 1,688
Class C 262 502 866 1,889
- -----------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ----------------------------------------------
Class A $557 $730 $919 $1,463
Class B 162 502 866 1,688
Class C 162 502 866 1,889
- ----------------------------------------------
</TABLE>
3
<PAGE> 114
-----------------------
AIM MUNICIPAL BOND FUND
-----------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.45% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Richard A. Berry, Senior Portfolio Manager, who has been responsible for the
fund since 1992 and has been associated with the advisor and/or its affiliates
since 1987.
- - Stephen D. Turman, Senior Portfolio Manager, who has been responsible for the
fund since 1992 and has been associated with the advisor and/or its affiliates
since 1985.
4
<PAGE> 115
-----------------------
AIM MUNICIPAL BOND FUND
-----------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Municipal Bond Fund are subject to the
maximum 4.75% initial sales charge as listed under the heading "CATEGORY II
Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class"
section of this prospectus. Purchases of Class B and Class C shares are subject
to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
ordinary income.
DIVIDENDS
The fund generally declares dividends daily and pays dividends, if any, monthly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
SPECIAL TAX INFORMATION REGARDING THE FUND
In addition to the general tax information set forth under the heading
"Shareholder Information--Taxes" in this prospectus, the following information
describes the tax impact of certain dividends you may receive from the fund.
You will not be required to include the "exempt-interest" portion of dividends
paid by the fund in your gross income for federal income tax purposes. You will
be required to report the receipt of exempt-interest dividends and other
tax-exempt interest on your federal income tax returns. Exempt-interest
dividends from the fund may be subject to state and local income taxes, may give
rise to a federal alternative minimum tax liability, may affect the amount of
social security benefits subject to federal income tax, may affect the
deductibility of interest on certain indebtedness, and may have other collateral
federal income tax consequences for you. The fund may invest in municipal
securities the interest on which constitutes an item of tax preference and could
give rise to a federal alternative minimum tax liability for you, and may invest
up to 20% of its net assets in such securities and other taxable securities. The
fund will try to avoid investments that result in taxable dividends.
To the extent that dividends paid by the fund are derived from taxable
investments or realized capital gains, they will be taxable as ordinary income
or long-term capital gains. The percentage of dividends that constitutes
exempt-interest dividends will be determined annually. This percentage may
differ from the actual percentage of exempt interest received by the fund for
the particular days in which you hold shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
municipal securities. If such a proposal were enacted, the ability of the fund
to pay exempt-interest dividends might be adversely affected.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Trustees of AIM Funds Group
(the trust), on behalf of the fund, voted to request shareholders to approve the
following items that will affect the fund:
- - An Agreement and Plan of Reorganization which provides for the reorganization
of the fund into a new series portfolio of AIM Investment Securities Funds
having the same investment objective and policies;
- - A new advisory agreement between the trust and the advisor. The principal
changes to the advisory agreement are (i) the deletion of references to the
provision of administrative services and certain expense limitations that are
no longer applicable, and (ii) the clarification of provisions relating to
delegations of responsibilities and the non-exclusive nature of the advisor's
services. The revised advisory agreement does not change the fees paid by the
fund (except that the agreement permits the fund to pay a fee to the advisor
in connection with any new securities lending program implemented in the
future);
- - Changing the fund's fundamental investment restrictions. The proposed
revisions to the funds's fundamental investment restrictions are described in
the fund's statement of additional information; and
- - Changing the fund's investment objective and making it non-fundamental. The
investment objective of the fund would be changed by deleting references to
the types of securities that the fund will purchase to achieve its objective.
If the investment objective of the fund becomes non-fundamental, it can be
changed in the future by the Board of Trustees of the trust without further
approval by shareholders. Pursuant to this proposal, the fund's investment
objective would read: "The fund's investment objective is to achieve a high
level of current income exempt from federal income taxes, consistent with the
preservation of principal."
The Board of Trustees of the trust has called a meeting of the fund's
shareholders to be held on or about May 3, 2000 to vote on these and other
proposals. Only shareholders of record as of February 18, 2000 will be entitled
to vote at the meeting. Proposals that are approved are expected to become
effective on or about May 26, 2000.
5
<PAGE> 116
-----------------------
AIM MUNICIPAL BOND FUND
-----------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.35 $ 8.34 $ 8.19 $ 8.31 $ 7.78
Income from investment operations:
Net investment income 0.41 0.42 0.42 0.43 0.43
Net gains (losses) on securities (both
realized and unrealized) (0.61) 0.01 0.16 (0.12) 0.56
Total from investment operations (0.20) 0.43 0.58 0.31 0.99
Less distributions:
Dividends from net investment income (0.41) (0.42) (0.43) (0.43) (0.43)
Returns of capital -- -- -- -- (0.03)
Total distributions (0.41) (0.42) (0.43) (0.43) (0.46)
Net asset value, end of period $ 7.74 $ 8.35 $ 8.34 $ 8.19 $ 8.31
Total return(a) (2.45)% 5.28% 7.27% 3.90% 13.05%
- ------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $294,720 $327,705 $318,469 $278,812 $284,803
Ratio of expenses to average net assets 0.84%(b) 0.82% 0.90% 0.80% 0.88%
Ratio of net investment income to average net
assets 5.01%(b) 5.00% 5.14% 5.29% 5.26%
Portfolio turnover rate 28% 19% 24% 26% 36%
- ------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average daily net assets of $322,097,527.
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.37 $ 8.36 $ 8.19 $ 8.31 $ 7.78
Income from investment operations:
Net investment income 0.35 0.36 0.36 0.37 0.39
Net gains (losses) on securities (both
realized and unrealized) (0.62) 0.01 0.17 (0.13) 0.54
Total from investment operations (0.27) 0.37 0.53 0.24 0.93
Less distributions:
Dividends from net investment income (0.35) (0.36) (0.36) (0.36) (0.37)
Returns of capital -- -- -- -- (0.03)
Total distributions (0.35) (0.36) (0.36) (0.36) (0.40)
Net asset value, end of period $ 7.75 $ 8.37 $ 8.36 $ 8.19 $ 8.31
Total return(a) (3.28)% 4.48% 6.59% 2.99% 12.14%
- -------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $72,256 $72,723 $47,185 $33,770 $21,478
Ratio of expenses to average net assets 1.59%(b) 1.57 1.66% 1.61% 1.68%(c)
Ratio of net investment income to average net
assets 4.26%(b) 4.25 4.38% 4.49% 4.46%(d)
Portfolio turnover rate 28% 19% 24% 26% 36%
- -------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges.
(b) Ratios are based on average daily net assets of $75,352,248.
(c) After fee waivers and/or expense reimbursements. The ratio of expenses to
average daily net assets prior to fee waivers and/or expense reimbursements
was 1.77% for 1995.
(d) After fee waivers and/or expense reimbursements. The ratio of net investment
income to average daily net assets prior to fee waivers and/or expense
reimbursements was 4.37% for 1995.
6
<PAGE> 117
-----------------------
AIM MUNICIPAL BOND FUND
-----------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------------------
FOR THE PERIOD
YEAR ENDED DECEMBER 31, AUGUST 4, THROUGH
--------------------------------- DECEMBER 31,
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.35 $ 8.35 $ 8.30
Income from investment operations:
Net investment income 0.35 0.36 0.15
Net gains (losses) on securities (both realized and
unrealized) (0.61) -- 0.04
Total from investment operations (0.26) 0.36 0.19
Less distributions:
Dividends from net investment income (0.35) (0.36) (0.14)
Total distributions (0.35) (0.36) (0.14)
Net asset value, end of period $ 7.74 $ 8.35 $ 8.35
Total return(a) (3.16)% 4.36% 2.36%
- ----------------------------------------------------------------------------------
Ratios/supplemental data:
- ----------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $ 9,652 $ 9,565 $ 825
Ratio of expenses to average net assets 1.59%(b) 1.57% 1.67%(c)
Ratio of net investment income to average net assets 4.26%(b) 4.25% 4.37%(c)
Portfolio turnover rate 28% 19% 24%
- ----------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are based on average daily net assets of $10,172,642.
(c) Annualized.
7
<PAGE> 118
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29,
1998 and continue to hold them, those shares will convert to
Class A shares of that fund seven years after your date of
purchase. If you exchange those shares for Class B shares of
another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until eight years after your
date of purchase of the original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 119
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 120
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 121
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 122
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 123
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 124
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 125
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 126
-----------------------
AIM MUNICIPAL BOND FUND
-----------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77046-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports only)
</TABLE>
- --------------------------------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
----------------------------------
AIM Municipal Bond Fund
SEC 1940 Act file number: 811-1540
----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com MBD-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 127
AIM SELECT GROWTH FUND
--------------------------------------------------------------------------
AIM Select Growth Fund seeks to achieve long-term growth of capital by
investing primarily in the common stocks of established medium- to
large-size companies with prospects for above-average, long-term earnings
growth.
AIM--Registered Trademark--
PROSPECTUS
MARCH 9, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it
for future reference.
As with all other mutual fund
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.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
The Board of Trustees voted to
request shareholder approval of
certain items. For further
information on these items, see
Submission of Matters to
Shareholders in this prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 128
----------------------
AIM SELECT GROWTH FUND
----------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 5
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 5
Dividends and Distributions 5
Submission of Matters to Shareholders 5
FINANCIAL HIGHLIGHTS 6
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta Con
Disciplina and Invest with Discipline are registered service marks and AIM Bank
Connection, AIM Funds, AIM Funds and Design, AIM Investor and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 129
----------------------
AIM SELECT GROWTH FUND
----------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to achieve long-term growth of capital by
investing primarily in the common stocks of established medium- to large-size
companies with prospects for above-average, long-term earnings growth.
The fund may invest up to 25% of its total assets in foreign securities.
The fund's management committee focuses on companies that have experienced
above-average, long-term growth in earnings, have excellent prospects for future
growth and whose securities they believe are undervalued relative to the
issuer's current or projected earnings, the current market value of the issuer's
assets or the equity markets generally. The fund's management committee
considers whether to sell a particular security when any of those factors
materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
Foreign securities have additional risks, including exchange rate changes,
political and economic upheaval, the relative lack of information about these
companies, relatively low market liquidity and the potential lack of strict
financial and accounting controls and standards.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 130
----------------------
AIM SELECT GROWTH FUND
----------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1990 ....................................... (5.04)%
1991 ....................................... 37.05%
1992 ....................................... 0.19%
1993 ....................................... 3.63%
1994 ....................................... (4.99)%
1995 ....................................... 34.31%
1996 ....................................... 18.61%
1997 ....................................... 19.54%
1998 ....................................... 27.09%
1999 ....................................... 41.48%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
29.40% (quarter ended December 31, 1998) and the lowest quarterly return was
- -19.50% (quarter ended September 30, 1990).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------------------
for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A 33.67% 26.47% 15.30% 10.85% 12/04/67
Class B 35.29% 26.66% -- 19.31% 09/01/93
Class C 39.26% -- -- 24.65% 08/04/97
Russell 3000--Registered
Trademark-- Index(1) 20.90% 26.94% 17.69% 17.47%(2) 12/31/78(2)
- -------------------------------------------------------------------------------------------
</TABLE>
(1) The Russell 3000-- Registered Tradermark -- Index is a widely recognized,
unmanaged index of common stocks that measures the performance of the
3,000 largest U.S. companies based on total market capitalization.
(2) The average annual total return given is since the date closest to the
earliest date the index became available.
2
<PAGE> 131
----------------------
AIM SELECT GROWTH FUND
----------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- ------------------------------------------------------------------
(fees paid directly
from your investment) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 5.50% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever is less) None(1) 5.00% 1.00%
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- ------------------------------------------------------------------
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.66% 0.66% 0.66%
Distribution and/or
Service (12b-1) Fees 0.25 1.00 1.00
Other Expenses 0.18 0.24 0.24
Total Annual Fund
Operating Expenses 1.09 1.90 1.90
- -----------------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $655 $878 $1,118 $1,806
Class B 693 897 1,226 2,011
Class C 293 597 1,026 2,222
- -----------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $655 $878 $1,118 $1,806
Class B 193 597 1,026 2,011
Class C 193 597 1,026 2,222
- -----------------------------------------------------------
</TABLE>
3
<PAGE> 132
----------------------
AIM SELECT GROWTH FUND
----------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.66% of average daily net assets.
PORTFOLIO MANAGERS
The fund is managed by a select committee comprised of equity research analysts
employed by the advisor or A I M Capital Management, Inc., a wholly owned
subsidiary of the advisor. The members of the committee provide knowledge
regarding a variety of equity market capitalization sectors and investment
styles. The committee meets periodically to discuss investment opportunities and
ideas; however, purchases and sales of securities must have the prior approval
of one of the following persons:
- - Ryan E. Crane, Portfolio Manager, who has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1994.
- - Geoffrey V. Keeling, Portfolio Manager, who has been responsible for the fund
since 1999 and has been associated with the advisor and/or its affiliates
since 1995. Prior to 1995 he was a student.
- - Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for
the fund since 1994 and has been associated with the advisor and/or its
affiliates since 1986.
- - Robert L. Shoss, Portfolio Manager, who has been responsible for the fund
since 1999 and has been associated with the advisor and/or its affiliates
since 1995. From 1991 to 1995, he was enrolled in graduate school.
- - Bret W. Stanley, Senior Portfolio Manager, who has been responsible for the
fund since 1999 and has been associated with the advisor and/or its affiliates
since 1998. From 1994 to 1998, he was Vice President and portfolio manager
with Van Kampen American Capital Asset Management, Inc.
- - Kenneth A. Zschappel, Senior Portfolio Manager, who has been responsible for
the fund since 1999 and has been associated with the advisor and/or its
affiliates since 1990.
4
<PAGE> 133
----------------------
AIM SELECT GROWTH FUND
----------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Select Growth Fund are subject to the maximum
5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales
Charges" in the "Shareholder Information--Choosing a Share Class" section of
this prospectus. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Trustees of AIM Funds Group
(the trust), on behalf of the fund, voted to request shareholders to approve the
following items that will affect the fund:
- - A new advisory agreement between the trust and the advisor. The principal
changes to the advisory agreement are (i) the deletion of references to the
provision of administrative services and certain expense limitations that are
no longer applicable, and (ii) the clarification of provisions relating to
delegations of responsibilities and the non-exclusive nature of the advisor's
services. The revised advisory agreement does not change the fees paid by the
fund (except that the agreement permits the fund to pay a fee to the advisor
in connection with any new securities lending program implemented in the
future);
- - Changing the fund's fundamental investment restrictions. The proposed
revisions to the fund's fundamental investment restrictions are described in
the fund's statement of additional information; and
- - Changing the fund's investment objective and making it non-fundamental. The
investment objective of the fund would be changed so that the fund may invest
without regard to market capitalization, and by deleting references to the
types of securities that the fund will purchase to achieve its objective. If
the investment objective of the fund becomes non-fundamental, it can be
changed in the future by the Board of Trustees of the trust without further
approval by shareholders. Pursuant to this proposal, the fund's investment
objective would read: "The fund's investment objective is to achieve long-term
growth of capital."
The Board of Trustees of the trust has called a meeting of the fund's
shareholders to be held on or about May 3, 2000 to vote on these and other
proposals. Only shareholders of record as of February 18, 2000 will be entitled
to vote at the meeting. Proposals that are approved are expected to become
effective on or about May 26, 2000.
5
<PAGE> 134
----------------------
AIM SELECT GROWTH FUND
----------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997(a) 1996 1995(a)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.35 $ 15.67 $ 14.78 $ 13.05 $ 10.32
Income from investment operations:
Net investment income (loss) (0.06) (0.04) 0.01 0.07 0.02
Net gains (losses) on securities (both
realized and unrealized) 8.00 4.24 2.82 2.34 3.50
Total from investment operations 7.94 4.20 2.83 2.41 3.52
Less distributions:
Dividends from net investment income -- -- (0.01) -- --
Distributions from net realized gains (1.06) (0.52) (1.93) (0.68) (0.79)
Total distributions (1.06) (0.52) (1.94) (0.68) (0.79)
Net asset value, end of period $ 26.23 $ 19.35 $ 15.67 $ 14.78 $ 13.05
Total return(b) 41.48% 27.09% 19.54% 18.61% 34.31%
- --------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $461,628 $320,143 $266,168 $227,882 $168,217
Ratio of expenses to average net assets 1.09%(c) 1.11% 1.13% 1.18% 1.28%
Ratio of net investment income (loss) to average
net assets (0.31)%(c) (0.22)% 0.04% 0.46% 0.20%
Portfolio turnover rate 31% 68% 110% 97% 87%
- --------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $358,478,474.
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------
YEAR ENDED DECEMBER 31,
1999(a) 1998 1997(a) 1996 1995(a)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.33 $ 14.98 $ 14.32 $ 12.77 $ 10.21
Income from investment operations:
Net investment income (loss) (0.23) (0.17) (0.13) (0.05) (0.08)
Net gains (losses) on securities (both
realized and unrealized) 7.53 4.04 2.72 2.28 3.43
Total from investment operations 7.30 3.87 2.59 2.23 3.35
Less distributions:
Distributions from net realized gains (1.06) (0.52) (1.93) (0.68) (0.79)
Total distributions (1.06) (0.52) (1.93) (0.68) (0.79)
Net asset value, end of period $ 24.57 $ 18.33 $ 14.98 $ 14.32 $ 12.77
Total return(b) 40.29% 26.13% 18.50% 17.60% 33.00%
- --------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $592,555 $428,002 $356,186 $280,807 $138,034
Ratio of expenses to average net assets 1.90%(c) 1.93% 1.99% 2.03% 2.13%
Ratio of net investment income (loss) to average
net assets (1.12)%(c) (1.04)% (0.82)% (0.39)% (0.65)%
Portfolio turnover rate 31% 68% 110% 97% 87%
- --------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges.
(c) Ratios are based on average net assets of $467,268,589.
6
<PAGE> 135
----------------------
AIM SELECT GROWTH FUND
----------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------
FOR THE PERIOD
YEAR ENDED DECEMBER 31, AUGUST 4, THROUGH
------------------------------- DECEMBER 31,
1999(a) 1998(a) 1997(a)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 18.32 $14.98 $17.65
Income from investment operations:
Net investment income (loss) (0.23) (0.17) (0.04)
Net gains (losses) on securities (both realized
and unrealized) 7.52 4.03 (0.70)
Total from investment operations 7.29 3.86 (0.74)
Less distributions:
Distributions from net realized gains (1.06) (0.52) (1.93)
Total distributions (1.06) (0.52) (1.93)
Net asset value, end of period $ 24.55 $18.32 $14.98
Total return(b) 40.26% 26.07% (3.86)%
- ---------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ---------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $25,275 $8,501 $1,189
Ratio of expenses to average net assets 1.90%(c) 1.93% 1.95%(d)
Ratio of net investment income (loss) to average
net assets (1.12)%(c) (1.04)% (0.77)%(d)
Portfolio turnover rate 31% 68% 110%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $13,432,524.
(d) Annualized.
7
<PAGE> 136
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29,
1998 and continue to hold them, those shares will convert to
Class A shares of that fund seven years after your date of
purchase. If you exchange those shares for Class B shares of
another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until eight years after your
date of purchase of the original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 137
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 138
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 139
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 140
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 141
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 142
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 143
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 144
----------------------
AIM SELECT GROWTH FUND
----------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- -------------------------------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- ------------------------------------
AIM Select Growth Fund
SEC 1940 Act file number: 811-1540
- ------------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com GRO-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 145
AIM VALUE FUND
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AIM Value Fund seeks to achieve long-term growth of capital by investing
primarily in equity securities judged by the fund's investment advisor to
be undervalued relative to the investment advisor's appraisal of the
current or projected earnings of the companies issuing the securities, or
relative to current market values of assets owned by the companies issuing
the securities or relative to the equity markets generally. Income is a
secondary objective.
AIM --Registered Trademark--
PROSPECTUS
MARCH 9, 2000
This prospectus contains important
information about Class A, B and C
shares of the fund. Please
read it before investing and keep it
for future reference.
As with all other mutual fund
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.
Investments in the fund:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
The Board of Trustees voted to
request shareholder approval of
certain items. For further
information on these items, see
Submission of Matters to
Shareholders in this prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
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AIM VALUE FUND
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TABLE OF CONTENTS
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<TABLE>
<S> <C>
INVESTMENT OBJECTIVES AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 4
Dividends and Distributions 4
Submission of Matters to Shareholders 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta Con
Disciplina and Invest with Discipline are registered service marks and AIM Bank
Connection, AIM Funds, AIM Funds and Design, AIM Investor and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 147
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AIM VALUE FUND
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INVESTMENT OBJECTIVES AND STRATEGIES
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The fund's primary investment objective is to achieve long-term growth of
capital by investing primarily in equity securities judged by the fund's
investment advisor to be undervalued relative to the investment advisor's
appraisal of the current or projected earnings of the companies issuing the
securities, or relative to current market values of assets owned by the
companies issuing the securities or relative to the equity markets generally.
Income is a secondary objective.
The fund also may invest in preferred stocks and debt instruments that have
prospects for growth of capital. The fund also may invest up to 25% of its total
assets in foreign securities.
The portfolio managers focus on undervalued equity securities of (1)
out-of-favor cyclical growth companies, (2) established growth companies that
are undervalued compared to historical relative valuation parameters, (3)
companies where there is early but tangible evidence of improving prospects that
are not yet reflected in the price of the company's equity securities and (4)
companies whose equity securities are selling at prices that do not reflect the
current market value of their assets and where there is reason to expect
realization of this potential in the form of increased equity values. The
portfolio managers consider whether to sell a particular security when they
believe the company no longer fits into any of the above categories.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objectives.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. The prices of equity securities change in
response to many factors, including the historical and prospective earnings of
the issuer, the value of its assets, general economic conditions, interest
rates, investor perceptions and market liquidity.
Foreign securities have additional risks, including exchange rate changes,
political and economic upheaval, the relative lack of information about these
companies, relatively low market liquidity and the potential lack of strict
financial and accounting controls and standards.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
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PERFORMANCE INFORMATION
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The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1990 ..................................... 1.88%
1991 ..................................... 43.45%
1992 ..................................... 16.39%
1993 ..................................... 18.71%
1994 ..................................... 3.28%
1995 ..................................... 34.85%
1996 ..................................... 14.52%
1997 ..................................... 23.95%
1998 ..................................... 32.76%
1999 ..................................... 29.95%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
27.35% (quarter ended December 31, 1998) and the lowest quarterly return was
- -20.11% (quarter ended September 30, 1990).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
(for the periods ended
December 31, 1999) SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A 22.80% 25.56% 20.60% 19.38% 05/01/84
Class B 23.94% 25.80% -- 20.78% 10/18/93
Class C 27.92% -- -- 24.55% 08/04/97
S&P 500(1) 21.03% 28.54% 18.19% 18.60%(2) 04/30/84(2)
- --------------------------------------------------------------------------------
</TABLE>
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
2
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AIM VALUE FUND
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FEE TABLE AND EXPENSE EXAMPLE
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FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- --------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 5.50% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is less) None(1) 5.00% 1.00%
- ---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- ---------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.63% 0.63% 0.63%
Distribution and/or
Service (12b-1) Fees 0.25 1.00 1.00
Other Expenses 0.14 0.18 0.18
Total Annual Fund
Operating Expenses 1.02 1.81 1.81
Fee Waiver(2) 0.02 0.02 0.02
Net Expenses 1.00 1.79 1.79
- -------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
(2) The investment advisor has contractually agreed to waive 0.025% of the
management fee on average net assets in excess of $2 billion.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------
<S> <C> <C> <C> <C>
Class A $648 $857 $1,082 $1,729
Class B 684 869 1,180 1,919
Class C 284 569 980 2,127
- -------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------
<S> <C> <C> <C> <C>
Class A $ 648 $857 $1,082 $1,729
Class B 184 569 980 1,919
Class C 184 569 980 2,127
- -------------------------------------------------
</TABLE>
3
<PAGE> 150
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AIM VALUE FUND
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FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.63% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Joel E. Dobberpuhl, Senior Portfolio Manager, who has been responsible for the
fund since 1992 and has been associated with the advisor and/or its affiliates
since 1990.
- - Evan G. Harrel, Senior Portfolio Manager, who has been responsible for the
fund since 1998 and has been associated with the advisor and/or its affiliates
since 1998. From 1994 to 1998, he was Vice President of Van Kampen American
Capital Asset Management, Inc. and a portfolio manager of various growth and
equity funds.
- - Robert A. Shelton, Portfolio Manager, who has been responsible for the fund
since 1997 and has been associated with the advisor and/or its affiliates
since 1995. From 1991 to 1995, he was a financial analyst for CS First Boston.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Value Fund are subject to the maximum 5.50%
initial sales charge as listed under the heading "CATEGORY I Initial Sales
Charges" in the "Shareholder Information--Choosing a Share Class" section of
this prospectus. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Trustees of AIM Funds Group
(the trust), on behalf of the fund, voted to request shareholders to approve the
following items that will affect the fund:
- - A new advisory agreement between the trust and the advisor. The principal
changes to the advisory agreement are (i) the deletion of references to the
provision of administrative services and certain expense limitations that are
no longer applicable, and (ii) clarification of provisions relating to
delegations of responsibilities and the non-exclusive nature of the advisor's
services. The revised advisory agreement does not change the fees paid by the
fund (except that the agreement permits the fund to pay a fee to the advisor
in connection with any new securities lending program implemented in the
future);
- - Changing the fund's fundamental investment restrictions. The proposed
revisions to the fund's fundamental investment restrictions are described in
the fund's statement of additional information; and
- - Changing the fund's investment objectives and making them non-fundamental. The
investment objectives of the fund would be changed by deleting references to
the types of securities that the fund will purchase to achieve its objectives.
If the investment objectives of the fund become non-fundamental, they can be
changed in the future by the Board of Trustees of the trust without further
approval by shareholders. Pursuant to this proposal, the fund's investment
objectives would read: "The fund's investment objective is to achieve
long-term growth of capital. Income is a secondary objective."
The Board of Trustees of the trust has called a meeting of the fund's
shareholders to be held on or about May 3, 2000 to vote on these and other
proposals. Only shareholders of record as of February 18, 2000 will be entitled
to vote at the meeting. Proposals that are approved are expected to become
effective on or about May 26, 2000.
4
<PAGE> 151
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AIM VALUE FUND
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FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996(a) 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 40.19 $ 32.42 $ 29.15 $ 26.81 $ 21.14
Income from investment operations:
Net investment income (loss) (0.04) 0.09 0.17 0.43 0.14
Net gains on securities (both realized and
unrealized) 11.93 10.38 6.78 3.42 7.21
Total from investment operations 11.89 10.47 6.95 3.85 7.35
Less distributions:
Dividends from net investment income -- (0.09) (0.04) (0.41) (0.09)
Distributions from net realized gains (3.25) (2.61) (3.64) (1.10) (1.59)
Total distributions (3.25) (2.70) (3.68) (1.51) (1.68)
Net asset value, end of period $ 48.83 $ 40.19 $ 32.42 $ 29.15 $ 26.81
Total return(b) 29.95% 32.76% 23.95% 14.52% 34.85%
- -----------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -----------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $12,640,073 $8,823,094 $6,745,253 $5,100,061 $3,408,952
Ratio of expenses to average net assets(c) 1.00%(d) 1.00% 1.04% 1.11% 1.12%
Ratio of net investment income (loss) to average
net assets(e) (0.09)%(d) 0.26% 0.57% 1.65% 0.74%
Portfolio turnover rate 66% 113% 137% 126% 151%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.02%, 1.02%, 1.06%, 1.13% and 1.13% for 1999-1995, respectively.
(d) Ratios are based on average net assets of $10,456,191,563.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were (0.11%), 0.24%, 0.55%, 1.63% and 0.73% for 1999-1995,
respectively.
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1999(a) 1998 1997 1996(a) 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 39.24 $ 31.89 $ 28.92 $ 26.65 $ 21.13
Income from investment operations:
Net investment income (loss) (0.39) (0.18) (0.07) 0.20 (0.01)
Net gains (losses) on securities (both
realized and unrealized) 11.60 10.14 6.68 3.38 7.12
Total from investment operations 11.21 9.96 6.61 3.58 7.11
Less distributions:
Dividends from net investment income -- -- -- (0.21) --
Distributions from net realized gains (3.25) (2.61) (3.64) (1.10) (1.59)
Total distributions (3.25) (2.61) (3.64) (1.31) (1.59)
Net asset value, end of period $ 47.20 $ 39.24 $ 31.89 $ 28.92 $ 26.65
Total return(b) 28.94% 31.70% 22.96% 13.57% 33.73%
- -----------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -----------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $14,338,087 $9,680,068 $6,831,796 $4,875,933 $2,860,531
Ratio of expenses to average net assets(c) 1.79%(d) 1.80% 1.85% 1.94% 1.94%
Ratio of net investment income (loss) to average
net assets(e) (0.88)%(d) (0.54)% (0.24)% 0.82% (0.08)%
Portfolio turnover rate 66% 113% 137% 126% 151%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.81%, 1.82%, 1.87%, 1.96% and 1.96% for 1999-1995, respectively.
(d) Ratios are based on average net assets of $11,615,113,487.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.90)%, (0.56)%, (0.26)%, 0.81% and (0.09)% for
1999-1995, respectively.
5
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FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
FOR THE PERIOD
YEAR ENDED DECEMBER 31, AUGUST 4,
----------------------------------- THROUGH
1999(a) 1998(a) DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 39.26 $ 31.90 $ 35.60
Income from investment operations:
Net investment income (loss) (0.39) (0.19) (0.01)
Net gains (losses) on securities (both
realized and unrealized) 11.60 10.16 (0.05)
Total from investment operations 11.21 9.97 (0.06)
Less distributions:
Dividends from net investment income -- -- --
Distributions from net realized gains (3.25) (2.61) (3.64)
Total distributions (3.25) (2.61) (3.64)
Net asset value, end of period $ 47.22 $ 39.26 $ 31.90
Total return(b) 28.92% 31.72% (0.08)%
- ------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $860,859 $212,095 $32,900
Ratio of expenses to average net assets(c) 1.79%(d) 1.80% 1.84%(f)
Ratio of net investment income (loss) to average
net assets(e) (0.88)%(d) (0.54)% (0.23)%(f)
Portfolio turnover rate 66% 113% 137%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.81%, 1.82% and 1.86% (annualized) for 1999-1997, respectively.
(d) Ratios are based on average net assets of $478,128,084.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.90)%, (0.56)% and (0.25)% (annualized) for 1999-1997,
respectively.
(f) Annualized.
6
<PAGE> 153
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THE AIM FUNDS
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SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29,
1998 and continue to hold them, those shares will convert to
Class A shares of that fund seven years after your date of
purchase. If you exchange those shares for Class B shares of
another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until eight years after your
date of purchase of the original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 154
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THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 155
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THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 156
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 157
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 158
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 159
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 160
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 161
---------------
AIM VALUE FUND
---------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
------------------------------------
AIM Value Fund
SEC 1940 Act file number: 811-1540
------------------------------------
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 162
STATEMENT OF
ADDITIONAL INFORMATION
AIM BALANCED FUND AIM MONEY MARKET FUND
AIM GLOBAL UTILITIES FUND AIM MUNICIPAL BOND FUND
AIM HIGH YIELD FUND AIM SELECT GROWTH FUND
AIM INCOME FUND AIM VALUE FUND
AIM INTERMEDIATE GOVERNMENT FUND
(SERIES PORTFOLIOS OF
AIM FUNDS GROUP)
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND IT SHOULD BE
READ IN CONJUNCTION WITH A PROSPECTUS FOR THE ABOVE-NAMED FUNDS, A COPY OF
WHICH MAY BE OBTAINED FROM AUTHORIZED DEALERS OR BY WRITING A I M FUND
SERVICES, INC., P.O. BOX 4739, HOUSTON, TEXAS 77210-4739.
STATEMENT OF ADDITIONAL INFORMATION DATED: MARCH 9, 2000,
RELATING TO THE AIM BALANCED FUND PROSPECTUS DATED MARCH 9, 2000,
THE AIM GLOBAL UTILITIES FUND PROSPECTUS DATED MARCH 9, 2000,
THE AIM HIGH YIELD FUND PROSPECTUS DATED MARCH 9, 2000,
THE AIM INCOME FUND PROSPECTUS DATED MARCH 9, 2000,
THE AIM INTERMEDIATE GOVERNMENT FUND PROSPECTUS DATED MARCH 9, 2000,
THE AIM MONEY MARKET FUND PROSPECTUS DATED MARCH 9, 2000,
THE AIM MUNICIPAL BOND FUND PROSPECTUS DATED MARCH 9, 2000,
THE AIM SELECT GROWTH FUND PROSPECTUS DATED MARCH 9, 2000,
AND THE AIM VALUE FUND PROSPECTUS DATED MARCH 9, 2000.
<PAGE> 163
T A B L E O F C O N T E N T S
<TABLE>
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INTRODUCTION.......................................................................................................................1
Submission of Matters to Shareholders.....................................................................................1
GENERAL INFORMATION ABOUT THE TRUST................................................................................................3
The Trust and its Shares..................................................................................................3
PERFORMANCE INFORMATION............................................................................................................5
Total Return Quotations...................................................................................................8
Yield Quotations.........................................................................................................10
PORTFOLIO TRANSACTIONS AND BROKERAGE..............................................................................................11
General Brokerage Policy.................................................................................................11
Allocation of Portfolio Transactions.....................................................................................12
Allocation of IPO Securities Transactions................................................................................12
Section 28(e) Standards..................................................................................................13
Transactions with Regular Brokers........................................................................................14
Brokerage Commissions Paid...............................................................................................14
Portfolio Turnover: (All Funds except AIM Money Market Fund)............................................................15
INVESTMENT STRATEGIES AND RISKS...................................................................................................15
All Funds except AIM Money Market Fund...................................................................................15
AIM Money Market Fund....................................................................................................16
AIM Municipal Bond Fund..................................................................................................17
AIM High Yield Fund......................................................................................................18
AIM Global Utilities Fund................................................................................................18
AIM Balanced Fund........................................................................................................20
Risk Factors Regarding Non-Investment Grade Debt Securities..............................................................20
Real Estate Investment Trusts ("REITs")..................................................................................21
Lending Portfolio Securities: All Funds.................................................................................21
Short Sales: AIM Balanced Fund and AIM High Yield Fund..................................................................21
Delayed Delivery Agreements: All Funds..................................................................................22
When-Issued Securities: All Funds.......................................................................................23
Investments in Foreign Securities: All Funds (except AIM Intermediate Government Fund and AIM
Municipal Bond Fund)............................................................................................23
Risk Factors Regarding Foreign Securities................................................................................24
Illiquid Securities......................................................................................................24
Rule 144A Securities.....................................................................................................25
Repurchase Agreements....................................................................................................25
Reverse Repurchase Agreements............................................................................................26
Dollar Roll Transactions: AIM Income Fund and AIM Intermediate Government Fund...........................................26
Borrowing................................................................................................................26
Equity-Linked Derivatives................................................................................................27
Investment in Other Investment Companies.................................................................................27
Temporary Defensive Investments..........................................................................................27
OPTIONS, FUTURES AND CURRENCY STRATEGIES..........................................................................................27
Introduction.............................................................................................................27
General Risks of Options, Futures and Currency Strategies................................................................28
Cover ................................................................................................................28
Writing Call Options.....................................................................................................29
</TABLE>
i
<PAGE> 164
<TABLE>
<S> <C>
Writing Put Options...........................................................................................29
Purchasing Put Options........................................................................................30
Purchasing Call Options.......................................................................................30
Over-The-Counter Options......................................................................................31
Index Options.................................................................................................31
Limitations on Options........................................................................................31
Interest Rate, Currency and Stock Index Futures Contracts.....................................................32
Options on Futures Contracts..................................................................................33
Forward Contracts.............................................................................................33
Limitations on Use of Futures, Options on Futures and Certain Options on Currencies...........................33
HEDGING AND OTHER INVESTMENT TECHNIQUES................................................................................34
Covered Call Options..........................................................................................34
Futures Contracts.............................................................................................34
Options on Futures Contracts..................................................................................35
Risks as to Futures Contracts and Related Options.............................................................35
Foreign Exchange Transactions: AIM Income Fund and AIM High Yield Fund.......................................36
INVESTMENT RESTRICTIONS................................................................................................37
AIM Balanced Fund.............................................................................................37
AIM Global Utilities Fund.....................................................................................38
AIM High Yield Fund...........................................................................................39
AIM Income Fund...............................................................................................40
AIM Intermediate Government Fund..............................................................................41
AIM Money Market Fund.........................................................................................42
AIM Municipal Bond Fund.......................................................................................43
AIM Select Growth Fund........................................................................................44
AIM Value Fund................................................................................................45
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES....................................................................46
MANAGEMENT.............................................................................................................52
Trustees and Officers.........................................................................................52
INVESTMENT ADVISORY AND OTHER SERVICES.................................................................................58
THE DISTRIBUTION PLANS.................................................................................................62
THE DISTRIBUTOR........................................................................................................67
SALES CHARGES AND DEALER CONCESSIONS...................................................................................69
REDUCTIONS IN INITIAL SALES CHARGES....................................................................................73
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS............................................................................76
HOW TO PURCHASE AND REDEEM SHARES......................................................................................78
AIM High Yield Fund...........................................................................................80
Backup Withholding............................................................................................80
NET ASSET VALUE DETERMINATION..........................................................................................82
TAX MATTERS............................................................................................................84
</TABLE>
ii
<PAGE> 165
<TABLE>
<S> <C>
DESCRIPTION OF MONEY MARKET INSTRUMENTS................................................................................87
SHAREHOLDER INFORMATION................................................................................................88
MISCELLANEOUS INFORMATION..............................................................................................90
Charges for Certain Account Information.......................................................................90
Audit Reports.................................................................................................90
Legal Matters.................................................................................................91
Custodians and Transfer Agent.................................................................................91
DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED
BY U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES..............................................................91
RATINGS OF SECURITIES..................................................................................................94
FINANCIAL STATEMENTS...................................................................................................FS
</TABLE>
iii
<PAGE> 166
INTRODUCTION
AIM Funds Group (the "Trust") is a series mutual fund. The rules and
regulations of the Securities and Exchange Commission (the "SEC") require all
mutual funds to furnish prospective investors certain information concerning the
activities of a fund being considered for investment. The information for AIM
BALANCED FUND is included in a Prospectus dated March 9, 2000. The information
for AIM GLOBAL UTILITIES FUND is included in a Prospectus dated March 9, 2000.
The information for AIM HIGH YIELD FUND is included in a Prospectus dated March
9, 2000. The information for AIM INCOME FUND is included in a Prospectus dated
March 9, 2000. The information for AIM INTERMEDIATE GOVERNMENT FUND is included
in a Prospectus dated March 9, 2000. The information for AIM MONEY MARKET FUND
is included in a Prospectus dated March 9, 2000. The information for AIM
MUNICIPAL BOND FUND is included in a Prospectus dated March 9, 2000. The
information for AIM SELECT GROWTH FUND is included in a Prospectus dated March
9, 2000. The information for AIM VALUE FUND is included in a Prospectus dated
March 9, 2000. Copies of each Prospectus and additional copies of this Statement
of Additional Information may be obtained without charge by writing the
principal distributor of the Funds' shares, A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, Texas 77210-4739, or by calling (800)
347-4246. Investors must receive a Prospectus before they invest in any Fund.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Funds. Some of
the information required to be in this Statement of Additional Information is
also included in the Prospectuses, and in order to avoid repetition, reference
will be made herein to sections of the Prospectuses. Additionally, the
Prospectuses 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
Prospectuses and this Statement of Additional Information, may be obtained from
the SEC by paying the charges prescribed under its rules and regulations.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Trustees of the
Trust, on behalf of its series portfolios (the "Funds"), voted to request
shareholder approval to amend the Funds' fundamental investment restrictions.
The Board of Trustees has called a meeting of the Funds' shareholders to be held
on or about May 3, 2000. Only shareholders of record as of February 18, 2000 are
entitled to vote at the meeting. Proposals that are approved are expected to
become effective on or about May 26, 2000.
If shareholders approve the proposal to amend the Funds' fundamental
investment restrictions, each of AIM BALANCED FUND, AIM GLOBAL UTILITIES FUND,
AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM
MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM SELECT GROWTH FUND and AIM VALUE
FUND will operate under the following fundamental investment restrictions:
Each Fund will be subject to the following investment restrictions,
which may be changed only by a vote of a majority of such Fund's outstanding
shares, except that AIM GLOBAL UTILITIES FUND will not be subject to
restrictions (1) or (4):
(1) The Fund is a "diversified company" as defined in the 1940 Act. The
Fund will not purchase the securities of any issuer if, as a result, the Fund
would fail to be a diversified company within the meaning of the 1940 Act, and
the rules and regulations promulgated thereunder, as such statute, rules and
regulations are amended from time to time or are interpreted from time to time
by the SEC staff (collectively, the "1940 Act Laws and Interpretations") or
except to the extent that the Fund may be permitted to do so by exemptive order
or similar relief (collectively, with the 1940 Act Laws and Interpretations, the
"1940 Act Laws, Interpretations and Exemptions"). In complying with this
restriction, however, the Fund may purchase securities of other investment
companies to the extent permitted by the 1940 Act Laws, Interpretations and
Exemptions.
(2) The Fund may not borrow money or issue senior securities, except as
permitted by the 1940 Act Laws, Interpretations and Exemptions.
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<PAGE> 167
(3) The Fund may not underwrite the securities of other issuers. This
restriction does not prevent the Fund from engaging in transactions involving
the acquisition, disposition or resale of its portfolio securities, regardless
of whether the Fund may be considered to be an underwriter under the Securities
Act of 1933.
(4) The Fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940 Act Laws,
Interpretations and Exemptions) of its investments in the securities of issuers
primarily engaged in the same industry. This restriction does not limit the
Fund's investments in (i) obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, (ii) tax-exempt obligations
issued by governments or political subdivisions of governments, or (iii) for AIM
MONEY MARKET FUND, bank instruments. In complying with this restriction, the
Fund will not consider a bank-issued guaranty or financial guaranty insurance
as a separate security.
(5) The Fund may not purchase real estate or sell real estate unless
acquired as a result of ownership of securities or other instruments. This
restriction does not prevent the Fund from investing in issuers that invest,
deal, or otherwise engage in transactions in real estate or interests therein,
or investing in securities that are secured by real estate or interests therein.
(6) The Fund may not purchase physical commodities or sell physical
commodities unless acquired as a result of ownership of securities or other
instruments. This restriction does not prevent the Fund from engaging in
transactions involving futures contracts and options thereon or investing in
securities that are secured by physical commodities.
(7) The Fund may not make personal loans or loans of its assets to
persons who control or are under common control with the Fund, except to the
extent permitted by 1940 Act Laws, Interpretations and Exemptions. This
restriction does not prevent the Fund from, among other things, purchasing debt
obligations, entering into repurchase agreements, loaning its assets to
broker-dealers or institutional investors, or investing in loans, including
assignments and participation interests.
(8) 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 restrictions as the Fund.
AIM GLOBAL UTILITIES FUND will concentrate (as such term may be defined
or interpreted by the 1940 Act Laws, Interpretations and Exemptions) its
investments in the securities of domestic and foreign public utility companies.
The investment restrictions set forth above will provide the Funds with
the ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
the change. Even though the Funds will have this flexibility if shareholders
approve the proposal, the Board of Trustees has adopted internal guidelines for
each Fund relating to certain of these restrictions which the advisor must
follow in managing the Funds. Any changes to these guidelines, which are set
forth below, require the approval of the Board of Trustees.
1. In complying with the fundamental restriction regarding issuer
diversification, the Fund will not, with respect to 75% of its total assets (and
for AIM MONEY MARKET FUND with respect to 100% of its total assets), purchase
securities of any issuer (other than securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities), if, as a result, (i)
more than 5% of the Fund's total assets would be invested in the securities of
that issuer, except as permitted by Rule 2a-7 under the 1940 Act, or (ii) the
Fund would hold more than 10% of the outstanding voting securities of that
issuer. The Fund may (i) purchase securities of other investment companies as
permitted by Section 12(d)(1) of the 1940 Act and (ii) invest its assets in
securities of other money market funds and lend money to other investment
companies and their series portfolios that have AIM as an investment advisor,
subject to the terms and conditions of any exemptive orders issued by the SEC.
2
<PAGE> 168
2. In complying with the fundamental restriction regarding borrowing
money and issuing senior securities, the Fund may borrow money in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). The Fund may borrow from banks,
broker/dealers or an AIM Advised Fund. The Fund may not borrow for leveraging,
but may borrow for temporary or emergency purposes, in anticipation of or in
response to adverse market conditions, or for cash management purposes. The Fund
may not purchase additional securities when any borrowings from banks exceed 5%
of the Fund's total assets.
3. In complying with the fundamental restriction regarding industry
concentration, the Fund may invest up to 25% of its total assets in the
securities of issuers whose principal business activities are in the same
industry (this guideline will not apply to AIM GLOBAL UTILITIES FUND).
4. In complying with the fundamental restriction with regard to making
loans, the Fund may lend up to 33 1/3% of its total assets and may lend money to
an AIM Advised Fund, on such terms and conditions as the SEC may require in an
exemptive order.
5. Notwithstanding the fundamental restriction with regard to investing
all assets in an open-end fund, the Fund may not invest all of its assets in the
securities of a single open-end management investment company with the same
fundamental investment objectives, policies and restrictions as the Fund.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from changes in values of assets will not
be considered a violation of the restriction.
GENERAL INFORMATION ABOUT THE TRUST
THE TRUST AND ITS SHARES
The Trust was previously organized as a Massachusetts business trust
pursuant to a Master Trust Agreement, dated October 30, 1984, as amended.
Pursuant to agreements and plans of reorganization, the Funds were reorganized
on October 15, 1993 as portfolios of AIM Funds Group, a Delaware business trust
which is registered under the Investment Company Act of 1940, as amended (the
"1940 Act") as an open-end series management investment company. The Trust
currently is organized under an Amended and Restated Agreement and Declaration
of Trust, dated November 5, 1998, (the "Trust Agreement"). Each Fund is a series
of shares of the Trust. The Trust currently consists of nine separate
portfolios: AIM BALANCED FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH YIELD FUND,
AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM MONEY MARKET FUND, AIM
MUNICIPAL BOND FUND, AIM SELECT GROWTH FUND and AIM VALUE FUND (each a "Fund"
and collectively, the "Funds"). 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.
On October 15, 1993, the Funds (other than AIM BALANCED FUND and AIM
MONEY MARKET FUND) succeeded to the assets and assumed the liabilities of the
funds with corresponding names (the "Predecessor Funds") of AIM Funds Group, a
Massachusetts business trust ("AFG"), pursuant to an Agreement and Plan of
Reorganization between the Trust and AFG. Also on October 15, 1993, AIM BALANCED
FUND succeeded to the assets and assumed the liabilities of AIM Convertible
Securities, Inc., a Maryland corporation ("ACS"), pursuant to an Agreement and
Plan of Reorganization between the Trust and ACS. Finally, on October 16, 1993,
AIM MONEY MARKET FUND succeeded to the assets and assumed the liabilities of the
AIM Cash Fund and AIM Money Market Fund portfolios of AFG and the AIM Money
Market Fund portfolio of Short-Term Investments Co., a Massachusetts business
trust ("STIC"), pursuant to an Agreement and Plan of Reorganization among the
Trust, AFG and STIC. All historical financial and other information contained in
this Statement of Additional Information for periods prior to October 15, 1993
relating to the Funds (or a class thereof) is that of the Predecessor Funds (or
the corresponding class thereof) or ACS. However, the historical financial and
other information relating to AIM MONEY MARKET FUND does not reflect information
prior to October
3
<PAGE> 169
16, 1993. Pursuant to an Amendment to the Trust Agreement, dated May 1, 1995,
AIM Utilities Fund changed its name to AIM GLOBAL UTILITIES FUND. The Trust
Agreement was further amended on September 25, 1995 to reflect a name change of
AIM Government Securities Fund to AIM INTERMEDIATE GOVERNMENT FUND. The Trust
Agreement was amended on May 1, 1997 to change the name AIM MONEY MARKET FUND
Class C shares to AIM MONEY MARKET FUND AIM Cash Reserve Shares. The Trust
Agreement was amended on May 1, 1998, to change the name of AIM Growth Fund to
AIM SELECT GROWTH FUND. Shares of beneficial interest of the Trust are
redeemable at their net asset value (subject, in certain circumstances, to a
contingent deferred sales charge) at the option of the shareholder or at the
option of the Trust in certain circumstances. For information concerning the
methods of redemption, investors should consult the Prospectuses under the
caption "Redeeming Shares."
The assets received by the Trust from the issue or sale of shares of
each of its series of shares, and all income, earnings, profits and proceeds
thereof, subject only to the rights of creditors, are specifically allocated to
the appropriate Fund. They constitute the underlying assets of each Fund, are
required to be segregated on the Trust's books of account, and are to be charged
with the expenses with respect to such Fund and its respective classes. Any
general expenses of the Trust not readily identifiable as belonging to a
particular Fund are allocated by or under the direction of the Board of
Trustees, primarily on the basis of relative net assets, or other relevant
factors.
Each share of each Fund represents an equal proportionate interest in
that Fund with each other share and is entitled to such dividends and
distributions out of the income belonging to such Fund as are declared by the
Board. Each Fund, except AIM MONEY MARKET FUND, offers three separate classes of
shares as follows: Class A shares, Class B shares and Class C shares. AIM MONEY
MARKET FUND offers three separate classes of shares: Class B shares, Class C
shares and AIM Cash Reserve Shares. Each such class represents interests in the
same portfolio of investments but, as further described in the Prospectuses,
each such class is subject to differing sales charges and expenses, which
differences will result in differing net asset values and dividends and
distributions. Upon any liquidation of the Trust, shareholders of each class are
entitled to share pro rata in the net assets belonging to the applicable Fund
allocable to such class available for distribution after satisfaction of
outstanding liabilities of the Fund allocable to such class.
Class A shares (except for AIM MONEY MARKET FUND), Class B shares,
Class C shares and, in the case of AIM MONEY MARKET FUND, AIM Cash Reserve
Shares, of the same Fund represent interests in that Fund's assets and have
identical voting, dividend, liquidation and other rights on the same terms and
conditions, except that each class of shares bears differing class-specific
expenses, is subject to differing sales loads, conversion features and exchange
privileges, and has exclusive voting rights on matters pertaining to that class'
distribution plan (although shareholders of Class A shares and Class B
shareholders of a given Fund (AIM Cash Reserve Shares and Class B shares of AIM
MONEY MARKET FUND) must approve any material increase in fees payable with
respect to the Class A shares of such Fund (AIM Cash Reserve Shares of AIM MONEY
MARKET FUND) under the Class A and C Plan.
The Trust is not required to hold annual or regular meetings of
shareholders. Meetings of shareholders of a 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.
Shareholders of each Fund are entitled to one vote per share (with
proportionate voting for fractional shares), irrespective of the relative net
asset value of the shares of a Fund. However, on matters affecting an individual
Fund or class of shares, a separate vote of shareholders of that Fund or class
is required. Shareholders of a Fund or class are not entitled to vote on any
matter which does not affect that Fund or class but which requires a separate
vote of another Fund or class. An example of a matter which would be voted on
separately by shareholders of each Fund is the approval of the Advisory
Agreement, and an example of a matter which would be voted on separately by
shareholders of each class of shares is approval of the distribution plans. When
issued, shares of each Fund are fully paid and nonassessable, have no preemptive
or subscription rights, and are fully transferable. Other than the automatic
conversion of Class B shares to
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<PAGE> 170
Class A shares (Class B shares to AIM Cash Reserve Shares of AIM MONEY MARKET
FUND), 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 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 at least
two-thirds 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.
Under Delaware law, shareholders of a Delaware business trust shall be
entitled to the same limitations of liability extended to shareholders of
private for-profit corporations, however, there is a remote possibility that
shareholders could, under certain circumstances, be held liable for the
obligations of the Trust to the extent 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. However, the Trust Agreement disclaims
shareholder liability for acts or obligations of the Trust and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or the trustees to all parties, and each
party thereto must expressly waive all rights of action directly against
shareholders of the Trust. The Trust Agreement provides for indemnification out
of the property of a Fund for all losses and expenses of any shareholder of such
Fund held liable on account of being or having been a shareholder. Thus, the
risk of a shareholder incurring financial loss due to shareholder liability is
limited to circumstances in which a Fund would be unable to meet its obligations
and wherein the complaining party was held not to be bound by the disclaimer.
The Trust Agreement further provides that the trustees and officers
will not be liable for any act, omission or obligation of the Trust or any
Trustee or officer. However, nothing in the Trust Agreement protects a trustee
or officer against any liability to the Trust or to the shareholders to which a
trustee or officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office with the Trust. The Trust Agreement provides for
indemnification by the Trust of the trustees, the officers and employees or
agents of the Trust, if it is determined that such person acted in good faith
and reasonably believed: (1) in the case of conduct in his or her official
capacity for the Trust, that his or her conduct was in the Trust's best
interests, (2) in all other cases, that his or her conduct was at least not
opposed to the Trust's best interests and (3) in a criminal proceeding, that he
or she had no reason to believe that his or her conduct was unlawful. Such
person may not be indemnified against any liability to the Trust or to the
Trust's shareholders to which he or she would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office. The Trust Agreement also
authorizes the purchase of liability insurance on behalf of trustees and
officers.
PERFORMANCE INFORMATION
All advertisements of the Funds will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of a Fund's shares. If
any advertised performance data does not reflect the maximum sales charge (if
any), such advertisement will disclose that the sales charge has not been
deducted in computing the performance data, and that, if reflected, the maximum
sales charge would reduce the performance quoted. Further information regarding
each Fund's performance is contained in that Fund's annual report to
shareholders, which is available upon request and without charge.
Each Fund's total return is calculated in accordance with a
standardized formula for computation of annualized total return. Standardized
total return for Class A shares reflects the deduction of a Fund's
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<PAGE> 171
maximum front-end sales charge at the time of purchase. Standardized total
return for Class B and Class C shares reflects the deduction of the maximum
applicable contingent deferred sales charge on a redemption of shares held for
the period.
A Fund's total return shows its overall change in value, including
changes in share price and assuming all the Fund's dividends and capital gain
distributions are reinvested. A cumulative total return reflects the Fund's
performance over a stated period of time. An average annual total return
reflects the hypothetical compounded annual rate of 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, a Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
Yield is computed in accordance with standardized formulas described
below and can be expected to fluctuate from time to time and is not necessarily
indicative of future results. Accordingly, yield information may not provide a
basis for comparison with investments which pay a fixed rate of interest for a
stated period of time. Yield reflects investment income net of expenses over the
relevant period attributable to a Fund share, expressed as an annualized
percentage of the maximum offering price per share for Class A shares and net
asset value per share for Class B shares and Class C shares, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND.
Yield is a function of the type and quality of a Fund's investments,
the maturity of the securities held in a Fund's portfolio and the operating
expense ratio of the Fund. A tax-equivalent yield is calculated in the same
manner as the standard yield with an adjustment for a stated, assumed tax rate.
AIM MUNICIPAL BOND FUND may also demonstrate the effect of such tax-equivalent
adjustments generally by comparing various yield levels with their corresponding
tax-equivalent yields, given a stated tax rate.
From time to time, A I M Advisors, Inc. ("AIM") or its affiliates may
waive all or a portion of their fees and/or assume certain expenses of any Fund.
Voluntary fee waivers or reductions or commitments to assume expenses may be
rescinded at any time without further notice to investors. During periods of
voluntary fee waivers or reductions or commitments to assume expenses, AIM will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions or reimbursement of expenses set
forth in the Fee Table in a Prospectus may not be terminated or amended to the
Funds' detriment during the period stated in the agreement between AIM and the
Fund. Fee waivers or reductions or commitments to reduce expenses will have the
effect of increasing that Fund's yield and total return.
The performance of each Fund will vary from time to time and past
results are not necessarily indicative of future results. A Fund's performance
is a function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund and
market conditions. A shareholder's investment in a Fund is not insured or
guaranteed. These factors should be carefully considered by the investor before
making an investment in any Fund.
AIM BALANCED FUND, AIM GLOBAL UTILITIES FUND, AIM SELECT GROWTH FUND
and AIM VALUE FUND may participate in the initial public offering ("IPO")
market, and a significant portion of those Funds' returns may be attributable to
their investments in IPOs. Investments in IPOs could have a magnified impact on
a fund with a small asset base. There is no guarantee that as a fund's assets
grow, it will continue to experience substantially similar performance by
investing in IPOs.
Total return and yield figures for the Funds are neither fixed nor
guaranteed. The Funds may provide performance information in reports, sales
literature and advertisements. The Funds may also, from time to time, quote
information about the Funds published or aired by publications or other media
entities which contain articles or segments relating to investment results or
other data about one or more of the Funds. The following is a list of such
publications or media entities:
6
<PAGE> 172
<TABLE>
<S> <C> <C>
Advertising Age Forbes Nation's Business
Barron's Fortune New York Times
Best's Review Hartford Courant Pension World
Broker World Inc. Pensions & Investments
Business Week Institutional Investor Personal Investor
Changing Times Insurance Forum Philadelphia Inquirer
Christian Science Monitor Insurance Week USA Today
Consumer Reports Investor's Daily U.S. News & World Report
Economist Journal of the American Wall Street Journal
FACS of the Week Society of CLU & ChFC Washington Post
Financial Planning Kiplinger Letter CNN
Financial Product News Money CNBC
Financial Services Week Mutual Fund Forecaster PBS
Financial World
</TABLE>
Each Fund may also compare its performance to performance data of
similar mutual funds as published by the following services:
Bank Rate Monitor Stanger
Donoghue's Weisenberger
Mutual Fund Values (Morningstar) Lipper, Inc.
Each Fund's performance may also be compared in advertising to the
performance of comparative benchmarks such as the following:
Standard & Poor's 400 Index
Standard & Poor's 500 Stock Index Bond Buyer Index
Dow Jones Industrial Average NASDAQ
EAFE Index COFI
Consumer Price Index First Boston High Yield Index
Lehman Bond Indices
Each Fund may also compare its performance to rates on Certificates of
Deposit and other fixed rate investments such as the following:
10 year Treasuries
30 year Treasuries
90 day Treasury Bills
Advertising for AIM GLOBAL UTILITIES FUND, AIM SELECT GROWTH FUND and
AIM VALUE FUND may from time to time include discussions of general economic
conditions and interest rates. Advertising for such Funds and for AIM Balanced
Fund may also include references to the use of those Funds as part of an
individual's overall retirement investment program. From time to time, sales
literature and/or advertisements for any of the Funds may disclose (i) the
largest holdings in the Fund's portfolio, (ii) certain selling group members
and/or (iii) certain institutional shareholders.
From time to time, the Funds' sales literature and/or advertisements
may discuss generic topics pertaining to the mutual fund industry. This
includes, but is 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.
7
<PAGE> 173
Although performance data may be useful to prospective investors when
comparing a Fund's performance with other funds and other potential investments,
investors should note that the methods of computing performance of other
potential investments are not necessarily comparable to the methods employed by
a Fund.
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return is as follows:
n
P(1+T) =ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable
maximum sales load is deducted at the beginning of the
1, 5, or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the 1, 5, or 10 year periods (or
fractional portion of such period).
The average annual total returns for each of the named Funds, with
respect to its Class A shares, for the one, five and ten year periods (or since
inception, if shorter) ended December 31, 1999, were as follows:
<TABLE>
<CAPTION>
PERIODS ENDED DECEMBER 31, 1999
-------------------------------
CLASS A SHARES: 1 YEAR 5 YEARS 10 YEARS
-------------- ------ ------- --------
<S> <C> <C> <C>
AIM Balanced Fund.............................................. 13.38% 20.62% 15.42%
AIM Global Utilities Fund...................................... 26.79% 21.55% 13.06%
AIM High Yield Fund............................................ -2.80% 6.96% 9.60%
AIM Income Fund................................................ -7.55% 7.68% 7.31%
AIM Intermediate Government Fund............................... -6.55% 5.59% 5.95%
AIM Municipal Bond Fund........................................ -7.12% 4.26% 5.59%
AIM Select Growth Fund......................................... 33.67% 26.47% 15.30%
AIM Value Fund................................................. 22.80% 25.56% 20.60%
</TABLE>
The average annual total returns for each of the named Funds, with
respect to its Class B shares, for the periods ended December 31, 1999, were as
follows:
<TABLE>
<CAPTION>
PERIODS ENDED DECEMBER 31, 1999
-------------------------------
SINCE
CLASS B SHARES: 1 YEAR 5 YEARS INCEPTION*
-------------- ------ ------- ---------
<S> <C> <C> <C>
AIM Balanced Fund.............................................. 13.08% 20.63% 14.66%
AIM Global Utilities Fund...................................... 28.16% 21.83% 13.61%
AIM High Yield Fund............................................ -3.14% 6.96% 5.90%
AIM Income Fund................................................ -8.25% 7.58% 4.32%
AIM Intermediate Government Fund............................... -7.16% 5.48% 3.78%
AIM Municipal Bond Fund........................................ -7.91% 4.13% 3.06%
AIM Select Growth Fund......................................... 35.29% 26.66% 19.31%
AIM Value Fund................................................. 23.94% 25.80% 20.78%
</TABLE>
*The inception date of the Class B shares of AIM GLOBAL UTILITIES FUND,
AIM HIGH YIELD FUND, AIM MUNICIPAL BOND FUND and AIM SELECT GROWTH
FUND, was September 1, 1993; the inception date of the Class B shares
of AIM INCOME FUND and AIM INTERMEDIATE GOVERNMENT FUND was
8
<PAGE> 174
September 7, 1993; and the inception date of the Class B shares of AIM
BALANCED FUND and AIM VALUE FUND was October 18, 1993.
The average annual total returns for AIM MONEY MARKET FUND, with
respect to its Class B shares and AIM Cash Reserve Shares, for the year ended
December 31, 1999 were -1.55% and 4.22%, respectively; and since inception
(October 16, 1993) were 3.53% and 4.33%, respectively.
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
n
P(1+U) =ERV
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment of only
a stated portion of, or none of, the applicable maximum
sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.
Cumulative total return across a stated period may be calculated as
follows:
n
P(1+V) =ERV
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a
stated portion of, or none of, the applicable maximum
sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.
The average annual total returns for each of the Funds, with respect to its
Class C shares, for the periods ended December 31, 1999, were as follows:
<TABLE>
<CAPTION>
CLASS C SHARES: PERIODS ENDED DECEMBER 31, 1999
-------------- -------------------------------
1 YEAR SINCE INCEPTION*
------ ---------------
<S> <C> <C>
AIM Balanced Fund 17.09% 14.29%
AIM Global Utilities Fund 32.18% 24.10%
AIM High Yield Fund .54% .11%
AIM Income Fund -4.62% 2.17%
AIM Intermediate Government Fund -3.49% 3.39%
AIM Money Market Fund 2.44% 3.67%
AIM Municipal Bond Fund -4.09% 1.42%
AIM Select Growth Fund 39.26% 24.65%
AIM Value Fund 27.92% 24.55%
</TABLE>
* The inception date of the Class C shares of the Funds was August 4, 1997.
9
<PAGE> 175
YIELD QUOTATIONS
The standard formula for calculating yield (including tax-equivalent
yield for AIM MUNICIPAL BOND FUND) for each Fund except AIM MONEY MARKET FUND,
as described in the Prospectuses, is as follows:
6
YIELD = 2[((a-b)/(c x d) + 1) -1]
Where a = dividends and interest earned during a stated
30-day period. For purposes of this calculation,
dividends are accrued rather than recorded on the
ex-dividend date. Interest earned under this formula
must generally be calculated based on the yield to
maturity of each obligation (or, if more appropriate,
based on yield to call date).
b = expenses accrued during period (net of reimbursement).
c = the average daily number of shares outstanding during
the period.
d = the maximum offering price per share on the last day of
the period.
Tax-equivalent yield for AIM MUNICIPAL BOND FUND will be calculated by
dividing that portion of the yield of the Fund (as determined above) which is
tax-exempt by one minus a stated income tax rate and adding the product to that
portion of the yield that is not tax-exempt.
The yields for each of the named Funds were as follows:
<TABLE>
<CAPTION>
30 DAYS ENDED DECEMBER 31, 1999
-------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
<S> <C> <C> <C>
AIM Balanced Fund........................... 2.40% 1.74% 1.74%
AIM Global Utilities Fund................... 1.02% .44% .44%
AIM High Yield Fund......................... 11.43%* 11.20%* 11.20%*
AIM Income Fund............................. 7.27% 6.78% 6.78%
AIM Intermediate Government Fund............ 6.02% 5.53% 5.53%
AIM Municipal Bond Fund..................... 4.35%** 3.78%** 3.78%**
</TABLE>
* The relatively high yields in this Fund, like that of other junk
bond funds, reflect a substantial premium for the high default
risk perceived by the market. Investors should not consider these
yields a measure of income potential.
** The tax-equivalent yield, assuming a tax rate of 39.6%, for the
Class A shares, Class B shares and Class C shares of AIM MUNICIPAL
BOND FUND was 7.20%, 6.26% and 6.26%, respectively.
The standard formula for calculating annualized yield for AIM MONEY
MARKET FUND is as follows:
Y = V - V x 365
1 0
------ ---
V 7
0
Where Y = annualized yield.
V = the value of a hypothetical pre-existing account in
0 the Fund having a balance of one share at the
beginning of a stated seven-day period.
V = the value of such an account at the end of the stated
1 period.
The annualized yield for each of the Class B, Class C shares and AIM
Cash Reserve Shares of AIM MONEY MARKET FUND for the 7 days ended December 31,
1999, was 3.69%, 3.68% and 4.43%, respectively.
10
<PAGE> 176
The standard formula for calculating effective annualized yield for AIM
MONEY MARKET FUND is as follows:
365/7
EY = (Y+1) -1
Where EY = effective annualized yield.
Y = annualized yield, as determined above.
The effective annualized yield for each of the Class B, Class C shares
and AIM Cash Reserve Shares of AIM MONEY MARKET FUND for the 7 days ended
December 31, 1999, was 3.76%, 3.74% and 4.53%, respectively.
For the purpose of determining the annualized yield and effective
annualized yield, the net change in the value of the hypothetical AIM MONEY
MARKET FUND account reflects the value of additional shares purchased with
dividends from the original shares and any such additional shares, and all fees
charged, other than non-recurring account or sales charges, to all shareholder
accounts in proportion to the length of the base period and the Fund's average
account size, but does not include realized gains and losses or unrealized
appreciation and depreciation or income other than investment income.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
AIM makes decisions to buy and sell securities for each Fund, selects
broker-dealers, effects the Funds' investment portfolio transactions, allocates
brokerage fees in such transactions, and where applicable, negotiates
commissions and spreads on transactions. AIM's primary consideration in
effecting a security transaction is to obtain the most favorable execution of
the order, which includes the best price on the security and a low commission
rate. While AIM seeks reasonably competitive commission rates, the Funds may not
pay the lowest commission or spread available. See "Section 28(e) Standards"
below.
Some of the securities in which the Funds invest are traded in
over-the-counter markets. In such transactions, a Fund deals directly with
dealers who make markets in the securities involved, except when better prices
are available elsewhere. Portfolio transactions placed through dealers who are
primary market makers are effected at net prices without commissions, but which
include compensation in the form of a mark up or mark down.
Traditionally, commission rates have not been negotiated on stock
markets outside the United States. Although in recent years many overseas stock
markets have adopted a system of negotiated rates, a number of markets maintain
an established schedule of minimum commission rates.
AIM may determine target levels of commission business with various
brokers on behalf of its clients (including the Funds) over a certain time
period. The target levels will be based upon the following factors, among
others: (1) the execution services provided by the broker; (2) the research
services provided by the broker; and (3) the broker's interest in mutual funds
in general and in the Funds and other mutual funds advised by AIM or A I M
Capital Management, Inc. (collectively, the "AIM Funds") in particular,
including sales of the Funds and of the other AIM Funds. In connection with (3)
above, the Funds' trades may be executed directly by dealers that sell shares of
the AIM Funds or by other broker-dealers with which such dealers have clearing
arrangements. AIM will not use a specific formula in connection with any of
these considerations to determine the target levels.
The Funds may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of a Fund, provided the conditions of an exemptive order received by
the Funds from the SEC are met. In addition, a Fund may purchase or sell a
security from or to
11
<PAGE> 177
another AIM Fund or account (and may invest in affiliated money market funds)
provided the Funds follow procedures adopted by the Boards 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.
Under the 1940 Act, certain persons affiliated with the Trust are
prohibited from dealing with the Funds as principal in any purchase or sale of
securities unless an exemptive order allowing such transactions is obtained from
the SEC. The 1940 Act also prohibits the Funds from purchasing a security being
publicly underwritten by a syndicate of which certain persons affiliated with
the Trust are members except in accordance with certain conditions. These
conditions may restrict the ability of a Fund to purchase municipal securities
being publicly underwritten by such syndicate, and the Fund may be required to
wait until the syndicate has been terminated before buying such securities. At
such time, the market price of the securities may be higher or lower than the
original offering price. A person affiliated with the Trust may, from time to
time, serve as placement agent or financial advisor to an issuer of municipal
securities and be paid a fee by such issuer. Each Fund may purchase such
municipal securities directly from the issuer, provided that the purchase is
reviewed by the Board of Trustees and a determination is made that the placement
fee or other remuneration paid by the issuer to a person affiliated with the
Trust is fair and reasonable in relation to the fees charged by others
performing similar services.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous other investment accounts. Some
of these accounts may have investment objectives similar to the Funds.
Occasionally, identical securities will be appropriate for investment by one of
the Funds and by another Fund or one or more of these investment accounts.
However, the position of each account in the same securities and the length of
time that each account may hold its investment in the same securities may vary.
The timing and amount of purchase by each account will also be determined by its
cash position. If the purchase or sale of securities is consistent with the
investment policies of the Fund(s) and one or more of these accounts, and is
considered at or about the same time, AIM will fairly allocate transactions in
such securities among the Fund(s) and these accounts. AIM may combine such
transactions, in accordance with applicable laws and regulations, to obtain the
most favorable execution. Simultaneous transactions could, however, adversely
affect a Fund's ability to obtain or dispose of the full amount of a security
which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to a Fund. In making such allocations,
AIM considers the investment objectives and policies of its advisory clients,
the relative size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, the size of investment commitments
generally held, and the judgments of the persons responsible for recommending
the investment.
ALLOCATION OF IPO SECURITIES TRANSACTIONS
From time to time, certain of the AIM Funds or other accounts managed
by AIM may become interested in participating in security distributions that
are available in an IPO, and occasions may arise when purchases of such
securities by one AIM Fund or account may also be considered for purchase by
one or more other AIM Funds or accounts. In such cases, it shall be AIM's
practice to specifically combine or otherwise bunch indications of interest for
IPO securities for all AIM Funds and accounts participating in purchase
transactions for that security, and to allocate such transactions in accordance
with the following procedures:
AIM will determine the eligibility of each AIM Fund and account that
seeks to participate in a particular IPO by reviewing a number of factors,
including suitability of the investment with the AIM Fund's or account's
investment objective, policies and strategies, the liquidity of the AIM Fund or
account if such investment is purchased, and whether the portfolio manager
intends to hold the security as a long-term investment. The allocation of
limited supply securities issued in IPOs will be made to eligible AIM Funds and
accounts in a manner designed to be fair and equitable for the eligible AIM
Funds and accounts, and so that there is equal
12
<PAGE> 178
allocation of IPOs over the longer term. Where multiple funds or accounts are
eligible, rotational participation may occur, based on the extent to which an
AIM Fund or account has participated in previous IPOs as well as the size of the
AIM Fund or account. Each eligible AIM Fund and account with an asset level of
less than $500 million will be placed in one of three tiers, depending upon its
asset level. The AIM Funds and accounts in the tier containing funds and
accounts with the smallest asset levels will participate first, each receiving a
40 basis point allocation (rounded to the nearest share round lot that
approximates 40 basis points) (the "Allocation"), based on that AIM Fund's or
account's net assets. This process continues until all of the AIM Funds and
accounts in the three tiers receive their Allocations, or until the shares are
all allocated. Should securities remain after this process, eligible AIM Funds
and accounts will receive their Allocations on a straight pro rata basis. For
the tier of AIM Funds and accounts not receiving a full Allocation, the
Allocation may be made only to certain AIM Funds or accounts so that each may
receive close to or exactly 40 basis points.
When any AIM Fund and/or account with substantially identical
investment objectives and policies participates in syndicates, they will do so
in amounts that are substantially proportionate to each other. In these cases,
the net assets of the largest AIM Fund will be used to determine in which tier,
as described in the paragraph above, such group of AIM Funds or accounts will be
placed. If no AIM Fund is participating, then the net assets of the largest
account will be used to determine tier placement. The price per share of
securities purchased in such syndicate transactions will be the same for each
AIM Fund and account.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM,
under certain circumstances, lawfully may cause an account to pay a higher
commission than the lowest available. Under Section 28(e), AIM must make a good
faith determination that the commissions paid are "reasonable in relation to the
value of the brokerage and research services provided ... viewed in terms of
either that particular transaction or [AIM's] overall responsibilities with
respect to the accounts as to which it exercises investment discretion." The
services provided by the broker also must lawfully and appropriately assist AIM
in the performance of its investment decision-making responsibilities.
Accordingly, in recognition of research services provided to it, a Fund may pay
a broker higher commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the 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, in
written form or on computer software. Research services may also include the
providing of custody services, as well as the providing of equipment used to
communicate research information, the providing of specialized consultations
with AIM personnel with respect to computerized systems and data furnished to
AIM as a component of other research services, the arranging of meetings with
management of companies, and the providing of access to consultants who supply
research information.
The outside research assistance is useful to AIM since the
broker-dealers used by AIM tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, the research provides
AIM with a diverse perspective on financial markets. Research services provided
to AIM by broker- dealers are available for the benefit of all accounts managed
or advised by AIM or by its affiliates. Some broker-dealers may indicate that
the provision of research services is dependent upon the generation of certain
specified levels of commissions and underwriting concessions by AIM's clients,
including the Funds. However,
13
<PAGE> 179
the Funds are not under any obligation to deal with any broker-dealer in the
execution of transactions in portfolio securities.
In some cases, the research services are available only from the
broker-dealer providing them. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM believes
that the research services are beneficial in supplementing AIM's research and
analysis and that they improve the quality of AIM's investment advice. The
advisory fee paid by the Funds is not reduced because AIM receives such
services. However, to the extent that AIM would have purchased research services
had they not been provided by broker-dealers, the expenses to AIM could be
considered to have been reduced accordingly.
TRANSACTIONS WITH REGULAR BROKERS
As of December 31, 1999, the following Fund entered into repurchase
agreements with the following regular brokers, as that term is defined in Rule
10b-1 under the 1940 Act, having the noted market values.
<TABLE>
<CAPTION>
Bank of CIBC Deutsche Bank
Goldman America Oppenheimer Securities
Sachs & Co. Securities Corp. Corp.
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM Money Market Fund $46,500,000 $300,000,000 $68,000,000 $8,342,665
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
As of December 31, 1999, AIM BALANCED FUND held an amount of common
stock issued by Merrill Lynch & Co., Inc., Morgan Stanley Dean Witter & Co. and
Goldman Sachs Group, Inc. (The) having a market value of $14,696,000,
$21,412,500 and $4,926,006, respectively. As of December 31, 1999, AIM VALUE
FUND held an amount of common stock issued by Morgan Stanley having a market
value of $685,414,125.
BROKERAGE COMMISSIONS PAID
For the year ended December 31, 1999, AIM BALANCED FUND, AIM GLOBAL
UTILITIES FUND, AIM SELECT GROWTH FUND and AIM VALUE FUND directed certain
brokerage transactions to broker-dealers that provided AIM with research,
statistical and other information: $156,721,721, $10,896,995, $74,955,560 and
$3,288,505,195, respectively. For the same period, AIM BALANCED FUND, AIM GLOBAL
UTILITIES FUND, AIM SELECT GROWTH FUND, and AIM VALUE FUND paid the following in
related brokerage commissions: $252,312, $19,863, $92,999 and $3,014,005,
respectively.
Except as noted, the Trust does not utilize an affiliated broker or
dealer in effecting portfolio transactions and does not recapture commissions
paid in such transactions. Brokerage commissions or underwriting concessions (or
both) paid by each of the Funds listed below were as follows for the years ended
December 31, 1999, 1998 and 1997.
14
<PAGE> 180
<TABLE>
<CAPTION>
FUND 1999 1998 1997
---- -------- -------- --------
(000) (000) (000)
<S> <C> <C> <C>
AIM Balanced Fund.............................. $ 1,595 $ 1,328 $ 726
AIM Global Utilities Fund...................... 199 209 150
AIM High Yield Fund............................ 102 14 102
AIM Income Fund................................ 44 12 28
AIM Intermediate Government Fund............... -0- -0- -0-
AIM Municipal Bond Fund........................ -0- -0- -0-
AIM Select Growth Fund......................... 592 906 1,101
AIM Value Fund................................. 23,804 34,489 35,473
</TABLE>
PORTFOLIO TURNOVER: (ALL FUNDS EXCEPT AIM MONEY MARKET FUND).
Any particular security will be sold, and the proceeds reinvested,
whenever such action is deemed prudent from the viewpoint of a Fund's investment
objectives, regardless of the holding period of that security. Each Fund's
historical portfolio turnover rates are included in the Financial Highlights
tables of the Fund's Prospectus. A higher rate of portfolio turnover may result
in higher transaction costs, including brokerage commissions. Also, to the
extent that higher portfolio turnover results in a higher rate of net realized
capital gains to a Fund, the portion of the Fund's distributions constituting
taxable capital gains may increase. See "Tax Matters."
INVESTMENT STRATEGIES AND RISKS
The following discussion of investment policies supplements the
discussion of the investment objectives and policies set forth in the
Prospectuses under the headings "Investment Objectives and Strategies" and
"Principal Risks of Investing in the Fund."
ALL FUNDS EXCEPT AIM MONEY MARKET FUND
AIM GLOBAL UTILITIES FUND, AIM SELECT GROWTH FUND and AIM VALUE FUND
invest in securities traded in the over-the-counter market or listed on a
national securities exchange, while AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND and AIM MUNICIPAL BOND FUND generally acquire bonds
in new offerings or in principal trades with broker-dealers. AIM BALANCED FUND,
investing in both equity and debt securities, acquires securities in the
over-the-counter market and on national securities exchanges, and acquires bonds
in new offerings or in principal trades with broker-dealers. Ordinarily, the
Funds do not purchase securities with the intention of engaging in short-term
trading. However, any particular security will be sold, and the proceeds
reinvested, whenever such action is deemed prudent from the viewpoint of a
Fund's investment objectives, regardless of the holding period of that security.
A portion of each Fund's assets may be held in cash and high quality,
short-term money market instruments such as certificates of deposit, commercial
paper, bankers' acceptances, short-term U.S. Government obligations, taxable
municipal securities, master notes, and repurchase agreements, pending
investment in portfolio securities, to meet anticipated short-term cash needs
such as dividend payments or redemptions of shares, or for temporary defensive
purposes. Such investments generally are the type in which AIM MONEY MARKET FUND
invests, generally will have maturities of 60 days or less and normally are held
to
15
<PAGE> 181
maturity. None of the Funds (except AIM MONEY MARKET FUND) is limited to
investing in Money Market Instruments which are "First Tier" securities as
defined in Rule 2a-7 under the 1940 Act. See "Description of Money Market
Instruments." The underlying securities that are subject to a repurchase
agreement will be "marked-to-market" on a daily basis so that AIM can determine
the value of the securities in relation to the amount of the repurchase
agreement.
U.S. Government securities may take the form of participation interests
in, and may be evidenced by, deposit or safekeeping receipts. Participation
interests are pro rata interests in U.S. Government securities. A Fund may
acquire participation interests in pools of mortgages sold by the Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Banks. Instruments evidencing
deposit or safekeeping are documentary receipts for such original securities
held in custody by others.
U.S. Government securities, including those that are guaranteed by
federal agencies or instrumentali ties, may or may not be backed by the "full
faith and credit" of the United States. Some securities issued by federal
agencies or instrumentalities are only supported by the credit of the agency or
instrumentality (such as the Federal Home Loan Banks) while others have an
additional line of credit with the U.S. Treasury (such as FNMA). In the case of
securities not backed by the full faith and credit of the United States, the
Funds must look principally to the agency issuing or guaranteeing the obligation
for ultimate repayment and may not be able to assert a claim against the United
States itself in the event the agency or instrumentality does not meet its
commitments.
AIM MONEY MARKET FUND
The types of money market instruments in which the Fund presently
invests are listed under "Description of Money Market Instruments" in this
Statement of Additional Information. If the trustees determine that it may be
advantageous to invest in other types of money market instruments, the Fund may
invest in such instruments, if it is permitted to do so by its investment
objectives, policies and restrictions.
The Fund will limit investments in Money Market Instruments to those
which at the date of purchase are "First Tier" securities as defined in Rule
2a-7 under the 1940 Act, as such Rule may be amended from time to time.
Generally, "First Tier" securities are securities that are rated in the highest
rating category for short- term debt obligations by two nationally recognized
statistical rating organizations ("NRSROs"), or, if only rated by one NRSRO, are
rated in the highest rating category for short-term debt obligations by that
NRSRO, or, if unrated, are determined by AIM (under the supervision of and
pursuant to guidelines established by the Board of Trustees) to be of comparable
quality to a rated security that meets the foregoing quality standards, as well
as securities issued by a registered investment company that is a money market
fund and U.S. government securities.
The Fund will not invest in instruments maturing more than 397 days
from the date of investment, and will maintain a dollar weighted average
portfolio maturity of 90 days or less. The Fund must comply with the
requirements of Rule 2a-7 under the 1940 Act, which govern the operations of
money market funds and may be more restrictive than the Fund's restrictions. If
any of the Fund's policies and restrictions are more restrictive than Rule 2a-7,
such policies and restrictions will be followed.
The rating applied to a security at the time the security is purchased
by the Fund may be changed while the Fund holds such security in its portfolio.
This change may affect, but will not necessarily compel, a decision to dispose
of a security. If the major rating services used by the Fund were to alter their
standards or systems for ratings, the Fund would then employ ratings under the
revised standards or systems that would be comparable to those specified in its
current investment objectives, policies and restrictions.
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The Board of Trustees has established procedures in compliance with
Rule 2a-7 under the 1940 Act that include reviews of portfolio holdings by the
trustees at such intervals as they may deem appropriate to determine whether net
asset value, calculated by using available market quotations, deviates from
$1.00 per share and, if so, whether such deviation may result in material
dilution or is otherwise unfair to investors or existing shareholders. In the
event the trustees determine that a deviation having such a result exists, they
intend to take such corrective action as they deem necessary and appropriate,
including, but not limited to, the following: the sale of portfolio instruments
prior to maturity in order to realize capital gains or losses or to shorten
average portfolio maturity; withholding dividends; authorizing redemption of
shares in kind; or establishing a net asset value per share by using available
market quotations, in which case, the net asset value could possibly be greater
or less than $1.00 per share. If the trustees deem it inadvisable to continue
the practice of maintaining a net asset value of $1.00 per share, they may alter
this procedure. The shareholders of the Fund will be notified promptly after any
such change.
Any increase in the value of a shareholder's investment in the Fund
resulting from the reinvestment of dividend income is reflected by an increase
in the number of shares in the shareholder's account.
AIM MUNICIPAL BOND FUND
For purposes of the Fund's investment policies and limitations, the
term "municipal bonds" includes debt obligations of varying maturities issued to
obtain funds for various public purposes, including the construction of a wide
range of public facilities, the refunding of outstanding obligations, the
obtaining of funds for general operating expenses and the lending of such funds
to other public institutions and facilities. In addition, certain types of
industrial development bonds are issued by or on behalf of public authorities to
obtain funds to provide for the construction, equipment, repair or improvement
of privately operated facilities ("private activity bonds"). Such obligations
are considered to be municipal bonds appropriate for investment by the Fund,
provided that the interest paid thereon, in the opinion of bond counsel, is
exempt from federal income taxes. As used in this Statement of Additional
Information, interest which is "tax-exempt" or "exempt from federal income
taxes" means interest on municipal bonds which is excluded from gross income for
federal income tax purposes, but which may give rise to federal alternative
minimum tax liability. The principal and interest payments on private activity
bonds (such as industrial development or pollution control bonds) are the
responsibility of the industrial user and, therefore, are not backed by the
taxing power of the issuing municipality. Such obligations are included within
the term municipal bonds if the interest paid thereon qualifies for exemption
from federal income tax, but the interest on private activity bonds will be
considered to be an item of preference for purposes of alternative minimum tax
liability under the Internal Revenue Code of 1986, as amended (the "Code"). See
"Tax Matters."
There is a risk that some or all of the interest received by the Fund
from municipal securities might become taxable as a result of tax law changes or
determinations of the Internal Revenue Service.
At least 80% of the Fund's total assets will be invested in municipal
securities rated within the four highest rating categories of Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Ratings Services ("S&P") or any
other NRSRO. The Fund may invest up to 20% of its total assets in municipal
securities that are rated below Baa/BBB (or a comparable rating of any other
NRSRO) or that are unrated. For purposes of the foregoing percentage
limitations, municipal securities (i) which have been collateralized with U.S.
Government obligations held in escrow until the municipal securities' scheduled
redemption date or final maturity, but (ii) which have not been rated by a NRSRO
subsequent to the date of escrow collateralization, will be treated by the Fund
as the equivalent of Aaa/AAA rated securities.
The two principal classifications of municipal bonds are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable only from the revenues derived
from a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source. Industrial
development bonds, which are municipal bonds, are in most cases revenue bonds
and do not generally constitute the pledge of the credit of the issuer of such
bonds.
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Securities in which the Fund invests may be insured by financial
insurance companies. Since a limited number of entities provide such insurance,
the Fund may invest more than 25% of its assets in securities insured by the
same insurance company.
AIM HIGH YIELD FUND
The Fund seeks high income principally by purchasing securities that
are rated Baa, Ba or B by Moody's, or BBB, BB or B by S&P, or securities of
comparable quality in the opinion of AIM that are either unrated or rated by
other NRSROs. The Fund may also hold, from time to time, securities rated Caa by
Moody's or CCC by S&P, or, if unrated or rated by other NRSROs, securities of
comparable quality as determined by AIM. It should be noted, however, that
achieving the Fund's investment objective may be more dependent on the credit
analysis of AIM, and less on that of credit rating agencies, than may be the
case for funds that invest in more highly rated bonds.
The Fund will not acquire equity securities, other than preferred
stocks, except when (a) attached to or included in a unit with income-generating
securities that otherwise would be attractive to the Fund; (b) acquired through
the exercise of equity features accompanying convertible securities held by the
Fund, such as conversion or exchange privileges or warrants for the acquisition
of stock or equity interests of the same or a different issuer; or (c) in the
case of an exchange offer whereby the equity security would be acquired with the
intention of exchanging it for a debt security issued on a "when-issued" basis.
The Fund does not expect to invest more than 5% of the value of its total assets
in issues, other than preferred stocks, of the type discussed in this paragraph.
AIM GLOBAL UTILITIES FUND
DESCRIPTION OF THE UTILITIES INDUSTRY
Electric Utility Industry. Electric utilities are heavily regulated.
Local rates are subject to the review of state commissions, and sales either
between companies or that cross state lines are subject to review by the Federal
Energy Regulatory Commission. The industry is also subject to regulation by the
SEC under the Public Utility Holding Company Act of 1935. In addition, companies
constructing or operating nuclear powered generating stations are subject to
extensive regulation by the Nuclear Regulatory Commission.
Electric utility companies are also subject to extensive local
regulation in environmental and site location matters. Future legislation with
regard to the issues of acid rain and toxic and radioactive wastes could have a
significant impact on the manner in which utility companies conduct their
business, and the costs that they incur. Since the late 1970s, investor-owned
utilities have experienced a number of unfavorable regulatory trends, including
increased regulatory resistance to price increases and new legislation
encouraging deregulation and competition.
Electric utilities and their predominant business, electric energy
generation, transmission and distribution, are undergoing fundamental changes
that may materially affect their financial condition. These changes are
attributable to advancements in technology, as well as deregulation of the
retail sale of electric generation and other aspects of utilities' core
businesses. For example, Federal law and regulations have been amended to
provide for open transmission system access and competitive wholesale sales of
electric generation, and various states are considering, or have adopted
(including California, Illinois, Massachusetts, New Hampshire, New York, and
Pennsylvania), new regulatory structures to allow access by some or all
customers to energy suppliers in addition to the local utility.
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Competition in electric generation is expected to create new
uncertainties in the electric utility industry. These uncertainties include
future prices of electricity in both the wholesale and retail markets, potential
changes in the composition of utilities' customer base and supply and demand
volatility. Specifically, it is expected that state deregulation of electric
generating operations will result in price pressures that will reduce the future
revenues of utilities in such states. In addition, to the extent a utility loses
retail customers, it may have to sell generation previously used to serve retail
customers in the wholesale market. Since margins in the wholesale market are
currently lower than in the retail market, this change could further reduce
revenues and adversely affect the profit margins of affected utilities.
Furthermore, the ability of utilities to compete in the retail electric
generation market may be compromised by the costs of earlier investments in
generation facilities such as nuclear power plants. While the trend in this area
has been to allow utilities to recover such costs through the imposition of
surcharges on customers' bills, not every state that deregulates its retail
electric generation market may do so. It is also unknown at this time whether
the existing state statutory schemes designed to address the loss of investments
suffered by deregulated utilities will adequately compensate such utilities or
place them in a position to effectively compete with new market entrants who are
not encumbered by these investments.
Natural Gas Industry. The natural gas industry is comprised primarily
of many small distribution companies and a few large interstate pipeline
companies. The Public Utility Holding Company Act of 1935 has generally acted as
a bar to the consolidation of pipeline and distribution companies. Regulation of
these companies is similar to that of electric companies. The performance of
natural gas utilities may also be substantially affected by fluctuations in
energy prices.
In addition, the gas industry is continuing to undergo structural
changes in response to federal policies designed to increase competition. These
policies have required interstate gas pipelines to unbundle their gas sales
service from other regulated tariff services, such as transportation and
storage. There are also initiatives in several states, such as Pennsylvania, to
deregulate the gas industry.
Communications Industry. Most of the communications industry capacity
is concentrated in the hands of a few very large publicly-held companies, unlike
the situation in the electric and gas industries. Significant risks for the
investor to overcome still exist, however, including risk related to pricing at
marginal versus embedded cost. New entrants may have lower costs of material due
to newer technologies or lower standards of reliability than those imposed in
the past by American Telephone & Telegraph ("AT&T") on the industry.
Accordingly, the marginal cost of incremental service is much lower than the
costs embedded in an existing network. Communications companies are not subject
to the Public Utility Holding Company Act of 1935.
Interstate communications service may be subject to Federal
Communications Commission regulation. Local service may be regulated by the
states. In addition, AT&T and its former subsidiaries are still subject to
judicial review pursuant to the settlement of the antitrust case brought against
them by the Department of Justice.
Water Utility Industry. The water utility industry is composed of
regulated public utilities that are involved in the distribution of drinking
water to densely populated areas. The industry is geographically diverse and
subject to the same rate base and rate of return regulations as are other public
utilities. Demand for water is most heavily influenced by the local weather,
population growth in the service area and new construction. Supplies of clean,
drinkable water are limited and are primarily a function of the amount of past
rainfall.
Other. In addition to the particular types of utilities industries
described above, the Fund may invest in developing utility technology companies
(such as cellular telephone, fiber optics and satellite communications firms)
and in holding companies which derive a substantial portion of their revenues
from
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utility-related activities. Generally, a holding company will be considered to
derive a substantial portion of its revenues from utility-related activities if
such activities account for at least 40% of its revenues.
AIM BALANCED FUND
Most debt securities purchased by the Fund will be rated Baa or better
by Moody's or BBB or better by S&P or, if unrated, deemed to be of comparable
quality by AIM, although the Fund may invest to a limited extent in lower-rated
securities. The fixed income securities in which the Fund invests may include
U.S. Government obligations, mortgage-backed securities, asset-backed
securities, bank obligations, corporate debt obligations and unrated
obligations, including those of foreign issuers. The Fund may, in pursuit of its
objective, invest up to 10% of its total assets in debt securities rated lower
than Baa by Moody's or BBB by S&P (or a comparable rating of any other
nationally recognized statistical rating organizations "NRSROs") or unrated
securities determined by AIM to be of comparable quality.
RISK FACTORS REGARDING NON-INVESTMENT GRADE DEBT SECURITIES
AIM HIGH YIELD FUND, and to a lesser extent AIM BALANCED FUND, AIM
GLOBAL UTILITIES FUND, AIM INCOME FUND and AIM MUNICIPAL BOND FUND, seek to meet
their respective investment objectives by investing in non-investment grade debt
securities, commonly known as "junk bonds." While generally providing greater
income and opportunity for gain, non-investment grade debt securities may be
subject to greater risks than higher-rated securities. Economic downturns tend
to disrupt the market for junk bonds and adversely affect their values. Such
economic downturns may be expected to result in increased price volatility for
junk bonds and of the value of shares of the above-named Funds, and increased
issuer defaults on junk bonds.
In addition, many issuers of junk bonds are substantially leveraged,
which may impair their ability to meet their obligations. In some cases, junk
bonds are subordinated to the prior payment of senior indebtedness, which
potentially limits a Fund's ability to fully recover principal or to receive
payments when senior securities are subject to a default.
The credit rating of a junk bond does not necessarily address its
market value risk, and ratings may from time to time change to reflect
developments regarding the issuer's financial condition. Junk bonds have
speculative characteristics which are likely to increase in number and
significance with each successive lower rating category.
When the secondary market for junk bonds becomes more illiquid, or in
the absence of readily available market quotations for such securities, the
relative lack of reliable objective data makes it more difficult for the
trustees to value a Fund's securities, and judgment plays a more important role
in determining such valuations. Increased illiquidity in the junk bond market
also may affect a Fund's ability to dispose of such securities at desirable
prices.
In the event a Fund experiences an unexpected level of net redemptions,
the Fund could be forced to sell its junk bonds without regard to their
investment merits, thereby decreasing the asset base upon which the Fund's
expenses can be spread and possibly reducing the Fund's rate of return. Prices
of junk bonds have been found to be less sensitive to fluctuations in interest
rates, and more sensitive to adverse economic changes and individual corporate
developments than those of higher-rated debt securities.
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REAL ESTATE INVESTMENT TRUSTS ("REITS")
To the extent consistent with their respective investment objectives
and policies, AIM BALANCED FUND, AIM GLOBAL UTILITIES FUND, AIM SELECT GROWTH
FUND and AIM VALUE FUND may each invest up to 25% of its total assets and AIM
INCOME FUND and AIM HIGH YIELD FUND may each invest up to 10% of its net assets
in equity and/or debt securities issued by REITs.
REITs are trusts which sell equity or debt securities to investors and
use the proceeds to invest in real estate or interests therein. A REIT may focus
on particular projects, such as apartment complexes, or geographic regions, such
as the Southeastern United States, or both.
To the extent that a Fund has the ability to invest in REITs, such Fund
could conceivably own real estate directly as a result of a default on the
securities it owns. A Fund, therefore, may be subject to certain risks
associated with the direct ownership of real estate including difficulties in
valuing and trading real estate, declines in the value of real estate, risks
related to general and local economic conditions, adverse changes in the climate
for real estate, environmental liability risks, increases in property taxes and
operating expenses, changes in zoning laws, casualty or condemnation losses,
limitations on rents, changes in neighborhood values, the appeal of properties
to tenants, and increases in interest rates.
In addition to the risks described above, equity REITs may be affected
by any changes in the value of the underlying property owned by the trusts,
while mortgage REITs may be affected by the quality of any credit extended.
Equity and mortgage REITs are dependent upon management skill, are not
diversified, and are therefore subject to the risk of financing single or a
limited number of projects. Such trusts are also subject to heavy cash flow
dependency, defaults by borrowers, self-liquidation, and the possibility of
failing to maintain exemption from the 1940 Act. Changes in interest rates may
also affect the value of debt securities held by a Fund. By investing in REITs
indirectly through a Fund, a shareholder will bear not only his/her
proportionate share of the expenses of the Fund, but also, indirectly, similar
expenses of the REITs.
LENDING PORTFOLIO SECURITIES: ALL FUNDS
Consistent with applicable regulatory requirements, the Funds may lend
their portfolio securities (principally to broker-dealers) to the extent of
one-third of their respective total assets. Such loans would be callable at any
time and would be continuously secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. The Funds would continue to receive the income on loaned
securities and would, at the same time, earn interest on the loan collateral or
on the investment of the loan collateral if it were cash. Any cash collateral
pursuant to these loans would be invested in short-term money market
instruments or affiliated money market funds. Where voting or consent rights
with respect to loaned securities pass to the borrower, the Funds will follow
the policy of calling the loan, in whole or in part as may be appropriate, to
permit the exercise of such voting or consent rights if the matters involved
are expected to have a material effect on the Funds' investment in the loaned
securities. Lending securities entails a risk of loss to the Funds if and to
the extent that the market value of the securities loaned were to increase and
the lender did not increase the collateral accordingly.
SHORT SALES: AIM BALANCED FUND AND AIM HIGH YIELD FUND
Each of AIM BALANCED FUND and AIM HIGH YIELD FUND may from time to time
make short sales of securities which it owns or which it has the right to
acquire through the conversion or exchange of other securities it owns. In a
short sale, a Fund does not immediately deliver the securities sold and does not
receive the proceeds from the sale. A Fund is said to have a short position in
the securities sold until it delivers the securities sold, at which time it
receives the proceeds of the sale. A Fund will neither make short sales of
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securities nor maintain a short position unless, at all times when a short
position is open, the Fund owns an equal amount of such securities or securities
convertible into or exchangeable, without payment of any further consideration,
for securities of the same issue as, and equal in amount to, the securities sold
short. This is a technique known as selling short "against the box." To secure
its obligation to deliver the securities sold short, a Fund will deposit in
escrow in a separate account with its custodian, State Street Bank and Trust
Company ("State Street"), an equal amount of the securities sold short or
securities convertible into or exchangeable for such securities.
Since a Fund ordinarily will want to continue to receive interest and
dividend payments on securities in its portfolio which are convertible into the
securities sold short, the Fund will normally close out a short position by
purchasing and delivering an equal amount of the securities sold short, rather
than by delivering securities which it already holds.
A Fund will make a short sale, as a hedge, when it believes that the
price of a security may decline, causing a decline in the value of a security
owned by the Fund or a security convertible into or exchangeable for such
security, or when the Fund does not want to sell the security it owns, because,
among other reasons, it wishes to defer recognition of gain or loss for federal
income tax purposes. In such case, any future losses in a Fund's long position
should be reduced by a gain in the short position. Conversely, any gain in the
long position should be reduced by a loss in the short position. The extent to
which such gains or losses are reduced will depend upon the amount of the
security sold short relative to the amount a Fund owns, either directly or
indirectly, and, in the case where the Fund owns convertible securities, changes
in the conversion premium. In determining the number of shares to be sold short
against a Fund's position in a convertible security, the anticipated fluctuation
in the conversion premium is considered. A Fund may also make short sales to
generate additional income from the investment of the cash proceeds of short
sales.
DELAYED DELIVERY AGREEMENTS: ALL FUNDS
Each Fund may purchase or sell securities on a delayed delivery basis.
Delayed delivery agreements involve commitments by a Fund to dealers or issuers
to acquire securities or instruments at a specified future date beyond the
customary same-day settlement for such securities or instruments. These
commitments may fix the payment price and interest rate to be received on the
investment. AIM INTERMEDIATE GOVERNMENT FUND also may engage in buy/sellback
transactions (a form of delayed delivery agreement). In a buy/sellback
transaction, the Fund enters a trade to sell securities at one price and
simultaneously enters a trade to buy the same securities at another price for
settlement at a future date. Delayed delivery agreements will not be used as a
speculative or leverage technique. Rather, from time to time, AIM can anticipate
that cash for investment purposes will result from, among other things,
scheduled maturities of existing portfolio instruments or from net sales of
shares of a Fund. To assure that a Fund will be as fully invested as possible in
instruments meeting the Fund's investment objective, the Fund may enter into
delayed delivery agreements, but only to the extent of anticipated funds
available for investment during a period of not more than five business days.
Until the settlement date, a Fund will segregate liquid assets of a dollar value
sufficient at all times to make payment for the delayed delivery securities. No
more than 25% of a Fund's total assets will be committed to delayed delivery
agreements and when-issued securities, as described below. The delayed delivery
securities, which will not begin to accrue interest or dividends until the
settlement date, will be recorded as an asset of a Fund and will be subject to
the risk of market fluctuation. The purchase price of the delayed delivery
securities is a liability of a Fund until settlement. Absent extraordinary
circumstances, a Fund will not sell or otherwise transfer the delayed delivery
securities prior to settlement. If cash is not available to a Fund at the time
of settlement, the Fund may be required to dispose of portfolio securities that
it would otherwise hold to maturity in order to meet its obligation to accept
delivery under a delayed delivery agreement. The Board of Trustees has
determined that entering into delayed delivery agreements does not present a
materially increased risk of loss to shareholders, but the Board of Trustees may
restrict the use of delayed delivery agreements if the risk of loss is
determined to be material, or if it affects the stable net asset value of AIM
MONEY MARKET FUND.
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WHEN-ISSUED SECURITIES: ALL FUNDS
Each Fund may purchase securities on a "when-issued" basis, that is,
the date for delivery of and payment for the securities is not fixed at the date
of purchase, but is set after the securities are issued (normally within
forty-five days after the date of the transaction). The payment obligation and,
if applicable, the interest rate that will be received on the securities are
fixed at the time the buyer enters into the commitment. A Fund will only make
commitments to purchase such securities with the intention of actually acquiring
such securities, but the Fund may sell these securities before the settlement
date if it is deemed advisable. No additional when- issued commitments will be
made if as a result more than 25% of a Fund's total assets would become
committed to purchases of when-issued securities and delayed delivery
agreements.
If a Fund purchases a when-issued security, it will direct its
custodian bank to collateralize the when- issued commitment by segregating
liquid assets in the same fashion as required for a delayed delivery agreement.
Such segregated liquid assets will likewise be marked-to-market, and the amount
segregated will be increased if necessary to maintain adequate coverage of the
when-issued commitments.
Securities purchased on a when-issued basis and the securities held in
a Fund's portfolio are subject to changes in market value based upon the
public's perception of the creditworthiness of the issuer and, if applicable,
changes in the level of interest rates. Therefore, if a Fund is to remain
substantially fully invested at the same time that it has purchased securities
on a when-issued basis, there will be a possibility that the market value of the
Fund's assets will fluctuate to a greater degree. Furthermore, when the time
comes for the Fund to meet its obligations under when-issued commitments, the
Fund will do so by using then available cash flow, by sale of the segregated
liquid assets, by sale of other securities or, although it would not normally
expect to do so, by directing the sale of the when-issued securities themselves
(which may have a market value greater or less than the Fund's payment
obligation).
Investment in securities on a when-issued or delayed delivery basis may
increase a Fund's exposure to market fluctuation and may increase the
possibility that the Fund will incur short-term gains subject to federal
taxation or short-term losses if the Fund must engage in portfolio transactions
in order to honor a when-issued or delayed delivery commitment. In a delayed
delivery transaction, the Fund relies on the other party to complete the
transaction. If the transaction is not completed, the Fund may miss a price or
yield considered to be advantageous. A Fund will employ techniques designed to
reduce such risks. If a Fund purchases a when-issued security, the Fund's
custodian bank will segregate liquid assets in an amount equal to the when-
issued commitment. If the market value of such segregated assets declines,
additional liquid assets will be segregated on a daily basis so that the market
value of the segregated assets will equal the amount of the Fund's when- issued
commitments. To the extent liquid assets are segregated, they will not be
available for new investments or to meet redemptions. Securities purchased on a
delayed delivery basis may require a similar segregation of liquid assets.
INVESTMENTS IN FOREIGN SECURITIES: ALL FUNDS (EXCEPT AIM INTERMEDIATE GOVERNMENT
FUND AND AIM MUNICIPAL BOND FUND)
Each Fund may invest up to 25% of its total assets (up to 20% for AIM
BALANCED FUND, 40% for AIM INCOME FUND, 50% for AIM MONEY MARKET FUND and 80%
for AIM GLOBAL UTILITIES FUND) in foreign securities, although AIM MONEY MARKET
FUND may only invest in foreign securities denominated in U.S. dollars. To the
extent it invests in securities denominated in foreign currencies, each Fund
bears the risks 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. EACH FUND (OTHER THAN AIM Money Market Fund) may invest in securities
of foreign issuers which are in the form of American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs"), or other securities
representing underlying securities of foreign issuers, and such investments are
treated as foreign securities for purposes of percentage limitations on
investments in foreign securities. For
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a discussion of the risks pertaining to investments in foreign securities, see
"Risk Factors Regarding Foreign Securities" below.
RISK FACTORS REGARDING FOREIGN SECURITIES
Investments by a Fund in foreign securities, whether denominated in
U.S. dollars or foreign currencies, may entail all of the risks set forth below.
Investments by a Fund in ADRs, EDRs or similar securities also may entail some
or all of the risks described below.
Currency Risk. The value of the Funds' foreign investments will be
affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security decreases when the value of the U.S. dollar rises against the
foreign currency in which the security is denominated, and increases when the
value of the U.S. dollar falls against such currency.
Political and Economic Risk. The economies of many of the countries in
which the Funds may invest may not be 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
Funds' investments.
Regulatory Risk. Foreign companies are not registered with the
Securities and Exchange Commission and are generally not subject to the
regulatory controls imposed on United States issuers and, as a consequence,
there is generally less publicly available information about foreign securities
than is available about domestic securities. Foreign companies are not subject
to uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic companies. Income from
foreign securities owned by the Funds may be reduced by a withholding tax at the
source, which tax would reduce dividend income payable to the Fund's
shareholders.
Market Risk. The securities markets in many of the countries in which
the Funds invest will have substantially less trading volume than the major
United States markets. As a result, the securities of some foreign companies may
be less liquid and experience more price volatility than comparable domestic
securities. Increased custodian costs as well as administrative costs (such as
the need to use foreign custodians) may be associated with the maintenance of
assets in foreign jurisdictions. There is generally less government regulation
and supervision of foreign stock exchanges, brokers and issuers which may make
it difficult to enforce contractual obligations. In addition, transaction costs
in foreign securities markets are likely to be higher, since brokerage
commission rates in foreign countries are likely to be higher than in the United
States.
On January 1, 1999, certain members of the European Economic and
Monetary Union ("EMU"), namely Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain established a
common European currency known as the "euro" and each member's local currency
became a denomination of the euro. It is anticipated that each participating
country will replace its local currency with the euro on July 1, 2002. Any other
European country that is a member of the European Union and satisfies the
criteria for participation in the EMU may elect to participate in the EMU and
may supplement its existing currency with the euro. The anticipated replacement
of existing currencies with the euro on July 1, 2002 could cause market
disruptions before or after July 1, 2002 and could adversely affect the value of
securities held by a Fund.
ILLIQUID SECURITIES
Each Fund may invest up to 15% of its net assets (10% of the net assets
of AIM MONEY MARKET FUND) in securities that are illiquid. Illiquid securities
include securities that cannot be disposed of promptly (within
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seven days) in the normal course of business at a price at which they are
valued. Illiquid securities may include securities that are subject to
restrictions on resale because they have not been registered under the
Securities Act of 1933. Restricted securities may, in certain circumstances, be
resold pursuant to Rule 144A, and thus may or may not constitute illiquid
securities. Limitations on the resale of restricted securities may have an
adverse effect on their marketability, which may prevent the Fund from disposing
of them promptly at reasonable prices. The Fund may have to bear the expense of
registering such securities for resale, and the risk of substantial delays in
effecting such registrations. The Trust's Board of Trustees is responsible for
developing and establishing guidelines and procedures for determining the
liquidity of Rule 144A restricted securities on behalf of the Funds and
monitoring AIM's implementation of the guidelines and procedures.
RULE 144A SECURITIES
Each of the Funds may purchase securities which, while privately
placed, are eligible for purchase and resale pursuant to Rule 144A under the
Securities Act of 1933 (the "1933 Act"). This Rule permits certain qualified
institutional buyers, such as the Funds, 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 Funds'
restriction of investing no more than 15% of their respective net assets (10% in
the case of AIM MONEY MARKET FUND) 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, a Fund's holdings of illiquid
securities will be reviewed to determine what, if any, action is required to
assure that such Fund does not invest more than 15% of its net assets (10% in
the case of AIM MONEY MARKET FUND) in illiquid securities. Investing in Rule
144A securities could have the effect of increasing the amount of each Fund's
investments in illiquid securities if qualified institutional buyers are
unwilling to purchase such securities.
REPURCHASE AGREEMENTS
Each of the Funds may engage in repurchase agreement transactions
involving the types of securities in which it is permitted to invest. Repurchase
agreements are agreements under which the purchaser (for example, a Fund)
acquires ownership of a 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 purchaser's holding period. A Fund may,
however, enter into a "continuing contract" or "open" repurchase agreement under
which the seller is under a continuing obligation to repurchase the underlying
obligation from the Fund on demand and the effective interest rate is negotiated
on a daily basis. In general, a Fund will enter into repurchase agreements only
with domestic banks with total assets of at least $1 billion or with primary
dealers in U.S. Government securities; however, total assets will not be the
sole determinative factor, and a Fund may enter into repurchase agreements with
other institutions which the Board of Trustees believes present minimal credit
risks. Nevertheless, if the seller of a repurchase agreement fails to repurchase
the debt instrument in accordance with the terms of the agreement, the Fund
which entered into the repurchase agreement may incur a loss to the extent that
the proceeds it realizes on the sale of the underlying obligation are less than
the repurchase price. Repurchase agreements are considered to be loans by a Fund
under the 1940 Act.
Rule 2a-7 under the 1940 Act provides that, for purposes of determining
the percentage of the total assets of AIM MONEY MARKET FUND that are invested in
securities of an issuer, a repurchase agreement shall be deemed to be an
acquisition of the underlying securities, provided that the obligation of the
seller to repurchase the securities from the Fund is fully collateralized. To be
fully collateralized, the collateral must
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among other things consist entirely of cash items, U.S. Government securities or
securities that, at the time the repurchase agreement is entered into, are rated
in the highest rating category by the Requisite NRSROs (as defined in Rule
2a-7), and the repurchase agreement must qualify under a provision of applicable
insolvency law providing an exclusion from any automatic stay of creditors'
rights against the seller.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are agreements which involve the sale of
securities held by a Fund, with an agreement that the Fund will repurchase the
securities at an agreed upon price and date. A Fund may employ reverse
repurchase agreements (i) for temporary emergency purposes, such as to meet
unanticipated net redemptions so as to avoid liquidating other portfolio
securities during unfavorable market conditions; (ii) to cover short-term cash
requirements resulting from the timing of trade settlements; or (iii) to take
advantage of market situations where the interest income to be earned from the
investment of the proceeds of the transaction is greater than the interest
expense of the transaction. At the time it enters into a reverse repurchase
agreement, a Fund will segregate liquid assets having a dollar value equal to
the repurchase price. Reverse repurchase agreements are considered borrowings by
a Fund under the 1940 Act.
DOLLAR ROLL TRANSACTIONS: AIM INCOME FUND AND AIM INTERMEDIATE GOVERNMENT FUND
In order to enhance portfolio returns and manage prepayment risks, AIM
INCOME FUND and AIM INTERMEDIATE GOVERNMENT FUND may engage in dollar roll
transactions with respect to mortgage securities issued by GNMA, FNMA and FHLMC.
In a dollar roll transaction, a Fund sells a mortgage security held in the
portfolio to a financial institution such as a bank or broker-dealer, and
simultaneously agrees to repurchase a substantially similar security (same type,
coupon and maturity) from the institution at a later date at an agreed upon
price. The mortgage securities that are repurchased will bear the same interest
rate as those sold, but generally will be collateralized by different pools of
mortgages with different prepayment histories. During the period between the
sale and repurchase, a Fund will not be entitled to receive interest and
principal payments on the securities sold. Proceeds of the sale will be invested
in short-term instruments, and the income from these investments, together with
any additional fee income received on the sale, could generate income for a Fund
exceeding the yield on the sold security.
Dollar roll transactions involve the risk that the market value of the
securities retained by a Fund may decline below the price of the securities that
the Fund has sold but is obligated to repurchase under the agreement. In the
event the buyer of securities in a dollar roll transaction files for bankruptcy
or becomes insolvent, the Fund's use of the proceeds from the sale of the
securities may be restricted pending a determination by the other party, or its
trustee or receiver, whether to enforce the Fund's obligation to repurchase the
securities. A Fund will not purchase additional securities when any borrowings
from banks exceed 5% of the Fund's total assets.
BORROWING
Each of the Funds may borrow money to a limited extent from banks
(including the Funds' custodian bank) for temporary or emergency purposes
subject to the limitations under the 1940 Act. The Funds will restrict
borrowings, reverse repurchase agreements and dollar roll transactions to an
aggregate of 33-1/3% of each Fund's respective total assets at the time of the
transaction. None of the Funds will purchase additional securities when
borrowings exceed 5% of its respective total assets.
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EQUITY-LINKED DERIVATIVES
AIM BALANCED FUND, AIM GLOBAL UTILITIES FUND, AIM SELECT GROWTH FUND
and AIM VALUE FUND may invest in equity-linked derivative products designed to
replicate the composition and performance of particular indices. Examples of
such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark
Series ("WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial
Average Instruments ("DIAMONDS") and Optomised Portfolios as Listed Securities
("OPALS"). Investments in equity-linked derivatives involve the same risks
associated with a direct investment in the types of securities included in the
indices such products are designed to track. There can be no assurance that the
trading price of the equity- linked derivatives will equal the underlying value
of the basket of securities purchased to replicate a particular index or that
such basket will replicate the index. Investments in equity-linked derivatives
may constitute investment in other investment companies. See "Investment in
Other Investment Companies.
INVESTMENT IN OTHER INVESTMENT COMPANIES
Each of the Funds 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. The following restrictions
apply to investments in other investment companies other than Affiliated Money
Market Funds (defined below): (i) a Fund may not purchase more than 3% of the
total outstanding voting stock of another investment company; (ii) a Fund may
not invest more than 5% of its total assets in securities issued by another
investment company; and (iii) a Fund may not invest more than 10% of its total
assets in securities issued by other investment companies other than Affiliated
Money Market Funds. With respect to a Fund's purchase of shares of another
investment company, including Affiliated Money Market Funds, the Fund will
indirectly bear its proportionate share of the advisory fees and other operating
expenses of such investment company. The Funds have obtained an exemptive order
from the SEC allowing them to invest in money market funds that have AIM or an
affiliate of AIM as an investment advisor (the "Affiliated Money Market Funds"),
provided that investments in Affiliated Money Market Funds do not exceed 25% of
the total assets of such Fund.
TEMPORARY DEFENSIVE INVESTMENTS
In anticipation of or in response to adverse market conditions, for
cash management purposes, or for defensive purposes, each of the Funds may
temporarily hold all or a portion of its assets in cash, money market
instruments, bonds, or other debt securities. Each of the Funds may also invest
up to 25% of its total assets in Affiliated Money Market Funds for these
purposes. For a description of the various rating categories of corporate bonds
and commercial paper in which the Funds may invest, see "Ratings of Securities"
in this Statement of Additional Information.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
The following discussion on options, futures and currency strategies
applies to AIM BALANCED FUND, AIM GLOBAL UTILITIES FUND, AIM SELECT GROWTH FUND
and AIM VALUE FUND.
INTRODUCTION
The Funds may each use forward contracts, futures contracts, options on
securities, options on indices, options on currencies, and options on futures
contracts to attempt to hedge against the overall level of investment and
currency risk normally associated with each Fund's investments. These
instruments are
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often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency or an index of securities).
GENERAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use by the Funds of options, futures contracts and forward currency
contracts involves special considerations and risks, as described below. Risks
pertaining to particular strategies are described in the sections that follow.
(1) Successful use of hedging transactions depends upon AIM's ability
to correctly predict the direction of changes in the value of the applicable
markets and securities, contracts and/or currencies. While AIM is experienced in
the use of these instruments, there can be no assurance that any particular
hedging strategy will succeed.
(2) There might be imperfect correlation, or even no correlation,
between the price movements of an instrument (such as an option contract) and
the price movements of the investments being hedged. For example, if a
"protective put" is used to hedge a potential decline in a security and the
security does decline in price, the put option's increased value may not
completely offset the loss in the underlying security. Such a lack of
correlation might occur due to factors unrelated to the value of the investments
being hedged, such as changing interest rates, market liquidity, and speculative
or other pressures on the markets in which the hedging instrument is traded.
(3) Hedging strategies, if successful, can reduce risk of loss by
wholly or partially offsetting the negative effect of unfavorable price
movements in the investments being hedged. However, hedging strategies can also
reduce opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments.
(4) There is no assurance that a liquid secondary market will exist for
any particular option, futures contract, forward contract or option thereon at
any particular time.
(5) As described below, a Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties. If a Fund were
unable to close out its positions in such instruments, it might be required to
continue to maintain such assets or accounts or make such payments until the
position expired or matured. The requirements might impair the Fund's ability to
sell a portfolio security or make an investment at a time when it would
otherwise be favorable to do so, or require that the Fund sell a portfolio
security at a disadvantageous time.
(6) There is no assurance that a Fund will use hedging transactions.
For example, if a Fund determines that the cost of hedging will exceed the
potential benefit to the Fund, the Fund will not enter into such transaction.
COVER
Transactions using forward contracts, futures contracts and options
(other than options purchased by a Fund) expose a Fund to an obligation to
another party. A Fund will not enter into any such transactions unless it owns
either (1) an offsetting ("covered") position in securities, currencies, or
other options, forward contracts or futures contracts or (2) cash, liquid assets
and/or short-term debt securities with a value sufficient at all times to cover
its potential obligations not covered as provided in (1) above. Each Fund will
comply with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash or liquid securities. To the extent that a
futures contract, forward contract or option is deemed to be illiquid, the
assets
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used to "cover" the Fund's obligation will also be treated as illiquid for
purposes of determining the Fund's maximum allowable investment in illiquid
securities.
Even though options purchased by the Funds do not expose the Funds to
an obligation to another party, but rather provide the Funds with a right to
exercise, the Funds intend to "cover" the cost of any such exercise. To the
extent that a purchased option is deemed illiquid, the Fund will treat the
market value of the option (i.e., the amount at risk to the Fund) as illiquid,
but will not treat the assets used as cover on such transactions as illiquid.
Assets used as cover cannot be sold while the position in the
corresponding forward contract, futures contract or option is open, unless they
are replaced with other appropriate assets. If a large portion of a Fund's
assets is used for cover or otherwise set aside, it could affect portfolio
management or the Fund's ability to meet redemption requests or other current
obligations.
WRITING CALL OPTIONS
Each of the Funds may write (sell) covered call options on securities,
futures contracts, forward contracts, indices and currencies. As the writer of a
call option, a Fund would have the obligation to deliver the underlying
security, cash or currency (depending on the type of derivative) to the holder
(buyer) at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of a Fund continues, it may be assigned an exercise notice,
requiring it to deliver the underlying security, cash or currency against
payment of the exercise price. This obligation terminates upon the expiration of
the call option, or such earlier time at which a Fund effects a closing purchase
transaction by purchasing an option identical to that previously sold.
When writing a call option a Fund, in return for the premium, gives up
the opportunity for profit from a price increase in the underlying security,
contract or currency above the exercise price, and retains the risk of loss
should the price of the security, contract or currency decline. Unlike one who
owns securities, contracts or currencies not subject to an option, a Fund has no
control over when it may be required to sell the underlying securities,
contracts or currencies, since most options may be exercised at any time prior
to the option's expiration. If a call option that a Fund has written expires, it
will realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security, contract or
currency during the option period. If the call option is exercised, a Fund will
realize a gain or loss from the sale of the underlying security, contract or
currency, which will be increased or offset by the premium received.
Writing call options can serve as a limited hedge because declines in
the value of the hedged investment would be offset to the extent of the premium
received for writing the option.
Closing transactions may be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security, contract or currency
from being called or to permit the sale of the underlying security, contract or
currency. Furthermore, effecting a closing transaction will permit a Fund to
write another call option on the underlying security, contract or currency with
either a different exercise price or expiration date, or both.
WRITING PUT OPTIONS
Each of the Funds may write (sell) covered put options on securities,
futures contracts, forward contracts, indices and currencies. As the writer of a
put option, a Fund would have the obligation to buy the underlying security,
contract or currency (depending on the type of derivative) at the exercise price
at any time until (American style) or on (European style) the expiration date.
This obligation terminates upon the expiration
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of the put option, or such earlier time at which a Fund effects a closing
purchase transaction by purchasing an option identical to that previously sold.
A Fund would write a put option at an exercise price that, reduced by
the premium received on the option, reflects the lower price it is willing to
pay for the underlying security, contract or currency. The risk in such a
transaction would be that the market price of the underlying security, contract
or currency would decline below the exercise price less the premium received.
PURCHASING PUT OPTIONS
Each of the Funds may purchase covered put options on securities,
futures contracts, forward contracts, indices and currencies. As the holder of a
put option, a Fund would have the right to sell the underlying security,
contract or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. A Fund may enter into closing sale
transactions with respect to such options, exercise such option or permit such
option to expire.
A Fund may purchase a put option on an underlying security, contract or
currency ("protective put") owned by the Fund in order to protect against an
anticipated decline in the value of the security, contract or currency. Such
hedge protection is provided only during the life of the put option. The premium
paid for the put option and any transaction costs would reduce any profit
realized when the security, contract or currency is delivered upon exercise of
said option. Conversely, if the underlying security, contract or currency does
not decline in value, the option may expire worthless and the premium paid for
the protective put would be lost.
A Fund may also purchase put options on underlying securities,
contracts or currencies against which it has written other put options. For
example, where a Fund has written a put option on an underlying security, rather
than entering a closing transaction of the written option, it may purchase a put
option with a different exercise price and/or expiration date that would
eliminate some or all of the risk associated with the written put. Used in
combinations, these strategies are commonly referred to as "put spreads."
Likewise, a Fund may write call options on underlying securities, contracts or
currencies against which it has purchased protective put options. This strategy
is commonly referred to as a "collar."
PURCHASING CALL OPTIONS
Each of the Funds may purchase covered call options on securities,
futures contracts, forward contracts, indices and currencies. As the holder of a
call option, a Fund would have the right to purchase the underlying security,
contract or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. A Fund may enter into closing sale
transactions with respect to such options, exercise such options or permit such
options to expire.
Call options may be purchased by a Fund for the purpose of acquiring
the underlying security, contract or currency for its portfolio. Utilized in
this fashion, the purchase of call options would enable a Fund to acquire the
security, contract or currency at the exercise price of the call option plus the
premium paid. So long as it holds such a call option, rather than the underlying
security or currency itself, the Fund is partially protected from any unexpected
decline in the market price of the underlying security, contract or currency
and, in such event, could allow the call option to expire, incurring a loss only
to the extent of the premium paid for the option.
Each of the Funds may also purchase call options on underlying
securities, contracts or currencies against which it has written other call
options. For example, where a Fund has written a call option on an underlying
security, rather than entering a closing transaction of the written option, it
may purchase a call option
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with a different exercise strike and/or expiration date that would eliminate
some or all of the risk associated with the written call. Used in combinations,
these strategies are commonly referred to as "call spreads."
OVER-THE-COUNTER OPTIONS
Options may be either listed on an exchange or traded in
over-the-counter ("OTC") markets. Listed options are third-party contracts
(i.e., performance of the obligations of the purchaser and seller is guaranteed
by the exchange or clearing corporation) and have standardized strike prices and
expiration dates. OTC options are two-party contracts with negotiated strike
prices and expiration dates. A Fund will not purchase an OTC option unless it
believes that daily valuations for such options are readily obtainable. OTC
options differ from exchange-traded options in that OTC options are transacted
with dealers directly and not through a clearing corporation (which guarantees
performance). Consequently, there is a risk of non-performance by the dealer.
Since no exchange is involved, OTC options are valued on the basis of an average
of the last bid prices obtained from dealers, unless a quotation from only one
dealer is available, in which case only that dealer's price will be used. In the
case of OTC options, there can be no assurance that a liquid secondary market
will exist for any particular option at any specific time. Although a Fund will
enter into OTC options only with dealers that are expected to be capable of
entering into closing transactions with it, there is no assurance that the Fund
will in fact be able to close out an OTC option position at a favorable price
prior to expiration. In the event of insolvency of the dealer, a Fund might be
unable to close out an OTC option position at any time prior to its expiration.
The staff of the SEC considers purchased OTC options (i.e., the market
value of the option) to be illiquid securities. A Fund may also sell OTC options
and, in connection therewith, segregate assets or cover its obligations with
respect to OTC options written by it. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities
or futures contracts except that all settlements are in cash and gain or loss
depends on changes in the index in question (and thus on price movements in the
securities market or a particular market sector generally) rather than on price
movements in individual securities or futures contracts. The amount of cash is
equal to the difference between the closing price of the index and the exercise
price of the call or put times a specified multiple (the "multiplier"), which
determines the total dollar value for each point of such difference.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund writes a call
on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. A Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will not be
perfectly correlated with the value of the index.
LIMITATIONS ON OPTIONS
A Fund will not write options if, immediately after such sale, the
aggregate value of securities or obligations underlying the outstanding options
exceeds 20% of the Fund's total assets. A Fund will not
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purchase options if, at any time of the investment, the aggregate premiums paid
for the options will exceed 5% of the Fund's total assets.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each of the Funds may enter into interest rate, currency or stock index
futures contracts (collectively, "Futures" or "Futures Contracts") as a hedge
against changes in prevailing levels of interest rates, currency exchange rates
or stock price levels, respectively, in order to establish more definitely the
effective return on securities or currencies held or intended to be acquired by
it. A Fund's hedging may include sales of Futures as an offset against the
effect of expected increases in interest rates, and decreases in currency
exchange rates and stock prices, and purchases of Futures as an offset against
the effect of expected declines in interest rates, and increases in currency
exchange rates or stock prices.
A Futures Contract is a two party agreement to buy or sell a specified
amount of a specified security or currency (or delivery of a cash settlement
price, in the case of an index future) for a specified price at a designated
date, time and place. A stock index future provides for the delivery, at a
designated date, time and place, of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading on the contract and the price agreed upon in the Futures Contract; no
physical delivery of stocks comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Future is outstanding.
The Funds will only enter into Futures Contracts that are traded
(either domestically or internationally) on futures exchanges and are
standardized as to maturity date and underlying financial instrument. Futures
exchanges and trading thereon in the United States are regulated under the
Commodity Exchange Act and by the Commodity Futures Trading Commission ("CFTC").
Foreign futures exchanges and trading thereon are not regulated by the CFTC and
are not subject to the same regulatory controls. For a further discussion of the
risks associated with investments in foreign securities, see "Foreign
Securities" in this Statement of Additional Information.
Closing out an open Future is effected by entering into an offsetting
Future for the same aggregate amount of the identical financial instrument or
currency and the same delivery date. There can be no assurance, however, that a
Fund will be able to enter into an offsetting transaction with respect to a
particular Future at a particular time. If a Fund is not able to enter into an
offsetting transaction, it will continue to be required to maintain the margin
deposits on the Future.
A Fund's Futures transactions will be entered into for hedging purposes
only; that is, Futures will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures will be purchased to
protect the Fund against an increase in the price of securities or currencies it
has committed to purchase or expects to purchase.
"Margin" with respect to Futures is the amount of funds that must be
deposited by a Fund in order to initiate Futures trading and maintain its open
positions in Futures. A margin deposit made when the Futures Contract is entered
("initial margin") is intended to ensure the Fund's performance under the
Futures Contract. The margin required for a particular Future is set by the
exchange on which the Future is traded and may be significantly modified from
time to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which a Fund entered into the Futures Contract will
be made on a daily basis as the price of the underlying security, currency or
index fluctuates making the Futures more or less valuable, a process known as
marking-to-market.
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If a Fund were unable to liquidate a Future or an option on a Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Fund would continue to be
subject to market risk with respect to the position. In addition, except in the
case of purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or
currencies except that options on Futures Contracts give the purchaser the
right, in return for the premium paid, to assume a position in a Futures
Contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. Upon exercise of the option, the delivery of the Futures position by
the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's Futures margin account.
FORWARD CONTRACTS
A forward contract is an obligation, usually arranged with a commercial
bank or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. A Fund either
may accept or make delivery of the currency at the maturity of the forward
contract. A Fund may also, if its contra party agrees prior to maturity, enter
into a closing transaction involving the purchase or sale of an offsetting
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.
Each of the Funds may engage in forward currency transactions in
anticipation of, or to protect itself against, fluctuations in exchange rates. A
Fund may enter into forward contracts with respect to a specific purchase or
sale of a security, or with respect to its portfolio positions generally. When a
Fund purchases a security denominated in a foreign currency for settlement in
the near future, it may immediately purchase in the forward market the currency
needed to pay for and settle the purchase. By entering into a forward contract
with respect to the specific purchase or sale of a security denominated in a
foreign currency, the Fund can secure an exchange rate between the trade and
settlement dates for that purchase or sale transaction. This practice is
sometimes referred to as "transaction hedging." Position hedging is the purchase
or sale of foreign currency with respect to portfolio security positions
denominated or quoted in a foreign currency.
The cost to a Fund of engaging in forward contracts varies with factors
such as the currencies involved, the length of the contract period and the
market conditions then prevailing. Because forward contracts are usually entered
into on a principal basis, no fees or commissions are involved. The use of
forward contracts does not eliminate fluctuations in the prices of the
underlying securities a Fund owns or intends to acquire, but it does establish a
rate of exchange in advance. In addition, while forward contract sales limit the
risk of loss due to a decline in the value of the hedged currencies, they also
limit any potential gain that might result should the value of the currencies
increase.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Fund enters into Futures Contracts, options on
Futures Contracts and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for bona fide hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the total assets of the Fund, after taking into account unrealized
profits and unrealized losses on any contracts it has entered
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into. This guideline may be modified by the Board, without a shareholder vote.
This limitation does not limit the percentage of the Fund's assets at risk to
5%.
HEDGING AND OTHER INVESTMENT TECHNIQUES
The following discussion on hedging and other investment techniques
applies to AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT
FUND and AIM MUNICIPAL BOND FUND.
COVERED CALL OPTIONS
Each Fund may write call options, but only on a covered basis; that is,
the Fund will own the underlying security. The exercise price of a call option
may be below, equal to, or above the current market value of the underlying
security at the time the option is written. When a Fund writes a covered call
option, an amount equal to the premium received by the Fund is recorded as an
asset and an equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the last sale price, or in the
absence of a sale, the last offering price. If a written call option expires on
the stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or a loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and
the writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call option
owns or has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in return
for the premium paid by the purchaser of the option, a Fund has given up the
opportunity for capital appreciation above the exercise price should the market
price of the underlying security increase, but has retained the risk of loss
should the price of the underlying security decline. During the option period, a
Fund may be required at any time to deliver the underlying security against
payment of the exercise price. This obligation is terminated upon the expiration
of the option period or at such earlier time at which a Fund effects a closing
purchase transaction by purchasing (at a price which may be higher than was
received when the call option was written) a call option identical to the one
originally written.
FUTURES CONTRACTS
In cases of purchases of futures contracts, an amount of liquid assets,
equal to the cost of the futures contracts (less any related margin deposits),
will be segregated with a Fund's custodian to collateralize the position and
ensure that the use of such futures contracts is unleveraged. Unlike when a Fund
purchases or sells a security, no price is paid or received by a Fund upon the
purchase or sale of a futures contract. Initially, a Fund will be required to
deposit with its custodian for the account of the broker a stated amount, as
called for by the particular contract, of liquid assets. This amount is known as
"initial margin." The nature of initial margin in futures transactions is
different from that of margin in securities transactions in that futures
contract margin does not involve the borrowing of funds by the customer to
finance the transactions.
Rather, the initial margin is in the nature of a performance bond or
good faith deposit on the contract which is returned to the Fund upon
termination of the futures contract assuming all contractual obligations have
been satisfied. Subsequent payments, called "variation margin," to and from the
broker will be made on a daily basis as the price of the futures contract
fluctuates, making the long and short positions in the futures contract
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more or less valuable. This process is known as "marking-to-market." For
example, when a Fund has purchased a stock index futures contract and the price
of the underlying stock index has risen, that position will have increased in
value and the Fund will receive from the broker a variation margin payment with
respect to that increase in value. Conversely, where a Fund has purchased a
stock index futures contract and the price of the underlying stock index has
declined, that position would be less valuable and the Fund would be required to
make a variation margin payment to the broker. Variation margin payments would
be made in a similar fashion when a Fund has purchased an interest rate futures
contract. At any time prior to expiration of the futures contract, a Fund may
elect to close the position by taking an opposite position which will operate to
terminate the Fund's position in the futures contract. A final determination of
variation margin is then made, additional cash is required to be paid by or
released to the Fund and the Fund realizes a loss or a gain.
Interest Rate Futures Contracts - Each of the Funds may purchase and
sell interest rate futures contracts in order to hedge the value of their
respective portfolios against changes in market conditions. An interest rate
futures contract is an agreement between two parties to buy and sell a debt
security for a set price on a future date. Currently, there are futures
contracts based on long-term U.S. Treasury bonds, U.S. Treasury notes, U.S.
Treasury bills, Eurodollars and the Bond Buyer Municipal Bond Index.
Foreign Currency Futures Contracts - AIM HIGH YIELD FUND and AIM
INCOME FUND
Futures contracts may also be used to hedge the risk of changes in the
exchange rates of foreign currencies.
OPTIONS ON FUTURES CONTRACTS
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume an offsetting futures
position (a short position if the option is a call and a long position if the
option is a put) at a specified exercise price at any time during the period of
the option. Upon exercise of the option, the assumption of offsetting futures
positions by the writer and holder of the option will be accompanied by delivery
of the accumulated cash balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a put,
the exercise price of the option on the futures contract. If an option on a
futures contract is exercised on the last trading date prior to the expiration
date of the option, the settlement will be made entirely in cash equal to the
difference between the exercise price of the option and the closing price of the
futures contract on the expiration date.
A Fund may purchase and sell put and call options on futures contracts
in order to hedge the value of its portfolio against changes in market
conditions. Depending on the pricing of the option compared to either the price
of the futures contract upon which it is based or the price of the underlying
securities or currency, it may or may not be less risky than ownership of the
futures contract or underlying securities or currency.
RISKS AS TO FUTURES CONTRACTS AND RELATED OPTIONS
The use of futures contracts and related options as hedging devices
presents several risks. One risk arises because of the imperfect correlation
between movements in the price of hedging instruments and movements in the price
of the stock, debt securities or foreign currency which are the subject of the
hedge. If the price of a hedging instrument moves less than the price of the
stocks, debt securities or foreign currency which are the subject of the hedge,
the hedge will not be fully effective. If the price of a hedging instrument
moves more than the price of the stock, debt securities or foreign currency, a
Fund will experience either a loss or a gain on the hedging instrument which
will not be completely offset by movements in the price of the stock,
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debt securities or foreign currency which are the subject of the hedge. The use
of options on futures contracts involves the additional risk that changes in the
value of the underlying futures contract will not be fully reflected in the
value of the option.
Successful use of hedging instruments by a Fund is also subject to
AIM's ability to predict correctly movements in the direction of interest rates
or of foreign exchange rates (foreign currencies). Because of possible price
distortions in the futures and options markets, and because of the imperfect
correlation between movements in the prices of hedging instruments and the
investments being hedged, even a correct forecast by AIM of general market
trends may not result in a completely successful hedging transaction.
It is also possible that where a Fund has sold futures contracts to
hedge its portfolio against a decline in the market, the market may advance and
the value of stocks or debt securities held in a Fund's portfolio may decline.
If this occurred, a Fund would lose money on the futures contracts and also
experience a decline in the value of its portfolio securities. Similar risks
exist with respect to foreign currency hedges.
Positions in futures contracts or options may be closed out only on an
exchange on which such contracts are traded. Although the Funds intend to
purchase or sell futures contracts or purchase options only on exchanges or
boards of trade where there appears to be an active market, there is no
assurance that a liquid market on an exchange or board of trade will exist for
any particular contract or at any particular time. If there is not a liquid
market at a particular time, it may not be possible to close a futures position
or purchase an option at such time. In the event of adverse price movements
under those circumstances, the Fund would continue to be required to segregate
additional liquid assets for payment of maintenance margin on its futures
positions. The extent to which the Fund may engage in futures contracts or
related options will be limited by Internal Revenue Code requirements for
qualification as a regulated investment company and the Funds' intent to
continue to qualify as such. The result of a hedging program cannot be foreseen
and may cause a Fund to suffer losses which it would not otherwise sustain.
FOREIGN EXCHANGE TRANSACTIONS: AIM INCOME FUND AND AIM HIGH YIELD FUND
Each Fund has authority to deal in foreign exchange between currencies
of the different countries in which it will invest either for the settlement of
transactions or as a hedge against possible variations in the foreign exchange
rates 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 Funds may purchase and sell options on futures contracts, forward
contracts or futures contracts which are denominated in a particular foreign
currency to hedge the risk of fluctuations in the value of another currency.
Each Fund's dealings in foreign exchange will be limited to hedging foreign
currency exposure and may involve either specific transactions or portfolio
positions. Transaction hedging is the purchase or sale of foreign currency with
respect to specific receivables or payables of the Fund accruing in connection
with the purchase or sale of its portfolio securities, the sale and redemption
of shares of the Fund, or the payment of dividends and distributions by the
Fund. Position hedging is the purchase or sale of foreign currency with respect
to portfolio security positions (or underlying portfolio security positions,
such as in an ADR) denominated or quoted in a foreign currency. The Funds will
not speculate in foreign exchange. No Fund will commit a larger percentage of
its total assets to foreign exchange hedges than the percentage of its total
assets which it could invest in foreign securities. Further information
concerning futures contracts and related options is set forth above.
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INVESTMENT RESTRICTIONS
For a discussion of the proposed changes to the investment
restrictions, see "Submission of Matters to Shareholders" in this Statement of
Additional Information.
Each Fund is subject to the following restrictions which may not be
changed without approval of the lesser of (i) 67% or more of the Fund's shares
present at a meeting if the holders of more than 50% of the outstanding shares
are present in person or represented by proxy, or (ii) more than 50% of the
Fund's outstanding shares. Any investment restriction that involves a maximum or
minimum percentage of securities or assets shall not be considered to be
violated unless an excess over or a deficiency under the percentage occurs
immediately after, and is caused by, an acquisition or disposition of securities
or utilization of assets by the Fund.
AIM BALANCED FUND
The Fund may not:
1. With respect to 75% of its total assets, purchase the securities
of any issuer if such purchase would cause more than 5% of the value of
its total assets to be invested in the securities of such issuer
(except U.S. Government securities or securities issued by its agencies
and instrumentalities), and except that the Fund may purchase
securities of other investment companies to the extent permitted by
applicable law or exemptive order.
2. Concentrate 25% or more of its investments in a particular
industry.
3. Make short sales of securities or maintain a short position in
securities unless at all times when a short position is open, it owns
at least an equal amount of such securities or owns securities
comparable to or exchangeable for at least an equal amount of such
securities.
4. Purchase or sell commodity contracts, except that the Fund may,
as appropriate and consistent with its investment policies and other
investment restrictions, for hedging purposes, write, purchase or sell
options (including puts, calls and combinations thereof), write covered
call options, enter into futures contracts on securities, securities
indices and currencies, options on such futures contracts, forward
foreign currency exchange contracts, forward commitments and repurchase
agreements.
5. Purchase or sell real estate (except that this restriction does
not preclude investments in companies engaged in real estate activities
or in real estate investment trusts or in securities secured by real
estate).
6. Borrow money or pledge its assets except that the Fund may enter
into reverse repurchase agreements and except, as a temporary measure
for extraordinary or emergency purposes and not for investment
purposes, the Fund may borrow from banks (including the Fund's
custodian bank) amounts of up to 33-1/3% of the value of its total
assets (including the amount of such borrowings) less its liabilities
(excluding the amount of such borrowings) and may pledge amounts of up
to 33-1/3% of its total assets to secure such borrowings. The Fund will
not purchase securities while borrowings in an amount in excess of 5%
of its total assets are outstanding. The Fund may not issue senior
securities, except to the extent permitted by the 1940 Act, including
permitted borrowings.
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7. Make loans, except (a) through the purchase of a portion of an
issue of bonds or other obligations of types commonly offered publicly
and purchased by financial institutions, (b) through the purchase of
short-term obligations (maturing within a year), including repurchase
agreements, and (c) the Fund may lend its portfolio securities,
provided that the value of the securities loaned does not exceed
33-1/3% of the Fund's total assets.
AIM GLOBAL UTILITIES FUND
The Fund may not:
1. Purchase the securities of any issuer if such purchase would
cause more than 5% of the value of its assets to be invested in the
securities of such issuer, except that the Fund may purchase securities
of other investment companies to the extent permitted by applicable law
or exemptive order.
2. Purchase the securities of any issuer if such purchase would
cause more than 5% of the voting securities, or more than 10% of the
securities of any class of such issuer, to be held by the Fund, except
that the Fund may purchase securities of other investment companies to
the extent permitted by applicable law or exemptive order.
3. Make short sales of securities or purchase securities on margin,
but it may obtain such short-term credits as are necessary for the
clearance of purchases and sales of securities and may make margin
payments in connection with transactions in financial futures contracts
and options thereon.
4. Act as a securities underwriter.
5. Make loans, except (a) through the purchase of a portion of an
issue of bonds or other obligations of types commonly offered publicly
and purchased by financial institutions, and (b) through the purchase
of short-term obligations (maturing within a year), including
repurchase agreements, and (c) the Fund may lend its portfolio
securities, provided that the value of the securities loaned does not
exceed 33-1/3% of the Fund's total assets.
6. Borrow money or mortgage, pledge, or hypothecate its assets,
except that the Fund may enter into financial futures contracts, and
except that the Fund may borrow from banks to pay for redemptions and
for temporary purposes in an amount not exceeding one-third of the
value of its total assets (including the amount of such borrowings)
less its liabilities (excluding the amount of such borrowings) and may
secure such borrowings by pledging up to one-third of the value of its
total assets. For the purpose of this restriction, collateral
arrangements with respect to margin for a financial futures contract
are not deemed to be a pledge of assets. The Fund will not purchase
securities while borrowings in an amount in excess of 5% of its total
assets are outstanding.
7. Buy or sell commodities or commodity contracts, although the
Fund may purchase and sell financial futures contracts and options
thereon for hedging purposes.
8. Invest in real estate, although the Fund may purchase securities
secured by real estate or interests therein or issued by issuers which
invest in real estate.
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AIM HIGH YIELD FUND
The Fund may not:
1. Borrow money or issue senior securities or mortgage, pledge, or
hypothecate its assets, except that the Fund may enter into financial
futures contracts, and borrow from banks to pay for redemptions and for
temporary purposes in an amount not exceeding one-third of the value of
its total assets (including the amount of such borrowings) less its
liabilities (excluding the amount of such borrowings) and may secure
such borrowings by pledging up to one-third of the value of its total
assets. For the purpose of this restriction, collateral arrangements
with respect to margin for a financial futures contract are not deemed
to be a pledge of assets. Secured temporary borrowings may take the
form of reverse repurchase agreements, pursuant to which the Fund would
sell portfolio securities for cash and simultaneously agree to
repurchase them at a specified date for the same amount of cash plus an
interest component. The Fund will not purchase securities while
borrowings in excess of 5% of its total assets are outstanding.
2. Make short sales of securities or maintain short positions,
unless, at all times when a short position is open, the Fund owns at
least an equal amount of the securities sold short or owns securities
convertible into or exchangeable for at least an equal amount of such
securities sold short, without the payment of further consideration.
3. Purchase or sell real estate or interests therein, but the Fund
may purchase and sell (a) securities which are secured by real estate,
and (b) the securities of companies which invest or deal in real estate
or interests therein, including real estate investment trusts.
4. Act as a securities underwriter.
5. Purchase or sell commodities or commodity contracts, other than
financial futures contracts and options thereon.
6. With respect to 75% of the value of its total assets, invest
more than 5% of the market value of its total assets in the securities
of any one issuer, other than obligations of or guaranteed by the U.S.
Government or any of its agencies or instrumentalities, except that the
Fund may purchase securities of other investment companies to the
extent permitted by applicable law or exemptive order.
7. Concentrate 25% or more of the value of its total assets in the
securities of issuers which conduct their principal business activities
in the same industry. Gas, electric, water and telephone companies as
well as banks, credit institutions, and insurance companies will be
considered to be in separate industries.
8. Make loans, except that the Fund may lend its portfolio
securities provided that the value of the securities loaned does not
exceed 33-1/3% of its total assets, and except that the Fund may enter
into repurchase agreements.
9. Purchase securities on margin, except that the Fund may obtain
such short-term credits as may be necessary for the clearance of
purchases and sales of securities and may make margin payments in
connection with transactions in financial futures contracts and options
thereon.
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10. Invest in puts, calls, or any combinations thereof, except,
however, that the Fund may invest in financial futures contracts,
purchase and sell options on financial futures contracts, may acquire
and hold puts which relate to equity securities acquired by the Fund
when such puts are attached to or included in a unit with such equity
securities, and may sell covered call options.
AIM INCOME FUND
The Fund may not:
1. Purchase the securities of any issuer if such purchase would
cause more than 5% of the value of its assets to be invested in the
securities of such issuer (except U.S. Government securities, including
securities issued by its agencies and instrumentalities), and except
that the Fund may purchase securities of other investment companies to
the extent permitted by applicable law or exemptive order.
2. Purchase the securities of any issuer if such purchase would
cause more than 5% of the voting securities, or more than 10% of the
securities of any class of such issuer, to be held by the Fund, except
that the Fund may purchase securities of other investment companies to
the extent permitted by applicable law or exemptive order.
3. Concentrate 25% or more of its investments in a particular
industry.
4. Make short sales of securities or purchase securities on margin,
but it may obtain such short-term credits as are necessary for the
clearance of purchases and sales of securities and may make margin
payments in connection with transactions in financial futures contracts
and options thereon.
5. Act as a securities underwriter.
6. Make loans, except (a) through the purchase of a portion of an
issue of bonds or other obligations of types commonly offered publicly
and purchased by financial institutions, (b) through the purchase of
short-term obligations (maturing within a year), including repurchase
agreements, and (c) the Fund may lend its portfolio securities,
provided that the value of the securities loaned does not exceed
33-1/3% of the Fund's total assets.
7. Borrow, except that the Fund may enter into financial futures
contracts and that the right is reserved to borrow from banks, provided
that no borrowing may exceed one-third of the value of its total assets
(including the amount of such borrowings) less its liabilities
(excluding the amount of such borrowings) and may secure such
borrowings by pledging up to one-third of the value of its total
assets. (For the purposes of this restriction, collateral arrangements
with respect to margin for a financial futures contract are not deemed
to be a pledge of assets.) The Fund will not purchase securities while
borrowings in an amount in excess of 5% of its total assets are
outstanding.
8. Invest in puts, calls, straddles, spreads or any combination
thereof, except, however, that the Fund may purchase and sell options
on financial futures contracts and may sell covered call options.
9. Buy or sell commodities or commodity contracts, although the
Fund may purchase and sell financial futures contracts and options
thereon.
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10. Invest in real estate, although the Fund may purchase
securities secured by real estate or interests therein or issued by
issuers which invest in real estate.
11. Invest in securities with unlimited liability except for
assessability allowed by statutes with respect to wages.
12. Issue senior securities except to the extent permitted by the
1940 Act, including permitted borrowing.
AIM INTERMEDIATE GOVERNMENT FUND
The Fund may not:
1. Purchase the securities of any issuer if such purchase would
cause more than 5% of the value of its assets to be invested in the
securities of such issuer (except U.S. Government securities, including
securities issued by its agencies and instrumentalities, as described
under "Investment Objectives" in the Prospectus, and except that the
Fund may purchase securities of other investment companies to the
extent permitted by applicable law or exemptive order).
2. Purchase the securities of any issuer if such purchase would
cause more than 5% of the voting securities, or more than 10% of the
securities of any class of such issuer, to be held by the Fund (except
U.S. Government securities including securities issued by its agencies
and instrumentalities, as described under "Investment Objectives" in
the Prospectus), and except that the Fund may purchase securities of
other investment companies to the extent permitted by applicable law or
exemptive order.
3. Concentrate 25% or more of its investments in a particular
industry.
4. Make short sales of securities or purchase securities on margin,
but it may obtain such short-term credits as are necessary for the
clearance of purchases and sales of securities and may make margin
payments in connection with transactions in financial futures contracts
and options thereon.
5. Act as a securities underwriter.
6. Make loans, except (a) through the purchase of a portion of an
issue of bonds or other obligations of types commonly offered publicly
and purchased by financial institutions, (b) through the purchase of
short-term obligations (maturing within a year), including repurchase
agreements, and (c) the Fund may lend its portfolio securities provided
that the value of the securities loaned does not exceed 33-1/3% of the
Fund's total assets.
7. Borrow money or mortgage, pledge, or hypothecate its assets,
except that the Fund may enter into financial futures contracts, and
except that the Fund may borrow from banks to pay for redemptions and
for temporary purposes in an amount not exceeding one-third of the
value of its total assets (including the amount of such borrowings)
less its liabilities (excluding the amount of such borrowings) and may
secure such borrowings by pledging up to one-third of the value of its
total assets. For the purpose of this restriction, collateral
arrangements with respect to margin for a financial futures contract
are not deemed to be a pledge of assets. The Fund will not purchase
securities while borrowings in an amount in excess of 5% of its total
assets are outstanding.
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8. Invest in puts, calls, straddles, spreads or any combination
thereof, except, however, that the Fund may purchase and sell options
on financial futures contracts and may sell covered call options.
9. Buy or sell commodities or commodity contracts, although the
Fund may purchase and sell financial futures contracts and options
thereon.
10. Invest in real estate, although the Fund may purchase
securities secured by real estate or interests therein or issued by
issuers which invest in real estate.
AIM MONEY MARKET FUND
The Fund may not:
1. Purchase the securities of any issuer if such purchase would
cause more than 5% of the value of its assets to be invested in the
securities of such issuer, except (a) U.S. Government securities,
including securities issued by its agencies and instrumentalities, (b)
to the extent permitted by Rule 2a-7 under the 1940 Act, as amended
from time to time, and (c) that the Fund may purchase securities of
other investment companies to the extent permitted by applicable law or
exemptive order.
2. Concentrate 25% or more of its investments in a particular
industry, provided that this limitation does not apply to securities
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, and obligations of domestic banks.
3. Pledge, mortgage or hypothecate more than 33-1/3% of the total
assets of the Fund, except that reverse repurchase agreements and loans
of portfolio securities are not deemed to involve pledging, mortgaging
or hypothecating assets.
4. Purchase securities on margin or make short sales of securities,
except as is necessary for the clearance of purchases and sales of
securities.
5. Underwrite securities (except to the extent that the purchase of
securities either directly from the issuer or from an underwriter for
an issuer and the later disposition of such securities may be deemed an
underwriting).
6. Make loans, except it may purchase instruments and securities
permitted by the investment objectives and policies, it may invest in
reverse repurchase agreements, and it may loan portfolio securities in
an amount equal to one-third of its total assets.
7. Borrow money or issue senior securities (which term shall not
include delayed delivery and when-issued securities) except as a
temporary measure for extraordinary or emergency purposes and except
that the Fund may enter into reverse repurchase agreements in amounts,
inclusive of all borrowings, up to one-third of the value of the Fund's
total assets (including the amount of such borrowings) less its
liabilities (excluding the amount of such borrowings) at the time it
enters into such agreements. The Fund will not purchase portfolio
securities while borrowings in an amount in excess of 5% of its total
assets are outstanding.
8. Invest in puts or calls or engage in arbitrage transactions.
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9. Buy or sell commodities or commodity futures contracts.
10. Invest in real estate, although the Fund may purchase
securities secured by real estate or interests therein or issued by
issuers which invest in real estate or interests therein.
AIM MUNICIPAL BOND FUND
The Fund may not:
1. Invest less than 65% of its total assets in securities other
than municipal bonds.
2. Purchase the securities of any issuer if such purchase would
cause more than 5% of the value of its assets to be invested in the
securities of such issuer (except U.S. Government securities, including
securities issued by its agencies and instrumentalities, and except
that the Fund may purchase securities of other investment companies to
the extent permitted by applicable law or exemptive order). For the
purpose of this restriction and that set forth in restriction 3, the
Fund will regard each state and each political subdivision, agency or
instrumentality of such state and each multi-state agency of which such
state is a member as a separate issuer.
3. Purchase the securities of any issuer if such purchase would
cause more than 10% of the debt obligations of such issuer to be held
by the Fund.
4. Purchase securities if such purchase would cause, at the time of
purchase, 25% or more of total Fund assets to be invested in any one
industry. Investment in municipal bonds and obligations issued or
guaranteed by the U.S. Government, its agencies, authorities or
instrumentalities does not involve investment in any industry.
5. Make short sales of securities or purchase securities on margin,
but it may obtain such short-term credits as are necessary for the
clearance of purchases and sales of securities and may make margin
payments in connection with transactions in financial futures contracts
and options thereon and municipal bond index futures contracts.
6. Act as a securities underwriter except to the extent that it may
be deemed to be an underwriter under the Securities Act of 1933 when
purchasing or selling a portfolio security.
7. Make loans, except that it may purchase debt instruments,
including repurchase agreements maturing within seven days, as
permitted by the investment objective and policies of the Fund, and
except that it may lend its portfolio securities provided that the
value of the securities loaned does not exceed 33-1/3% of its total
assets.
8. Borrow, except that the Fund may enter into financial futures
contracts and municipal bond index futures contracts and that the right
is reserved to borrow from banks, provided that no borrowing may exceed
one-third of the value of its total assets (including the amount of
such borrowings) less its liabilities (excluding the amount of such
borrowings) and may secure such borrowings by pledging up to one-third
of the value of its total assets. (For the purposes of this
restriction, collateral arrangements with respect to margin for a
financial or a municipal bond index futures contract are not deemed to
be a pledge of assets.) The Fund will not purchase securities while
borrowings in excess of 5% of its total assets are outstanding.
43
<PAGE> 209
9. Invest in puts, calls, straddles, spreads or any combination
thereof, except, however, that the Fund may purchase and sell options
on financial futures contracts and may sell covered call options.
10. Buy or sell commodities or commodity contracts, although the
Fund may purchase and sell financial futures contracts and options
thereon and municipal bond index futures contracts.
11. Invest in real estate, although the Fund may purchase
securities secured by real estate or interests therein or issued by
issuers which invest in real estate.
AIM SELECT GROWTH FUND
The Fund may not:
1. Purchase the securities of any issuer if such purchase would
cause more than 5% of the value of its assets to be invested in the
securities of such issuer (except U.S. Government securities, including
securities issued by its agencies and instrumentalities), and except
that the Fund may purchase securities of other investment companies to
the extent permitted by applicable law or exemptive order.
2. Purchase the securities of any issuer if such purchase would
cause more than 5% of the voting securities, or more than 10% of the
securities of any class of such issuer, to be held by the Fund, except
that the Fund may purchase securities of other investment companies to
the extent permitted by applicable law or exemptive order.
3. Concentrate 25% or more of its investments in a particular
industry.
4. Make short sales of securities or purchase securities on margin,
but it may obtain such short-term credits as are necessary for the
clearance of purchases and sales of securities and may make margin
payments in connection with transactions in stock index futures
contracts and options thereon.
5. Act as a securities underwriter.
6. Make loans, except (a) through the purchase of a portion of an
issue of bonds or other obligations of types commonly offered publicly
and purchased by financial institutions, (b) through the purchase of
short-term obligations (maturing within a year), including repurchase
agreements, and (c) the Fund may lend its portfolio securities,
provided that the value of the securities loaned does not exceed
33-1/3% of the Fund's total assets.
7. Borrow, except that the Fund may enter into stock index futures
contracts and that the right is reserved to borrow from banks, provided
that no borrowing may exceed one-third of the value of its total assets
(including the amount of such borrowings) less its liabilities
(excluding the amount of such borrowings) and may secure such
borrowings by pledging up to one-third of the value of its total
assets. For the purposes of this restriction, collateral arrangements
with respect to margin for a stock index futures contract are not
deemed to be a pledge of assets. The Fund will not purchase securities
while borrowings in excess of 5% of its total assets are outstanding.
.
8. Buy or sell commodities or commodity contracts, although the
Fund may invest in financial futures and options thereon for hedging
purposes.
44
<PAGE> 210
9. Invest in real estate, although the Fund may purchase securities
secured by real estate or interests therein or issued by issuers which
invest in real estate.
AIM VALUE FUND
The Fund may not:
1. Purchase the securities of any issuer if such purchase would
cause more than 5% of the value of its assets to be invested in the
securities of such issuer (except U.S. Government securities, including
securities issued by its agencies and instrumentalities, and except
that the Fund may purchase securities of other investment companies to
the extent permitted by applicable law or exemptive order).
2. Purchase the securities of any issuer if such purchase would
cause more than 5% of the voting securities, or more than 10% of the
securities of any class of such issuer, to be held by the Fund, except
that the Fund may purchase securities of other investment companies to
the extent permitted by applicable law or exemptive order.
3. Concentrate 25% or more of its investments in a particular
industry.
4. Make short sales of securities or purchase securities on margin,
but it may obtain such short-term credits as are necessary for the
clearance of purchases and sales of securities and may make margin
payments in connection with transactions in stock index futures
contracts and options thereon.
5. Act as a securities underwriter.
6. Make loans, except (a) through the purchase of a portion of an
issue of bonds or other obligations of types commonly offered publicly
and purchased by financial institutions, (b) through the purchase of
short-term obligations (maturing within a year), including repurchase
agreements, and (c) the Fund may lend its portfolio securities,
provided that the value of the securities loaned does not exceed
33-1/3% of the Fund's total assets.
7. Borrow, except that the Fund may enter into stock index futures
contracts and that the right is reserved to borrow from banks, provided
that no borrowing may exceed one-third of the value of its total assets
(including the amount of such borrowings) less its liabilities
(excluding the amount of such borrowings) and may secure such
borrowings by pledging up to one-third of the value of its total
assets. (For the purposes of this restriction, collateral arrangements
with respect to margin for a stock index futures contract are not
deemed to be a pledge of assets.) The Fund will not purchase securities
while borrowings in an amount in excess of 5% of its total assets are
outstanding.
8. Buy or sell commodities or commodity contracts, although the
Fund may invest in financial futures and options thereon for hedging
purposes.
9. Invest in real estate, although the Fund may purchase securities
secured by real estate or interests therein or issued by issuers which
invest in real estate.
As a non-fundamental policy, none of the Funds will invest for the
purpose of influencing management or exercising control, except that a Fund may
purchase securities of other investment companies to the extent
45
<PAGE> 211
permitted by applicable law or exemptive order. As a non-fundamental policy, AIM
INTERMEDIATE GOVERNMENT FUND will maintain a dollar-weighted average portfolio
maturity of between three and ten years.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of March 1, 2000, the trustees and officers of the Trust as a group
owned less than 1% of all classes of outstanding shares of the Trust; except
that the trustees and officers as a group owned 3.20% of the outstanding
Class A shares of AIM BALANCED FUND.
To the best knowledge of the Trust, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of the Trust's
equity securities as of March 1, 2000, and the percentage of the outstanding
shares held by such holders are set forth below:
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address of Owned of and
Beneficial Owner Record* Beneficially
- ---------------- -------- ------------
<S> <C> <C>
AIM BALANCED FUND -
Class A shares
Merrill Lynch Pierce Fenner & Smith 10.95% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Class B shares
Merrill Lynch Pierce Fenner & Smith 10.80% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
</TABLE>
- ------------------------
46
<PAGE> 212
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address of Owned of and
Beneficial Owner Record* Beneficially
- ---------------- -------- ------------
<S> <C> <C>
Class C shares
Merrill Lynch Pierce Fenner & Smith 25.29% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
AIM GLOBAL UTILITIES FUND -
Class B shares
Merrill Lynch Pierce Fenner & Smith 8.29% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Class C shares
Merrill Lynch Pierce Fenner & Smith 5.15% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
AIM HIGH YIELD FUND -
Class A shares
Merrill Lynch Pierce Fenner & Smith 5.76% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
</TABLE>
- -----------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
47
<PAGE> 213
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address of Owned of and
Beneficial Owner Record* Beneficially
- ---------------- -------- ------------
<S> <C> <C>
Class B shares
Merrill Lynch Pierce Fenner & Smith 13.60% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Class C shares
Merrill Lynch Pierce Fenner & Smith 17.35% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Banc One Securities Corp FBO 10.60% - 0 -
The One Investment Solution
733 Greencrest Drive
Westerville, OH 43081-0000
AIM INCOME FUND -
Class B shares
Merrill Lynch Pierce Fenner & Smith 8.65% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
</TABLE>
- --------------------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
48
<PAGE> 214
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address of Owned of and
Beneficial Owner Record* Beneficially
- ---------------- -------- ------------
<S> <C> <C>
Class C shares
Merrill Lynch Pierce Fenner & Smith 13.27% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
AIM INTERMEDIATE GOVERNMENT FUND -
Class A shares
Merrill Lynch Pierce Fenner & Smith 7.69% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Class B shares
Merrill Lynch Pierce Fenner & Smith 19.93% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Class C shares
Merrill Lynch Pierce Fenner & Smith 21.05% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
</TABLE>
- ---------------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
49
<PAGE> 215
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address of Owned of and
Beneficial Owner Record* Beneficially
- ---------------- -------- ------------
<S> <C> <C>
AIM MONEY MARKET FUND
AIM Cash Reserve Shares
A I M Advisors, Inc. 6.46% - 0 -
11 Greenway Plaza
Suite 100
Attn: David Hessel
Houston, TX 77046
AIM MUNICIPAL BOND FUND -
Class B shares
Merrill Lynch Pierce Fenner & Smith 11.84% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Class C shares
Merrill Lynch Pierce Fenner & Smith 23.50% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
AIM SELECT GROWTH FUND -
Class B shares
Merrill Lynch Pierce Fenner & Smith 15.64% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
</TABLE>
- -------------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially
50
<PAGE> 216
<TABLE>
<CAPTION>
Percent
Owned of
Percent Record
Name and Address of Owned of and
Beneficial Owner Record* Beneficially
- ---------------- -------- ------------
<S> <C> <C>
Class C shares
Merrill Lynch Pierce Fenner & Smith 14.63% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
AIM VALUE FUND -
Class A shares
Merrill Lynch Pierce Fenner & Smith 11.21% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Class B shares
Merrill Lynch Pierce Fenner & Smith 14.37% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Class C shares
Merrill Lynch Pierce Fenner & Smith 27.00% - 0 -
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
</TABLE>
- ----------------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially
51
<PAGE> 217
MANAGEMENT
The overall management of the business and affairs of the Funds and the
Trust is vested in the Board of Trustees. The Board of Trustees approves all
significant agreements between the Trust, on behalf of one or more of the Funds,
and persons or companies furnishing services to the Funds. The day-to-day
operations of each Fund are delegated to the officers of the Trust and to AIM,
subject always to the objective(s) and policies of the applicable Fund and to
the general supervision of the Board of Trustees. Certain trustees and officers
of the Trust are affiliated with AIM and A I M Management Group Inc. ("AIM
Management"), the parent corporation of AIM.
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations
during at least 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, Texas 77046.
<TABLE>
<CAPTION>
==========================================================================================================================
POSITIONS
NAME, ADDRESS AND AGE HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST
REGISTRANT THE PAST 5 YEARS
==========================================================================================================================
<S> <C> <C>
*CHARLES T. BAUER (81) Trustee and Director and Chairman , A I M Management Group Inc.,
Chairman 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 Executive Vice
Chairman and Director, AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (55) 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 (75) Trustee Formerly, Director, Cortland Trust Inc. (investment
Six Blythewood Road company), CF & I Steel Corp., Monumental Life Insurance
Baltimore, MD 21210 Company and Monumental General Insurance Company;
and Chairman of the Board of Equitable Bancorporation.
- --------------------------------------------------------------------------------------------------------------------------
EDWARD K. DUNN, JR. (64) Trustee Chairman of the Board of Directors, Mercantile Mortgage
2 Hopkins Plaza Corp. Formerly, Vice Chairman of the Board of Directors,
8th Floor, Suite 805 President and Chief Operating Officer, Mercantile-Safe
Baltimore, MD 21201 Deposit & Trust Co.; and President, Mercantile
Bankshares.
- --------------------------------------------------------------------------------------------------------------------------
JACK FIELDS (48) Trustee Chief Executive Officer, Texana Global, Inc. (foreign
Jetero Plaza, Suite E trading company) and Twenty First Century Group, Inc.
8810 Will Clayton Parkway (governmental affairs company). Formerly, Member of
Humble, TX 77338 the U.S. House of Representatives.
==========================================================================================================================
</TABLE>
- -------------------
* A trustee who is an "interested person" of the Trust and A I M Advisors,
Inc. as defined in the 1940 Act.
52
<PAGE> 218
<TABLE>
<CAPTION>
==========================================================================================================================
POSITIONS
NAME, ADDRESS AND AGE HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST
REGISTRANT THE PAST 5 YEARS
==========================================================================================================================
<S> <C> <C>
**CARL FRISCHLING (63) Trustee Partner, Kramer Levin Naftalis & Frankel LLP (law firm).
919 Third Avenue
New York, NY 10022
- --------------------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (53) Trustee and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and President,
A I M Advisors, Inc.; Director and Senior Vice President,
A I M Capital Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc. and Fund Management
Company; and Director and Chief Executive Officer,
Managed Products, AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------------
PREMA MATHAI-DAVIS (49) Trustee Chief Executive Officer, YWCA of the U.S.A.
350 Fifth Avenue, Suite 301
New York, NY 10118
- --------------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (57) Trustee Partner, Pennock & Cooper (law firm).
6363 Woodway, Suite 825
Houston, TX 77057
- --------------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (60) Trustee Executive Vice President, Development and Operations,
The Williams Tower Hines Interests Limited Partnership (real
50th Floor estate development).
2800 Post Oak Blvd.
Houston, TX 77056
- --------------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (52) Senior Vice Director and President, A I M Capital Management,
President 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.
- --------------------------------------------------------------------------------------------------------------------------
CAROL F. RELIHAN (45) Senior Vice Director, Senior Vice President, General Counsel and
President Secretary, A I M Advisors, Inc.; Senior Vice President,
and Secretary General Counsel and Secretary, A I M Management
Group Inc.; Director, Vice President and General Counsel,
Fund Management Company; Vice President and General
Counsel, A I M Fund Services, Inc.; and Vice President,
A I M Capital Management, Inc. and A I M Distributors,
Inc.
- --------------------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (41) Vice President Vice President and Fund Controller, A I M Advisors, Inc.;
and Treasurer and Assistant Vice President and Assistant Treasurer,
Fund Management Company.
==========================================================================================================================
</TABLE>
- -------------------
** A trustee who is an "interested person" of the Trust as defined in the
1940 Act.
53
<PAGE> 219
<TABLE>
<CAPTION>
==========================================================================================================================
POSITIONS
NAME, ADDRESS AND AGE HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST
REGISTRANT THE PAST 5 YEARS
==========================================================================================================================
<S> <C> <C>
ROBERT G. ALLEY (51) Vice President Senior Vice President, A I M Capital Management, Inc.;
and Vice President, A I M Advisors, Inc.
- --------------------------------------------------------------------------------------------------------------------------
STUART W. COCO (44) Vice President Senior Vice President, A I M Capital Management, Inc.;
and Vice President, A I M Advisors, Inc.
- --------------------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (56) 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.
- --------------------------------------------------------------------------------------------------------------------------
KAREN DUNN KELLEY (39) Vice President Senior Vice President, A I M Capital Management, Inc.;
and Vice President, A I M Advisors, Inc.
- --------------------------------------------------------------------------------------------------------------------------
EDGAR M. LARSEN (59) Vice President Vice President, A I M Capital Management, Inc.
==========================================================================================================================
</TABLE>
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
(Chairman), Fields, Frischling, Pennock and Sklar and Dr. Mathai-Davis. The
Audit Committee is responsible for:
o considering management's recommendations of independent
accountants for each Fund and evaluating such accountants'
performance, costs and financial stability;
o with AIM, reviewing and coordinating audit plans prepared by
the Funds' independent accountants and management's internal
audit staff; and
o reviewing financial statements contained in periodic reports
to shareholders with the Funds' independent accountants and
management.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly, Dunn, Fields, Frischling, Pennock and Sklar (Chairman) and Dr.
Mathai-Davis. The Investments Committee is responsible for:
o overseeing AIM's investment-related compliance systems and
procedures to ensure their continued adequacy; and
o considering and acting, on an interim basis between meetings
of the full Board, on investment-related matters requiring
Board consideration, including dividends and distributions,
brokerage policies and pricing matters.
The members of the Nominating and Compensation Committee are Messrs.
Crockett (Chairman), Daly, Dunn, Fields, Pennock and Sklar and Dr. Mathai-Davis.
The Nominating and Compensation Committee is responsible for:
54
<PAGE> 220
o considering and nominating individuals to stand for election
as dis-interested trustees as long as the trust maintains a
distribution plan pursuant to Rule 12b-1 under the 1940 Act;
o reviewing from time to time the compensation payable to the
dis-interested trustees; and
o making recommendations to the Board regarding matters related
to compensation, including deferred compensation plans and
retirement plans for the dis-interested trustees.
The Nominating and Compensation Committee will consider nominees
recommended by a shareholder to serve as trustees, provided (i) that such person
is a shareholder of record at the time he or she submits such names and is
entitled to vote at the meeting of shareholders at which trustees will be
elected, and (ii) that the Nominating and Compensation Committee or the Board,
as applicable, shall make the final determination of persons to be nominated.
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 AIM. All of the
Trust's executive officers hold similar offices with some or all of the other
investment companies managed or advised by AIM.
Remuneration of Trustees
Each trustee is reimbursed for expenses incurred in connection with
each meeting of the Board of Trustees or any committee thereof. 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.
55
<PAGE> 221
Set forth below is information regarding compensation paid or accrued
for each trustee of the Trust during the year ended December 31, 1999:
<TABLE>
<CAPTION>
===================================================================================================
RETIREMENT
AGGREGATE BENEFITS TOTAL
COMPENSATION ACCRUED COMPENSATION
FROM THE BY ALL FROM ALL AIM
TRUSTEE TRUST(1) AIM FUNDS(2) FUNDS(3)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Charles T. Bauer $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------
Bruce L. Crockett 23,116 37,485 103,500
- ---------------------------------------------------------------------------------------------------
Owen Daly II 23,116 122,898 103,500
- ---------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. 21,954 55,565 103,500
- ---------------------------------------------------------------------------------------------------
Jack Fields 22,660 15,826 101,500
- ---------------------------------------------------------------------------------------------------
Carl Frischling(4) 23,116 97,791 103,500
- ---------------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- ---------------------------------------------------------------------------------------------------
Prema Mathai-Davis 21,474 11,870 101,500
- ---------------------------------------------------------------------------------------------------
Lewis F. Pennock 23,116 45,766 103,500
- ---------------------------------------------------------------------------------------------------
Ian W. Robinson(5) 5,618 94,442 25,000
- ---------------------------------------------------------------------------------------------------
Louis S. Sklar 22,664 90,232 101,500
===================================================================================================
</TABLE>
- ---------------------
(1) The total amount of compensation deferred by all trustees of the Trust
during the fiscal year ended December 31, 1999, including amounts earned
thereon, was $176,057.
(2) During the fiscal year ended December 31, 1999, the total amount of expenses
allocated to the Trust in respect of such retirement benefits was $54,659. Data
reflect compensation estimated for the calendar year ended December 31, 1999.
(3) Each trustee serves as a director or trustee of a total of 12 registered
investment companies advised by AIM. Data reflects total compensation for the
calendar year ended December 31, 1999.
(4) During the fiscal year ended December 31, 1999, the Trust paid $93,776 in
legal fees to Mr. Frischling's law firm, Kramer Levin Naftalis & Frankel LLP,
for services rendered to the dis-interested trustees of the Trust.
(5) Mr. Robinson was a trustee until March 12, 1999, when he retired.
56
<PAGE> 222
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, AIM Management 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 a maximum of 75% of the annual 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) and based on 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 all benefits under the Plan, the trustee's surviving
spouse (if any) shall receive a quarterly survivor's benefit equal to 50% of the
amount payable to the deceased trustee, for no more than ten years beginning the
first day of the calendar quarter following the date of the trustee's death.
Payments under the Plan are not secured or funded by any Applicable AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible trustee upon retirement assuming the retainer amount
reflected below and various years of service. The estimated credited years of
service for Messrs. Crockett, Daly, Dunn, Fields, Frischling, Pennock, Robinson
and Sklar and Dr. Mathai-Davis are 13, 13, 2, 3, 23, 18, 11, 10, and 1 years,
respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
===========================================
Number of Years Annual Retirement
of Service With Compensation
Applicable AIM Paid By All
Funds Applicable
AIM Funds
===========================================
10 $67,500
-------------------------------------------
9 $60,750
-------------------------------------------
8 $54,000
-------------------------------------------
7 $47,250
-------------------------------------------
6 $40,500
-------------------------------------------
5 $33,750
==========================================
Deferred Compensation Agreements
Messrs. Daly, Dunn, Fields, Frischling, Sklar and Dr. Mathai-Davis (for
purposes of this paragraph only, the "deferring trustees") have each executed a
Deferred Compensation Agreement (collectively, the "Compensation 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.
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<PAGE> 223
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, generally
in 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 or her deferral account, the balance of the deferral account will be
distributed to his or her designated beneficiary in a single lump sum payment as
soon as practicable after such deferring trustee's death. The Compensation
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 OTHER SERVICES
AIM was organized in 1976, and along with its subsidiaries, manages or
advises over 120 investment portfolios encompassing a broad range of investment
objectives. The address of AIM is 11 Greenway Plaza, Suite 100, Houston, Texas
77046. AIM is a direct, 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. AIM is the sole shareholder of the Funds'
principal underwriter, A I M Distributors, Inc. ("AIM Distributors"). AIM
Management is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire
Square, London, EC2M 4YR, England. AMVESCAP PLC and its subsidiaries are an
independent investment management group engaged in institutional investment
management and retail mutual fund businesses in the United States, Europe and
the Pacific Region. Certain of the directors and officers of AIM are also
executive officers of the Trust and their affiliations are shown under
"Management" herein.
AIM and the Trust have adopted a Code of Ethics which requires
investment personnel and certain other employees (a) to pre-clear all 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, unless the security qualifies for a de minimis exemption for
which the trade would be allowed if the issuer of the security has a market
capitalization of $2 billion or more and such a request can only be granted once
every thirty days for no more than 2,000 shares, and (iii) transactions
involving securities being considered for investment by an AIM Fund, unless the
security qualifies for the de minimis exemption, as previously explained, for
which the personal security trade would be allowed even if the security is 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 AIM
employees who are registered with the NASD from purchasing securities in an
initial public offering. Personal trading reports are reviewed periodically by
AIM, and the Board of Trustees reviews quarterly and annual reports (including
information on any substantial violations of the Code of Ethics). Sanctions for
violations of the Code of Ethics may include censure, monetary penalties,
suspension or termination of employment.
The Trust, on behalf of each Fund, has entered into a Master Investment
Advisory Agreement and a Master Administrative Services Agreement with AIM. The
Master Investment Advisory Agreement will continue from year to year only if
such continuance is specifically approved at least annually by the Trust's Board
of Trustees and by the affirmative vote of a majority of the trustees who are
not parties to the agreement or "interested persons" of any such party by votes
cast in person at a meeting called for such purpose. The agreement provides that
either party may terminate such agreement on 60 days' written notice without
penalty. The agreement terminates automatically in the event of its assignment.
Under the terms of the Master Investment Advisory Agreement, AIM
supervises all aspects of the Funds' operations and provides investment advisory
services to the Funds. AIM obtains and evaluates economic,
58
<PAGE> 224
statistical and financial information to formulate and implement investment
programs for the Funds. AIM will not be liable to the Funds or their
shareholders except in the case of AIM's willful misfeasance, bad faith, gross
negligence or reckless disregard of duty.
Pursuant to the Master Investment Advisory Agreement, AIM receives a
fee from each of AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND and AIM
MUNICIPAL BOND FUND calculated at the following annual rates, based on the
average daily net assets of the Fund during the year:
NET ASSETS ANNUAL RATE
---------- -----------
First $200 million 0.50%
Next $300 million 0.40%
Next $500 million 0.35%
Amount over $1 billion 0.30%
Pursuant to the Master Investment Advisory Agreement, AIM receives a fee
from AIM MONEY MARKET FUND calculated at the following annual rates, based on
the average daily net assets of the Fund during the year:
NET ASSETS ANNUAL RATE
---------- -----------
First $1 billion 0.55%
Amount over $1 billion 0.50%
Pursuant to the Master Investment Advisory Agreement, AIM receives a fee
from AIM BALANCED FUND calculated at the following annual rates, based on the
average daily net assets of the Fund during the year:
NET ASSETS ANNUAL RATE
---------- -----------
First $150 million 0.75%
Amount over $150 million 0.50%
Pursuant to the Master Investment Advisory Agreement, AIM receives a fee
from AIM HIGH YIELD FUND calculated at the following annual rates, based on the
average daily net assets of the Fund during the year:
NET ASSETS ANNUAL RATE
---------- -----------
First $200 million 0.625%
Next $300 million 0.550%
Next $500 million 0.500%
Amount over $1 billion 0.450%
Pursuant to the Master Investment Advisory Agreement, AIM receives a fee
from AIM SELECT GROWTH FUND and AIM VALUE FUND calculated at the following
annual rates, based on the average daily net assets of the Fund during the year:
59
<PAGE> 225
NET ASSETS ANNUAL RATE
---------- -----------
First $150 million 0.80%
Amount over $150 million 0.625%
Pursuant to the Master Investment Advisory Agreement, AIM
receives a fee from AIM GLOBAL UTILITIES FUND calculated at the following annual
rates, based on the average daily net assets of the Fund during the year:
NET ASSETS ANNUAL RATE
---------- -----------
First $200 million 0.60%
Next $300 million 0.50%
Next $500 million 0.40%
Amount over $1 billion 0.30%
The Master Investment Advisory Agreement provides that if, for any
fiscal year, the total of all ordinary business expenses of a Fund, including
all investment advisory fees, but excluding brokerage commissions and fees,
taxes, interest and extraordinary expenses, such as litigation costs, exceed the
applicable expense limitations imposed by state securities regulations in any
state in which the Fund's shares are qualified for sale, as such limitations may
be raised or lowered from time to time, the aggregate of all such investment
advisory fees paid by such Fund shall be reduced by the amount of such excess.
The amount of any such reduction to be borne by AIM shall be deducted from the
monthly investment advisory fee otherwise payable to AIM during such fiscal
year. If required pursuant to such state securities regulations, AIM will
reimburse the Fund no later than the last day of the first month of the next
succeeding fiscal year, for any such annual operating expenses (after reduction
of all investment advisory fees in excess of such limitation).
AIM may from time to time waive or reduce its fee. Voluntary fee
waivers or reductions may be rescinded at any time without further notice to
investors. During periods of voluntary fee waivers or reductions, AIM will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions set forth in the Fee Table in a
Prospectus may not be terminated or amended to the Funds' detriment during the
period stated in the agreement between AIM and the Fund.
AIM has contractually agreed to waive a portion of its advisory fees
payable by AIM VALUE FUND, so that the effective fee schedule is as follows:
0.80% of the first $150 million of the Fund's average daily net assets, plus
0.625% of the Fund's average daily net assets in excess of $150 million to and
including $2 billion, plus 0.60% of the Fund's average daily net assets in
excess of $2 billion. During the year ended December 31, 1999, AIM VALUE FUND
waived 0.02% in advisory fees.
60
<PAGE> 226
Each Fund paid to AIM the following management fees net of any expense
limitations and fee waivers for the years ended December 31, 1999, 1998 and
1997:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
AIM Balanced Fund.............................. $ 13,624,208 $ 9,043,320 $ 4,789,939
AIM Global Utilities Fund...................... 1,802,726 1,652,662 1,440,692
AIM High Yield Fund............................ 16,396,698 17,600,312 13,632,090
AIM Income Fund................................ 2,785,338 2,375,487 1,801,746
AIM Intermediate Government Fund............... 2,310,621 1,611,515 1,174,166
AIM Money Market Fund.......................... 7,448,373 5,891,106 4,586,148
AIM Municipal Bond Fund........................ 1,830,490 1,738,038 1,532,157
AIM Select Growth Fund......................... 5,507,389 4,362,261 3,901,342
AIM Value Fund................................. $136,059,101 $94,937,000 $72,810,450
</TABLE>
For the fiscal years ended December 31, 1999, 1998 and 1997, AIM waived
advisory fees for each Fund as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
AIM Balanced Fund.............................. $ -0- -0- -0-
AIM Global Utilities Fund...................... -0- -0- -0-
AIM High Yield Fund............................ -0- -0- -0-
AIM Income Fund................................ -0- -0- -0-
AIM Intermediate Government Fund............... -0- -0- -0-
AIM Money Market Fund.......................... -0- -0- -0-
AIM Municipal Bond Fund........................ -0- -0- -0-
AIM Select Growth Fund......................... -0- -0- -0-
AIM Value Fund................................. $5,137,356 $3,423,939 $2,501,999
</TABLE>
For the fiscal years ended December 31, 1999, 1998 and 1997, AIM did not
reimburse expenses of any of the Funds.
The Trust pays all expenses not specifically assumed by AIM or AIM
Distributors including compensation and expenses of trustees who are not
directors, officers or employees of AIM, AIM Distributors or any other
affiliates of AIM Management; registration, filing and other fees in connection
with filings with regulatory authorities; the fees and expenses of independent
accountants; costs of printing and mailing registration statements,
prospectuses, proxy statements, and annual and periodic reports to shareholders;
custodian and transfer agent fees; brokerage commissions and securities
transactions costs incurred by the Funds; taxes and corporate fees; legal fees
incurred in connection with the affairs of the Funds; and expenses of meetings
of shareholders and trustees.
AIM, at its own expense, furnishes to the Trust office space and
facilities. AIM furnishes to the Trust all personnel for managing the affairs of
the Trust and each of its series of shares and is reimbursed under the Master
Administrative Services Agreement for the services of a principal financial
officer of the Trust and her staff.
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<PAGE> 227
The Master Administrative Services Agreement between the Trust and AIM provides
that AIM may perform or arrange for the provision of certain accounting, and
other administrative services to each Fund which are not required to be
performed by AIM under the Master Investment Advisory Agreement. The Master
Administrative Services Agreement will continue from year to year only if such
continuance is specifically approved at least annually by the Trust's Board of
Trustees, including the "dis-interested" trustees, by votes cast in person at a
meeting called for such purpose.
The Funds paid AIM the following amounts, which represented the
indicated annualized percentage of average net assets for such period, as
reimbursement of administrative services costs for the years ended December 31,
1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
AVERAGE AVERAGE AVERAGE
AMOUNT PAID NET ASSETS AMOUNT PAID NET ASSETS AMOUNT PAID NET ASSETS
----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
AIM Balanced Fund................ $158,046 0.006% $ 104,952 0.006% $ 87,375 .01%
AIM Global Utilities Fund........ 88,999 0.03% 85,383 0.03% 77,375 .03%
AIM High Yield Fund.............. 177,468 0.005% 135,537 0.004% 111,767 .004%
AIM Income Fund.................. 111,839 0.02% 87,349 0.02% 81,464 .02%
AIM Intermediate Government Fund. 97,900 0.02% 80,271 0.02% 70,736 .03%
AIM Money Market Fund............ 118,024 0.01% 71,394 0.007% 68,947 .01%
AIM Municipal Bond Fund.......... 91,647 0.02% 73,917 0.02% 70,780 .02%
AIM Select Growth Fund........... 110,205 0.01% 78,567 0.01% 74,201 .01%
AIM Value Fund................... 631,457 0.003% 323,939 0.002% 225,784 .002%
</TABLE>
In addition, the Transfer Agency and Service Agreement between the
Trust and A I M Fund Services, Inc. ("AFS"), a registered transfer agent and
wholly-owned subsidiary of AIM, provides that AFS will perform certain
shareholder services for the Funds 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 Funds; maintain shareholder accounts and provide
shareholders with information regarding the Funds and their accounts.
THE DISTRIBUTION PLANS
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 (other
than AIM MONEY MARKET FUND) and Class C shares of the Funds and the AIM Cash
Reserve Shares of AIM MONEY MARKET FUND (the "Class A and C Plan"). Such plan
provides that the Class A shares and AIM Cash Reserve Shares pay 0.25% per annum
of their average daily net assets as compensation to AIM Distributors for the
purpose of financing any activity which is primarily intended to result in the
sale of the Class A shares and AIM Cash Reserve Shares. Under the Class A and C
Plan, Class C shares of the Funds pay compensation to AIM Distributors at an
annual rate of 1.00% per annum of the average daily net assets attributable to
Class C shares for the purpose of financing any activity which is primarily
intended to result in the sale of Class C shares. The Class A and C Plan is
designed to compensate AIM Distributors, on a quarterly basis, for certain
promotional and other sales-related costs, and to implement a dealer incentive
program which provides for periodic payments to selected dealers who furnish
continuing personal shareholder services to their customers who purchase and own
Class A or Class C shares of a Fund. Payments can also be directed by AIM
Distributors to selected institutions who have entered into service agreements
with respect to Class A and Class C shares (or AIM Cash Reserve Shares) of each
Fund and who provide continuing personal services to their customers who own
such shares of a Fund. The service fees
62
<PAGE> 228
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.
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 a Fund,
in amounts of up to 0.25% of the average daily 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.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc.
THE CLASS B PLAN. The Trust has also adopted a Master Distribution Plan
pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of the
Funds (the "Class B Plan", and collectively with the Class A and C Plan, the
"Plans"). Under the Class B Plan, each 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, each 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. Any amounts not
paid as a service fee would constitute an asset-based sales charge. 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 prospectusesand 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.
BOTH PLANS. Pursuant to an incentive program, AIM Distributors may
enter into agreements ("Shareholder Service Agreements") with investment dealers
selected from time to time by AIM Distributors for the provision of distribution
assistance in connection with the sale of the Funds' shares to such dealers'
customers, and for the provision of continuing personal shareholder services to
customers who may from time to time directly or beneficially own shares of the
Funds. The distribution assistance and continuing personal shareholder services
to be rendered by dealers under the Shareholder Service Agreements may include,
but shall not be limited to, the following: distributing sales literature;
answering routine customer inquiries concerning the Funds; assisting customers
in changing dividend options, account designations and addresses, and in
enrolling in any of several special investment plans offered in connection with
the purchase of the 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 any capital gains
distributions automatically in the Funds' shares; and providing such other
information and services as the Funds or the customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plans to be made to banks
which provide services to their customers who have purchased shares. Services
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding a 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
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<PAGE> 229
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 Fund shares; and such other administrative
services as a 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 recordkeeping for and administrative services to
401(k) plans.
Financial intermediaries and any other person entitled to receive
compensation for selling Fund shares may receive different compensation for
selling shares of one particular class over another.
The Trust may also enter into Variable Group Annuity Contractholder
Service Agreements ("Variable Contract Agreements") on behalf of the Funds
(other than AIM MONEY MARKET 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 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 a Fund on behalf of plan participants; and performing such other
administrative services as deemed to be necessary or desirable, to the extent
permitted by applicable statute, rule or regulation to provide such services.
Under a Shareholder Service Agreement, a 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 will be calculated at the end of each payment period for each
business day of the Funds during such period at the annual rate of 0.25% of the
average daily net asset value of the Funds' shares purchased or acquired through
exchange. Fees calculated in this manner shall be paid only to those selected
dealers or other institutions who are dealers or institutions of record at the
close of business on the last business day of the applicable payment period for
the account in which such Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable
limitations imposed 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 Funds
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 Funds and their respective classes.
AIM Distributors may from time to time waive or reduce any portion of
its 12b-1 fee for Class A shares and Class C shares. Voluntary fee waivers or
reductions may be rescinded at any time without further notice to investors.
During periods of voluntary fee waivers or reductions, AIM Distributors will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions set forth in the Fee Table in a
Prospectus may not be terminated or amended to the Funds' detriment during the
period stated in the agreement between AIM Distributors and the Fund.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Funds pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Funds, in
making dealer incentive and shareholder servicing payments under the Plans.
These payments are an obligation of the Funds and not of AIM Distributors.
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<PAGE> 230
For the year ended December 31, 1999, the various classes of the Funds
paid to AIM Distributors the following amounts pursuant to the Plans:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
<S> <C> <C> <C>
AIM Balanced Fund.......................... $ 3,755,133 $ 10,013,693 $ 1,464,190
AIM Global Utilities Fund.................. 500,106 1,165,993 39,036
AIM High Yield Fund........................ 3,885,854 17,586,035 1,307,654
AIM Income Fund............................ 1,006,620 2,401,345 244,571
AIM Intermediate Government Fund........... 622,422 2,414,889 411,484
AIM Money Market Fund...................... N/A 3,680,653 440,903
AIM Municipal Bond Fund.................... 805,244 753,522 101,726
AIM Select Growth Fund..................... 896,196 4,672,685 134,325
AIM Value Fund............................. 26,140,479 116,152,779 4,781,281
</TABLE>
For the year ended December 31, 1999, the AIM Cash Reserve Shares of
AIM MONEY MARKET FUND paid $2,443,795 to AIM Distributors pursuant to the Class
A and C Plan.
An estimate by category of the allocation of actual fees paid by Class
A shares of the Funds under the Class A and C Plan during the year ended
December 31, 1999, was as follows:
<TABLE>
<CAPTION>
PRINTING COMPENSATION
ADVERTISING AND MAILING SEMINARS TO DEALERS
----------- ----------- -------- ------------
<S> <C> <C> <C> <C>
AIM Balanced Fund.......................... $ 118,519 $ 11,106 $ 28,773 $ 3,596,735
AIM Global Utilities Fund.................. 3,311 311 836 495,648
AIM High Yield Fund........................ 63,938 5,923 14,814 3,801,179
AIM Income Fund............................ 16,079 1,532 4,207 984,801
AIM Intermediate Government Fund........... 9,141 868 2,380 610,033
AIM Municipal Bond Fund.................... 20,146 1,949 5,524 777,625
AIM Select Growth Fund..................... 11,864 1,102 2,881 880,350
AIM Value Fund............................. 401,488 37,437 97,758 25,603,796
</TABLE>
During the year ended December 31, 1999, an estimate by category of the
allocation of actual fees paid by AIM Cash Reserve Shares of AIM MONEY MARKET
FUND under the Class A and C Plan was as follows: $174,714 was spent on
advertising, $16,315 was spent on printing and mailing, $41,631 was spent on
seminars and $2,211,135 was spent on compensation to dealers.
An estimate by category of the allocation of actual fees paid by the
Funds under the Class B Plan during the year ended December 31, 1999, was as
follows:
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<PAGE> 231
<TABLE>
<CAPTION>
COMPENSATION COMPENSATION
PRINTING AND TO TO
ADVERTISING MAILING SEMINARS UNDERWRITERS DEALERS
----------- ------------ -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
AIM Balanced Fund........................$ 404,810 $ 38,350 $ 103,333 $ 7,510,270 $ 1,956,931
AIM Global Utilities Fund................ 19,626 1,823 4,766 874,495 265,284
AIM High Yield Fund...................... 515,604 48,632 128,178 13,189,527 3,704,095
AIM Income Fund.......................... 113,165 10,994 30,039 1,801,009 446,139
AIM Intermediate Government Fund......... 109,571 10,552 28,829 1,811,167 454,770
AIM Money Market Fund.................... 117,635 10,813 26,840 2,760,490 764,875
AIM Municipal Bond Fund.................. 24,928 2,466 6,849 565,142 154,137
AIM Select Growth Fund................... 62,281 5,914 15,431 3,504,514 1,084,546
AIM Value Fund........................... 2,728,649 254,704 666,084 87,113,351 25,388,347
</TABLE>
An estimate by category of the allocation of actual fees paid by Class
C shares of the Funds under the Class A and C Plan during the year ended
December 31, 1999, was as follows:
<TABLE>
<CAPTION>
COMPENSATION COMPENSATION
PRINTING AND TO TO
ADVERTISING MAILING SEMINARS UNDERWRITERS DEALERS
----------- ------------ -------- ------------ -----------
<S> <C> <C> <C> <C> <C>
AIM Balanced Fund........................ $ -0- $ -0- $ -0- $ 835,196 $ 628,994
AIM Global Utilities Fund................ -0- -0- -0- 24,428 14,608
AIM High Yield Fund...................... -0- -0- -0- 716,978 590,676
AIM Income Fund.......................... 229 23 69 163,909 80,341
AIM Intermediate Government Fund........ -0- -0- -0- 182,613 228,871
AIM Money Market Fund.................... -0- -0- -0- 273,359 167,544
AIM Municipal Bond Fund.................. 41 2 8 61,493 40,182
AIM Select Growth Fund................... -0- -0- -0- 68,795 65,530
AIM Value Fund........................... -0- -0- -0- 3,259,285 1,521,996
</TABLE>
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 (the "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 Funds and
its respective shareholders.
Amounts payable by a Fund under the Plans need not be directly related
to the expenses actually incurred by AIM Distributors on behalf of each Fund.
The Plans do not obligate the Funds 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 Funds 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.
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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.
Unless terminated earlier in accordance with their terms, the Plans
continue from year to year 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 by the vote of a majority of the
Independent Trustees, or, with respect to a particular class, by the vote of a
majority of the outstanding voting securities of that class.
Any change in the Plans that would increase materially the distribution
expenses paid by the applicable class requires shareholder approval; otherwise,
it may be amended by the 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 Funds will no longer convert into Class A shares of the Funds
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 Funds 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 Funds
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: The Class A and C Plan allows payment to AIM Distributors or to
dealers or financial institutions of up to 0.25% of average daily net assets of
each Fund's Class A shares and AIM Cash Reserve Shares as compared to 1.00% of
such assets of each Fund's Class B and Class C shares; (ii) the Class B Plan
obligates 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
The Trust has entered into master distribution agreements relating to
the Funds (the "Distribution Agreements") with A I M Distributors, Inc. ("AIM
Distributors"), a registered broker-dealer and a wholly owned subsidiary of AIM,
pursuant to which AIM Distributors acts as the distributor of Class A, Class B
and Class C shares of the Funds and AIM Cash Reserve Shares of AIM MONEY MARKET
FUND. The address of AIM Distributors is P.O. Box 4739, Houston, Texas
77210-4739. Certain trustees and officers of the Trust are affiliated with AIM
Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive
right to distribute shares of the Funds directly and through institutions with
whom AIM Distributors has entered into selected dealer agreements. Under the
Distribution Agreement for the Class B shares, AIM Distributors sells Class B
shares at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
institutions through whom Class B shares are sold a sales commission under
schedules established by AIM Distributors. The Distribution Agreement for the
Class B shares provides that AIM Distributors (or its assignee or transferee)
will receive 0.75% (of the total 1.00% payable under the distribution plan
applicable to
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Class B shares) of each Fund's average daily net assets attributable to Class B
shares attributable to the sales efforts of AIM Distributors.
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing the Funds'
prospectuses and statements of additional information relating to public
offerings made by AIM Distributors pursuant to the Distribution Agreements
(other than those prospectuses and statements of additional information
distributed to existing shareholders of the Funds), and any promotional or sales
literature used by AIM Distributors or furnished by AIM Distributors to dealers
in connection with the public offering of the Funds' shares, including expenses
of advertising in connection with such public offerings. AIM Distributors has
not undertaken to sell any specified number of shares of any classes of the
Funds.
AIM Distributors expects to pay sales commissions from its own
resources to dealers and institutions who sell Class B and Class C shares of the
Funds 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 requires 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 a 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 relating to Class C shares
for the first year after they are purchased. The portion of the payments to AIM
Distributors under the Class A and C Plan attributable to Class C shares which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of on-going sales commissions to dealers
plus financing costs, if any. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record.
The Trust (on behalf of any class of any 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 the
Distribution Agreement for Class B shares would not affect the obligation of a
Fund and its Class B shareholders to pay contingent deferred sales charges.
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<PAGE> 234
From time to time, AIM Distributors may transfer and sell its right to
payments under the Distribution Agreements relating to Class B shares in order
to finance distribution expenditures in respect of Class B shares.
The following chart reflects the total sales charges paid in connection
with the sale of Class A shares of each Fund and the amount retained by AIM
Distributors for the years ended December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
---------------------- -------------------- -------------------
SALES AMOUNT SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED CHARGES RETAINED
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
AIM Balanced Fund............... $4,738,340 $823,856 $ 6,719,092 $ 1,172,743 $ 4,100,493 $ 672,146
AIM Global Utilities Fund....... 363,844 56,996 407,940 71,338 376,255 57,864
AIM High Yield Fund............. 4,583,060 800,330 10,554,990 1,822,464 12,115,351 2,043,967
AIM Income Fund................. 1,984,670 358,051 1,727,399 340,185 1,158,790 203,261
AIM Intermediate Government Fund 1,622,505 297,352 1,129,232 196,016 648,578 116,124
AIM Money Market Fund........... N/A N/A 1,738,598 347,757 2,470,808 443,904
AIM Municipal Bond Fund......... 524,426 97,187 556,829 100,100 480,346 87,434
AIM Select Growth Fund.......... 1,100,704 176,131 778,128 136,229 895,672 143,669
AIM Value Fund.................. 47,407,647 7,218,373 30,111,088 4,259,204 31,118,672 4,660,735
</TABLE>
The following chart reflects the contingent deferred sales charges paid
by Class A and Class B shareholders for the years ended December 31, 1999, 1998
and 1997, and by Class C shareholders for the years ended December 31, 1999 and
1998, and for the period from August 4, 1997 through December 31, 1997:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
AIM Balanced Fund................................................. $150,341 $ 106,255 $ 99,075
AIM Global Utilities Fund......................................... 67,367 71,709 88,250
AIM High Yield Fund............................................... 423,986 660,651 581,549
AIM Income Fund................................................... 48,455 99,010 45,242
AIM Intermediate Government Fund.................................. 171,470 108,148 131,697
AIM Money Market Fund............................................. 1,254,200 905,887 344,545
AIM Municipal Bond Fund.......................................... 123,118 48,077 44,830
AIM Select Growth Fund............................................ 75,951 105,783 109,547
AIM Value Fund.................................................... 1,053,955 1,498,642 1,752,662
</TABLE>
SALES CHARGES AND DEALER CONCESSIONS
CATEGORY 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 Aggressive Growth Fund, AIM Asian Growth Fund, AIM Basic Value Fund, AIM
Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM
Constellation Fund, AIM Dent Demographic Trends Fund, AIM European Development
Fund, AIM Euroland Growth Fund, AIM Global Utilities Fund, AIM Global Growth &
Income Fund, AIM International Equity Fund, AIM Japan Growth Fund, AIM Large Cap
Basic Value Fund, AIM Large Cap Growth Fund, AIM Mid Cap Equity Fund, AIM Mid
Cap Growth Fund, AIM Mid Cap Opportunities
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<PAGE> 235
Fund, AIM New Pacific Growth Fund, AIM Select Growth Fund, AIM Small Cap 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 2.00 2.04 1.60
</TABLE>
- ----------------
(1) AIM Small Cap Opportunities Fund will not accept any single purchase in
excess of $250,000.
CATEGORY II. Certain AIM Funds are currently sold with a sales charge
ranging from 4.75% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds are: the Class A shares of each of AIM Advisor Real
Estate Fund, AIM Balanced Fund, AIM Developing Markets Fund, AIM Emerging
Markets Debt Fund, AIM Global Aggressive Growth Fund, AIM Global Consumer
Products and Services Fund, AIM Global Financial Services Fund, AIM Global
Government Income Fund, AIM Global Growth Fund, AIM Global Health Care Fund, AIM
Global Income Fund, AIM Global Infrastructure Fund, AIM Global Resources Fund,
AIM Global Telecommunications and Technology Fund, AIM Global Trends Fund, AIM
High Income Municipal Fund, AIM High Yield Fund, AIM High Yield Fund II, AIM
Income Fund, AIM Intermediate Government Fund, AIM Latin American Growth Fund,
AIM Municipal Bond Fund, AIM Strategic Income Fund and AIM Tax-Exempt Bond Fund
of Connecticut.
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<PAGE> 236
<TABLE>
<CAPTION>
Dealer
Investor's Sales Charge Concession
------------------------------- ------------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of the Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
------------------------------- ------------- ---------- ------------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
CATEGORY 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
Investor's Sales Charge Concession
------------------------------- ------------
As a As a As a
Percentage Percentage Percentage
of the Public of the Net of the 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 of Category
I, II or III funds; however, AIM Distributors may pay a dealer concession and/or
advance a service fee on such transactions as set forth below.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the
entire initial sales charge to dealers for all sales with respect to which
orders are placed with AIM Distributors during a particular period. Dealers to
whom substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of
the initial sales charge paid by investors, AIM Distributors may, from time to
time, at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. 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
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<PAGE> 237
0.25% of the public offering price of the shares sold. Any such bonus or
incentive programs will not change the price paid by investors for the purchase
of the applicable AIM Fund's shares or the amount that any particular AIM Fund
will receive as proceeds from such sales. Dealers may not use sales of the AIM
Funds' shares to qualify for any incentives to the extent that such incentives
may be prohibited by the laws of any state.
AIM Distributors may make payments to dealers and institutions who are
dealers of record for purchases of $1 million or more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM Limited Maturity Treasury
Fund and AIM Tax-Free Intermediate Fund as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. AIM Distributors may make payments to dealers
and institutions who are dealers of record for purchases of $1 million or more
of Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM Limited Maturity Treasury Fund, and in an amount up to
0.25% of such purchases of Class A shares of AIM Tax-Free Intermediate Fund.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class B shares of the AIM Funds at the time of such sales. Payments
with respect to Class B shares will equal 4.00% of the purchase price of the
Class B shares sold by the dealer or institution, and will consist of a sales
commission equal to 3.75% of the purchase price of the Class B shares sold plus
an advance of the first year service fee of 0.25% with respect to such shares.
The portion of the payments to AIM Distributors under the Class B Plan which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of such sales commissions plus financing
costs.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the AIM Funds at the time of such sales. Payments
with respect to Class C shares will equal 1.00% of the purchase price of the
Class C shares sold by the dealer or institution, and will consist of a sales
commission of 0.75% of the purchase price of the Class C shares sold plus an
advance of the first year service fee of 0.25% with respect to such shares. AIM
Distributors will retain all payments received by it relating to Class C shares
for the first year after they are purchased. The portion of the payments to AIM
Distributors under the Class A and C Plan attributable to Class C shares which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of on-going sales commissions to dealers
plus financing costs, if any. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record. These
commissions are not paid on sales to investors exempt from the CDSC, including
shareholders of record of AIM Advisor Funds, Inc. 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.
Exchanges of AIM Cash Reserve Shares of AIM Money Market Fund for Class
B shares or Class C shares are considered sales of such Class B shares or Class
C shares for purposes of the sales charges and dealer concessions discussed
above.
AIM Distributors may pay investment dealers or other financial service
firms for share purchases (measured on an annual basis) of Class A Shares of all
AIM Funds except AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate
Fund and AIM Tax-Exempt Cash Fund sold at net asset value to an employee benefit
plan as follows: 1% of the first $2 million of such purchases, plus 0.80% of the
next $1 million of such purchases, plus 0.50% of the next $17 million of such
purchases, plus 0.25% of amounts in excess of $20 million of such purchases and
up to 0.10% of the net asset value of any Class A shares of AIM Limited Maturity
Treasury Fund sold at net asset value to an employee benefit plan in accordance
with this paragraph.
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<PAGE> 238
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 AIM Funds will not be taken into account in
determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
o an individual and his or her spouse and children, including any
trust established exclusively for the benefit of any such person;
or a pension, profit-sharing, or other benefit plan established
exclusively for the benefit of any such person, such as an IRA,
Roth IRA, a single-participant money-purchase/profit-sharing plan
or an individual participant in a 403(b) Plan (unless such 403(b)
plan qualifies as the purchaser as defined below);
o 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"), if:
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;
o 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;
o a Simplified Employee Pension (SEP), Salary Reduction and other
Elective Simplified Employee Pension account (SAR-SEP) or a
Savings Incentive Match Plans for Employees IRA (SIMPLE IRA),
where the employer has notified the distributor in writing that
all of its related employee SEP, SAR-SEP or SIMPLE IRA accounts
should be linked; or
o 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.
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.
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<PAGE> 239
1. LETTERS OF INTENT. A purchaser, as previously defined, may pay
reduced initial sales charges by completing the appropriate section of the
account application and by fulfilling a Letter of Intent ("LOI"). The LOI
privilege is also available to holders of the Connecticut General Guaranteed
Account, established for tax qualified group annuities, for contracts purchased
on or before June 30, 1992. The LOI confirms such purchaser's intention as to
the total investment to be made in shares of the AIM Funds (except for (i) Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares
of AIM Floating Rate Fund) within the following 13 consecutive months. By
marking the LOI section on the account application and by signing the account
application, the purchaser indicates that he understands and agrees to the terms
of the LOI and is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales
charge made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gains distributions will not be applied to the LOI. At any time during the
13-month period after meeting the original obligation, a purchaser may revise
his intended investment amount upward by submitting a written and signed
request. Such a revision will not change the original expiration date. By
signing an LOI, a purchaser is not making a binding commitment to purchase
additional shares, but if purchases made within the 13-month period do not total
the amount specified, the investor will pay the increased amount of sales charge
as described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the
initial purchase (or subsequent purchases if necessary) the Transfer Agent will
escrow in the form of shares an appropriate dollar amount (computed to the
nearest full share). All dividends and any capital gain distributions on the
escrowed shares will be credited to the purchaser. All shares purchased,
including those escrowed, will be registered in the purchaser's name. If the
total investment specified under this LOI is completed within the 13-month
period, the escrowed shares will be promptly released. If the intended
investment is not completed, the purchaser will pay the Transfer Agent the
difference between the sales charge on the specified amount and the amount
actually purchased. If the purchaser does not pay such difference within 20 days
of the expiration date, he irrevocably constitutes and appoints the Transfer
Agent as his attorney to surrender for redemption any or all shares, to make up
such difference within 60 days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes
to cancel the agreement, he must give written notice to AIM Distributors. If at
any time before completing the LOI Program the purchaser requests the Transfer
Agent to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
2. RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may
also qualify for reduced initial sales charges based upon such purchaser's
existing investment in shares of any of the AIM Funds (except for (i) Class A
shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund and (ii) Class B and Class C shares of the AIM Funds and (iii)
shares of AIM Floating Rate Fund) at the time of the proposed purchase. Rights
of Accumulation are also available to holders of the Connecticut General
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<PAGE> 240
Guaranteed Account, established for tax-qualified group annuities, for contracts
purchased on or before June 30, 1992. To determine whether or not a reduced
initial sales charge applies to a proposed purchase, AIM Distributors takes into
account not only the money which is invested upon such proposed purchase, but
also the value of all shares of the AIM Funds (except for (i) Class A shares of
AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund,
(ii) Class B and Class C shares of the AIM Funds and (iii) AIM Floating Rate
Fund) owned by such purchaser, calculated at their then current public offering
price. If a purchaser so qualifies for a reduced sales charge, the reduced sales
charge applies to the total amount of money then being invested by such
purchaser and not just to the portion that exceeds the breakpoint above which a
reduced sales charge applies. For example, if a purchaser already owns
qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest
an additional $20,000 in a fund, with a maximum initial sales charge of 5.50%,
the reduced initial sales charge of 5.25% will apply to the full $20,000
purchase and not just to the $15,000 in excess of the $25,000 breakpoint. To
qualify for obtaining the discount applicable to a particular purchase, the
purchaser or his dealer must furnish AFS with a list of the account numbers and
the names in which such accounts of the purchaser are registered at the time the
purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM
Funds at net asset value (without payment of an initial sales charge) may be
made in connection with: (a) the reinvestment of dividends and distributions
from a fund; (b) exchanges of shares of certain funds; (c) use of the
reinstatement privilege; or (d) a merger, consolidation or acquisition of assets
of a fund.
The following purchasers will not pay initial sales charges on
purchases of Class A shares because there is a reduced sales effort involved in
sales to these purchasers:
o AIM Management and its affiliates, or their clients;
o Any current or retired officer, director or employee (and
members of their immediate family) of AIM Management, its
affiliates or The AIM Family of Funds--Registered Trademark--,
and any foundation, trust or employee benefit plan established
exclusively for the benefit of, or by, such persons;
o Any current or retired officer, director, or employee (and
members of their immediate family), of CIGNA Corporation or its
affiliates, or of First Data Investor Services Group; and any
deferred compensation plan for directors of investment
companies sponsored by CIGNA Investments, Inc. or its
affiliates;
o Sales representatives and employees (and members of their
immediate family) of selling group members or financial
institutions that have arrangements with such selling group
members;
o Purchases through approved fee-based programs;
o Employee benefit plans designated as purchasers as defined
above, and non-qualified plans offered in conjunction
therewith, provided the initial investment in the plan(s) is
at least $1 million; the sponsor signs a $1 million LOI; the
employer-sponsored plan has at least 100 eligible employees;
or all plan transactions are executed through a single omnibus
account per Fund and the financial institution or service
organization has entered into the appropriate agreement with
the distributor. Section 403(b) plans sponsored by public
educational institutions are not eligible for a sales charge
exception based on the aggregate investment made by the plan
or the number of eligible employees. Purchases of AIM Small
Cap Opportunities Fund by such plans are subject to initial
sales charges;
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o Shareholders of record of Advisor Class shares of AIM
International Growth Fund or AIM Worldwide Growth Fund on
February 12, 1999 who have continuously owned shares of the AIM
Funds;
o Shareholders of record or discretionary advised clients of any
investment advisor holding shares of AIM Weingarten Fund or AIM
Constellation Fund on September 8, 1986, or of AIM Charter Fund
on November 17, 1986, who have continuously owned shares having
a market value of at least $500 and who purchase additional
shares of the same Fund;
o Unitholders of G/SET series unit investment trusts investing
proceeds from such trusts in shares of AIM Weingarten Fund or
AIM Constellation Fund; provided, however, prior to the
termination date of the trusts, a unitholder may invest
proceeds from the redemption or repurchase of his units only
when the investment in shares of AIM Weingarten Fund and AIM
Constellation Fund is effected within 30 days of the redemption
or repurchase;
o A shareholder of a fund that merges or consolidates with an AIM
Fund or that sells its assets to an AIM Fund in exchange for
shares of an AIM Fund;
o Shareholders of the GT Global funds as of April 30, 1987 who
since that date continually have owned shares of one or more of
these funds;
o Certain former AMA Investment Advisers' shareholders who became
shareholders of the AIM Global Health Care Fund in October
1989, and who have continuously held shares in the GT Global
funds since that time and
o Shareholders of record of Advisor Class shares of an AIM Fund
on February 11, 2000 who have continuously owned shares of that
AIM Fund, and who purchase additional shares of that AIM fund.
As used above, immediate family includes an individual and his or her
spouse, children, parents and parents of spouse.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS
Former GT Global funds Class A shares that are subject to a contingent
deferred sales charge and that were purchased before June 1, 1998 are entitled
to the following waivers from the contingent deferred sales charge otherwise due
upon redemption: (1) minimum required distributions made in connection with an
IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other
retirement plan following attainment of age 70 1/2; (2) total or partial
redemptions resulting from a distribution following retirement in the case of a
tax-qualified employer-sponsored retirement plan; (3) when a redemption results
from a tax-free return of an excess contribution pursuant to Section 408(d)(4)
or (5) of the Code or from the death or disability of the employee; (4)
redemptions pursuant to a Fund's right to liquidate a shareholder's account
involuntarily; (5) redemptions pursuant to distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in the former GT Global
funds, which are permitted to be made without penalty pursuant to the Code,
other than tax-free rollovers or transfers of assets, and the proceeds of which
are reinvested in the former GT Global funds; (6) redemptions made in connection
with participant-directed exchanges between options in an employer-sponsored
benefit plan; (7) redemptions made for the purpose of providing cash to fund a
loan to a participant in a tax-qualified retirement plan; (8) redemptions made
in connection with a distribution from any retirement plan or account that is
permitted in accordance with the provisions of Section 72(t)(2) of the Code, and
the regulations promulgated thereunder; (9) redemptions made in connection with
a distribution from any retirement plan or
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account that involves the return of an excess deferral amount pursuant to
Section 401(k)(8) or Section 402(g)(2) of the Code; (10) redemptions made in
connection with a distribution from a qualified profit-sharing or stock bonus
plan described in Section 401(k) of the Code to a participant or beneficiary
under Section 401(k)(2)(B)(IV) of the Code upon hardship of the covered employee
(determined pursuant to Treasury Regulation Section 1.401(k)-1(d)(2)); and (11)
redemptions made by or for the benefit of certain states, counties or cities, or
any instrumentalities, departments or authorities thereof where such entities
are prohibited or limited by applicable law from paying a sales charge or
commission.
Former GT Global funds Class B shares purchased before June 1, 1998 are
subject to the following waivers from the contingent deferred sales charge
otherwise due upon redemption: (1) total or partial redemptions resulting from a
distribution following retirement in the case of a tax-qualified
employer-sponsored retirement; (2) minimum required distributions made in
connection with an IRA, Keogh Plan or custodial account under Section 403(b) of
the Code or other retirement plan following attainment of age 70 1/2; (3)
redemptions pursuant to distributions from a tax-qualified employer-sponsored
retirement plan, which is invested in the former GT Global funds, which are
permitted to be made without penalty pursuant to the Code, other than tax-free
rollovers or transfers of assets, and the proceeds of which are reinvested in
the former GT Global funds; (4) redemptions made in connection with
participant-directed exchanges between options in an employer- sponsored benefit
plan; (5) redemptions made for the purpose of providing cash to fund a loan to a
participant in a tax-qualified retirement plan; (6) redemptions made in
connection with a distribution from any retirement plan or account that is
permitted in accordance with the provisions of Section 72(t)(2) of the Code, and
the regulations promulgated thereunder; (7) redemptions made in connection with
a distribution from a qualified profit-sharing or stock bonus plan described in
Section 401(k) of the Code to a participant or beneficiary under Section
401(k)(2)(B)(IV) of the Code upon hardship of the covered employee (determined
pursuant to Treasury Regulation Section 1.401(k)-1(d)(2)); and (8) redemptions
made by or for the benefit of certain states, counties or cities, or any
instrumentalities, departments or authorities thereof where such entities are
prohibited or limited by applicable law from paying a sales charge or
commission.
CDSCs will not apply to the following:
o Additional purchases of Class C shares of AIM Advisor Flex
Fund, AIM Advisor International Value Fund, AIM Advisor Large
Cap Value Fund and AIM Advisor Real Estate Fund by
shareholders of record on April 30, 1995, of these Funds,
except that shareholders whose broker-dealers maintain a
single omnibus account with AFS on behalf of those
shareholders, perform sub-accounting functions with respect to
those shareholders, and are unable to segregate shareholders
of record prior to April 30, 1995, from shareholders whose
accounts were opened after that date will be subject to a CDSC
on all purchases made after March 1, 1996;
o Redemptions following the death or post-purchase disability of
(1) any registered shareholders on an account or (2) a settlor
of a living trust, of shares held in the account at the time of
death or initial determination of post-purchase disability;
o Certain distributions from individual retirement accounts,
Section 403(b) retirement plans, Section 457 deferred
compensation plans and Section 401 qualified plans, where
redemptions result 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 that 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 the distributor of the
transfer no later than the time the transfer occurs; (iii)
tax-free rollovers or transfers of assets to another plan of
the type described above invested in Class B or Class C shares
of one or more of the AIM Funds; (iv) tax-free returns of
excess contributions or returns of excess deferral amounts;
and
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(v) distributions on the death or disability (as defined in the
Internal Revenue Code of 1986, as amended) of the participant
or beneficiary;
o Amounts from a Systematic Withdrawal Plan of up to an annual
amount of 12% of the account value on a per fund basis, at the
time the withdrawal plan is established, provided the investor
reinvests his dividends;
o Liquidation by the Fund when the account value falls below the
minimum required account size of $500;
o Investment account(s) of AIM; and
o Class C shares where the investor's dealer of record notifies
the distributor prior to the time of investment that the dealer
waives the payment otherwise payable to him.
Upon the redemption of shares of funds in sales charge Categories I and
II (see "Sales Charges and Dealer Concessions") purchased in amounts of $1
million or more, no CDSC will be applied in the following situations:
o Shares held more than 18 months;
o Redemptions from employee benefit plans designated as qualified
purchasers, as defined above, where the redemptions are in
connection with employee terminations or withdrawals, provided
the total amount invested in the plan is at least $1,000,000;
the sponsor signs a $1 million LOI; or the employer-sponsored
plan has at least 100 eligible employees; provided, however,
that 403(b) plans sponsored by public educational institutions
shall qualify for the CDSC waiver 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;
o Private foundations or endowment funds;
o Redemption of shares by the investor where the investor's
dealer waives the amounts otherwise payable to it by the
distributor and notifies the distributor prior to the time of
investment; and
o Shares acquired by exchange from Class A shares of funds in
sales charge Categories I and II unless the shares acquired by
exchange are redeemed within 18 months of the original purchase
of the Class A shares.
HOW TO PURCHASE AND REDEEM SHARES
A description of the manner in which shares of the Funds may be
purchased appears in the Prospectus under the headings "Purchasing Shares - How
to Purchase Shares."
The sales charge normally deducted on purchases of Class A shares of
the Funds is used to compensate AIM Distributors and participating dealers for
their expenses incurred in connection with the distribution of the Funds' Class
A shares. Since there is little expense associated with unsolicited orders
placed directly with AIM Distributors by persons who, because of their
relationship with the Funds or with AIM and its
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affiliates, are familiar with the Funds, or whose programs for purchase involve
little expense (e.g., because of the size of the transaction and shareholder
records required), AIM Distributors believes that it is appropriate and in the
Funds' best interests that such persons, and certain other persons whose
purchases result in relatively low expenses of distribution, be permitted to
purchase Class A shares of the Funds through AIM Distributors without payment of
a sales charge. The persons who may purchase Class A shares of the Funds without
a sales charge are listed under the caption "Reductions in Initial Sales Charges
- - Purchases at Net Asset Value."
Complete information concerning the method of exchanging shares of the
Funds for shares of the other mutual funds managed or advised by AIM is set
forth in each Prospectus under the caption "Exchanging Shares."
Information concerning redemption of the Funds' shares is set forth in
the Prospectuses under the caption "Redeeming Shares - How to Redeem Shares."
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the Funds' obligation to redeem shares, AIM Distributors may also
repurchase shares as an accommodation to shareholders. To effect a repurchase,
those dealers who have executed Selected Dealer Agreements with AIM Distributors
must phone orders to the order desk of the Funds at (800) 959-4246 and guarantee
delivery of all required documents in good order. A repurchase is effected at
the net asset value per share of the applicable Fund next determined after the
repurchase order is received. Such an arrangement is subject to timely receipt
by AFS, the Funds' 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. While there is no charge imposed
by a Fund or by AIM Distributors (other than any applicable contingent deferred
sales charge) when shares are redeemed or repurchased, dealers may charge a fair
service fee for handling the transaction. AIM intends to redeem all shares of
the Funds in cash.
The right of redemption may be suspended or the date of payment
postponed when (a) trading on the New York Stock Exchange ("NYSE") is
restricted, as determined by applicable rules and regulations of the 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 a Fund not reasonably practicable.
A Fund's net asset value is calculated by dividing the number of
outstanding shares into the net assets of the Fund. Net assets are the excess of
a Fund's assets over its liabilities.
For AIM Money Market Fund: The Fund may use the amortized cost method
to determine its net asset value so long as the Fund does not (a) purchase any
instrument with a remaining maturity greater than 397 days (for these purposes,
repurchase agreements shall not be deemed to involve the purchase by the Fund of
the securities pledged as collateral in connection with such agreements) or (b)
maintain a dollar-weighted average portfolio maturity in excess of 90 days, and
otherwise complies with the terms of rules adopted by the SEC.
For all other Funds: The following formula may be used to determine the
public offering price per Class A share of an investor's investment:
Net Asset Value / (1 - Sales Charge as % of Offering Price) = Offering
Price.
For example, at the close of business on December 31, 1999, AIM VALUE
FUND - Class A shares had 258,850,990 shares outstanding, net assets of
$12,640,072,795 and a net asset value per share of $48.83. The offering price,
therefore, was $51.67.
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AIM HIGH YIELD FUND
Variable Annuity Contracts--Currently, shares of AIM HIGH YIELD FUND
may be purchased at net asset value by the Life Insurance Company of North
America ("LINA") under an arrangement whereby the shares will serve as an
underlying investment medium for certain variable annuity contracts previously
issued by LINA.
The basic objective of the variable annuity contracts is to provide
individuals with retirement benefits through net purchase payment accumulations
and annuity payments which are based upon the performance of AIM HIGH YIELD FUND
or other available funds. The contracts allow their owners and participants to
defer federal income tax ("FIT") payments on contract investment accumulations
until annuity payments begin. The annuity payment options generally provide for
lifetime annuity payments based upon the life of the named annuitant (and joint
annuitant, if applicable). Such payments may be made for a guaranteed minimum
number of years. Certain charges are made in connection with the sale of the
contracts.
The LINA contracts are no longer being issued except that existing
owners, participants and, in some cases, new participants under existing group
contracts under certain tax-qualified plans, may continue to make contributions
under the contract. Persons who wish to receive additional information
concerning investment in AIM HIGH YIELD FUND through LINA's variable annuity
contracts are urged to read the LINA prospectus which describes them. LINA
variable annuity information and a prospectus may be obtained by writing to LINA
Security Corporation, 601 Walnut Street, Ninth Floor, Philadelphia, Pennsylvania
19102, or by calling (215) 351-3121.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will generally be subject to 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
taxpayer identification number ("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 or the Fund 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
non-exempt mutual fund accounts opened after 1983.
Interest and dividend payments are subject to backup withholding in
all five situations discussed above. Redemption proceeds and long-term gain
distributions are subject to backup withholding only if (1), (2) or (5) above
applies.
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Certain payees and payments are exempt from backup withholding and
information reporting. 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:
o a corporation
o an organization exempt from tax under Section 501(a), an
individual retirement plan (IRA), or a custodial account under
Section 403(b)(7)
o the United States or any of its agencies or instrumentalities
o a state, the District of Columbia, a possession of the United
States, or any of their political subdivisions or
instrumentalities
o a foreign government or any of its political subdivisions,
agencies or instrumentalities
o an international organization or any of its agencies or
instrumentalities
o a foreign central bank of issue
o a dealer in securities or commodities required to register in the
U.S. or a possession of the U.S.
o a futures commission merchant registered with the Commodity
Futures Trading Commission
o a real estate investment trust
o an entity registered at all times during the tax year under the
1940 Act
o a common trust fund operated by a bank under Section 584(a)
o a financial institution
o a middleman known in the investment community as a nominee or
listed in the most recent publication of the American Society of
Corporate Secretaries, Inc., Nominee List
o a trust exempt from tax under Section 664 or described in Section
4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a
correct TIN will be subject to a $50 penalty imposed by the IRS unless such
failure is due to reasonable cause and not willful neglect. If an investor
falsifies information on this form or makes any other false statement resulting
in no backup withholding on an
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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 federal income tax withholding at a 30% rate on ordinary
income dividends and distributions 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.
NET ASSET VALUE DETERMINATION
For AIM Money Market Fund: The net asset value per share of the Fund
is determined daily as of 12:00 noon and the close of the customary trading
session on the 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 the Fund is determined as of
the close of the customary trading session of the NYSE on such day. Net asset
value per share is determined by dividing the value of the Fund's securities,
cash and other assets (including interest accrued but not collected)
attributable to a particular class, less all its liabilities (including accrued
expenses and dividends payable) attributable to that class, by the number of
shares outstanding of that Class and rounding the resulting per share net asset
value to the nearest one cent. Determination of the net asset value per share is
made in accordance with generally accepted accounting principles.
The securities of the Fund are valued on the basis of amortized cost.
This method values a security at its cost on the date of purchase and thereafter
assumes a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation, it may result
in periods during which value, as determined by amortized cost, is higher or
lower than the price the Fund would receive if the security were sold. During
such periods, the daily yield on shares of the Fund computed as described under
"Performance Information" may differ somewhat from an identical computation made
by another investment company with identical investments utilizing available
indications as to the market value of its portfolio securities.
The valuation of portfolio instruments based upon their amortized cost
and the concomitant maintenance of the net asset value per share of $1.00 for
the Fund is permitted in accordance with applicable rules and regulations of the
SEC which require the Fund to adhere to certain conditions. These rules require,
among other things, that the Fund maintain a dollar-weighted average portfolio
maturity of 90 days or less, purchase only instruments having remaining
maturities of 397 calendar days or less and invest only in securities determined
by the Board of Trustees to be "Eligible Securities" (as defined in Rule 2a-7
under the 1940 Act) and to present minimal credit risk to the Fund.
The Board of Trustees is required to establish procedures designed to
stabilize, to the extent reasonably practicable, the Fund's price per share at
$1.00, as computed for the purpose of sales and redemptions. Such procedures
include review of the Fund's holdings by the Board of Trustees at such intervals
as they may deem appropriate, to determine whether the net asset value
calculated by using available market quotations or other reputable sources for
the Fund deviates from $1.00 per share and, if so, whether such deviation may
result in material dilution or is otherwise unfair to existing holders of the
Fund's shares. In the event the Board of Trustees determines that such a
deviation exists for the Fund, it will take such corrective action as the Board
of Trustees deems necessary and appropriate with respect to the Fund, including
the sale of portfolio instruments prior to maturity to realize capital gains or
losses or to shorten the average portfolio maturity; the withholding of
dividends; redemption of shares in kind; or the establishment of a net asset
value per share by using available market quotations.
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The Fund intends to comply with any amendments made to Rule 2a-7 which
may require corresponding changes in the Fund's procedures which are designed to
stabilize the Fund's price per share at $1.00.
For All Other Funds: The net asset value of a share of each Fund is
normally determined once daily as of the close of the customary trading session
of the 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 share of each Fund 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 the customary trading session of the
NYSE will generally be used. Net asset value per share is determined by dividing
the value of a Fund's securities, cash and other assets (including interest
accrued but not collected) attributable to a particular class, less all its
liabilities (including accrued expenses and dividends payable) attributable to
that class, by the total number of shares outstanding of that class.
Determination of a Fund's net asset value per share is made in accordance with
generally accepted accounting principles.
Each equity security held by a Fund 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 closing bid price on that
day, prior to the determination of net asset value. Each security traded in the
over-the-counter market (but not including securities reported on the NASDAQ
National Market System) is valued at the closing bid price furnished by
independent pricing services or market makers. Each security reported on the
NASDAQ National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the closing bid price on that day; option
contracts are valued at the mean between the closing bid and asked prices on the
exchange where the contracts are principally traded; futures contracts are
valued at final settlement price quotations from the primary exchange on which
they are traded. Debt securities (including convertible bonds) are valued on the
basis of prices provided by an independent pricing service. Prices provided by
the pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as institution-size trading in
similar groups of securities, developments related to special securities,
dividend rate, yield, quality, coupon rate, maturity, type of issue, individual
trading characteristics and other market data. 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.
Short-term obligations having 60 days or less to maturity are valued on the
basis of amortized cost, which approximates market 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 close of the customary trading session of
the NYSE. The values of such securities used in computing the net asset value of
each Fund's shares are determined at such times. Foreign currency exchange rates
are also generally determined prior to the close of the customary trading
session of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which such
values are determined and the close of the customary trading session of the
NYSE which will not be reflected in the computation of a 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.
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TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Funds and their shareholders that are not
described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of each Fund or its shareholders, and the
discussion here and in the Prospectus is not intended as a substitute for
careful tax planning.
Each Fund is treated as a separate association taxable as a
corporation. Each Fund intends to qualify under the Internal Revenue Code of
1986, as amended (the "Code"), as a regulated investment company ("RIC") for
each taxable year. Accordingly, each Fund must, among other things, generally
derive at least 90% of its gross income from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stock,
securities, foreign currencies, or other income derived with respect to its
business of investing in such stock, securities or currencies. Each Fund must
diversify its holdings so that, at the end of each fiscal quarter: (i) at least
50% of the market value of the Fund's assets is represented by cash, U.S.
Government securities and other securities, with such other securities limited,
with respect to any one issuer, to an amount not greater than 5% of the Fund's
assets and not more than 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer (other than U.S. Government securities).
As a RIC, each Fund will generally not be subject to federal income
tax ("FIT") on its income and gains distributed to shareholders if it currently
distributes the sum of (i) at least 90% of its investment company taxable income
(net investment taxable income and the excess of net short-term capital gains
over net long-term capital losses) for the taxable year and (ii) at least 90% of
the excess of its tax-exempt interest income under Code Section 103(a) over its
deductions disallowed under Code Sections 265 and 171(a)(2) (the "Distribution
Requirement"). Distributions made by a Fund during its taxable year, or under
certain circumstances within 12 months after the end of its taxable year, will
be considered distributions made during the taxable year and will therefore
satisfy the Distribution Requirement.
Each Fund may use "equalization accounting" in determining the portion
of its net investment income and capital gain net income that has been
distributed. A Fund that elects to use equalization accounting will allocate a
portion of its realized investment income and capital gains to redemptions of
Fund shares and will reduce the amount of such income and gains that it
distributes in cash. However, each Fund intends to make cash distributions for
each taxable year in an aggregate amount that is sufficient to satisfy the
Distribution Requirement without taking into account its use of equalization
accounting. The IRS has not published any guidance concerning the methods to be
used in allocating investment income and capital gains to redemptions of shares.
In the event that the IRS determines that a Fund is using an improper method of
allocation and has underdistributed its net investment income and capital gain
net income for any taxable year, such Fund may be liable for additional federal
income tax.
Each Fund is subject to a nondeductible 4% excise tax if it does not
meet certain distribution requirements under the Code. To avoid this excise tax,
during each calendar year, each Fund must distribute: (1) at least 98% of its
ordinary income (not taking into account any capital gains or losses) for the
calendar year (except that any foreign currency gain or loss occurring after
October 31 shall be taken into account the following year), (2) at least 98% of
its capital gains in excess of its capital losses for the 12-month period ending
on October 31, and (3) all ordinary income and capital gains from previous
calendar years that were not distributed during such years. Dividends declared
to shareholders of record on a date in October, November or December will be
taxable to shareholders on December 31 in the year declared as long as the Fund
pays the dividends no later than January 31 of the following year.
The Code and the regulations promulgated thereunder are subject to
change, and interpretations of the Code and the regulations may be modified or
affected at any time by Congress, the Department of the Treasury or judicial
decision. It should be noted that any such change could be applied
retroactively.
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All Funds except AIM MONEY MARKET FUND: Section 1092 of the Code
affects the taxation of certain transactions involving futures or options
contracts. If a futures or options contract is part of a "straddle" (which could
include another futures contract or underlying stock or securities), as defined
in Section 1092 of the Code, then, generally, losses are deferred first to the
extent that the modified "wash sale" rules of the Section 1092 regulations
apply, and second to the extent of unrecognized gains on offsetting positions.
Further, the Funds may be required to capitalize, rather than deduct currently,
any interest expense on indebtedness incurred or continued to purchase or carry
any positions that are part of a straddle. Sections 1092 and 246 of the Code and
the regulations thereunder also suspend the holding periods for straddle
positions with possible adverse effects regarding long-term capital gain
treatment and the corporate dividends received deduction.
Section 1256 of the Code generally requires that futures contracts and
options on future contracts be "marked-to-market" at the end of each year for
FIT purposes. Code Section 1256 further characterizes 60% of any capital gain or
loss with respect to such futures and options contracts as long-term capital
gain (taxable to noncorporate shareholders at a maximum rate of 20%) or loss and
40% as short-term capital gain or loss. If such a future or option is held as an
offsetting position and can be considered a straddle under Section 1092 of the
Code, such a straddle will constitute a mixed straddle. A mixed straddle will be
subject to both Section 1256 and Section 1092 unless certain elections are made
by the Fund.
The Funds may have invested in certain foreign currency transactions,
the gain or loss from which may be subject to taxation as ordinary income or
loss under Code Section 988.
For federal income tax purposes, exercise of the reinstatement
privilege with respect to Class A shares of a Fund that have not been held for
more than ninety days may increase the amount of gain or reduce the amount of
loss recognized in the original redemption transaction because the initial sales
charge will not be taken into account in determining such gain or loss to the
extent there has been a reduction in the initial sales charge that would
otherwise be imposed upon reinvestment. Wash sale rules may defer any loss
recognized.
AIM BALANCED FUND and AIM HIGH YIELD FUND: These Funds may engage in
certain hedging transactions (such as short sales "against the box") that may
result in "constructive sales" of offsetting appreciated positions under section
1259 of the Code. In the event of such a constructive sale, a Fund will be
deemed to recognize gain as if the offsetting position were sold or otherwise
terminated at its fair market value and will take such gain into account in the
taxable year in which the appreciated position was hedged unless the closed
transaction exception applies.
AIM GLOBAL UTILITIES FUND: Pursuant to the investment objectives of
the Fund, the Fund may invest up to 80% of its total assets in foreign
securities. Dividends and interest received by the Fund with respect to these
investments may give rise to withholding and other taxes imposed by foreign
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. If more than 50% in value of the Fund's total
assets at the close of its taxable year consists of stock or securities of
foreign corporations, the Fund will be eligible to file an election with the IRS
pursuant to which shareholders of the Fund will be required to include their
proportionate share of such withholding taxes in their United States income tax
returns as gross income, treat such proportionate share as taxes paid by them,
and deduct such proportionate share in computing their taxable income or,
alternatively, use them as foreign tax credits to the extent allowed against
their United States income taxes subject to certain provisions and limitations
contained in the Code. If the election is made, the Fund will report annually to
its shareholders the amount per share of such withholding taxes. Please note
that such foreign tax credits are non-refundable and therefore cannot be claimed
by certain retirement accounts and other persons not otherwise subject to United
States income taxation.
AIM MUNICIPAL BOND FUND: With respect to interest income that is
exempt from FIT, the Fund intends to comply with Section 852(b)(5) of the Code,
which enables distributions of tax-exempt income to retain their
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character when distributed to shareholders as an exempt interest dividend. Each
year, the Fund provides shareholders a statement indicating the amount of
distribution that is exempt from FIT. Some or all of the interest that the Fund
receives from municipal securities might become taxable by law or determined by
the Internal Revenue Service to be taxable. This statement also provides a
breakdown showing the percentage of such income that came from each state. In
addition, the Fund reports for FIT purposes any net realized capital gains and
any ordinary income from the Fund's short-term holdings. Further, the Fund also
reports certain interest from "Qualified Private Activity Bonds" which
shareholders may be required to include in the alternative minimum tax
calculation.
The Tax Reform Act of 1986 (the "1986 Act") divided municipal debt
obligations into three categories, only one of which ("Public Purpose Bonds")
bears interest which is exempt from both the regular income tax and the
alternative minimum tax as it applies to individuals. For corporations, some or
all of the income from Public Purpose Bonds would be includable in the corporate
alternative minimum tax base. Of the other two categories ("Qualified Private
Activity Bonds" and "Private Activity Bonds"), for both individuals and
corporations, Qualified Private Activity Bonds bear interest which is excluded
from income for purposes of the regular income tax but must generally be
included in the alternative minimum tax base, and Private Activity Bonds are
taxable under both the regular and alternative minimum taxes. For taxable years
beginning after 1997, however, certain small corporations are wholly exempt from
the alternative minimum tax.
The 1986 Act also applied limitations on the issuance of bonds whose
proceeds are used by organizations exempt from tax under Code Section 501(c)(3),
as well as general limitations on the amount of Qualified Private Activity Bonds
governmental units may issue.
The 1986 Act limitations on tax-exempt bonds apply generally to bonds
issued after August 16, 1986. The private activity bond rules are generally
applicable to bonds issued on or after September 1, 1986, with the alternative
minimum tax rules applicable generally to bonds issued on or after August 7,
1986. AIM MUNICIPAL BOND FUND intends to limit its investments in Qualified
Private Activity Bonds and taxable securities to no more than 20% of its total
assets in any given year, consistent with its stated investment objective.
Original issue discount on tax-exempt bonds is accrued as tax-exempt
interest (except for a portion thereof in the case of certain stripped
tax-exempt bonds), and is included in the tax basis of the security for capital
gain and loss computation purposes. Any gain or loss from the sale or other
disposition of a tax-exempt security is generally treated as either long-term or
short-term capital gain or loss, depending upon its holding period, and is fully
taxable. However, gain recognized from the sale or other disposition of a
tax-exempt security purchased after April 30, 1993, will be treated as ordinary
income to the extent of the accrued market discount on such security.
Interest on indebtedness incurred by shareholders (including financial
institutions) will not be deductible for FIT purposes to the extent that the
money was used to purchase or carry tax-exempt securities. The purchase of Fund
shares may be considered to have been made with borrowed funds even though the
borrowed funds are not directly traceable to the purchase of Fund shares.
Further, persons who are "substantial users" (or persons related thereto) of
facilities financed by private activity bonds should consult their own tax
advisor before purchasing Fund shares.
The exemption of interest income for FIT purposes does not necessarily
result in exemption under state and local laws. Shareholders should consult
their tax advisors as to the treatment of such income under state and local
laws.
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DESCRIPTION OF MONEY MARKET INSTRUMENTS
AIM MONEY MARKET FUND will limit its investments to those securities
which at the time of purchase are "First Tier" securities as defined in Rule
2a-7 under the 1940 Act, as such Rule may be amended from time to time.
Subsequent to its purchase by AIM MONEY MARKET FUND, a security may cease to be
a First Tier security. Subject to certain exceptions set forth in Rule 2a-7,
such an event will not require the disposition of the security by the Fund, but
AIM will consider such an event to be relevant in its determination of whether
the Fund should continue to hold the security.
U.S. GOVERNMENT DIRECT OBLIGATIONS: Bills, notes and bonds issued by
the U.S. Treasury.
U.S. GOVERNMENT AGENCIES SECURITIES: Certain federal agencies such as
the Government National Mortgage Association have been established as
instrumentalities of the U.S. Government to supervise and finance certain types
of activities. Issues of these agencies, while not direct obligations of the
U.S. Government, are either backed by the full faith and credit of the United
States or are guaranteed by the Treasury or supported by the issuing agencies'
right to borrow from the Treasury.
BANKER'S ACCEPTANCES: A bill of exchange or time draft drawn on and
accepted by a commercial bank. It is used by corporations to finance the
shipment and storage of goods and to furnish dollar exchange. Maturities are
generally six months or less.
CERTIFICATES OF DEPOSIT: A negotiable interest-bearing instrument with
a specific maturity. Certificates of deposit are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market, prior to maturity.
TIME DEPOSITS: A non-negotiable receipt issued by a bank in exchange
for the deposit of funds. Like a certificate of deposit, it earns a specified
rate of interest over a definite period of time; however, it cannot be traded in
the secondary market.
COMMERCIAL PAPER: The term used to designate unsecured short-term
promissory notes issued by corporations and other entities. Maturities on these
issues vary from a few days to nine months.
REPURCHASE AGREEMENTS: A repurchase agreement is a contractual
undertaking whereby the seller of securities (limited to U.S. Government
securities, including securities issued or guaranteed by the U.S. Treasury or
the various agencies and instrumentalities of the U.S. Government, including
mortgage-backed securities issued by U.S. Government agencies) agrees to
repurchase the securities at a specified price on a future date determined by
negotiations.
MASTER NOTES: Demand notes that permit investment of fluctuating
amounts of money at varying rates of interest pursuant to arrangements with
issuers who meet the quality criteria of a Fund. The interest rate on a master
note may fluctuate based upon changes in specified interest rates or be reset
periodically according to a prescribed formula or may be a set rate. Although
there is no secondary market in master notes, if such notes have a demand
feature, the payee may demand payment of the principal amount of the note on
relatively short notice. The notes may be secured or unsecured.
VARIABLE AND FLOATING RATE INSTRUMENTS: Certain instruments issued,
guaranteed or sponsored by the U.S. Government or its agencies, state and local
government issuers, and certain debt instruments issued by domestic banks or
corporations, may carry variable or floating rates of interest. Such instruments
bear interest at rates which are not fixed, but which vary with changes in
specified market rates or indices, such as a Federal Reserve composite index.
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SHAREHOLDER INFORMATION
This information supplements the discussion in each Fund's Prospectus
under the title "Shareholder Information."
TIMING OF PURCHASE ORDERS. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to AFS. Any loss
resulting from the dealer's failure to submit an order within the prescribed
time frame will be borne by that dealer. If a check used to purchase shares does
not clear, or if any investment order must be canceled due to nonpayment, the
investor will be responsible for any resulting loss to an AIM Fund or to AIM
Distributors.
SHARE CERTIFICATES. AIM Funds will issue share certificates upon
written request to AFS. Otherwise, shares are held on the shareholder's behalf
and recorded on the Fund books. AIM Funds will not issue certificates for shares
held in prototype retirement plans.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, all
shares are to be held by AFS and all dividends and distributions are reinvested
in shares of the applicable AIM Fund by AFS. To provide funds for payments made
under the Systematic Withdrawal Plan, AFS redeems sufficient full and fractional
shares at their net asset value in effect at the time of each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events.
Since such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the AIM Funds and AIM Cash Reserve
Shares of AIM Money Market Fund), it is disadvantageous to effect such purchases
while a Systematic Withdrawal Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic
Withdrawal Plan.
TERMS AND CONDITIONS OF EXCHANGES. 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, 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.
EXCHANGES BY TELEPHONE. 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 AFS as long as such
request is received prior to the close of the customary trading session of the
NYSE. AFS and AIM Distributors 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
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shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
By signing an account application form, an investor appoints AFS as
his true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by AFS 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. AFS 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 AFS 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
conformations promptly after the transaction. AFS reserves the right to modify
or terminate the telephone exchange privilege at any time without notice. An
investor may elect not to have this privilege by marking the appropriate box on
the application. Then any exchanges must be effected in writing by the investor.
REDEMPTIONS BY TELEPHONE. By signing an account application form, an
investor appoints AFS as his true and lawful attorney-in-fact to surrender for
redemption any and all unissued shares held by AFS in the designated account(s),
present or future, with full power of substitution in the premises. AFS 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 AFS 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. AFS reserves the right to cease
to act as attorney-in-fact subject to this appointment, and AIM Distributors
reserves the right to modify or terminate the telephone redemption privilege at
any time without notice. An investor may elect not to have this privilege by
marking the appropriate box on the application. Then any redemptions must be
effected in writing by the investor.
SIGNATURE GUARANTEES. In addition to those circumstances listed in the
"Shareholder Information" section of each Fund's prospectus, signature
guarantees are required in the following situations: (1) requests to transfer
the registration of shares to another owner; (2) telephone exchange and
telephone redemption authorization forms; (3) changes in previously designated
wiring or electronic funds transfer instructions; and (4) 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.
AIM Funds may waive or modify any signature guarantee requirements at any time.
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 AFS' current Signature Guarantee Standards and
Procedures, such as certain domestic banks, credit unions, securities dealers,
or securities exchanges. AFS 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
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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.
TRANSACTIONS BY INTERNET. An investor may effect transactions in his
account through the Internet by selecting the AIM Internet Connect option on his
completed account application form or completing an AIM Internet Connect
Authorization Form. By signing either form the investor acknowledges and agrees
that AFS and AIM Distributors will not be liable for any loss, expense or cost
arising out of any internet transaction effected in accordance with the
instructions set forth in the forms if they reasonably believe such request to
be genuine. Procedures for verification of internet transactions include
requests for confirmation of the shareholder's personal identification number
and mailing of confirmations promptly after the transactions. The investor also
acknowledges that (1) if he no longer wants the AIM Internet Connect option, he
will notify AFS in writing, and (2) the AIM Internet Connect option may be
terminated at any time by the AIM Funds.
DIVIDENDS AND DISTRIBUTIONS. 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.
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.
Dividends on Class B and Class C shares are expected to be lower than
those for Class A shares or AIM Cash Reserve Shares because of higher
distribution fees paid by Class B and Class C shares. Dividends on all shares
may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made
by the shareholder at any time by notice to AFS and are effective as to any
subsequent payment if such notice is received by AFS prior to the record date of
such payment. Any dividend and distribution election remains in effect until AFS
receives a revised written election by the shareholder.
Any dividend or distribution paid by a fund which does not declare
dividends daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes.
MISCELLANEOUS INFORMATION
CHARGES FOR CERTAIN ACCOUNT INFORMATION
AFS may impose certain copying charges for requests for copies of
shareholder account statements and other historical account information older
than the current year and the immediately preceding year.
AUDIT REPORTS
The Board of Trustees will issue to shareholders semi-annually the
Funds' financial statements. Financial statements, audited by independent
auditors, will be issued annually. The firm of KPMG LLP, 700 Louisiana, Bank of
America Building, Houston, Texas 77002, currently serves as the auditors of each
Fund.
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LEGAL MATTERS
Certain legal matters for the Trust have been passed upon by Ballard
Spahr Andrews & Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania
19103.
CUSTODIANS AND TRANSFER AGENT
State Street Bank and Trust Company (the "Custodian"), 225 Franklin
Street, Boston, Massachusetts 02110 is custodian of all securities and cash of
the Funds, except AIM MUNICIPAL BOND FUND, for which the Bank of New York, 90
Washington Street, 11th Floor, New York, New York 10286, is the custodian. Under
its respective contract with the Trust, each Custodian maintains the portfolio
securities of the Funds, administers the purchases and sales of portfolio
securities, collects interest and dividends and other distributions made on the
securities held in the portfolios of the Funds and performs other ministerial
duties. A I M Fund Services, Inc. (a wholly owned subsidiary of AIM), P.O. Box
4739, Houston, Texas 77210-4739 acts as transfer and dividend disbursing agent
for the Funds. These services do not include any supervisory function over
management or provide any jprotection against any possible depreciation of
assets. The Funds pay the Custodians and AFS 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 retail purchases of the AIM Funds.
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(s).
DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED
BY U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES
AIM INTERMEDIATE GOVERNMENT FUND may invest in "Agency Securities,"
which include some or all of those listed below. The following list does not
purport to be an exhaustive list of all Agency Securities, and the Fund reserves
the right to invest in Agency Securities other than those listed below.
EXPORT-IMPORT BANK CERTIFICATES are certificates of beneficial
interest and participation certificates issued and guaranteed by the
Export-Import Bank of the United States.
FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS are bonds issued by a
cooperatively owned, nationwide system of banks and associations supervised by
the Farm Credit Administration, an independent agency of the U.S. Government.
FEDERAL HOME LOAN BANK NOTES AND BONDS are notes and bonds issued by
the Federal Home Loan Bank System.
FHA DEBENTURES are debentures issued by the Federal Housing
Administration of the U.S. Government.
FHA INSURED NOTES are bonds issued by the Farmers Home Administration
of the U.S. Government.
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FEDERAL HOME LOAN MORTGAGE CORPORATION ("FHLMC") BONDS are bonds
issued and guaranteed by FHLMC, a corporate instrumentality of the U.S.
Government. The Federal Home Loan Banks own all the capital stock of FHLMC,
which obtains its funds by selling mortgages (as well as participation interests
in the mortgages) and by borrowing funds through the issuance of debentures and
otherwise.
FHLMC PARTICIPATION CERTIFICATES OR "FREDDIE MACS" represent undivided
interests in specified groups of conventional mortgage loans (and/or
participation interests in those loans) underwritten and owned by FHLMC. At
least 95% of the aggregate principal balance of the whole mortgage loans and/or
participations in a group formed by FHLMC typically consist of single-family
mortgage loans, and not more than 5% consists of multi-family loans. FHLMC
Participation Certificates are not guaranteed by, and do not constitute a debt
or obligation of, the U.S. Government or any Federal Home Loan Bank. FHLMC
Participation Certificates are issued in fully registered form only, in original
unpaid principal balances of $25,000, $100,000, $200,000, $500,000, $1 million
and $5 million. FHLMC guarantees to each registered holder of a Participation
Certificate, to the extent of such holder's pro rata share (i) the timely
payment of interest accruing at the applicable certificate rate on the unpaid
principal balance outstanding on the mortgage loans, and (ii) collection of all
principal on the mortgage loans without any offset or deductions. Pursuant to
these guaranties, FHLMC indemnifies holders of Participation Certificates
against any reduction in principal by reason of charges for property repairs,
maintenance, and foreclosure.
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") BONDS are bonds issued
and guaranteed by the Federal National Mortgage Association, a federally
chartered and privately-owned corporation.
FNMA PASS-THROUGH CERTIFICATES OR "FANNIE MAES" are mortgage
pass-through certificates issued and guaranteed by FNMA. FNMA Certificates
represent a fractional undivided ownership interest in a pool of mortgage loans
either provided from FNMA's own portfolio or purchased from primary lenders. The
mortgage loans included in the pool are conventional, insured by the Federal
Housing Administration or guaranteed by the Veterans Administration. FNMA
Certificates are not backed by, nor entitled to, the full faith and credit of
the U.S. Government.
Loans not provided from FNMA's own portfolio are purchased only from
primary lenders that satisfy certain criteria developed by FNMA, including depth
of mortgage origination experience, servicing experience and financial capacity.
FNMA may purchase an entire loan pool from a single lender, and issue
Certificates backed by that loan pool alone, or may package a pool made up of
loans purchased from various lenders.
Various types of mortgage loans, and loans with varying interest
rates, may be included in a single pool, although each pool will consist of
mortgage loans related to one-family or two-to-four family residential
properties. Substantially all FNMA mortgage pools currently consist of fixed
interest rate and growing equity mortgage loans, although FNMA mortgage pools
may also consist of adjustable interest rate mortgage loans or other types of
mortgage loans. Each mortgage loans must conform to FNMA's published
requirements or guidelines with respect to maximum principal amount,
loan-to-value ratio, loan term, underwriting standards and insurance coverage.
All mortgage loans are held by FNMA as trustee pursuant to a trust
indenture for the benefit of Certificate holders. The trust indenture gives FNMA
responsibility for servicing or administering the loans in a pool. FNMA
contracts with the lenders or other servicing institutions to perform all
services and duties customary to the servicing of mortgages, as well as duties
specifically prescribed by FNMA, and under FNMA supervision. FNMA may remove
service providers for cause.
The pass-through rate on FNMA Certificates is the lowest annual
interest rate borne by an underlying mortgage loan in the pool, less a fee to
FNMA as compensation for servicing and for FNMA's guarantee. Lenders servicing
the underlying mortgage loans receive as compensation a portion of the fee paid
to FNMA, the excess yields on pooled loans with coupon rates above the lowest
rate borne by any mortgage loan in the pool and certain other amounts collected,
such as late charges.
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The minimum size of a FNMA pool is $1 million of mortgage loans.
Registered holders purchase Certificates in amounts not less than $25,000.
FNMA Certificates are marketed by the servicing lender banks, usually
through securities dealers. The lender of a single lender pool typically markets
all Certificates based on that pool, and lenders of multiple lender pool market
Certificates based on a pro rata interest in the aggregate pool. The amounts of
FNMA Certificates currently outstanding is limited.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES OR
"GINNIE MAES" are mortgage-backed securities which represent a partial ownership
interest in a pool of mortgage loans issued by lenders such as mortgage bankers,
commercial banks and savings and loan associations. Each mortgage loan included
in the pool is either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
is assembled, and, after being approved by GNMA, is offered to investors through
securities dealers. GNMA is a U.S. Government corporation within the Department
of Housing and Urban Development.
The Portfolio will purchase only GNMA Certificates of the "modified
pass-through" type, which entitle the holder to receive its proportionate share
of all interest and principal payments owed on the mortgage pool, net of fees
paid to the issuer and GNMA, regardless of whether or not the mortgagor actually
makes the payment. GNMA Certificates differ from bonds in that the principal is
paid back monthly by the borrower over the term of the loan rather than returned
in a lump sum at maturity. Payment of principal of and interest on GNMA
Certificates of the "modified pass-through" type is guaranteed by GNMA and
backed by the full faith and credit of the U.S. Government.
The average life of a GNMA Certificate is likely to be substantially
less than the original maturity of the mortgage pools underlying the securities.
Prepayments of principal by mortgagors and mortgage foreclosures will usually
result in the return on the greater part of principal invested far in advance of
the maturity of the mortgages in the pool. Foreclosures impose no risk to
principal investment because of the GNMA guarantee.
As the prepayment rates of individual mortgage pools will vary widely,
it is not possible to accurately predict the average life of a particular issue
of GNMA Certificates. However, statistics published by the FHA indicate that the
average life of a single-family dwelling mortgage with 25- to 30-year maturity,
the type of mortgage which backs the vast majority of GNMA Certificates, is
approximately 12 years. It is therefore customary practice to treat GNMA
Certificates as 30-year mortgage-backed securities which prepay fully in the
twelfth year.
As a consequence of the fees paid to GNMA and the issuer of GNMA
Certificates, the coupon rate of interest of GNMA Certificates is lower than the
interest paid on the VA-guaranteed or FHA-insured mortgages underlying the
Certificates.
The yield which will be earned on GNMA Certificates may vary from
their coupon rates for the following reasons: (i) Certificates may be issued at
a premium or discount, rather than at par; (ii) Certificates may trade in the
secondary market at a premium or discount after issuance; (iii) interest is
earned and compounded monthly which has the effect of raising the effective
yield earned on the Certificates; and (iv) the actual yield of each Certificate
is affected by the prepayment of mortgages included in the mortgage pool
underlying the Certificates and the rate at which principal so prepaid is
reinvested. In addition, prepayment of mortgages included in the mortgage pool
underlying a GNMA Certificate purchased at a premium may result in a loss to the
Portfolio.
Due to the large amount of GNMA Certificates outstanding and active
participation in the secondary market by securities dealers and investors, GNMA
Certificates are highly liquid instruments. Prices of GNMA Certificates are
readily available from securities dealers and depend on, among other things, the
level of market
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rates, the Certificate's coupon rate and the prepayment experience of the pool
of mortgages backing each Certificate.
GENERAL SERVICES ADMINISTRATION PARTICIPATION CERTIFICATES are
participation certificates issued by the General Services Administration of the
U.S. Government.
MARITIME ADMINISTRATION BONDS are bonds issued and provided by the
Department of Transportation of the U.S. Government.
NEW COMMUNITIES DEBENTURES are debentures issued in accordance with
the provisions of Title IV of the Housing and Urban Development Act of 1968, as
supplemented and extended by Title VII of the Housing and Urban Development Act
of 1970, the payment of which is guaranteed by the U.S. Government.
PUBLIC HOUSING NOTES AND BONDS are short-term project notes and
long-term bonds issued by public housing and urban renewal agencies in
connection with programs administered by the Department of Housing and Urban
Development of the U.S. Government, the payment of which is secured by the U.S.
Government.
SBA DEBENTURES are debentures fully guaranteed as to principal and
interest by the Small Business Administration of the U.S. Government.
SLMA DEBENTURES are debentures backed by the Student Loan Marketing
Association.
TITLE XI BONDS are bonds issued in accordance with the provisions of
Title XI of the Merchant Marine Act of 1936, as amended, the payment of which is
guaranteed by the U.S. Government.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY BONDS are bonds issued
by the Washington Metropolitan Area Transit Authority and are guaranteed by the
Secretary of Transportation of the U.S. Government.
RATINGS OF SECURITIES
The following is a description of the factors underlying the
commercial paper and debt ratings of Moody's, S&P, Fitch IBCA, Inc. ("Fitch")
and Duff & Phelps:
MOODY'S BOND RATINGS
----------------------
Moody's describes its ratings for corporate bonds as follows:
AAA: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt-edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
AA: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high grade bonds. These 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 risk appear somewhat larger than the Aaa
securities.
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<PAGE> 260
A: Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa: Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from Aa to B. The modifier 1 indicates that the company
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the company ranks in the
lower end of its generic rating category.
MOODY'S MUNICIPAL BOND RATINGS
------------------------------
Aaa: Bonds rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds 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.
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<PAGE> 261
A: Bonds rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from Aa to B. The modifier indicates that the issue ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic category.
MOODY'S SHORT-TERM LOAN RATINGS
-------------------------------
Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or (MIG). Such ratings recognize the
differences between short-term credit risk and long-term risk. Factors affecting
the liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk,
long-term secular trends for example, may be less important over the short run.
A short-term rating may also be assigned on an issue having a demand
feature variable rate demand obligation (VRDO). Such ratings will be designated
as VMIG or, if the demand feature is not rated, as NR. Short-term ratings on
issues with demand features are differentiated by the use of the VMIG symbol to
reflect such characteristics as payment upon periodic demand rather than fixed
maturity dates and payment relying on external liquidity. Additionally,
investors should be alert to the fact that the source of payment may be limited
to the external liquidity with no or limited legal recourse to the issuer in the
event the demand is not met.
A VMIG rating may also be assigned to commercial paper programs. Such
programs are characterized as having variable short-term maturities but having
neither a variable rate nor demand feature.
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<PAGE> 262
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4.
Gradations of investment quality are indicated by rating symbols, with
each symbol representing a group in which the quality characteristics are
broadly the same.
MIG 1/VMIG 1: This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
MIG 2/VMIG 2: This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/VMIG 3: This designation denotes favorable quality. All security elements
are accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
MIG 4/VMIG 4: This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
MOODY'S COMMERCIAL PAPER RATINGS
----------------------------------
Moody's commercial paper ratings are opinions of the ability of issues
to repay punctually promissory obligations not having an original maturity in
excess of nine months.
PRIME-1: Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structures with moderate reliance on
debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
PRIME-2: Issuers rated Prime-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3: Issuers rated Prime-3 (or related supported institutions) have an
acceptable capacity for repayment of short-term promissory obligations. The
effects of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating
categories.
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<PAGE> 263
S&P BOND RATINGS
----------------
S&P describes its ratings for corporate bonds as follows:
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only in small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB-B-CCC-CC-C: Debt rated BB, B, CCC, CC and C is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the lowest degree of speculation and
C the highest. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or large exposure
to adverse conditions.
S&P DUAL RATINGS
----------------
S&P assigns "dual" ratings to all debt issues that have a put option
or demand feature as part of their structure.
The first rating addresses the likelihood of repayment of principal
and interest as due, and the second rating addresses only the demand feature.
The long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols for the put option (for
example, AAA/A-1+). With short-term demand debt, the note rating symbols are
used with the commercial paper rating symbols (for example, SP-1+/A-1+).
S&P MUNICIPAL NOTE RATINGS
--------------------------
An S&P note rating reflects the liquidity factors and market-access
risks unique to notes. Notes maturing in three years or less will likely receive
a note rating. Notes maturing beyond three years will most likely receive a
long-term debt rating. The following criteria will be used in making that
assessment: amortization schedule (the larger the final maturity relative to
other maturities, the more likely the issue will be treated as a note); and
source of payment (the more the issue depends on the market for its refinancing,
the more likely it is to be treated as a note).
Note rating symbols and definitions are as follows:
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<PAGE> 264
SP-1: Strong capacity to pay principal and interest. Issues determined to
possess very strong characteristics are given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.
SP-3: Speculative capacity to pay principal and interest.
S&P COMMERCIAL PAPER RATINGS
----------------------------
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days.
Rating categories are as follows:
A-1: This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
A-3: Issues carrying this designation have adequate capacity for timely payment.
They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B: Issues with this rating are regarded as having only speculative capacity for
timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D: Debt with this rating is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due, even
if the applicable grace period has not expired, unless it is believed that such
payments will be made during such grace period.
FITCH INVESTMENT GRADE BOND RATINGS
-----------------------------------
Fitch investment grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
represent Fitch's assessment of the issuer's ability to meet the obligations of
a specific debt issue in a timely manner.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the issuer's
future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be
provided by insurance policies or financial guaranties unless otherwise
indicated.
99
<PAGE> 265
Bonds carrying the same rating are of similar but not necessarily
identical credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell or hold any
security. Ratings do not comment on the adequacy of market price, the
suitability of any security for a particular investor, or the tax-exempt nature
or taxability of payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other
obligors, underwriters, their experts, and other sources Fitch believes to be
reliable. Fitch does not audit or verify the truth or accuracy of such
information. Ratings may be changed, suspended, or withdrawn as a result of
changes in, or the unavailability of, information or for other reasons.
AAA: Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA." Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F-1+."
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the "AAA" category.
NR: Indicates that Fitch does not rate the specific issue.
CONDITIONAL: A conditional rating is premised on the successful completion of a
project or the occurrence of a specific event.
SUSPENDED: A rating is suspended when Fitch deems the amount of information
available from the issuer to be inadequate for rating purposes.
WITHDRAWN: A rating will be withdrawn when an issue matures or is called or
refinanced, and, at Fitch's discretion, when an issuer fails to furnish proper
and timely information.
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<PAGE> 266
FITCHALERT: Ratings are placed on FitchAlert to notify investors of an
occurrence that is likely to result in a rating change and the likely direction
of such change. These are designated as "Positive," indicating a potential
upgrade, "Negative," for potential downgrade, or "Evolving," where ratings may
be raised or lowered. FitchAlert is relatively short-term, and should be
resolved within 12 months.
RATINGS OUTLOOK
---------------
An outlook is used to describe the most likely direction of any rating
change over the intermediate term. It is described as "Positive" or "Negative."
The absence of a designation indicates a stable outlook.
FITCH SPECULATIVE GRADE BOND RATINGS
------------------------------------
Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
("BB" to "C") represent Fitch's assessment of the likelihood of timely payment
of principal and interest in accordance with the terms of obligation for bond
issues not in default. For defaulted bonds, the rating ("DDD" to "D") is an
assessment of the ultimate recovery value through reorganization or liquidation.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer or possible recovery value in
bankruptcy, the current and prospective financial condition and operating
performance of the issuer and any guarantor, as well as the economic and
political environment that might affect the issuer's future financial strength.
Bonds that have the same rating are of similar but not necessarily
identical credit quality since rating categories cannot fully reflect the
differences in degrees of credit risk.
BB: Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified, which could assist the
obligor in satisfying its debt service requirements.
B: Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC: Bonds have certain identifiable characteristics that, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC: Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C: Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D: Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D" represents
the lowest potential for recovery.
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<PAGE> 267
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the "DDD", "DD", or "D" categories.
FITCH SHORT-TERM RATINGS
---------------------------
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
The short-term rating places greater emphasis than a long-term rating
on the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
Fitch short-term ratings are as follows:
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as for
issues assigned "F-1+" and "F-1" ratings.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate, however,
near-term adverse changes could cause these securities to be rated below
investment grade.
F-S: Weak Credit Quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are vulnerable
to near-term adverse changes in financial and economic conditions.
D: Default. Issues assigned this rating are in actual or imminent payment
default.
LOC: The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.
DUFF & PHELPS LONG-TERM RATINGS
--------------------------------
AAA: Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+, AA AND AA-: High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.
A+, A AND A-: Protection factors are average but adequate. However, risk factors
are more variable and greater in periods of economic stress.
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BBB+, BBB AND BBB-: Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.
BB+, BB AND BB-: Below investment grade but deemed likely to meet obligations
when due. Present or prospective financial protection factors fluctuate
according to industry conditions or company fortunes. Overall quality may move
up or down frequently within this category.
B+, B AND B-: Below investment grade and possessing risk that obligations will
not be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this category or into
a higher or lower rating grade.
CCC: Well below investment grade securities. Considerable uncertainty exists as
to timely payment of principal, interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.
DD: Defaulted debt obligations. Issuer failed to meet scheduled principal and/or
interest payments.
DP: Preferred stock with dividend arrearages.
DUFF & PHELPS SHORT-TERM RATINGS
----------------------------------
D - 1+: Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding and safety is just below risk-free U.S. Treasury short-term
obligations.
D - 1: Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.
D - 1-: High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
D - 2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
D - 3: Satisfactory liquidity and other protection factors qualify issue as to
investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.
D - 4: Speculative investment characteristics. Liquidity is not sufficient to
insure against disruption in debt service. Operating factors and market access
may be subject to a high degree of variation.
D - 5: Issuer failed to meet scheduled principal and/or interest payments.
103
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FINANCIAL STATEMENTS
FS
<PAGE> 270
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Balanced Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Balanced Fund (a portfolio of AIM
Funds Group), including the schedule of investments, as
of December 31, 1999, and the related statement of
operations for the year then ended, the statement of
changes in net assets for each of the years in the
two-year period then ended, and the financial highlights
for each of the years in the five-year period then ended.
These financial statements and financial highlights are
the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1999, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Balanced
Fund as of December 31, 1999, the results of its
operations for the year then ended, the changes in its
net assets for each of the years in the two-year period
then ended, and the financial highlights for each of the
years in the five-year period then ended, in conformity
with generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
February 4, 2000
Houston, Texas
FS-1
<PAGE> 271
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED BONDS &
NOTES-25.23%
AIRLINES-1.37%
Airplanes Pass Through
Trust-Series D, Gtd. Sub.
Bonds, 10.88%, 03/15/19 $ 500,000 $ 440,000
- ---------------------------------------------------------------
America West Airlines,
Inc.,-Series C, Pass Through
Ctfs., 6.86%, 07/02/04 4,581,363 4,481,352
- ---------------------------------------------------------------
American Airlines, Inc.-Series
87-A, Equipment Trust Ctfs.,
9.90%, 01/15/11 2,955,000 3,271,510
- ---------------------------------------------------------------
AMR Corp., Deb., 10.00%,
04/15/21 4,300,000 4,878,049
- ---------------------------------------------------------------
Delta Air Lines, Inc.,
Deb., 9.00%, 05/15/16 5,000,000 5,172,100
- ---------------------------------------------------------------
Deb., 10.38%, 12/15/22 2,300,000 2,702,845
- ---------------------------------------------------------------
Notes, 7.90%, 12/15/09
(Acquired 12/07/99; Cost
$5,958,360)(a) 6,000,000 5,884,080
- ---------------------------------------------------------------
Series B, Medium Term Notes,
8.52%, 01/30/04 2,000,000 2,054,980
- ---------------------------------------------------------------
Series C, Medium Term Notes,
6.65%, 03/15/04 2,900,000 2,781,912
- ---------------------------------------------------------------
Northwest Airlines Inc.-Series
971B, Pass Through Ctfs.,
7.25%, 07/02/14 4,471,394 4,044,041
- ---------------------------------------------------------------
United Air Lines, Inc.,
Deb., 9.75%, 08/15/21 3,600,000 3,943,224
- ---------------------------------------------------------------
Series 95A2, Pass Through
Ctfs., 9.56%, 10/19/18 3,750,000 4,006,237
- ---------------------------------------------------------------
43,660,330
- ---------------------------------------------------------------
AUTOMOBILES-0.33%
DaimlerChrysler N.A. Holdings,
Gtd. Notes, 7.20%, 09/01/09 5,950,000 5,853,372
- ---------------------------------------------------------------
General Motors Corp., Putable
Deb., 8.80%, 03/01/21 400,000 440,096
- ---------------------------------------------------------------
Rocs Series CHR-1998-1,
Collateral Trust, 6.50%,
08/01/18 4,814,270 4,283,040
- ---------------------------------------------------------------
10,576,508
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.20%
Bank One Corp.-Series A, Medium
Term Sub. Notes, 6.00%,
02/17/09 4,750,000 4,218,047
- ---------------------------------------------------------------
Midland Bank PLC (United
Kingdom), Yankee Sub. Notes,
7.65%, 05/01/25 2,105,000 2,099,990
- ---------------------------------------------------------------
6,318,037
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-0.68%
First Union Corp., Putable Sub.
Deb., 7.50%, 04/15/35 5,700,000 5,690,025
- ---------------------------------------------------------------
Republic New York Corp.,
Sub. Deb., 9.50%, 04/15/14 5,400,000 5,951,232
- ---------------------------------------------------------------
Sub. Notes, 9.70%, 02/01/09 5,000,000 5,517,800
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
BANKS (MONEY CENTER)-(CONTINUED)
Santander Financial Issuances
Ltd. (Cayman Islands), Unsec.
Gtd. Yankee Sub. Notes, 7.25%,
11/01/15 $ 5,000,000 $ 4,626,300
- ---------------------------------------------------------------
21,785,357
- ---------------------------------------------------------------
BANKS (REGIONAL)-0.91%
Marshall & Ilsley Corp.-Series
D, Medium Term Notes, 6.43%,
10/15/02 4,000,000 3,937,840
- ---------------------------------------------------------------
Mercantile Bancorp., Inc.,
Unsec. Sub. Notes, 7.30%,
06/15/07 8,300,000 8,126,945
- ---------------------------------------------------------------
Riggs Capital Trust II-Series C,
Gtd. Bonds, 8.88%, 03/15/27 9,550,000 8,711,348
- ---------------------------------------------------------------
US Bancorp, Sub. Deb., 7.50%,
06/01/26 8,400,000 8,314,068
- ---------------------------------------------------------------
29,090,201
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO
& CABLE)-1.98%
British Sky Broadcasting Group
PLC (United Kingdom), Sr.
Unsec. Gtd. Yankee Notes,
8.20%, 07/15/09 11,520,000 11,094,071
- ---------------------------------------------------------------
Clear Channel Communications,
Inc., Conv. Unsec. Notes,
1.50%, 12/01/02 10,500,000 10,788,750
- ---------------------------------------------------------------
Comcast Cable Communications,
Unsec. Notes, 8.50%, 05/01/27 3,400,000 3,609,848
- ---------------------------------------------------------------
Continental Cablevision, Inc.,
Sr. Notes, 8.30%, 05/15/06 8,350,000 8,662,540
- ---------------------------------------------------------------
Cox Communications, Inc., Unsec.
Notes, 7.75%, 08/15/06 6,300,000 6,347,187
- ---------------------------------------------------------------
CSC Holdings Inc.,
Sr. Unsec. Deb., 7.63%,
07/15/18 7,100,000 6,626,430
- ---------------------------------------------------------------
Sr. Unsec. Deb., 7.88%,
02/15/18 1,420,000 1,358,883
- ---------------------------------------------------------------
Sr. Unsec. Notes, 7.88%,
12/15/07 5,545,000 5,470,420
- ---------------------------------------------------------------
Lenfest Communications, Inc.,
Sr. Unsec. Sub. Notes, 8.25%,
02/15/08 2,300,000 2,311,500
- ---------------------------------------------------------------
TCI Communications, Inc., Sr.
Notes, 8.00%, 08/01/05 6,500,000 6,697,925
- ---------------------------------------------------------------
62,967,554
- ---------------------------------------------------------------
CHEMICALS-0.40%
Airgas, Inc., Medium Term Notes,
7.14%, 03/08/04 6,700,000 6,317,028
- ---------------------------------------------------------------
Union Carbide Corp., Deb.,
6.79%, 06/01/25 6,750,000 6,476,760
- ---------------------------------------------------------------
12,793,788
- ---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.18%
Equistar Chemical, L.P., Sr.
Unsec. Notes, 8.50%, 02/15/04 5,750,000 5,721,946
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.83%
Comverse Technology, Inc., Conv.
Unsec. Sub. Deb., 4.50%,
07/01/05 7,700,000 26,266,625
- ---------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 272
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
COMPUTERS (HARDWARE)-0.31%
Candescent Technology Corp., Sr.
Conv. Sub. Deb., 7.00%,
05/01/03 (Acquired
04/17/98-07/12/99; Cost
$11,901,350)(a) $ 12,670,000 $ 9,882,600
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-0.85%
VERITAS Software Corp., Conv.
Unsec. Disc. Notes, 1.86%,
08/13/06(b) 10,000,000 26,962,500
- ---------------------------------------------------------------
CONSUMER FINANCE-1.36%
Capital One Financial Corp.,
Unsec. Notes, 7.25%, 05/01/06 3,890,000 3,674,533
- ---------------------------------------------------------------
CitiFinancial Credit Co.,
Putable Notes,
6.63%, 06/01/15 2,000,000 1,979,820
- ---------------------------------------------------------------
7.88%, 02/01/25 4,000,000 3,892,800
- ---------------------------------------------------------------
Countrywide Capital III-Series
B, Gtd. Bonds, 8.05%, 06/15/27 4,300,000 3,960,171
- ---------------------------------------------------------------
General Motors Acceptance Corp.,
Notes, 9.00%, 10/15/02 4,175,000 4,367,509
- ---------------------------------------------------------------
Household Finance Corp., Notes,
7.13%, 09/01/05 4,700,000 4,604,449
- ---------------------------------------------------------------
Sr. Unsec. Unsub. Notes,
6.40%, 06/17/08 10,900,000 10,060,918
- ---------------------------------------------------------------
MBNA Capital I-Series A, Gtd.
Bonds, 8.28%, 12/01/26 12,415,000 10,893,418
- ---------------------------------------------------------------
43,433,618
- ---------------------------------------------------------------
ELECTRIC COMPANIES-2.53%
Arizona Public Service Co.,
Unsec. Notes, 6.25%, 01/15/05 5,000,000 4,717,850
- ---------------------------------------------------------------
CMS Energy Corp., Sr. Unsec.
Notes, 8.13%, 05/15/02 4,950,000 4,932,823
- ---------------------------------------------------------------
Commonwealth Edison Co.-Series
94, First Mortgage Notes,
7.50%, 07/01/13 9,300,000 9,086,100
- ---------------------------------------------------------------
El Paso Electric Co.-Series E,
Sec. First Mortgage Bonds,
9.40%, 05/01/11 4,000,000 4,237,720
- ---------------------------------------------------------------
Empire District Electric Co.
(The), Sr. Notes, 7.70%,
11/15/04 8,550,000 8,383,189
- ---------------------------------------------------------------
Indiana Michigan Power
Co.-Series F, Sec. Lease
Obligation Bonds, 9.82%,
12/07/22 1,357,218 1,501,735
- ---------------------------------------------------------------
Niagara Mohawk Power Co.,
First Mortgage Notes, 6.63%,
07/01/05 7,200,000 6,881,184
- ---------------------------------------------------------------
Series G, Sr. Unsec. Notes,
7.75%, 10/01/08 11,700,000 11,716,497
- ---------------------------------------------------------------
Series H, Sr. Unsec. Disc.
Notes, 8.50%, 07/01/10(c) 12,000,000 8,989,440
- ---------------------------------------------------------------
Southern Energy, Inc., Sr.
Notes, 7.90%, 07/15/09
(Acquired 07/21/99-12/03/99;
Cost $7,165,447)(a) 7,225,000 6,966,056
- ---------------------------------------------------------------
Texas-New Mexico Power Co., Sr.
Sec. Notes, 6.25%, 01/15/09 2,750,000 2,365,302
- ---------------------------------------------------------------
UtiliCorp United, Inc., Sr.
Unsec. Putable Notes, 6.70%,
10/15/06 3,000,000 2,963,820
- ---------------------------------------------------------------
Western Resources, Inc., Sr.
Unsec. Notes,
6.25%, 08/15/03 2,425,000 2,292,837
- ---------------------------------------------------------------
7.13%, 08/01/09 6,000,000 5,428,920
- ---------------------------------------------------------------
80,463,473
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
ENTERTAINMENT-0.62%
Time Warner Inc., Deb.,
9.13%, 01/15/13 $ 10,000,000 $ 10,984,700
- ---------------------------------------------------------------
9.15%, 02/01/23 7,850,000 8,764,996
- ---------------------------------------------------------------
19,749,696
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.01%
BellSouth Capital Funding,
Putable Deb., 6.04%, 11/15/26 4,000,000 3,943,240
- ---------------------------------------------------------------
Chrysler Financial Corp., Deb.,
8.50%, 02/01/18 150,000 150,219
- ---------------------------------------------------------------
Dow Capital B.V. (Netherlands),
Gtd. Yankee Deb., 9.20%,
06/01/10 10,250,000 11,282,175
- ---------------------------------------------------------------
Heller Financial, Inc., Notes,
7.38%, 11/01/09 (Acquired
11/23/99; Cost $9,469,885)(a) 9,500,000 9,265,635
- ---------------------------------------------------------------
Source One Mortgage Services
Corp., Deb., 9.00%, 06/01/12 5,700,000 6,208,662
- ---------------------------------------------------------------
Sun Canada Financial Co., Gtd.
Sub. Notes, 6.63%, 12/15/07
(Acquired 10/14/99; Cost
$1,402,095)(a) 1,500,000 1,404,550
- ---------------------------------------------------------------
32,254,481
- ---------------------------------------------------------------
FOODS-0.58%
ConAgra, Inc.,
Sr. Putable Notes, 6.70%,
08/01/27 7,500,000 6,981,075
- ---------------------------------------------------------------
Sr. Unsec. Putable Notes,
7.13%, 10/01/26 7,700,000 7,461,377
- ---------------------------------------------------------------
Grand Metropolitan Investment
Corp., Gtd. Bonds, 7.45%,
04/15/35 4,000,000 3,967,600
- ---------------------------------------------------------------
18,410,052
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-0.20%
Alpharma, Inc., Conv. Sr. Unsec.
Sub. Notes, 3.00%, 06/01/06
(Acquired 05/27/99; Cost
$6,000,000)(a) 6,000,000 6,465,000
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS
(NON-DURABLES)-0.19%
Procter & Gamble Co. (The),
Putable Deb., 8.00%, 09/01/24 5,650,000 5,998,718
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.66%
Conseco, Inc., Unsec. Notes,
6.80%, 06/15/05 6,700,000 6,259,207
- ---------------------------------------------------------------
9.00%, 10/15/06 2,560,000 2,634,829
- ---------------------------------------------------------------
Torchmark Corp., Notes,
7.38%, 08/01/13 3,000,000 2,728,560
- ---------------------------------------------------------------
7.88%, 05/15/23 10,500,000 9,385,215
- ---------------------------------------------------------------
21,007,811
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-0.36%
Florida Windstorm, Underwriting
Association, Sr. Sec. Notes,
7.13%, 02/25/19 (Acquired
03/26/99; Cost $2,834,354)(a) 2,850,000 2,625,449
- ---------------------------------------------------------------
</TABLE>
FS-
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
INSURANCE (PROPERTY-CASUALTY)-(CONTINUED)
Terra Nova Insurance PLC (United
Kingdom),
Sr. Unsec. Gtd. Notes, 7.00%,
05/15/08 $ 2,350,000 $ 2,161,483
- ---------------------------------------------------------------
Sr. Unsec. Gtd. Yankee Notes,
7.20%, 08/15/07 7,000,000 6,553,330
- ---------------------------------------------------------------
11,340,262
- ---------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-0.52%
HSBC America Capital Trust II,
Gtd. Bonds, 8.38%, 05/15/27
(Acquired 08/12/99; Cost
$1,907,256)(a) 1,990,000 1,842,700
- ---------------------------------------------------------------
Lehman Brothers Holdings Inc.,
Notes, 8.50%, 08/01/15 5,350,000 5,481,664
- ---------------------------------------------------------------
Sr. Notes, 8.80%, 03/01/15 4,855,000 5,075,903
- ---------------------------------------------------------------
Sr. Sub. Notes, 7.38%,
01/15/07 4,400,000 4,272,400
- ---------------------------------------------------------------
16,672,667
- ---------------------------------------------------------------
NATURAL GAS-1.38%
CMS Panhandle Holding Co., Sr.
Notes, 6.13%, 03/15/04 6,600,000 6,250,688
- ---------------------------------------------------------------
Enron Corp., Sr. Sub. Deb.,
6.75%, 07/01/05 4,550,000 4,367,727
- ---------------------------------------------------------------
8.25%, 09/15/12 4,300,000 4,367,768
- ---------------------------------------------------------------
Ferrellgas Partners L.P.-Series
B, Sr. Sec. Gtd. Notes, 9.38%,
06/15/06 4,950,000 4,875,750
- ---------------------------------------------------------------
Kinder Morgan, Inc., Unsec.
Deb., 7.35%, 08/01/26 7,800,000 7,591,116
- ---------------------------------------------------------------
National Fuel Gas Co.-Series D,
Medium Term Notes, 6.30%,
05/27/08 8,600,000 7,830,386
- ---------------------------------------------------------------
Nova Gas Transmission Ltd.
(Canada), Yankee Deb., 8.50%,
12/15/12 5,015,000 5,217,054
- ---------------------------------------------------------------
PanEnergy Corp., Notes, 7.88%,
08/15/04 1,500,000 1,505,505
- ---------------------------------------------------------------
Sonat Inc., Unsec. Notes, 7.63%,
07/15/11 2,000,000 1,967,120
- ---------------------------------------------------------------
43,973,114
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.15%
NRG Energy, Inc., Sr. Unsec.
Notes, 7.50%, 06/01/09 5,000,000 4,603,500
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.14%
ONEOK, Inc., Unsec. Notes,
7.75%, 08/15/06 3,100,000 3,068,969
- ---------------------------------------------------------------
Talisman Energy Inc. (Canada),
Yankee Deb., 7.13%, 06/01/07 1,500,000 1,441,425
- ---------------------------------------------------------------
4,510,394
- ---------------------------------------------------------------
OIL & GAS (REFINING &
MARKETING)-0.22%
Quaker State Corp., Notes,
6.63%, 10/15/05 2,840,000 2,660,938
- ---------------------------------------------------------------
Tosco Corp., Unsec. Deb., 7.80%,
01/01/27 4,450,000 4,194,837
- ---------------------------------------------------------------
6,855,775
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
POWER PRODUCERS
(INDEPENDENT)-0.70%
AES Corp.,
Sr. Notes, 8.00%, 12/31/08 $ 1,000,000 $ 917,500
- ---------------------------------------------------------------
Sr. Unsec. Sub. Notes, 8.38%,
08/15/07 3,000,000 2,797,500
- ---------------------------------------------------------------
Sr. Unsec. Sub. Notes, 10.25%,
07/15/06 1,800,000 1,836,000
- ---------------------------------------------------------------
CE Generation LLC, Sr. Sec.
Notes, 7.42%, 12/15/18
(Acquired 02/24/99-08/19/99;
Cost $7,913,190)(a) 7,800,000 7,187,926
- ---------------------------------------------------------------
Hydro-Quebec,
Series B (Canada), Gtd. Medium
Term Notes, 8.62%, 12/15/11 4,750,000 5,127,245
- ---------------------------------------------------------------
Series IO (Canada), Gtd.
Yankee Bond, 8.05%, 07/07/24 1,300,000 1,364,246
- ---------------------------------------------------------------
Kincaid Generation LLC, Sec.
Bonds, 7.33%, 06/15/20
(Acquired 04/30/98; Cost
$3,508,645)(a) 3,500,000 3,095,355
- ---------------------------------------------------------------
22,325,772
- ---------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.62%
News America Holdings, Inc.,
Putable Notes, 8.45%, 08/01/34 3,125,000 3,173,688
- ---------------------------------------------------------------
Sr. Gtd. Deb., 9.25%, 02/01/13 10,150,000 11,062,485
- ---------------------------------------------------------------
Sr. Unsec. Gtd. Putable Bonds,
7.43%, 10/01/26 5,450,000 5,353,045
- ---------------------------------------------------------------
19,589,218
- ---------------------------------------------------------------
RAILROADS-0.50%
CSX Corp.,
Deb., 9.00%, 08/15/06 6,750,000 7,146,225
- ---------------------------------------------------------------
Sr. Unsec. Putable Deb.,
6.95%, 05/01/27 3,530,000 3,507,020
- ---------------------------------------------------------------
Norfolk Southern Corp., Notes,
7.05%, 05/01/37 5,500,000 5,391,265
- ---------------------------------------------------------------
16,044,510
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUSTS-0.27%
Health Care REIT, Inc., Sr.
Unsec. Notes, 7.63%, 03/15/08 1,150,000 952,189
- ---------------------------------------------------------------
Spieker Properties, Inc., Unsec.
Deb., 7.35%, 12/01/17 8,800,000 7,767,848
- ---------------------------------------------------------------
8,720,037
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.16%
Great Atlantic & Pacific Tea
Co., Inc. (Canada), Yankee
Gtd. Notes, 7.78%, 11/01/00(c) 5,000,000 5,048,200
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.25%
AnnTaylor Stores Corp., Conv.
Unsec. Gtd. Sub. Bonds, 0.55%,
06/18/19 (Acquired
11/04/99-11/17/99; Cost
$9,000,250)(a) 14,600,000 7,829,250
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.69%
Dime Capital Trust I-Series A,
Gtd. Bonds, 9.33%, 05/06/27 5,400,000 5,091,768
- ---------------------------------------------------------------
Sovereign Bancorp, Inc., Medium
Term Sub. Notes, 8.00%,
03/15/03 5,330,000 5,090,203
- ---------------------------------------------------------------
</TABLE>
FS-3
<PAGE> 273
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
SAVINGS & LOAN COMPANIES-(CONTINUED)
St. Paul Bancorp, Inc., Sr.
Unsec. Notes, 7.13%, 02/15/04 $ 5,500,000 $ 5,361,070
- ---------------------------------------------------------------
Washington Mutual, Inc.,
Gtd. Bonds, 8.38%, 06/01/27 4,285,000 4,094,403
- ---------------------------------------------------------------
Notes, 7.50%, 08/15/06 2,215,000 2,204,523
- ---------------------------------------------------------------
21,841,967
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.24%
Lamar Advertising Co., Conv.
Unsec. Notes, 5.25%, 09/15/06 5,300,000 7,751,250
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.47%
Laidlaw Inc. (Canada),
Putable Yankee Deb., 6.72%,
10/01/27 3,000,000 2,552,100
- ---------------------------------------------------------------
Unsec. Yankee Deb., 6.70%,
05/01/08 8,100,000 6,894,477
- ---------------------------------------------------------------
Unsec. Yankee Notes, 7.65%,
05/15/06 5,965,000 5,541,783
- ---------------------------------------------------------------
14,988,360
- ---------------------------------------------------------------
SHIPPING-0.08%
Hutchison Delta Finance
Ltd.-Series REGS (Cayman
Islands), Conv. Unsec. Notes,
7.00%, 11/25/01 2,250,000 2,610,000
- ---------------------------------------------------------------
SOVEREIGN DEBT-0.76%
Province of Manitoba (Canada),
Yankee Unsec. Deb., 5.50%,
10/01/08 2,000,000 1,794,160
- ---------------------------------------------------------------
Series AZ, Putable Yankee
Deb., 7.75%, 07/17/16 5,850,000 5,990,108
- ---------------------------------------------------------------
Province of Newfoundland
(Canada), Unsec. Yankee Deb.,
9.00%, 06/01/19 2,500,000 2,804,975
- ---------------------------------------------------------------
Province of Quebec-Series A
(Canada), Medium Term Putable
Yankee Notes,
5.74%, 03/02/26 4,430,000 4,392,877
- ---------------------------------------------------------------
6.29%, 03/06/26 9,300,000 9,144,132
- ---------------------------------------------------------------
24,126,252
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-1.02%
AT&T Corp., Deb., 8.63%,
12/01/31 12,700,000 13,017,373
- ---------------------------------------------------------------
MCI Communications Corp.,
Sr. Unsec. Notes, 6.50%,
04/15/10 7,900,000 7,373,544
- ---------------------------------------------------------------
Sr. Unsec. Putable Deb.,
7.13%, 06/15/27 10,150,000 10,198,720
- ---------------------------------------------------------------
Sprint Corp., Putable Deb.,
9.00%, 10/15/19 1,800,000 1,994,346
- ---------------------------------------------------------------
32,583,983
- ---------------------------------------------------------------
TELEPHONE-1.17%
AT&T Corp.-Liberty Media Group,
Bonds, 7.88%, 07/15/09
(Acquired 06/30/99; Cost
$2,833,014)(a) 2,850,000 2,841,778
- ---------------------------------------------------------------
Cable & Wireless Communications
PLC (United Kingdom), Yankee
Notes, 6.75%, 12/01/08 3,400,000 3,349,578
- ---------------------------------------------------------------
Electric Lightwave, Inc. Notes,
6.05%, 05/15/04 (Acquired
04/21/99; Cost $9,792,846)(a) 9,800,000 9,247,378
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELEPHONE-(CONTINUED)
GTE Corp., Unsec. Deb., 6.84%,
04/15/18 $ 5,500,000 $ 5,040,860
- ---------------------------------------------------------------
NTL Inc., Conv. Sub. Notes,
5.75%, 12/15/09 (Acquired
12/17/99; Cost $9,000,000)(a) 9,000,000 9,720,000
- ---------------------------------------------------------------
SBC Communications, Inc., Deb.,
7.38%, 07/15/43 7,930,000 7,133,352
- ---------------------------------------------------------------
37,332,946
- ---------------------------------------------------------------
WASTE MANAGEMENT-0.34%
Browning-Ferris Industries,
Inc., Deb., 7.40%, 09/15/35 4,170,000 3,023,250
- ---------------------------------------------------------------
Waste Management, Inc.,
Sr. Unsec. Notes, 7.13%,
12/15/17 1,020,000 799,292
- ---------------------------------------------------------------
Unsec. Putable Notes, 7.10%,
08/01/26 7,500,000 6,955,650
- ---------------------------------------------------------------
10,778,192
- ---------------------------------------------------------------
Total U.S. Dollar
Denominated Bonds & Notes
(Cost $804,332,607) 803,333,944
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-45.04%
AUTOMOBILES-0.31%
Ford Motor Co. 185,000 9,885,937
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-0.49%
Chase Manhattan Corp. (The) 200,000 15,537,500
- ---------------------------------------------------------------
BIOTECHNOLOGY-0.66%
Biogen, Inc.(d) 155,000 13,097,500
- ---------------------------------------------------------------
Genzyme Corp.(d) 175,000 7,875,000
- ---------------------------------------------------------------
20,972,500
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO
& CABLE)-2.80%
CBS Corp.(d) 361,400 23,107,012
- ---------------------------------------------------------------
Hispanic Broadcasting Corp.(d) 193,000 17,798,219
- ---------------------------------------------------------------
Infinity Broadcasting
Corp.-Class A(d) 474,250 17,161,922
- ---------------------------------------------------------------
Univision Communications,
Inc.-Class A(d) 305,000 31,167,187
- ---------------------------------------------------------------
89,234,340
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.36%
ANTEC Corp.(d) 260,600 9,511,900
- ---------------------------------------------------------------
JDS Uniphase Corp.(d) 58,000 9,356,125
- ---------------------------------------------------------------
Lucent Technologies Inc. 517,000 38,678,062
- ---------------------------------------------------------------
Motorola, Inc. 100,000 14,725,000
- ---------------------------------------------------------------
Sycamore Networks, Inc.(d) 47,000 14,476,000
- ---------------------------------------------------------------
Tellabs, Inc.(d) 190,000 12,195,625
- ---------------------------------------------------------------
Williams Communications Group,
Inc.(d) 275,700 7,978,069
- ---------------------------------------------------------------
106,920,781
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-1.64%
Dell Computer Corp.(d) 135,000 6,885,000
- ---------------------------------------------------------------
International Business Machines
Corp.(e) 133,000 14,364,000
- ---------------------------------------------------------------
</TABLE>
FS-4
<PAGE> 274
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (HARDWARE)-(CONTINUED)
Sun Microsystems, Inc.(d) 398,000 $ 30,820,125
- ---------------------------------------------------------------
52,069,125
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.46%
Cisco Systems, Inc.(d) 340,000 36,422,500
- ---------------------------------------------------------------
Foundry Networks, Inc.(d) 33,000 9,955,687
- ---------------------------------------------------------------
46,378,187
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.16%
EMC Corp.(d) 309,000 33,758,250
- ---------------------------------------------------------------
Immersion Corp.(d) 85,400 3,277,225
- ---------------------------------------------------------------
37,035,475
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-5.63%
America Online, Inc.(d)(e) 442,000 33,343,375
- ---------------------------------------------------------------
Concord Communications, Inc.(d) 81,100 3,598,812
- ---------------------------------------------------------------
eSPEED, Inc.-Class A(d) 128,700 4,576,894
- ---------------------------------------------------------------
FreeMarkets, Inc.(d) 94,700 32,322,293
- ---------------------------------------------------------------
InfoSpace.com, Inc.(d) 184,800 39,547,200
- ---------------------------------------------------------------
ISS Group, Inc.(d) 220,000 15,647,500
- ---------------------------------------------------------------
Microsoft Corp.(d) 200,000 23,350,000
- ---------------------------------------------------------------
Telemate.Net Software, Inc.(d) 282,700 4,593,875
- ---------------------------------------------------------------
USWeb Corp.(d) 500,000 22,218,750
- ---------------------------------------------------------------
179,198,699
- ---------------------------------------------------------------
CONSUMER FINANCE-0.21%
SLM Holding Corp. 155,000 6,548,750
- ---------------------------------------------------------------
ELECTRIC COMPANIES-0.09%
Plug Power, Inc.(d) 100,000 2,825,000
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.67%
Conexant Systems, Inc.(d) 30,300 2,011,162
- ---------------------------------------------------------------
General Electric Co. 125,000 19,343,750
- ---------------------------------------------------------------
21,354,912
- ---------------------------------------------------------------
ELECTRONICS (COMPONENT
DISTRIBUTORS)-0.00%
Sensormatic Electronics Corp.
(Acquired 06/30/98; Cost
$59,993)(a) 4,392 76,585
- ---------------------------------------------------------------
ELECTRONICS (DEFENSE)-0.29%
General Motors Corp.-Class
H(d)(e) 95,000 9,120,000
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-2.05%
Analog Devices, Inc.(d) 196,000 18,228,000
- ---------------------------------------------------------------
Intel Corp. 233,500 19,219,969
- ---------------------------------------------------------------
Microchip Technology, Inc.(d) 136,000 9,307,500
- ---------------------------------------------------------------
SDL, Inc.(d) 85,200 18,573,600
- ---------------------------------------------------------------
65,329,069
- ---------------------------------------------------------------
ENTERTAINMENT-0.33%
Time Warner Inc. 144,200 10,445,488
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
EQUIPMENT (SEMICONDUCTOR)-0.50%
Applied Materials, Inc.(d) 125,000 $ 15,835,938
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.82%
American Express Co. 75,000 12,468,750
- ---------------------------------------------------------------
Citigroup Inc. 242,998 13,501,576
- ---------------------------------------------------------------
Fannie Mae 175,000 10,926,563
- ---------------------------------------------------------------
Freddie Mac 238,000 11,200,875
- ---------------------------------------------------------------
MGIC Investment Corp. 163,000 9,810,563
- ---------------------------------------------------------------
57,908,327
- ---------------------------------------------------------------
FOODS-0.21%
Keebler Foods Co.(d) 234,000 6,581,250
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-1.27%
American Home Products Corp. 196,000 7,729,750
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 135,000 8,665,313
- ---------------------------------------------------------------
Johnson & Johnson 100,000 9,312,500
- ---------------------------------------------------------------
Warner-Lambert Co. 178,000 14,584,875
- ---------------------------------------------------------------
40,292,438
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-0.30%
Forest Laboratories, Inc.(d) 156,000 9,584,250
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-1.09%
Lilly (Eli) & Co. 141,000 9,376,500
- ---------------------------------------------------------------
Merck & Co., Inc. 122,000 8,181,625
- ---------------------------------------------------------------
Pfizer Inc. 331,000 10,736,813
- ---------------------------------------------------------------
Schering-Plough Corp. 152,000 6,412,500
- ---------------------------------------------------------------
34,707,438
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.76%
Baxter International, Inc. 150,400 9,447,000
- ---------------------------------------------------------------
Guidant Corp.(d) 280,000 13,160,000
- ---------------------------------------------------------------
Medtronic, Inc. 490,000 17,854,375
- ---------------------------------------------------------------
VISX, Inc.(d) 300,000 15,525,000
- ---------------------------------------------------------------
55,986,375
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.21%
MAXIMUS, Inc.(d) 200,000 6,787,500
- ---------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES-0.27%
Ethan Allen Interiors, Inc. 270,000 8,656,875
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.38%
Procter & Gamble, Co. (The) 110,000 12,051,875
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.46%
AXA Financial, Inc. 314,000 10,636,750
- ---------------------------------------------------------------
Nationwide Financial Services,
Inc.-Class A 140,000 3,911,250
- ---------------------------------------------------------------
14,548,000
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.87%
American International Group,
Inc. 175,000 18,921,875
- ---------------------------------------------------------------
</TABLE>
FS-5
<PAGE> 275
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (MULTI-LINE)-(CONTINUED)
CIGNA Corp. 110,000 $ 8,861,875
- ---------------------------------------------------------------
27,783,750
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-0.21%
Travelers Property Casualty
Corp.-Class A 195,000 6,678,750
- ---------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-1.29%
Goldman Sachs Group, Inc. (The) 52,300 4,926,006
- ---------------------------------------------------------------
Merrill Lynch & Co., Inc. 176,000 14,696,000
- ---------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 150,000 21,412,500
- ---------------------------------------------------------------
41,034,506
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-0.13%
Federated Investors, Inc.-Class B 206,400 4,140,900
- ---------------------------------------------------------------
LODGING-HOTELS-0.76%
Carnival Corp. 230,000 10,996,875
- ---------------------------------------------------------------
Royal Caribbean Cruises Ltd. 270,400 13,334,100
- ---------------------------------------------------------------
24,330,975
- ---------------------------------------------------------------
MANUFACTURING
(DIVERSIFIED)-0.35%
Tyco International Ltd. 284,000 11,040,500
- ---------------------------------------------------------------
NATURAL GAS-0.65%
Enron Corp. 295,000 13,090,625
- ---------------------------------------------------------------
Williams Companies, Inc. (The) 251,000 7,671,188
- ---------------------------------------------------------------
20,761,813
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.23%
Apache Corp. 200,000 7,387,500
- ---------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-0.23%
Conoco Inc.-Class B 300,000 7,462,500
- ---------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-0.25%
Exxon Mobil Corp. 100,644 8,108,132
- ---------------------------------------------------------------
PERSONAL CARE-0.14%
Steiner Leisure Ltd.(d) 275,000 4,589,063
- ---------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-0.50%
AES Corp.(d) 215,000 16,071,250
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.56%
Home Depot, Inc. (The) 262,500 17,997,656
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.25%
Safeway Inc.(d) 228,000 8,108,250
- ---------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-0.50%
Dayton Hudson Corp. 215,100 15,796,406
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-0.83%
Amazon.com, Inc.(d) 95,000 7,231,875
- ---------------------------------------------------------------
Bed Bath & Beyond, Inc.(d) 290,000 10,077,500
- ---------------------------------------------------------------
Linens 'n Things, Inc.(d) 305,200 9,041,550
- ---------------------------------------------------------------
26,350,925
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (ADVERTISING/MARKETING)-0.94%
Omnicom Group, Inc. 130,000 $ 13,000,000
- ---------------------------------------------------------------
Young & Rubicam Inc. 241,000 17,050,750
- ---------------------------------------------------------------
30,050,750
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.93%
National Information Consortium,
Inc.(d) 278,000 8,896,000
- ---------------------------------------------------------------
Official Payments Corp.(d) 186,300 9,687,600
- ---------------------------------------------------------------
Quanta Services, Inc.(d) 392,000 11,074,000
- ---------------------------------------------------------------
29,657,600
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-0.25%
DST Systems, Inc.(d) 106,000 8,089,125
- ---------------------------------------------------------------
TELECOMMUNICATIONS-0.49%
Broadwing Inc.(d) 419,520 15,469,800
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.72%
Infonet Services Corp.-Class
B(d) 370,000 9,712,500
- ---------------------------------------------------------------
Western Wireless Corp.-Class
A(d) 196,300 13,103,025
- ---------------------------------------------------------------
22,815,525
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-1.56%
AT&T Corp. 216,450 10,984,838
- ---------------------------------------------------------------
Global TeleSystems Group,
Inc.(d) 475,450 16,462,456
- ---------------------------------------------------------------
MCI WorldCom, Inc.(d) 420,000 22,286,250
- ---------------------------------------------------------------
49,733,544
- ---------------------------------------------------------------
TELEPHONE-2.98%
Bell Atlantic Corp. 158,000 9,726,875
- ---------------------------------------------------------------
McLeodUSA, Inc.-Class A(d) 290,000 17,073,750
- ---------------------------------------------------------------
NEXTLINK Communications,
Inc.-Class A(d) 224,800 18,672,450
- ---------------------------------------------------------------
Qwest Communications
International, Inc.(d) 665,000 28,595,000
- ---------------------------------------------------------------
SBC Communications, Inc. 204,000 9,945,000
- ---------------------------------------------------------------
Time Warner Telecom, Inc.(d) 218,500 10,911,344
- ---------------------------------------------------------------
94,924,419
- ---------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$765,923,442) 1,434,256,253
- ---------------------------------------------------------------
DOMESTIC PREFERRED STOCKS-2.43%
COMPUTERS (SOFTWARE & SERVICES)-0.45%
PSINet, Inc.-Series C, $3.375
Conv. Pfd. 100,000 5,837,500
- ---------------------------------------------------------------
Verio Inc.-$3.375 Conv. Pfd.
(Acquired 07/15/99-10/01/99;
Cost $7,092,498)(a) 150,000 8,475,000
- ---------------------------------------------------------------
14,312,500
- ---------------------------------------------------------------
ELECTRIC COMPANIES-0.28%
Calpine Capital Trust-$2.875
Conv. Pfd. 139,000 8,982,875
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.22%
Kerr-McGee Corp.-5.50% Pfd. DECS 209,800 6,818,500
- ---------------------------------------------------------------
</TABLE>
FS-6
<PAGE> 276
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PERSONAL CARE-0.16%
Estee Lauder Cos. Inc.-$3.805
Conv. Pfd. 60,000 $ 5,193,750
- ---------------------------------------------------------------
TELECOMMUNICATIONS-0.13%
Broadwing Inc.-Series B, $3.375
Conv. Pfd. 70,000 4,147,500
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-0.71%
WinStar Communications,
Inc.-Series F, $72.50 Conv.
Pfd. 16,950 22,585,875
- ---------------------------------------------------------------
TELEPHONE-0.27%
NEXTLINK Communications,
Inc.-$3.25 Conv. Pfd. 24,200 4,643,375
- ---------------------------------------------------------------
NEXTLINK Communications,
Inc.-$3.25 Conv. Pfd.
(Acquired 03/26/98-06/02/98;
Cost $975,188)(a) 20,800 3,991,000
- ---------------------------------------------------------------
8,634,375
- ---------------------------------------------------------------
WATER UTILITIES-0.21%
AES Trust III-$3.375 Conv. Pfd. 108,600 6,692,475
- ---------------------------------------------------------------
Total Domestic Preferred
Stocks (Cost $63,730,828) 77,367,850
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT(f)
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS &
NOTES-3.50%
AUSTRALIA-0.22%
New South Wales Treasury
Corp.-Series 4 (Sovereign
Debt), Gtd. Notes, 7.00%,
04/01/04 AUD 4,300,000 2,838,785
- ---------------------------------------------------------------
State Bank New South
Wales-Series E (Banks-Major
Regional), Sr. Unsec. Gtd.
Medium Term Notes, 8.63%,
08/20/01 AUD 6,125,000 4,155,283
- ---------------------------------------------------------------
6,994,068
- ---------------------------------------------------------------
CANADA-0.71%
AT&T Canada Inc. (Telephone),
Sr. Unsec. Notes, 7.15%,
09/23/04 CAD 1,700,000 1,163,734
- ---------------------------------------------------------------
Bell Mobility Cellular, Inc.
(Telecommunications-Cellular/Wireless),
Deb., 6.55%, 06/02/08 CAD 2,500,000 1,659,721
- ---------------------------------------------------------------
Canadian Oil Debco Inc. (Oil &
Gas- Exploration &
Production), Deb., 11.00%,
10/31/00 CAD 2,500,000 1,790,601
- ---------------------------------------------------------------
Clearnet Communications Inc.
(Telecommunications-Cellular/Wireless),
Sr. Unsec. Disc. Notes,
10.75%, 02/15/09(c) CAD 5,000,000 2,026,606
- ---------------------------------------------------------------
Export Development Corp.
(Sovereign Debt), Sr. Unsub.
Notes, 6.50%, 12/21/04 NZD 6,000,000 2,970,914
- ---------------------------------------------------------------
Poco Petroleums Ltd. (Oil & Gas-
Exploration & Production),
Unsec. Deb., 6.60%,
09/11/07 CAD 5,400,000 3,540,923
- ---------------------------------------------------------------
Province of British Columbia
(Sovereign Debt), Notes,
7.50%, 12/31/03 GBP 950,000 1,553,548
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(f) VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Province of Ontario (Sovereign
Debt),
Notes, 6.38%, 06/10/04 GBP 950,000 $ 1,498,329
- ---------------------------------------------------------------
Unsec. Unsub. Notes, 6.25%,
12/03/08 NZD 3,750,000 1,711,057
- ---------------------------------------------------------------
Province of Quebec (Sovereign
Debt), Unsec. Notes, 5.13%,
01/04/09 DEM 1,600,000 770,578
- ---------------------------------------------------------------
Teleglobe Canada Inc.
(Telephone), Unsec. Deb.,
8.35%, 06/20/03 CAD 1,000,000 709,423
- ---------------------------------------------------------------
TransCanada Pipelines-Series Q
(Natural Gas), Deb., 10.63%,
10/20/09 CAD 1,500,000 1,282,478
- ---------------------------------------------------------------
Westcoast Energy Inc.-Series V
(Natural Gas), Unsec. Deb.,
6.45%, 12/18/06 CAD 3,000,000 2,037,497
- ---------------------------------------------------------------
22,715,409
- ---------------------------------------------------------------
DENMARK-0.21%
Kingdom of Denmark (Sovereign
Debt), Bonds, 5.00%,
08/15/05 DKK 51,000,000 6,806,533
- ---------------------------------------------------------------
GERMANY-0.25%
Bundesrepublik Deutschland
(Sovereign Debt), Series 92
Bonds, 7.25%, 10/21/02 EUR 2,790,000 3,004,448
- ---------------------------------------------------------------
Landesbank Baden-Wuerttemberg
(Banks- Major Regional), Sr.
Unsec. Unsub. Medium Term
Notes, 6.25%, 12/15/04 AUD 5,700,000 3,572,998
- ---------------------------------------------------------------
Treuhandanstalt (Sovereign
Debt), Gtd. Notes, 6.00%,
11/12/03 EUR 1,140,000 1,195,434
- ---------------------------------------------------------------
7,772,880
- ---------------------------------------------------------------
GREECE-0.24%
Hellenic Republic (Sovereign
Debt), Bonds, 6.60%,
01/15/04 GRD 2,500,000,000 7,669,388
- ---------------------------------------------------------------
NETHERLANDS-0.48%
Dresdner Finance B.V.-Series 11
(Banks- Major Regional),
Floating Rate Gtd. Notes,
3.53%, 07/30/03 EUR 7,250,000 7,281,476
- ---------------------------------------------------------------
Hypovereins Finance N.V.-Series
E (Banks- Major Regional),
Gtd. Medium Term Notes, 6.00%,
03/12/07 DEM 2,900,000 1,496,248
- ---------------------------------------------------------------
Mannesmann Finance B.V.
(Machinery- Diversified), Gtd.
Unsec. Unsub. Notes, 4.75%,
05/27/09 EUR 1,300,000 1,153,665
- ---------------------------------------------------------------
SPT Telecom A.S.
(Telecommunications- Long
Distance), Gtd. Unsec. Unsub.
Notes, 5.13%, 05/07/03 DEM 4,600,000 2,346,111
- ---------------------------------------------------------------
Tecnost International Finance
N.V.-Series E (Telephone),
Medium Term Gtd. Notes, 6.13%,
07/30/09 EUR 3,210,000 3,111,084
- ---------------------------------------------------------------
15,388,584
- ---------------------------------------------------------------
NEW ZEALAND-0.22%
International Bank for
Reconstruction & Development
(Banks-Money Center), Unsec.
Notes, 5.50%, 04/15/04 NZD 8,500,000 4,113,246
- ---------------------------------------------------------------
</TABLE>
FS-7
<PAGE> 277
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(f) VALUE
<S> <C> <C>
NEW ZEALAND-(CONTINUED)
New Zealand Government
(Sovereign Debt)
Series 302 Bonds, 10.00%,
03/15/02 NZD 2,650,000 $ 1,478,054
- ---------------------------------------------------------------
Series 404 Bonds, 8.00%,
04/15/04 NZD 2,650,000 1,430,651
- ---------------------------------------------------------------
7,021,951
- ---------------------------------------------------------------
SWEDEN-0.26%
Stadshypotek A.B.-Series 1562
(Banks- Regional), Bonds,
3.50%, 09/15/04 SEK 43,000,000 4,544,805
- ---------------------------------------------------------------
Swedish Government-Series 1035
(Sovereign Debt), Bonds,
6.00%, 02/09/05 SEK 30,000,000 3,609,571
- ---------------------------------------------------------------
8,154,376
- ---------------------------------------------------------------
UNITED KINGDOM-0.79%
Lloyds Bank PLC-Series E
(Banks-Major Regional), Medium
Term Sub. Notes, 5.25%,
07/14/08 DEM 6,800,000 3,325,110
- ---------------------------------------------------------------
Merrill Lynch & Co., Inc.-Series
E (Investment
Banking/Brokerage), Sr. Unsec.
Unsub. Medium Term Notes,
7.38%, 12/17/07 GBP 6,650,000 10,887,514
- ---------------------------------------------------------------
National Power PLC (Electric
Companies), Sr. Unsec. Unsub.
Bonds, 8.00%, 02/21/07 AUD 3,100,000 2,012,382
- ---------------------------------------------------------------
National Westminster Bank
PLC-Series E (Banks-Money
Center), Unsec. Unsub. Medium
Term Bonds, 5.13%, 06/30/11EUR 2,500,000 2,255,470
- ---------------------------------------------------------------
Sutton Bridge Financial
Ltd.-Series REGS (Power
Producers-Independent), Gtd.
Eurobonds, 8.63%, 06/30/22
(Acquired 05/29/97; Cost
$4,890,565)(a) GBP 3,000,000 5,090,868
- ---------------------------------------------------------------
Union Bank Switzerland London,
(Banks- Major Regional),
Unsec. Sub. Notes, 7.38%,
11/26/04 GBP 1,000,000 1,637,219
- ---------------------------------------------------------------
25,208,563
- ---------------------------------------------------------------
UNITED STATES OF AMERICA-0.12%
General Electric Capital
Corp.-Series E
(Financial-Diversified), Sr.
Unsec. Unsub. Medium Term
Notes, 6.00%, 07/27/01 GBP 2,400,000 3,814,070
- ---------------------------------------------------------------
Total Non-U.S. Dollar
Denominated
Non-Convertible Bonds &
Notes (Cost $117,303,454) 111,545,822
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
FOREIGN STOCKS-5.46%
BERMUDA-0.88%
Global Crossing Ltd.
(Telecommunications- Long
Distance)(d) 559,252 27,962,600
- ---------------------------------------------------------------
CANADA-0.37%
AT&T Canada, Inc. (Telephone)(d) 291,000 11,712,750
- ---------------------------------------------------------------
FINLAND-2.03%
Nokia Oyj-ADR (Communications
Equipment) 220,000 41,800,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINLAND-(CONTINUED)
Sonera Oyj
(Telecommunications-Cellular/
Wireless) 333,900 $ 22,868,451
- ---------------------------------------------------------------
64,668,451
- ---------------------------------------------------------------
FRANCE-0.41%
AXA (Insurance-Multi-Line) 36,800 5,125,971
- ---------------------------------------------------------------
AXA-ADR (Insurance-Multi-Line) 110,000 7,810,000
- ---------------------------------------------------------------
12,935,971
- ---------------------------------------------------------------
GERMANY-0.36%
Mannesmann A.G.
(Machinery-Diversified) 47,823 11,527,482
- ---------------------------------------------------------------
ISRAEL-0.19%
Partner Communications Co.
Ltd.-ADR
(Telecommunications-Cellular/
Wireless)(d) 228,300 5,907,263
- ---------------------------------------------------------------
NETHERLANDS-0.38%
Libertel N.V.
(Telecommunications-Cellular/
Wireless)(d) 467,200 12,225,549
- ---------------------------------------------------------------
SOUTH KOREA-0.34%
Korea Telecom Corp.-ADR
(Telephone) 143,596 10,733,801
- ---------------------------------------------------------------
SPAIN-0.50%
Telefonica S.A. (Telephone)(d) 495,000 12,355,180
- ---------------------------------------------------------------
Terra Networks, S.A.
(Computers-Software &
Services)(d) 68,100 3,718,254
- ---------------------------------------------------------------
16,073,434
- ---------------------------------------------------------------
Total Foreign Stocks (Cost
$72,168,443) 173,747,301
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY SECURITIES-7.14%
U.S. TREASURY BONDS-0.71%
9.375%, 02/15/06 $ 20,000,000 22,820,200
- ---------------------------------------------------------------
U.S. TREASURY NOTES-6.43%
7.25%, 08/15/04 35,000,000 36,099,000
- ---------------------------------------------------------------
5.875%, 11/15/04 2,000,000 1,960,620
- ---------------------------------------------------------------
6.50%, 08/15/05 to 10/15/06 121,000,000(g) 120,776,810
- ---------------------------------------------------------------
6.875%, 05/15/06 34,500,000(g) 35,088,225
- ---------------------------------------------------------------
6.625%, 05/15/07 7,000,000(g) 7,027,230
- ---------------------------------------------------------------
5.63%, 05/15/08 4,000,000 3,763,160
- ---------------------------------------------------------------
204,715,045
- ---------------------------------------------------------------
Total U.S. Treasury
Securities (Cost
$231,414,173) 227,535,245
- ---------------------------------------------------------------
U.S. GOVERNMENT AGENCY
SECURITIES-2.14%
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC")-0.42%
Pass through ctfs.
6.50%, 12/01/28 13,995,426 13,199,366
- ---------------------------------------------------------------
</TABLE>
FS-8
<PAGE> 278
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE
ASSOCIATION ("FNMA")-1.16%
Pass through ctfs.
7.00%, 05/01/28 $ 20,690,733 $ 19,998,836
- ---------------------------------------------------------------
6.50%, 11/01/28 to 12/01/28 18,009,410 16,968,105
- ---------------------------------------------------------------
36,966,941
- ---------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION ("GNMA")-0.56%
Pass through ctfs.
6.50%, 09/15/28 to 03/15/29 19,065,864 17,898,080
- ---------------------------------------------------------------
Total U.S. Government Agency
Securities (Cost
$72,041,945) 68,064,387
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE
<S> <C> <C> <C> <C>
OPTIONS
PURCHASED-0.01%
ELECTRONICS
(DEFENSE)-0.01%
General Motors
Corp.-Class H (Cost
$465,975) 95,000 $ 90 Jan-00 195,938
- --------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS-7.50%
STIC Liquid Assets Portfolio(h) $119,363,406 $ 119,363,406
- ---------------------------------------------------------------
STIC Prime Portfolio(h) 119,363,406 119,363,406
- ---------------------------------------------------------------
Total Money Market Funds
(Cost $238,726,812) 238,726,812
- ---------------------------------------------------------------
TOTAL INVESTMENTS-98.45% (Cost
$2,366,107,679) 3,134,773,552
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.55% 49,376,620
- ---------------------------------------------------------------
NET ASSETS-100.00% $3,184,150,172
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
AUD - Australian Dollar
CAD - Canadian Dollars
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
DECS - Dividend Enhanced Convertible Stock
DEM - German Deutsche Mark
DKK - Danish Krone
Disc. - Discounted
EUR - Euro
GBP - British Pound Sterling
GRD - Greek Drachma
Gtd. - Guaranteed
NZD - New Zealand Dollar
Pfd. - Preferred
REIT - Real Estate Investment Trust
Sec. - Secured
SEK - Swedish Krona
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
Notes to Schedule of Investments:
(a) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The market
value at 12/31/99 represented 3.20% of the Fund's net assets.
(b) Discounted bond at purchase. Interest rate shown represents the coupon rate
at which the bond will accrue at a specified future date.
(c) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended.
(d) Non-income producing security.
(e) A portion of this security is subject to call options written. See Note 7.
(f) Foreign denominated security. Par value and coupon are denominated in
currency indicated.
(g) A portion of this principal was pledged as collateral to cover margin
requirements for open future contracts. See Note 8.
(h) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-9
<PAGE> 279
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$2,366,107,679) $3,134,773,552
- ---------------------------------------------------------
Receivables for:
Investments sold 18,914,453
- ---------------------------------------------------------
Foreign currency contracts closed 24,825
- ---------------------------------------------------------
Fund shares sold 25,083,485
- ---------------------------------------------------------
Interest and dividends 22,904,366
- ---------------------------------------------------------
Variation margin 276,250
- ---------------------------------------------------------
Foreign currency contracts 655,642
- ---------------------------------------------------------
Investment for deferred compensation plan 42,523
- ---------------------------------------------------------
Other assets 40,344
- ---------------------------------------------------------
Total assets 3,202,715,440
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 4,357,824
- ---------------------------------------------------------
Fund shares reacquired 8,656,785
- ---------------------------------------------------------
Options written (premiums $1,494,360) 1,167,812
- ---------------------------------------------------------
Deferred compensation plan 42,523
- ---------------------------------------------------------
Accrued advisory fees 1,343,610
- ---------------------------------------------------------
Accrued distribution fees 2,543,619
- ---------------------------------------------------------
Accrued transfer agent fees 249,013
- ---------------------------------------------------------
Accrued operating expenses 204,082
- ---------------------------------------------------------
Total liabilities 18,565,268
- ---------------------------------------------------------
Net assets applicable to shares
outstanding $3,184,150,172
=========================================================
NET ASSETS:
Class A $1,800,349,970
=========================================================
Class B $1,183,215,180
=========================================================
Class C $ 200,585,022
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 55,074,835
=========================================================
Class B 36,282,468
=========================================================
Class C 6,144,390
=========================================================
Class A:
Net asset value and redemption price
per share $ 32.69
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $32.69 / 95.25%) $ 34.32
=========================================================
Class B:
Net asset value and offering price per
share $ 32.61
=========================================================
Class C:
Net asset value and offering price per
share $ 32.65
=========================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 85,768,860
- ---------------------------------------------------------
Dividends (net of $91,426 foreign
withholding tax) 13,436,438
- ---------------------------------------------------------
Total investment income 99,205,298
- ---------------------------------------------------------
EXPENSES:
Advisory fees 13,624,208
- ---------------------------------------------------------
Administrative services fees 158,046
- ---------------------------------------------------------
Custodian fees 240,252
- ---------------------------------------------------------
Distribution fees-Class A 3,755,133
- ---------------------------------------------------------
Distribution fees-Class B 10,013,693
- ---------------------------------------------------------
Distribution fees-Class C 1,464,190
- ---------------------------------------------------------
Trustees' fees 22,015
- ---------------------------------------------------------
Transfer agent fees-Class A 2,032,670
- ---------------------------------------------------------
Transfer agent fees-Class B 2,032,007
- ---------------------------------------------------------
Transfer agent fees-Class C 297,956
- ---------------------------------------------------------
Other 550,475
- ---------------------------------------------------------
Total expenses 34,190,645
- ---------------------------------------------------------
Less: Expenses paid indirectly (75,967)
- ---------------------------------------------------------
Net expenses 34,114,678
- ---------------------------------------------------------
Net investment income 65,090,620
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FOREIGN CURRENCY CONTRACTS,
FUTURES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 436,666
- ---------------------------------------------------------
Foreign currencies (154,053)
- ---------------------------------------------------------
Foreign currency contracts 534,910
- ---------------------------------------------------------
Futures contracts 45,119,738
- ---------------------------------------------------------
Option contracts written 908,045
- ---------------------------------------------------------
46,845,306
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 384,287,115
- ---------------------------------------------------------
Foreign currencies 5,416
- ---------------------------------------------------------
Foreign currency contracts 396,014
- ---------------------------------------------------------
Futures contracts (10,141,023)
- ---------------------------------------------------------
Option contracts written 391,074
- ---------------------------------------------------------
374,938,596
- ---------------------------------------------------------
Net gain from investment securities,
foreign currencies, foreign currency
contracts, futures and option contracts 421,783,902
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $486,874,522
=========================================================
</TABLE>
FS-10
<PAGE> 280
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 65,090,620 $ 42,651,746
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, foreign currency contracts, futures
and option contracts 46,845,306 (34,961,701)
- ---------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, foreign currency
contracts, futures and option contracts 374,938,596 202,514,022
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 486,874,522 210,204,067
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (42,749,278) (25,009,619)
- ---------------------------------------------------------------------------------------------
Class B (20,909,084) (12,164,517)
- ---------------------------------------------------------------------------------------------
Class C (3,188,689) (1,261,081)
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A -- (2,990,460)
- ---------------------------------------------------------------------------------------------
Class B -- (2,026,544)
- ---------------------------------------------------------------------------------------------
Class C -- (260,076)
- ---------------------------------------------------------------------------------------------
Share transactions-net:
Class A 243,729,476 537,064,636
- ---------------------------------------------------------------------------------------------
Class B 132,034,584 344,386,485
- ---------------------------------------------------------------------------------------------
Class C 61,800,642 99,082,872
- ---------------------------------------------------------------------------------------------
Net increase in net assets 857,592,173 1,147,025,763
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,326,557,999 1,179,532,236
- ---------------------------------------------------------------------------------------------
End of period $3,184,150,172 $2,326,557,999
=============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $2,395,161,389 $1,957,596,687
- ---------------------------------------------------------------------------------------------
Undistributed net investment income 404,927 5,095,292
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, foreign currency
contracts, futures and option contracts 14,952,655 (34,826,585)
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, foreign currency contracts, futures and
option contracts 773,631,201 398,692,605
- ---------------------------------------------------------------------------------------------
$3,184,150,172 $2,326,557,999
=============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-11
<PAGE> 281
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Balanced Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of nine separate portfolios, each
having an unlimited number of shares of beneficial interest. The Fund currently
offers three different classes of shares: Class A shares, Class B shares and
Class C shares. Class A shares are sold with a front-end sales charge. Class B
shares and Class C shares are sold with a contingent deferred sales charge.
Matters affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The Fund's investment objective
is to achieve as high a total return as possible, consistent with preservation
of capital, by investing in a broadly diversified portfolio of high-yielding
securities, including common stocks, preferred stocks, convertible securities
and bonds.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The following is a summary of the significant accounting policies
followed by the Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last 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 closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. 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. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities 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 would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded on
the accrual basis. Dividend income is recorded on the ex-dividend date. On
December 31, 1999, undistributed net investment income was decreased by
$2,933,934 and undistributed net realized gains increased by $2,933,934 as a
result of differing book/tax treatment of foreign currency transactions and
other reclassifications. Net assets of the Fund were unaffected by the
reclassifications.
C. Distributions -- Distributions from income are recorded on ex-dividend date,
and are declared and paid quarterly. Distributions from net realized capital
gains, if any, are generally paid annually and recorded on ex-dividend date.
The Fund may elect to use a portion of the proceeds of fund share redemptions
as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations
FS-12
<PAGE> 282
are included with the net realized and unrealized gain or loss from
investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
Outstanding foreign currency contracts at December 31, 1999 were as follows:
<TABLE>
<CAPTION>
CONTRACT TO
------------------------- UNREALIZED
SETTLEMENT DATE DELIVER RECEIVE VALUE APPRECIATION
--------------------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
01/24/00 SEK 68,000,000 $ 8,381,403 $ 8,004,163 $377,240
-----------------------------------------------------------------------------
02/28/00 EUR 10,000,000 10,385,000 10,110,458 274,542
-----------------------------------------------------------------------------
02/28/00 GBP 500,000 811,250 807,390 3,860
-----------------------------------------------------------------------------
78,500,000 $19,577,653 $18,922,011 $655,642
=============================================================================
</TABLE>
G. Futures Contracts -- The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits required
upon entering into futures contracts are satisfied by the segregation of
specific securities as collateral for the account of the broker (the Fund's
agent in acquiring the futures position). During the period the futures
contracts are open, changes in the value of the contracts are recognized as
unrealized gains or losses by "marking to market" on a daily basis to reflect
the market value of the contracts at the end of each day's trading. Variation
margin payments are made or received depending upon whether unrealized gains
or losses are incurred. When the contracts are closed, the Fund recognizes a
realized gain or loss equal to the difference between the proceeds from, or
cost of, the closing transaction and the Fund's basis in the contract. Risks
include the possibility of an illiquid market and that a change in value of
the contracts may not correlate with changes in the value of the securities
being hedged.
H. Covered Call Options -- The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security at the time the
option is written. When the Fund writes a covered call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the mean between the last bid
and asked prices on that day. If a written call option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or a loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
I. Put Options -- The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Fund pays an option premium. The option's underlying instrument
may be a security or a futures contract. Put options may be used by the Fund
to hedge securities it owns by locking in a minimum price at which the Fund
can sell. If security prices fall, the put option could be exercised to
offset all or a portion of the Fund's resulting losses. At the same time,
because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged.
J. Bond Premiums -- It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
K. Expenses -- Distribution expenses and transfer agency expenses directly
attributable to a class of shares are charged to that class' operations. All
other expenses which are attributable to more than one class are allocated
among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the first $150 million of the Fund's average daily net assets, plus 0.50% of the
Fund's average daily net assets in excess of $150 million.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to
FS-13
<PAGE> 283
the Fund. For the year ended December 31, 1999, AIM was paid $158,046 for such
services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $1,916,453 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively, the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended December 31,
1999, the Class A, Class B and Class C shares paid AIM Distributors $3,755,133,
$10,013,693 and $1,464,190, respectively, as compensation under the Plans.
AIM Distributors received commissions of $823,856 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $150,341 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 1999, the Fund paid legal fees of $7,985
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $29,183 and $46,784, respectively, under expense offset arrangements.
The effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $75,967 during the year ended December 31, 1999.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$2,017,133,351 and $1,619,226,894, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $826,568,954
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (58,369,796)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $768,199,158
=========================================================
Cost of investments for tax purposes is
$2,366,574,394.
</TABLE>
FS-14
<PAGE> 284
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ----------
<S> <C> <C>
Beginning of year 500 $ 797,973
- ------------------------------------------------------------------------------------
Written 6,745 4,420,253
- ------------------------------------------------------------------------------------
Closed (3,755) (3,723,866)
- ------------------------------------------------------------------------------------
End of year 3,490 $1,494,360
====================================================================================
</TABLE>
Open call option contracts written at December 31, 1999 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
- ------------------------------------------------------ -------- ------- --------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
America Online Inc. Jan-00 $ 88 2,210 $ 851,927 $ 414,374 $ 437,553
- ---------------------------------------------------------------------------------------------------------------------------------
General Motors Corp. - Class H Jan-00 100 950 412,761 279,063 133,698
- ---------------------------------------------------------------------------------------------------------------------------------
International Business Machines Corp. Jan-00 95 330 229,672 474,375 (244,703)
- ---------------------------------------------------------------------------------------------------------------------------------
3,490 $1,494,360 $1,167,812 $ 326,548
=================================================================================================================================
</TABLE>
NOTE 8-FUTURES CONTRACTS
On December 31, 1999, $7,619,000 principal amount of U.S. Treasury obligations
was pledged as collateral to cover margin requirements for open futures
contracts. Open futures contracts were as follows:
<TABLE>
<CAPTION>
VALUE OF
NO. OF MONTH/ OPEN FUTURES UNREALIZED
CONTRACT CONTRACTS COMMITMENT CONTRACTS APPRECIATION
- ------------------------------------------------------------ --------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
S&P 500 Index 325 Mar-00/Buy $120,591,250 $3,977,452
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 9-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 24,207,279 $ 705,353,097 29,663,763 $ 789,886,049
- -----------------------------------------------------------------------------------------------------------------------
Class B 9,923,280 287,877,047 15,995,669 427,423,474
- -----------------------------------------------------------------------------------------------------------------------
Class C 3,295,250 96,614,771 4,375,455 117,461,185
- -----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 1,334,538 39,562,999 872,547 23,134,563
- -----------------------------------------------------------------------------------------------------------------------
Class B 652,505 19,306,388 492,389 13,073,889
- -----------------------------------------------------------------------------------------------------------------------
Class C 92,159 2,744,998 54,578 1,446,813
- -----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (17,165,067) (501,186,620) (10,355,432) (275,955,976)
- -----------------------------------------------------------------------------------------------------------------------
Class B (6,020,681) (175,148,851) (3,657,104) (96,110,878)
- -----------------------------------------------------------------------------------------------------------------------
Class C (1,289,864) (37,559,127) (747,879) (19,825,126)
- -----------------------------------------------------------------------------------------------------------------------
15,029,399 $ 437,564,702 36,693,986 $ 980,533,993
=======================================================================================================================
</TABLE>
FS-15
<PAGE> 285
NOTE 10-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and a share of
Class B outstanding during each of the years in the five-year period ended
December 31, 1999, and for a share of Class C outstanding during each of the
years in the two-year period ended December 31, 1999 and the period August 4,
1997 (date sales commenced) through December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------
1999(a) 1998(a) 1997 1996 1995
---------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.23 $ 25.78 $ 21.84 $ 19.22 $ 14.62
- ------------------------------------------------------------ ---------- ---------- -------- -------- -------
Income from investment operations:
Net investment income 0.82 0.71 0.60 0.66 0.49
- ------------------------------------------------------------ ---------- ---------- -------- -------- -------
Net gains on securities (both realized and unrealized) 4.46 2.45 4.66 2.99 4.57
- ------------------------------------------------------------ ---------- ---------- -------- -------- -------
Total from investment operations 5.28 3.16 5.26 3.65 5.06
- ------------------------------------------------------------ ---------- ---------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.82) (0.65) (0.55) (0.55) (0.46)
- ------------------------------------------------------------ ---------- ---------- -------- -------- -------
Distributions from net realized gains -- (0.06) (0.77) (0.48) --
- ------------------------------------------------------------ ---------- ---------- -------- -------- -------
Total distributions (0.82) (0.71) (1.32) (1.03) (0.46)
- ------------------------------------------------------------ ---------- ---------- -------- -------- -------
Net asset value, end of period $ 32.69 $ 28.23 $ 25.78 $ 21.84 $ 19.22
============================================================ ========== ========== ======== ======== =======
Total return(b) 19.04% 12.46% 24.41% 19.25% 34.97%
============================================================ ========== ========== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,800,350 $1,318,230 $683,633 $334,189 $92,241
============================================================ ========== ========== ======== ======== =======
Ratio of expenses to average net assets 0.94%(c) 0.95% 0.98% 1.15% 1.43%(d)
============================================================ ========== ========== ======== ======== =======
Ratio of net investment income to average net assets 2.81%(c) 2.81% 2.48% 2.97% 2.81%(e)
============================================================ ========== ========== ======== ======== =======
Portfolio turnover rate 65% 43% 66% 72% 77%
============================================================ ========== ========== ======== ======== =======
</TABLE>
<TABLE>
<S> <C>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $1,502,053,346.
(d) After fee waivers and/or expense reimbursements. The ratio
of expenses to average net assets prior to fee waivers
and/or expense reimbursements was 1.46% for 1995.
(e) After fee waivers and/or expense reimbursements. The ratio
of net investment income to average net assets prior to fee
waivers and/or expense reimbursements was 2.78% for 1995.
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------ ------------------------------
1999(a) 1998(a) 1997 1996 1995 1999(a) 1998(a) 1997
---------- -------- -------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.18 $ 25.75 $ 21.83 $ 19.22 $ 14.62 $ 28.21 $ 25.76 $ 25.55
- ---------------------------------------- ---------- -------- -------- -------- ------- -------- -------- -------
Income from investment operations:
Net investment income 0.58 0.42 0.38 0.48 0.31 0.58 0.42 0.16
- ---------------------------------------- ---------- -------- -------- -------- ------- -------- -------- -------
Net gains on securities (both realized
and unrealized) 4.45 2.51 4.68 2.99 4.61 4.46 2.53 1.01
- ---------------------------------------- ---------- -------- -------- -------- ------- -------- -------- -------
Total from investment operations 5.03 2.93 5.06 3.47 4.92 5.04 2.95 1.17
- ---------------------------------------- ---------- -------- -------- -------- ------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.60) (0.44) (0.37) (0.38) (0.32) (0.60) (0.44) (0.19)
- ---------------------------------------- ---------- -------- -------- -------- ------- -------- -------- -------
Distributions from net realized gains -- (0.06) (0.77) (0.48) -- -- (0.06) (0.77)
- ---------------------------------------- ---------- -------- -------- -------- ------- -------- -------- -------
Total distributions (0.60) (0.50) (1.14) (0.86) (0.32) (0.60) (0.50) (0.96)
- ---------------------------------------- ---------- -------- -------- -------- ------- -------- -------- -------
Net asset value, end of period $ 32.61 $ 28.18 $ 25.75 $ 21.83 $ 19.22 $ 32.65 $ 28.21 $ 25.76
======================================== ========== ======== ======== ======== ======= ======== ======== =======
Total return(b) 18.08% 11.53% 23.42% 18.28% 33.93% 18.09% 11.60% 4.67%
======================================== ========== ======== ======== ======== ======= ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,183,215 $894,165 $486,506 $237,082 $72,634 $200,585 $114,163 $ 9,394
======================================== ========== ======== ======== ======== ======= ======== ======== =======
Ratio of expenses to average net assets 1.75%(c) 1.76% 1.79% 1.97% 2.21%(d) 1.75%(c) 1.73% 1.78%(f)
======================================== ========== ======== ======== ======== ======= ======== ======== =======
Ratio of net investment income to
average net assets 2.00%(c) 2.00% 1.67% 2.15% 2.03%(e) 2.00%(c) 2.03% 1.68%(f)
======================================== ========== ======== ======== ======== ======= ======== ======== =======
Portfolio turnover rate 65% 43% 66% 72% 77% 65% 43% 66%
======================================== ========== ======== ======== ======== ======= ======== ======== =======
</TABLE>
<TABLE>
<S> <C>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not
annualized for periods less than one year.
(c) Ratios are based on average net assets of $1,001,369,340 and
$146,419,005 for Class B and Class C, respectively.
(d) After fee waivers and/or expense reimbursements. The ratio
of expenses to average net assets prior to fee waivers
and/or expense reimbursements was 2.23% for 1995.
(e) After fee waivers and/or expense reimbursements. The ratio
of net investment income to average net assets prior to fee
waivers and/or expense reimbursements was 2.01% for 1995.
(f) Annualized.
</TABLE>
FS-16
<PAGE> 286
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Global Utilities Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Global Utilities Fund (a portfolio of
AIM Funds Group), including the schedule of investments,
as of December 31, 1999, the related statement of
operations for the year then ended, the statement of
changes in net assets for each of the years in the
two-year period then ended and the financial highlights
for each of the years in the five-year period then ended.
These financial statements and financial highlights are
the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1999, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Global
Utilities Fund as of December 31, 1999, the results of
its operations for the year then ended, the changes in
its net assets for each of the years in the two-year
period then ended and the financial highlights for each
of the years in the five-year period then ended, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
February 4, 2000
Houston, Texas
FS-17
<PAGE> 287
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-53.50%
BROADCASTING (TELEVISION, RADIO & CABLE)-3.30%
UnitedGlobalCom Inc.-Class A(a) 90,000 $ 6,356,250
- --------------------------------------------------------------
Univision Communications,
Inc.-Class A(a) 63,000 6,437,812
- --------------------------------------------------------------
12,794,062
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-6.28%
Aether Systems, Inc.(a) 38,100 2,728,912
- --------------------------------------------------------------
ANTEC Corp.(a) 45,000 1,642,500
- --------------------------------------------------------------
Copper Mountain Networks, Inc.(a) 29,700 1,447,875
- --------------------------------------------------------------
Covad Communications Group, Inc.(a) 14,100 788,719
- --------------------------------------------------------------
JDS Uniphase Corp.(a) 7,000 1,129,187
- --------------------------------------------------------------
Juniper Networks, Inc.(a) 8,100 2,754,000
- --------------------------------------------------------------
Lucent Technologies Inc. 102,200 7,645,837
- --------------------------------------------------------------
Sycamore Networks, Inc.(a) 5,400 1,663,200
- --------------------------------------------------------------
Tellabs, Inc.(a) 45,000 2,888,437
- --------------------------------------------------------------
Williams Communications Group,
Inc.(a) 57,800 1,672,587
- --------------------------------------------------------------
24,361,254
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-5.11%
Cisco Systems, Inc.(a) 25,400 2,720,975
- --------------------------------------------------------------
Foundry Networks, Inc.(a) 11,600 3,499,575
- --------------------------------------------------------------
Redback Networks, Inc.(a) 72,800 12,922,000
- --------------------------------------------------------------
Rhythms NetConnections, Inc.(a) 22,000 682,000
- --------------------------------------------------------------
19,824,550
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-0.36%
GRIC Communications, Inc.(a) 54,900 1,393,087
- --------------------------------------------------------------
ELECTRIC COMPANIES-7.20%
Allegheny Energy, Inc. 82,100 2,211,569
- --------------------------------------------------------------
DQE, Inc. 76,500 2,648,813
- --------------------------------------------------------------
Edison International 143,800 3,765,762
- --------------------------------------------------------------
Energy East Corp. 112,000 2,331,000
- --------------------------------------------------------------
FirstEnergy Corp. 50,000 1,134,375
- --------------------------------------------------------------
FPL Group, Inc. 55,500 2,376,094
- --------------------------------------------------------------
IPALCO Enterprises, Inc. 42,000 716,625
- --------------------------------------------------------------
NiSource, Inc. 101,000 1,805,375
- --------------------------------------------------------------
NSTAR 29,531 1,196,005
- --------------------------------------------------------------
Pinnacle West Capital Corp. 85,500 2,613,094
- --------------------------------------------------------------
Southern Co. (The) 114,400 2,688,400
- --------------------------------------------------------------
Teco Energy, Inc. 115,000 2,134,688
- --------------------------------------------------------------
Texas Utilities Co. 64,800 2,304,450
- --------------------------------------------------------------
27,926,250
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT-0.09%
Conexant Systems, Inc.(a) 5,400 $ 358,425
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-0.72%
SDL, Inc.(a) 12,900 2,812,200
- --------------------------------------------------------------
ENTERTAINMENT-0.40%
Time Warner Inc. 21,200 1,535,675
- --------------------------------------------------------------
NATURAL GAS-2.85%
Enron Corp. 75,000 3,328,125
- --------------------------------------------------------------
Public Service Co. of North
Carolina, Inc. 40,000 1,292,500
- --------------------------------------------------------------
Williams Companies, Inc. (The) 209,900 6,415,069
- --------------------------------------------------------------
11,035,694
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-1.32%
AES Corp.(a) 40,000 2,990,000
- --------------------------------------------------------------
MidAmerican Energy Holdings Co.(a) 63,200 2,129,050
- --------------------------------------------------------------
5,119,050
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-0.43%
Alexandria Real Estate Equities,
Inc. 52,500 1,670,156
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.81%
Convergys Corp.(a) 160,000 4,920,000
- --------------------------------------------------------------
Quanta Services, Inc.(a) 74,000 2,090,500
- --------------------------------------------------------------
7,010,500
- --------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.74%
Clarent Corp.(a) 36,900 2,868,975
- --------------------------------------------------------------
TELECOMMUNICATIONS-2.99%
Broadwing Inc.(a) 314,344 11,591,435
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-4.20%
Infonet Services Corp.-Class B(a) 65,200 1,711,500
- --------------------------------------------------------------
Phone.com, Inc.(a) 51,400 5,959,188
- --------------------------------------------------------------
TeleCorp PCS, Inc.(a) 56,300 2,139,400
- --------------------------------------------------------------
Tritel, Inc.(a) 82,700 2,620,556
- --------------------------------------------------------------
Triton PCS Holdings, Inc.-Class A(a) 40,800 1,856,400
- --------------------------------------------------------------
Western Wireless Corp.-Class A(a) 30,200 2,015,850
- --------------------------------------------------------------
16,302,894
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-3.59%
AT&T Corp. 58,350 2,961,263
- --------------------------------------------------------------
Global TeleSystems Group, Inc.(a) 38,200 1,322,675
- --------------------------------------------------------------
MCI WorldCom, Inc.(a) 181,389 9,624,954
- --------------------------------------------------------------
13,908,892
- --------------------------------------------------------------
</TABLE>
FS-18
<PAGE> 288
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE-12.11%
Bell Atlantic Corp. 49,000 $ 3,016,563
- --------------------------------------------------------------
BellSouth Corp. 41,800 1,956,763
- --------------------------------------------------------------
CenturyTel, Inc. 118,800 5,628,150
- --------------------------------------------------------------
GTE Corp. 31,600 2,229,775
- --------------------------------------------------------------
McLeodUSA Inc.-Class A(a) 80,000 4,710,000
- --------------------------------------------------------------
NEXTLINK Communications, Inc.-Class
A(a) 43,400 3,604,913
- --------------------------------------------------------------
Qwest Communications International,
Inc.(a) 150,000 6,450,000
- --------------------------------------------------------------
SBC Communications, Inc. 308,893 15,058,534
- --------------------------------------------------------------
Time Warner Telecom, Inc.(a) 86,300 4,309,606
- --------------------------------------------------------------
46,964,304
- --------------------------------------------------------------
Total Domestic Common Stocks
(Cost $83,442,776) 207,477,403
- --------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-28.16%
ARGENTINA-0.44%
El Sitio, Inc. (Computers-Software
& Services)(a) 46,000 1,690,500
- --------------------------------------------------------------
AUSTRALIA-0.34%
Telstra Corp. Ltd. (Telephone) 195,000 1,060,792
- --------------------------------------------------------------
Telstra Corp. Ltd.-Installment
Receipts (Telephone)(a) 72,000 254,023
- --------------------------------------------------------------
1,314,815
- --------------------------------------------------------------
AUSTRIA-0.45%
Oesterreichische
Elektrizitactswirtschafts A.G.-
Class A (Electric Companies) 12,500 1,754,997
- --------------------------------------------------------------
BELGIUM-0.40%
Electrabel S.A. (Electric
Companies) 4,700 1,537,352
- --------------------------------------------------------------
BERMUDA-0.91%
Global Crossing Ltd.
(Telecommunications-Long
Distance)(a) 70,523 3,526,150
- --------------------------------------------------------------
CANADA-1.47%
AT&T Canada, Inc. (Telephone)(a) 74,600 3,002,650
- --------------------------------------------------------------
BCT.Telus Communications, Inc.
(Telephone) 55,382 1,348,768
- --------------------------------------------------------------
BCT.Telus Communications,
Inc.-Class A (Telephone) 18,460 445,736
- --------------------------------------------------------------
Westcoast Energy, Inc. (Natural
Gas) 57,400 921,988
- --------------------------------------------------------------
5,719,142
- --------------------------------------------------------------
DENMARK-0.63%
Tele Danmark A.S.-ADR (Telephone) 65,000 2,453,750
- --------------------------------------------------------------
FINLAND-3.24%
Nokia Oyj-ADR (Communications
Equipment) 46,400 8,816,000
- --------------------------------------------------------------
Sonera Group Oyj
(Telecommunications-
Cellular/Wireless) 54,900 3,760,042
- --------------------------------------------------------------
12,576,042
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-2.20%
France Telecom S.A.-ADR
(Telecommunications) 39,000 $ 5,206,500
- --------------------------------------------------------------
Suez Lyonnaise des Eaux S.A.
(Manufacturing- Diversified) 10,900 1,745,376
- --------------------------------------------------------------
Vivendi (Manufacturing-Diversified) 17,600 1,588,017
- --------------------------------------------------------------
8,539,893
- --------------------------------------------------------------
GERMANY-1.35%
Mannesmann A.G.
(Machinery-Diversified) 11,391 2,745,766
- --------------------------------------------------------------
RWE A.G. (Electric Companies) 28,100 1,100,140
- --------------------------------------------------------------
Viag A.G.
(Manufacturing-Diversified) 75,400 1,381,131
- --------------------------------------------------------------
5,227,037
- --------------------------------------------------------------
GREECE-0.09%
Panafon Hellenic Telecom S.A.-GDR
(Telecommunications-Cellular/Wireless)
(Acquired 11/20/98; Cost
$244,080)(b) 27,000 348,300
- --------------------------------------------------------------
HUNGARY-0.40%
Magyar Tavkozlesi Rt-ADR
(Telecommunications-Long
Distance) 42,700 1,537,200
- --------------------------------------------------------------
IRELAND-1.68%
eircom PLC (Telecommunications-Long
Distance) 1,499,100 6,532,971
- --------------------------------------------------------------
ISRAEL-0.63%
Partner Communications Co. Ltd.-ADR
(Telecommunications-Cellular/
Wireless)(a) 94,000 2,432,250
- --------------------------------------------------------------
ITALY-2.83%
ACEA S.p.A. (Water Utilities)(a) 388,800 5,400,047
- --------------------------------------------------------------
AEM S.p.A. (Electric Companies) 645,000 2,583,658
- --------------------------------------------------------------
Enel S.p.A. (Electric Companies)(a) 293,100 1,227,161
- --------------------------------------------------------------
Societa Nordelettrica S.p.A.
(Electric Companies) 570,000 1,749,713
- --------------------------------------------------------------
10,960,579
- --------------------------------------------------------------
JAPAN-1.00%
Nippon Telegraph & Telephone Corp.
(Telephone) 125 2,141,983
- --------------------------------------------------------------
Nippon Telegraph & Telephone
Corp.-ADR (Telephone) 20,000 1,722,500
- --------------------------------------------------------------
3,864,483
- --------------------------------------------------------------
MEXICO-0.20%
Nuevo Grupo Iusacell A.A. de
C.V.-ADR
(Telecommunications-Cellular/
Wireless)(a) 51,600 770,775
- --------------------------------------------------------------
NETHERLANDS-3.09%
KPNQWest N.V.
(Telecommunications-Long
Distance)(a) 65,700 4,370,781
- --------------------------------------------------------------
Libertel N.V.
(Telecommunications-Cellular/
Wireless)(a) 79,000 2,067,248
- --------------------------------------------------------------
</TABLE>
FS-19
<PAGE> 289
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NETHERLANDS-(CONTINUED)
Versatel Telecom International N.V.
(Telecommunications-Long
Distance)(a) 158,000 $ 5,565,669
- --------------------------------------------------------------
12,003,698
- --------------------------------------------------------------
SOUTH KOREA-0.86%
Korea Telecom Corp.-ADR (Telephone) 44,800 3,348,800
- --------------------------------------------------------------
SPAIN-3.20%
Autopistas Concesionaria Espanola
S.A. (Services-Commercial &
Consumer) 80,850 785,235
- --------------------------------------------------------------
Endesa S.A. (Electric Companies) 75,000 1,487,785
- --------------------------------------------------------------
Telefonica S.A. (Telephone)(a) 255,738 6,383,210
- --------------------------------------------------------------
Terra Networks, S.A.
(Computers-Software &
Services)(a) 68,500 3,740,094
- --------------------------------------------------------------
12,396,324
- --------------------------------------------------------------
UNITED KINGDOM-2.75%
COLT Telecom Group PLC
(Communications Equipment)(a) 19,000 972,227
- --------------------------------------------------------------
Kelda Group PLC (Water Utilities) 270,407 1,528,192
- --------------------------------------------------------------
National Grid Group PLC (Electric
Companies) 131,526 1,000,286
- --------------------------------------------------------------
PowerGen PLC (Electric Companies) 136,949 984,035
- --------------------------------------------------------------
PowerGen PLC-ADR (Electric
Companies) 47,800 1,511,675
- --------------------------------------------------------------
Scottish Power PLC (Electric
Companies) 223,850 1,695,203
- --------------------------------------------------------------
Thus PLC (Telecommunications-Long
Distance)(a) 218,500 1,379,495
- --------------------------------------------------------------
United Utilities PLC (Water
Utilities) 151,936 1,578,705
- --------------------------------------------------------------
10,649,818
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$58,428,005) 109,184,876
- --------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED
STOCKS-4.34%
BROADCASTING (TELEVISION, RADIO &
CABLE)-0.36%
MediaOne Group, Inc., $3.04 Conv.
Pfd. 29,200 1,401,600
- --------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.90%
PSINet, Inc.-Series C, $3.375 Conv.
Pfd. 60,000 3,502,500
- --------------------------------------------------------------
ELECTRIC COMPANIES-0.77%
Calpine Capital Trust, $2.875 Conv.
Pfd. 46,100 2,979,212
- --------------------------------------------------------------
NATURAL GAS-0.97%
El Paso Energy Cap Trust, Inc.,
$2.375 Conv. Pfd. 74,500 3,752,938
- --------------------------------------------------------------
TELECOMMUNICATIONS-0.12%
Broadwing Inc.-Series B, $3.375
Conv. Pfd. 8,000 474,000
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-0.89%
WinStar Communications, Inc.-Series
F, $72.50 Conv. Pfd. 2,600 3,464,500
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE-0.33%
NEXTLINK Communications, Inc.
$3.25 Conv. Pfd. 3,000 $ 575,625
- --------------------------------------------------------------
$3.25 Conv. Pfd. (Acquired
03/26/98; Cost $180,000)(b) 3,600 690,750
- --------------------------------------------------------------
1,266,375
- --------------------------------------------------------------
Total Domestic Convertible
Preferred Stocks (Cost
$14,819,973) 16,841,125
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. DOLLAR DENOMINATED BONDS &
NOTES-5.98%
BROADCASTING (TELEVISION, RADIO &
CABLE)-0.24%
Comcast Corp., Sr. Sub. Deb.,
9.50%, 01/15/08 $ 900,000 925,875
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-0.93%
Candescent Technology Corp., Sr.
Conv. Sub. Deb., 7.00%, 05/01/03
(Acquired 04/17/98-11/30/98; Cost
$4,509,350)(b) 4,605,000 3,591,900
- --------------------------------------------------------------
ELECTRIC COMPANIES-1.96%
El Paso Electric Co.-Series E, Sec.
First Mortgage Bonds, 9.40%,
05/01/11 1,900,000 2,012,917
- --------------------------------------------------------------
Indiana Michigan Power Co.-Series
F, Sec. Lease Obligation Bonds,
9.82%, 12/07/22 3,020,696 3,342,340
- --------------------------------------------------------------
Western Resources, Inc., Sr. Unsec.
Notes,
6.25%, 08/15/03 1,500,000 1,418,250
- --------------------------------------------------------------
7.13%, 08/01/09 900,000 814,338
- --------------------------------------------------------------
7,587,845
- --------------------------------------------------------------
NATURAL GAS-0.32%
Dynegy Inc., Sr. Unsec. Deb.,
7.13%, 05/15/18 1,400,000 1,247,288
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-0.62%
AES Corp.,
Sr. Notes, 8.00%, 12/31/08 1,500,000 1,376,250
- --------------------------------------------------------------
Sr. Unsec. Sub. Notes, 10.25%,
07/15/06 1,000,000 1,020,000
- --------------------------------------------------------------
2,396,250
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-1.04%
AT&T Corp., Sr. Notes, 7.75%,
03/01/07 1,850,000 1,889,109
- --------------------------------------------------------------
Global TeleSystems Group, Inc.,
Conv. Notes, 8.75%, 06/30/00 620,000 2,152,175
- --------------------------------------------------------------
4,041,284
- --------------------------------------------------------------
TELEPHONE-0.87%
NTL Inc., Conv. Sub. Notes, 5.75%,
12/15/09 (Acquired 12/17/99; Cost
$1,800,000)(b) 1,800,000 1,944,000
- --------------------------------------------------------------
SBC Communications, Inc., Deb.,
7.38%, 07/15/43 1,600,000 1,439,264
- --------------------------------------------------------------
3,383,264
- --------------------------------------------------------------
Total U.S. Dollar Denominated
Bonds & Notes (Cost
$24,349,922) 23,173,706
- --------------------------------------------------------------
</TABLE>
FS-20
<PAGE> 290
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED BONDS &
NOTES-3.36%
CANADA-1.14%
Clearnet Communications Inc.
(Telecommunications-Cellular/Wireless),
Sr. Unsec. Disc. Notes, 10.75%,
02/15/09(d) CAD 3,000,000 $ 1,215,963
- --------------------------------------------------------------
Teleglobe Canada Inc. (Telephone),
Unsec. Deb., 8.35%, 06/20/03 CAD 2,400,000 1,702,615
- --------------------------------------------------------------
TransCanada Pipelines-Series Q
(Natural Gas), Deb., 10.63%,
10/20/09 CAD 1,750,000 1,496,224
- --------------------------------------------------------------
4,414,802
- --------------------------------------------------------------
FRANCE-0.42%
France Telecom (Telephone), Conv.
Bonds, 2.00%, 01/01/04 FRF 6,455,040 1,641,494
- --------------------------------------------------------------
UNITED KINGDOM-1.80%
COLT Telecom Group PLC
(Communications Equipment), Conv.
Bonds, 2.00%,
12/16/06 (Acquired 12/09/99;
Cost $1,513,645)(b) EUR 1,475,000 1,597,708
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
National Grid Co. PLC (Electric
Companies), Conv. Bonds, 4.25%,
02/17/08 (Acquired 02/05/98; Cost
$4,574,700)(b) GBP 2,760,000 $ 5,375,740
- --------------------------------------------------------------
6,973,448
- --------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Bonds & Notes
(Cost $11,848,786) 13,029,744
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS-4.66%
STIC Liquid Assets Portfolio(e) 9,033,715 9,033,715
- --------------------------------------------------------------
STIC Prime Portfolio(e) 9,033,715 9,033,715
- --------------------------------------------------------------
Total Money Market Funds (Cost
$18,067,430) 18,067,430
- --------------------------------------------------------------
TOTAL INVESTMENTS-100.00%
(Cost $210,956,892) 387,774,284
- --------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.00%) (8,910)
- --------------------------------------------------------------
NET ASSETS-100.00% $387,765,374
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
CAD - Canadian Dollars
Conv. - Convertible
Deb. - Debentures
Disc. - Discounted
EUR - Euro
FRF - French Franc
GBP - British Pound Sterling
GDR - Global Depositary Receipt
Pfd. - Preferred
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 12/31/99 was $13,548,398 which
represented 3.49% of the Fund's net assets.
(c) Foreign denominated security. Par value and coupon are denominated in
currency indicated.
(d) Step bond issued at discount. The interest rate represents the coupon rate
at which the bond will accrue at a specified future date.
(e) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-21
<PAGE> 291
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$210,956,892) $387,774,284
- ---------------------------------------------------------
Foreign currencies, at value (cost $5,703) 5,723
- ---------------------------------------------------------
Receivables for:
Fund shares sold 634,820
- ---------------------------------------------------------
Dividends and interest 950,990
- ---------------------------------------------------------
Investment for deferred compensation plan 33,815
- ---------------------------------------------------------
Other assets 15,540
- ---------------------------------------------------------
Total assets 389,415,172
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 472,480
- ---------------------------------------------------------
Fund shares reacquired 536,539
- ---------------------------------------------------------
Deferred compensation 33,815
- ---------------------------------------------------------
Accrued advisory fees 175,431
- ---------------------------------------------------------
Accrued administrative services fees 7,144
- ---------------------------------------------------------
Accrued distribution fees 307,833
- ---------------------------------------------------------
Accrued transfer agent fees 40,453
- ---------------------------------------------------------
Accrued operating expenses 76,103
- ---------------------------------------------------------
Total liabilities 1,649,798
- ---------------------------------------------------------
Net assets applicable to shares outstanding $387,765,374
=========================================================
NET ASSETS:
Class A $238,431,599
=========================================================
Class B $142,632,134
=========================================================
Class C $ 6,701,641
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 9,141,304
=========================================================
Class B 5,478,806
=========================================================
Class C 257,525
=========================================================
Class A:
Net asset value and redemption price per
share $ 26.08
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $26.08 / 94.50%) $ 27.60
=========================================================
Class B:
Net asset value and offering price per
share $ 26.03
=========================================================
Class C:
Net asset value and offering price per
share $ 26.02
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $161,589 foreign
withholding tax) $ 4,612,201
- ---------------------------------------------------------
Interest 4,338,134
- ---------------------------------------------------------
Total investment income 8,950,335
- ---------------------------------------------------------
EXPENSES:
Advisory fees 1,802,726
- ---------------------------------------------------------
Administrative services fees 88,999
- ---------------------------------------------------------
Custodian fees 112,375
- ---------------------------------------------------------
Trustees' fees 7,164
- ---------------------------------------------------------
Distribution fees -- Class A 500,106
- ---------------------------------------------------------
Distribution fees -- Class B 1,165,993
- ---------------------------------------------------------
Distribution fees -- Class C 39,036
- ---------------------------------------------------------
Transfer agent fees -- Class A 308,147
- ---------------------------------------------------------
Transfer agent fees -- Class B 179,611
- ---------------------------------------------------------
Transfer agent fees -- Class C 6,013
- ---------------------------------------------------------
Other 207,892
- ---------------------------------------------------------
Total expenses 4,418,062
- ---------------------------------------------------------
Less: Expenses paid indirectly (4,581)
- ---------------------------------------------------------
Net expenses 4,413,481
- ---------------------------------------------------------
Net investment income 4,536,854
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 30,857,872
- ---------------------------------------------------------
Foreign currencies (285,335)
- ---------------------------------------------------------
30,572,537
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 64,067,017
- ---------------------------------------------------------
Foreign currencies (3,469)
- ---------------------------------------------------------
64,063,548
- ---------------------------------------------------------
Net gain from investment securities and
foreign currencies 94,636,085
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $99,172,939
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-22
<PAGE> 292
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 4,536,854 $ 6,163,727
- --------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and option contracts 30,572,537 11,466,949
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and option contracts 64,063,548 25,167,621
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 99,172,939 42,798,297
- --------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (3,130,474) (4,323,452)
- --------------------------------------------------------------------------------------------
Class B (980,604) (1,627,090)
- --------------------------------------------------------------------------------------------
Class C (28,383) (23,697)
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (13,462,484) (7,225,608)
- --------------------------------------------------------------------------------------------
Class B (8,054,908) (4,089,137)
- --------------------------------------------------------------------------------------------
Class C (355,717) (109,604)
- --------------------------------------------------------------------------------------------
Share transactions-net:
Class A (3,558,143) 865,940
- --------------------------------------------------------------------------------------------
Class B 3,957,825 8,749,835
- --------------------------------------------------------------------------------------------
Class C 2,679,799 1,643,746
- --------------------------------------------------------------------------------------------
Net increase in net assets 76,239,850 36,659,230
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 311,525,524 274,866,294
- --------------------------------------------------------------------------------------------
End of period $387,765,374 $311,525,524
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $203,276,266 $198,796,429
- --------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (41,312) (68,800)
- --------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and option contracts 7,715,300 46,323
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and option contracts 176,815,120 112,751,572
- --------------------------------------------------------------------------------------------
$387,765,374 $311,525,524
============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-23
<PAGE> 293
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Utilities Fund (the "Fund") is a series portfolio of AIM Funds Group
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of nine separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objectives are to achieve a high level of current income
and secondarily, growth of capital, by investing primarily in the common and
preferred stocks of public utility companies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last 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 closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. 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. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities 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 would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Trustees.
B. Securities Transactions and Investment Income -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded
on the accrual basis. Dividend income is recorded on the ex-dividend date.
On December 31, 1999, undistributed net investment income was decreased by
$369,905, undistributed net realized gains decreased by $1,030,451 and
paid-in capital increased by $1,400,356 as a result of differing book/tax
treatment of foreign currency transactions, equalization credits and other
reclassifications. Net assets of the Fund were unaffected by the
reclassifications.
C. Distributions -- Distributions from income are recorded on ex-dividend date,
and are declared and paid quarterly. Distributions from net realized
capital gains, if any, are generally paid annually and recorded on
ex-dividend date. The Fund may elect to use a portion of the proceeds of
fund share redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes
on otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from
FS-24
<PAGE> 294
changes in market prices of securities held. Such fluctuations are included
with the net realized and unrealized gain or loss from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
G. Bond Premiums -- It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
H. Expenses -- Distribution expenses and transfer agency expenses directly
attributable to a class of shares are charged to that class' operations. All
other expenses which are attributable to more than one class are allocated
among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.60% on
the first $200 million of the Fund's average daily net assets, plus 0.50% on the
next $300 million of the Fund's average daily net assets, plus 0.40% on the next
$500 million of the Fund's average daily net assets, plus 0.30% on the Fund's
average daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 1999, AIM was
paid $88,999 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $339,533 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively, the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate
of 0.25% of the Fund's average daily net assets of Class A shares and 1.00% of
the average daily net assets of Class B and C shares. Of these amounts, the Fund
may pay a service fee of 0.25% of the average daily net assets of the Class A,
Class B or Class C shares to selected dealers and financial institutions who
furnish continuing personal shareholder services to their customers who purchase
and own the appropriate class of shares of the Fund. Any amounts not paid as a
service fee under the Plans would constitute an asset-based sales charge. The
Plans also impose a cap on the total sales charges, including asset-based sales
charges that may be paid by the respective classes. For the year ended December
31, 1999, the Class A, Class B and Class C shares paid AIM Distributors
$500,106, $1,165,993 and $39,036, respectively, as compensation under the Plans.
AIM Distributors received commissions of $56,996 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $67,367 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 1999, the Fund paid legal fees of $4,002
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $3,537 and $1,044, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $4,581 during the year ended December 31, 1999.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
FS-25
<PAGE> 295
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$111,927,760 and $138,238,897, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $182,332,667
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (5,515,275)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $176,817,392
==========================================================================
Investments have the same cost for tax and financial
statement purposes.
</TABLE>
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 1,548,711 $ 34,438,387 2,025,020 $ 40,729,263
- -------------------------------------------------------------------------------------------------------------------
Class B 884,404 19,574,340 1,124,804 22,635,167
- -------------------------------------------------------------------------------------------------------------------
Class C 183,463 4,121,099 196,103 3,960,554
- -------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 636,523 15,200,629 520,447 10,555,882
- -------------------------------------------------------------------------------------------------------------------
Class B 332,374 7,978,341 246,404 4,994,635
- -------------------------------------------------------------------------------------------------------------------
Class C 14,370 346,523 5,787 117,358
- -------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (2,406,262) (53,197,159) (2,500,981) (50,419,205)
- -------------------------------------------------------------------------------------------------------------------
Class B (1,070,971) (23,594,856) (935,494) (18,879,967)
- -------------------------------------------------------------------------------------------------------------------
Class C (83,100) (1,787,823) (120,588) (2,434,166)
- -------------------------------------------------------------------------------------------------------------------
39,512 $ 3,079,481 561,502 $ 11,259,521
===================================================================================================================
</TABLE>
FS-26
<PAGE> 296
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and a share of
Class B outstanding during each of the years in the five-year period ended
December 31, 1999, and for a share of Class C outstanding during each of the
years in the two-year period ended December 31, 1999 and the period August 4,
1997 (date sales commenced) through December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.01 $ 19.26 $ 16.01 $ 14.59 $ 11.85
- --------------------------------------------------------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.38 0.48 0.47 0.55 0.55
- --------------------------------------------------------- -------- -------- -------- -------- --------
Net gains on securities (both realized and unrealized) 6.60 2.53 3.26 1.43 2.71
- --------------------------------------------------------- -------- -------- -------- -------- --------
Total from investment operations 6.98 3.01 3.73 1.98 3.26
- --------------------------------------------------------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.35) (0.46) (0.47) (0.56) (0.52)
- --------------------------------------------------------- -------- -------- -------- -------- --------
Distributions from net realized gains (1.56) (0.80) (0.01) -- --
- --------------------------------------------------------- -------- -------- -------- -------- --------
Total distributions (1.91) (1.26) (0.48) (0.56) (0.52)
- --------------------------------------------------------- -------- -------- -------- -------- --------
Net asset value, end of period $ 26.08 $ 21.01 $ 19.26 $ 16.01 $ 14.59
========================================================= ======== ======== ======== ======== ========
Total return(a) 34.15% 16.01% 23.70% 13.88% 28.07%
========================================================= ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $238,432 $196,665 $179,456 $164,001 $170,624
========================================================= ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.10%(b) 1.06% 1.13% 1.17% 1.21%
========================================================= ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 1.69%(b) 2.39% 2.79% 3.62% 4.20%
========================================================= ======== ======== ======== ======== ========
Portfolio turnover rate 37% 38% 26% 48% 88%
========================================================= ======== ======== ======== ======== ========
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $200,042,322.
<TABLE>
<CAPTION>
Class B Class C
------------------------------------------------- -------------------------
1999 1998 1997 1996 1995 1999(A) 1998 1997
-------- -------- ------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.98 $ 19.24 $ 16.01 $ 14.60 $ 11.84 $20.97 $19.24 $17.67
- ---------------------------------------------- -------- -------- ------- ------- ------- ------ ------ ------
Income from investment operations:
Net investment income 0.21 0.33 0.34 0.42 0.44 0.21 0.33 0.13
- ---------------------------------------------- -------- -------- ------- ------- ------- ------ ------ ------
Net gains on securities (both realized and
unrealized) 6.59 2.53 3.25 1.44 2.73 6.59 2.52 1.58
- ---------------------------------------------- -------- -------- ------- ------- ------- ------ ------ ------
Total from investment operations 6.80 2.86 3.59 1.86 3.17 6.80 2.85 1.71
- ---------------------------------------------- -------- -------- ------- ------- ------- ------ ------ ------
Less distributions:
Dividends from net investment income (0.19) (0.32) (0.35) (0.45) (0.41) (0.19) (0.32) (0.13)
- ---------------------------------------------- -------- -------- ------- ------- ------- ------ ------ ------
Distributions from net realized gains (1.56) (0.80) (0.01) -- -- (1.56) (0.80) (0.01)
- ---------------------------------------------- -------- -------- ------- ------- ------- ------ ------ ------
Total distributions (1.75) (1.12) (0.36) (0.45) (0.41) (1.75) (1.12) (0.14)
- ---------------------------------------------- -------- -------- ------- ------- ------- ------ ------ ------
Net asset value, end of period $ 26.03 $ 20.98 $ 19.24 $ 16.01 $ 14.60 $26.02 $20.97 $19.24
============================================== ======== ======== ======= ======= ======= ====== ====== ======
Total return(b) 33.16% 15.14% 22.74% 12.98% 27.16% 33.18% 15.09% 9.74%
============================================== ======== ======== ======= ======= ======= ====== ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $142,632 $111,866 $94,227 $79,530 $70,693 $6,702 $2,994 $1,183
============================================== ======== ======== ======= ======= ======= ====== ====== ======
Ratio of expenses to average net assets 1.84%(c) 1.81% 1.91% 1.96% 1.97% 1.84%(c) 1.81% 1.90%(d)
============================================== ======== ======== ======= ======= ======= ====== ====== ======
Ratio of net investment income to average net
assets 0.95%(c) 1.64% 2.01% 2.83% 3.44% 0.95%(c) 1.64% 2.02%(d)
============================================== ======== ======== ======= ======= ======= ====== ====== ======
Portfolio turnover rate 37% 38% 26% 48% 88% 37% 38% 26%
============================================== ======== ======== ======= ======= ======= ====== ====== ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $116,599,341 and $3,903,633 for
Class B and Class C, respectively.
(d) Annualized.
FS-27
<PAGE> 297
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM High Yield Fund:
We have audited the accompanying statement of assets and
liabilities of AIM High Yield Fund (a portfolio of AIM
Funds Group), including the schedule of investments, as
of December 31, 1999, the related statement of operations
for the year then ended, and the statement of changes in
its net assets for each of the years in the two-year
period then ended and the financial highlights for each
of the years in the five-year period then ended. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM High
Yield Fund as of December 31, 1999, the results of its
operations for the year then ended, the changes in its
net assets for each of the years in the two-year period
then ended and the financial highlights for each of the
years in the five-year period then ended, in conformity
with generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
February 4, 2000
Houston, Texas
FS-28
<PAGE> 298
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED CORPORATE
BONDS & NOTES-91.02%
AEROSPACE/DEFENSE-0.47%
Precision Partners, Inc., Sr. Sub.
Notes, 12.00%, 03/15/09(a) $18,925,000 $ 14,288,375
- ---------------------------------------------------------------
AIR FREIGHT-0.64%
Atlas Air, Inc., Sr. Unsec.
Notes, 10.75%, 08/01/05 18,897,000 19,463,910
- ---------------------------------------------------------------
AIRLINES-3.22%
Airplanes Pass Through
Trust-Series D, Gtd. Sub.
Bonds, 10.88%, 03/15/12 62,860,000 55,316,800
- ---------------------------------------------------------------
Amtran, Inc., Sr. Unsec. Gtd.
Notes, 10.50%, 08/01/04 24,250,000 24,371,250
- ---------------------------------------------------------------
Dunlop Standard Aerospace
Holdings PLC (United Kingdom),
Sr. Unsec. Sub. Yankee Notes,
11.88%, 05/15/09 17,960,000 18,566,150
- ---------------------------------------------------------------
98,254,200
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-2.40%
Advance Stores Co., Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/15/08 24,825,000 21,473,625
- ---------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 26,750,000 26,081,250
- ---------------------------------------------------------------
Venture Holdings Trust, Sr.
Unsec. Gtd. Sub. Notes,
11.00%, 06/01/07 20,250,000 19,743,750
- ---------------------------------------------------------------
12.00%, 06/01/09 6,750,000 6,108,750
- ---------------------------------------------------------------
73,407,375
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-3.18%
Charter Communications Holdings,
LLC/ Charter Communications
Holdings Capital Corp., Sr.
Unsec. Disc. Notes, 9.92%,
04/01/11(b) 21,120,000 12,487,200
- ---------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(b) 33,250,000 21,945,000
- ---------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.88%, 10/15/07(b) 39,305,000 26,432,612
- ---------------------------------------------------------------
Pegasus Communications
Corp.-Series A, Sr. Sub. Notes,
12.50%, 08/01/07(a) 17,500,000 19,162,500
- ---------------------------------------------------------------
United Pan-Europe Communications
N.V. (Netherlands), Sr. Disc.
Notes, 13.38%, 11/01/09(a)(b) 30,000,000 16,950,000
- ---------------------------------------------------------------
96,977,312
- ---------------------------------------------------------------
BUILDING MATERIALS-0.89%
Blount Inc., Sr. Sub Notes,
13.00%, 08/01/09(a) 22,000,000 23,320,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
BUILDING MATERIALS-(CONTINUED)
Imperial Home Decor Group-Series
B, Sr. Unsec. Gtd. Sub. Notes,
11.00%, 03/15/08(c) $19,100,000 $ 3,724,500
- ---------------------------------------------------------------
27,044,500
- ---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-1.57%
Sterling Chemicals, Inc.-Series
B, Sr. Gtd. Sec. Sub. Notes,
12.38%, 07/15/06 16,500,000 17,160,000
- ---------------------------------------------------------------
Texas Petrochemical Corp., Sr.
Unsec. Sub. Notes, 11.13%,
07/01/06 17,980,000 15,732,500
- ---------------------------------------------------------------
ZSC Specialty Chemicals PLC
(United Kingdom), Sr. Gtd.
Unsub. Notes, 11.00%,
07/01/09(a) 14,500,000 15,080,000
- ---------------------------------------------------------------
47,972,500
- ---------------------------------------------------------------
CHEMICALS (SPECIALTY)-1.03%
Key Plastics Holdings,
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.25%, 03/15/07 23,770,000 9,151,450
- ---------------------------------------------------------------
Trans-Resources, Inc.-
Series B, Sr. Unsec. Disc.
Notes, 12.00%, 03/15/08(b) 11,750,000 5,463,750
- ---------------------------------------------------------------
Series B, Sr. Unsec. Notes,
10.75%, 03/15/08 19,000,000 17,005,000
- ---------------------------------------------------------------
31,620,200
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-1.45%
Dialog Corp. PLC-Series A (United
Kingdom), Sr. Sub. Yankee
Notes, 11.00%, 11/15/07 26,250,000 12,731,250
- ---------------------------------------------------------------
GST Network Funding, Inc., Sr.
Sec. Disc. Notes, 10.50%,
05/01/08(b) 36,450,000 17,769,375
- ---------------------------------------------------------------
ProNet Inc., Sr. Sub. Notes,
11.88%, 06/15/05 20,000,000 13,700,000
- ---------------------------------------------------------------
44,200,625
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.46%
Convergent Communications-Series
B, Sr. Unsec. Notes, 13.00%,
04/01/08 33,500,000 25,292,500
- ---------------------------------------------------------------
Exodus Communications, Inc., Sr.
Unsec. Notes, 11.25%, 07/01/08 18,425,000 19,208,062
- ---------------------------------------------------------------
44,500,562
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.21%
Equinix Inc., Sr. Notes, 13.00%,
12/01/07(a)(d) 16,690,000 17,315,875
- ---------------------------------------------------------------
Metal Management, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.00%,
05/15/08 25,500,000 19,635,000
- ---------------------------------------------------------------
36,950,875
- ---------------------------------------------------------------
</TABLE>
FS-29
<PAGE> 299
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE &
SERVICES)-2.13%
Cybernet Internet Services
International, Inc.,
Conv. Unsec. Sub. Notes,
13.00%, 08/15/09(a)(b) $11,250,000 $ 6,215,625
- ---------------------------------------------------------------
Sr. Notes, 14.00%, 07/01/09 24,000,000 21,000,000
- ---------------------------------------------------------------
Earthwatch Inc.,
Sr. Disc. Notes, 13.00%,
07/15/07 (Acquired 07/07/99;
Cost $24,705,502)(b)(d)(e) 34,000,000 23,800,000
- ---------------------------------------------------------------
Sr. Notes, 12.50%, 03/01/05
(Acquired 03/14/97-09/01/99;
Cost $15,500,000)(e) 22,320,000 13,894,200
- ---------------------------------------------------------------
64,909,825
- ---------------------------------------------------------------
CONSTRUCTION (CEMENT &
AGGREGATES)-0.50%
Schuff Steel Co., Sr. Unsec. Gtd.
Sub. Notes, 10.50%, 06/01/08 18,550,000 15,211,000
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD &
HEALTH)-0.85%
Fleming Companies, Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
10.63%, 07/31/07 28,700,000 26,045,250
- ---------------------------------------------------------------
FOODS-1.35%
Vlasic Foods International
Inc.-Series B, Sr. Unsec. Sub.
Notes, 10.25%, 07/01/09 23,500,000 22,501,250
- ---------------------------------------------------------------
Volume Services America Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.25%,
03/01/09 19,000,000 18,810,000
- ---------------------------------------------------------------
41,311,250
- ---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-1.96%
Resort at Summerlin LP-Series B,
Sr. Unsec. Sub. Notes, 13.00%,
12/15/07 32,609,000 22,989,345
- ---------------------------------------------------------------
Venetian Casino Resort LLC, Sec.
Gtd. Mortgage Notes, 12.25%,
11/15/04 42,200,000 37,030,500
- ---------------------------------------------------------------
60,019,845
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-1.27%
Biovail Corp. International, Sr.
Notes, 10.88%, 11/15/05 16,875,000 17,803,125
- ---------------------------------------------------------------
King Pharmaceuticals, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.75%,
02/15/09 19,570,000 20,842,050
- ---------------------------------------------------------------
38,645,175
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL
MANAGEMENT)-0.62%
Triad Hospitals Holdings
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 05/15/09 18,320,000 19,052,800
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-0.58%
DJ Orthopedics, Corp., Sr. Unsec.
Gtd. Sub. Notes, 12.63%,
06/15/09 18,000,000 17,730,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
HEALTH CARE (SPECIALIZED
SERVICES)-0.54%
Team Health, Inc., Sr. Sub.
Notes, 12.00%, 03/15/09(a) $16,930,000 $ 16,591,400
- ---------------------------------------------------------------
HOMEBUILDING-0.54%
D.R. Horton, Inc., Unsec. Gtd.
Sub. Notes, 10.00%, 04/15/06 16,105,000 16,507,625
- ---------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-2.10%
Falcon Products, Inc.-Series B,
Sr. Unsec. Gtd. Sub. Notes,
11.38%, 06/15/09 22,500,000 21,712,500
- ---------------------------------------------------------------
O'Sullivan Industries Inc., Sr.
Sub. Notes, 13.38%,
10/15/09(a)(d) 21,000,000 20,947,500
- ---------------------------------------------------------------
Winsloew Furniture, Inc., Sr.
Sub. Notes, 12.75%, 08/15/07(a) 23,870,000 21,483,000
- ---------------------------------------------------------------
64,143,000
- ---------------------------------------------------------------
HOUSEWARES-0.56%
Decora Industries, Inc.-Series B,
Sr. Sec. Gtd. Notes, 11.00%,
05/01/05 21,370,000 17,202,850
- ---------------------------------------------------------------
IRON & STEEL-1.06%
Acme Metal Inc., Sr. Unsec. Gtd.
Notes, 10.88%, 12/15/07(c) 28,939,000 5,932,495
- ---------------------------------------------------------------
GS Technologies Operating Co.,
Inc., Sr. Gtd. Notes, 12.00%,
09/01/04 21,755,000 10,116,075
- ---------------------------------------------------------------
Sheffield Steel Corp.-Series B,
First Mortgage Notes, 11.50%,
12/01/05 19,100,000 16,330,500
- ---------------------------------------------------------------
32,379,070
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.90%
Marvel Enterprises, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.00%,
06/15/09 29,375,000 27,465,625
- ---------------------------------------------------------------
LODGING-HOTELS-0.37%
Stena Line A.B. (Sweden), Sr.
Unsec. Yankee Notes, 10.63%,
06/01/08 18,680,000 11,301,400
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.66%
National Equipment
Services-Series B, Sr. Unsec.
Sub. Notes, 10.00%, 11/30/04 20,000,000 20,150,000
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.47%
Anthony Crane Rentals LP-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.38%, 08/01/08 21,085,000 17,816,825
- ---------------------------------------------------------------
Glenoit Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 04/15/07 24,915,000 6,353,325
- ---------------------------------------------------------------
Jordan Industries, Inc.-Series D,
Sr. Unsec. Notes, 10.38%,
08/01/07 20,500,000 20,602,500
- ---------------------------------------------------------------
44,772,650
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-5.24%
Berry Plastics Corp.,
Sr. Gtd. Sub. Notes, 12.25%,
04/15/04(d) 13,000,000 13,390,000
- ---------------------------------------------------------------
Series B, Sr. Sub. Notes,
12.25%, 04/15/04(a) 4,750,000 4,892,500
- ---------------------------------------------------------------
</TABLE>
FS-30
<PAGE> 300
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
MANUFACTURING (SPECIALIZED)-(CONTINUED)
Brand Scaffold Services, Inc.,
Sr. Unsec. Notes, 10.25%,
02/15/08 $22,800,000 $ 20,748,000
- ---------------------------------------------------------------
Derby Cycle Corp. (The), Sr.
Unsec. Notes, 10.00%, 05/15/08 18,955,000 10,899,125
- ---------------------------------------------------------------
First Wave Marine, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.00%,
02/01/08 22,835,000 15,870,325
- ---------------------------------------------------------------
Globe Manufacturing Corp.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.00%, 08/01/08 17,050,000 8,269,250
- ---------------------------------------------------------------
Knowles Electronics, Inc., Sr.
Sub. Notes, 13.13%, 10/15/09(a) 25,000,000 24,375,000
- ---------------------------------------------------------------
MMI Products, Inc.-Series B, Sr.
Unsec. Sub. Notes, 11.25%,
04/15/07 19,140,000 19,809,900
- ---------------------------------------------------------------
Neenah Corp.
Series B, Sr. Sub. Notes,
11.13%, 05/01/07 4,000,000 3,720,000
- ---------------------------------------------------------------
Series D, Sr. Sub. Notes,
11.13%, 05/01/07 15,000,000 13,950,000
- ---------------------------------------------------------------
Omega Cabinets, Sr. Sub. Notes,
10.50%, 06/15/07 23,990,000 23,990,000
- ---------------------------------------------------------------
159,914,100
- ---------------------------------------------------------------
METALS MINING-1.59%
Centaur Mining and Exploration
Ltd. (Australia), Sr. Gtd.
Yankee Notes, 11.00%, 12/01/07 28,800,000 28,656,000
- ---------------------------------------------------------------
Doe Run Resources Corp.
(The)-Series B, Sr. Unsec. Gtd.
Notes, 11.25%, 03/15/05 21,000,000 19,845,000
- ---------------------------------------------------------------
48,501,000
- ---------------------------------------------------------------
NATURAL GAS-0.40%
Western Gas Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.00%,
06/15/09 12,000,000 12,360,000
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.76%
Global Imaging Systems, Inc., Sr.
Unsec. Gtd. Sub. Notes, 10.75%,
02/15/07 23,800,000 23,086,000
- ---------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-0.50%
Pride International, Inc., Sr.
Unsec. Notes, 10.00%, 06/01/09 14,735,000 15,287,562
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-3.10%
Abraxas Petroleum Corp.,
Sr. Unsec. Gtd. Notes, 11.50%,
11/01/04 8,644,300 7,823,092
- ---------------------------------------------------------------
Series B, Sr. Sec. Gtd. Notes,
12.88%, 03/15/03 14,000,000 14,560,000
- ---------------------------------------------------------------
Comstock Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.25%,
05/01/07 18,775,000 19,338,250
- ---------------------------------------------------------------
Frontier Oil Corp., Sr. Unsec.
Notes, 11.75%, 11/15/09 28,000,000 27,720,000
- ---------------------------------------------------------------
Pogo Producing Co.-Series B, Sr.
Unsec. Sub. Notes, 10.38%,
02/15/09 18,335,000 18,976,725
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
OIL & GAS (EXPLORATION &
PRODUCTION)-(CONTINUED)
Queen Sand Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.50%,
07/01/08 $13,145,000 $ 6,375,325
- ---------------------------------------------------------------
94,793,392
- ---------------------------------------------------------------
PERSONAL CARE-0.67%
American Tissue Inc., Sr. Sec.
Notes, 12.50%, 07/15/06(a) 20,150,000 20,603,375
- ---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.66%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 20,120,000 20,019,400
- ---------------------------------------------------------------
POWER PRODUCERS
(INDEPENDENT)-0.68%
Panda Funding Corp., Series A-1,
Pooled Project Bonds, 11.63%,
08/20/12 20,566,149 20,668,980
- ---------------------------------------------------------------
RAILROADS-1.80%
RailWorks Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.50%, 04/15/09 25,500,000 25,946,250
- ---------------------------------------------------------------
TFM S.A. de C.V. (Mexico), Sr.
Yankee Gtd. Disc. Notes,
11.75%, 06/15/09(b) 45,000,000 29,025,000
- ---------------------------------------------------------------
54,971,250
- ---------------------------------------------------------------
RESTAURANTS-0.56%
AFC Enterprises, Sr. Unsec. Sub.
Notes, 10.25%, 05/15/07 16,990,000 17,159,900
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.22%
Cumberland Farms, Inc.-Series
11A, Sec. Notes, 10.50%,
10/01/03 16,207,000 15,923,378
- ---------------------------------------------------------------
Stater Brothers Holdings Inc.,
Sr. Notes, 10.75%, 08/15/06 21,000,000 21,367,500
- ---------------------------------------------------------------
37,290,878
- ---------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-0.43%
Plainwell Inc.-Series B, Sr.
Unsec. Sub. Notes, 11.00%,
03/01/08 24,905,000 13,075,125
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-2.93%
Cabot Safety Corp., Sr. Sub.
Notes, 12.50%, 07/15/05 14,975,000 15,349,375
- ---------------------------------------------------------------
CSK Auto Inc.-Series A, Sr. Gtd.
Sub. Deb, 11.00%, 11/01/06 15,245,000 15,549,900
- ---------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 06/01/08 27,650,000 26,712,625
- ---------------------------------------------------------------
Rent-A-Center, Inc., Sr. Unsec.
Gtd. Sub. Notes, 11.00%,
08/15/08 23,060,000 23,809,450
- ---------------------------------------------------------------
Vista Eyecare, Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 12.75%,
10/15/05 19,700,000 7,978,500
- ---------------------------------------------------------------
89,399,850
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-1.27%
Big 5 Corp.-Series B, Sr. Unsec.
Notes, 10.88%, 11/15/07 17,315,000 17,141,850
- ---------------------------------------------------------------
GFSI Holdings, Inc.-Series B, Sr.
Disc. Notes, 11.38%,
09/15/09(b) 20,000,000 6,100,000
- ---------------------------------------------------------------
</TABLE>
FS-31
<PAGE> 301
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-(CONTINUED)
J Crew Operating Corp., Sr. Sub.
Notes, 10.38%, 10/15/07 $18,245,000 $ 15,417,025
- ---------------------------------------------------------------
38,658,875
- ---------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-1.00%
Dimac Corp., Sr. Sub. Notes,
12.50%, 10/01/08(a) 25,000,000 9,375,000
- ---------------------------------------------------------------
MDC Communications Corp.
(Canada), Sr. Unsec. Sub.
Yankee Notes, 10.50%, 12/01/06 21,470,000 21,308,975
- ---------------------------------------------------------------
30,683,975
- ---------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-1.88%
Avis Rent A Car, Inc., Sr. Unsec.
Gtd. Sub. Notes, 11.00%,
05/01/09 21,150,000 22,313,250
- ---------------------------------------------------------------
Coinmach Corp.-Series D, Sr.
Unsec. Notes, 11.75%, 11/15/05 22,185,000 22,961,475
- ---------------------------------------------------------------
Hydrochem Industrial Service
Co.-Series B, Sr. Gtd. Sub.
Notes, 10.38%, 08/01/07 14,055,000 12,122,438
- ---------------------------------------------------------------
57,397,163
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.66%
MSX International, Inc., Sr.
Unsec. Gtd. Sub. Notes, 11.38%,
01/15/08 21,130,000 20,284,800
- ---------------------------------------------------------------
SHIPPING-0.37%
Millenium Seacarriers, Sr. Sec.
Gtd. Mortgage Notes, 12.00%,
07/15/05 19,900,000 11,442,500
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-8.53%
Clearnet Communications, Inc.
(Canada), Sr. Unsec. Disc.
Yankee Notes, 14.75%,
12/15/05(b)(d) 18,860,000 18,671,400
- ---------------------------------------------------------------
Crown Castle International Corp.,
Sr. Unsec. Disc. Notes, 10.63%,
11/15/07(b) 22,844,000 17,475,660
- ---------------------------------------------------------------
KMC Telecom Holdings, Inc., Sr.
Notes, 13.50%, 05/15/09(a) 18,000,000 18,090,000
- ---------------------------------------------------------------
Loral Space & Communications
Ltd., Sr. Gtd. Sub. Notes,
11.25%, 01/15/07(d) 23,000,000 17,365,000
- ---------------------------------------------------------------
Microcell Telecommunications,
Inc.- Series B, (Canada), Sr.
Disc. Yankee Notes, 14.00%,
06/01/06(b) 29,530,000 26,281,700
- ---------------------------------------------------------------
Nextel Communications, Inc.,
Sr. Unsec. Notes, 12.00%,
11/01/08 29,040,000 32,670,000
- ---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 12.13%,
04/15/08(b) 37,500,000 22,297,875
- ---------------------------------------------------------------
Powertel, Inc., Sr. Unsec. Disc.
Notes, 12.00%, 05/01/06(b) 38,000,000 33,751,220
- ---------------------------------------------------------------
Spectrasite Holdings, Inc.,
Sr. Disc. Notes, 12.00%,
07/15/08(b) 30,300,000 18,180,000
- ---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 11.25%,
04/15/09(b) 21,230,000 11,464,200
- ---------------------------------------------------------------
WebLink Wireless, Inc., Sr. Disc.
Sub. Notes, 11.25%, 02/01/08(b) 38,640,000 13,717,200
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS
(CELLULAR/WIRELESS)-(CONTINUED)
Worldwide Fiber Inc. (Canada),
Sr. Notes,
12.50%, 12/15/05(a) $12,065,000 $ 12,728,575
- ---------------------------------------------------------------
12.00%, 08/01/09(a) 17,210,000 17,855,375
- ---------------------------------------------------------------
260,548,205
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-8.22%
Destia Communications, Inc., Sr.
Unsec. Notes, 13.50%, 07/15/07 20,200,000 21,462,500
- ---------------------------------------------------------------
Esprit Telecom Group PLC (United
Kingdom), Sr. Unsec. Yankee
Notes, 11.50%, 12/15/07 19,500,000 19,890,000
- ---------------------------------------------------------------
FirstCom Corp., Sr. Notes,
14.00%, 10/27/07 30,990,000 31,997,175
- ---------------------------------------------------------------
Long Distance International,
Inc., Sr. Unsec. Notes, 12.25%,
04/15/08 26,290,000 15,313,925
- ---------------------------------------------------------------
Primus Telecommunications Group,
Inc., Sr. Sec. Notes, 11.75%,
08/01/04(d) 20,000,000 20,300,000
- ---------------------------------------------------------------
RSL Communications PLC (United
Kingdom),
Sr. Unsec. Gtd. Yankee Notes,
12.00%, 11/01/08 14,500,000 14,681,250
- ---------------------------------------------------------------
Sr. Unsec. Yankee Gtd. Notes,
9.88%, 11/15/09 7,000,000 6,317,500
- ---------------------------------------------------------------
Sr. Yankee Gtd. Notes, 12.25%,
11/15/06 15,134,000 15,512,350
- ---------------------------------------------------------------
Versatel Telecom International
N.V. (Netherlands),
Sr. Notes, 13.25%, 05/15/08 20,250,000 21,667,500
- ---------------------------------------------------------------
Sr. Unsec. Notes, 13.25%,
05/15/08 14,810,000 15,846,700
- ---------------------------------------------------------------
Viatel, Inc.,
Sr. Notes, 11.50%, 03/15/09(a) 33,417,680 34,086,034
- ---------------------------------------------------------------
Sr. Sec. Notes, 11.25%,
04/15/08 33,500,000 33,835,000
- ---------------------------------------------------------------
250,909,934
- ---------------------------------------------------------------
TELEPHONE-7.52%
AirGate PCS Inc., Sr. Sub. Notes,
13.50%, 10/01/09(b)(d) 28,400,000 15,904,000
- ---------------------------------------------------------------
Alestra S.A. (Mexico), Sr. Notes,
12.13%, 05/15/06(a) 15,000,000 15,187,500
- ---------------------------------------------------------------
12.63%, 05/15/09(a) 9,500,000 9,595,000
- ---------------------------------------------------------------
Esat Telecom Group PLC (Ireland),
Sr. Yankee Notes, 12.50%,
02/01/07(b) 25,530,000 21,828,150
- ---------------------------------------------------------------
ICG Services, Inc., Sr. Unsec.
Disc. Notes, 10.00%,
02/15/08(b) 79,650,000 42,967,989
- ---------------------------------------------------------------
Logix Communications Enterprises,
Sr. Unsec. Notes, 12.25%,
06/15/08 53,750,000 42,059,375
- ---------------------------------------------------------------
NEXTLINK Communications, Inc.,
Sr. Disc. Notes, 12.13%,
12/01/09(a)(b) 23,500,000 13,806,250
- ---------------------------------------------------------------
Sr. Unsec. Disc. Notes, 12.25%,
06/01/09(b) 25,855,000 16,030,100
- ---------------------------------------------------------------
PTC International Finance II SA
(Luxembourg), Sr. Gtd. Sub.
Notes, 11.25%, 12/01/09
(Acquired 11/16/99; Cost
$11,232,192)(e) 11,400,000 11,457,000
- ---------------------------------------------------------------
U.S. Xchange LLC, Sr. Unsec.
Notes, 15.00%, 07/01/08 42,500,000 40,906,250
- ---------------------------------------------------------------
229,741,614
- ---------------------------------------------------------------
</TABLE>
FS-32
<PAGE> 302
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TEXTILES (APPAREL)-2.40%
Cherokee International LCC-Series
B, Sr. Unsec. Sub. Notes,
10.50%, 05/01/09 $22,600,000 $ 20,001,000
- ---------------------------------------------------------------
Panolam Industries International,
Sr. Sub. Notes, 11.50%,
02/15/09(a) 18,330,000 18,834,075
- ---------------------------------------------------------------
Perry Ellis International,
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 12.25%, 04/01/06 22,550,000 22,662,750
- ---------------------------------------------------------------
St. John Knits International,
Inc., Sr. Sub. Notes, 12.50%,
07/01/09(a) 13,400,000 11,892,500
- ---------------------------------------------------------------
73,390,325
- ---------------------------------------------------------------
TRUCKERS-0.51%
Travelcenters of America, Inc.,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/01/07 15,530,000 15,530,000
- ---------------------------------------------------------------
TRUCKS & PARTS-1.49%
FleetPride Inc., Sr. Unsec. Gtd.
Sub. Notes, 12.00%, 08/01/05 22,400,000 20,496,000
- ---------------------------------------------------------------
North American Van Lines, Inc.,
Sr. Sub. Notes, 13.38%,
12/01/09(a) 25,000,000 25,125,000
- ---------------------------------------------------------------
45,621,000
- ---------------------------------------------------------------
WASTE MANAGEMENT-1.65%
Allied Waste North America Inc.,
Sr. Sub Notes, 10.00%,
08/01/09(a) 56,250,000 50,343,750
- ---------------------------------------------------------------
Total U.S. Dollar Denominated
Corporate Bonds & Notes
(Cost $3,091,978,086) 2,779,802,152
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-2.62%
BROADCASTING (TELEVISION, RADIO &
CABLE)-0.19%
UnitedGlobalCom Inc.-Class A(f) 83,896 5,925,155
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-0.09%
Convergent Communications,
Inc.(f) 179,280 2,846,070
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.02%
Abraxas Petroleum Corp.(f) 736,228 690,213
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUSTS-0.02%
Meditrust Cos. 89,907 494,488
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.86%
Celcaribe S.A., Ordinary Trust
Ctfs. (Acquired
05/17/94-01/23/97; Cost
$0)(e)(f) 2,276,400 3,983,700
- ---------------------------------------------------------------
Clearnet Communications
Inc.-Class A-ADR (Canada)(f) 100,716 3,462,112
- ---------------------------------------------------------------
Loral Space & Communications Ltd. 21,676 526,998
- ---------------------------------------------------------------
Microcell Telecommunications,
Inc. (Canada)(f) 253,257 8,325,824
- ---------------------------------------------------------------
Nextel Communications, Inc.-Class
A(f) 52,195 5,382,609
- ---------------------------------------------------------------
Powertel, Inc.(f) 45,663 4,583,424
- ---------------------------------------------------------------
26,264,667
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG
DISTANCE)-1.33%
FirstCom Corp.(f) 804,650 $ 29,570,888
- ---------------------------------------------------------------
Primus Telecommunications Group,
Inc.(f) 34,902 1,335,002
- ---------------------------------------------------------------
RSL Communications PLC-Class A
(United Kingdom)(f) 179,445 3,072,989
- ---------------------------------------------------------------
Viatel, Inc.(f) 121,387 6,509,378
- ---------------------------------------------------------------
40,488,257
- ---------------------------------------------------------------
TELEPHONE-0.11%
ICG Communications, Inc.(f) 39,600 742,500
- ---------------------------------------------------------------
Intermedia Communications Inc.(f) 69,657 2,703,562
- ---------------------------------------------------------------
3,446,062
- ---------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$11,155,019) 80,154,912
- ---------------------------------------------------------------
PREFERRED STOCKS-1.76%
COMPUTERS (SOFTWARE &
SERVICES)-0.06%
Earthwatch Inc.-Series C, $1.20
Conv. Pfd. (Acquired 03/14/97;
Cost $4,824)(e) 103,236 1,884,057
- ---------------------------------------------------------------
SHIPPING-0.05%
Pegasus Shipping Hellas Co.-Pfd.
(Bermuda) (Acquired 06/24/98;
Cost $7,461,000)(e) 15,000 1,425,000
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-1.65%
Dobson Communications
Corp.-$122.50 PIK Pfd. 21,435 21,702,598
- ---------------------------------------------------------------
Nextel Communications,
Inc.-Series E, $111.25 PIK Pfd. 28,493 28,777,930
- ---------------------------------------------------------------
50,480,528
- ---------------------------------------------------------------
Total Preferred Stocks (Cost
$49,098,015) 53,789,585
- ---------------------------------------------------------------
RIGHTS & WARRANTS-0.74%
BROADCASTING (TELEVISION, RADIO &
CABLE)-0.01%
Knology Inc., expiring 10/22/07
(Acquired 03/12/98; Cost
$0)(e)(g) 47,250 129,938
- ---------------------------------------------------------------
Wireless One, Inc., expiring
10/19/00(g) 37,560 0
- ---------------------------------------------------------------
129,938
- ---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.01%
Sterling Chemicals Holdings,
expiring 08/15/08(g) 7,500 120,000
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.06%
Cybernet Internet Services
International, Inc., expiring
07/01/09 (Acquired 10/18/99;
Cost $0)(e)(g) 23,000 1,845,750
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.00%
Electronic Retailing Systems
International, Inc., expiring
02/01/04(g) 18,802 18,802
- ---------------------------------------------------------------
</TABLE>
FS-33
<PAGE> 303
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-0.00%
Resort At Summerlin LP, expiring
12/15/07(g) 26,889 $ 269
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL
MANAGEMENT)-0.01%
Republic Health Corp., expiring
04/03/00(g) 17,500 315,000
- ---------------------------------------------------------------
HOUSEHOLD FURNISHING &
APPLIANCES-0.04%
Winsloew Furniture, Inc.,
expiring 08/15/07 (Acquired
12/06/99; Cost $0)(e)(g) 23,870 1,193,500
- ---------------------------------------------------------------
IRON & STEEL-0.00%
Bar Technologies, Inc., expiring
04/01/01(g) 6,000 120,000
- ---------------------------------------------------------------
METAL FABRICATORS-0.00%
Gulf States Steel, Inc., expiring
04/15/03(g) 15,990 160
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.00%
Abraxas Petroleum Corp.-Rts.(g) 736,228 0
- ---------------------------------------------------------------
SHIPPING-0.00%
Millenium Seacarriers, expiring
07/15/03(g) 19,900 24,875
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.01%
Cellnet Data System, expiring
10/01/07 (Acquired
09/24/97-10/15/97; Cost
$0)(e)(g) 10,000 2,600
- ---------------------------------------------------------------
Nextel International, Inc.,
expiring 04/15/07(g) 39,500 325,875
- ---------------------------------------------------------------
328,475
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG
DISTANCE)-0.46%
Long Distance International,
Inc., expiring 04/13/08(g) 25,610 $ 64,025
- ---------------------------------------------------------------
Versatel Telecom International
N.V. (Netherlands), expiring
05/15/08 (Acquired
05/20/98-05/24/99; Cost
$1,654)(e)(g) 35,060 14,032,765
- ---------------------------------------------------------------
14,096,790
- ---------------------------------------------------------------
TELEPHONE-0.14%
AirGate PCS Inc., expiring
10/01/09(g) 28,400 2,485,000
- ---------------------------------------------------------------
Esat Telecom Group PLC (Ireland),
expiring 02/01/07 (Acquired
06/16/97; Cost $0)(e)(g) 25,530 1,850,925
- ---------------------------------------------------------------
4,335,925
- ---------------------------------------------------------------
Total Rights & Warrants (Cost
$711,621) 22,529,484
- ---------------------------------------------------------------
MONEY MARKET FUNDS-2.12%
STIC Liquid Assets Portfolio(h) 32,367,437 32,367,437
- ---------------------------------------------------------------
STIC Prime Portfolio(h) 32,367,437 32,367,437
- ---------------------------------------------------------------
Total Money Market Funds
(Cost $64,734,875) 64,734,874
- ---------------------------------------------------------------
TOTAL INVESTMENTS-98.26% (Cost
$3,217,677,616) 3,001,011,007
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.74% 53,028,747
- ---------------------------------------------------------------
NET ASSETS-100.00% $3,054,039,754
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Ctfs. - Certificates
Disc. - Discounted
Gtd. - Guaranteed
Pfd. - Preferred
PIK - Payment in Kind
Rts. - Rights
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Notes to Schedule of Investments:
(a) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1993, as amended.
(b) Step Bond issued at a discount. The interest rate represents the coupon rate
at which the bond will accrue at a specified future date.
(c) Defaulted security. Currently, the issuer is in default with respect to a
portion of interest payments.
(d) Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit represents shares of the issuer.
(e) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 12/31/99 was $75,499,435 which
represents 2.47% of the Fund's net assets.
(f) Non-income producing security.
(g) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(h) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-34
<PAGE> 304
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value
(cost $3,217,677,616) $3,001,011,007
- ----------------------------------------------------------
Cash 498,337
- ----------------------------------------------------------
Receivables for:
Fund shares sold 10,262,404
- ----------------------------------------------------------
Dividends and interest 72,951,666
- ----------------------------------------------------------
Investment for deferred compensation plan 86,639
- ----------------------------------------------------------
Other assets 77,473
- ----------------------------------------------------------
Total assets 3,084,887,526
- ----------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 13,289,236
- ----------------------------------------------------------
Dividends 12,542,033
- ----------------------------------------------------------
Deferred compensation plan 86,639
- ----------------------------------------------------------
Accrued advisory fees 1,268,054
- ----------------------------------------------------------
Accrued distribution fees 2,995,847
- ----------------------------------------------------------
Accrued operating expenses 665,963
- ----------------------------------------------------------
Total liabilities 30,847,772
- ----------------------------------------------------------
Net assets applicable to shares
outstanding $3,054,039,754
==========================================================
NET ASSETS:
Class A $1,364,501,549
==========================================================
Class B $1,559,863,535
==========================================================
Class C $ 129,674,670
==========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 169,182,889
==========================================================
Class B 193,343,459
==========================================================
Class C 16,110,440
==========================================================
Class A:
Net asset value and redemption price per
share $ 8.07
- ----------------------------------------------------------
Offering price per share:
(Net asset value of $8.07 divided
by 95.25%) $ 8.47
==========================================================
Class B:
Net asset value and offering price per
share $ 8.07
==========================================================
Class C:
Net asset value and offering price per
share $ 8.05
==========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 375,366,595
- ---------------------------------------------------------
Dividends 2,393,402
- ---------------------------------------------------------
Total investment income 377,759,997
- ---------------------------------------------------------
EXPENSES:
Advisory fees 16,396,698
- ---------------------------------------------------------
Administrative services fees 177,468
- ---------------------------------------------------------
Transfer agent fees -- Class A 2,097,314
- ---------------------------------------------------------
Transfer agent fees -- Class B 2,604,737
- ---------------------------------------------------------
Transfer agent fees -- Class C 193,682
- ---------------------------------------------------------
Trustees' fees 27,921
- ---------------------------------------------------------
Distribution fees -- Class A 3,885,854
- ---------------------------------------------------------
Distribution fees -- Class B 17,586,035
- ---------------------------------------------------------
Distribution fees -- Class C 1,307,654
- ---------------------------------------------------------
Other 1,526,312
- ---------------------------------------------------------
Total expenses 45,803,675
- ---------------------------------------------------------
Less: Expenses paid indirectly (175,176)
- ---------------------------------------------------------
Net expenses 45,628,499
- ---------------------------------------------------------
Net investment income 332,131,498
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (269,838,431)
- ---------------------------------------------------------
Change in net unrealized appreciation of
investment securities 1,279,047
- ---------------------------------------------------------
Net gain (loss) from investment
securities (268,559,384)
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $ 63,572,114
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-35
<PAGE> 305
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 332,131,498 $ 336,256,233
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (269,838,431) (188,887,632)
- ----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 1,279,047 (359,473,146)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 63,572,114 (212,104,545)
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (159,655,684) (170,021,135)
- ----------------------------------------------------------------------------------------------
Class B (165,609,472) (158,792,161)
- ----------------------------------------------------------------------------------------------
Class C (12,356,480) (6,792,770)
- ----------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
Class A (520,904) --
- ----------------------------------------------------------------------------------------------
Class B (589,357) --
- ----------------------------------------------------------------------------------------------
Class C (43,823) --
- ----------------------------------------------------------------------------------------------
Return of capital:
Class A (2,837,931) --
- ----------------------------------------------------------------------------------------------
Class B (3,209,458) --
- ----------------------------------------------------------------------------------------------
Class C (239,296) --
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A (181,118,609) 142,435,247
- ----------------------------------------------------------------------------------------------
Class B (116,020,002) 448,570,951
- ----------------------------------------------------------------------------------------------
Class C 27,659,521 101,384,122
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (550,969,381) 144,679,709
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,605,009,135 3,460,329,426
- ----------------------------------------------------------------------------------------------
End of period $3,054,039,754 $3,605,009,135
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,735,858,478 $4,011,736,919
- ----------------------------------------------------------------------------------------------
Undistributed net investment income (100,711) 5,490,138
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (465,051,403) (194,272,265)
- ----------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (216,666,610) (217,945,657)
- ----------------------------------------------------------------------------------------------
$3,054,039,754 $3,605,009,135
==============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM High Yield Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of nine separate portfolios, each
having an unlimited number of shares of beneficial interest. The Fund currently
offers three different classes of shares: Class A shares, Class B shares and
Class C shares. Class A shares are sold with a front-end sales charge. Class B
shares and Class C shares are sold with a contingent deferred sales charge.
Matters affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The Fund's investment objective
is to achieve a high level of current income by investing primarily in publicly
traded, non-investment grade debt securities. The Fund will also consider the
possibility of capital growth when it purchases and sells securities. Debt
securities of less than investment grade are considered "high-risk" securities
(commonly referred to as junk bonds). These bonds may involve special risks in
addition to the risks associated with higher rated debt securities. High yield
bonds may be more susceptible to real
FS-36
<PAGE> 306
or perceived adverse economic conditions than higher grade bonds. Also, the
secondary market in which high yield bonds are traded may be less liquid than
the market for higher grade bonds.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last 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 closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. 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. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities 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 would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded on
the accrual basis. Dividend income is recorded on ex-dividend date. On
December 31, 1999, undistributed net investment income was increased by
$7,340,058, undistributed net realized gains decreased by $940,707 and
paid-in capital was decreased by $6,399,351 as a result of differing book/tax
treatment of market discount and other reclassifications. Net assets of the
Fund were unaffected by the reclassifications.
C. Distributions -- Distributions from income are recorded on ex-dividend date,
and are declared and paid monthly. Distributions from net realized capital
gains, if any, are generally paid annually and recorded on ex-dividend date.
The Fund may elect to use a portion of the proceeds of fund share redemptions
as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund has a capital loss
carryforward of $416,097,836 as of December 31, 1999 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, in the year 2007.
E. Expenses -- Distribution expenses and transfer agency expenses directly
attributable to a class of shares are charged to that class' operations. All
other expenses which are attributable to more than one class are allocated
among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.625% on
the first $200 million of the Fund's average daily net assets, plus 0.55% on the
next $300 million of the Fund's average daily net assets, plus 0.50% on the next
$500 million of the Fund's average daily net assets, plus 0.45% on the Fund's
average daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 1999, AIM was
paid $177,468 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $2,941,102 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant
FS-37
<PAGE> 307
to the Plans, pays AIM Distributors compensation at the annual rate of 0.25% of
the Fund's average daily net assets of Class A shares and 1.00% of the average
daily net assets of Class B and C shares. Of these amounts, the Fund may pay a
service fee of 0.25% of the average daily net assets of the Class A, Class B or
Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended December 31,
1999, the Class A, Class B and Class C shares paid AIM Distributors $3,885,854,
$17,586,035 and $1,307,654, respectively, as compensation under the Plans.
AIM Distributors received commissions of $800,330 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $423,986 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 1999, the Fund paid legal fees of $9,734
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $39,420 and $135,756, respectively, under expense offset arrangements.
The effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $175,176 during the year ended December 31, 1999.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$2,588,655,750 and $2,726,847,749, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 146,029,538
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (368,443,665)
- ---------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities $(222,414,127)
=========================================================
</TABLE>
Cost of investments for tax purposes is $3,223,425,134.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 87,500,179 $ 744,553,292 113,312,954 $ 1,099,027,598
- --------------------------------------------------------------------------------------
Class B 46,805,949 400,392,138 81,983,594 793,346,240
- --------------------------------------------------------------------------------------
Class C 10,550,688 89,612,238 31,084,188 309,774,327
- --------------------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 12,419,332 104,772,227 11,706,241 112,173,341
- --------------------------------------------------------------------------------------
Class B 10,055,937 84,833,641 8,418,057 80,427,189
- --------------------------------------------------------------------------------------
Class C 975,391 8,192,752 480,845 4,500,556
- --------------------------------------------------------------------------------------
Reacquired:
Class A (121,294,314) (1,030,444,128) (110,296,515) (1,068,765,692)
- --------------------------------------------------------------------------------------
Class B (71,318,813) (601,245,781) (44,848,230) (425,202,478)
- --------------------------------------------------------------------------------------
Class C (8,365,761) (70,145,469) (21,196,339) (212,890,761)
- --------------------------------------------------------------------------------------
(32,671,412) $ (269,479,090) 70,644,795 $ 692,390,320
======================================================================================
</TABLE>
FS-38
<PAGE> 308
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and a share of
Class B outstanding during each of the years in the five-year period ended
December 31, 1999, and for a share of Class C outstanding during each of the
years in the two-year period ended December 31, 1999 and the period August 4,
1997 (date sales commenced) through December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.77 $ 10.16 $ 9.88 $ 9.43 $ 8.93
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- --------
Income from investment operations:
Net investment income 0.85 0.92 0.90 0.92 0.93
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.66) (1.40) 0.28 0.46 0.52
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- --------
Total from investment operations 0.19 (0.48) 1.18 1.38 1.45
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- --------
Less distributions:
Dividends from net investment income (0.87) (0.91) (0.90) (0.93) (0.95)
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- --------
Return of capital (0.02) -- -- -- --
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- --------
Total distributions (0.89) (0.91) (0.90) (0.93) (0.95)
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- --------
Net asset value, end of period $ 8.07 $ 8.77 $ 10.16 $ 9.88 $ 9.43
=========================================================== ========== ========== ========== ========== ========
Total return(a) 2.21% (5.10)% 12.52% 15.44% 16.86%
=========================================================== ========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,364,502 $1,670,863 $1,786,352 $1,272,974 $886,106
=========================================================== ========== ========== ========== ========== ========
Ratio of expenses to average net assets 0.92%(b) 0.85% 0.90% 0.97% 0.96%
=========================================================== ========== ========== ========== ========== ========
Ratio of net investment income to average net assets 10.06%(b) 9.45% 9.08% 9.67% 9.95%
=========================================================== ========== ========== ========== ========== ========
Portfolio turnover rate 79% 76% 80% 77% 61%
=========================================================== ========== ========== ========== ========== ========
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $1,554,341,715.
<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------------------------------------------- -------------------------------
1999 1998 1997 1996 1995 1999 1998(A) 1997
---------- ---------- ---------- ---------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 8.76 $ 10.16 $ 9.88 $ 9.42 $ 8.92 $ 8.74 $ 10.14 $ 10.04
- --------------------------- ---------- ---------- ---------- ---------- -------- -------- -------- -------
Income from investment
operations:
Net investment income 0.79 0.84 0.83 0.85 0.85 0.78 0.82 0.35
- --------------------------- ---------- ---------- ---------- ---------- -------- -------- -------- -------
Net gains (losses) on
securities (both
realized and unrealized) (0.66) (1.40) 0.28 0.47 0.52 (0.65) (1.38) 0.10
- --------------------------- ---------- ---------- ---------- ---------- -------- -------- -------- -------
Total from investment
operations 0.13 (0.56) 1.11 1.32 1.37 0.13 (0.56) 0.45
- --------------------------- ---------- ---------- ---------- ---------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income (0.80) (0.84) (0.83) (0.86) (0.87) (0.80) (0.84) (0.35)
- --------------------------- ---------- ---------- ---------- ---------- -------- -------- -------- -------
Return of capital (0.02) -- -- -- -- (0.02) -- --
- --------------------------- ---------- ---------- ---------- ---------- -------- -------- -------- -------
Total distributions (0.82) (0.84) (0.83) (0.86) (0.87) (0.82) (0.84) (0.35)
- --------------------------- ---------- ---------- ---------- ---------- -------- -------- -------- -------
Net asset value, end of
period $ 8.07 $ 8.76 $ 10.16 $ 9.88 $ 9.42 $ 8.05 $ 8.74 $ 10.14
=========================== ========== ========== ========== ========== ======== ======== ======== =======
Total return(b) 1.46% (5.90)% 11.71% 14.68% 15.91% 1.46% (5.92)% 4.49%
=========================== ========== ========== ========== ========== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $1,559,864 $1,820,899 $1,647,801 $1,068,060 $557,926 $129,675 $113,246 $26,177
=========================== ========== ========== ========== ========== ======== ======== ======== =======
Ratio of expenses to
average net assets 1.68%(c) 1.61% 1.65% 1.68% 1.73% 1.68%(c) 1.61% 1.68%(d)
=========================== ========== ========== ========== ========== ======== ======== ======== =======
Ratio of net investment
income to average net
assets 9.30%(c) 8.69% 8.33% 8.95% 9.18% 9.30%(c) 8.69% 8.30%(d)
=========================== ========== ========== ========== ========== ======== ======== ======== =======
Portfolio turnover rate 79% 76% 80% 77% 61% 79% 76% 80%
=========================== ========== ========== ========== ========== ======== ======== ======== =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and for periods less than
one year is not annualized.
(c) Ratios are based on average net assets of $1,758,603,534 and $130,765,409
for Class B and Class C, respectively.
(d) Annualized.
FS-39
<PAGE> 309
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Income Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Income Fund (a portfolio of AIM Funds
Group), including the schedule of investments, as of
December 31, 1999, and the related statement of
operations for the year then ended, the statement of
changes in net assets for each of the years in the
two-year period then ended, and the financial highlights
for each of the years in the five-year period then ended.
These financial statements and financial highlights are
the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1999, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial presentation. We believe
that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Income Fund as of December 31, 1999, the results of its
operations for the year then ended, the changes in its
net assets for each of the years in the two-year period
then ended and the financial highlights for each of the
years in the five-year period then ended, in conformity
with generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
February 4, 2000
Houston, Texas
FS-40
<PAGE> 310
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED
CORPORATE BONDS & NOTES-75.54%
AIR FREIGHT-0.61%
Atlas Air, Inc., Sr. Unsec.
Notes, 10.75%, 08/01/05 $ 3,970,000 $ 4,089,100
- ---------------------------------------------------------------
AIRLINES-4.04%
Air 2 US-Series C, Equipment
Trust Ctfs., 10.13%, 10/01/20
(Acquired 10/28/99; Cost
$3,750,000)(b) 3,750,000 3,733,050
- ---------------------------------------------------------------
Airplanes Pass Through
Trust-Series D, Gtd. Sub.
Bonds, 10.88%, 03/15/19 1,810,000 1,592,800
- ---------------------------------------------------------------
Delta Air Lines, Inc., Deb.,
9.00%, 05/15/16 500,000 517,210
- ---------------------------------------------------------------
10.38%, 12/15/22 5,000,000 5,875,750
- ---------------------------------------------------------------
Delta Air Lines, Inc., Equipment
Trust Ctfs., 10.50%, 04/30/16 5,000,000 5,823,900
- ---------------------------------------------------------------
Dunlop Standard Aerospace
Holdings PLC (United Kingdom),
Sr. Unsec. Sub. Notes, 11.88%,
05/15/09 2,700,000 2,791,125
- ---------------------------------------------------------------
United Air Lines, Inc.,
Deb., 9.75%, 08/15/21
(Acquired 09/23/99; Cost
$4,205,475)(b) 3,750,000 4,107,525
- ---------------------------------------------------------------
Series 95A2, Pass Through
Ctfs., 9.56%, 10/19/18 2,325,000 2,483,867
- ---------------------------------------------------------------
26,925,227
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.72%
Advance Stores Co., Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/15/08 2,585,000 2,236,025
- ---------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 2,640,000 2,574,000
- ---------------------------------------------------------------
4,810,025
- ---------------------------------------------------------------
AUTOMOBILES-1.11%
General Motors Corp., Putable
Deb., 8.80%, 03/01/21 6,700,000 7,371,608
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.81%
Midland Bank PLC (United
Kingdom), Yankee Sub. Notes,
7.65%, 05/01/25 1,870,000 1,865,549
- ---------------------------------------------------------------
Regions Financial Corp., Putable
Sub. Notes, 7.75%, 09/15/24 3,650,000 3,525,133
- ---------------------------------------------------------------
5,390,682
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-1.70%
First Union Corp., Putable Sub.
Deb., 7.50%, 04/15/35 5,000,000 4,991,250
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
BANKS (MONEY CENTER)-(CONTINUED)
Republic New York Corp.,
Sub. Notes, 9.70%, 02/01/09 $ 3,000,000 $ 3,310,680
- ---------------------------------------------------------------
Sub. Deb., 9.50%, 04/15/14 2,750,000 3,030,720
- ---------------------------------------------------------------
11,332,650
- ---------------------------------------------------------------
BANKS (REGIONAL)-1.40%
Mercantile Bancorp., Inc.,
Unsec. Sub. Notes, 7.30%,
06/15/07 6,000,000 5,874,900
- ---------------------------------------------------------------
Riggs Capital Trust II-Series C,
Gtd. Bonds, 8.88%, 03/15/27 3,800,000 3,466,295
- ---------------------------------------------------------------
9,341,195
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO
& CABLE)-5.59%
British Sky Broadcasting Group
PLC (United Kingdom), Sr.
Unsec. Gtd. Yankee Notes,
8.20%, 07/15/09 5,400,000 5,200,346
- ---------------------------------------------------------------
Charter Communications Holdings,
LLC/ Charter Communications
Holdings Capital Corp., Sr.
Unsec. Disc. Notes, 9.92%,
04/01/11(c) 5,000,000 2,956,250
- ---------------------------------------------------------------
Comcast Cable Communications,
Unsec. Notes, 8.50%, 05/01/27 3,000,000 3,185,160
- ---------------------------------------------------------------
CSC Holdings Inc., Sr. Unsec.
Deb.,
7.63%, 02/15/18 6,000,000 5,741,760
- ---------------------------------------------------------------
7.63%, 07/15/18 5,650,000 5,273,145
- ---------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(c) 5,680,000 3,748,800
- ---------------------------------------------------------------
Knology Holdings, Inc., Sr.
Disc. Notes, 11.88%,
10/15/07(c) 4,100,000 2,757,250
- ---------------------------------------------------------------
Lenfest Communications, Inc.,
Sr. Unsec. Sub. Notes, 8.25%,
02/15/08 5,000,000 5,025,000
- ---------------------------------------------------------------
United Pan-Europe Communications
N.V. (Netherlands), Sr. Disc.
Notes, 13.38%, 11/01/09(c)(d) 6,000,000 3,390,000
- ---------------------------------------------------------------
37,277,711
- ---------------------------------------------------------------
BUILDING MATERIALS-0.48%
Blount Inc., Sr. Sub Notes,
13.00%, 08/01/09(d) 3,000,000 3,180,000
- ---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.47%
Sterling Chemicals, Inc.-Series
B, Sr. Gtd. Sec. Sub. Notes,
12.38%, 07/15/06 3,000,000 3,120,000
- ---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.08%
Key Plastics Holdings,
Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.25%, 03/15/07 1,325,000 510,125
- ---------------------------------------------------------------
</TABLE>
FS-41
<PAGE> 311
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
COMMUNICATIONS EQUIPMENT-0.31%
Dialog Corp. PLC-Series A
(United Kingdom), Sr. Sub.
Yankee Notes, 11.00%, 11/15/07 $ 1,500,000 $ 727,500
- ---------------------------------------------------------------
ProNet Inc., Sr. Sub. Notes,
11.88%, 06/15/05 1,940,000 1,328,900
- ---------------------------------------------------------------
2,056,400
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-0.83%
Candescent Technology Corp., Sr.
Conv. Sub. Deb., 7.00%,
05/01/03 (Acquired 04/20/98;
Cost $2,000,000)(b) 2,000,000 1,560,000
- ---------------------------------------------------------------
Lattice Semiconductor Corp.,
Conv. Notes, 4.75%, 11/01/06
(Acquired 12/03/99; Cost
$4,140,000)(b) 3,000,000 3,957,120
- ---------------------------------------------------------------
5,517,120
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-0.32%
Exodus Communications, Inc., Sr.
Unsec. Notes, 11.25%, 07/01/08 2,025,000 2,111,062
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.55%
Equinix Inc., Sr. Notes, 13.00%,
12/01/07(d)(e) 3,540,000 3,672,750
- ---------------------------------------------------------------
CONSUMER FINANCE-1.94%
Capital One Financial Corp.,
Unsec. Notes, 7.25%, 05/01/06 4,000,000 3,778,440
- ---------------------------------------------------------------
CitiFinancial Credit Co.,
Putable Notes, 7.88%, 02/01/25 1,400,000 1,362,480
- ---------------------------------------------------------------
Countrywide Capital III-Series
B, Gtd. Bonds, 8.05%, 06/15/27 2,650,000 2,440,571
- ---------------------------------------------------------------
MBNA Capital I-Series A, Gtd.
Bonds, 8.28%, 12/01/26 6,065,000 5,321,674
- ---------------------------------------------------------------
12,903,165
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD &
HEALTH)-0.22%
Fleming Companies, Inc.-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.63%, 07/31/07 1,600,000 1,452,000
- ---------------------------------------------------------------
ELECTRIC COMPANIES-5.59%
Cleveland Electric Illuminating
Co. (The)- Series D, Sr. Sec.
Notes, 7.88%, 11/01/17 3,800,000 3,585,927
- ---------------------------------------------------------------
CMS Energy Corp., Sr. Unsec.
Notes, 8.13%, 05/15/02 850,000 847,050
- ---------------------------------------------------------------
El Paso Electric Co.-Series E,
Sec. First Mortgage Bonds,
9.40%, 05/01/11 4,600,000 4,873,378
- ---------------------------------------------------------------
Indiana Michigan Power
Co.-Series F, Sec. Lease
Obligation Bonds, 9.82%,
12/07/22 4,968,213 5,497,229
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
ELECTRIC COMPANIES-(CONTINUED)
Niagara Mohawk Power Corp.,
First Mortgage Notes, 7.75%,
05/15/06 $ 4,300,000 $ 4,354,137
- ---------------------------------------------------------------
Series H, Sr. Unsec. Disc.
Notes, 8.50%, 07/01/10(c) 10,000,000 7,491,200
- ---------------------------------------------------------------
Southern Energy, Inc., Sr.
Notes, 7.90%, 07/15/09
(Acquired 07/21/99-12/03/99;
Cost $5,978,820)(b) 6,000,000 5,784,960
- ---------------------------------------------------------------
Western Resources, Inc., Sr.
Unsec. Notes, 7.13%, 08/01/09 5,352,000 4,842,597
- ---------------------------------------------------------------
37,276,478
- ---------------------------------------------------------------
ENTERTAINMENT-2.33%
Time Warner Inc., Deb.,
9.13%, 01/15/13 5,000,000 5,492,350
- ---------------------------------------------------------------
9.15%, 02/01/23 9,000,000 10,049,040
- ---------------------------------------------------------------
15,541,390
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.26%
Heller Financial, Inc., Notes,
7.38%, 11/01/09 (Acquired
11/23/99; Cost $2,108,295)(b) 2,115,000 2,062,823
- ---------------------------------------------------------------
Source One Mortgage Services
Corp., Deb., 9.00%, 06/01/12 1,130,000 1,230,840
- ---------------------------------------------------------------
Sumitomo Bank International
Finance N.V. (Japan), Gtd.
Sub. Notes, 8.50%, 06/15/09 4,350,000 4,429,383
- ---------------------------------------------------------------
Sun Canada Financial Co., Gtd.
Sub. Notes, 6.63%, 12/15/07
(Acquired 10/14/99;
$655,145)(b) 700,000 655,457
- ---------------------------------------------------------------
8,378,503
- ---------------------------------------------------------------
FOODS-1.63%
ConAgra, Inc., Sr. Unsec.
Putable Notes, 7.13%, 10/01/26 6,100,000 5,910,961
- ---------------------------------------------------------------
Grand Metropolitan Investment,
Gtd. Bonds, 7.45%, 04/15/35 5,000,000 4,959,500
- ---------------------------------------------------------------
10,870,461
- ---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL
COMPANIES-0.46%
Venetian Casino Resort LLC, Sec.
Gtd. Mortgage Notes, 12.25%,
11/15/04 3,500,000 3,071,250
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-0.42%
Team Health, Inc., Sr. Sub.
Notes, 12.00%, 03/15/09(d) 2,870,000 2,812,600
- ---------------------------------------------------------------
HOMEBUILDING-0.11%
D.R. Horton, Inc., Unsec. Gtd.
Sub. Notes, 10.00%, 04/15/06 745,000 763,625
- ---------------------------------------------------------------
</TABLE>
FS-42
<PAGE> 312
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
HOUSEHOLD FURNISHING &
APPLIANCES-0.45%
O'Sullivan Industries Inc., Sr.
Sub. Notes, 13.38%,
10/15/09(d)(e) $ 3,000,000 $ 2,992,500
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS
(NON-DURABLES)-0.40%
Procter & Gamble Co. (The),
Putable Deb., 8.00%, 09/01/24 2,500,000 2,654,300
- ---------------------------------------------------------------
HOUSEWARES-0.30%
Decora Industries, Inc.-Series
B, Sr. Sec. Gtd. Notes,
11.00%, 05/01/05 2,500,000 2,012,500
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.68%
Americo Life, Inc., Sr. Sub.
Notes, 9.25%, 06/01/05 1,000,000 1,005,000
- ---------------------------------------------------------------
Conseco, Inc., Unsec. Notes,
6.80%, 06/15/05 1,600,000 1,494,736
- ---------------------------------------------------------------
9.00%, 10/15/06 1,500,000 1,543,845
- ---------------------------------------------------------------
Torchmark Corp., Notes, 7.88%,
05/15/23 8,000,000 7,150,640
- ---------------------------------------------------------------
11,194,221
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-0.58%
Terra Nova Insurance PLC (United
Kingdom), Sr. Unsec. Gtd.
Yankee Notes, 7.20%, 08/15/07 2,200,000 2,059,618
- ---------------------------------------------------------------
Notes, 7.00%, 05/15/08 2,000,000 1,839,560
- ---------------------------------------------------------------
3,899,178
- ---------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-1.57%
HSBC America Capital Trust II,
Gtd. Bonds, 8.38%, 05/15/27
(Acquired 08/12/99; Cost
$3,162,786)(b) 3,300,000 3,055,734
- ---------------------------------------------------------------
Lehman Brothers Holdings Inc.,
Notes, 7.38%, 01/15/07 3,585,000 3,481,035
- ---------------------------------------------------------------
Sr. Notes, 8.80%, 03/01/15 1,000,000 1,045,500
- ---------------------------------------------------------------
Notes, 8.50%, 08/01/15 2,790,000 2,858,662
- ---------------------------------------------------------------
10,440,931
- ---------------------------------------------------------------
IRON & STEEL-0.31%
Acme Metal Inc., Sr. Unsec. Gtd.
Notes, 10.88%, 12/15/07(f) 3,240,000 664,200
- ---------------------------------------------------------------
GS Technologies Operating Co.,
Inc., Sr. Gtd. Notes, 12.00%,
09/01/04 3,000,000 1,395,000
- ---------------------------------------------------------------
2,059,200
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.29%
Marvel Enterprises, Inc., Sr.
Unsec. Gtd. Sub. Notes,
12.00%, 06/15/09 2,075,000 1,940,125
- ---------------------------------------------------------------
LODGING-HOTELS-0.49%
John Q. Hammons Hotels, Inc.,
Sec. First Mortgage Notes,
9.75%, 10/01/05 2,000,000 1,850,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
LODGING-HOTELS-(CONTINUED)
Stena Line A.B. (Sweden), Sr.
Unsec. Yankee Notes, 10.63%,
06/01/08 $ 2,300,000 $ 1,391,500
- ---------------------------------------------------------------
3,241,500
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.84%
Caterpillar Inc., Deb., 9.38%,
08/15/11 5,000,000 5,628,850
- ---------------------------------------------------------------
MANUFACTURING
(DIVERSIFIED)-0.28%
Anthony Crane Rentals LP-Series
B, Sr. Unsec. Gtd. Sub. Notes,
10.38%, 08/01/08 1,500,000 1,267,500
- ---------------------------------------------------------------
Glenoit Corp., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 04/15/07 2,310,000 589,050
- ---------------------------------------------------------------
1,856,550
- ---------------------------------------------------------------
MANUFACTURING
(SPECIALIZED)-0.54%
Brand Scaffold Services, Inc.,
Sr. Unsec. Notes, 10.25%,
02/15/08 1,600,000 1,456,000
- ---------------------------------------------------------------
MMI Products, Inc.-Series B, Sr.
Unsec. Sub. Notes, 11.25%,
04/15/07 2,070,000 2,142,450
- ---------------------------------------------------------------
3,598,450
- ---------------------------------------------------------------
METALS MINING-0.86%
Centaur Mining and Exploration
Ltd. (Australia), Sr. Gtd.
Yankee Notes, 11.00%, 12/01/07 2,500,000 2,487,500
- ---------------------------------------------------------------
Rio Algom Ltd. (Canada), Unsec.
Yankee Deb., 7.05%, 11/01/05 3,500,000 3,276,805
- ---------------------------------------------------------------
5,764,305
- ---------------------------------------------------------------
NATURAL GAS-2.22%
Dynegy Inc., Sr. Unsec. Deb.,
7.13%, 05/15/18 4,000,000 3,563,680
- ---------------------------------------------------------------
Enron Corp., Sr. Sub. Deb.,
8.25%, 09/15/12 4,100,000 4,164,616
- ---------------------------------------------------------------
Nova Gas Transmission Ltd.
(Canada), Yankee Deb., 8.50%,
12/15/12 3,000,000 3,120,870
- ---------------------------------------------------------------
Sonat Inc., Unsec. Notes, 7.63%,
07/15/11 4,000,000 3,934,240
- ---------------------------------------------------------------
14,783,406
- ---------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-0.47%
NRG Energy, Inc., Sr. Unsec.
Notes, 7.50%, 06/01/09 3,400,000 3,130,380
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-1.87%
Anadarko Petroleum Corp., Deb.,
7.25%, 03/15/25 5,395,000 5,422,299
- ---------------------------------------------------------------
ONEOK, Inc., Unsec. Notes,
7.75%, 08/15/06 3,500,000 3,464,965
- ---------------------------------------------------------------
</TABLE>
FS-43
<PAGE> 313
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION)-(CONTINUED)
Talisman Energy Inc. (Canada),
Yankee Deb., 7.13%, 06/01/07 $ 3,750,000 $ 3,603,563
- ---------------------------------------------------------------
12,490,827
- ---------------------------------------------------------------
OIL & GAS (REFINING &
MARKETING)-1.38%
Sunoco, Inc., Deb., 9.00%,
11/01/24 4,000,000 4,222,160
- ---------------------------------------------------------------
Texas Petrochemical Corp., Sr.
Unsec. Sub. Notes, 11.13%,
07/01/06 2,010,000 1,758,750
- ---------------------------------------------------------------
Tosco Corp., Unsec. Deb., 7.80%,
01/01/27 3,400,000 3,205,044
- ---------------------------------------------------------------
9,185,954
- ---------------------------------------------------------------
PERSONAL CARE-0.46%
American Tissue Inc., Sr. Sec.
Notes, 12.50%, 07/15/06(d) 3,000,000 3,067,500
- ---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.33%
Polaroid Corp., Sr. Unsec.
Notes, 11.50%, 02/15/06 2,220,000 2,208,900
- ---------------------------------------------------------------
POWER PRODUCERS
(INDEPENDENT)-0.83%
Hydro-Quebec-Series
IO (Canada), Gtd. Yankee Bond,
8.05%, 07/07/24 610,000 640,146
- ---------------------------------------------------------------
B (Canada), Gtd. Medium Term
Notes, 8.62%, 12/15/11 2,000,000 2,158,840
- ---------------------------------------------------------------
Kincaid Generation LLC, Sec.
Bonds, 7.33%, 06/15/20
(Acquired 04/30/98; Cost
$2,004,940)(b) 2,000,000 1,768,774
- ---------------------------------------------------------------
Panda Funding Corp., Series A-1,
Pooled Project Bonds, 11.63%,
08/20/12 992,021 996,981
- ---------------------------------------------------------------
5,564,741
- ---------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-1.77%
News America Holdings, Inc.,
Sr. Gtd. Deb., 9.25%, 02/01/13 7,100,000 7,738,290
- ---------------------------------------------------------------
Sr. Unsec. Gtd. Putable Bonds,
7.43%, 10/01/26 1,000,000 982,210
- ---------------------------------------------------------------
Putable Notes, 8.45%, 08/01/34 3,000,000 3,046,740
- ---------------------------------------------------------------
11,767,240
- ---------------------------------------------------------------
RAILROADS-1.92%
CSX Corp., Sr. Unsec. Putable
Deb.,
6.95%, 05/01/27 2,000,000 1,986,980
- ---------------------------------------------------------------
7.25%, 05/01/27 7,000,000 6,870,290
- ---------------------------------------------------------------
Norfolk Southern Corp., Notes,
7.05%, 05/01/37 4,000,000 3,920,920
- ---------------------------------------------------------------
12,778,190
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT
TRUSTS-0.93%
Health Care REIT, Inc.,
Unsec. Notes, 7.57%, 04/15/00 $ 1,400,000 $ 1,393,476
- ---------------------------------------------------------------
Sr. Unsec. Notes, 7.63%,
03/15/08 1,500,000 1,241,985
- ---------------------------------------------------------------
Spieker Properties, Inc., Unsec.
Deb., 7.35%, 12/01/17 4,000,000 3,530,840
- ---------------------------------------------------------------
6,166,301
- ---------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-0.13%
Plainwell Inc.-Series B, Sr.
Unsec. Sub. Notes, 11.00%,
03/01/08 1,710,000 897,750
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-1.68%
Amazon.com, Inc., Conv. Deb.,
4.75%, 02/01/09 (Acquired
01/29/99; Cost $2,507,500)(b) 2,500,000 2,840,625
- ---------------------------------------------------------------
CSK Auto Inc.-Series A, Sr. Gtd.
Sub. Deb, 11.00%, 11/01/06 715,000 729,300
- ---------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 06/01/08 5,190,000 5,021,325
- ---------------------------------------------------------------
Rent-A-Center, Inc., Sr. Unsec.
Gtd. Sub. Notes, 11.00%,
08/15/08 2,500,000 2,581,250
- ---------------------------------------------------------------
11,172,500
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.40%
Big 5 Corp.-Series B, Sr. Unsec.
Notes, 10.88%, 11/15/07 1,625,000 1,608,750
- ---------------------------------------------------------------
J Crew Operating Corp., Sr. Sub.
Notes, 10.38%, 10/15/07 1,255,000 1,060,475
- ---------------------------------------------------------------
2,669,225
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-1.69%
Dime Capital Trust I-Series A,
Gtd. Bonds, 9.33%, 05/06/27 2,700,000 2,545,884
- ---------------------------------------------------------------
Sovereign Bancorp, Inc., Medium
Term Sub. Notes, 8.00%,
03/15/03 5,050,000 4,822,801
- ---------------------------------------------------------------
St. Paul Bancorp, Inc., Sr.
Unsec. Notes, 7.13%, 02/15/04 1,500,000 1,462,110
- ---------------------------------------------------------------
Washington Mutual, Inc.,
Notes, 7.50%, 08/15/06 1,015,000 1,010,199
- ---------------------------------------------------------------
Gtd. Bonds, 8.38%, 06/01/27 1,485,000 1,418,947
- ---------------------------------------------------------------
11,259,941
- ---------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-1.30%
Hydrochem Industrial Service
Co.-Series B, Sr. Gtd. Sub.
Notes, 10.38%, 08/01/07 920,000 793,500
- ---------------------------------------------------------------
Laidlaw Inc. (Canada),
Unsec. Yankee Notes, 7.65%,
05/15/06 3,000,000 2,787,150
- ---------------------------------------------------------------
Unsec. Yankee Deb., 6.70%,
05/01/08 4,000,000 3,404,680
- ---------------------------------------------------------------
Putable Yankee Deb., 6.72%,
10/01/27 2,000,000 1,701,400
- ---------------------------------------------------------------
8,686,730
- ---------------------------------------------------------------
</TABLE>
FS-44
<PAGE> 314
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
SERVICES (EMPLOYMENT)-0.29%
MSX International, Inc., Sr.
Unsec. Gtd. Sub. Notes,
11.38%, 01/15/08 $ 1,980,000 $ 1,900,800
- ---------------------------------------------------------------
SHIPPING-0.35%
Hutchison Delta Finance
Ltd.-Series REGS (Cayman
Islands), Conv. Unsec. Notes,
7.00%, 11/25/01 2,000,000 2,320,000
- ---------------------------------------------------------------
SOVEREIGN DEBT-2.17%
Province of Manitoba-Series AZ
(Canada), Putable Yankee Deb.,
7.75%, 07/17/16 5,000,000 5,119,750
- ---------------------------------------------------------------
Province of Newfoundland
(Canada), Unsec. Yankee Deb.,
9.00%, 06/01/19 1,000,000 1,121,990
- ---------------------------------------------------------------
Province of Quebec-Series A
(Canada), Medium Term Putable
Yankee Notes,
5.74%, 03/02/26 3,500,000 3,470,670
- ---------------------------------------------------------------
6.29%, 03/06/26 4,800,000 4,719,552
- ---------------------------------------------------------------
14,431,962
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-1.34%
Loral Space & Communications
Ltd., Sr. Gtd. Sub. Notes,
11.25%, 01/15/07(e) 2,000,000 1,510,000
- ---------------------------------------------------------------
Nextel Communications, Inc., Sr.
Unsec. Notes, 12.00%, 11/01/08 3,375,000 3,796,875
- ---------------------------------------------------------------
WebLink Wireless, Inc., Sr.
Disc. Sub. Notes, 11.25%,
02/01/08(c) 3,110,000 1,104,050
- ---------------------------------------------------------------
Worldwide Fiber Inc. (Canada),
Sr. Notes,
12.50%, 12/15/05 1,430,000 1,508,650
- ---------------------------------------------------------------
12.00%, 08/01/09(d) 1,000,000 1,037,500
- ---------------------------------------------------------------
8,957,075
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-4.30%
Destia Communications, Inc., Sr.
Unsec. Notes, 13.50%, 07/15/07 3,500,000 3,718,750
- ---------------------------------------------------------------
Esprit Telecom Group PLC (United
Kingdom), Sr. Unsec. Yankee
Notes, 11.50%, 12/15/07 1,500,000 1,530,000
- ---------------------------------------------------------------
MCI Communications Corp., Sr.
Unsec. Putable Deb., 7.13%,
06/15/27 5,500,000 5,526,400
- ---------------------------------------------------------------
Primus Telecommunications Group,
Inc.,
Sr. Unsec. Notes, 11.25%,
01/15/09 3,500,000 3,395,000
- ---------------------------------------------------------------
Notes, 12.75%, 10/15/09(d) 1,500,000 1,567,500
- ---------------------------------------------------------------
RSL Communications PLC (United
Kingdom), Sr. Unsec. Yankee
Gtd. Notes, 9.88%, 11/15/09 8,000,000 7,220,000
- ---------------------------------------------------------------
Sprint Corp., Putable Deb.,
9.00%, 10/15/19 3,800,000 4,210,286
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)-(CONTINUED)
Versatel Telecom International
N.V. (Netherlands), Sr. Notes,
13.25%, 05/15/08 $ 1,370,000 $ 1,465,900
- ---------------------------------------------------------------
28,633,836
- ---------------------------------------------------------------
TELEPHONE-4.41%
Alestra S.A. (Mexico), Sr.
Notes, 12.63%, 05/15/09(d) 3,000,000 3,030,000
- ---------------------------------------------------------------
AT&T Canada Inc. (Canada), Sr.
Unsec. Notes 7.65%, 09/15/06 2,800,000 2,791,387
- ---------------------------------------------------------------
AT&T Corp.-Liberty Media Group,
Bonds, 7.88%, 07/15/09
(Acquired 06/30/99; Cost
$2,982,120)(b) 3,000,000 2,991,345
- ---------------------------------------------------------------
Bell Atlantic Financial
Services, Inc.- Series REGS,
Conv. Bonds, 4.25%, 09/15/05 3,700,000 4,653,324
- ---------------------------------------------------------------
ICG Services, Inc., Sr. Unsec.
Disc. Notes, 10.00%,
02/15/08(c) 4,000,000 2,157,840
- ---------------------------------------------------------------
Logix Communications
Enterprises, Sr. Unsec. Notes,
12.25%, 06/15/08 1,000,000 782,500
- ---------------------------------------------------------------
SBC Communications, Inc., Deb.,
7.38%, 07/15/43 1,200,000 1,079,448
- ---------------------------------------------------------------
Telefonos de Mexico S.A.
(Mexico), Conv. Yankee Notes,
4.25%, 06/15/04 3,000,000 3,911,250
- ---------------------------------------------------------------
U.S. Xchange LLC, Sr. Unsec.
Notes, 15.00%, 07/01/08 5,000,000 4,812,500
- ---------------------------------------------------------------
Williams Communications Group,
Inc., Sr. Unsec. Notes,
10.70%, 10/01/07 3,000,000 3,157,500
- ---------------------------------------------------------------
29,367,094
- ---------------------------------------------------------------
TRUCKERS-0.33%
Travelcenters of America, Inc.,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/01/07 2,180,000 2,180,000
- ---------------------------------------------------------------
TRUCKS & PARTS-0.75%
North American Van Lines, Inc.,
Sr. Sub. Notes, 13.38%,
12/01/09(d) 5,000,000 5,025,000
- ---------------------------------------------------------------
WASTE MANAGEMENT-2.65%
Allied Waste North America Inc.,
Sr. Sub Notes, 10.00%,
08/01/09(d) 4,920,000 4,403,400
- ---------------------------------------------------------------
Browning-Ferris Industries,
Inc., Deb.,
9.25%, 05/01/21 2,570,000 2,325,850
- ---------------------------------------------------------------
7.40%, 09/15/35 1,200,000 870,000
- ---------------------------------------------------------------
Waste Management, Inc., Sr.
Unsec. Notes,
7.13%, 10/01/07 3,710,000 3,271,997
- ---------------------------------------------------------------
7.13%, 12/15/17 1,335,000 1,046,133
- ---------------------------------------------------------------
Unsec. Putable Notes, 7.10%,
08/01/26 6,170,000 5,722,181
- ---------------------------------------------------------------
17,639,561
- ---------------------------------------------------------------
Total U.S. Dollar
Denominated Corporate
Bonds & Notes (Cost
$529,967,761) 503,342,650
- ---------------------------------------------------------------
</TABLE>
FS-45
<PAGE> 315
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(g) VALUE
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED
CORPORATE BONDS & NOTES-18.07%
AUSTRALIA-1.05%
New South Wales Treasury
Corp.-Series 4 (Sovereign
Debt), Gtd. Notes, 7.00%,
04/01/04 AUD 6,900,000 $ 4,555,259
- ---------------------------------------------------------------
State Bank New South
Wales-Series E (Banks-Major
Regional), Sr. Unsec. Gtd.
Medium Term Notes, 8.63%,
08/20/01 AUD 3,600,000 2,442,289
- ---------------------------------------------------------------
6,997,548
- ---------------------------------------------------------------
CANADA-4.18%
AT&T Canada Inc. (Telephone),
Sr. Unsec. Notes, 7.15%,
09/23/04 CAD 1,150,000 787,231
- ---------------------------------------------------------------
Bell Mobility Cellular Inc.
(Telecommunications-Cellular/Wireless),
Deb., 6.55%, 06/02/08 CAD 2,250,000 1,493,749
- ---------------------------------------------------------------
Canadian Pacific Ltd.-Series D
(Manufacturing-Diversified),
Unsec. Medium Term Notes,
5.85%, 03/30/09 (Acquired
3/24/99; Cost $2,149,715(b) CAD 3,250,000 2,079,725
- ---------------------------------------------------------------
Clearnet Communications Inc.
(Telecommunications-Cellular/Wireless),
Sr. Disc. Notes,
11.75%, 08/13/07 (Acquired
07/31/97-11/04/97; Cost
$4,341,891)(b)(c) CAD 8,200,000 4,033,811
- ---------------------------------------------------------------
10.40%, 05/15/08(c) CAD 9,050,000 3,981,674
- ---------------------------------------------------------------
Export Development Corp.
(Sovereign Debt), Sr. Unsub.
Notes, 6.50%, 12/21/04 NZD 2,150,000 1,064,578
- ---------------------------------------------------------------
Microcell Telecommunications
Inc.
(Telecommunications-Cellular/Wireless),
Sr. Disc. Notes, 11.13%,
10/15/07(c) CAD 3,500,000 1,630,811
- ---------------------------------------------------------------
Poco Petroleums Ltd. (Oil & Gas-
Exploration & Production),
Unsec. Deb., 6.60%,
09/11/07 CAD 4,150,000 2,721,265
- ---------------------------------------------------------------
Province of Ontario (Sovereign
Debt),
Deb. 6.25%, 01/13/04 DEM 790,000 422,570
- ---------------------------------------------------------------
Sr. Unsec. Unsub. Notes,
6.25%, 12/03/08 NZD 2,500,000 1,140,705
- ---------------------------------------------------------------
Province of Quebec (Sovereign
Debt), Unsec. Notes, 5.13%,
01/04/09 EUR 825,000 397,329
- ---------------------------------------------------------------
Rogers Cablesystems
(Broadcasting- Television,
Radio & Cable), Sr. Sec.
Second Priority Deb., 9.65%,
01/15/14 CAD 3,300,000 2,389,316
- ---------------------------------------------------------------
Teleglobe Canada Inc.
(Telephone), Unsec. Deb.,
8.35%, 06/20/03 CAD 5,000,000 3,547,114
- ---------------------------------------------------------------
TransCanada Pipelines-Series Q
(Natural Gas), Deb., 10.63%,
10/20/09 CAD 1,750,000 1,496,224
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(g) VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Westcoast Energy Inc.-Series V
(Natural Gas), Unsec. Deb.,
6.45%, 12/18/06 (Acquired
12/03/96; Cost 739,416)(b) CAD 1,000,000 $ 679,166
- ---------------------------------------------------------------
27,865,268
- ---------------------------------------------------------------
CAYMAN ISLANDS-0.51%
Sutton Bridge Financial
Ltd.-Series REGS (Power
Producers-Independent), Gtd.
Eurobonds, 8.63%,
06/30/22(d) GBP 2,000,000 3,393,912
- ---------------------------------------------------------------
DENMARK-0.85%
Kingdom of Denmark (Sovereign
Debt), Bonds, 5.00%,
08/15/05 DKK 42,500,000 5,672,111
- ---------------------------------------------------------------
GERMANY-0.49%
Landesbank Baden-Wuerttemberg
(Banks- Major Regional), Sr.
Unsec. Unsub. Medium Term
Notes, 6.25%, 12/15/04 AUD 2,400,000 1,504,420
- ---------------------------------------------------------------
Treuhandanstalt (Sovereign
Debt), Gtd. Notes, 6.00%,
11/12/03 EUR 1,695,000 1,777,422
- ---------------------------------------------------------------
3,281,842
- ---------------------------------------------------------------
GREECE-0.72%
Hellenic Republic (Sovereign
Debt), Bonds, 6.60%,
01/15/04 GRD 1,570,000,000 4,816,376
- ---------------------------------------------------------------
LUXEMBOURG-0.64%
PTC International Finance II
S.A. (Telephone), Sr. Sub.
Gtd. Notes, 11.25%, 12/01/09
(Acquired 11/16/99; Cost
$4,145,603)(b) EUR 4,100,000 4,250,238
- ---------------------------------------------------------------
NETHERLANDS-3.18%
Dresdner Finance B.V.-Series 11
(Banks- Major Regional),
Floating Rate Gtd. Notes,
3.53%, 07/30/03(h) EUR 4,700,000 4,720,405
- ---------------------------------------------------------------
Hypovereins Finance N.V.-Series
E (Banks- Major Regional),
Gtd. Medium Term Notes, 6.00%,
03/12/07 DEM 1,485,000 766,182
- ---------------------------------------------------------------
KPNQwest N.V.-Series REGS
(Telecommunications-Long
Distance), Sr. Unsec. Notes,
7.13%, 06/01/09 EUR 4,325,000 4,336,995
- ---------------------------------------------------------------
Mannesmann Finance B.V.
(Machinery- Diversified),
Conv. Bonds, 1.00%,
10/13/04 EUR 2,000,000 2,463,286
- ---------------------------------------------------------------
Gtd. Unsec. Unsub. Notes,
4.75%, 05/27/09 EUR 1,890,000 1,677,251
- ---------------------------------------------------------------
SPT Telecom A.S.
(Telecommunications-Long
Distance), Gtd. Unsec. Unsub.
Notes, 5.13%, 05/07/03 DEM 2,750,000 1,402,567
- ---------------------------------------------------------------
Tecnost International Finance
N.V.-Series E (Telephone),
Medium Term Gtd. Notes, 6.13%,
07/30/09 EUR 2,050,000 1,986,830
- ---------------------------------------------------------------
</TABLE>
FS-46
<PAGE> 316
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(g) VALUE
<S> <C> <C>
NETHERLANDS-(CONTINUED)
Tele1 Europe
(Telecommunications-Long
Distance), Sr. Notes, 11.88%,
12/01/09 (Acquired 12/08/99;
Cost $3,834,750)(b) EUR 3,750,000 $ 3,811,929
- ---------------------------------------------------------------
21,165,445
- ---------------------------------------------------------------
NEW ZEALAND-1.10%
Inter-American Development Bank
(Banks- Money Center), Unsec.
Bonds, 5.75%, 04/15/04 NZD 4,750,000 2,310,718
- ---------------------------------------------------------------
New Zealand Government-Series
302 (Sovereign Debt), Bonds,
10.00%, 03/15/02 NZD 4,575,000 2,551,735
- ---------------------------------------------------------------
404 (Sovereign Debt), Bonds,
8.00%, 04/15/04 NZD 4,580,000 2,472,597
- ---------------------------------------------------------------
7,335,050
- ---------------------------------------------------------------
SWEDEN-1.19%
Stadshypotek A.B.-Series 1562
(Banks- Regional), Bonds,
3.50%, 09/15/04 SEK 47,000,000 4,967,578
- ---------------------------------------------------------------
Swedish Government-Series 1035
(Sovereign Debt), Bonds,
6.00%, 02/09/05 SEK 24,800,000 2,983,912
- ---------------------------------------------------------------
7,951,490
- ---------------------------------------------------------------
UNITED KINGDOM-3.80%
Airtours PLC
(Services-Commercial &
Consumer), Conv. Sub. Notes,
5.75%, 01/05/04 (Acquired
12/09/98; Cost
$3,091,887)(b) GBP 1,869,000 3,040,508
- ---------------------------------------------------------------
Jazztel PLC
(Telecommunications-Cellular/
Wireless), Sr. Notes, 13.25%,
12/15/09 (Acquired 12/09/99;
Cost $2,319,212)(b) EUR 2,260,000 2,288,225
- ---------------------------------------------------------------
Lloyds Bank PLC-Series E
(Banks-Major Regional), Medium
Term Sub. Notes, 5.25%,
07/14/08 DEM 6,400,000 3,129,515
- ---------------------------------------------------------------
Merrill Lynch & Co., Inc.-Series
E (Investment
Banking/Brokerage), Sr. Unsec.
Unsub. Medium Term Notes,
7.38%, 12/17/07 GBP 1,770,000 2,897,880
- ---------------------------------------------------------------
National Power PLC (Electric
Companies), Sr. Unsec. Unsub.
Bonds, 8.00%, 02/21/07 AUD 5,000,000 3,245,777
- ---------------------------------------------------------------
National Westminster Bank
PLC-Series E (Banks-Money
Center), Unsec. Unsub. Medium
Term Bonds, 5.13%,
06/30/11 EUR 1,550,000 1,398,391
- ---------------------------------------------------------------
Scotia Holdings PLC-Series REGS
(Health Care-Drugs-Generic &
Other), Conv. Unsec. Unsub.
Notes, 8.50%, 03/26/02 GBP 1,000,000 1,243,821
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(g) VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
TeleWest Communications PLC
(Broadcasting-Television,
Radio & Cable), Sr. Unsec.
Conv. Notes, 5.25%,
02/19/07 GBP 2,530,000 $ 4,683,190
- ---------------------------------------------------------------
Union Bank of Switzerland London
(Banks-Major Regional), Unsec.
Sub. Notes, 8.00%, 01/08/07GBP 2,000,000 3,385,248
- ---------------------------------------------------------------
25,312,555
- ---------------------------------------------------------------
UNITED STATES OF AMERICA-0.36%
General Electric Capital
Corp.-Series E
(Financial-Diversified), Sr.
Unsec. Unsub. Medium Term
Notes, 6.00%, 07/27/01 GBP 1,500,000 2,383,794
- ---------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Corporate
Bonds & Notes (Cost
$125,392,735) 120,425,629
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-1.98%
BANKS (REGIONAL)-0.94%
First Republic Capital
Corp.-Series A-Pfd. (Acquired
05/26/99; Cost $3,500,000)(b) 3,500 3,220,000
- ---------------------------------------------------------------
Westpac Banking Corp., STRYPES
Trust- $3.135 Conv. Pfd 95,000 3,045,937
- ---------------------------------------------------------------
6,265,937
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO
& CABLE)-0.00%
Knology Inc.-Wts., expiring
10/22/07 (Acquired 03/12/98;
Cost $0)(b)(i) 4,100 11,275
- ---------------------------------------------------------------
Wireless One, Inc.-Wts.,
expiring 10/19/00(i) 2,670 0
- ---------------------------------------------------------------
11,275
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-0.35%
Microsoft Corp.(j) 20,291 2,368,974
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.00%
Electronic Retailing Systems
International, Inc.-Wts.,
expiring 02/01/04(i) 3,630 3,630
- ---------------------------------------------------------------
FOODS-0.13%
Ralston Purina Group.-$4.34
Conv. Pfd. 23,000 840,937
- ---------------------------------------------------------------
IRON & STEEL-0.00%
Gulf States Steel, Inc.-Wts.,
expiring 04/15/03(i) 1,650 17
- ---------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-0.44%
Cendant Corp.-$3.75 Conv. PRIDES 78,000 2,915,250
- ---------------------------------------------------------------
</TABLE>
FS-47
<PAGE> 317
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.04%
Clearnet Communications
Inc.-Class A-ADR (Canada)(j) 5,874 $ 201,919
- ---------------------------------------------------------------
Loral Space & Communications
Ltd.(j) 2,059 50,059
- ---------------------------------------------------------------
251,978
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-0.08%
Versatel Telecom International
N.V.-Wts. (Netherlands),
expiring 05/15/08 (Acquired
05/20/98; Cost $0)(b)(i) 1,370 548,343
- ---------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$12,869,080) 13,206,341
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY SECURITIES-1.52%
U.S. TREASURY NOTES-1.52%
5.50%, 08/31/01 $ 5,000,000 4,944,400
- ---------------------------------------------------------------
7.25%, 08/15/04 5,000,000 5,157,000
- ---------------------------------------------------------------
Total U.S. Treasury
Securities (Cost
$10,165,234) 10,101,400
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS-1.01%
STIC Liquid Assets Portfolio(k) 3,358,998 $ 3,358,998
- ---------------------------------------------------------------
STIC Prime Portfolio(k) 3,358,998 3,358,998
- ---------------------------------------------------------------
Total Money Market Funds
(Cost $6,717,996) 6,717,996
- ---------------------------------------------------------------
TOTAL INVESTMENTS-98.12% (Cost
$685,112,806) 653,794,016
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.88% 12,535,304
- ---------------------------------------------------------------
NET ASSETS-100.00% $666,329,320
===============================================================
</TABLE>
Abbreviations:
ADR - America Depositary Receipt
AUD - Australian Dollar
CAD - Canadian Dollar
Conv. - Convertible
Deb. - Debentures
DEM - German Deutsche Mark
Disc. - Discounted
DKK - Danish Krone
EUR - Euro
GBP - British Pound Sterling
GRD - Greek Drachma
Gtd. - Guaranteed
NZD - New Zealand Dollar
Pfd. - Preferred
PRIDES - Preferred Redeemable Increased Dividend Equity Security
REIT - Real Estate Investment Trusts
Sec. - Secured
SEK - Swedish Krona
Sr. - Senior
STRYPES - Structured Yield Product Exchangeable for Stock
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
Wts. - Warrants
Notes to Schedule of Investments:
(a) Principal amount is in U.S. Dollars, except as indicated by note (g).
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 12/31/99 was $56,480,633 which
represents 8.48% of the Fund's net assets.
(c) Discounted bond at purchase. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(d) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1993, as amended.
(e) Consists of more than one class of securities traded together as a unit. In
addition to the debt obligations listed, each unit contains warrants that
enable the holder to purchase common stock in the issuer at a predetermined
price per share of common stock.
(f) Defaulted security. Currently, the issuer is partially in default with
respect to interest payments.
(g) Foreign denominated security. Par value and coupon rate are denominated in
currency indicated.
(h) The coupon rate shown on floating rate note represents rate at the period
end.
(i) Non-income producing security.
(j) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(k) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-48
<PAGE> 318
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$685,112,806) $653,794,016
- ---------------------------------------------------------
Receivables for:
Investments sold 2,276,457
- ---------------------------------------------------------
Foreign currency contracts closed 73,961
- ---------------------------------------------------------
Fund shares sold 1,531,743
- ---------------------------------------------------------
Interest and dividends 13,711,495
- ---------------------------------------------------------
Foreign currency contracts outstanding 428,336
- ---------------------------------------------------------
Investment for deferred compensation plan 77,326
- ---------------------------------------------------------
Other assets 33,285
- ---------------------------------------------------------
Total assets 671,926,619
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,067,402
- ---------------------------------------------------------
Fund shares reacquired 1,966,181
- ---------------------------------------------------------
Dividends 746,263
- ---------------------------------------------------------
Deferred compensation plan 77,326
- ---------------------------------------------------------
Foreign currency contracts closed 10,560
- ---------------------------------------------------------
Foreign currency contracts outstanding 79,121
- ---------------------------------------------------------
Amount due to Custodian 686,784
- ---------------------------------------------------------
Accrued advisory fees 237,999
- ---------------------------------------------------------
Accrued distribution fees 570,288
- ---------------------------------------------------------
Accrued transfer agent fees 56,990
- ---------------------------------------------------------
Accrued operating expenses 98,385
- ---------------------------------------------------------
Total liabilities 5,597,299
- ---------------------------------------------------------
Net assets applicable to shares outstanding $666,329,320
=========================================================
NET ASSETS:
Class A $393,414,414
=========================================================
Class B $244,713,091
=========================================================
Class C $ 28,201,815
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 51,834,716
=========================================================
Class B 32,269,196
=========================================================
Class C 3,725,195
=========================================================
Class A:
Net asset value and redemption price per
share $ 7.59
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $7.59 divided
by 95.25%) $ 7.97
=========================================================
Class B:
Net asset value and offering price per
share $ 7.58
=========================================================
Class C:
Net asset value and offering price per
share $ 7.57
=========================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 52,455,832
- ---------------------------------------------------------
Dividends (net of $1,419 foreign
withholding tax) 1,024,078
- ---------------------------------------------------------
Total investment income 53,479,910
- ---------------------------------------------------------
EXPENSES:
Advisory fees 2,785,338
- ---------------------------------------------------------
Administrative services fees 111,839
- ---------------------------------------------------------
Custodian fees 102,279
- ---------------------------------------------------------
Trustees' fees 10,727
- ---------------------------------------------------------
Distribution fees -- Class A 1,006,620
- ---------------------------------------------------------
Distribution fees -- Class B 2,401,345
- ---------------------------------------------------------
Distribution fees -- Class C 244,571
- ---------------------------------------------------------
Transfer agent fees -- Class A 649,179
- ---------------------------------------------------------
Transfer agent fees -- Class B 405,725
- ---------------------------------------------------------
Transfer agent fees -- Class C 41,321
- ---------------------------------------------------------
Other 306,728
- ---------------------------------------------------------
Total expenses 8,065,672
- ---------------------------------------------------------
Less: Expenses paid indirectly (12,978)
- ---------------------------------------------------------
Net expenses 8,052,694
- ---------------------------------------------------------
Net investment income 45,427,216
=========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FOREIGN CURRENCY CONTRACTS
AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (21,513,111)
- ---------------------------------------------------------
Foreign currencies (246,991)
- ---------------------------------------------------------
Foreign currency contracts 1,947,070
- ---------------------------------------------------------
Futures contracts (76,650)
- ---------------------------------------------------------
(19,889,682)
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities (47,772,599)
- ---------------------------------------------------------
Foreign currencies (1,694)
- ---------------------------------------------------------
Foreign currency contracts (36,322)
- ---------------------------------------------------------
(47,810,615)
- ---------------------------------------------------------
Net gain (loss) from investment
securities, foreign currencies, foreign
currency contracts and futures
contracts (67,700,297)
- ---------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(22,273,081)
=========================================================
</TABLE>
FS-49
<PAGE> 319
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 45,427,216 $ 35,484,095
- ------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, foreign currency contracts and
futures contracts (19,889,682) (2,670,536)
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and foreign
currency contracts (47,810,615) (8,393,729)
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (22,273,081) 24,419,830
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (27,905,932) (24,056,371)
- ------------------------------------------------------------------------------------------
Class B (14,665,005) (9,376,348)
- ------------------------------------------------------------------------------------------
Class C (1,497,538) (561,222)
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A -- (2,510,957)
- ------------------------------------------------------------------------------------------
Class B -- (1,354,867)
- ------------------------------------------------------------------------------------------
Class C -- (120,997)
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A 33,756,872 67,975,662
- ------------------------------------------------------------------------------------------
Class B 49,567,754 97,469,590
- ------------------------------------------------------------------------------------------
Class C 11,280,738 17,151,361
- ------------------------------------------------------------------------------------------
Net increase in net assets 28,263,808 169,035,681
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 638,065,512 469,029,831
- ------------------------------------------------------------------------------------------
End of period $666,329,320 $638,065,512
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $719,086,161 $624,536,057
- ------------------------------------------------------------------------------------------
Undistributed net investment income (1,347,825) 68,804
- ------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, foreign currency
contracts and futures contracts (20,443,436) (3,384,384)
- ------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and foreign currency
contracts (30,965,580) 16,845,035
- ------------------------------------------------------------------------------------------
$666,329,320 $638,065,512
==========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-50
<PAGE> 320
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Income Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of nine separate portfolios, each
having an unlimited number of shares of beneficial interest. The Fund currently
offers three different classes of shares: Class A shares, Class B shares and
Class C shares. Class A shares are sold with a front-end sales charge. Class B
shares and Class C shares are sold with a contingent deferred sales charge.
Matters affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The Fund's investment objective
is to achieve a high level of current income consistent with reasonable concern
for safety of principal by investing primarily in fixed-rate corporate debt and
U.S. Government obligations.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last 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 closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. 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. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities 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 would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded
on the accrual basis. Dividend income is recorded on the ex-dividend date.
On December 31, 1999, undistributed net investment income was decreased by
$2,775,370, undistributed net realized gains increased by $2,830,630 and
paid-in capital decreased by $55,260 as a result of differing book/tax
treatment of foreign currency transactions and other reclassifications. Net
assets of the Fund were unaffected by the reclassifications.
C. Distributions -- It is the policy of the Fund to declare daily dividends
from net investment income. Such distributions are paid monthly.
Distributions from net realized capital gains, if any, are generally paid
annually and recorded on ex-dividend date. The Fund may elect to use a
portion of the proceeds of fund share redemptions as distributions for
federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $15,159,499 as of December 31, 1999 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, in the year 2007.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into
FS-51
<PAGE> 321
U.S. dollar amounts on the respective dates of such transactions. The Fund
does not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
Outstanding foreign currency contracts at December 31, 1999 were as follows:
<TABLE>
<CAPTION>
CONTRACT TO UNREALIZED
SETTLEMENT ------------------------ APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
--------------------- -------- ---------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
01/24/00 SEK 66,000,000 $ 8,134,891 $ 7,768,745 $366,146
--------------------- -------- ---------- ----------- ----------- --------------
02/04/00 CAD 1,500,000 1,023,053 1,040,168 (17,115)
--------------------- -------- ---------- ----------- ----------- --------------
02/28/00 EUR 1,000,000 1,038,500 1,011,046 27,454
--------------------- -------- ---------- ----------- ----------- --------------
02/28/00 GBP 4,500,000 7,301,250 7,266,514 34,736
--------------------- -------- ---------- ----------- ----------- --------------
02/28/00 NZD 5,500,000 2,814,460 2,876,466 (62,006)
--------------------- -------- ---------- ----------- ----------- --------------
78,500,000 $20,312,154 $19,962,939 $349,215
===================== ======== ========== =========== =========== ==============
</TABLE>
G. Futures Contracts -- The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits required
upon entering into futures contracts are satisfied by the segregation of
specific securities as collateral for the account of the broker (the Fund's
agent in acquiring the futures position). During the period the futures
contracts are open, changes in the value of the contracts are recognized as
unrealized gains or losses by "marking to market" on a daily basis to reflect
the market value of the contracts at the end of each day's trading. Variation
margin payments are made or received depending upon whether unrealized gains
or losses are incurred. When the contracts are closed, the Fund recognizes a
realized gain or loss equal to the difference between the proceeds from, or
cost of, the closing transaction and the Fund's basis in the contract. Risks
include the possibility of an illiquid market and that a change in value of
the contracts may not correlate with changes in the value of the securities
being hedged.
H. Bond Premiums -- It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
I. Expenses -- Distribution expenses and transfer agency expenses directly
attributable to a class of shares are charged to that class' operations. All
other expenses which are attributable to more than one class are allocated
among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at an annual rate of 0.50% on the first
$200 million of the Fund's average daily net assets, plus 0.40% on the next $300
million of the Fund's average daily net assets, plus 0.35% on the next $500
million of the Fund's average daily net assets, plus 0.30% on the Fund's average
daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 1999, AIM was
paid $111,839 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $668,106 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively, the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended December 31,
1999, the Class A, Class B and Class C shares paid AIM Distributors $1,006,620,
$2,401,345 and $244,571, respectively, as compensation under the Plans.
AIM Distributors received commissions of $358,051 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $48,455 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 1999, the Fund paid legal fees of $4,426
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
FS-52
<PAGE> 322
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $7,504 and $5,474, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $12,978 during the year ended December 31, 1999.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$602,560,607 and $501,931,451, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 8,639,591
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (40,003,123)
- ---------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities $(31,363,532)
=========================================================
</TABLE>
Cost of investments for tax purposes is $685,157,548.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 19,309,632 $ 154,855,498 18,358,462 $ 156,866,536
- -----------------------------------------------------------------------------------------------------------------------
Class B 14,308,868 114,665,985 15,156,529 128,945,810
- -----------------------------------------------------------------------------------------------------------------------
Class C 2,744,473 21,843,332 2,530,069 21,507,916
- -----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 2,892,178 22,930,219 2,575,274 21,978,433
- -----------------------------------------------------------------------------------------------------------------------
Class B 1,404,212 11,107,962 956,975 8,134,643
- -----------------------------------------------------------------------------------------------------------------------
Class C 150,804 1,188,183 65,508 553,356
- -----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (18,052,165) (144,028,845) (12,996,807) (110,869,307)
- -----------------------------------------------------------------------------------------------------------------------
Class B (9,612,004) (76,206,193) (4,664,899) (39,610,863)
- -----------------------------------------------------------------------------------------------------------------------
Class C (1,483,247) (11,750,777) (581,112) (4,909,911)
- -----------------------------------------------------------------------------------------------------------------------
11,662,751 $ 94,605,364 21,399,999 $ 182,596,613
=======================================================================================================================
</TABLE>
FS-53
<PAGE> 323
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and a share of
Class B outstanding during each of the years in the five-year period ended
December 31, 1999; and for a share of Class C outstanding during each of the
years in the two-year period ended December 31, 1999 and the period August 4,
1997 (date sales commenced) through December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.38 $ 8.57 $ 8.24 $ 8.17 $ 7.20
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.57 0.57 0.55 0.57 0.58
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.81) (0.16) 0.39 0.09 1.00
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations (0.24) 0.41 0.94 0.66 1.58
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.55) (0.55) (0.52) (0.59) (0.61)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from net realized gains -- (0.05) (0.09) -- --
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (0.55) (0.60) (0.61) (0.59) (0.61)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 7.59 $ 8.38 $ 8.57 $ 8.24 $ 8.17
============================================================ ======== ======== ======== ======== ========
Total return(a) (2.92)% 4.94% 11.92% 8.58% 22.77%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $393,414 $399,701 $340,608 $286,183 $251,280
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.91%(b) 0.91% 0.94% 0.98% 0.98%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 7.11%(b) 6.69% 6.55% 7.13% 7.52%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 78% 41% 54% 80% 227%
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $402,647,801.
<TABLE>
<CAPTION>
CLASS B CLASS C
--------------------------------------------------- ---------------------------
1999 1998 1997 1996 1995 1999 1998 1997
-------- -------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.37 $ 8.55 $ 8.23 $ 8.15 $ 7.18 $ 8.36 $ 8.54 $ 8.38
- --------------------------------------------- -------- -------- -------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.50 0.50 0.48 0.50 0.53 0.50 0.50 0.19
- --------------------------------------------- -------- -------- -------- ------- ------- ------- ------- -------
Net gains (losses) on securities (both
realized and unrealized) (0.80) (0.15) 0.38 0.11 0.98 (0.80) (0.15) 0.22
- --------------------------------------------- -------- -------- -------- ------- ------- ------- ------- -------
Total from investment operations (0.30) 0.35 0.86 0.61 1.51 (0.30) 0.35 0.41
- --------------------------------------------- -------- -------- -------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.49) (0.48) (0.45) (0.53) (0.54) (0.49) (0.48) (0.16)
- --------------------------------------------- -------- -------- -------- ------- ------- ------- ------- -------
Distributions from net realized gains -- (0.05) (0.09) -- -- -- (0.05) (0.09)
- --------------------------------------------- -------- -------- -------- ------- ------- ------- ------- -------
Total distributions (0.49) (0.53) (0.54) (0.53) (0.54) (0.49) (0.53) (0.25)
- --------------------------------------------- -------- -------- -------- ------- ------- ------- ------- -------
Net asset value, end of period $ 7.58 $ 8.37 $ 8.55 $ 8.23 $ 8.15 $ 7.57 $ 8.36 $ 8.54
============================================= ======== ======== ======== ======= ======= ======= ======= =======
Total return(a) (3.72)% 4.20% 10.89% 7.87% 21.72% (3.71)% 4.21% 4.96%
============================================= ======== ======== ======== ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $244,713 $219,033 $125,871 $85,343 $44,304 $28,202 $19,332 $ 2,552
============================================= ======== ======== ======== ======= ======= ======= ======= =======
Ratio of expenses to average net assets 1.66%(b) 1.66% 1.69% 1.80% 1.79% 1.66%(b) 1.66% 1.69%(c)
============================================= ======== ======== ======== ======= ======= ======= ======= =======
Ratio of net investment income to average net
assets 6.36%(b) 5.94% 5.80% 6.30% 6.71% 6.36%(b) 5.94% 5.80%(c)
============================================= ======== ======== ======== ======= ======= ======= ======= =======
Portfolio turnover rate 78% 41% 54% 80% 227% 78% 41% 54%
============================================= ======== ======== ======== ======= ======= ======= ======= =======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are based on average net assets of $240,134,478 and $24,457,067 for
Class B and Class C, respectively.
(c) Annualized.
FS-54
<PAGE> 324
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Intermediate Government Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Intermediate Government Fund (a
portfolio of AIM Funds Group), including the schedule of
investments, as of December 31, 1999, and the related
statement of operations for the year then ended, the
statement of changes in net assets for each of the years
in the two-year period then ended and the financial
highlights for each of the years in the five-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1999, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM
Intermediate Government Fund as of December 31, 1999, the
results of its operations for the year then ended, the
changes in its net assets for each of the years in the
two-year period then ended and the financial highlights
for each of the years in the five-year period then ended,
in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
KPMG LLP
February 4, 2000
Houston, Texas
FS-55
<PAGE> 325
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. GOVERNMENT AGENCY
SECURITIES-61.87%
FEDERAL FARM CREDIT BANK-0.96%
Debentures
6.15%, 09/01/00 $ 700,000 $ 700,140
- --------------------------------------------------------------
6.22%, 06/17/08 4,500,000 4,163,625
- --------------------------------------------------------------
4,863,765
- --------------------------------------------------------------
FEDERAL HOME LOAN BANK-1.36%
Debentures
7.31%, 07/06/01 4,000,000 4,047,920
- --------------------------------------------------------------
7.36%, 07/01/04 2,800,000 2,852,332
- --------------------------------------------------------------
6,900,252
- --------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC")-13.45%
Debentures
6.745%, 08/01/01 10,000,000 10,033,900
- --------------------------------------------------------------
6.45%, 04/29/09 10,000,000 9,360,500
- --------------------------------------------------------------
Pass Through Certificates
12.00%, 04/01/00 to 02/01/13 15,475 17,586
- --------------------------------------------------------------
6.50%, 07/01/01 to 01/01/28 6,960,616 6,668,918
- --------------------------------------------------------------
9.00%, 12/01/05 to 04/01/25 3,378,074 3,536,455
- --------------------------------------------------------------
8.00%, 07/01/06 to 10/01/10 270,236 275,839
- --------------------------------------------------------------
8.50%, 07/01/07 to 12/01/26 11,651,571 12,059,727
- --------------------------------------------------------------
10.50%, 09/01/09 to 01/01/21 1,216,474 1,330,883
- --------------------------------------------------------------
7.00%, 11/01/10 to 04/01/11 993,920 987,302
- --------------------------------------------------------------
10.00%, 11/01/11 to 04/01/20 7,508,485 8,109,817
- --------------------------------------------------------------
6.00%, 12/01/13 9,058,069 8,613,680
- --------------------------------------------------------------
9.50%, 11/01/20 to 04/01/25 6,658,156 7,151,681
- --------------------------------------------------------------
68,146,288
- --------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
("FNMA")-33.10%
Debentures
8.25%, 12/18/00 5,000,000 5,086,400
- --------------------------------------------------------------
7.50%, 02/11/02 9,000,000 9,154,350
- --------------------------------------------------------------
6.80%, 01/10/03 5,000,000 5,003,150
- --------------------------------------------------------------
8.50%, 02/01/05 4,500,000 4,508,865
- --------------------------------------------------------------
5.875%, 02/02/06 8,000,000 7,562,080
- --------------------------------------------------------------
Medium Term Notes
6.33%, 08/11/00 5,000,000 5,006,350
- --------------------------------------------------------------
6.625%, 05/21/01 5,250,000 5,260,763
- --------------------------------------------------------------
6.69%, 08/07/01 3,500,000 3,511,550
- --------------------------------------------------------------
6.40%, 09/27/05 4,610,000 4,497,332
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
Pass Through Certificates
8.50%, 01/01/07 to 11/01/26 $ 54,233,551 $ 55,639,934
- --------------------------------------------------------------
6.00%, 01/01/09 to 04/01/24 21,008,452 19,976,083
- --------------------------------------------------------------
7.50%, 06/01/10 to 03/01/27 14,116,651 14,161,231
- --------------------------------------------------------------
7.00%, 05/01/11 to 10/01/12 6,949,305 6,898,643
- --------------------------------------------------------------
6.50%, 05/01/13 to 11/01/28 7,752,270 7,527,248
- --------------------------------------------------------------
9.50%, 07/01/16 to 08/01/22 1,351,170 1,438,846
- --------------------------------------------------------------
10.00%, 12/20/19 to 12/20/21 6,536,702 7,170,433
- --------------------------------------------------------------
8.00%, 04/01/25 to 07/01/26 5,310,416 5,374,328
- --------------------------------------------------------------
167,777,586
- --------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION ("GNMA")-13.00%
Pass Through Certificates
6.00%, 10/15/08 to 11/15/08 441,623 422,162
- --------------------------------------------------------------
6.50%, 10/15/08 401,290 392,634
- --------------------------------------------------------------
7.00%, 10/15/08 to 07/15/28 15,943,777 15,456,239
- --------------------------------------------------------------
9.00%, 10/15/08 to 04/15/21 1,041,608 1,104,058
- --------------------------------------------------------------
9.50%, 06/15/09 to 03/15/23 3,870,767 4,133,332
- --------------------------------------------------------------
10.00%, 11/15/09 to 07/15/24 8,170,457 8,894,475
- --------------------------------------------------------------
11.00%, 12/15/09 to 12/15/15 75,512 83,282
- --------------------------------------------------------------
13.50%, 07/15/10 to 04/15/15 242,152 283,018
- --------------------------------------------------------------
12.50%, 11/15/10 95,001 109,370
- --------------------------------------------------------------
13.00%, 01/15/11 to 05/15/15 223,307 257,840
- --------------------------------------------------------------
12.00%, 01/15/13 to 07/15/15 379,120 428,437
- --------------------------------------------------------------
10.50%, 07/15/13 to 02/15/16 81,861 89,404
- --------------------------------------------------------------
8.00%, 01/15/22 to 06/15/27 27,571,100 28,011,192
- --------------------------------------------------------------
7.50%, 03/15/26 to 08/15/28 6,248,090 6,196,000
- --------------------------------------------------------------
65,861,443
- --------------------------------------------------------------
Total U.S. Government Agency Securities
(Cost $321,634,272) 313,549,334
- --------------------------------------------------------------
U.S. TREASURY SECURITIES-29.56%
U.S. TREASURY BONDS-7.32%
7.50%, 11/15/16 5,500,000 5,879,225
- --------------------------------------------------------------
7.25%, 08/15/22 1,100,000 1,158,872
- --------------------------------------------------------------
6.125%, 08/15/29(a) 31,500,000 30,038,085
- --------------------------------------------------------------
37,076,182
- --------------------------------------------------------------
</TABLE>
FS-56
<PAGE> 326
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY NOTES-20.77%
6.625%, 07/31/01 $ 25,000,000 $ 25,160,000
- --------------------------------------------------------------
6.375%, 08/15/02 25,000,000 25,038,250
- --------------------------------------------------------------
6.00%, 08/15/04 to 08/15/09 35,000,000 34,226,850
- --------------------------------------------------------------
7.50%, 02/15/05 20,000,000 20,860,600
- --------------------------------------------------------------
105,285,700
- --------------------------------------------------------------
U.S. TREASURY STRIPS-1.47%(B)
6.605%, 05/15/06 8,000,000 5,272,400
- --------------------------------------------------------------
6.775%, 11/15/18 7,750,000 2,152,408
- --------------------------------------------------------------
7,424,808
- --------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $153,089,107) 149,786,690
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS-20.99%
STIT Government & Agency
Portfolio (Cost
$106,386,819)(c) 106,386,819 $106,386,819
- --------------------------------------------------------------
TOTAL INVESTMENTS-112.42%
(Cost $581,110,198) 569,722,843
- --------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(12.42%) (62,923,368)
- --------------------------------------------------------------
NET ASSETS-100.00% $506,799,475
==============================================================
</TABLE>
Abbreviations:
STRIPS - Separately Traded Registered Interest and Principal Security
Notes to Schedule of Investments:
(a) Principal amount has been deposited in escrow with custodian as collateral
for reverse repurchase agreements outstanding at 12/31/99.
(b) STRIPS are traded on a discount basis. In such cases, the interest rate
shown represents the rate of discount paid or received at the time of
purchase by the Fund.
(c) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-57
<PAGE> 327
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments at market value
(cost $581,110,198) $569,722,843
- ---------------------------------------------------------
Receivables for:
Investments sold 75,753,906
- ---------------------------------------------------------
Fund shares sold 1,257,172
- ---------------------------------------------------------
Interest 7,591,996
- ---------------------------------------------------------
Principal paydowns 199,003
- ---------------------------------------------------------
Investment for deferred compensation plan 42,785
- ---------------------------------------------------------
Other assets 51,430
- ---------------------------------------------------------
Total assets 654,619,135
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased (on when issued or
delayed delivery basis) 76,453,125
- ---------------------------------------------------------
Fund shares reacquired 3,009,900
- ---------------------------------------------------------
Dividends 799,791
- ---------------------------------------------------------
Reverse repurchase agreements (note 5) 66,632,500
- ---------------------------------------------------------
Interest expense (note 5) 13,926
- ---------------------------------------------------------
Deferred compensation plan 42,785
- ---------------------------------------------------------
Dollar roll fees 79,814
- ---------------------------------------------------------
Accrued advisory fees 191,893
- ---------------------------------------------------------
Accrued administrative services fees 10,272
- ---------------------------------------------------------
Accrued distribution fees 493,144
- ---------------------------------------------------------
Accrued transfer agent fees 36,662
- ---------------------------------------------------------
Accrued operating expenses 55,848
- ---------------------------------------------------------
Total liabilities 147,819,660
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $506,799,475
=========================================================
</TABLE>
<TABLE>
<S> <C>
NET ASSETS:
Class A $238,956,779
=========================================================
Class B $228,831,672
=========================================================
Class C $ 39,011,024
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 27,152,824
=========================================================
Class B 25,957,333
=========================================================
Class C 4,438,768
=========================================================
Class A:
Net asset value and redemption price per
share $ 8.80
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $8.80
divided by 95.25%) $ 9.24
=========================================================
Class B:
Net asset value and offering price per
share $ 8.82
=========================================================
Class C:
Net asset value and offering price per
share $ 8.79
=========================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 39,664,653
- ---------------------------------------------------------
Dividends 1,139,420
- ---------------------------------------------------------
Total investment income 40,804,073
- ---------------------------------------------------------
EXPENSES:
Advisory fees 2,310,621
- ---------------------------------------------------------
Administrative services fees 97,900
- ---------------------------------------------------------
Custodian fees 68,252
- ---------------------------------------------------------
Distribution fees - Class A 622,422
- ---------------------------------------------------------
Distribution fees - Class B 2,414,889
- ---------------------------------------------------------
Distribution fees - Class C 411,484
- ---------------------------------------------------------
Interest (Note 5) 984,822
- ---------------------------------------------------------
Transfer agent fees - Class A 318,908
- ---------------------------------------------------------
Transfer agent fees - Class B 341,419
- ---------------------------------------------------------
Transfer agent fees - Class C 59,001
- ---------------------------------------------------------
Trustees' fees 10,971
- ---------------------------------------------------------
Other 255,687
- ---------------------------------------------------------
Total expenses 7,896,376
- ---------------------------------------------------------
Less: Expenses paid indirectly (6,776)
- ---------------------------------------------------------
Net expenses 7,889,600
- ---------------------------------------------------------
Net investment income 32,914,473
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (27,037,801)
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (17,820,871)
- ---------------------------------------------------------
Net gain (loss) on investment securities (44,858,672)
- ---------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(11,944,199)
=========================================================
</TABLE>
FS-58
<PAGE> 328
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 32,914,473 $ 21,481,081
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (27,037,801) 6,570,449
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (17,820,871) (2,570,929)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (11,944,199) 25,480,601
- --------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (16,289,770) (12,395,672)
- --------------------------------------------------------------------------------------------
Class B (13,961,515) (7,690,274)
- --------------------------------------------------------------------------------------------
Class C (2,201,216) (1,395,135)
- --------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS IN EXCESS OF NET INVESTMENT INCOME:
Class A -- (247,750)
- --------------------------------------------------------------------------------------------
Class B -- (176,643)
- --------------------------------------------------------------------------------------------
Class C -- (32,108)
- --------------------------------------------------------------------------------------------
RETURN OF CAPITAL:
Class A (133,023) --
- --------------------------------------------------------------------------------------------
Class B (129,047) --
- --------------------------------------------------------------------------------------------
Class C (21,986) --
- --------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A 14,339,321 76,269,628
- --------------------------------------------------------------------------------------------
Class B 11,152,000 147,670,216
- --------------------------------------------------------------------------------------------
Class C 4,431,396 35,531,445
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (14,758,039) 263,014,308
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 521,557,514 258,543,206
- --------------------------------------------------------------------------------------------
End of period $506,799,475 $521,557,514
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $553,973,791 $524,340,223
- --------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (52,483) (42,488)
- --------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (35,734,478) (9,173,737)
- --------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (11,387,355) 6,433,516
- --------------------------------------------------------------------------------------------
$506,799,475 $521,557,514
============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Intermediate Government Fund (the "Fund") is a series portfolio of AIM Funds
Group (the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of nine separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is to achieve a high level of current income
consistent with reasonable concern for safety of principal by investing
primarily in debt securities issued, guaranteed or otherwise backed by the U.S.
Government.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and
FS-59
<PAGE> 329
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
the significant accounting policies followed by the Fund in the preparation of
its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last 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 closing bid price on that day. Each
security reported on the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the
closing bid price. Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices are
not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in the
case of equity securities and in the case of debt obligations, the mean
between the last bid and asked prices. 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.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of trading of the New York Stock Exchange
("NYSE").
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. The Fund may engage in dollar roll
transactions with respect to mortgage backed securities issued by GNMA, FNMA
and FHLMC. In a dollar roll transaction, the Fund sells a mortgage backed
security held in the Fund to a financial institution such as a bank or
broker-dealer, and simultaneously agrees to repurchase a substantially
similar security (same type, coupon and maturity) from the institution at a
later date at an agreed upon price. The mortgage backed securities that are
repurchased will bear the same interest rate as those sold, but generally
will be collateralized by different pools of mortgages with different
prepayment histories. During the period between the sale and repurchase, the
Fund will not be entitled to receive interest and principal payments on
securities sold. Proceeds of the sale will be invested in short-term
instruments, and the income from these investments, together with any
additional fee income received on the sale, could generate income for the
Fund exceeding the yield on the security sold.
Dollar roll transactions involve the risk that the market value of the
securities retained by the Fund may decline below the price of the
securities that the Fund has sold but is obligated to repurchase under the
agreement. In the event the buyer of securities in a dollar roll transaction
files for bankruptcy or becomes insolvent, the Fund's use of the proceeds
from the sale of the securities may be restricted pending a determination by
the other party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities.
Realized gains or losses on sales are computed on the basis of specific
identification of the securities sold. Interest income is recorded as earned
from settlement date and is recorded on the accrual basis. Dividend income
is recorded on the ex-dividend date. On December 31, 1999, undistributed net
investment income was decreased by $187,911, undistributed net realized
gains increased by $477,060 and paid-in capital decreased by $289,149 as a
result of differing book/tax treatment of paydowns and other
reclassifications. Net assets of the Fund were unaffected by the
reclassifications.
C. Distributions -- It is the policy of the Fund to declare daily dividends
from net investment income. Such distributions are paid monthly.
Distributions from net realized capital gains, if any, are generally paid
annually and recorded on ex-dividend date. The Fund may elect to use a
portion of the proceeds of fund share redemptions as distributions for
federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements
of the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $33,920,463 as of December 31, 1999 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, in the year 2007.
E. Expenses -- Distribution expenses and transfer agency expenses directly
attributable to a class of shares are charged to that class' operations. All
other expenses which are attributable to more than one class are allocated
among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.50% on
the first $200 million of the Fund's average daily net assets, plus 0.40% on the
next $300 million of the Fund's average daily net assets, plus 0.35% on the next
$500 million of the Fund's average daily net assets, plus 0.30% on the Fund's
average daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 1999, AIM was
paid $97,900 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $398,305 for such services.
FS-60
<PAGE> 330
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively, the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended December 31,
1999, the Class A, Class B and Class C shares paid AIM Distributors $622,422,
$2,414,889 and $411,484, respectively, as compensation under the Plans. AIM
Distributors received commissions of $297,352 from sales of the Class A shares
of the Fund during the year ended December 31, 1999. Such commissions are not an
expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $171,470 in contingent deferred sales charges imposed
on redemptions of Fund shares. Certain officers and trustees of the Trust are
officers and directors of AIM, AFS and AIM Distributors. During the year ended
December 31, 1999, the Fund paid legal fees of $4,381 for services rendered by
Kramer, Levin, Naftalis & Frankel LLP as counsel to the Board of Trustees. A
member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $6,004 and $772, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $6,776 during the year ended December 31, 1999.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BORROWINGS
Reverse repurchase agreements involve the sale of securities held by the Fund,
with an agreement that the Fund will repurchase such securities at an
agreed-upon price and date. Proceeds from reverse repurchase agreements are
treated as borrowings. The Fund will use the proceeds of a reverse repurchase
agreement (which are considered to be borrowings under the 1940 Act) to purchase
other permitted securities either maturing, or under an agreement to resell, at
a date simultaneous with or prior to the expiration of the reverse repurchase
agreement. The Fund will enter into a reverse repurchase agreement only when the
interest income to be earned from the investment of proceeds of the transaction
is greater than the interest expense of the transaction. The agreements are
collateralized by the underlying securities and are carried at the amount at
which the securities will subsequently be repurchased as specified in the
agreements. The maximum amount outstanding during the year ended December 31,
1999 was $68,903,125, while borrowings averaged $29,142,158 per day with a
weighted average interest rate of 3.38%.
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
FS-61
<PAGE> 331
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$739,215,875 and $689,864,111, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 1,097,791
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (12,634,599)
- --------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities $(11,536,808)
==========================================================================
</TABLE>
Cost of investments for tax purposes is $581,259,651.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 43,994,368 $ 405,966,986 29,655,462 $ 283,586,927
- -----------------------------------------------------------------------------------------------------------------------
Class B 24,981,699 228,902,826 27,535,042 264,070,374
- -----------------------------------------------------------------------------------------------------------------------
Class C 4,401,944 40,514,763 6,742,689 63,813,508
- -----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 1,422,251 12,951,091 1,069,069 10,191,327
- -----------------------------------------------------------------------------------------------------------------------
Class B 1,015,685 9,277,928 568,105 5,430,298
- -----------------------------------------------------------------------------------------------------------------------
Class C 193,191 1,758,352 143,118 1,253,716
- -----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (43,911,017) (404,578,756) (22,783,533) (217,508,626)
- -----------------------------------------------------------------------------------------------------------------------
Class B (24,856,772) (227,028,754) (12,722,862) (121,830,456)
- -----------------------------------------------------------------------------------------------------------------------
Class C (4,134,353) (37,841,719) (3,103,831) (29,535,779)
- -----------------------------------------------------------------------------------------------------------------------
3,106,996 $ 29,922,717 27,103,259 $ 259,471,289
=======================================================================================================================
</TABLE>
FS-62
<PAGE> 332
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and a share of
Class B outstanding during each of the years in the five-year period ended
December 31, 1999 and for a share of Class C outstanding during each of the
years in the two-year period ended December 31, 1999 and the period August 4,
1997 (date sales commenced) through December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.58 $ 9.46 $ 9.28 $ 9.70 $ 8.99
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.60 0.62 0.63 0.63 0.69
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.78) 0.13 0.18 (0.42) 0.73
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations (0.18) 0.75 0.81 0.21 1.42
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.60) (0.63) (0.61) (0.59) (0.67)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Return of capital -- -- (0.02) (0.04) (0.04)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (0.60) (0.63) (0.63) (0.63) (0.71)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 8.80 $ 9.58 $ 9.46 $ 9.28 $ 9.70
============================================================ ======== ======== ======== ======== ========
Total return(a) (1.87)% 8.17% 9.07% 2.35% 16.28%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $238,957 $245,613 $167,427 $174,344 $176,318
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets including interest
expense 1.08%(b) 1.20% 1.11% 1.08% 1.19%
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets exclusive of
interest expense 0.89%(b) 0.96% 1.00% 1.00% 1.08%
============================================================ ======== ======== ======== ======== ========
Ratio of interest expense to average net assets 0.19%(b) 0.24% 0.11% 0.08% 0.11%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 6.60%(b) 6.43% 6.77% 6.76% 7.36%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 141% 147% 99% 134% 140%
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $248,968,723.
FS-63
<PAGE> 333
NOTE 8-FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------------- -----------------------------
1999 1998 1997 1996 1995 1999 1998 1997
-------- -------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.59 $ 9.46 $ 9.28 $ 9.69 $ 8.99 $ 9.56 $ 9.44 $ 9.33
- ---------------------------------------- -------- -------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.53 0.55 0.56 0.55 0.63 0.53 0.56 0.24
- ---------------------------------------- -------- -------- ------- ------- ------- ------- ------- -------
Net gains (losses) on securities (both
realized and unrealized) (0.77) 0.13 0.17 (0.41) 0.70 (0.77) 0.11 0.10
- ---------------------------------------- -------- -------- ------- ------- ------- ------- ------- -------
Total from investment operations (0.24) 0.68 0.73 0.14 1.33 (0.24) 0.67 0.34
- ---------------------------------------- -------- -------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.53) (0.55) (0.53) (0.51) (0.59) (0.53) (0.55) (0.22)
- ---------------------------------------- -------- -------- ------- ------- ------- ------- ------- -------
Return of capital -- -- (0.02) (0.04) (0.04) -- -- (0.01)
- ---------------------------------------- -------- -------- ------- ------- ------- ------- ------- -------
Total distributions (0.53) (0.55) (0.55) (0.55) (0.63) (0.53) (0.55) (0.23)
- ---------------------------------------- -------- -------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 8.82 $ 9.59 $ 9.46 $ 9.28 $ 9.69 $ 8.79 $ 9.56 $ 9.44
======================================== ======== ======== ======= ======= ======= ======= ======= =======
Total return(a) (2.56)% 7.40% 8.16% 1.61% 15.22% (2.57)% 7.31% 3.64%
======================================== ======== ======== ======= ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $228,832 $237,919 $89,265 $79,443 $61,300 $39,011 $38,026 $ 1,851
======================================== ======== ======== ======= ======= ======= ======= ======= =======
Ratio of expenses to average net assets
including interest expense 1.85%(b) 1.96% 1.87% 1.84% 1.97% 1.85%(b) 1.96% 1.87%(c)
======================================== ======== ======== ======= ======= ======= ======= ======= =======
Ratio of expenses to average net assets
exclusive of interest expense 1.66%(b) 1.72% 1.76% 1.76% 1.86% 1.66%(b) 1.72% 1.76%(c)
======================================== ======== ======== ======= ======= ======= ======= ======= =======
Ratio of interest expense to average net
assets 0.19%(b) 0.24% 0.11% 0.08% 0.11% 0.19%(b) 0.24% 0.11%(c)
======================================== ======== ======== ======= ======= ======= ======= ======= =======
Ratio of net investment income to
average net assets 5.83%(b) 5.68% 6.01% 6.00% 6.58% 5.83%(b) 5.68% 6.01%(c)
======================================== ======== ======== ======= ======= ======= ======= ======= =======
Portfolio turnover rate 141% 147% 99% 134% 140% 141% 147% 99%
======================================== ======== ======== ======= ======= ======= ======= ======= =======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not
annualized for periods less than one year.
(b) Ratios are based on average net assets of $241,488,881 and
$41,148,444 for Class B and Class C, respectively.
(c) Annualized.
FS-64
<PAGE> 334
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Money Market Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Money Market Fund (a portfolio of AIM
Funds Group), including the schedule of investments, as
of December 31, 1999, and the related statement of
operations for the year then ended, the statement of
changes in net assets for each of the years in the
two-year period then ended and the financial highlights
for each of the years in the five-year period then ended.
These financial statements and financial highlights are
the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Money
Market Fund as of December 31, 1999, the results of its
operations for the year then ended, the changes in net
assets for each of the years in the two-year period then
ended and the financial highlights for each of the years
in the five-year period then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
February 4, 2000
Houston, Texas
FS-65
<PAGE> 335
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER-42.22%(a)
ASSET-BACKED SECURITIES-
COMMERCIAL/LOAN/LEASES-3.69%
Centric Capital Corp.
6.02% 01/31/00 $ 21,533 $ 21,424,976
- ------------------------------------------------------------------
6.00% 02/17/00 17,000 16,866,833
- ------------------------------------------------------------------
5.80% 03/28/00 15,459 15,242,317
- ------------------------------------------------------------------
53,534,126
- ------------------------------------------------------------------
ASSET-BACKED SECURITIES-
CONSUMER RECEIVABLES-5.06%
Old Line Funding Corp.
6.28% 01/07/00 20,000 19,979,066
- ------------------------------------------------------------------
6.15% 01/12/00 28,611 28,557,236
- ------------------------------------------------------------------
Riverwoods Funding Corp.
6.07% 01/11/00 25,000 24,957,847
- ------------------------------------------------------------------
73,494,149
- ------------------------------------------------------------------
ASSET-BACKED SECURITIES-
MULTI-PURPOSE-15.47%
Bavaria TRR Corp.
5.48% 01/27/00 30,700 30,578,496
- ------------------------------------------------------------------
5.92% 03/23/00 20,000 19,730,311
- ------------------------------------------------------------------
Edison Asset Securitization,
L.L.C.
6.11% 01/24/00 20,000 19,921,928
- ------------------------------------------------------------------
Falcon Asset Securitization
Corp.
6.30% 01/05/00 25,750 25,731,976
- ------------------------------------------------------------------
6.25% 01/07/00 16,525 16,507,786
- ------------------------------------------------------------------
6.10% 02/02/00 24,000 23,869,867
- ------------------------------------------------------------------
Park Avenue Receivables
Corp.
5.81% 03/08/00 20,000 19,783,738
- ------------------------------------------------------------------
Three Rivers Funding Corp.
7.00% 01/12/00 37,002 36,922,857
- ------------------------------------------------------------------
6.51% 01/13/00 31,573 31,504,486
- ------------------------------------------------------------------
224,551,445
- ------------------------------------------------------------------
ASSET-BACKED SECURITIES-TRADE
RECEIVABLES-6.83%
Asset Securitization,
Floating Rate Notes(b)
6.09% 03/10/00 25,000 24,996,868
- ------------------------------------------------------------------
Corporate Asset Funding Co.
5.50% 01/19/00 22,220 22,158,895
- ------------------------------------------------------------------
Variable Funding Capital
5.76% 01/10/00 17,000 16,975,520
- ------------------------------------------------------------------
5.42% 01/18/00 15,024 14,985,547
- ------------------------------------------------------------------
5.68% 01/21/00 20,000 19,936,889
- ------------------------------------------------------------------
99,053,719
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
AUTOMOBILE-1.70%
Daimler-Chrysler North
America Holding
5.87% 03/22/00 $ 25,000 $ 24,669,812
- ------------------------------------------------------------------
BANKS-DOMESTIC-1.72%
Abbey National North America
Corp.
12.50% 01/04/00 25,000 24,973,959
- ------------------------------------------------------------------
FINANCE-MULTIPLE INDUSTRY-6.72%
Associates First Capital
Corp.
5.60% 02/09/00 25,000 24,848,333
- ------------------------------------------------------------------
Caterpillar Finance Services
Corp.
5.80% 03/15/00 10,000 9,996,361
- ------------------------------------------------------------------
GE Capital International
Funding
5.89% 03/09/00 25,000 24,721,860
- ------------------------------------------------------------------
General Electric Capital
Corp., Floating Rate Notes
4.98%(b) 08/21/00 13,000 12,982,673
- ------------------------------------------------------------------
Prudential Funding Corp.
5.72% 01/28/00 25,000 24,892,750
- ------------------------------------------------------------------
97,441,977
- ------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-1.03%
Credit Suisse First Boston,
Inc.
5.74% 02/18/00 15,000 14,885,200
- ------------------------------------------------------------------
Total Commercial Paper
(Cost $612,604,387) 612,604,387
- ------------------------------------------------------------------
BANK NOTES-0.86%
BANKS-DOMESTIC-0.86%
Atlantic American Corp.
6.47% (Cost
$12,500,000)(c) 06/01/09 12,500 12,500,000
- ------------------------------------------------------------------
TAXABLE MUNICIPAL BONDS-1.34%
HOSPITAL MANAGEMENT-0.65%
Illinois Health Facilities
Authority (Loyola
University Health
Systems); Revenue Bonds
6.50%(d) 07/01/24 9,500 9,500,000
- ------------------------------------------------------------------
FINANCE-MULTIPLE
INDUSTRY-0.69%
Mississippi Business Finance
Corp. (Mississippi
Industrial Development);
Revenue Bonds
6.46%(e) 02/01/23 10,000 10,000,000
- ------------------------------------------------------------------
Total Taxable Municipal
Bonds (Cost
$19,500,000) 19,500,000
- ------------------------------------------------------------------
CERTIFICATE OF DEPOSIT-0.69%
Bank Austria
5.65% (Cost $9,997,546) 07/06/00 10,000 9,997,546
- ------------------------------------------------------------------
</TABLE>
FS-66
<PAGE> 336
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
MASTER NOTE
AGREEMENTS-9.24%(f)
Merrill Lynch Mortgage
Capital, Inc.
4.76%(g) 08/17/00 $ 75,000 $ 75,000,000
- ------------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co.
4.60%(h) 03/01/00 59,000 59,000,000
- ------------------------------------------------------------------
Total Master Note
Agreements (Cost
$134,000,000) 134,000,000
- ------------------------------------------------------------------
PROMISSORY NOTE-3.24%
Goldman Sachs & Co.
4.90% (Cost $47,000,000) 02/24/00 47,000 47,000,000
- ------------------------------------------------------------------
Total Investments
(excluding repurchase
agreements) (Cost
$835,601,933) 835,601,933
- ------------------------------------------------------------------
REPURCHASE AGREEMENTS-38.51%(I)
Banc One Capital Markets,
Inc.
3.25%(j) 01/03/00 68,000 68,000,000
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
Bank of America Securities
3.15%(k) 01/03/00 $300,000 $ 300,000,000
- ------------------------------------------------------------------
CIBC Oppenheimer Corp.
3.25%(l) 01/03/00 68,000 68,000,000
- ------------------------------------------------------------------
Deutsche Bank Securities
Corp.
3.50%(m) 01/03/00 8,343 8,342,665
- ------------------------------------------------------------------
Goldman Sachs & Co.
5.64%(n) 01/07/00 46,500 46,500,000
- ------------------------------------------------------------------
Greenwich Capital Markets,
Inc.
3.30%(o) 01/03/00 68,000 68,000,000
- ------------------------------------------------------------------
Total Repurchase
Agreements (Cost
$558,842,665) 558,842,665
- ------------------------------------------------------------------
TOTAL INVESTMENTS-96.10% $1,394,444,598(p)
- ------------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-3.90% 56,580,651
- ------------------------------------------------------------------
NET ASSETS-100.00% $1,451,025,249
==================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Some commercial paper is traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(b) The coupon rate shown on floating rate notes represents the rate at period
end.
(c) Interest rates are redetermined weekly. Rate shown is the rate in effect on
12/31/99.
(d) Demand security; payable upon demand by the Fund with usually no more than
seven calendar days notice. Interest rates are redetermined weekly. Rates
shown are rates in effect on 12/31/99.
(e) Demand security; payable upon demand by the Fund with usually no more than
seven calendar days notice. Interest rates are redetermined monthly. Rates
shown are rates in effect on 12/31/99.
(f) The investments in master note agreements are through participation in joint
accounts with other mutual funds, private accounts, and certain
nonregistered investment companies managed by the investment advisor or its
affiliates.
(g) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon one business day notice. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
12/31/99.
(h) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon three business days notice. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
12/31/99.
(i) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(j) Joint repurchase agreement entered into 12/31/99 with a maturing value of
$300,081,250 and collateralized by $300,000,000 U.S. Government obligations
0% to 8.125% due 01/03/00 to 05/15/21 with an aggregate market value at
12/31/99 of $306,004,707.
(k) Joint repurchase agreement entered into 12/31/99 with a maturing value of
$470,258,255 and collateralized by $470,134,815 U.S. Government obligations,
4.75% to 5.25% due 02/01/01 to 11/14/03 with an aggregate market value at
12/31/99 of $510,000,998.
(l) Joint repurchase agreement entered into 12/31/99 with a maturing value of
$285,077,188 and collateralized by $285,000,000 U.S. Government and Treasury
obligations, 5.812% to 8.023% due 04/01/19 to 05/01/35 with an aggregate
market value at 12/31/99 of $290,700,000.
(m) Joint repurchase agreement entered into 12/31/99 with a maturing value of
$300,087,500 and collateralized by $300,000,000 U.S. Government obligations,
5.75% to 7.089% due 09/01/17 to 02/01/38 with an aggregate market value at
12/31/99 of $306,000,000.
(n) Joint repurchase agreement entered into 12/31/99 with a maturing value of
$100,501,333 and collateralized by $100,000,000 U.S. Government and Treasury
obligations, 0% to 8.625% due 06/30/00 to 12/15/43 with an aggregate market
value at 12/31/99 of $102,004,901.
(o) Joint repurchase agreement entered into 12/31/99 with a maturing value of
$240,066,000 and collateralized by $240,000,000 U.S. Government and Treasury
obligations, 5% to 10% due 02/01/00 to 12/01/29 with an aggregate market
value at 12/31/99 of $244,803,339.
(p) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
FS-67
<PAGE> 337
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase
agreements, at value (amortized cost) $ 835,601,933
- ----------------------------------------------------------
Repurchase agreements 558,842,665
- ----------------------------------------------------------
Receivables for:
Fund shares sold 79,248,923
- ----------------------------------------------------------
Interest 1,830,759
- ----------------------------------------------------------
Investment for deferred compensation plan 98,626
- ----------------------------------------------------------
Other assets 152,970
- ----------------------------------------------------------
Total assets 1,475,775,876
- ----------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 22,471,641
- ----------------------------------------------------------
Dividends 291,654
- ----------------------------------------------------------
Deferred compensation plan 98,626
- ----------------------------------------------------------
Accrued advisory fees 610,061
- ----------------------------------------------------------
Accrued distribution fees 1,116,373
- ----------------------------------------------------------
Accrued transfer agent fees 114,686
- ----------------------------------------------------------
Accrued operating expenses 47,586
- ----------------------------------------------------------
Total liabilities 24,750,627
- ----------------------------------------------------------
Net assets applicable to shares
outstanding $1,451,025,249
==========================================================
NET ASSETS:
AIM Cash Reserve Shares $ 989,478,007
==========================================================
Class B $ 404,911,432
==========================================================
Class C $ 56,635,810
==========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
AIM Cash Reserve Shares 989,471,533
==========================================================
Class B 404,900,819
==========================================================
Class C 56,634,526
==========================================================
AIM Cash Reserve Shares:
Net asset value and offering price per
share $ 1.00
==========================================================
Class B:
Net asset value and offering price per
share $ 1.00
==========================================================
Class C:
Net asset value and offering price per
share $ 1.00
==========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $72,284,896
- ---------------------------------------------------------
EXPENSES:
Advisory fees 7,448,373
- ---------------------------------------------------------
Administrative services fees 118,024
- ---------------------------------------------------------
Custodian fees 171,275
- ---------------------------------------------------------
Distribution fees - Class B 3,680,653
- ---------------------------------------------------------
Distribution fees - Class C 440,903
- ---------------------------------------------------------
Distribution fees - AIM Cash Reserve Shares 2,443,795
- ---------------------------------------------------------
Trustees' fees 15,267
- ---------------------------------------------------------
Transfer agent fees - Class B 583,322
- ---------------------------------------------------------
Transfer agent fees - Class C 69,876
- ---------------------------------------------------------
Transfer agent fees - AIM Cash Reserve
Shares 1,549,204
- ---------------------------------------------------------
Other 1,055,705
- ---------------------------------------------------------
Total expenses 17,576,397
- ---------------------------------------------------------
Less: Expenses paid indirectly (20,102)
- ---------------------------------------------------------
Net expenses 17,556,295
- ---------------------------------------------------------
Net investment income 54,728,601
- ---------------------------------------------------------
Net realized gain from investments 83
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $54,728,684
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-68
<PAGE> 338
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 54,728,601 $ 46,894,254
- ----------------------------------------------------------------------------------------------
Net realized gain from investments 83 2,781
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 54,728,684 46,897,035
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A* -- (20,797,936)
- ----------------------------------------------------------------------------------------------
Class B (12,546,032) (6,486,731)
- ----------------------------------------------------------------------------------------------
Class C (1,514,495) (628,599)
- ----------------------------------------------------------------------------------------------
AIM Cash Reserve Shares (40,668,074) (18,980,988)
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A* -- (375,997,608)
- ----------------------------------------------------------------------------------------------
Class B 94,371,540 194,469,771
- ----------------------------------------------------------------------------------------------
Class C 29,244,201 19,103,703
- ----------------------------------------------------------------------------------------------
AIM Cash Reserve Shares (189,587,232) 834,944,363
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (65,971,408) 672,523,010
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,516,996,657 844,473,647
- ----------------------------------------------------------------------------------------------
End of period $1,451,025,249 $1,516,996,657
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,450,988,058 $1,516,959,549
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain from investments 37,191 37,108
- ----------------------------------------------------------------------------------------------
$1,451,025,249 $1,516,996,657
==============================================================================================
</TABLE>
* The Fund's Class A shares were reclassified as AIM Cash Reserve Shares on
12/21/98.
See Notes to Financial Statements.
FS-69
<PAGE> 339
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Money Market Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of nine separate portfolios, each
having an unlimited number of shares of beneficial interest. The Fund currently
offers three different classes of shares: Class B shares, Class C shares and AIM
Cash Reserve Shares. The Fund formerly offered Class A shares; however, on
December 21, 1998 the Class A shares were reclassified as AIM Cash Reserve
Shares. Class B shares and Class C shares are sold with a contingent deferred
sales charge. AIM Cash Reserve Shares are sold at net asset value. Matters
affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The Fund's investment objective
is to provide as high a level of current income as is consistent with the
preservation of capital and liquidity.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- The Fund's securities are valued on the basis of
amortized cost which approximates market value. This method values a security
at its cost on the date of purchase and thereafter, assumes a constant
amortization to maturity of any discount or premiums.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income, adjusted for amortization of premiums and discounts on
investments, is recorded as earned from settlement date and is recorded on
the accrual basis.
C. Distributions -- It is the policy of the Fund to declare daily dividends from
net investment income. Such distributions are paid monthly. Distributions
from net realized capital gains, if any, are generally paid annually and
recorded on ex-dividend date. The Fund may elect to use a portion of the
proceeds of fund share redemptions as distributions for federal income tax
purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Expenses -- Distribution expenses and transfer agency expenses directly
attributable to a class of shares are charged to that class' operations. All
other expenses which are attributable to more than one class are allocated
among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.55% on
the first $1 billion of the Fund's average daily net assets, plus 0.50% on the
Fund's average daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 1999, AIM was
paid $118,024 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $1,341,736 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class B, Class C and the AIM Cash Reserve shares of the Fund. The Trust has
adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class B shares, Class C shares and AIM Cash Reserve Shares (collectively,
the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors
compensation at the annual rate of 0.25% of the Fund's average daily net assets
of AIM Cash Reserve Shares and 1.00% of the average daily net assets of Class B
and C shares. Of these amounts, the Fund may pay a service fee of 0.25% of the
average daily net assets of the Class B, Class C or AIM Cash Reserve Shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own the appropriate
class of shares of the Fund. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges that may be paid
by the respective classes. For the year ended December 31, 1999, the Class B,
Class C and AIM Cash Reserve Shares paid AIM Distributors $3,680,653, $440,903
and $2,443,795, respectively, as compensation under the Plans.
During the year ended December 31, 1999, AIM Distributors received $1,254,200
in contingent deferred sales charges imposed on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
FS-70
<PAGE> 340
During the year ended December 31, 1999, the Fund paid legal fees of $5,825
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $15,823 and $4,279, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $20,102 during the year ended December 31, 1999.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
-------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold:
Class A* -- -- 12,526,260,894 $ 12,526,260,894
- -------------------------------------------------------------------------------------------------------------------------------
Class B 1,129,278,732 $ 1,129,278,732 732,230,888 732,230,888
- -------------------------------------------------------------------------------------------------------------------------------
Class C 387,953,922 387,953,922 350,900,238 350,900,238
- -------------------------------------------------------------------------------------------------------------------------------
AIM Cash Reserve Shares 8,060,651,699 8,060,651,699 6,566,275,190 6,566,275,190
- -------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A* -- -- 15,630,817 15,630,817
- -------------------------------------------------------------------------------------------------------------------------------
Class B 10,880,999 10,880,999 5,684,934 5,684,934
- -------------------------------------------------------------------------------------------------------------------------------
Class C 1,259,465 1,259,465 536,206 536,206
- -------------------------------------------------------------------------------------------------------------------------------
AIM Cash Reserve Shares 34,229,027 34,229,027 15,456,154 15,456,154
- -------------------------------------------------------------------------------------------------------------------------------
Issued in connection with acquisitions:**
Class A* -- -- 135,276 135,276
- -------------------------------------------------------------------------------------------------------------------------------
Class B -- -- 72,923,588 72,923,588
- -------------------------------------------------------------------------------------------------------------------------------
Class C -- -- 5,548,897 5,548,897
- -------------------------------------------------------------------------------------------------------------------------------
AIM Cash Reserve Shares -- -- 117,682,745 117,682,745
- -------------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A* -- -- (12,918,024,595) (12,918,024,595)
- -------------------------------------------------------------------------------------------------------------------------------
Class B (1,045,788,191) (1,045,788,191) (616,369,639) (616,369,639)
- -------------------------------------------------------------------------------------------------------------------------------
Class C (359,969,186) (359,969,186) (337,881,638) (337,881,638)
- -------------------------------------------------------------------------------------------------------------------------------
AIM Cash Reserve Shares (8,284,467,958) (8,284,467,958) (5,864,469,726) (5,864,469,726)
- -------------------------------------------------------------------------------------------------------------------------------
(65,971,491) $ (65,971,491) 672,520,229 $ 672,520,229
===============================================================================================================================
</TABLE>
* Class A shares were reclassified to AIM Cash Reserve Shares effective
December 21, 1998.
** The Fund acquired AIM Advisor Cash Management Fund and AIM Dollar Fund on
February 27, 1998 and December 21, 1998, respectively. The acquired funds'
net assets as of the respective closing dates were $5,680,255 and
$190,605,903, respectively. The net assets of the Fund immediately prior to
each acquisition were $701,467,228 and $1,383,530,387, respectively.
FS-71
<PAGE> 341
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of AIM Cash Reserve Shares
and Class B outstanding during each of the years in the five-year period ended
December 31, 1999, and for a share of Class C outstanding during each of the
years in the two-year period ended December 31, 1999 and the period August 4,
1997 (date sales commenced) through December 31, 1997.
<TABLE>
<CAPTION>
AIM CASH RESERVE SHARES
---------------------------------------------------------
1999 1998 1997 1996 1995
-------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------ -------- ---------- -------- -------- --------
Income from investment operations:
Net investment income 0.0414 0.0453 0.0456 0.0433 0.0493
- ------------------------------------------------------------ -------- ---------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.0414) (0.0453) (0.0456) (0.0433) (0.0493)
- ------------------------------------------------------------ -------- ---------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============================================================ ======== ========== ======== ======== ========
Total return(a) 4.22% 4.62% 4.66% 4.41% 5.04%
============================================================ ======== ========== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $989,478 $1,179,072 $344,117 $315,470 $293,450
============================================================ ======== ========== ======== ======== ========
Ratio of expenses to average net assets 1.04%(b) 0.99% 1.05% 1.08% 1.04%
============================================================ ======== ========== ======== ======== ========
Ratio of net investment income to average net assets 4.16%(b) 4.53% 4.55% 4.32% 4.92%
============================================================ ======== ========== ======== ======== ========
</TABLE>
(a) Does not deduct contingent deferred sales charges where applicable.
(b) Ratios are based on average net assets of $977,518,910.
<TABLE>
<CAPTION>
CLASS B SHARES CLASS C SHARES
-------------------------------------------------------- -------------------------------
1999 1998 1997 1996 1995 1999 1998 1997
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income 0.0339 0.0371 0.0378 0.0360 0.0419 0.0339 0.0371 0.0158
- --------------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.0339) (0.0371) (0.0378) (0.0360) (0.0419) (0.0339) (0.0371) (0.0158)
- --------------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
================================= ======== ======== ======== ======== ======== ======== ======== ========
Total return(a) 3.45% 3.78% 3.84% 3.66% 4.27% 3.44% 3.78% 3.92%
================================= ======== ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $404,911 $310,534 $116,058 $ 91,148 $ 69,857 $ 56,636 $ 27,391 $ 8,287
================================= ======== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets 1.79%(b) 1.81% 1.80% 1.81% 1.78% 1.79%(b) 1.81% 1.80%(c)
================================= ======== ======== ======== ======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 3.41%(b) 3.71% 3.80% 3.60% 4.14% 3.41%(b) 3.71% 3.80%(c)
================================= ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
(a) Does not deduct contingent deferred sales charges where applicable and is
annualized for periods less than one year.
(b) Ratios are based on average net assets of $368,065,266 and $44,090,340 for
Class B and Class C, respectively.
(c) Annualized.
FS-72
<PAGE> 342
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Municipal Bond Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Municipal Bond Fund (a portfolio of
AIM Funds Group), including the schedule of investments,
as of December 31, 1999, and the related statement of
operations for the year then ended, the statement of
changes in net assets and the financial highlights for
each of the years in the five-year period then ended.
These financial statements and financial highlights are
the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1999, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM
Municipal Bond Fund as of December 31, 1999, the results
of its operations for the year then ended, the changes in
its net assets and the financial highlights for each of
the years in the five-year period then ended, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
February 4, 2000
Houston, Texas
FS-73
<PAGE> 343
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
ALABAMA-1.43%
Alabama (State of)
Housing Finance
Authority; Single
Family Mortgage Series
D-2 RB
5.50%, 10/01/17(b) -- Aaa $ 985 $ 923,408
- ----------------------------------------------------------------
Alabama (State of) Public
School & College
Authority; Capital
Improvement Series 1999
C RB
5.75%, 07/01/17 AA Aa3 1,400 1,383,284
- ----------------------------------------------------------------
Courtland Industrial
Development Board
(Champion International
Corp. Project);
Refunding Environmental
Improvement Series RB
6.40%, 11/01/26(b) -- Baa1 2,315 2,225,988
- ----------------------------------------------------------------
McIntosh Industrial
Development Board;
Environmental
Improvement Series C
IDR
5.375%, 06/01/28 AA- A2 1,000 870,040
- ----------------------------------------------------------------
5,402,720
- ----------------------------------------------------------------
ALASKA-0.84%
Alaska (State of) Housing
Finance Corp.;
Collateralized First
Veterans' Home Mortgage
Series A-2 RB
6.75%, 12/01/24(b) AAA Aaa 2,860 2,916,313
- ----------------------------------------------------------------
Alaska (State of) Housing
Finance Corp.;
Collateralized First
Veterans' Mortgage
Program Series RB
6.875%, 06/01/33 AAA Aaa 250 256,475
- ----------------------------------------------------------------
3,172,788
- ----------------------------------------------------------------
ARIZONA-1.67%
Arizona (State of)
Educational Loan
Marketing Corp.; RB
6.125%, 09/01/02(b) -- Aa 1,900 1,953,808
- ----------------------------------------------------------------
Mohave (County of)
Unified School District
No. 1 (Lake Havasu);
Series 1996 A GO
5.90%, 07/01/15(c) AAA Aaa 1,000 1,009,290
- ----------------------------------------------------------------
Pima (County of) Unified
School District No. 10
(Amphitheater); School
Improvement Series 1992
E GO
6.50%, 07/01/05 A+ A2 3,100 3,336,158
- ----------------------------------------------------------------
6,299,256
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
ARKANSAS-0.92%
Arkansas (State of)
Development Financing
Authority (State Agency
Facilities Department
Corp. Project); Series
1999 A RB
5.70%, 11/01/19(c) AAA Aaa $1,500 $ 1,454,850
- ----------------------------------------------------------------
Little Rock (City of);
Capital Improvement
Series B GO
5.75%, 02/01/06 AA Aa3 2,000 2,001,660
- ----------------------------------------------------------------
3,456,510
- ----------------------------------------------------------------
CALIFORNIA-1.77%
Abag Financing Authority
for Non-Profit Corps.
(Lytton Gardens Inc.);
Series 1999 COP
6.00%, 02/15/19 AA- -- 2,085 2,066,131
- ----------------------------------------------------------------
Abag Financing Authority
for Non-Profit Corps.
(Odd Fellows Home of
California); Series
1999 COP
6.00%, 08/15/24 AA- -- 1,000 957,830
- ----------------------------------------------------------------
Foothill/Eastern Corridor
Agency (California Toll
Road Project); Senior
Lien Series A RB
6.00%, 01/01/10(d)(e) AAA AAA 400 426,932
- ----------------------------------------------------------------
Sacramento (City of)
California City
Financing Authority
(Senior Convention
Center Hotel); Series
1999 A RB
6.25%, 01/01/30(f) -- -- 750 684,015
- ----------------------------------------------------------------
Sacramento (City of)
California Cogeneration
Authority (Procter &
Gamble Project); Series
1995 RB
7.00%, 07/01/04 BBB -- 500 536,855
- ----------------------------------------------------------------
Sacramento (City of);
Refunding Municipal
Utility District Series
M RB
5.25%, 07/01/28 A A2 1,000 857,110
- ----------------------------------------------------------------
San Francisco (City and
County of) Parking
Authority; Parking
Meter Series 1994 RB
7.00%, 06/01/05(d)(e) AAA Aaa 1,000 1,120,600
- ----------------------------------------------------------------
6,649,473
- ----------------------------------------------------------------
COLORADO-1.11%
Adams County School
District No. 1;
Unlimited Tax Building
Series 1992 A GO
6.625%, 12/01/02(d)(e) AAA Aaa 500 531,320
- ----------------------------------------------------------------
</TABLE>
FS-74
<PAGE> 344
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
COLORADO-(CONTINUED)
Colorado Health
Facilities Authority
(National Jewish
Medical and Research
Project); Hospital
Series RB
5.25%, 01/01/18 BBB -- $ 500 $ 413,925
- ----------------------------------------------------------------
5.375%, 01/01/29 BBB -- 1,000 794,280
- ----------------------------------------------------------------
Highlands Ranch Metro
District No. 1;
Unlimited Tax Refunding
& Improvement Series A
GO
7.30%, 09/01/02(d)(e) NRR NRR 500 545,050
- ----------------------------------------------------------------
Mesa County School
District No. 51; 1989
Series B COP
6.875%, 12/01/05(c) AAA Aaa 1,465 1,538,499
- ----------------------------------------------------------------
Mountain Village Metro
District (San Miguel
County); Unlimited Tax
Refunding Series GO
7.95%, 12/01/02(d)(e) NRR NRR 50 54,710
- ----------------------------------------------------------------
Mountain Village Metro
District (San Miguel
County); Unlimited Tax
Unrefunded Balance
Series GO
7.95%, 12/01/03(f) -- -- 305 318,466
- ----------------------------------------------------------------
4,196,250
- ----------------------------------------------------------------
CONNECTICUT-2.81%
Bridgeport (City of);
Unlimited Tax Refunding
Series A GO
6.00%, 09/01/06(c) AAA Aaa 1,000 1,062,340
- ----------------------------------------------------------------
Connecticut (State of);
General Purpose Public
Improvement Series
1992-A GO
6.50%, 03/15/02(d)(e) NRR NRR 5,500 5,812,455
- ----------------------------------------------------------------
Connecticut (State of)
Housing Finance
Authority; Housing
Mortgage Financing
Program Sub-Series C-2
RB
5.85%, 11/15/28(b) AA Aa2 2,340 2,227,352
- ----------------------------------------------------------------
Connecticut (State of)
Housing Finance
Authority; Subseries
1996 A-3 RB
5.95%, 05/15/17 AA Aa2 800 803,592
- ----------------------------------------------------------------
Waterbury Housing
Authority; Refunding
Mortgage Series A RB
5.45%, 07/01/23(c) AAA Aaa 750 690,435
- ----------------------------------------------------------------
10,596,174
- ----------------------------------------------------------------
DELAWARE-0.07%
Delaware Economic
Development Authority
(Osteopathic Hospital
Association); Series A
RB
6.75%, 01/01/13(d) NRR AAA 250 272,178
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
DISTRICT OF
COLUMBIA-0.47%
District of Columbia
(Gonzaga College High
School); Series 1999 RB
5.375%, 07/01/19(c) AAA Aaa $1,000 $ 914,800
- ----------------------------------------------------------------
District of Columbia;
Unlimited Tax Series
1999 A GO
5.50%, 06/01/29 BBB Baa3 1,000 873,060
- ----------------------------------------------------------------
1,787,860
- ----------------------------------------------------------------
FLORIDA-1.64%
Dade (County of)
(Courthouse Center
Project); RB
5.90%, 04/01/05(d)(e) NRR NRR 500 530,810
- ----------------------------------------------------------------
Escambia (County of)
(Champion International
Corp. Project); PCR
6.90%, 08/01/22(b) BBB Baa1 1,125 1,142,685
- ----------------------------------------------------------------
Highlands (County of)
Health Facilities
Authority (Adventist
Health System Project);
Hospital Series RB
5.25%, 11/15/20 A- Baa1 2,000 1,643,460
- ----------------------------------------------------------------
Miami (City of) Parking
Facilities; Series 1992
A RB
6.70%, 10/01/01(d)(e) NRR NRR 1,120 1,181,018
- ----------------------------------------------------------------
Orange County Health
Facilities Authority
(South Central Nursing
Homes); Mortgage Series
A RB
5.40%, 07/01/19(c) AAA Aaa 1,000 939,230
- ----------------------------------------------------------------
Plantation (City of)
Health Facilities
Authority (Covenant
Retirement Communities
Inc.); RB
7.75%, 12/01/02(d)(e) NRR NRR 250 275,413
- ----------------------------------------------------------------
Seminole (County of)
Water & Sewer Series
1999 RB
5.375%, 10/01/22 AA- Aa3 500 463,785
- ----------------------------------------------------------------
6,176,401
- ----------------------------------------------------------------
GEORGIA-1.77%
Cobb-Marietta (City of)
Coliseum & Exhibition
Hall Authority; Series
1999 RB
5.625%, 10/01/19(c) AAA Aaa 2,000 1,911,480
- ----------------------------------------------------------------
Fulton (County of)
Development Authority;
(Delta Airlines Inc.
Project) Special
Facilities RB
5.45%, 05/01/23(b) BBB- Baa3 3,450 2,930,051
- ----------------------------------------------------------------
Georgia (State of)
Housing and Finance
Authority (Home
Ownership Opportunity
Program); Series C RB
6.50%, 12/01/11 AA+ Aa2 755 781,131
- ----------------------------------------------------------------
</TABLE>
FS-75
<PAGE> 345
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
GEORGIA-(CONTINUED)
Savannah (City of)
Economic Development
Authority (Hershey
Foods Corp. Project);
Refunding IDR
6.60%, 06/01/12 A+ -- $1,000 $ 1,047,960
- ----------------------------------------------------------------
6,670,622
- ----------------------------------------------------------------
IDAHO-0.25%
Idaho Health Facilities
Authority (Elks
Rehabilitation Hospital
Project); Hospital
Series RB
5.30%, 07/15/18 BBB -- 1,150 949,785
- ----------------------------------------------------------------
ILLINOIS-8.95%
Berwyn (City of) (Macneal
Memorial Hospital
Association Project);
Hospital Series 1991 RB
7.00%, 06/01/01(d)(e) AAA Aaa 3,250 3,422,640
- ----------------------------------------------------------------
Chicago (City of) Public
Building Committee
(Chicago School
Reform); Refunding
Series 1999 RB
5.25%, 12/01/15(c) AAA Aaa 1,500 1,419,435
- ----------------------------------------------------------------
Chicago (City of); Sales
Tax Series RB
5.25%, 01/01/28(c) AAA Aaa 650 569,205
- ----------------------------------------------------------------
Chicago (City of);
Wastewater
Transmission; RB
5.25%, Second Lien
Series 01/01/17(c) AAA Aaa 1,500 1,385,670
- ----------------------------------------------------------------
5.125%, Second Lien
Series B 01/01/18(c) AAA Aaa 750 665,543
- ----------------------------------------------------------------
Chicago Emergency
Telephone System;
Unlimited Tax Series GO
5.60%, 01/01/10(d) AAA Aaa 400 409,524
- ----------------------------------------------------------------
Chicago Midway Airport;
Series A RB
5.625%, 01/01/22(c) AAA Aaa 1,000 940,600
- ----------------------------------------------------------------
Cook (County of);
Unlimited Tax Series
1992 B GO
5.75%, 11/15/02(d)(e) AAA Aaa 2,000 2,093,240
- ----------------------------------------------------------------
Du Page (County of) High
School District No. 87
(Glenbard TWP);
Unlimited Tax Series B
GO
5.10%, 12/01/20 -- Aa3 2,000 1,739,820
- ----------------------------------------------------------------
Illinois (State of);
Sales Tax Series 1991 B
RB
6.50%, 06/15/01(d)(e) AAA NRR 1,500 1,569,585
- ----------------------------------------------------------------
Illinois (State of)
Development Finance
Authority (CPC
International Project);
Refunding PCR
6.75%, 05/01/16 -- A2 2,500 2,581,675
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
ILLINOIS-(CONTINUED)
Illinois Educational
Facilities Authority
(Midwestern
University); Series B
RB
5.50%, 05/15/18 A -- $1,000 $ 921,750
- ----------------------------------------------------------------
Illinois Educational
Facilities Authority
(Northwestern
University); Adjustable
Medium Term Series RB
5.25%, 11/01/14(e) AA+ Aa1 1,000 954,330
- ----------------------------------------------------------------
Illinois Educational
Facilities Authority
(Shedd Aquarium
Society); RB
5.60%, 07/01/27(c) AAA Aaa 3,500 3,241,805
- ----------------------------------------------------------------
Illinois Health
Facilities Authority
(Blessing Hospital);
Hospital Series 1999 A
6.00%, 11/15/19(b) AAA Aaa 1,000 991,890
- ----------------------------------------------------------------
Illinois Health
Facilities Authority
(Evangelical Hospital
Corp.); RB
6.25%, Refunding Series
1992 A 04/15/22(d) NRR AAA 1,000 1,043,350
- ----------------------------------------------------------------
6.25%, Series 1992 C
04/15/22(d) NRR NRR 1,150 1,191,573
- ----------------------------------------------------------------
Illinois Health
Facilities Authority
(Franciscan Sisters
Health Care); Series
1992 RB
6.40%, 09/01/04(d) AAA Aaa 2,000 2,130,220
- ----------------------------------------------------------------
Illinois Health
Facilities Authority
(Memorial Hospital);
Refunding Hospital
Series 1992 RB
7.25%, 05/01/02(d)(e) NRR NRR 200 214,668
- ----------------------------------------------------------------
Peoria and Pekin and
Waukegan (Cities of);
GNMA Collateralized
Mortgage Series 1990 RB
7.875%, 08/01/22(b) AA -- 80 82,801
- ----------------------------------------------------------------
Tazewell County Community
High School District
No. 303 (Pekin);
Unlimited Tax Series
1996 GO
5.625%, 01/01/14(c) AAA Aaa 1,435 1,423,348
- ----------------------------------------------------------------
University of Illinois
(Auxiliary Facilities
System); Series 1991 RB
5.75%, 04/01/22 AA- Aa3 4,750 4,667,635
- ----------------------------------------------------------------
33,660,307
- ----------------------------------------------------------------
INDIANA-0.67%
Carmel Retirement Rental
Housing (Beverly
Enterprises Project);
Refunding Series RB
8.75%, 12/01/08(f) -- -- 90 96,286
- ----------------------------------------------------------------
Indiana (State of)
Housing Finance
Authority; Series B-1
RB
6.15%, 07/01/17 -- Aaa 155 156,477
- ----------------------------------------------------------------
</TABLE>
FS-76
<PAGE> 346
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
INDIANA-(CONTINUED)
Indianapolis (City of)
(Lake Nora and Fox Club
Project); Series 1999 A
Multi-Family RB
5.90%, 10/01/19(c) -- Aaa $1,795 $ 1,741,904
- ----------------------------------------------------------------
Indiana Transportation
Finance Authority
(Airport Lease
Facility); Series A RB
6.25%, 11/01/02(d)(e) NRR AAA 395 418,226
- ----------------------------------------------------------------
6.25%, 11/01/16 A+ A1 105 107,085
- ----------------------------------------------------------------
2,519,978
- ----------------------------------------------------------------
IOWA-0.28%
Iowa Finance Authority
(Trinity Regional
Hospital Project);
Hospital Facilities
Series 1997 RB
6.00%, 07/01/12(c) AAA Aaa 1,000 1,048,420
- ----------------------------------------------------------------
KANSAS-0.43%
Hutchinson Health Care
Facilities (Wesley
Towers); Refunding &
Improvement Series 1999
A RB
6.25%, 11/15/19(f) -- -- 1,500 1,331,265
- ----------------------------------------------------------------
Newton (City of) (Newton
Healthcare Corp.);
Hospital Series A RB
7.375%, 11/15/04(d)(e) NRR NRR 250 281,103
- ----------------------------------------------------------------
1,612,368
- ----------------------------------------------------------------
KENTUCKY-1.18%
Jefferson (County of)
(Beverly Enterprises
Project); Refunding
Health Facilities
Series RB
5.875%, 05/01/08(f) -- -- 595 565,066
- ----------------------------------------------------------------
Kentucky Economic
Development Finance
Authority (Appalachian
Regional Healthcare);
Refunding & Improvement
Hospital Systems Series
RB
5.875%, 10/01/22 BB+ -- 1,000 791,070
- ----------------------------------------------------------------
Mount Sterling (City of);
Lease Funding Series
1993 A RB
6.15%, 03/01/13 -- Aa 3,000 3,101,190
- ----------------------------------------------------------------
4,457,326
- ----------------------------------------------------------------
LOUISIANA-3.25%
Louisiana Public
Facilities Authority
(Medical Center at New
Orleans Project); RB
6.125%, 10/15/07(c) AAA -- 2,775 2,842,488
- ----------------------------------------------------------------
Louisiana Public
Facilities Authority
(Our Lady of Lake
Regional Hospital);
Hospital Refunding
Series C RB
6.00%, 12/01/01(d)(e) AAA Aaa 2,500 2,612,625
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
LOUISIANA-(CONTINUED)
Louisiana Public
Facilities Authority
(Tulane University of
Louisiana); RB
6.00%, 10/01/16(c) AAA Aaa $2,500 $ 2,531,925
- ----------------------------------------------------------------
New Orleans Levee
District; Trust
Receipts Series 1995 A
RB
5.95%, 11/01/07(c) AAA Aaa 1,000 1,043,700
- ----------------------------------------------------------------
Ouachita Parish Hospital
Service District No. 1
(Glenwood Regional
Medical Center);
Refunding Series 1996
RB
5.70%, 05/15/16(c) AAA Aaa 1,000 982,200
- ----------------------------------------------------------------
St. John Baptist Parish
(Sales Tax
Distribution); Public
Improvement Series 1987
RB
7.60%, 01/01/08(d) NRR NRR 500 575,865
- ----------------------------------------------------------------
7.60%, 01/01/09(d) NRR NRR 500 582,560
- ----------------------------------------------------------------
West Feliciana Parish
(Gulf States
Utilities); Series A
PCR
7.50%, 05/01/15 BB+ -- 1,000 1,061,240
- ----------------------------------------------------------------
12,232,603
- ----------------------------------------------------------------
MAINE-0.60%
Maine (State of)
Education Loan
Authority; Education
Loan Series A-2 RB
6.95%, 12/01/07(b) -- A 770 791,984
- ----------------------------------------------------------------
Maine (State of) Housing
Authority; Series 1999
E-1 RB
5.85%, 11/15/20 AA Aa2 1,500 1,464,585
- ----------------------------------------------------------------
2,256,569
- ----------------------------------------------------------------
MARYLAND-0.28%
Maryland Health and
Higher Education
Facilities Authority
(Doctors Community
Hospital Inc.); Series
1990 RB
8.75%, 07/01/00(d)(e) AAA AAA 1,000 1,042,370
- ----------------------------------------------------------------
MASSACHUSETTS-3.91%
Massachusetts (State of);
Unlimited Tax
Consolidated Loan
Series 1991 C GO
7.00%, 08/01/01(d)(e) NRR NRR 2,450 2,588,695
- ----------------------------------------------------------------
Massachusetts (State of)
Health and Education
Facilities Authority
(Caritas Christi
Obligation Group);
Series A RB
5.625%, 07/01/20 BBB Baa2 1,000 830,720
- ----------------------------------------------------------------
Massachusetts (State of)
Health and Education
Facilities Authority
(Lowell General
Hospital); Series 1991
A RB
8.40%, 06/01/01(d)(e) NRR NRR 3,550 3,807,020
- ----------------------------------------------------------------
</TABLE>
FS-77
<PAGE> 347
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
MASSACHUSETTS-(CONTINUED)
Massachusetts (State of)
Health and Education
Facilities Authority
(Valley Regional Health
System Issue); Series
1990 B RB
8.00%, 07/01/00(d)(e) NRR AAA $3,000 $ 3,116,340
- ----------------------------------------------------------------
Massachusetts (State of)
Health and Education
Facilities Authority
(Winchester Hospital);
Series D RB
5.80%, 07/01/09(c) AAA -- 1,000 1,035,460
- ----------------------------------------------------------------
Massachusetts (State of)
Industrial Finance
Agency (Beverly
Enterprises); Refunding
Series RB
8.00%, 05/01/02(f) -- -- 150 151,005
- ----------------------------------------------------------------
Massachusetts (State of)
Municipal Wholesale
Electric Cooperative
Power Supply; System
Series 1992 A RB
6.75%, 07/01/08(c) AAA Aaa 3,000 3,183,180
- ----------------------------------------------------------------
14,712,420
- ----------------------------------------------------------------
MICHIGAN-4.14%
Detroit (City of) School
District; Unlimited Tax
Series 1992 GO
6.00%, 05/01/01(d)(e) NRR NRR 1,000 1,038,220
- ----------------------------------------------------------------
6.15%, 05/01/01(d)(e) NRR NRR 1,300 1,352,169
- ----------------------------------------------------------------
Flint (City of) Hospital
Building Authority;
Hospital Series B RB
5.375%, 07/01/18(c) A -- 1,000 901,820
- ----------------------------------------------------------------
Garden City Hospital
Finance Authority
(Garden City Hospital);
Hospital Refunding
Series A RB
5.625%, 09/01/10 -- Ba3 1,000 881,290
- ----------------------------------------------------------------
Hudsonville (City of)
Public Schools;
Refunding Unlimited Tax
Series 1997 GO
5.15%, 05/01/27(c) AAA Aaa 1,000 861,320
- ----------------------------------------------------------------
Lake Orion Community
School District;
Unlimited Tax Refunding
Series 1994 GO
7.00%, 05/01/05(d)(e) AAA Aaa 2,500 2,763,675
- ----------------------------------------------------------------
Lakeview Community School
District; Refunding
Unlimited Tax Series
1996 GO
5.75%, 05/01/07(d)(e) AAA NRR 1,000 1,042,951
- ----------------------------------------------------------------
Lincoln Park (City of)
School District;
Unlimited Tax Series
1996 GO
6.00%, 05/01/06(d)(e) AAA Aaa 1,210 1,285,686
- ----------------------------------------------------------------
Michigan (State of)
Housing Development
Authority; Refunding
Rental Housing Series A
RB
6.60%, 04/01/12 AA- -- 945 989,991
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
MICHIGAN-(CONTINUED)
Ypsilanti (City of)
School District;
Refunding Unlimited Tax
Series 1996 GO
5.75%, 05/01/07(d)(e) AAA Aaa $4,275 $ 4,458,611
- ----------------------------------------------------------------
15,575,733
- ----------------------------------------------------------------
MINNESOTA-0.32%
Minneapolis (City of)
Special School District
No. 001; Unlimited Tax
Series 1997 GO
5.00%, 02/01/14 AA+ Aa1 1,300 1,213,875
- ----------------------------------------------------------------
MISSISSIPPI-3.45%
Mississippi (State of)
Development Board
(Capital Projects and
Equipment Acquisition);
Special Obligation
Series A2 RB
5.00%, 07/01/24(c) AAA Aaa 4,570 3,904,151
- ----------------------------------------------------------------
Mississippi (State of)
Development Board
(Panola County
Hospital); Special
Obligation Series RB
5.00%, 07/01/28 A -- 5,000 3,920,100
- ----------------------------------------------------------------
Mississippi Higher
Education Assistance
Corp.; Student Loan
Sub-Series C RB
7.50%, 09/01/09(b) -- A 5,000 5,175,200
- ----------------------------------------------------------------
12,999,451
- ----------------------------------------------------------------
MISSOURI-2.03%
Kansas City Industrial
Development Authority
(General Motors Corp.
Project); PCR
6.05%, 04/01/06 A A3 1,435 1,450,168
- ----------------------------------------------------------------
Kansas City Municipal
Assistance Corp.
(Truman Medical Center
Charitable Foundation);
Leasehold Improvement
Series 1991 A RB
7.00%, 11/01/01(d)(e) NRR NRR 605 630,912
- ----------------------------------------------------------------
Missouri Development
Finance Board (Procter
& Gamble Paper
Products); Solid Waste
Disposal Series RB
5.20%, 03/15/29(b) AA -- 1,000 868,150
- ----------------------------------------------------------------
Missouri (State of)
Environmental
Improvement and Energy
Resources Authority;
Series 1995 C PCR
5.85%, 01/01/10 -- Aa1 1,000 1,035,530
- ----------------------------------------------------------------
</TABLE>
FS-78
<PAGE> 348
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
MISSOURI-(CONTINUED)
Missouri (State of)
Health and Educational
Facilities Authority
(Fontbonne College);
Educational Facilities
Series RB
5.125%, 10/01/17(c) A -- $2,555 $ 2,271,804
- ----------------------------------------------------------------
5.20%, 10/01/20(c) A -- 1,575 1,395,765
- ----------------------------------------------------------------
7,652,329
- ----------------------------------------------------------------
NEVADA-1.54%
Boulder (City of)
(Boulder City Hospital
Inc. Project); Hospital
Refunding Series RB
5.85%, 01/01/22(f) -- -- 500 419,045
- ----------------------------------------------------------------
Humboldt (County of)
(Sierra Pacific
Project); Refunding
Series 1987 PCR
6.55%, 10/01/13(c) AAA Aaa 3,000 3,146,550
- ----------------------------------------------------------------
Las Vegas (City of);
Refunding 1992 Limited
Tax GO
6.50%, 04/01/02(d)(e) AAA Aaa 1,000 1,057,520
- ----------------------------------------------------------------
Reno Redevelopment
Agency; Refunding
Sub-Series A Tax
Allocation Notes
6.00%, 06/01/10 -- Baa3 1,185 1,187,832
- ----------------------------------------------------------------
5,810,947
- ----------------------------------------------------------------
NEW HAMPSHIRE-1.43%
Hudson (City of);
Unlimited Tax Series GO
5.25%, 03/15/28 -- Aa3 1,610 1,432,642
- ----------------------------------------------------------------
New Hampshire State
Turnpike System; Series
1990 RB
7.40%, 04/01/00(d)(e) AAA AAA 3,850 3,957,030
- ----------------------------------------------------------------
5,389,672
- ----------------------------------------------------------------
NEW JERSEY-2.52%
Hudson (County of)
Correctional Facility;
Series 1992 Refunding
COP
6.60%, 12/01/21(c) AAA Aaa 1,250 1,291,538
- ----------------------------------------------------------------
New Jersey Economic
Development Authority
(Atlantic City Sewer
Co.); Sewer Facility
Series 1991 RB
7.25%, 12/01/11(b)(f) -- -- 1,630 1,694,222
- ----------------------------------------------------------------
New Jersey Economic
Development Authority
(Continental Airlines
Inc. Project);
Specialty Facilities
Series 1999 RB
6.40%, 09/15/23(b) BB Ba2 6,250 5,887,063
- ----------------------------------------------------------------
New Jersey City Economic
Development Authority
(Franciscan Oaks
Project); First
Mortgage Series RB
5.70%, 10/01/17(f) -- -- 500 422,795
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
NEW JERSEY-(CONTINUED)
New Jersey Health Care
Facility Financing
Authority; Unrefunded
Balance Series 1987 C
RB
8.60%, 07/01/17(c) AAA Aaa $ 190 $ 195,348
- ----------------------------------------------------------------
9,490,966
- ----------------------------------------------------------------
NEW MEXICO-1.79%
Albuquerque (City of)
(Albuquerque Academy
Project); Educational
Facilities Series 1995
RB
5.75%, 10/15/03(d)(e) NRR NRR 915 945,588
- ----------------------------------------------------------------
Espanola Gross Receipt
Tax; Refunding and
Improvement Series 1999
RB
5.80%, 03/01/23(c) AAA Aaa 1,000 960,570
- ----------------------------------------------------------------
Las Cruces South Central
Solid Waste Authority;
Environmental Services
RB
5.65%, 06/01/09 -- A3 575 571,653
- ----------------------------------------------------------------
Los Alamos (County of);
Utility Series A RB
6.00%, 07/01/15(c) AAA Aaa 2,000 2,025,660
- ----------------------------------------------------------------
Santa Fe (City of);
Series 1994 RB
6.25%, 06/01/04(d)(e) AAA Aaa 2,100 2,220,372
- ----------------------------------------------------------------
6,723,843
- ----------------------------------------------------------------
NEW YORK-9.37%
New York (City of); GO
8.25%, Unlimited Tax
Series 1991 F
11/15/01(d)(e) NRR AAA 2,000 2,161,020
- ----------------------------------------------------------------
7.65%, Unlimited Tax
Series 1992 F
02/01/02(d)(e) NRR AAA 4,775 5,122,715
- ----------------------------------------------------------------
7.00%, Unlimited Tax
Series H
02/01/02(d)(e) NRR NRR 350 370,685
- ----------------------------------------------------------------
7.20%, Unlimited Tax
Series H
02/01/02(d)(e) NRR NRR 390 414,570
- ----------------------------------------------------------------
02/01/15 A- A3 110 115,724
- ----------------------------------------------------------------
7.70%, Unlimited Tax
Series D
02/01/02(d)(e) NRR AAA 1,970 2,115,386
- ----------------------------------------------------------------
02/01/09 A- A3 30 32,091
- ----------------------------------------------------------------
7.00%, Unlimited Tax
Series C, Sub-Series
C-1 08/01/02(d)(e) NRR AAA 1,990 2,130,076
- ----------------------------------------------------------------
7.379, Unlimited Tax
Series B1
08/15/04(d)(e) NRR AAA 500 556,895
- ----------------------------------------------------------------
6.25%, Unlimited Tax
Series A 08/01/17 A- A3 3,035 3,083,074
- ----------------------------------------------------------------
7.00%, Unlimited Tax
Series C, Sub-Series
C-1 08/01/17 A- A3 10 10,544
- ----------------------------------------------------------------
7.00%, Unlimited Tax
Series B 02/01/18(c) AAA -- 830 869,807
- ----------------------------------------------------------------
</TABLE>
FS-79
<PAGE> 349
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
NEW YORK-(CONTINUED)
New York (City of); GO-(Continued)
7.00%, Unlimited Tax
Series B
02/01/02(d)(e) AAA -- $ 170 $ 180,220
- ----------------------------------------------------------------
New York City Industrial
Development Agency
(Brooklyn Navy Yard
Cogen Partners); RB
5.65%, 10/01/28(b) BBB- Baa3 500 431,675
- ----------------------------------------------------------------
New York City Industrial
Development Agency (The
Lighthouse Inc.
Project); Series 1992
RB LOC-Chase Manhattan
Bank
6.50%, 07/01/02(d)(e) NRR NRR 1,500 1,588,710
- ----------------------------------------------------------------
New York City Municipal
Water Finance
Authority; Water &
Sewer Systems Series A
RB
5.00%, 06/15/17 A A1 1,350 1,191,847
- ----------------------------------------------------------------
New York State Dorm
Authority (City
University System);
Series C RB
6.00%, 07/01/00(d)(e) NRR NRR 135 136,195
- ----------------------------------------------------------------
6.00%, 07/01/16 A- Baa1 365 365,044
- ----------------------------------------------------------------
New York State Dorm
Authority (State
University Educational
Facilities); Series A
RB
6.50%, 05/15/06 A A3 1,000 1,072,360
- ----------------------------------------------------------------
New York State
Environmental Facility
Corp.; Water Revenue
Series E PCR
6.875%, 06/15/01(d)(e) AAA NRR 2,300 2,419,623
- ----------------------------------------------------------------
6.875%, 06/15/10 AA+ Aaa 1,100 1,154,197
- ----------------------------------------------------------------
New York State Urban
Development Corp.;
Correctional Capital
Facilities Series 1991
3 RB
7.375%, 01/01/02(d)(e) NRR AAA 7,850 8,399,814
- ----------------------------------------------------------------
Triborough Bridge and
Tunnel Authority;
General Purpose Series
1996 B RB
5.20%, 01/01/22 A+ Aa3 1,570 1,381,192
- ----------------------------------------------------------------
35,303,464
- ----------------------------------------------------------------
NORTH CAROLINA-1.49%
North Carolina Eastern
Municipal Power Agency;
Series A RB
6.125%, 01/01/10(c) AAA Aaa 1,500 1,552,290
- ----------------------------------------------------------------
North Carolina Housing
Finance Agency; Single
Family- Series II RB
6.20%, 03/01/16 AA Aa2 595 601,765
- ----------------------------------------------------------------
North Carolina Medical
Care Community Hospital
(Annie Penn Memorial
Hospital); Refunding
Series RB
5.375%, 01/01/22 -- Baa3 250 205,955
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
NORTH CAROLINA-(CONTINUED)
North Carolina Municipal
Power Agency (No. 1
Catawba Electric
Project); Refunding RB
7.25%, 01/01/07 BBB+ Baa1 $2,750 $ 2,955,205
- ----------------------------------------------------------------
North Carolina Municipal
Power Agency (No. 1
Catawba Electric
Project); Series 1990
RB
6.50%, 01/01/10(d) AAA AAA 260 280,192
- ----------------------------------------------------------------
5,595,407
- ----------------------------------------------------------------
NORTH DAKOTA-0.24%
North Dakota Housing
Finance Agency; Home
Mortgage Series B RB
5.85%, 07/01/28(b) -- Aa3 945 898,591
- ----------------------------------------------------------------
OHIO-2.09%
Cleveland (City of)
Parking Facilities;
Improvement Series RB
8.00%, 09/15/02(d)(e) NRR NRR 500 549,805
- ----------------------------------------------------------------
Fairfield (City of)
School District;
Unlimited Tax Series
1995 GO
6.10%, 12/01/15(c) AAA Aaa 1,000 1,035,960
- ----------------------------------------------------------------
Findlay (City of);
Limited Tax Series 1996
GO
5.875%, 07/01/17 AA- Aa3 1,000 1,001,640
- ----------------------------------------------------------------
Mason (City of) Health
Care Facilities (MCV
Health Care Facilities,
Inc.); Series 1990 RB
7.625%, 02/01/01(d)(e) AAA NRR 2,105 2,206,566
- ----------------------------------------------------------------
Montgomery (County of)
(Grandview Hospital &
Medical Center);
Refunding Hospital
Series RB
5.50%, 12/01/09(d)(e) NRR NRR 1,000 1,017,520
- ----------------------------------------------------------------
Ohio Department of
Transportation
(Panhandle Rail Line
Project); Series 1992
COP
6.50%, 04/15/12(c) AAA Aaa 1,100 1,153,449
- ----------------------------------------------------------------
Ohio Building Authority
(Adult Correctional
Facility); Series 1999
A RB
5.25%, 10/01/18 AA- Aa2 1,000 914,090
- ----------------------------------------------------------------
7,879,030
- ----------------------------------------------------------------
OKLAHOMA-2.55%
McAlester (City of)
Public Works Authority;
Refunding and
Improvement Series 1995
RB
5.50%, 12/01/09(d)(e) AAA Aaa 975 998,244
- ----------------------------------------------------------------
Mustang Improvement
Utility Authority;
Series 1999 RB
5.70%, 10/01/19(c) -- Aaa 1,500 1,423,290
- ----------------------------------------------------------------
</TABLE>
FS-80
<PAGE> 350
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
OKLAHOMA-(CONTINUED)
Oklahoma Development
Finance Authority (St.
John Health System);
Refunding Series 1999
RB
5.75%, 02/15/18 AA Aa3 $ 675 $ 647,122
- ----------------------------------------------------------------
5.75%, 02/15/25 AA Aa3 1,750 1,643,932
- ----------------------------------------------------------------
Sapula (City of)
Municipal Authority;
Capital Improvement
Series RB
5.00%, 07/01/21(c) AAA Aaa 1,000 867,090
- ----------------------------------------------------------------
Tulsa (City of)
Industrial Authority
(St. Johns Medical
Center Project); RB
6.25%, 02/15/06(d)(e) AA Aa3 2,000 2,133,380
- ----------------------------------------------------------------
Tulsa (City of)
Industrial Authority
(Tulsa Regional Medical
Center); Hospital
Series RB
7.20%, 06/01/03(d)(e) AAA NRR 500 547,090
- ----------------------------------------------------------------
Tulsa Public Facilities
Authority-Capital
Improvements-Water
System; Series 1988 B
RB
6.00%, 03/01/08 A+ -- 1,305 1,350,388
- ----------------------------------------------------------------
9,610,536
- ----------------------------------------------------------------
OREGON-1.15%
Cow Creek Band Umpqua
Tribe of Indians;
Series B RB
5.10%, 07/01/12(c) AAA Aaa 1,000 961,580
- ----------------------------------------------------------------
Marion (County of) (Ogden
Martin Systems);
Refunding Solid Waste &
Electric Series RB
5.50%, 10/01/06(c) AAA Aaa 1,000 1,031,110
- ----------------------------------------------------------------
Portland (City of) Sewer
System; Series 1994 A
RB
6.20%, 06/01/04(d)(e) NRR NRR 1,200 1,273,704
- ----------------------------------------------------------------
6.25%, 06/01/04(d)(e) NRR NRR 1,000 1,063,390
- ----------------------------------------------------------------
4,329,784
- ----------------------------------------------------------------
PENNSYLVANIA-2.39%
Chester (County of)
Health and Educational
Facilities Authority
(Jefferson Health
Systems); Series B RB
5.375%, 05/15/27 AA- A1 4,000 3,325,960
- ----------------------------------------------------------------
Chester Upland School
Authority; Refunding
School Series B RB
5.25%, 09/01/21(c) AAA Aaa 1,000 892,340
- ----------------------------------------------------------------
Montgomery County
Industrial Development
Authority (Meadowood
Corp. Project);
Refunding First
Mortgage Series A RB
10.25%, 12/01/00(d)(e) NRR NRR 100 107,239
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
PENNSYLVANIA-(CONTINUED)
Montgomery County
Industrial Development
Authority (Pennsburg
Nursing &
Rehabilitation Center);
Refunding Series 1993
RB
7.625%, 03/31/04(d)(e) NRR AAA $ 100 $ 112,607
- ----------------------------------------------------------------
Pennsylvania (State of);
Unlimited Tax Third
Series GO
6.75%, 11/15/13(c) AAA Aaa 1,250 1,352,387
- ----------------------------------------------------------------
Pennsylvania Economic
Development Finance
Authority (Colver
Project); Resource
Recovery Series 1994 D
RB
7.05%, 12/01/10(b) BBB- -- 2,900 2,958,348
- ----------------------------------------------------------------
Scranton-Lackawanna
Health & Welfare
Authority (Moses Taylor
Hospital Project);
Series B RB
8.50%, 07/01/01(d)(e) AAA NRR 250 269,037
- ----------------------------------------------------------------
9,017,918
- ----------------------------------------------------------------
PUERTO RICO-0.37%
Puerto Rico (Commonwealth
of) Electric Power
Authority; Series 1991
P RB
7.00%, 07/01/01(d)(e) AAA AAA 1,325 1,401,519
- ----------------------------------------------------------------
RHODE ISLAND-0.63%
Rhode Island Depositors
Economic Protection
Corp.; Special
Obligation Series 1992
A RB
6.95%, 08/01/02(d)(e) AAA AAA 1,250 1,340,462
- ----------------------------------------------------------------
Rhode Island Housing and
Mortgage Finance Corp.;
Homeownership
Opportunity Series 15 B
RB
6.00%, 10/01/04 AA+ Aa2 1,000 1,033,970
- ----------------------------------------------------------------
2,374,432
- ----------------------------------------------------------------
SOUTH CAROLINA-0.40%
Piedmont Municipal Power
Agency; Refunding
Electric Series A RB
5.75%, 01/01/24 BBB- Baa3 1,150 1,011,804
- ----------------------------------------------------------------
South Carolina State
Housing Finance and
Development Authority;
Homeownership Mortgage
Series 1990 C RB
7.50%, 07/01/05(b) AA Aa2 500 513,290
- ----------------------------------------------------------------
1,525,094
- ----------------------------------------------------------------
SOUTH DAKOTA-0.53%
South Dakota Health and
Educational Facility
Authority (Huron
Regional Medical
Center); Series 1994 RB
7.25%, 04/01/20 BBB -- 100 102,395
- ----------------------------------------------------------------
</TABLE>
FS-81
<PAGE> 351
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
SOUTH DAKOTA-(CONTINUED)
South Dakota Housing
Development Authority;
Homeownership Mortgage
Series F RB
5.80%, 05/01/28(b) AAA Aa1 $1,995 $ 1,878,811
- ----------------------------------------------------------------
1,981,206
- ----------------------------------------------------------------
TENNESSEE-1.42%
Franklin Industrial
Development Board
(Landings Apartment
Project); Multifamily
Housing Series A RB
5.75%, 04/01/10(c) AAA Aaa 1,035 1,039,906
- ----------------------------------------------------------------
Montgomery (County of)
Health, Educational and
Housing Facilities
Board (Clarksville
Project); Refunding and
Improvement Hospital
Series RB
5.375%, 01/01/28(c) A -- 1,800 1,552,806
- ----------------------------------------------------------------
Shelby (County of);
Unlimited Tax School
Series B GO
6.00%, 03/01/02(d)(e) NRR NRR 1,000 1,035,950
- ----------------------------------------------------------------
Shelby County Health,
Educational & Housing
Facilities Board (Kirby
Pines); Health Care
Facilities Series A RB
6.25%, 11/15/16(f) -- -- 1,000 898,960
- ----------------------------------------------------------------
Tennessee Housing
Development Agency;
Homeownership
Progressive Series Q RB
6.80%, 07/01/17 AA Aa2 790 811,733
- ----------------------------------------------------------------
5,339,355
- ----------------------------------------------------------------
TEXAS-17.31%
Arlington Independent
School District;
Pre-Refunding Unlimited
Tax Series GO
5.75%, 02/15/05(d)(e) NRR NRR 705 732,086
- ----------------------------------------------------------------
Arlington Independent
School District;
Unlimited Tax Series GO
5.75%, 02/15/21(d) -- Aaa 295 286,560
- ----------------------------------------------------------------
Austin (City of); Utility
System Combined Fee
Refunding Series 1991
RB
6.50%, 05/15/01(d)(e) AAA AAA 1,380 1,443,425
- ----------------------------------------------------------------
Austin Community College
District; Combined Fee
Revenue Building and
Refunding Series 1995
RB
6.10%, 02/01/05(d)(e) AAA Aaa 1,115 1,174,909
- ----------------------------------------------------------------
Austin Hotel Occupancy
Tax (Convention
Center); Series 1999 A
RB
5.50%, 11/15/29(c) AAA Aaa 1,425 1,298,944
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
TEXAS-(CONTINUED)
Austin Hotel Occupancy
Tax; Refunding Sub Lien
1999 Series RB
5.80%, 11/15/29(c) AAA Aaa $1,000 $ 951,020
- ----------------------------------------------------------------
Bellville Independent
School District;
Unlimited Tax School
Building and Refunding
Series 1995 A GO
6.125%, 02/01/20(c) -- Aaa 830 839,794
- ----------------------------------------------------------------
Brazos (County of) Health
Facilities Development
Corp. (Franciscan
Services Corp.); Series
A RB
5.375%, 01/01/22(c) AAA Aaa 2,000 1,810,020
- ----------------------------------------------------------------
Brazos Higher Education
Loan Authority Inc.;
Refunding Series 1992
C-1 RB
6.30%, Series 1992 C-1
11/01/01(b) -- Aa 325 333,554
- ----------------------------------------------------------------
6.45%, Series 1992 C-1
11/01/02(b) -- Aa 1,135 1,173,193
- ----------------------------------------------------------------
Carrollton (City of);
Limited Tax Series 1996
GO
5.75%, 08/15/06(d)(e) NRR NRR 1,000 1,040,580
- ----------------------------------------------------------------
Comal County Industrial
Development Authority
(The Coleman Co., Inc.
Project); Industrial
Development Series 1980
RB
9.25%, 08/01/00(d) NRR NRR 280 287,963
- ----------------------------------------------------------------
Dallas (City of);
Waterworks and Sewer
System Refunding and
Improvement Series RB
5.35%, 04/01/14 AA Aa2 3,055 2,968,788
- ----------------------------------------------------------------
Dallas (City of);
Waterworks and Sewer
System Series A RB
6.00%, 10/01/01(d)(e) NRR NRR 2,030 2,109,434
- ----------------------------------------------------------------
Dallas-Fort Worth
Regional Airport
Authority; Airport
Series 1985 RB
6.10%, 05/01/00(e) A+ A1 160 161,046
- ----------------------------------------------------------------
6.10%, 05/01/00(c)(e) AAA Aaa 365 367,445
- ----------------------------------------------------------------
De Soto (City of)
Independent School
District; Refunding
Unlimited Tax Series GO
5.125%, 08/15/17(c) AAA -- 2,155 1,907,541
- ----------------------------------------------------------------
Denton (County of);
Limited Tax Series 1999
A GO
5.875%, 05/01/19 AA Aa2 1,025 1,005,761
- ----------------------------------------------------------------
Denton (County of);
Refunding Limited Tax
Permanent Improvement
Series GO
5.125%, 07/15/26 AA Aa2 1,000 858,600
- ----------------------------------------------------------------
Georgetown (City of);
Utility System Series
1995 A RB
6.20%, 08/15/05(d)(e) AAA Aaa 1,500 1,591,545
- ----------------------------------------------------------------
</TABLE>
FS-82
<PAGE> 352
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
TEXAS-(CONTINUED)
Harris County; Toll Road
Unlimited Tax GO and
Sub. Lien Refunding
Series 1991
6.75%, 08/01/14 AA Aa1 $3,850 $ 4,053,511
- ----------------------------------------------------------------
Harris County Health
Facilities Development
Corp. (Saint Luke's
Episcopal Hospital
Project); Series 1991
6.70%, 02/15/03(d) AAA NRR 1,000 1,056,600
- ----------------------------------------------------------------
Harris County Health
Facilities Development
Corp. (Texas Childrens
Hospital Project);
Hospital Series 1999 RB
5.25%, 10/01/29 AA Aa2 2,000 1,690,960
- ----------------------------------------------------------------
Harris County Mental
Health and Mental
Retardation Authority;
Refunding Series 1992
RB
6.25%, 09/15/10(c) AAA Aaa 4,500 4,618,080
- ----------------------------------------------------------------
Houston (City of);
Refunding Series 1992 C
GO
6.25%, 03/01/02(d)(e) NRR NRR 1,470 1,518,510
- ----------------------------------------------------------------
Hurst, Euless, Bedford,
Texas Independent
School District;
6.50%, Refunding
Unlimited Tax Series
1994 GO 08/15/04(d)(e) AAA AAA 640 684,762
- ----------------------------------------------------------------
6.50%, Unrefunded
Unlimited Tax Series
1994 GO 08/15/24(c) AAA Aaa 360 371,214
- ----------------------------------------------------------------
Katy (City of)
Independent School
District; Limited Tax
Series 1999 GO
6.125%, 02/15/32 AAA Aaa 1,500 1,487,175
- ----------------------------------------------------------------
Keller (City of) Independent
School District; Series 1994
COP
6.00%, 08/15/05(c) AAA Aaa 1,000 1,055,840
- ----------------------------------------------------------------
Lockhart (City of) Tax
and Utility Systems;
Unlimited Tax Series
1996 GO
5.85%, 08/01/11(c) AAA Aaa 605 623,235
- ----------------------------------------------------------------
5.90%, Refunding
08/01/06(d)(e) AAA Aaa 1,100 1,156,716
- ----------------------------------------------------------------
Matagorda (County of)
District No. 1 (Reliant
Energy Project);
Refunding 1999 RB
5.95%, 05/01/30(b) BBB+ Baa1 2,250 1,975,860
- ----------------------------------------------------------------
North Central Texas
Health Facilities
Development Corp. (CC
Young Memorial
Project); Hospital
Series RB
5.375%, 02/15/25(c) A -- 1,000 884,030
- ----------------------------------------------------------------
Northside Independent
School District;
Unlimited Tax Series
1999 A GO
5.50%, 08/15/24 AAA Aaa 1,000 927,580
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
TEXAS-(CONTINUED)
North Texas Higher
Education Authority
Inc.; Student Loan RB
6.10%, Series 1993 C
04/01/08(b) -- Aa $1,000 $ 1,009,240
- ----------------------------------------------------------------
6.30%, Series 1993 D
04/01/09(b) -- A 500 499,245
- ----------------------------------------------------------------
Plano (City of)
Independent School
District; Unlimited Tax
Series 1991 B GO
5.625%, 02/15/01(d)(e) AAA Aaa 2,500 2,532,175
- ----------------------------------------------------------------
Richardson (City of)
Hospital Authority
(Baylor/Richardson
Project); Refunding and
Improvement Hospital
Series RB
5.625%, 12/01/28 BBB+ Baa2 1,250 1,010,575
- ----------------------------------------------------------------
South San Antonio (City
of ) Independent School
District; Refunding
Unlimited Tax Series
1999 GO
5.80%, 08/15/29 AAA Aaa 2,935 2,814,782
- ----------------------------------------------------------------
Southwest Higher
Education Authority
Inc. (Southern
Methodist University);
Higher Education Series
D RB
5.00%, 10/01/22 A+ A1 1,750 1,473,132
- ----------------------------------------------------------------
Tarrant County Texas
Water Control and
Improvement District
No. 1; Refunding Series
1993 RB
5.20%, 03/01/10(c) AAA Aaa 2,000 1,978,120
- ----------------------------------------------------------------
Texas (State of) Public
Property Finance Corp.
(Mental Health and
Mental Retardation);
Series 1996 RB
6.20%, 09/01/16 BBB+ -- 1,590 1,575,197
- ----------------------------------------------------------------
Texas (State of);
Unlimited Tax Veteran's
Land Unlimited Tax
Series 1994 GO
6.40%, 12/01/24(b) AA Aa1 2,000 2,021,600
- ----------------------------------------------------------------
Texas (State of)
Department of Housing
and Community Affairs
(Asmara Project);
Multifamily Housing
Series 1996 A RB
6.30%, 01/01/16 A -- 310 318,119
- ----------------------------------------------------------------
Texas National Research
Laboratory Community
Financing Corp.
(Superconducting Super
Collider); Refunded
Series 1991 RB
7.10%, 12/01/01(d)(e) AAA AAA 600 639,516
- ----------------------------------------------------------------
Tyler Health Facilities
Development Corp. (East
Texas Medical Center);
Hospital Series D RB
5.375%, 11/01/27(c) AAA Aaa 1,000 878,040
- ----------------------------------------------------------------
</TABLE>
FS-83
<PAGE> 353
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
TEXAS-(CONTINUED)
Tyler Health Facilities
Development Corp.
(Mother Frances
Hospital); Hospital
Series A RB
5.625%, 07/01/13 -- Baa2 $1,000 $ 898,120
- ----------------------------------------------------------------
University of Texas;
Series 1999 B RB
5.70%, 08/15/20 AAA Aa1 1,000 959,010
- ----------------------------------------------------------------
Victoria (County of)
(Texas Hospital
Citizens Medical
Center); RB
6.20%, 01/01/10(c) AAA Aaa 1,000 1,040,980
- ----------------------------------------------------------------
Weatherford (City of)
Independent School
District; Unlimited Tax
Series 1994 GO
6.40%, 02/15/05(d)(e) NRR NRR 900 960,750
- ----------------------------------------------------------------
6.40%, 02/15/12(c) -- Aaa 100 105,456
- ----------------------------------------------------------------
65,160,338
- ----------------------------------------------------------------
UTAH-1.90%
Central Utah Water
Conservancy District;
Limited Tax Series D GO
5.00%, 04/01/27(c) AAA Aaa 1,660 1,407,132
- ----------------------------------------------------------------
Intermountain Power
Agency (Utah Power
Supply); Series 1986 B
RB
5.00%, 07/01/16 A+ A1 1,550 1,372,789
- ----------------------------------------------------------------
Salt Lake (County of)
(Westminster College
Project); RB
5.75%, 10/01/27 BBB -- 1,000 890,040
- ----------------------------------------------------------------
Utah (State of)
Associated Municipal
Power System (San Juan
Project); Refunding
Series RB
5.00%, 06/01/22(c) AAA Aaa 775 660,649
- ----------------------------------------------------------------
Utah (State of) Housing
Finance Agency;
Federally Insured Term
Sub. Single Family
Mortgage RB
6.30%, Sub-Series 1994
E-1, 07/01/06 AA- Aa3 300 308,667
- ----------------------------------------------------------------
7.15%, Sub-Series 1994
G-1, 07/01/06 AA- Aa3 155 162,347
- ----------------------------------------------------------------
Utah (State of) Housing
Finance Agency; Single
Family Mortgage RB
6.05%, Series 1994 C
07/01/06 AA- Aa3 415 423,910
- ----------------------------------------------------------------
6.45%, Series G2
07/01/27(b) AAA Aaa 810 819,048
- ----------------------------------------------------------------
Utah (State of) Water
Finance Agency; Series
A RB
5.30%, 10/01/23(c) AAA Aaa 1,250 1,128,200
- ----------------------------------------------------------------
7,172,782
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
VIRGIN ISLAND-0.89%
Virgin Islands Public
Finance Authority;
Matching Fund Loan
Notes Series A RB
7.25%, 10/01/02(d)(e) AAA NRR $1,000 $ 1,088,940
- ----------------------------------------------------------------
Virgin Islands Territory
(Hugo Insurance Claims
Fund); Special Tax Bond
Series 1991
7.75%, 10/01/01(d)(e) NRR NRR 2,155 2,271,392
- ----------------------------------------------------------------
3,360,332
- ----------------------------------------------------------------
VIRGINIA-0.63%
Covington-Alleghany
(County of) Industrial
Development Authority
(Beverly Enterprises);
Refunding Series RB
9.375%, 09/01/01(f) -- -- 30 30,613
- ----------------------------------------------------------------
Richmond (City of);
Public Improvement
Refunding Unlimited Tax
Series B GO
6.25%, 01/15/18 AA A1 2,000 2,079,120
- ----------------------------------------------------------------
Virginia (State of)
Housing Development
Authority; Commonwealth
Mortgage Series A RB
7.10%, 01/01/17 AA+ Aa1 250 256,160
- ----------------------------------------------------------------
2,365,893
- ----------------------------------------------------------------
WASHINGTON-1.88%
Clark (County of) Camas
School District No. 17;
GO
6.00%, 12/01/05(d)(e) AAA Aaa 1,000 1,051,060
- ----------------------------------------------------------------
King (County of);
Unlimited Tax GO
5.50%, 07/01/07(d) AAA AAA 500 514,195
- ----------------------------------------------------------------
King (County of);
Unlimited Tax Refunding
GO
6.50%, 12/01/11 AA+ Aaa 500 500,600
- ----------------------------------------------------------------
Pend Oreille (County of)
Public Utility District
No. 1; Electric Series
B RB
6.30%, 01/01/17 A- A3 1,400 1,406,076
- ----------------------------------------------------------------
Washington State Public
Power Supply System
(Nuclear Project No.
1); Refunding Series A
RB
6.00%, 07/01/07(c) AAA Aaa 1,000 1,045,310
- ----------------------------------------------------------------
5.75%, 07/01/12(c) AAA Aaa 2,000 2,011,980
- ----------------------------------------------------------------
West Richland (City of);
Water & Sewer Refunding
Series RB
7.00%, 12/01/04(d)(e) AAA Aaa 500 547,770
- ----------------------------------------------------------------
7,076,991
- ----------------------------------------------------------------
WISCONSIN-1.28%
Wisconsin Health and
Educational Facility
Authority (United
Health Group, Inc.); RB
5.25%, 12/15/27(c) AAA Aaa 1,000 867,440
- ----------------------------------------------------------------
</TABLE>
FS-84
<PAGE> 354
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
WISCONSIN-(CONTINUED)
Wisconsin Health and
Educational Facilities
Authority (Sinai
Samaritan Medical
Center); Series 1996 F
RB
5.75%, 08/15/16(c) AAA Aaa $1,500 $ 1,473,165
- ----------------------------------------------------------------
Wisconsin Health and
Educational Facility
Authority (Sisters of
Sorrowful Mother);
Series 1997 A RB
5.90%, 08/15/24(c) AAA Aaa 2,500 2,384,550
- ----------------------------------------------------------------
Wisconsin Housing and
Economic Development
Authority; Home
Ownership Series 1994 E
RB
7.35%, 01/01/17 AA Aa2 90 93,890
- ----------------------------------------------------------------
4,819,045
- ----------------------------------------------------------------
WYOMING-0.88%
Campbell (County of)
School District No. 1
(Gillette); Unlimited
Tax Series GO
5.35%, 06/01/04 AAA Aaa 1,000 1,025,950
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATINGS(a) PAR
S&P MOODY'S (000) MARKET VALUE
<S> <C> <C> <C> <C>
WYOMING-(CONTINUED)
Laramie (County of)
(Memorial Hospital
Project); Hospital
Series RB
6.70%, 05/01/12(c) AAA Aaa $ 250 $ 264,432
- ----------------------------------------------------------------
Natrona (County of)
Wyoming Medical Center;
RB
6.00%, 09/15/11(c) AAA Aaa 1,000 1,037,260
- ----------------------------------------------------------------
Sweetwater (County of)
(Idaho Power Company
Project); Refunding
Series 1996 A PCR
6.05%, 07/15/26 A A3 1,000 988,260
- ----------------------------------------------------------------
3,315,902
- ----------------------------------------------------------------
TOTAL INVESTMENTS-98.92%
(Cost $372,253,281) 372,556,813
- ----------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.08% 4,070,816
- ----------------------------------------------------------------
NET ASSETS-100.00% $376,627,629
================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and Standard
& Poor's Ratings Service ("S&P"). NRR indicates a security that is not
re-rated subsequent to funding of an escrow fund (consisting of U.S.
Treasury obligations); this funding is pursuant to an advance refunding of
the security. Ratings are not covered by Independent Auditors' Report.
(b) Security subject to alternative minimum tax.
(c) Secured by bond insurance.
(d) Secured by an escrow fund of U.S. Treasury obligations.
(e) Security has an irrevocable call or mandatory put by the issuer. Maturity
date reflects such call or put.
(f) Unrated security; determined by the investment advisor to be of comparable
quality to the rated securities in which the Fund may invest pursuant to
guidelines of quality adopted by the Board of Trustees and followed by the
investment advisor.
Investment Abbreviations:
COP - Certificates of Participation
GO - General Obligation Bonds
IDR - Industrial Development Revenue Bonds
LOC - Letter of Credit
NRR - Not Re-Rated
PCR - Pollution Control Revenue Bonds
RB - Revenue Bonds
Sub. - Subordinated
See Notes to Financial Statements.
FS-85
<PAGE> 355
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$372,253,281) $372,556,813
- ----------------------------------------------------------
Receivables for:
Fund shares sold 679,906
- ----------------------------------------------------------
Interest 6,993,466
- ----------------------------------------------------------
Investments sold 2,225,600
- ----------------------------------------------------------
Investment for deferred compensation plan 69,976
- ----------------------------------------------------------
Other assets 24,176
- ----------------------------------------------------------
Total assets 382,549,937
- ----------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 2,033,552
- ----------------------------------------------------------
Investments purchased 1,510,208
- ----------------------------------------------------------
Dividends 745,358
- ----------------------------------------------------------
Amount due to custodian 1,024,350
- ----------------------------------------------------------
Deferred compensation plan 69,976
- ----------------------------------------------------------
Accrued advisory fees 146,896
- ----------------------------------------------------------
Accrued distribution fees 301,129
- ----------------------------------------------------------
Accrued transfer agent fees 18,969
- ----------------------------------------------------------
Accrued operating expenses 71,870
- ----------------------------------------------------------
Total liabilities 5,922,308
- ----------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $376,627,629
==========================================================
NET ASSETS:
Class A $294,719,732
==========================================================
Class B $ 72,255,902
==========================================================
Class C $ 9,651,995
==========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 38,054,890
==========================================================
Class B 9,317,682
==========================================================
Class C 1,246,825
==========================================================
Class A:
Net asset value and redemption price per
share $ 7.74
- ----------------------------------------------------------
Offering price per share:
(Net asset value of $7.74 divided by
95.25%) $ 8.13
==========================================================
Class B:
Net asset value and offering price per
share $ 7.75
==========================================================
Class C:
Net asset value and offering price per
share $ 7.74
==========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 23,860,069
- ----------------------------------------------------------
EXPENSES:
Advisory fees 1,830,490
- ----------------------------------------------------------
Administrative services fees 91,647
- ----------------------------------------------------------
Custodian fees 19,729
- ----------------------------------------------------------
Transfer agent fees - Class A 160,531
- ----------------------------------------------------------
Transfer agent fees - Class B 46,049
- ----------------------------------------------------------
Transfer agent fees - Class C 5,831
- ----------------------------------------------------------
Trustees' fees 9,669
- ----------------------------------------------------------
Distribution fees - Class A 805,244
- ----------------------------------------------------------
Distribution fees - Class B 753,522
- ----------------------------------------------------------
Distribution fees - Class C 101,726
- ----------------------------------------------------------
Interest expense 461
- ----------------------------------------------------------
Other 232,442
- ----------------------------------------------------------
Total expenses 4,057,341
- ----------------------------------------------------------
Less: Expenses paid indirectly (4,633)
- ----------------------------------------------------------
Net expenses 4,052,708
- ----------------------------------------------------------
Net investment income 19,807,361
- ----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (3,713,985)
- ----------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (26,831,659)
- ----------------------------------------------------------
Net gain (loss) on investment securities (30,545,644)
- ----------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(10,738,283)
==========================================================
</TABLE>
See Notes to Financial Statements.
FS-86
<PAGE> 356
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 19,807,361 $ 18,756,162
- ------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (3,713,985) 595,427
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (26,831,659) (197,391)
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (10,738,283) 19,154,198
- ------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (16,158,034) (16,134,077)
- ------------------------------------------------------------------------------------------
Class B (3,218,044) (2,410,612)
- ------------------------------------------------------------------------------------------
Class C (435,134) (214,027)
- ------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
Class A (288,606) (87,502)
- ------------------------------------------------------------------------------------------
Class B (67,461) (15,369)
- ------------------------------------------------------------------------------------------
Class C (9,104) (1,355)
- ------------------------------------------------------------------------------------------
Share transactions-net:
Class A (8,643,725) 8,923,504
- ------------------------------------------------------------------------------------------
Class B 5,334,838 25,558,113
- ------------------------------------------------------------------------------------------
Class C 857,965 8,741,537
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (33,365,588) 43,514,410
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 409,993,217 366,478,807
- ------------------------------------------------------------------------------------------
End of period $376,627,629 $409,993,217
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $381,002,296 $383,815,745
- ------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (80,397) (73,902)
- ------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (4,597,802) (883,817)
- ------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 303,532 27,135,191
- ------------------------------------------------------------------------------------------
$376,627,629 $409,993,217
==========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-87
<PAGE> 357
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Municipal Bond Fund (the "Fund") is a series portfolio of AIM Funds Group
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of nine separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is to achieve a high level of current income
exempt from federal income taxes, consistent with the preservation of principal,
by investing in a diversified portfolio of municipal bonds.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- Portfolio securities are valued on the basis of prices
provided by an independent pricing service approved by the Board of Trustees,
provided that securities with a demand feature exercisable within one to
seven days will be valued at par. Prices provided by the pricing service may
be determined without exclusive reliance on quoted prices and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, individual
trading characteristics and other market data. Portfolio securities for which
prices are not provided by the pricing service are valued at the mean between
the last available bid and asked prices, unless the Board of Trustees, or
persons designated by the Board of Trustees, determines that the mean between
the last available bid and asked prices does not accurately reflect the
current market value of the security. Securities for which market quotations
either are not readily available or are questionable are valued at fair value
as determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Notwithstanding the above, short-term obligations with maturities of 60 days
or less are valued at amortized cost.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded on
the accrual basis. Dividend income is recorded on the ex-dividend date. On
December 31, 1999, undistributed net investment income was increased by
$362,527 and paid-in capital decreased by $362,527 as a result of differing
book/tax treatment reclassifications. Net assets of the Fund were unaffected
by the reclassifications.
C. Distributions -- It is the policy of the Fund to declare daily dividends from
net investment income. Such distributions are paid monthly. Distributions
from net realized capital gains, if any, are generally paid annually and
recorded on ex-dividend date. The Fund may elect to use a portion of the
proceeds of fund share redemptions as distributions for federal income tax
purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund has a capital loss
carryforward of $2,805,103 as of December 31, 1999 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, in the year 2007.
E. Expenses -- Distribution expenses and transfer agency expenses directly
attributable to a class of shares are charged to that class' operations. All
other expenses which are attributable to more than one class are allocated
among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.50% on
the first $200 million of the Fund's average daily net assets, plus 0.40% on the
next $300 million of the Fund's average daily net assets, plus 0.35% on the next
$500 million of the Fund's average daily net assets, plus 0.30% on the Fund's
average daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 1999, AIM was
paid $91,647 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund.
FS-88
<PAGE> 358
For the year ended December 31, 1999, AFS was paid $138,338 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively, the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended December 31,
1999, the Class A, Class B and Class C shares paid AIM Distributors $805,244,
$753,522 and $101,726, respectively, as compensation under the Plans.
AIM Distributors received commissions of $97,187 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $123,118 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 1999, the Fund paid legal fees of $4,178
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $4,633 under an expense
offset arrangement. The effect of the above arrangement resulted in a reduction
of the Fund's total expenses of $4,633 during the year ended December 31, 1999.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. The funds which
are party to the line of credit are charged a commitment fee of 0.09% on the
unused balance of the committed line. Prior to May 28, 1999, the commitment fee
rate was 0.05%. The commitment fee is allocated among the funds based on their
respective average net assets for the period. During the year ended December 31,
1999, the Fund borrowed minimal amounts under the line of credit agreement.
Interest expense for the Fund for the year ended December 31, 1999 was $461.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$112,320,103 and $112,820,490, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 11,295,947
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (10,992,415)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 303,532
=========================================================
</TABLE>
Investments have the same cost for tax and financial
statement purposes.
FS-89
<PAGE> 359
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 10,431,994 $ 85,813,744 12,409,366 $ 103,769,637
- -----------------------------------------------------------------------------------------------------------------------
Class B 3,700,766 30,098,258 5,306,019 44,489,342
- -----------------------------------------------------------------------------------------------------------------------
Class C 851,082 6,903,087 1,294,847 10,824,561
- -----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 1,102,784 8,919,262 1,031,670 8,611,126
- -----------------------------------------------------------------------------------------------------------------------
Class B 264,015 2,137,326 183,219 1,532,455
- -----------------------------------------------------------------------------------------------------------------------
Class C 31,375 254,074 16,529 138,044
- -----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (12,703,387) (103,376,731) (12,388,704) (103,457,259)
- -----------------------------------------------------------------------------------------------------------------------
Class B (3,338,570) (26,900,746) (2,444,886) (20,463,684)
- -----------------------------------------------------------------------------------------------------------------------
Class C (780,440) (6,299,196) (265,347) (2,221,068)
- -----------------------------------------------------------------------------------------------------------------------
(440,381) $ (2,450,922) 5,142,713 $ 43,223,154
=======================================================================================================================
</TABLE>
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and a share of
Class B outstanding during each of the years in the five-year period ended
December 31, 1999, and for a share of Class C outstanding during each of the
years in the two-year period ended December 31, 1999 and the period August 4,
1997 (date sales commenced) through December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.35 $ 8.34 $ 8.19 $ 8.31 $ 7.78
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.41 0.42 0.42 0.43 0.43
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.61) 0.01 0.16 (0.12) 0.56
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations (0.20) 0.43 0.58 0.31 0.99
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.41) (0.42) (0.43) (0.43) (0.43)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Returns of capital -- -- -- -- (0.03)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (0.41) (0.42) (0.43) (0.43) (0.46)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 7.74 $ 8.35 $ 8.34 $ 8.19 $ 8.31
============================================================ ======== ======== ======== ======== ========
Total return(a) (2.45)% 5.28% 7.27% 3.90% 13.05%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $294,720 $327,705 $318,469 $278,812 $284,803
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.84%(b) 0.82% 0.90% 0.80% 0.88%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 5.01%(b) 5.00% 5.14% 5.29% 5.26%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 28% 19% 24% 26% 36%
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average daily net assets of $322,097,527.
FS-90
<PAGE> 360
NOTE 8-FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------- ----------------------------
1999 1998 1997 1996 1995 1999 1998 1997
------- ------- ------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.37 $ 8.36 $ 8.19 $ 8.31 $ 7.78 $ 8.35 $ 8.35 $ 8.30
- -------------------------------------- ------- ------- ------- ------- ------- ------ ------ ------
Income from investment operations:
Net investment income 0.35 0.36 0.36 0.37 0.39 0.35 0.36 0.15
- -------------------------------------- ------- ------- ------- ------- ------- ------ ------ ------
Net gains (losses) on securities
(both realized and unrealized) (0.62) 0.01 0.17 (0.13) 0.54 (0.61) -- 0.04
- -------------------------------------- ------- ------- ------- ------- ------- ------ ------ ------
Total from investment operations (0.27) 0.37 0.53 0.24 0.93 (0.26) 0.36 0.19
- -------------------------------------- ------- ------- ------- ------- ------- ------ ------ ------
Less distributions:
Dividends from net investment income (0.35) (0.36) (0.36) (0.36) (0.37) (0.35) (0.36) (0.14)
- -------------------------------------- ------- ------- ------- ------- ------- ------ ------ ------
Returns of capital -- -- -- -- (0.03) -- -- --
- -------------------------------------- ------- ------- ------- ------- ------- ------ ------
Total distributions (0.35) (0.36) (0.36) (0.36) (0.40) (0.35) (0.36) (0.14)
- -------------------------------------- ------- ------- ------- ------- ------- ------ ------ ------
Net asset value, end of period $ 7.75 $ 8.37 $ 8.36 $ 8.19 $ 8.31 $ 7.74 $ 8.35 $ 8.35
====================================== ======= ======= ======= ======= ======= ====== ====== ======
Total return(a) (3.28)% 4.48% 6.59% 2.99% 12.14% (3.16)% 4.36% 2.36%
====================================== ======= ======= ======= ======= ======= ====== ====== ======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $72,256 $72,723 $47,185 $33,770 $21,478 $9,652 $9,565 $ 825
====================================== ======= ======= ======= ======= ======= ====== ====== ======
Ratio of expenses to average net
assets 1.59%(b) 1.57% 1.66% 1.61% 1.68%(c) 1.59%(b) 1.57% 1.67%(d)
====================================== ======= ======= ======= ======= ======= ====== ====== ======
Ratio of net investment income to
average net assets 4.26%(b) 4.25% 4.38% 4.49% 4.46%(e) 4.26%(b) 4.25% 4.37%(d)
====================================== ======= ======= ======= ======= ======= ====== ====== ======
Portfolio turnover rate 28% 19% 24% 26% 36% 28% 19% 24%
====================================== ======= ======= ======= ======= ======= ====== ====== ======
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(b) Ratios are based on average daily net assets of $75,352,248 and $10,172,642
for Class B and Class C, respectively.
(c) After fee waivers and/or expense reimbursements. The ratio of expenses to
average daily net assets prior to fee waivers and/or expense reimbursements
was 1.77% for 1995.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. The ratio of net investment
income to average daily net assets prior to fee waivers and/or expense
reimbursements was 4.37% for 1995.
FS-91
<PAGE> 361
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Select Growth Fund:
We have audited the accompanying statement of assets and
liabilities of the AIM Select Growth Fund (a portfolio of
AIM Funds Group), including the schedule of investments,
as of December 31, 1999, and the related statement of
operations for the year then ended, the statement of
changes in net assets for each of the years in the
two-year period then ended and the financial highlights
for each of the years in the five-year period then ended.
These financial statements and financial highlights are
the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatements.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statement. Our procedures included confirmation of
securities owned as of December 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 audits provide a reasonable basis for our opinion
In our opinion, the financial statements and financial
highlights referred to above presently fairly, in all
material respects, the financial position of AIM Select
Growth Fund as of December 31, 1999, the results of its
operations for the year then ended, the changes in its
net assets for each of the years in the two-year period
then ended and the financial highlights for each of the
years in the five-year period then ended, in conformity
with generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
February 4, 2000
Houston, Texas
FS-92
<PAGE> 362
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-93.93%
BROADCASTING (TELEVISION, RADIO &
CABLE)-2.91%
AMFM Inc.(a) 76,000 $ 5,947,000
- ---------------------------------------------------------------
CBS Corp.(a) 122,400 7,825,950
- ---------------------------------------------------------------
Clear Channel Communications, Inc.(a) 197,956 17,667,573
- ---------------------------------------------------------------
31,440,523
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-7.19%
Comverse Technology, Inc.(a) 214,950 31,114,012
- ---------------------------------------------------------------
Finisar Corp.(a) 16,400 1,473,950
- ---------------------------------------------------------------
Juniper Networks, Inc.(a) 21,600 7,344,000
- ---------------------------------------------------------------
Lucent Technologies Inc. 160,800 12,029,850
- ---------------------------------------------------------------
Nokia Oyj A.B.-ADR (Finland) 123,600 23,484,000
- ---------------------------------------------------------------
Sycamore Networks, Inc.(a) 7,000 2,156,000
- ---------------------------------------------------------------
77,601,812
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-3.67%
Dell Computer Corp.(a) 179,000 9,129,000
- ---------------------------------------------------------------
National Instruments Corp.(a) 165,000 6,311,250
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a) 312,000 24,160,500
- ---------------------------------------------------------------
39,600,750
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.43%
Cisco Systems, Inc.(a) 144,000 15,426,000
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-3.54%
EMC Corp.(a) 274,000 29,934,500
- ---------------------------------------------------------------
QLogic Corp.(a) 51,500 8,233,562
- ---------------------------------------------------------------
38,168,062
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-16.10%
America Online, Inc.(a) 92,000 6,940,250
- ---------------------------------------------------------------
AppNet, Inc.(a) 190,700 8,343,125
- ---------------------------------------------------------------
Citrix Systems, Inc.(a) 123,300 15,165,900
- ---------------------------------------------------------------
Electronic Arts Inc.(a) 96,700 8,122,800
- ---------------------------------------------------------------
InfoSpace.com, Inc.(a) 165,000 35,310,000
- ---------------------------------------------------------------
ISS Group, Inc.(a) 16,400 1,166,450
- ---------------------------------------------------------------
Lycos, Inc.(a) 90,000 7,160,625
- ---------------------------------------------------------------
Marimba, Inc.(a) 17,000 783,062
- ---------------------------------------------------------------
Microsoft Corp.(a) 279,600 32,643,300
- ---------------------------------------------------------------
Oracle Corp.(a) 216,000 24,205,500
- ---------------------------------------------------------------
Siebel Systems, Inc.(a) 74,000 6,216,000
- ---------------------------------------------------------------
USWeb Corp.(a) 261,000 11,598,187
- ---------------------------------------------------------------
VERITAS Software Corp.(a) 112,500 16,101,562
- ---------------------------------------------------------------
173,756,761
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
CONSUMER FINANCE-1.16% SHARES VALUE
<S> <C> <C>
Capital One Financial Corp. 93,000 $ 4,481,437
- ---------------------------------------------------------------
Providian Financial Corp. 88,050 8,018,053
- ---------------------------------------------------------------
12,499,490
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.54%
McKesson HBOC, Inc. 260,000 5,866,250
- ---------------------------------------------------------------
ELECTRIC COMPANIES-1.05%
Niagara Mohawk Holdings Inc.(a) 214,300 2,986,806
- ---------------------------------------------------------------
Northeast Utilities 218,600 4,494,963
- ---------------------------------------------------------------
Texas Utilities Co. 107,000 3,805,187
- ---------------------------------------------------------------
11,286,956
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-4.57%
American Power Conversion Corp.(a) 318,000 8,387,250
- ---------------------------------------------------------------
DII Group, Inc.(a) 111,000 7,877,531
- ---------------------------------------------------------------
Koninklijke (Royal) Phillips
Electronics N.V.-ADR
(Netherlands) 111,136 15,003,360
- ---------------------------------------------------------------
Sanmina Corp.(a) 87,200 8,709,100
- ---------------------------------------------------------------
Solectron Corp.(a) 98,000 9,322,250
- ---------------------------------------------------------------
49,299,491
- ---------------------------------------------------------------
ELECTRONICS
(INSTRUMENTATION)-1.32%
Tektronix, Inc. 256,000 9,952,000
- ---------------------------------------------------------------
Waters Corp.(a) 82,000 4,346,000
- ---------------------------------------------------------------
14,298,000
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-7.50%
Altera Corp.(a) 280,800 13,917,150
- ---------------------------------------------------------------
Celestica Inc. (Canada)(a) 190,000 10,545,000
- ---------------------------------------------------------------
Linear Technology Corp. 88,800 6,354,750
- ---------------------------------------------------------------
Maxim Integrated Products, Inc.(a) 140,000 6,606,250
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 271,600 43,540,875
- ---------------------------------------------------------------
80,964,025
- ---------------------------------------------------------------
ENTERTAINMENT-0.83%
SFX Entertainment, Inc.-Class A(a) 246,300 8,912,981
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-1.34%
Teradyne, Inc.(a) 220,000 14,520,000
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-4.29%
American Express Co. 40,100 6,666,625
- ---------------------------------------------------------------
Citigroup Inc. 255,375 14,189,273
- ---------------------------------------------------------------
Fannie Mae 81,500 5,088,656
- ---------------------------------------------------------------
Freddie Mac 241,020 11,343,004
- ---------------------------------------------------------------
MGIC Investment Corp. 149,300 8,985,994
- ---------------------------------------------------------------
46,273,552
- ---------------------------------------------------------------
</TABLE>
FS-93
<PAGE> 363
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOODS-0.35%
Keebler Foods Co.(a) 135,000 $ 3,796,875
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-1.37%
Warner-Lambert Co. 180,000 14,748,750
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-1.06%
Forest Laboratories, Inc.(a) 105,200 6,463,225
- ---------------------------------------------------------------
Medicis Pharmaceutical
Corp.-Class A(a) 117,000 4,979,813
- ---------------------------------------------------------------
11,443,038
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-0.72%
Pfizer Inc. 241,200 7,823,925
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL
MANAGEMENT)-0.63%
Health Management Associates,
Inc.- Class A(a) 510,000 6,821,250
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.40%
Manor Care, Inc.(a) 270,700 4,331,200
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.99%
Express Scripts, Inc.-Class A(a) 34,600 2,214,400
- ---------------------------------------------------------------
United Healthcare Corp. 159,100 8,452,188
- ---------------------------------------------------------------
10,666,588
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.86%
Beckman Coulter, Inc. 68,500 3,484,938
- ---------------------------------------------------------------
Biomet, Inc. 120,600 4,824,000
- ---------------------------------------------------------------
Guidant Corp.(a) 173,100 8,135,700
- ---------------------------------------------------------------
Sybron International Corp.(a) 149,000 3,678,438
- ---------------------------------------------------------------
20,123,076
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-0.20%
Capital Senior Living Corp.(a) 425,000 2,151,563
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.43%
UnumProvident Corp. 145,000 4,649,063
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-0.73%
Radian Group Inc. 57,000 2,721,750
- ---------------------------------------------------------------
XL Capital Ltd.-Class A 100,000 5,187,500
- ---------------------------------------------------------------
7,909,250
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-2.08%
Affiliated Managers Group, Inc.(a) 54,300 2,195,756
- ---------------------------------------------------------------
Knight/Trimark Group, Inc.-Class A(a) 440,000 20,240,000
- ---------------------------------------------------------------
22,435,756
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.47%
Mattel, Inc. 383,800 5,037,375
- ---------------------------------------------------------------
LODGING-HOTELS-0.41%
Carnival Corp. 91,700 $ 4,384,406
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.34%
Tyco International Ltd. 372,640 14,486,380
- ---------------------------------------------------------------
NATURAL GAS-0.46%
Enron Corp. 112,000 4,970,000
- ---------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-2.05%
Cooper Cameron Corp.(a) 120,000 5,872,500
- ---------------------------------------------------------------
Diamond Offshore Drilling, Inc. 125,000 3,820,313
- ---------------------------------------------------------------
ENSCO International Inc. 344,600 7,882,725
- ---------------------------------------------------------------
Schlumberger Ltd. 73,400 4,128,750
- ---------------------------------------------------------------
Transocean Sedco Forex Inc. 14,240 479,697
- ---------------------------------------------------------------
22,183,985
- ---------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-0.42%
Atlantic Richfield Co. 52,900 4,575,850
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.51%
International Paper Co. 96,700 5,457,506
- ---------------------------------------------------------------
RAILROADS-0.71%
Kansas City Southern Industries, Inc. 103,000 7,686,375
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-1.20%
Home Depot, Inc. (The) 106,800 7,322,475
- ---------------------------------------------------------------
Lowe's Cos., Inc. 93,600 5,592,600
- ---------------------------------------------------------------
12,915,075
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.11%
CDW Computer Centers, Inc.(a) 152,100 11,958,863
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.41%
Saks Inc.(a) 284,500 4,427,531
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.38%
Dollar Tree Stores, Inc.(a) 84,025 4,069,961
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.40%
Albertson's, Inc. 172,000 5,547,000
- ---------------------------------------------------------------
Kroger Co. (The)(a) 229,800 4,337,475
- ---------------------------------------------------------------
Safeway Inc.(a) 146,000 5,192,125
- ---------------------------------------------------------------
15,076,600
- ---------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-1.80%
Costco Wholesale Corp.(a) 76,000 6,935,000
- ---------------------------------------------------------------
Dayton Hudson Corp. 170,000 12,484,375
- ---------------------------------------------------------------
19,419,375
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-0.29%
Linens 'n Things, Inc.(a) 105,000 3,110,625
- ---------------------------------------------------------------
</TABLE>
FS-94
<PAGE> 364
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-2.08%
Men's Wearhouse, Inc. (The)(a) 596,000 $ 17,507,500
- ---------------------------------------------------------------
Too Inc.(a) 290,000 5,002,500
- ---------------------------------------------------------------
22,510,000
- ---------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-0.78%
Media Metrix, Inc.(a) 33,000 1,179,750
- ---------------------------------------------------------------
Snyder Communications, Inc.(a) 74,000 1,424,500
- ---------------------------------------------------------------
Young & Rubicam Inc. 82,600 5,843,950
- ---------------------------------------------------------------
8,448,200
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-2.04%
Convergys Corp.(a) 98,000 3,013,500
- ---------------------------------------------------------------
Iron Mountain Inc.(a) 161,000 6,329,313
- ---------------------------------------------------------------
Quanta Services, Inc.(a) 295,000 8,333,750
- ---------------------------------------------------------------
Regis Corp. 230,000 4,341,250
- ---------------------------------------------------------------
22,017,813
- ---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-1.23%
Brocade Communications Systems,Inc.(a) 29,000 5,133,000
- ---------------------------------------------------------------
Critical Path, Inc.(a) 32,000 3,020,000
- ---------------------------------------------------------------
Insight Enterprises, Inc.(a) 126,000 5,118,750
- ---------------------------------------------------------------
13,271,750
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-2.68%
Affiliated Computer Services,
Inc.-Class A(a) 22,600 1,039,600
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 174,825 4,501,744
- ---------------------------------------------------------------
CSG Systems International, Inc.(a) 180,000 7,177,500
- ---------------------------------------------------------------
DST Systems, Inc.(a) 58,100 4,433,756
- ---------------------------------------------------------------
Fiserv, Inc.(a) 85,275 3,267,098
- ---------------------------------------------------------------
NOVA Corp.(a) 102,232 3,226,698
- ---------------------------------------------------------------
Paychex, Inc. 133,500 $ 5,340,000
- ---------------------------------------------------------------
28,986,396
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-3.47%
Global Crossing Ltd. (Bermuda)(a) 98,842 4,942,100
- ---------------------------------------------------------------
MCI WorldCom, Inc.(a) 491,945 26,103,805
- ---------------------------------------------------------------
Viatel, Inc.(a) 120,000 6,435,000
- ---------------------------------------------------------------
37,480,905
- ---------------------------------------------------------------
WASTE MANAGEMENT-0.43%
Waste Management, Inc. 271,600 4,668,125
- ---------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$482,564,675) 1,013,958,083
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. DOLLAR DENOMINATED
CONVERTIBLE NOTES-0.45%
COMPUTERS (PERIPHERALS)-0.45%
EMC Corp., Conv. Sub. Notes,
3.25%, 03/15/02 (Cost $677,145) $ 500,000 4,828,750
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS-5.69%
STIC Liquid Assets Portfolio(b) 30,735,705 30,735,705
- ---------------------------------------------------------------
STIC Prime Portfolio(b) 30,735,705 30,735,705
- ---------------------------------------------------------------
Total Money Market Funds
(Cost $61,471,410) 61,471,410
- ---------------------------------------------------------------
TOTAL INVESTMENTS-100.07% (Cost
$544,713,230) 1,080,258,243
- ---------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.07%) (799,909)
- ---------------------------------------------------------------
NET ASSETS-100.00% $1,079,458,334
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Sub. - Subordinated
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) This money market fund has the same investment advisor as the fund.
See Notes to Financial Statements.
FS-95
<PAGE> 365
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$544,713,230) $1,080,258,243
- ----------------------------------------------------------
Receivables for:
Fund shares sold 2,382,050
- ----------------------------------------------------------
Dividends and interest 477,981
- ----------------------------------------------------------
Investment for deferred compensation plan 71,413
- ----------------------------------------------------------
Other assets 31,284
- ----------------------------------------------------------
Total assets 1,083,220,971
- ----------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 1,950,932
- ----------------------------------------------------------
Deferred compensation plan 71,413
- ----------------------------------------------------------
Accrued advisory fees 560,995
- ----------------------------------------------------------
Accrued administrative services fees 11,504
- ----------------------------------------------------------
Accrued distribution fees 945,546
- ----------------------------------------------------------
Accrued transfer agent fees 125,614
- ----------------------------------------------------------
Accrued operating expenses 96,633
- ----------------------------------------------------------
Total liabilities 3,762,637
- ----------------------------------------------------------
Net assets applicable to shares
outstanding $1,079,458,334
==========================================================
NET ASSETS:
Class A $ 461,628,075
==========================================================
Class B $ 592,554,822
==========================================================
Class C $ 25,275,437
==========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 17,601,889
==========================================================
Class B 24,115,512
==========================================================
Class C 1,029,659
==========================================================
Class A:
Net asset value and redemption price per
share $ 26.23
- ----------------------------------------------------------
Offering price per share:
(Net asset value of $26.23 divided
by 94.50%) $ 27.76
==========================================================
Class B:
Net asset value and offering price per
share $ 24.57
==========================================================
Class C:
Net asset value and offering price per
share $ 24.55
==========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $40,337 foreign
withholding tax) $ 3,941,209
- ---------------------------------------------------------
Interest 2,584,817
- ---------------------------------------------------------
Total investment income 6,526,026
- ---------------------------------------------------------
EXPENSES:
Advisory fees 5,507,389
- ---------------------------------------------------------
Administrative services fees 110,205
- ---------------------------------------------------------
Custodian fees 79,919
- ---------------------------------------------------------
Transfer agent fees-Class A 444,403
- ---------------------------------------------------------
Transfer agent fees-Class B 871,807
- ---------------------------------------------------------
Transfer agent fees-Class C 25,522
- ---------------------------------------------------------
Trustees' fees 13,787
- ---------------------------------------------------------
Distribution fees-Class A 896,196
- ---------------------------------------------------------
Distribution fees-Class B 4,672,685
- ---------------------------------------------------------
Distribution fees-Class C 134,325
- ---------------------------------------------------------
Other 281,205
- ---------------------------------------------------------
Total expenses 13,037,443
- ---------------------------------------------------------
Less: Expenses paid indirectly (11,204)
- ---------------------------------------------------------
Net expenses 13,026,239
- ---------------------------------------------------------
Net investment income (loss) (6,500,213)
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain from:
Investment securities 45,120,492
- ---------------------------------------------------------
Foreign currencies 84
- ---------------------------------------------------------
Futures contracts 1,493,262
- ---------------------------------------------------------
46,613,838
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 269,570,221
- ---------------------------------------------------------
Foreign currencies (153)
- ---------------------------------------------------------
Futures contracts (1,127,100)
- ---------------------------------------------------------
268,442,968
- ---------------------------------------------------------
Net gain from investment securities,
foreign currencies and futures
contracts 315,056,806
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $308,556,593
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-96
<PAGE> 366
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
-------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (6,500,213) $ (4,533,684)
- ---------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, future and option contracts 46,613,838 17,616,351
- ---------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and future contracts 268,442,968 148,755,001
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 308,556,593 161,837,668
- ---------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS:
Class A (17,929,351) (8,360,767)
- ---------------------------------------------------------------------------------------------
Class B (24,484,976) (11,756,791)
- ---------------------------------------------------------------------------------------------
Class C (997,756) (234,011)
- ---------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A 25,912,665 (7,618,676)
- ---------------------------------------------------------------------------------------------
Class B 19,950,492 (6,948,989)
- ---------------------------------------------------------------------------------------------
Class C 11,803,897 6,185,419
- ---------------------------------------------------------------------------------------------
Net increase in net assets 322,811,564 133,103,853
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 756,646,770 623,542,917
- ---------------------------------------------------------------------------------------------
End of period $1,079,458,334 $756,646,770
=============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 548,170,108 $494,529,257
- ---------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (88,818) (71,168)
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, future and option contracts (4,167,969) (4,913,364)
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and future contracts 535,545,013 267,102,045
- ---------------------------------------------------------------------------------------------
$1,079,458,334 $756,646,770
=============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-97
<PAGE> 367
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Select Growth Fund (the "Fund") is a series portfolio of AIM Funds Group
(the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of nine separate portfolios,
each having an unlimited number of shares of beneficial interest. The Fund
currently offers three different classes of shares: Class A shares, Class B
shares and Class C shares. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is to achieve long-term growth of capital by
investing primarily in the common stocks of established medium to large size
companies with prospects for above average, long term earnings growth.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last 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 closing bid price on that day. Each
security reported on the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the
closing bid price. Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices are
not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in the
case of equity securities and in the case of debt obligations, the mean
between the last bid and asked prices. 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.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of trading of the New York Stock Exchange
("NYSE").
Generally, trading in foreign securities 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 would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded
on the accrual basis. Dividend income is recorded on the ex-dividend date.
On December 31, 1999, undistributed net investment income was increased by
$6,482,563, undistributed net realized gains decreased by $2,456,360 and
paid-in capital decreased by $4,026,203 as a result of differing book/tax
treatment of equalization credits and other reclassifications. Net assets of
the Fund were unaffected by the reclassifications.
C. Distributions -- Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to use a portion of the proceeds of fund share redemptions as
distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such transactions. The
Fund does not separately account for that portion of the results of
operations resulting from changes in foreign exchange rates on investments
and the fluctuations arising from changes in market prices of securities
held. Such
FS-98
<PAGE> 368
fluctuations are included with the net realized and unrealized gain or loss
from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
G. Futures Contracts -- The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits required
upon entering into futures contracts are satisfied by the segregation of
specific securities as collateral for the account of the broker (the Fund's
agent in acquiring the futures position). During the period the futures
contracts are open, changes in the value of the contracts are recognized as
unrealized gains or losses by "marking to market" on a daily basis to
reflect the market value of the contracts at the end of each day's trading.
Variation margin payments are made or received depending upon whether
unrealized gains or losses are incurred. When the contracts are closed, the
Fund recognizes a realized gain or loss equal to the difference between the
proceeds from, or cost of, the closing transaction and the Fund's basis in
the contract. Risks include the possibility of an illiquid market and that a
change in value of the contracts may not correlate with changes in the value
of the securities being hedged.
H. Expenses -- Distribution expenses and transfer agency expenses directly
attributable to a class of shares are charged to that class' operations. All
other expenses which are attributable to more than one class are allocated
among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 1999, AIM was
paid $110,205 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $776,902 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively, the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares. Of these amounts, the Fund may
pay a service fee of 0.25% of the average daily net assets of the Class A, Class
B or Class C shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
the appropriate class of shares of the Fund. Any amounts not paid as a service
fee under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. For the year ended December 31,
1999, the Class A, Class B and Class C shares paid AIM Distributors $896,196,
$4,672,685 and $134,325, respectively, as compensation under the Plans.
AIM Distributors received commissions of $176,131 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $75,951 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 1999, the Fund paid legal fees of $4,890
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $9,190 and $2,014, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $11,204 during the year ended December 31, 1999.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may
FS-99
<PAGE> 369
borrow on a first come, first served basis. During the year ended December 31,
1999, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. Prior to May 28, 1999, the commitment
fee rate was 0.05%. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$250,121,433 and $239,081,137, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $553,509,579
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (18,117,424)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $535,392,155
==========================================================================
</TABLE>
Cost of investments for tax purposes is $544,866,088.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 8,174,582 $ 169,122,203 31,005,519 $ 526,456,274
- ----------------------------------------------------------------------------------------------------------------------
Class B 5,441,024 110,096,224 5,430,217 86,111,821
- ----------------------------------------------------------------------------------------------------------------------
Class C 820,566 16,761,504 569,912 9,220,769
- ----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 702,598 17,072,219 444,090 7,953,651
- ----------------------------------------------------------------------------------------------------------------------
Class B 996,161 22,682,713 649,261 11,017,972
- ----------------------------------------------------------------------------------------------------------------------
Class C 41,870 952,496 13,022 220,846
- ----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (7,818,939) (160,281,757) (31,896,692) (542,028,601)
- ----------------------------------------------------------------------------------------------------------------------
Class B (5,672,316) (112,828,445) (6,508,718) (104,078,782)
- ----------------------------------------------------------------------------------------------------------------------
Class C (296,926) (5,910,103) (198,182) (3,256,196)
- ----------------------------------------------------------------------------------------------------------------------
2,388,620 $ 57,667,054 (491,571) $ (8,382,246)
======================================================================================================================
</TABLE>
FS-100
<PAGE> 370
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and a share of
Class B outstanding during each of the years in the five-year period ended
December 31, 1999, and for a share of Class C outstanding during each of the
years in the two-year period ended December 31, 1999 and the period August 4,
1997 (date sales commenced) through December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
1999 1998 1997(a) 1996 1995(a)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.35 $ 15.67 $ 14.78 $ 13.05 $ 10.32
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.06) (0.04) 0.01 0.07 0.02
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 8.00 4.24 2.82 2.34 3.50
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 7.94 4.20 2.83 2.41 3.52
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- (0.01) -- --
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from net realized gains (1.06) (0.52) (1.93) (0.68) (0.79)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (1.06) (0.52) (1.94) (0.68) (0.79)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 26.23 $ 19.35 $ 15.67 $ 14.78 $ 13.05
============================================================ ======== ======== ======== ======== ========
Total return(b) 41.48% 27.09% 19.54% 18.61% 34.31%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $461,628 $320,143 $266,168 $227,882 $168,217
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.09%(c) 1.11% 1.13% 1.18% 1.28%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income (loss) to average net assets (0.31)%(c) (0.22)% 0.04% 0.46% 0.20%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 31% 68% 110% 97% 87%
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $358,478,474.
<TABLE>
<CAPTION>
CLASS B CLASS C
-------------------------------------------------------- --------------------------------
1999(a) 1998 1997(a) 1996 1995(a) 1999(a) 1998(a) 1997(a)
-------- -------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 18.33 $ 14.98 $ 14.32 $ 12.77 $ 10.21 $ 18.32 $ 14.98 $ 17.65
- --------------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income (loss) (0.23) (0.17) (0.13) (0.05) (0.08) (0.23) (0.17) (0.04)
- --------------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) 7.53 4.04 2.72 2.28 3.43 7.52 4.03 (0.70)
- --------------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations 7.30 3.87 2.59 2.23 3.35 7.29 3.86 (0.74)
- --------------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Distributions from net realized
gains (1.06) (0.52) (1.93) (0.68) (0.79) (1.06) (0.52) (1.93)
- --------------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions (1.06) (0.52) (1.93) (0.68) (0.79) (1.06) (0.52) (1.93)
- --------------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 24.57 $ 18.33 $ 14.98 $ 14.32 $ 12.77 $ 24.55 $ 18.32 $ 14.98
================================= ======== ======== ======== ======== ======== ======== ======== ========
Total return(b) 40.29% 26.13% 18.50% 17.60% 33.00% 40.26% 26.07% (3.86)%
================================= ======== ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $592,555 $428,002 $356,186 $280,807 $138,034 $ 25,275 $ 8,501 $ 1,189
================================= ======== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets 1.90%(c) 1.93% 1.99% 2.03% 2.13% 1.90%(c) 1.93% 1.95%(d)
================================= ======== ======== ======== ======== ======== ======== ======== ========
Ratio of net investment income
(loss) to average net assets (1.12)%(c) (1.04)% (0.82)% (0.39)% (0.65)% (1.12)%(c) (1.04)% (0.77)%(d)
================================= ======== ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 31% 68% 110% 97% 87% 31% 68% 110%
================================= ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $467,268,589 and $13,432,524 for
Class B and Class C, respectively.
(d) Annualized.
FS-101
<PAGE> 371
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM Value Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Value Fund (a portfolio of AIM Funds
Group), including the schedule of investments, as of
December 31, 1999, and the related statement of
operations for the year then ended, and the statement of
changes in net assets for each of the years in the
two-year period then ended and the financial highlights
for each of the years in the five-year period then ended.
These financial statements and financial highlights are
the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Value
Fund as of December 31, 1999, the results of its
operations for the year then ended, the changes in net
assets for each of the years in the two-year period then
ended and the financial highlights for each of the years
in the five-year period then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
February 4, 2000
Houston, Texas
FS-102
<PAGE> 372
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-90.13%
BANKS (MONEY CENTER)-1.21%
Chase Manhattan Corp. (The) 4,350,000 $ 337,940,625
- ----------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO
& CABLE)-8.83%
Comcast Corp.-Class A 26,600,000 1,336,650,000
- ----------------------------------------------------------------
Cox Communications, Inc.-Class
A(a) 18,075,600 930,893,400
- ----------------------------------------------------------------
MediaOne Group, Inc. 2,500,000 192,031,250
- ----------------------------------------------------------------
2,459,574,650
- ----------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-10.06%
Comverse Technology, Inc.(a) 725,000 104,943,750
- ----------------------------------------------------------------
Lucent Technologies Inc. 1,800,000 134,662,500
- ----------------------------------------------------------------
Motorola, Inc. 3,200,000 471,200,000
- ----------------------------------------------------------------
Nokia Oyj-ADR (Finland) 11,000,000 2,090,000,000
- ----------------------------------------------------------------
2,800,806,250
- ----------------------------------------------------------------
COMPUTERS (HARDWARE)-9.05%
Apple Computer, Inc.(a) 8,000,000 822,500,000
- ----------------------------------------------------------------
Gateway Inc.(a) 11,361,100 818,709,269
- ----------------------------------------------------------------
International Business Machines
Corp. 4,257,400 459,799,200
- ----------------------------------------------------------------
Sun Microsystems, Inc.(a) 5,400,000 418,162,500
- ----------------------------------------------------------------
2,519,170,969
- ----------------------------------------------------------------
COMPUTERS (PERIPHERALS)-2.44%
EMC Corp.(a) 987,400 107,873,450
- ----------------------------------------------------------------
Lexmark International Group,
Inc.- Class A(a) 6,300,000 570,150,000
- ----------------------------------------------------------------
678,023,450
- ----------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-6.15%
At Home Corp.-Series A(a) 12,000,000 514,500,000
- ----------------------------------------------------------------
BMC Software, Inc.(a) 2,200,000 175,862,500
- ----------------------------------------------------------------
Citrix Systems, Inc.(a) 656,000 80,688,000
- ----------------------------------------------------------------
Microsoft Corp.(a) 4,200,000 490,350,000
- ----------------------------------------------------------------
Unisys Corp.(a) 14,108,100 450,577,444
- ----------------------------------------------------------------
1,711,977,944
- ----------------------------------------------------------------
CONSUMER FINANCE-0.20%
Providian Financial Corp. 600,000 54,637,500
- ----------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.48%
Solectron Corp.(a) 1,400,000 133,175,000
- ----------------------------------------------------------------
ELECTRONICS
(INSTRUMENTATION)-0.09%
Waters Corp.(a) 500,000 26,500,000
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS
(SEMICONDUCTORS)-1.47%
Analog Devices, Inc.(a) 1,600,000 $ 148,800,000
- ----------------------------------------------------------------
Texas Instruments Inc. 2,700,000 261,562,500
- ----------------------------------------------------------------
410,362,500
- ----------------------------------------------------------------
ENTERTAINMENT-3.12%
Time Warner Inc. 12,000,000 869,250,000
- ----------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-2.89%
Applied Materials, Inc.(a) 5,000,000 633,437,500
- ----------------------------------------------------------------
Teradyne, Inc.(a) 2,584,100 170,550,600
- ----------------------------------------------------------------
803,988,100
- ----------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-3.62%
American Express Co. 1,638,800 272,450,500
- ----------------------------------------------------------------
Associates First Capital
Corp.-Class A 10,600,000 290,837,500
- ----------------------------------------------------------------
Citigroup Inc. 6,500,000 361,156,250
- ----------------------------------------------------------------
Freddie Mac 1,800,000 84,712,500
- ----------------------------------------------------------------
1,009,156,750
- ----------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-1.62%
Bristol-Myers Squibb Co. 6,000,000 385,125,000
- ----------------------------------------------------------------
Warner-Lambert Co. 800,000 65,550,000
- ----------------------------------------------------------------
450,675,000
- ----------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-1.82%
Pharmacia & Upjohn, Inc. 11,266,600 506,997,000
- ----------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-2.55%
Guidant Corp. 15,100,000 709,700,000
- ----------------------------------------------------------------
HOUSEHOLD PRODUCTS
(NON-DURABLES)-1.39%
Colgate-Palmolive Co. 3,925,500 255,157,500
- ----------------------------------------------------------------
Kimberly-Clark Corp. 2,000,000 130,500,000
- ----------------------------------------------------------------
385,657,500
- ----------------------------------------------------------------
INSURANCE (MULTI-LINE)-3.66%
American International Group,
Inc. 8,100,000 875,812,500
- ----------------------------------------------------------------
Hartford Financial Services
Group, Inc. (The) 3,000,000 142,125,000
- ----------------------------------------------------------------
1,017,937,500
- ----------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-2.46%
Morgan Stanley Dean Witter &
Co. 4,801,500 685,414,125
- ----------------------------------------------------------------
LODGING-HOTELS-1.48%
Carnival Corp. 8,600,000 411,187,500
- ----------------------------------------------------------------
</TABLE>
FS-103
<PAGE> 373
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MANUFACTURING
(DIVERSIFIED)-2.69%
Tyco International Ltd. 19,241,100 $ 747,997,762
- ----------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.79%
Weyerhaeuser Co. 3,076,300 220,916,794
- ----------------------------------------------------------------
RESTAURANTS-0.38%
McDonald's Corp. 2,600,000 104,812,500
- ----------------------------------------------------------------
RETAIL (BUILDING
SUPPLIES)-0.79%
Lowe's Cos., Inc. 3,700,000 221,075,000
- ----------------------------------------------------------------
RETAIL (COMPUTERS &
ELECTRONICS)-1.84%
Best Buy Co., Inc.(a) 10,190,300 511,425,681
- ----------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.90%
Kroger Co. (The)(a) 18,232,200 344,132,775
- ----------------------------------------------------------------
Safeway Inc.(a) 5,200,000 184,925,000
- ----------------------------------------------------------------
529,057,775
- ----------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-6.71%
Costco Wholesale Corp.(a) 5,650,000 515,562,500
- ----------------------------------------------------------------
Dayton Hudson Corp. 18,428,100 1,353,313,594
- ----------------------------------------------------------------
1,868,876,094
- ----------------------------------------------------------------
SERVICES (ADVERTISING/
MARKETING)-1.80%
Omnicom Group, Inc. 5,000,000 500,000,000
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (DATA
PROCESSING)-1.88%
First Data Corp. 10,600,000 $ 522,712,500
- ----------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-4.82%
Nextel Communications,
Inc.-Class A(a) 13,000,000 1,340,625,000
- ----------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-1.94%
MCI WorldCom, Inc.(a) 10,200,000 541,237,500
- ----------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$15,946,920,824) 25,090,868,969
- ----------------------------------------------------------------
MONEY MARKET FUNDS-9.74%
STIC Liquid Assets Portfolio(b) 1,356,024,528 1,356,024,528
- ----------------------------------------------------------------
STIC Prime Portfolio(b) 1,356,024,528 1,356,024,528
- ----------------------------------------------------------------
Total Money Market Funds
(Cost $2,712,049,056) 2,712,049,056
- ----------------------------------------------------------------
TOTAL INVESTMENTS-99.87% (Cost
$18,658,969,880) 27,802,918,025
- ----------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.13% 36,100,295
- ----------------------------------------------------------------
NET ASSETS-100.00% $27,839,018,320
================================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-104
<PAGE> 374
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$18,658,969,880) $27,802,918,025
- ----------------------------------------------------------
Receivables for:
Fund shares sold 84,271,237
- ----------------------------------------------------------
Dividends and interest 16,004,305
- ----------------------------------------------------------
Foreign currency contracts 68,948,977
- ----------------------------------------------------------
Investment for deferred compensation plan 206,592
- ----------------------------------------------------------
Other assets 308,310
- ----------------------------------------------------------
Total assets 27,972,657,446
- ----------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 90,605,579
- ----------------------------------------------------------
Deferred compensation plan 206,592
- ----------------------------------------------------------
Accrued advisory fees 13,810,980
- ----------------------------------------------------------
Accrued distribution fees 24,487,687
- ----------------------------------------------------------
Accrued transfer agent fees 2,563,943
- ----------------------------------------------------------
Accrued trustees' fees 15,000
- ----------------------------------------------------------
Accrued operating expenses 1,949,345
- ----------------------------------------------------------
Total liabilities 133,639,126
- ----------------------------------------------------------
Net assets applicable to shares
outstanding $27,839,018,320
==========================================================
NET ASSETS:
Class A $12,640,072,795
==========================================================
Class B $14,338,086,751
==========================================================
Class C $ 860,858,774
==========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 258,850,990
==========================================================
Class B 303,769,322
==========================================================
Class C 18,231,480
==========================================================
Class A:
Net asset value and redemption price
per share $ 48.83
- ----------------------------------------------------------
Offering price per share:
(Net asset value of $48.83 divided by
94.50%) $ 51.67
==========================================================
Class B:
Net asset value and offering price per
share $ 47.20
==========================================================
Class C:
Net asset value and offering price per
share $ 47.22
==========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $1,003,035 foreign
withholding tax) $ 131,189,187
- ----------------------------------------------------------
Interest 74,202,959
- ----------------------------------------------------------
Total investment income 205,392,146
- ----------------------------------------------------------
EXPENSES:
Advisory fees 141,196,457
- ----------------------------------------------------------
Administrative services fees 631,457
- ----------------------------------------------------------
Custodian fees 1,130,367
- ----------------------------------------------------------
Distribution fees -- Class A 26,140,479
- ----------------------------------------------------------
Distribution fees -- Class B 116,152,779
- ----------------------------------------------------------
Distribution fees -- Class C 4,781,281
- ----------------------------------------------------------
Trustees' fees 122,469
- ----------------------------------------------------------
Transfer agent fees -- Class A 12,324,007
- ----------------------------------------------------------
Transfer agent fees -- Class B 19,092,344
- ----------------------------------------------------------
Transfer agent fees -- Class C 785,923
- ----------------------------------------------------------
Other 4,391,436
- ----------------------------------------------------------
Total expenses 326,748,999
- ----------------------------------------------------------
Less: Expenses paid indirectly (274,174)
- ----------------------------------------------------------
Fees waived by advisor (5,137,356)
- ----------------------------------------------------------
Net expenses 321,337,469
- ----------------------------------------------------------
Net investment income (loss) (115,945,323)
- ----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FOREIGN CURRENCY CONTRACTS
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 2,503,452,928
- ----------------------------------------------------------
Foreign currencies (312,317)
- ----------------------------------------------------------
Foreign currency contracts 51,130,896
- ----------------------------------------------------------
Option contracts written 26,312,201
- ----------------------------------------------------------
2,580,583,708
- ----------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 3,495,072,669
- ----------------------------------------------------------
Foreign currencies (2,929)
- ----------------------------------------------------------
Foreign currency contracts 64,405,814
- ----------------------------------------------------------
Option contracts written (112,630)
- ----------------------------------------------------------
3,559,362,924
- ----------------------------------------------------------
Net gain from investment securities,
foreign currencies, foreign currency
contracts and option contracts 6,139,946,632
- ----------------------------------------------------------
Net increase in net assets resulting from
operations $6,024,001,309
==========================================================
</TABLE>
See Notes to Financial Statements.
FS-105
<PAGE> 375
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (115,945,323) $ (24,044,585)
- --------------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, foreign currency contracts, futures and
option contracts 2,580,583,708 1,197,383,660
- --------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, foreign currency
contracts, futures and option contracts 3,559,362,924 3,328,905,060
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 6,024,001,309 4,502,244,135
- --------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A -- (18,008,475)
- --------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (788,853,278) (539,610,813)
- --------------------------------------------------------------------------------------------------
Class B (918,638,257) (602,045,865)
- --------------------------------------------------------------------------------------------------
Class C (52,550,069) (12,727,398)
- --------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 1,781,344,407 439,374,153
- --------------------------------------------------------------------------------------------------
Class B 2,515,709,918 1,179,878,726
- --------------------------------------------------------------------------------------------------
Class C 562,747,820 156,203,496
- --------------------------------------------------------------------------------------------------
Net increase in net assets 9,123,761,850 5,105,307,959
- --------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 18,715,256,470 13,609,948,511
- --------------------------------------------------------------------------------------------------
End of period $27,839,018,320 $18,715,256,470
==================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $17,884,938,370 $12,965,142,636
- --------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (577,334) (391,429)
- --------------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign
currencies, foreign currency contracts, futures and
option contracts 741,760,162 96,971,065
- --------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, foreign currency contracts, futures and
option contracts 9,212,897,122 5,653,534,198
- --------------------------------------------------------------------------------------------------
$27,839,018,320 $18,715,256,470
==================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-106
<PAGE> 376
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Value Fund (the "Fund") is a series portfolio of AIM Funds Group (the
"Trust"). The Trust is a Delaware business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company consisting of nine separate portfolios, each
having an unlimited number of shares of beneficial interest. The Fund currently
offers three different classes of shares: Class A shares, Class B shares and
Class C shares. Class A shares are sold with a front-end sales charge. Class B
shares and Class C shares are sold with a contingent deferred sales charge.
Matters affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The Fund's investment objective
is to achieve long-term growth of capital by investing primarily in equity
securities judged by the Fund's investment advisor to be undervalued relative to
the investment advisor's appraisal of the current or projected earnings of the
companies issuing the securities, or relative to current market values of assets
owned by the companies issuing the securities or relative to the equity markets
generally. Income is a secondary objective.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last 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 closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. 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. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities 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 would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded on
the accrual basis. Dividend income is recorded on the ex-dividend date. On
December 31, 1999, undistributed net investment income was increased by
$115,759,418, undistributed net realized gains decreased by $175,753,007 and
paid-in capital increased by $59,993,589 as a result of differing book/tax
treatment of foreign currency transactions, equalization credits and other
reclassifications. Net assets of the Fund were unaffected by the
reclassifications.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds of fund share redemptions as
distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such
FS-107
<PAGE> 377
transactions. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
Outstanding foreign currency contracts at December 31, 1999 were as follows:
<TABLE>
<CAPTION>
CONTRACT TO
SETTLEMENT ------------------------------ UNREALIZED
DATE CURRENCY DELIVER RECEIVE VALUE APPRECIATION
--------------------- -------- ------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
01/20/00 EUR 690,000,000 $ 730,747,420 $ 695,508,498 $35,238,922
--------------------- -------- ------------- -------------- -------------- ------------
01/21/00 EUR 237,000,000 251,193,790 238,910,220 12,283,570
--------------------- -------- ------------- -------------- -------------- ------------
01/24/00 EUR 404,000,000 428,775,645 407,349,160 21,426,485
--------------------- -------- ------------- -------------- -------------- ------------
1,331,000,000 $1,410,716,855 $1,341,767,878 $68,948,977
===================== ======== ============= ============== ============== ============
</TABLE>
G. Covered Call Options -- The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security at the time the
option is written. When the Fund writes a covered call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the mean between the last bid
and asked prices on that day. If a written call option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or a loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
H. Expenses -- Distribution expenses and transfer agency expenses directly
attributable to a class of shares are charged to that class' operations. All
other expenses which are attributable to more than one class are allocated
among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million. AIM has
contractually agreed to waive a portion of its advisory fees paid by the Fund to
AIM to the extent necessary to reduce the fees paid by the Fund at net asset
levels higher than those currently incorporated in the present advisory fee
schedule. Under the contractual waiver, AIM will receive a fee calculated at the
annual rate of 0.80% of the first $150 million of the Fund's average daily net
assets, plus 0.625% of the Fund's average daily net assets in excess of $150
million to and including $2 billion, plus 0.60% of the Fund's average daily net
assets in excess of $2 billion. The waiver is contractual and may not be
terminated without approval of the Board of Trustees. During the year ended
December 31, 1999, AIM waived fees of $5,137,356.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended December 31, 1999, AIM was
paid $631,457 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $20,339,409 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted plans
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively, the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.25% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C shares.
FS-108
<PAGE> 378
Of these amounts, the Fund may pay a service fee of 0.25% of the average daily
net assets of the Class A, Class B or Class C shares to selected dealers and
financial institutions who furnish continuing personal shareholder services to
their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. For the year ended December 31, 1999, the Class A, Class B and Class C
shares paid AIM Distributors $26,140,479, $116,152,779 and $4,781,281,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $7,218,373 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $1,053,955 in contingent deferred sales charges
imposed on redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
During the year ended December 31, 1999, the Fund paid legal fees of $48,355
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $246,830 and $27,344, respectively, under expense offset arrangements.
The effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $274,174 during the year ended December 31, 1999.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$15,678,784,868 and $13,551,728,590, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $9,404,563,463
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (341,731,444)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $9,062,832,019
==========================================================
</TABLE>
Cost of investments for tax purposes is $18,740,086,006.
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ------------
<S> <C> <C>
Beginning of period 2,995 $ 1,254,474
- ---------------------------- --------- ------------
Written 127,809 94,367,695
- ---------------------------- --------- ------------
Closed (17,839) (9,759,499)
- ---------------------------- --------- ------------
Exercised (60,465) (51,484,198)
- ---------------------------- --------- ------------
Expired (52,500) (34,378,472)
- ---------------------------- --------- ------------
End of period -- $ --
============================ ========= ============
</TABLE>
FS-109
<PAGE> 379
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 65,309,195 $ 2,905,872,208 61,939,114 $ 2,232,305,973
- ---------------------------------------------------------------------------------------------------------------------------
Class B 67,138,813 2,915,628,481 44,964,399 1,587,327,551
- ---------------------------------------------------------------------------------------------------------------------------
Class C 13,738,072 600,569,156 4,634,085 164,861,278
- ---------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 16,150,747 754,887,097 13,921,013 529,914,065
- ---------------------------------------------------------------------------------------------------------------------------
Class B 19,043,747 860,577,418 15,274,620 567,695,520
- ---------------------------------------------------------------------------------------------------------------------------
Class C 1,098,977 49,675,082 327,964 12,197,171
- ---------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (42,137,878) (1,879,414,898) (64,405,244) (2,322,845,885)
- ---------------------------------------------------------------------------------------------------------------------------
Class B (29,076,106) (1,260,495,981) (27,805,340) (975,144,345)
- ---------------------------------------------------------------------------------------------------------------------------
Class C (2,008,443) (87,496,418) (590,550) (20,854,953)
- ---------------------------------------------------------------------------------------------------------------------------
109,257,124 $ 4,859,802,145 48,260,061 $ 1,775,456,375
===========================================================================================================================
</TABLE>
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and a share of
Class B outstanding during each of the years in the five-year period ended
December 31, 1999 and for a share of Class C outstanding during each of the
years in the two-year period ended December 31, 1999 and the period August 4,
1997 (date sales commenced) through December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------
1999 1998 1997 1996(a) 1995
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 40.19 $ 32.42 $ 29.15 $ 26.81 $ 21.14
- ----------------------------------------------------- ----------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) (0.04) 0.09 0.17 0.43 0.14
- ----------------------------------------------------- ----------- ---------- ---------- ---------- ----------
Net gains on securities (both realized and
unrealized) 11.93 10.38 6.78 3.42 7.21
- ----------------------------------------------------- ----------- ---------- ---------- ---------- ----------
Total from investment operations 11.89 10.47 6.95 3.85 7.35
- ----------------------------------------------------- ----------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income -- (0.09) (0.04) (0.41) (0.09)
- ----------------------------------------------------- ----------- ---------- ---------- ---------- ----------
Distributions from net realized gains (3.25) (2.61) (3.64) (1.10) (1.59)
- ----------------------------------------------------- ----------- ---------- ---------- ---------- ----------
Total distributions (3.25) (2.70) (3.68) (1.51) (1.68)
- ----------------------------------------------------- ----------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 48.83 $ 40.19 $ 32.42 $ 29.15 $ 26.81
===================================================== =========== ========== ========== ========== ==========
Total return(b) 29.95% 32.76% 23.95% 14.52% 34.85%
===================================================== =========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $12,640,073 $8,823,094 $6,745,253 $5,100,061 $3,408,952
===================================================== =========== ========== ========== ========== ==========
Ratio of expenses to average net assets(c) 1.00%(d) 1.00% 1.04% 1.11% 1.12%
===================================================== =========== ========== ========== ========== ==========
Ratio of net investment income (loss) to average net
assets(e) (0.09)%(d) 0.26% 0.57% 1.65% 0.74%
===================================================== =========== ========== ========== ========== ==========
Portfolio turnover rate 66% 113% 137% 126% 151%
===================================================== =========== ========== ========== ========== ==========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.02%, 1.02%, 1.06%, 1.13% and 1.13% for 1999-1995, respectively.
(d) Ratios are based on average net assets of $10,456,191,563.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.11)%, 0.24%, 0.55%, 1.63% and 0.73% for 1999-1995,
respectively.
FS-110
<PAGE> 380
NOTE 9-FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
CLASS B CLASS C
--------------------------------------------------------------------- --------
1999(a) 1998 1997 1996(a) 1995 1999(a)
----------- ----------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 39.24 $ 31.89 $ 28.92 $ 26.65 $ 21.13 $ 39.26
- ------------------------------------------- ----------- ----------- ---------- ---------- ---------- --------
Income from investment operations:
Net investment income (loss) (0.39) (0.18) (0.07) 0.20 (0.01) (0.39)
- ------------------------------------------- ----------- ----------- ---------- ---------- ---------- --------
Net gains (losses) on securities (both
realized and unrealized) 11.60 10.14 6.68 3.38 7.12 11.60
- ------------------------------------------- ----------- ----------- ---------- ---------- ---------- --------
Total from investment operations 11.21 9.96 6.61 3.58 7.11 11.21
- ------------------------------------------- ----------- ----------- ---------- ---------- ---------- --------
Less distributions:
Dividends from net investment income -- -- -- (0.21) -- --
- ------------------------------------------- ----------- ----------- ---------- ---------- ---------- --------
Distributions from net realized gains (3.25) (2.61) (3.64) (1.10) (1.59) (3.25)
- ------------------------------------------- ----------- ----------- ---------- ---------- ---------- --------
Total distributions (3.25) (2.61) (3.64) (1.31) (1.59) (3.25)
- ------------------------------------------- ----------- ----------- ---------- ---------- ---------- --------
Net asset value, end of period $ 47.20 $ 39.24 $ 31.89 $ 28.92 $ 26.65 $ 47.22
=========================================== =========== =========== ========== ========== ========== ========
Total return(b) 28.94% 31.70% 22.96% 13.57% 33.73% 28.92%
=========================================== =========== =========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $14,338,087 $19,680,068 $6,831,796 $4,875,933 $2,860,531 $860,859
=========================================== =========== =========== ========== ========== ========== ========
Ratio of expenses to average net assets(c) 1.79%(d) 1.80% 1.85% 1.94% 1.94% 1.79%(d)
=========================================== =========== =========== ========== ========== ========== ========
Ratio of net investment income (loss) to
average net assets(e) (0.88)%(d) (0.54)% (0.24)% 0.82% (0.08)% (0.88)%(d)
=========================================== =========== =========== ========== ========== ========== ========
Portfolio turnover rate 66% 113% 137% 126% 151% 66%
=========================================== =========== =========== ========== ========== ========== ========
<CAPTION>
CLASS C
------------------------
1998(a) 1997
-------- ------------
<S> <C> <C>
Net asset value, beginning of period $ 31.90 $ 35.60
- ------------------------------------------- -------- -------
Income from investment operations:
Net investment income (loss) (0.19) (0.01)
- ------------------------------------------- -------- -------
Net gains (losses) on securities (both
realized and unrealized) 10.16 (0.05)
- ------------------------------------------- -------- -------
Total from investment operations 9.97 (0.06)
- ------------------------------------------- -------- -------
Less distributions:
Dividends from net investment income -- --
- ------------------------------------------- -------- -------
Distributions from net realized gains (2.61) (3.64)
- ------------------------------------------- -------- -------
Total distributions (2.61) (3.64)
- ------------------------------------------- -------- -------
Net asset value, end of period $ 39.26 $ 31.90
=========================================== ======== =======
Total return(b) 31.72% (0.08)%
=========================================== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $212,095 $32,900
=========================================== ======== =======
Ratio of expenses to average net assets(c) 1.80% 1.84%(f)
=========================================== ======== =======
Ratio of net investment income (loss) to
average net assets(e) (0.54)% (0.23)%(f)
=========================================== ======== =======
Portfolio turnover rate 113% 137%
=========================================== ======== =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.81%, 1.82%, 1.87%, 1.96% and 1.96% for 1999-1995 for Class B,
respectively, and 1.81%, 1.82% and 1.86% (annualized) for 1999-1997,
respectively, for Class C.
(d) Ratios are based on average net assets of $11,615,113,487 and $478,128,084
for Class B and Class C, respectively.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were (0.90)%, (0.56)%, (0.26)%, 0.81% and (0.09)% for
1999-1995, respectively, for Class B, and (0.90)%, (0.56)% and (0.25)%
(annualized) for 1999-1997, respectively, for Class C.
(f) Annualized.
FS-111
<PAGE> 381
PART C
OTHER INFORMATION
Item 23. Exhibits
Exhibit
Number
a(1) - (a) Agreement and Declaration of Trust of the Registrant
was filed as an Exhibit to Post-Effective Amendment No. 66
on September 15, 1993, and was filed electronically as an
Exhibit to Post- Effective Amendment No. 70 on November 17,
1995.
- (b) First Amendment to Agreement and Declaration of Trust
of the Registrant was filed as an Exhibit to Post-Effective
Amendment No. 66 on September 15, 1993, and was filed
electronically as an Exhibit to Post-Effective Amendment No.
70 on November 17, 1995.
- (c) Second Amendment to Agreement and Declaration of Trust
of the Registrant (name change of AIM Utilities Fund) was
filed electronically as an Exhibit to Post-Effective
Amendment No. 70 on November 17, 1995.
- (d) Third Amendment to Agreement and Declaration of Trust of
the Registrant (name change of AIM Government Securities
Fund) was filed electronically as an Exhibit to
Post-Effective Amendment No. 70 on November 17, 1995.
- (e) Fourth Amendment to Agreement and Declaration of Trust
of the Registrant (name change of Class C Shares of AIM
Money Market Fund) was filed electronically as an Exhibit to
Post-Effective Amendment No. 73 on July 25, 1997.
- (f) Fifth Amendment to Agreement and Declaration of Trust of
the Registrant (designation of Class C Shares of the Funds)
was filed electronically as an Exhibit to Post-Effective
Amendment No. 73 on July 25, 1997.
- (g) Sixth Amendment to Agreement and Declaration of Trust of
the Registrant (name change of AIM Growth Fund) was filed
electronically as an Exhibit to Post-Effective Amendment No.
74 on February 27, 1998.
- (h) Seventh Amendment to Agreement and Declaration of Trust
of the Registrant, dated September 26, 1998 is filed
herewith electronically.
(2) - (a) Amended and Restated Agreement and Declaration of
Trust of the Registrant, dated as of November 5, 1998, was
filed as an Exhibit to Post-Effective Amendment No. 75 on
February 12, 1999, and is hereby incorporated by reference.
- (b) Amendment No. 1, dated December 21, 1998 to Amended and
Restated Agreement and Declaration of Trust of the
Registrant (reclassification of Class A Shares of AIM Money
Market Fund), dated as of November 5, 1998, was filed as an
Exhibit to Post-Effective Amendment No. 75 on February 12,
1999, and is hereby incorporated by reference.
b(1) - (a) By-Laws of the Registrant were filed as an Exhibit to
Post-Effective Amendment No. 66 on September 15, 1993, and
were filed electronically as an Exhibit to Post-Effective
Amendment No. 70 on November 17, 1995.
- (b) Amendment to By-Laws of the Registrant was filed as an
Exhibit to Post-Effective Amendment No. 68 on April 11,
1994, and was filed electronically as an Exhibit to
Post-Effective Amendment No. 70 on November 17, 1995.
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<PAGE> 382
- (c) Second Amendment to By-Laws of the Registrant was
filed electronically as an Exhibit to Post -Effective
Amendment No. 70 on November 17,1995.
(2) - Amended and Restated By-Laws of the Registrant were filed
electronically as an Exhibit to Post-Effective Amendment No.
72 on April 28, 1997.
(3) - (a) Amended and Restated Bylaws of the Registrant were
filed as an Exhibit to Post- Effective Amendment No. 75 on
February 12, 1999, and is hereby incorporated by reference.
- (b) First Amendment to Amended and Restated Bylaws of the
Registrant, adopted June 9, 1999, is filed herewith
electronically.
c - Instruments Defining Rights of Security Holders - None.
d(1) - Master Investment Advisory Agreement, dated August 6, 1993,
between the Registrant and A I M Advisors, Inc. was filed as
an Exhibit to Post-Effective Amendment No. 67 on October 15,
1993.
(2) - (a) Master Investment Advisory Agreement, dated
October 18, 1993, between the Registrant and A I M Advisors,
Inc. was filed as an Exhibit to Post-Effective Amendment No.
68 on February 28, 1995, and was filed electronically as an
Exhibit to Post-Effective Amendment No. 71 on April 26,
1996.
- (b) Amendment No. 1, dated as of September 28, 1994, to
the Master Investment Advisory Agreement between the
Registrant and A I M Advisors, Inc., with respect to AIM
Growth Fund was filed as an Exhibit to Post-Effective
Amendment No. 69 on February 28, 1995, and was filed
electronically as an Exhibit to Post-Effective Amendment No.
71 on April 26, 1996.
- (c) Amendment No. 2, dated as of November 14, 1994, to the
Master Investment Advisory Agreement between Registrant and
A I M Advisors, Inc., with respect to AIM Value Fund was
filed as an Exhibit to Post-Effective Amendment No. 69 on
February 28, 1995, and was filed electronically as an
Exhibit to Post-Effective Amendment No. 71 on April 26,
1996.
(3) - (a) Master Investment Advisory Agreement, dated
February 28, 1997, between the Registrant and A I M
Advisors, Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 72 on April 28, 1997, and is
hereby incorporated by reference.
- (b) Amendment No. 1 dated as of May 1, 1998, to the Master
Investment Advisory Agreement, dated February 28, 1997
between Registrant and A I M Advisors, Inc., was filed
electronically as an Exhibit to Post-Effective Amendment No.
76 on April 15, 1999, and is hereby incorporated by
reference.
(4) - (a) Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement, dated
September 9, 1998, between Registrant and A I M Advisors,
Inc. was filed as an Exhibit to Post-Effective Amendment No.
75 on February 12, 1999, and is hereby incorporated by
reference.
- (b) Amendment No. 1, dated September 28, 1998 to Foreign
Country Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement, dated September 9,
1998, between Registrant and A I M Advisors, Inc. was filed
as an Exhibit to Post-Effective Amendment No. 75 on February
12, 1999, and is hereby incorporated by reference.
C-2
<PAGE> 383
- (c) Amendment No. 2, dated as of December 14, 1998 to
Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement, dated
September 9, 1998, between Registrant and A I M Advisors,
Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 76 on April 15, 1999, and is
hereby incorporated by reference.
- (d) Amendment No. 3, dated as of December 22, 1998 to
Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement, dated
September 9, 1998, between Registrant and A I M Advisors,
Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 76 on April 15, 1999, and is
hereby incorporated by reference.
- (e) Amendment No. 4, dated as of January 26, 1999 to
Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement, dated
September 9, 1998, between Registrant and A I M Advisors,
Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 76 on April 15, 1999, and is
hereby incorporated by reference.
- (f) Amendment No. 5, dated as of March 1, 1999 to Foreign
Country Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement, dated September 9,
1998, between Registrant and A I M Advisors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
76 on April 15, 1999, and is hereby incorporated by
reference.
- (g) Amendment No. 6, dated as of March 18, 1999 to Foreign
Country Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement, dated September 9,
1998, between Registrant and A I M Advisors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
76 on April 15, 1999, and is hereby incorporated by
reference.
- (h) Amendment No. 7, dated as of November 15, 1999 to
Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement, dated
September 9, 1998, between Registrant and A I M Advisors,
Inc. is filed herewith electronically.
(5) - Form of Sub-Advisory Agreement, dated August 6, 1993, among
the Registrant, A I M Advisors, Inc. and CIGNA Investments,
Inc. was filed as an Exhibit to Post-Effective Amendment No.
66 on September 15, 1993.
(6) - Sub-Advisory Agreement, dated October 18, 1993, among the
Registrant, A I M Advisors, Inc. and CIGNA Investments, Inc.
was filed as an Exhibit to Post-Effective Amendment No. 68
on April 11, 1994.
e(1) - Master Distribution Agreement, dated August 6, 1993,
between the Registrant (on behalf of its Class A Shares and
Class C Shares) and A I M Distributors, Inc. was filed as an
Exhibit to Post-Effective Amendment No. 67 on October 15,
1993.
(2) - Master Distribution Agreement, dated August 6, 1993,
between the Registrant (on behalf of its Class B Shares) and
A I M Distributors, Inc. was filed as an Exhibit to
Post-Effective Amendment No. 67 on October 15, 1993.
(3) - Master Distribution Agreement, dated October 18, 1993,
between the Registrant (on behalf of its Class A Shares and
Class C Shares) and A I M Distributors, Inc. was filed as an
Exhibit to Post-Effective Amendment No. 68 on April 11,
1994, and was filed electronically as an Exhibit to
Post-Effective Amendment No. 71 on April 26, 1997.
C-3
<PAGE> 384
(4) - Master Distribution Agreement, dated October 18, 1993,
between the Registrant (on behalf of its Class B Shares) and
A I M Distributors, Inc. was filed as an Exhibit to
Post-Effective Amendment No. 68 on April 11, 1994.
(5) - Amended and Restated Master Distribution Agreement,
dated May 2, 1995, between the Registrant (on behalf of its
Class B Shares) and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
70 on November 17, 1995.
(6) - Master Distribution Agreement, dated February 28, 1997,
between the Registrant (on behalf of its Class A Shares and
its AIM Cash Reserve Shares) and A I M Distributors, Inc.
was filed electronically as an Exhibit to Post-Effective
Amendment No. 72 on April 28, 1997.
(7) - (a) Master Distribution Agreement, dated February 28, 1997,
between the Registrant (on behalf of its Class B Shares) and
A I M Distributors, Inc. was filed electronically as an
Exhibit to Post-Effective Amendment No. 72 on April 28,
1997, and is hereby incorporated by reference.
- (b) Amendment No. 1, dated as of May 1, 1998, to the Master
Distribution Agreement, dated as of February 28, 1997,
between Registrant (on behalf of its Class B Shares) and A I
M Distributors, Inc. was filed electronically as an Exhibit
to Post-Effective Amendment No. 76 on April 15, 1999, and is
hereby incorporated by reference.
(8) - (a) Amended and Restated Master Distribution Agreement,
dated August 4, 1997, between the Registrant (on behalf of
its Class A Shares, Class C Shares and AIM Cash Reserve
Shares) and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post- Effective Amendment
No. 74 on February 27, 1998, and is hereby incorporated by
reference.
- (b) Amendment No. 1, dated as of December 21, 1998, to the
Amended and Restated Master Distribution Agreement between
Registrant (on behalf of its Class A Shares, Class C Shares
and AIM Cash Reserve Shares) and A I M Distributors, Inc.
was filed electronically as an Exhibit to Post-Effective
Amendment No. 76 on April 15, 1999, and is hereby
incorporated by reference.
(9) - Form of Selected Dealer Agreement between
A I M Distributors, Inc. and selected dealers was filed as
an Exhibit to Post-Effective Amendment No. 75 on February
12, 1999, and is hereby incorporated by reference.
(10) - Form of Bank Selling Group Agreement between
A I M Distributors, Inc. and banks was filed as an Exhibit
to Post-Effective Amendment No. 75 on February 12, 1999, and
is hereby incorporated by reference.
f(1) - AIM Funds Retirement Plan for Eligible Directors/Trustees,
effective as of March 8, 1994, as restated September 18,
1995, was filed electronically as an Exhibit to
Post-Effective Amendment No. 71 on April 26, 1996, and is
hereby incorporated by reference.
(2) - AIM Funds Retirement Plan for Eligible Directors/Trustees
was filed as an Exhibit to Post-Effective Amendment No. 69
on February 28, 1995.
(3) - Form of Deferred Compensation Agreement for Non-Affiliated
Directors, approved March 12, 1997, was filed electronically
as an Exhibit to Post-Effective Amendment No. 74 on February
27, 1998, and is hereby incorporated by reference.
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<PAGE> 385
(4) - Form of Deferred Compensation Plan for Eligible
Directors/Trustees as approved on December 5, 1995, was
filed electronically as an Exhibit to Post-Effective
Amendment No. 71 on April 26, 1996, and is hereby
incorporated by reference.
(5) - Form of Deferred Compensation Plan for Eligible
Directors/Trustees was filed as an Exhibit to Post-Effective
Amendment No. 69 on February 28, 1995.
g(1) - (a) Custodian Contract, dated October 15, 1993, between
the Registrant and State Street Bank and Trust Company was
filed as an Exhibit to Post-Effective Amendment No. 68 on
April 11, 1994, and was filed electronically as an Exhibit
to Post-Effective Amendment No. 71 on April 26, 1996, and is
hereby incorporated by reference.
- (b) Amendment No. 1, dated as of September 19, 1995, to the
Custodian Contract, dated October 15, 1993, between the
Registrant and State Street Bank and Trust Company was filed
electronically as an Exhibit to Post-Effective Amendment No.
71 on April 26, 1996, and is hereby incorporated by
reference.
- (c) Amendment No. 2, dated September 28, 1996, to the
Custodian Contract, dated October 15, 1993, between
Registrant and State Street Bank and Trust Company was filed
as an Exhibit to Post-Effective Amendment No. 75 on February
12, 1999, and is hereby incorporated by reference.
- (d) Amendment, dated September 9, 1998, to the Custodian
Contract, dated October 15, 1993, between the Registrant and
State Street Bank and Trust Company was filed as an Exhibit
to Post-Effective Amendment No. 75 on February 12, 1999, and
is hereby incorporated by reference.
(2) - (a) Subcustodian Agreement, dated September 9, 1994, among
the Registrant, Texas Commerce Bank National Association,
State Street Bank and Trust Company and A I M Fund Services,
Inc., was filed as an Exhibit to Post-Effective Amendment
No. 69 on February 28, 1995, and was filed electronically as
an Exhibit to Post-Effective Amendment No. 71 on April 26,
1996, and is hereby incorporated by reference.
- (b) Amendment No. 1, dated October 2, 1998 to Subcustodian
Agreement, dated September 9, 1994, among the Registrant,
Chase Bank of Texas N.A. (formerly Texas Commerce Bank),
State Street Bank and Trust Company and A I M Fund Services,
Inc., is filed herewith electronically.
(3) - (a) Custody Agreement, dated October 19, 1995, between the
Registrant, on behalf of AIM Municipal Bond Fund, and The
Bank of New York was filed electronically as an Exhibit to
Post-Effective Amendment No. 70 on November 17, 1995, and is
hereby incorporated by reference.
- (b) Amendment, dated July 30, 1996, to the Custodian
Contract, dated October 19, 1995, between the Registrant, on
behalf of AIM Municipal Bond Fund, and The Bank of New York
was filed as an Exhibit to Post-Effective Amendment No. 75
on February 12, 1999, and is hereby incorporated by
reference.
h(1) - Form of Transfer Agency and Registrar Agreement, dated as
of June 7, 1993, between AIM Funds Group, a Massachusetts
business trust, and The Shareholder Services Group, Inc. was
filed as an Exhibit to Post-Effective Amendment No. 65 on
July 16, 1993.
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<PAGE> 386
(2) - (a) Transfer Agency and Service Agreement, dated as of
November 1, 1994, between the Registrant and A I M Fund
Services, Inc. was filed electronically as an Exhibit to
Post- Effective Amendment No. 70 on November 17, 1995 and is
hereby incorporated by reference.
- (b) Amendment No. 1, dated August 4, 1997, to the Transfer
Agency and Service Agreement, dated as of November 1, 1994,
between Registrant and A I M Fund Services, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
74 on February 27, 1998, and is hereby incorporated by
reference.
- (c) Amendment No. 2, dated January 1, 1999, to the
Transfer Agency and Service Agreement, dated as of November
1, 1994, between Registrant and A I M Fund Services, Inc. is
filed herewith electronically.
(3) - (a) Remote Access and Related Service Agreement, dated as
of December 23, 1994, between the Registrant and First Data
Investor Services Group, Inc. (formerly, The Shareholder
Services Group, Inc.) was filed electronically as an Exhibit
to Post-Effective Amendment No. 71 on April 26, 1996, and is
hereby incorporated by reference.
- (b) Amendment No. 1, effective October 4, 1995, to the
Remote Access and Related Services Agreement, dated as of
December 23, 1994, between the Registrant and First Data
Investor Services Group, Inc. was filed electronically as an
Exhibit to Post-Effective Amendment No. 71 on April 26,
1996, and is hereby incorporated by reference.
- (c) Addendum No. 2, effective October 12, 1995, to the
Remote Access and Related Services Agreement, dated as of
December 23, 1994, between the Registrant and First Data
Investor Services Group, Inc. was filed electronically as an
Exhibit to Post-Effective Amendment No. 71 on April 26,
1996, and is hereby incorporated by reference.
- (d) Amendment No. 3, effective February 1, 1997, to the
Remote Access and Related Services Agreement, dated December
23, 1994, between the Registrant and First Data Investor
Services Group, Inc. was filed electronically as an Exhibit
to Post-Effective Amendment No. 73 on July 25, 1997, and is
hereby incorporated by reference.
- (e) Amendment No. 4, dated June 30, 1998, to the Remote
Access and Related Services Agreement, dated December 23,
1994, between Registrant and First Data Investor Services
Group, Inc. was filed as an Exhibit to Post-Effective
Amendment No. 75 on February 12, 1999, and is hereby
incorporated by reference.
- (f) Amendment No. 5, dated July 1, 1998, to the Remote
Access and Related Services Agreement, dated December 23,
1994, between Registrant and First Data Investor Services
Group, Inc. was filed as an Exhibit to Post-Effective
Amendment No. 75 on February 12, 1999, and is hereby
incorporated by reference.
- (g) Exhibit 1, effective as of August 4, 1997, to the Remote
Access and Related Services Agreement, dated December 23,
1994, between the Registrant and First Data Investor
Services Group, Inc. was filed electronically as an Exhibit
to Post-Effective Amendment No. 74 on February 27, 1998, and
is hereby incorporated by reference.
- (h) Amendment No. 6, dated August 30, 1999, to the Remote
Access and Related Services Agreement, dated December 23,
1994, between Registrant and First Data Investor Services
Group, Inc. is filed herewith electronically.
(4) - Preferred Registration Technology Escrow Agreement, dated
September 10, 1997, between the Registrant and First Data
Investor Services Group, Inc. was filed electronically
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<PAGE> 387
as an Exhibit to Post-Effective Amendment No. 74 on February
27, 1998, and is hereby incorporated by reference.
(5) - Shareholder Sub-Accounting Services Agreement, dated as of
October 1, 1993, between the Registrant and First Data
Investor Services Group, Inc., Financial Data Services, Inc.
and Merrill, Lynch, Pierce, Fenner & Smith Incorporated was
filed electronically as an Exhibit to Post-Effective
Amendment No. 71 on April 26, 1996, and is hereby
incorporated by reference.
(6) - Master Administrative Services Agreement, dated
August 6, 1993, between the Registrant and A I M Advisors,
Inc. was filed as an Exhibit to Post-Effective Amendment No.
67 on October 15, 1993.
(7) - Master Administrative Services Agreement, dated
October 18, 1993, between the Registrant and A I M Advisors,
Inc. was filed as an Exhibit to Post-Effective Amendment No.
68 on April 11, 1994, and was filed electronically as an
Exhibit to Post-Effective Amendment No. 71 on April 26,
1996.
(8) - (a) Administrative Services Agreement, dated
October 18, 1993, between A I M Advisors, Inc., on behalf of
the Registrant's portfolios, and A I M Fund Services, Inc.
was filed as an Exhibit to Post-Effective Amendment No. 68
on April 11, 1994.
- (b) Amendment No. 1, dated as of May 11, 1994, to the
Administrative Services Agreement, dated October 18, 1993,
between A I M Advisors, Inc., on behalf of the Registrant's
portfolios, and A I M Fund Services, Inc. was filed as an
Exhibit to Post-Effective Amendment No. 69 on February 28,
1995.
- (c) Amendment No. 2, dated as of July 1, 1994, to the
Administrative Services Agreement, dated October 18, 1993,
between A I M Advisors, Inc., on behalf of the Registrant's
portfolios, and A I M Fund Services, Inc. was filed as an
Exhibit to Post-Effective Amendment No. 69 on February 28,
1995.
- (d) Amendment No. 3, dated as of September 16, 1994, to
the Administrative Services Agreement, dated October 18,
1993, between A I M Advisors, Inc., on behalf of the
Registrant's portfolios, and A I M Fund Services, Inc. was
filed as an Exhibit to Post-Effective Amendment No. 69 on
February 28, 1995.
(9) - (a) Master Administrative Services Agreement, dated
February 28, 1997, between the Registrant and A I M
Advisors, Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 72 on April 28, 1997, and is
hereby incorporated by reference.
- (b) Amendment No. 1, dated as of May 1, 1998, to the
Master Administrative Services Agreement, dated February 28,
1997, between Registrant and A I M Advisors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
76 on April 15, 1999, and is hereby incorporated by
reference.
i - Opinion of Ballard Spahr Andrews & Ingersoll was filed in
connection with the Registrant's Rule 24f-2 Notice on or
about February 27, 1997.
j(1) - Consent of Ballard Spahr Andrews & Ingersoll, LLP is filed
herewith electronically.
(2) - Consent of KPMG LLP is filed herewith electronically.
k - Financial Statements - None.
C-7
<PAGE> 388
l - Agreements Concerning Initial Capitalization - None.
m(1) - Master Distribution Plan for Registrant's Class A Shares
and Class C Shares, and related forms, were filed as an
Exhibit to Post-Effective Amendment No. 68 on April 11,
1994.
(2) - Amended Master Distribution Plan for Registrant's Class A
Shares and AIM Cash Reserve Shares (formerly, Class C
Shares), and related forms, were filed electronically as an
Exhibit to Post-Effective Amendment No. 71 on April 26,
1996.
(3) - Amended and Restated Master Distribution Plan for
Registrant's Class A Shares and AIM Cash Reserve Shares was
filed electronically as an Exhibit to Post-Effective
Amendment No. 73 on July 25, 1997.
(4) - Second Amended and Restated Master Distribution Plan for
Registrant's Class A Shares, Class C Shares and AIM Cash
Reserve Shares was filed electronically as an Exhibit to
Post-Effective Amendment No. 74 on February 27, 1998.
(5) - Master Distribution Plan for Registrant's Class B Shares,
and related forms, were filed as an Exhibit to
Post-Effective Amendment No. 68 on April 11, 1994.
(6) - Amended and Restated Master Distribution Plan for
Registrant's Class B Shares, and related forms, were filed
electronically as an Exhibit to Post-Effective Amendment No.
70 on November 17, 1995.
(7) - (a) Second Amended and Restated Master Distribution Plan
for Registrant's Class B Shares was filed electronically as
an Exhibit to Post-Effective Amendment No. 73 on July 25,
1997, and is hereby incorporated by reference.
- (b) Amendment No. 1, dated as of May 1, 1998, to the Second
Amended and Restated Master Distribution Plan for
Registrant's Class B Shares, dated as of June 30, 1997, was
filed electronically as an Exhibit to Post-Effective
Amendment No. 76 on April 15, 1999, and is hereby
incorporated by reference.
(8) - (a) Third Amended and Restated Master Distribution Plan
for Registrant's Class A Shares, Class C Shares and AIM Cash
Reserve Shares was filed as an Exhibit to Post-Effective
Amendment No. 75 on February 12, 1999, and is hereby
incorporated by reference.
- (b) Amendment No. 1, dated as of December 21, 1998, to the
Third Amended and Restated Master Distribution Plan for
Registrant's Class A Shares, Class C Shares and AIM Cash
Reserve Shares was filed electronically as an Exhibit to
Post-Effective Amendment No. 76 on April 15, 1999, and is
hereby incorporated by reference.
(9) - Form of Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan was
filed as an Exhibit to Post-Effective Amendment No. 75 on
February 12, 1999, and is hereby incorporated by reference.
(10) - Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan was
filed as an Exhibit to Post-Effective Amendment No. 75 on
February 12, 1999, and is hereby incorporated by reference.
(11) - Form of Variable Group Annuity Contractholder Service
Agreement to be used in connection with Registrant's Master
Distribution Plan was filed as an Exhibit to Post- Effective
Amendment No. 75 on February 12, 1999, and is hereby
incorporated by reference.
C-8
<PAGE> 389
(12) - Form of Agency Pricing Agreement to be used in connection
with Registrant's Master Distribution Plan was filed as an
Exhibit to Post-Effective Amendment No. 75 on February 12,
1999, and is hereby incorporated by reference.
(13) - Forms of Service Agreement for Bank Trust Department and
for Brokers for Bank Trust Departments to be used in
connection with Registrant's Master Distribution Plan were
filed as an Exhibit to Post-Effective Amendment No. 75 on
February 12, 1999, and are hereby incorporated by reference.
n(1) - Rule 18f-3 Amended and Restated Multiple Class Plan
(effective July 1, 1997) was filed electronically as an
Exhibit to Post-Effective Amendment No. 73 on July 25, 1997.
(2) - Rule 18f-3 Second Amended and Restated Multiple Class Plan
(effective September 1, 1997) was filed electronically as an
Exhibit to Post-Effective Amendment No. 74 on February 27,
1998.
(3) - Rule 18f-3 Third Amended and Restated Multiple Class Plan
(effective August 5, 1999) is filed herewith electronically.
o(1) - The AIM Management Group Code of Ethics, as amended
August 17, 1999, relating to A I M Advisors, Inc. is filed
herewith electronically.
(2) - Code of Ethics of the Registrant is filed herewith
electronically.
Item 24. Persons Controlled by or Under Common Control with Registrant
Provide a list or diagram of all persons directly or indirectly controlled by
or under common control with the Registrant. For any person controlled by
another person, disclose the percentage of voting securities owned by the
immediately controlling person or other basis of that person's control. For each
company, also provide the state or other sovereign power under the laws of which
the company is organized.
None.
Item 25. 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 against any liability incurred in their official
capacity, other than insurance provided by any director, officer, affiliated
person or underwriter for their own protection.
The Registrant's Amended and Restated Agreement and Declaration of
Trust, dated November 5, 1998, as amended, provides, among other things
(i) that trustees shall not be liable for any act or omission or any
conduct whatsoever (except for liabilities to the Registrant or its
shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of duty); (ii) for the indemnification
by the Registrant of the trustees and officers to the fullest extent
permitted by the Delaware Business Trust Act and Bylaws; and (iii) that
the shareholders and former shareholders of the Registrant are held
harmless by the Registrant (or applicable portfolio or class) from
personal liability arising from their status as such, and are
indemnified by the Registrant (or applicable portfolio or class)
against all loss and expense arising from such personal liability in
accordance with the Registrant's Bylaws and applicable law.
A I M Advisors, Inc., the Registrant and other investment companies
managed by A I M Advisors, Inc., their respective officers, trustees,
directors and employees (the "Insured Parties") are insured under a
joint Mutual Fund and Investment Advisory
C-9
<PAGE> 390
Professional and Directors and Officers Liability Policy, issued by ICI
Mutual Insurance Company, with a $35,000,000 limit of liability.
Item 26. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or employment of a
substantial nature that each investment advisor of the Registrant, and each
director, officer or partner of the advisor, is or has been engaged within the
last two fiscal years, for his or her 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 "Fund Management--The Advisor" in
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 27(b) of this Part C.
Item 27. Principal Underwriters
(a) State the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing the Registrant's
securities also acts as a principal underwriter, depositor, or investment
advisor.
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 Growth Series
AIM International Funds, Inc.
AIM Investment Funds
AIM Investment Securities Funds - (Retail Classes)
AIM Series Trust
AIM Special Opportunities Funds
AIM Summit Fund, Inc.
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds, Inc.
GT Global Floating Rate Fund, Inc. d/b/a AIM Floating Rate Fund
C-10
<PAGE> 391
(b) Provide the information required by the following tables for each director,
officer or partner of each principal underwriter named in response to Item 20:
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Underwriter with Registrant
- ---------------- ---------------- ---------------
<S> <C> <C>
Charles T. Bauer Chairman & Director Chairman & Trustee
Michael J. Cemo President & Director None
Gary T. Crum Director Senior Vice President
Robert H. Graham Senior Vice President & Director President & Trustee
William G. Littlepage Senior Vice President & Director None
James L. Salners Executive Vice President None
John Caldwell Senior Vice President None
Marilyn M. Miller Senior Vice President None
Gene L. Needles Senior Vice President None
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
B.J. Thompson First Vice President None
James R. Anderson Vice President None
Mary K. Coleman Vice President None
Mary A. Corcoran Vice President None
Melville B. Cox Vice President & Chief Vice President
Compliance Officer
Sidney M. Dilgren Vice President None
Glenda A. Dayton Vice President None
Tony D. Green Vice President None
</TABLE>
- --------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046
C-11
<PAGE> 392
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Underwriter with Registrant
- ---------------- ---------------- ---------------
<S> <C> <C>
Dawn M. Hawley Vice President & Treasurer None
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
& Assistant Secretary
Charles H. McLaughlin Vice President None
Ivy B. McLemore 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
Gary K. Wendler Vice President None
Norman W. Woodson Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
Sheila R. Brown Assistant Vice President None
Scott E. Burman Assistant Vice President None
Luke P. Beausoleil Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer
& Controller
Simon R. Hoyle Assistant Vice President None
Kathryn A. Jordan Assistant Vice President None
Kim T. McAuliffe Assistant Vice President None
</TABLE>
- -----------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-12
<PAGE> 393
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Underwriter with Registrant
- ---------------- ---------------- ---------------
<S> <C> <C>
David B. O'Neil Assistant Vice President None
Rebecca Starling-Klatt Assistant Vice President None
Nicholas D. White Assistant Vice President None
Nancy L. Martin Assistant General Counsel Assistant Secretary
& Assistant Secretary
Samuel D. Sirko Assistant General Counsel Assistant Secretary
& Assistant Secretary
P. Michelle Grace Assistant Secretary Assistant Secretary
Lisa A. Moss Assistant Secretary Assistant Secretary
Stephen I. Winer Assistant Secretary Assistant Secretary
</TABLE>
- ---------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
(c) Provide the information required by the following table for all commissions
and other compensation received, directly or indirectly, from the Registrant
during the last fiscal year by each principal underwriter who is not an
affiliated person of the Registrant or any affiliated person of an affiliated
person:
None.
Item 28. Location of Accounts and Records
State the name and address of each person maintaining physical
possession of each account, book, or other document required to be maintained by
section 31(a) [15 U.S.C. 80a-30(a)] and the rules under that section.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, will maintain physical possession of each such account,
book or other document of the Registrant at its principal executive
offices, except for those maintained by the Registrant's Custodians,
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 (except AIM Municipal Bond Fund) and The Bank of
New York, 90 Washington Street, 11th Floor, New York, New York 10286
(for AIM Municipal Bond Fund), 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 29. Management Services
Provide a summary of the substantive provisions of any
management-related service contract not discussed in Part A or Part B,
disclosing the parties to the contract and the total amount paid and by whom for
the Registrant's last three fiscal years.
None.
C-13
<PAGE> 394
Item 30. Undertakings
In initial registration statements filed under the Securities Act,
provide an undertaking to file an amendment to the registration statement with
certified financial statements showing the initial capital received before
accepting subscriptions from more than 25 persons if the Registrant intends to
raise its initial capital under section 14(a)(3) [15 U.S.C. 80a-14(a)(3)].
Not applicable.
C-14
<PAGE> 395
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Houston, Texas on the 9th day of
March, 2000.
REGISTRANT: AIM FUNDS GROUP
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 March 9, 2000
- -----------------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Trustee & President March 9, 2000
- ----------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Trustee March 9, 2000
- -----------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Trustee March 9, 2000
- -----------------------------
(Owen Daly II)
/s/ EDWARD K. DUNN, JR. Trustee March 9, 2000
- -----------------------------
(Edward K. Dunn, Jr.)
/s/ JACK FIELDS Trustee March 9, 2000
- -----------------------------
(Jack Fields)
/s/ CARL FRISCHLING Trustee March 9, 2000
- -----------------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS Trustee March 9, 2000
- -----------------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Trustee March 9, 2000
- -----------------------------
(Lewis F. Pennock)
/s/ LOUIS S. SKLAR Trustee March 9, 2000
- -----------------------------
(Louis S. Sklar)
/s/ DANA R. SUTTON Vice President & March 9, 2000
- ----------------------------- Treasurer (Principal Financial
(Dana R. Sutton) and Accounting Officer)
<PAGE> 396
INDEX TO EXHIBITS
AIM FUNDS GROUP
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
a(1)(h) Seventh Amendment to Agreement and Declaration of Trust of the Registrant, dated
September 26, 1998
b(3)(b) First Amendment to Amended and Restated Bylaws of the Registrant, adopted June 9,
1999
d(4)(h) Amendment No. 7, dated as of November 15, 1999, to Foreign Country Selection and
Mandatory Securities Depository Responsibilities Delegation Agreement, dated September
9, 1998, between Registrant and A I M Advisors, Inc.
g(2)(b) Amendment No. 1, dated October 2, 1998, to Subcustodian Agreement, dated September
9, 1994, among Registrant, Chase Bank of Texas N.A. (formerly Texas Commerce Bank),
State Street Bank and Trust Company and A I M Fund Services, Inc.
h(2)(c) Amendment No. 2, dated January 1, 1999, to the Transfer Agency and Service Agreement,
dated as of November 1, 1994, between Registrant and A I M Fund Services, Inc.
h(3)(h) Amendment No. 6, dated August 30, 1999, to the Remote Access and Related Services
Agreement, dated December 23, 1994, between Registrant and First Data Investor
Services Group, Inc.
j(1) Consent of Ballard Spahr Andrews & Ingersoll, LLP
j(2) Consent of KPMG LLP
n(3) The 18f-3 Third Amended and Restated Multiple Class Plan (effective 8/5/99)
o(1) The AIM Management Group Code of Ethics, as amended August 17, 1999, relating to
A I M Management Group Inc. and A I M Advisors, Inc.
o(2) Code of Ethics of Registrant
</TABLE>
<PAGE> 1
EXHIBIT a(1)(h)
SEVENTH AMENDMENT
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM FUNDS GROUP
THIS SEVENTH AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST OF AIM
FUNDS GROUP (the "Amendment") is entered into as of the 26th day of September,
1998, among Charles T. Bauer, Bruce L. Crockett, Owen Daly II, Edward K. Dunn,
Jr., Jack Fields, Carl Frischling, Robert H. Graham, Prema Mathai-Davis, 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 Funds Group entered into as of
May 5, 1993, as amended (the "Agreement").
WHEREAS, Section 9.7 of the Agreement authorizes the Trustees without
Shareholder vote to amend or otherwise supplement the Agreement by making an
amendment; and
WHEREAS, at a meeting duly called and held on the 26th day of September
1998, the Trustees have resolved to amend the Agreement as hereinafter set
forth.
NOW, THEREFORE, the Trustees hereby amend the Agreement as hereinafter
set forth:
1. Capitalized terms not specifically defined in this Amendment shall
have the meanings ascribed to them in the Agreement.
2. Section 3.6 of the Agreement is hereby amended to read in its
entirety as follows:
"Section 3.6 Number of Trustees. The number of Trustees shall initially
be three (3), and thereafter shall be such number as shall be fixed from time to
time by resolution adopted by the Board of Trustees; provided, however, that the
number of Trustees shall in no event be less than three (3) nor more than
fifteen (15)."
3. With the exception of the amendment in the preceding paragraph 2 of
this Amendment, the Agreement shall in all other respects remain in full force
and effect.
4. This Amendment may be executed in multiple counterparts, each of
which shall be deemed to be an original and all of which taken together shall
constitute one and the same Amendment.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this Seventh Amendment to Agreement and Declaration of
Trust of AIM Funds Group as of the day first above written.
/s/ CHARLES T. BAUER /s/ BRUCE L. CROCKETT
- ---------------------------------- ----------------------------------
Charles T. Bauer, Trustee Bruce L. Crockett, Trustee
/s/ OWEN DALY II /s/ EDWARD K. DUNN, JR.
- ---------------------------------- ----------------------------------
Owen Daly II, Trustee Edward K. Dunn, Jr., Trustee
/s/ JACK FIELDS /s/ CARL FRISCHLING
- ---------------------------------- ----------------------------------
Jack Fields, Trustee Carl Frischling, Trustee
/s/ ROBERT H. GRAHAM /s/ PREMA-MATHAI DAVIS
- ---------------------------------- ----------------------------------
Robert H. Graham, Trustee Perma Mathai-Davis, Trustee
/s/ LEWIS F. PENNOCK /s/ IAN W. ROBINSON
- ---------------------------------- ----------------------------------
Lewis F. Pennock, Trustee Ian W. Robinson, Trustee
/s/ LOUIS S. SKLAR
----------------------------------
Louis S. Sklar, Trustee
THIS IS THE SIGNATURE PAGE FOR
THE SEVENTH AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST
OF AIM FUNDS GROUP
2
<PAGE> 1
EXHIBIT b(3)(b)
FIRST AMENDMENT TO AMENDED AND RESTATED
BYLAWS OF AIM FUNDS GROUP
(A DELAWARE BUSINESS TRUST)
ADOPTED JUNE 9, 1999
The Bylaws of AIM Funds Group are hereby amended as follows:
WHEREAS, the Board of Trustees of the Fund desires to modify the manner in which
a chairman is appointed to preside at each shareholder meeting;
NOW THEREFORE BE IT RESOLVED, that paragraph (a) of Article IV, Section 9 of
each Fund's Bylaws be, and it hereby is, amended by deleting paragraph (a) of
Article IV, Section 9 in its entirety and replacing it with the following:
Section 9. Organization of Meetings.
(a) The meetings of the shareholders shall be presided over
by the Chairman of the Board, or if the Chairman shall not be present
or if there is no Chairman, by the President, or if the President shall
not be present, by a Vice President, or if no Vice President is
present, by a chairman appointed for such purpose by the Board of
Trustees or, if not so appointed, by a chairman appointed for such
purpose by the officers and Trustees present at the meeting. The
Secretary of the Trust, if present, shall act as Secretary of such
meetings, or if the Secretary is not present, an Assistant Secretary of
the Trust shall so act, and if no Assistant Secretary is present, then
a person designated by the Secretary of the Trust shall so act, and if
the Secretary has not designated a person, then the meeting shall elect
a secretary for the meeting.
<PAGE> 1
EXHIBIT d(4)(h)
AMENDMENT NO. 7
TO
FOREIGN COUNTRY SELECTION
AND MANDATORY SECURITIES DEPOSITORY RESPONSIBILITIES
DELEGATION AGREEMENT
This Amendment No. 7, dated as of November 15, 1999, amends the
Foreign Country Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement, dated September 9, 1998, between A I M Advisors, Inc., a
Delaware corporation and each registered investment company (the "Investment
Companies") and its respective portfolios (the "Funds") listed on the signature
page thereof (as amended and supplemented, the "Agreement").
NOW, THEREFORE, the parties agree as follows;
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to include the following portfolio of AIM Equity
Funds, Inc.:
AIM Mid Cap Growth Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to include the following portfolio of AIM Special
Opportunities Funds:
AIM Large Cap Opportunities Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to include the following portfolios of AIM
Variable Insurance Funds, Inc.:
AIM V.I. Blue Chip Fund
AIM V.I. Dent Demographic Trends Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to delete the following portfolio of AIM Advisor
Funds, Inc.:
AIM Advisor MultiFlex Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to delete the following fund:
AIM Eastern Europe Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to delete the following fund and portfolios
thereunder:
1
<PAGE> 2
GT Global Variable Investment Trust
-----------------------------------
GT Global Variable Emerging Markets Fund
GT Global Variable Government Income Fund
GT Global Variable Growth & Income Fund
GT Global Variable Infrastructure Fund
GT Global Variable Latin America Fund
GT Global Variable Natural Resources Fund
GT Global Variable Strategic Income Fund
GT Global Variable Telecommunications Fund
GT Global Variable U.S. Government Income Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to delete the following fund and portfolios
thereunder:
GT Global Variable Investment Series
------------------------------------
GT Global Variable America Fund
GT Global Variable Europe Fund
GT Global Variable International Fund
GT Global Variable Money Market Fund
GT Global Variable New Pacific Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to rename the following portfolio of AIM Equity
Funds, Inc.:
AIM Growth and Income Fund, renamed as AIM Large Cap Basic
Value Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to rename the following portfolio of AIM Growth
Series:
AIM Europe Growth Fund, renamed as AIM Euroland Growth Fund
The list of Investment Companies and Funds covered by the Agreement
is hereby amended to rename the following portfolio of AIM
Investment Funds:
AIM Global Telecommunications Fund, renamed as AIM Global
Telecommunications and Technology Fund
In all other respects, the Agreement is hereby confirmed and remains
in full force and effect.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have caused this Amendment No. 7
to be executed by their respective officers on the date first written above.
A I M ADVISORS, INC.
Attest: /s/P. MICHELLE GRACE By: /s/ROBERT H. GRAHAM
------------------------------ ----------------------------
Assistant Secretary President
AIM ADVISOR FUNDS, INC. AIM INTERNATIONAL FUNDS, INC.
AIM Advisor Flex Fund AIM Asian Growth Fund
AIM Advisor International Value Fund AIM European Development Fund
AIM Advisor Large Cap Value Fund AIM International Equity Fund
AIM Advisor Real Estate Fund AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM EQUITY FUNDS, INC. AIM Global Income Fund
AIM Aggressive Growth Fund
AIM Blue Chip Fund AIM VARIABLE INSURANCE FUNDS, INC.
AIM Capital Development Fund AIM V.I. Aggressive Growth Fund
AIM Charter Fund AIM V.I. Balanced Fund
AIM Constellation Fund AIM V.I. Blue Chip Fund
AIM Dent Demographic Trends Fund AIM V.I. Capital Appreciation Fund
AIM Large Cap Basic Value Fund AIM V.I. Capital Development Fund
AIM Large Cap Growth Fund AIM V.I. Dent Demographic Trends Fund
AIM Mid Cap Growth Fund AIM V.I. Diversified Income Fund
AIM Weingarten Fund AIM V.I. Global Growth and Income Fund
AIM V.I. Global Utilities Fund
AIM FUNDS GROUP AIM V.I. Government Securities Fund
AIM Balanced Fund AIM V.I. Growth Fund
AIM Global Utilities Fund AIM V.I. Growth & Income Fund
AIM High Yield Fund AIM V.I. High Yield Fund
AIM Income Fund AIM V.I. International Equity Fund
AIM Money Market Fund AIM V.I. Money Market Fund
AIM Select Growth Fund AIM V.I. Telecommunications Fund
AIM Value Fund AIM V.I. Value Fund
AIM INVESTMENT SECURITIES FUNDS EMERGING MARKETS DEBT PORTFOLIO
AIM High Yield Fund II
GROWTH PORTFOLIO
AIM SPECIAL OPPORTUNITIES FUNDS Small Cap Portfolio
AIM Large Cap Opportunities Fund Value Portfolio
AIM Mid Cap Opportunities Fund
AIM Small Cap Opportunities Fund
AIM SUMMIT FUND, INC.
3
<PAGE> 4
GLOBAL INVESTMENT PORTFOLIO AIM INVESTMENT FUNDS
Global Consumer Products and AIM Developing Markets Fund
Services Portfolio AIM Emerging Markets Debt Fund
Global Financial Services Portfolio AIM Global Consumer Products and
Global Infrastructure Portfolio Services Fund
Global Natural Resources Portfolio AIM Global Financial Services Fund
AIM Global Government Income Fund
GT GLOBAL FLOATING RATE FUND, INC. AIM Global Growth & Income Fund
(doing business as AIM Floating AIM Global Health Care Fund
Rate Fund) AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM SERIES TRUST AIM Global Telecommunications and
AIM Global Trends Fund Technology Fund
AIM Latin American Growth Fund
FLOATING RATE PORTFOLIO AIM Strategic Income Fund
AIM GROWTH SERIES
AIM Basic Value Fund
AIM Euroland Growth Fund
AIM Japan Growth Fund
AIM Mid Cap Equity Fund
AIM New Pacific Growth Fund
AIM Small Cap Growth Fund
Attest: /s/OFELIA M. MAYO By: /s/ROBERT H. GRAHAM
------------------------------ ----------------------------
Assistant Secretary President
4
<PAGE> 1
EXHIBIT g(2)(b)
AMENDMENT NO. 1
SUBCUSTODIAN AGREEMENT
WITH
TEXAS COMMERCE BANK
(NOW KNOWN AS CHASE BANK OF TEXAS, N.A.)
The Subcustodian Agreement with Texas Commerce Bank (now known as Chase
Bank of Texas, N.A.) (the "Agreement"), dated September 9, 1994, is hereby
amended as follows (terms used herein but not otherwise defined herein have the
meaning ascribed them in the Agreement):
1) Section 7 - Communications is hereby deleted in its entirety and
replaced with the following:
Communications. All communications required or permitted to be given
under this Agreement shall be in writing (including telex, telegraph or
telefax, facsimile or similar electronic transmittal device) and shall
be deemed given (a) upon delivery in person to the persons indicated
below, or (b) three days after deposit in the United States postal
service, postage prepaid, registered or certified mail, return receipt
requested, or (c) upon receipt by facsimile (provided that receipt of
such facsimile is confirmed telephonically by the addressee) or (d) by
overnight delivery service (with receipt of delivery) sent to the
address shown below, or to such different address(es) as such party
shall designate by written notice to the other parties hereto at least
ten days in advance of the date on which such change of address shall
be effective. All communications required or permitted to be given
under this Agreement shall be addressed as follows:
(i) to the Subcustodian: Chase Bank of Texas, N.A.
P. O. Box 2558
Houston, Texas 77252-8391
Attn: Kathy Wallace
(ii) to the Custodian: State Street Bank and Trust
1776 Heritage Drive
North Quincy, MA 02171
Attn: Judith Charny
(iii) to the Transfer Agent: A I M Fund Services, Inc.
11 Greenway Plaza
Suite 100
Houston, Texas 77046
Attn: Robert Frazer
<PAGE> 2
2) Schedule A to the Agreement is hereby deleted in its entirety and
replaced with the following:
AIM Advisor Funds, Inc.
AIM Equity Funds, Inc.
AIM Funds Group
AIM International Funds, Inc.
AIM Investment Securities Funds
AIM Special Opportunities Funds
AIM Tax-Exempt Funds, Inc.
3) Schedule 2 to the Agreement is hereby deleted in its entirety and
replaced with the following:
Authorized Officers
-------------------
Jack Caldwell President
Mary A. Corcoran Senior Vice President
Sidney M. Dilgren Senior Vice President
Tony D. Green Senior Vice President
Lois S. Murphy Senior Vice President
Linda L. Wariner Senior Vice President
Ira P. Cohen Vice President
Mary E. Gentempo Vice President
Kim T. McAuliffe Vice President
Robert A. Frazer Assistant Vice President
Authorized Representatives
--------------------------
Sherri Arbour
Debi Folse
Robert Thompson
<PAGE> 3
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: 10-2-98
-------
CHASE BANK OF TEXAS, N.A.
(as Subcustodian)
By: /s/ KATHY WALLACE
--------------------------------------
Title: Vice President
-----------------------------------
STATE STREET BANK AND TRUST COMPANY
(as Custodian)
By: /s/ ILLEGIBLE
--------------------------------------
Title: Executive Vice President
-----------------------------------
A I M FUND SERVICES, INC.
(as Transfer Agent)
By: /s/ JOHN CALDWELL
--------------------------------------
Title: President
-----------------------------------
EACH OF THE FUNDS LISTED ON
AMENDED SCHEDULE A HERETO
By: /s/ ROBERT H. GRAHAM
--------------------------------------
Title: President
-----------------------------------
<PAGE> 1
EXHIBIT h(2)(c)
AMENDMENT NUMBER 2 TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
This Amendment, dated as of January 1, 1999 is made to the Transfer Agency and
Service Agreement dated November 1, 1994, amended August 4, 1997, (the
"Agreement") between AIM Funds Group (the "Fund") and A I M Fund Services, Inc.
("AFS") pursuant to Article 10 of the Agreement.
A fee calculated by multiplying the number of shareholder accounts in the Fund
by $.20 shall be paid by the Fund to AFS concurrently with the fees payable by
the Fund to AFS under Article 2 of the Agreement.
Upon a vote of the Board of Trustees of the Fund terminating this Amendment,
this Amendment shall cease to apply, and the Transfer Agency and Service
Agreement, as amended by Amendment Number 1, shall be complete without reference
hereto.
AIM FUNDS GROUP
By: /s/ ROBERT H. GRAHAM
----------------------------------
President
ATTEST:
/s/ LISA A. MOSS
- ----------------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By: /s/ JOHN CALDWELL
----------------------------------
President
ATTEST:
/s/ LISA A. MOSS
- ----------------------------------
Assistant Secretary
<PAGE> 1
EXHIBIT h(3)(h)
AMENDMENT NO. 6 TO THE REMOTE ACCESS
AND RELATED SERVICES AGREEMENT
FOR IMPRESSNET(TM) SERVICES
THIS AMENDMENT, dated as of the 30th day of August, 1999 is made to the
Remote Access and Related Services Agreement dated as of December 23, 1994, as
amended (the "Agreement") between each registered investment company listed on
Exhibit 1 of the Agreement (the "Fund") and FIRST DATA INVESTOR SERVICES GROUP,
INC. ("Investor Services Group").
WITNESSETH
WHEREAS, the Fund desires to enable Shareholders and Financial
Planners to conduct certain account transactions through the use of the
Internet and Investor Services Group desires to allow such access and provide
certain services as more fully described below in connection therewith;
NOW THEREFORE, the Fund and Investor Services Group agree that as of
the date first referenced above, Investor Services Group Agreement shall be
amended as follows:
1. Definitions. Terms not otherwise defined herein shall have the same
meanings as ascribed them in the Agreement. In addition, the following
definitions are hereby incorporated into Agreement:
(a) "End-User" shall mean any Shareholder or Financial Planner that
accesses the Investor Services Group recordkeeping system via
IMPRESSNet--Registered Trademark--.
(b) "Financial Planner" shall mean any investment advisor,
broker-dealer, financial planner or any other person authorized to act
on behalf of a Shareholder.
(c) "Financial Transaction" shall mean purchase, redemption, exchange
or any other transaction involving the movement of Shares initiated by
an End-User.
(d) "Fund Home Page" shall mean the Fund's proprietary web site on the
Internet used by the Fund to provide information to its shareholders
and potential shareholders.
(e) "IMPRESSNet--Registered Trademark--" shall mean the Investor
Services Group proprietary system consisting of the Investor Services
Group Secure Net Gateway and the Investor Services Group Web
Transaction Engine and shall also be deemed to be part of, and
included within the definition of "FDISG System" and "FDISG
Facilities", as those terms are defined in the Agreement.
(f) "Investor Services Group Secure Net Gateway" shall mean the system
of computer hardware and software and network established by Investor
Services Group to provide access between Investor Services Group
recordkeeping system and the Internet.
<PAGE> 2
(g) "Investor Services Group Web Transaction Engine" shall mean the
system of computer hardware and software created and established by
Investor Services Group in order to enable Shareholders of the Fund to
perform the transactions contemplated hereunder.
(h) "Internet" shall mean the communications network comprised of
multiple communications networks linking education, government,
industrial and private computer networks.
(i) "Shares" refers collectively to such shares of capital stock or
beneficial interest, as the case may be, or class thereof, of a Fund
as may be issued from time to time.
(j) "Shareholder" shall mean a record owner of Shares of the Fund.
2. Responsibilities of Investor Services Group. In addition to the
services rendered by Investor Services Group as set forth in the
Agreement, Investor Services Group agrees to provide the following
services for the fees set forth in the Schedule of
IMPRESSNet--Registered Trademark-- Fees attached hereto as Schedule A
of this Amendment:
(a) In accordance with the written IMPRESSNet--Registered Trademark--
procedures and product functionality documentation provided to the
Fund by Investor Services Group, Investor Services Group shall,
through the use of the Investor Services Group Web Transaction Engine
and Secure Net Gateway enable End-Users to utilize the Internet to
access the Investor Services Group System in order to perform
transactions in Shareholder accounts. IMPRESSNet--Registered
Trademark-- shall be accessible by End-Users in order to perform
transactions in Shareholder accounts via the Internet at least 95% of
the time during any 24 hour period, excluding a) the standard Initial
Program Loads (IPL) which shall be scheduled from 9:00 p.m. Saturday
through 7:00 a.m. Sunday Central Time, and b) the software change
windows which shall be scheduled from 12:00 a.m. Friday through 4:00
a.m. Friday Central Time and 12:00 a.m. Monday through 4:00 a.m.
Monday Central Time.
(b) (i) With respect to Shareholders, process the set up of personal
identification numbers ("PIN") which shall include verification of
initial identification numbers issued, reset and activate personalized
PIN's and reissue new PIN's in connection with lost PIN's; and (ii)
with respect to Financial Planners process the set up of digital
certificates which shall include verification of initial digital
certificates issued, reset and activate digital certificates and
reissue digital certificates in connection with expired or terminated
certificates.
(c) Installation services which shall include, review and sign off on
the Fund's network requirements, recommending method of linking to the
FDISG Web Transaction Engine, installing network hardware and
software, implementing the network connectivity, and testing the
network connectivity and performance;
2
<PAGE> 3
(d) Maintenance and support of the Investor Services Group Secure Net
Gateway and the Investor Services Group Web Transaction Engine, which
includes the following:
(i) error corrections, minor enhancements and interim upgrades to
IMPRESSNet--Registered Trademark-- which are made generally
available by FDISG to IMPRESSNet--Registered Trademark--
customers;
(ii) help desk support to provide assistance to Fund employees
with the Fund's use of IMPRESSNet--Registered Trademark--.
Maintenance and support shall not include (i) access to or use of any
substantial added functionality, new interfaces, new architecture, new
platforms, new versions or major development efforts, unless made
generally available by FDISG to IMPRESSNet--Registered Trademark--
clients, as determined solely by FDISG; or (ii) development of
customized features.
(e) Maintenance and upkeep of the security infrastructure and
capabilities described in the procedures and product functionality
documentation.
(f) Prepare and forward monthly usage reports to the Fund which shall
provide the Fund with a summary of activity and functionality used by
End-Users. In addition, the Fund will be provided web-site access for
determination of daily usage activity.
3. Responsibility of the Fund. In connection with the services provided
by Investor Services Group hereunder, the Fund shall be responsible
for the following:
(a) establishment and maintenance of the Fund Home Page on the
Internet;
(b) services and relationships between the Fund and any third party
on-line service providers to enable End-Users to access the Fund Home
Page and/or the Investor Services System via the Internet;
(c) provide Investor Services Group with access to and information
regarding the Fund Home Page in order to enable Investor Services
Group to provide the services contemplated hereunder.
4 Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software paid for by the Fund. Such exclusivity would
extend for a period of nine (9) months from the date the enhancement
is placed into the production libraries. Software exclusivity would be
waived if the Fund accepts either of the following conditions:
a). If prior to implementation, Investor Services Group or other
Investor Services Group clients agree to share in the expense of
the enhancements.
b). At any time during the 9 months following implementation, Investor
Services Group or other Investor Services Group clients agree to
share the expense for the enhancements.
3
<PAGE> 4
The Agreement, as previously amended and as amended by this Amendment,
("Modified Agreement") constitutes the entire agreement between the parties
with respect to the subject matter hereof. The Modified Agreement supersedes
all prior and contemporaneous agreements between the parties in connection with
the subject matter hereof. No officer, employee, servant or other agent of
either party is authorized to make any representation, warranty, or other
promises not expressly contained herein with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers, as of the day and year first
above written.
On behalf of the Funds and respective FIRST DATA INVESTOR SERVICES
Portfolios and Classes set forth in GROUP, INC.
Exhibit 1 of the Agreement which may
be amended from time to time.
<TABLE>
<S> <C>
By: /s/ROBERT H. GRAHAM By: /s/DEBRLEE G. GOLDBERG
-------------------------------- -------------------------------
Name: Robert H. Graham Name: Debrlee G. Goldberg
------------------------------- ----------------------------
Title: President Title: SVP
------------------------------ ---------------------------
</TABLE>
4
<PAGE> 5
SCHEDULE A
IMPRESSNET(TM) Fees
WEB TRANSACTION ENGINE
SET UP FEE: $150.00 PER HOUR
o Reviewing client network requirements and signing off on the
requirements
o Recommending method of linking to the Web Transaction Engine
o Installing the network hardware and software
o Implementing the network connectivity
o Testing the network connectivity and performance
FINANCIAL TRANSACTION COST:
<TABLE>
<CAPTION>
NUMBER OF TRANSACTIONS PER MONTH FEE PER TRANSACTION
-------------------------------- -------------------
<S> <C>
0-10,000 $.50
10,001-20,000 $.40
20,001+ $.25
</TABLE>
SOFTWARE MAINTENANCE FEE: $25,000 PER ANNUM
o Releases of new versions of Web Transaction Engine (does not include
customization)
o Maintain security infrastructure with auditing function for the
purpose of Fund and Shareholder protection
o Monthly Usage Reports and web access as described in Paragraph 2(f) of
this Amendment No. 6
o Help Desk Support (contact and escalation procedures set forth in
Exhibit 1)
HARDWARE MAINTENANCE FEE: $25,000 PER ANNUM
o Does not include client hardware and software requirements.
o Installation of hardware is billed as time and materials
o Does not include third party hardware and software maintenance
agreements
The Software Maintenance Fee and Hardware Maintenance Fee shall remain
unchanged until December 31, 2002. During each one year term of the agreement
after December 31, 2002, the Software Maintenance Fee and Hardware Maintenance
Fee may be changed no more than 5% than the then-current Software Maintenance
Fee and Hardware Maintenance Fee upon 90 days' prior written notice to the
Funds. Such change to the Software Maintenance Fee and Hardware Maintenance Fee
shall be effective at the beginning of the next one year term of the Agreement.
5
<PAGE> 6
CUSTOMIZED DEVELOPMENT: $150 PER HOUR
The above referenced fees do not include fees associated with third party
software products which may be required to utilize future releases of
IMPRESSNet(TM).
6
<PAGE> 7
EXHIBIT 1 OF SCHEDULE A
IMPRESSNET HELP DESK AND ESCALATION PROCEDURES
This is directed to the IMPRESSNet staff as well as the customer base to ensure
a common understanding of the expectations surrounding help desk support.
It is assumed that each site has a front line of technical support which
filters out calls and determines that the issue is IMPRESSNet related and is
severe enough to justify immediate attention. It is requested that off-hour
calls be reserved for major production or data integrity issues.
Once an issue is determined to be IMPRESSNet related, the client representative
(either the user or a point of contact) should call the First Data Help Desk at
(508) 871-8550.
The Help Desk has a list of primary and secondary developers on call by
product. It is advantageous to provide a clear and concise problem statement to
the Help Desk personnel along with a telephone number and point of contact. The
caller should be sure to obtain a ticket number to facilitate progress tracking
if necessary.
o The Help Desk will call and/or page the primary on-call developer and
allow 15 minutes for a return call.
o If no response is received, the Help Desk will call and/or page the
secondary on call and wait 10 minutes for a return call.
o If no response is received, the manager on call will be called and/or
paged.
o If no response is received, the Help Desk personnel will contact the
Vice President of Corporate Systems and then the Manager of the
Environmental Support Group.
o Finally, if no response is received the Help Desk personnel has access
to SCONCALL (special procedures utilized by help desk personnel)
Once the developer or manager is assigned the call, they are responsible for
seeing that the issue is satisfactorily addressed. They are not necessarily
responsible for physically addressing the issue.
The assigned person will contact the designated client personnel to inform them
the issue is being addressed and to collect any relevant information.
If an issue will take more than an hour to resolve, the assigned person will
periodically update the Help Desk with a progress status.
Once the issue has been addressed it is the responsibility of the assigned
person to notify the Help Desk that the issue can be marked as "resolved".
7
<PAGE> 8
The Help Desk will contact the client to obtain confirmation of resolution
prior to closing the ticket.
If there has been a lack of response on a particular issue after the specified
time period, please contact your Client Service or IMPRESSNet Manager.
8
<PAGE> 1
Exhibit j(1)
CONSENT OF COUNSEL
AIM FUNDS GROUP
---------------
We hereby consent to the use of our name and to the reference
to our firm under the caption "Miscellaneous Information - Legal Matters" in
the Statement of Additional Information for AIM Balanced Fund, AIM Global
Utilities Fund, AIM High Yield Fund, AIM Income Fund, AIM Intermediate
Government Fund, AIM Money Market Fund, AIM Municipal Bond Fund, AIM Select
Growth Fund and AIM Value Fund, which is included in Post-Effective Amendment
No. 77 to the Registration Statement under the Securities Act of 1933, as
amended (No. 2-27334), and Amendment No. 77 to the Registration Statement under
the Investment Company Act of 1940, as amended (No. 811-1540), on Form N-1A of
AIM Funds Group.
/s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
------------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
March 9, 2000
<PAGE> 1
Exhibit j(2)
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Trustees and Shareholders
AIM Funds Group:
We consent to the use of our reports on AIM Balanced Fund, AIM Global Utilities
Fund, AIM High Yield Fund, AIM Income Fund, AIM Intermediate Government Fund,
AIM Money Market Fund, AIM Municipal Bond Fund, AIM Select Growth Fund, and AIM
Value Fund (series portfolios of AIM Funds Group) dated February 4, 2000
included herein and the references to our firm under the headings "Financial
Highlights" in the Prospectuses and "Audit Reports" in the Statement of
Additional Information.
/s/ KPMG LLP
KPMG LLP
Houston, Texas
March 9, 2000
<PAGE> 1
EXHIBIT n(3)
THIRD AMENDED AND RESTATED MULTIPLE CLASS PLAN
OF
THE AIM FAMILY OF FUNDS--Registered Trademark--
1. This Third 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) AIM Cash Reserve Shares - shall mean the AIM Cash Reserve
Shares Class of AIM Money Market Fund, a Portfolio of AIM
Funds Group.
(c) CDSC - contingent deferred sales charge.
(d) CDSC Period - the period of years following acquisition of
Shares during which such Shares may be assessed a CDSC
upon redemption.
(e) Class - a class of Shares of a Fund representing an interest in
a Portfolio.
(f) Class A Shares - shall mean those Shares designated as Class A
Shares in the Fund's organizing documents.
(g) Class B Shares - shall mean those Shares designated as Class B
Shares in the Fund's organizing documents.
(h) Class C Shares - shall mean those Shares designated as Class C
Shares in the Fund's organizing documents.
(i) Directors - the directors or trustees of a Fund.
(j) 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.
(k) Distribution Fee - a fee paid by a Fund to the Distributor to
compensate the Distributor for Distribution Expenses.
(l) Distributor - A I M Distributors, Inc. or Fund Management
Company, as applicable.
(m) Fund - those investment companies advised by A I M Advisors,
Inc. which have adopted this Plan.
1
<PAGE> 2
(n) 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.
(o) Plan of Distribution - Any plan adopted under Rule 12b-1
under the Act with respect to payment of a Distribution
Fee and/or Service Fee.
(p) Portfolio - a series of the Shares of a Fund constituting a
separate investment portfolio of the Fund.
(q) 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.
(r) Share - a share of common stock of or beneficial interest in a
Fund, as applicable.
3. Allocation of Income and Expenses.
(a) Distribution Fees 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> 3
(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, which sales charge 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 Section 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.
(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.
(e) AIM Cash Reserve Shares. AIM Cash Reserve Shares shall be
(i) offered at net asset value and (ii) 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. AIM Cash Reserve Shares acquired through
exchange of Class A Shares of another Portfolio may 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.
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.
3
<PAGE> 4
(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.
(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 on terms
disclosed in the Fund's prospectus or statement of
additional information and, for the Class A Shares and AIM
Cash Reserve 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 or AIM Cash Reserve Shares, 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) AIM Cash Reserve Shares may be exchanged for Class A
Shares, Class B Shares or Class C 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.
(e) 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.
4
<PAGE> 5
(f) CDSC Computation. The CDSC payable upon redemption of
Class A Shares, Class B Shares, Class C Shares and AIM
Cash Reserve 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.
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. Effective Date. 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. Amendments. 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.
5
<PAGE> 1
EXHIBIT o(1)
THE AIM MANAGEMENT GROUP
CODE OF ETHICS
(ADOPTED MAY 1, 1981)
(AS LAST AMENDED AUGUST 17, 1999)
WHEREAS, the members of the AIM Management Group are A I M Management
Group Inc. ("AIM Management") and A I M Advisors, Inc. ("AIM Advisors") and
its wholly owned and indirect subsidiaries (individually and collectively
referred to as "AIM"); and
WHEREAS, certain members of AIM provide investment advisory services to
AIM's investment companies and other clients; and
WHEREAS, certain members of AIM provide distribution services as
principal underwriters for AIM's investment company clients; and
WHEREAS, certain members of AIM provide shareholder services as the
transfer agent, dividend disbursing agent and shareholder processing agent for
AIM's investment company clients; and
WHEREAS, the investment advisory business involves decisions and
information which may have at least a temporary impact on the market price of
securities, thus creating a potential for conflicts of interest between the
persons engaged in such business and their clients; and
WHEREAS, the members of AIM have a fiduciary relationship with respect
to each portfolio under management and the interests of the client accounts and
of the shareholders of AIM's investment company clients must take precedence
over the personal interests of the employees of AIM, thus requiring a rigid
adherence to the highest standards of conduct by such employees; and
WHEREAS, every practical step must be taken to ensure that no
intentional or inadvertent action is taken by an employee of AIM which is, or
appears to be, adverse to the interests of AIM or any of its client accounts,
including the defining of standards of behavior for such employees, while at
the same time avoiding unnecessary interference with the privacy or personal
freedom of such employees; and
WHEREAS, the members of AIM originally adopted a Code of Ethics ("the
Code") on May 1, 1981, and adopted amendments thereto in January 1989, October
1989, April 1991, December 6, 1994 and December 5, 1995, December 10, 1996, and
now deem it advisable to update and revise said Code in light of new investment
company products developed by AIM and changing circumstances in the securities
markets in which AIM conducts business; and
NOW, THEREFORE, the Boards of Directors of AIM Management and AIM
Advisors hereby adopt the following revised Code pursuant to the provisions of
Rule 17j-1 under the Investment Company Act of 1940 ("1940 Act"), with the
intention that certain provisions of the Code shall become applicable to the
officers, directors and employees of AIM.
I. APPLICABILITY
A. The provisions of AIM's Code shall apply to certain officers,
directors and employees (as hereinafter designated) of AIM. Unless
otherwise indicated, the term "employee" as used herein means: (i)
all officers, directors and employees of AIM Advisors and its
wholly owned and indirect subsidiaries and (ii) officers,
directors and employees of AIM Management who
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have an active part in the management, portfolio selection,
underwriting or shareholder functions with respect to
AIM's investment company clients or provide one or more similar
services for AIM's non-investment company clients. The term
"employee" does not include directors of AIM Management who do not
maintain an office at the home office of AIM Management and who do
not regularly obtain information concerning the investment
recommendations or decisions made by AIM on behalf of client
accounts ("independent directors").
B. The Code shall also apply to any person or entity appointed as a
sub-advisor for an AIM investment company client account unless
such person or entity has adopted a code of ethics in compliance
with Section 17(j) of the 1940 Act; or, in the event that such
person or entity is domiciled outside of the United States, has
adopted employee standards of conduct that provide equivalent
protections to AIM's client accounts. In performing sub-advisory
services, such person or entity will be subject to the direction
and supervision of AIM, and subject to the policies and control of
the Boards of Directors/Trustees of the respective AIM investment
company client(s).
II. INTERPRETATION AND ENFORCEMENT
A. The Chief Executive Officer of AIM Management shall appoint a
Code of Ethics Committee ("Committee"). The Committee shall have
the responsibility for interpreting the provisions of the Code, for
adopting and implementing Procedures for the enforcement of the
provisions of the Code, and for determining whether a violation of
the provisions of the Code, or of any such related Procedures has
occurred. The Committee will appoint an officer to monitor
personal investment activity by "Covered Persons" (as defined in
the Procedures adopted hereunder), both before and after any trade
occurs and to prepare periodic and annual reports, conduct
education seminars and obtain employee certifications as deemed
appropriate. In the event of a finding that a violation has
occurred requiring significant remedial action, the Committee
shall take such action as it deems appropriate on the imposition
of sanctions or initiation of disgorgement proceedings. The
Committee shall also make recommendations and submit reports to
the Boards of Directors/Trustees of AIM's investment company
clients.
B. If a sub-advisor has adopted a code of ethics in accordance with
Section 17(j) of the 1940 Act, then pursuant to a sub-advisory
agreement with AIM, it shall be the duty of such sub-advisor to
furnish AIM with a copy of the following:
o code of ethics and related procedures of the sub-advisor,
and a statement as to its employees' compliance therewith;
o any statement or policy on insider trading adopted pursuant
to Section 204A under the 1940 Act; and the procedures
designed to prevent the misuse of material non-public
information by any person associated with such sub-advisor;
and
o such other information as may reasonably be necessary for
AIM to report to the Boards of Directors/Trustees of its
investment company client account(s) as to such
sub-advisor's adherence to the Boards' policies and controls
referenced in Section I.B. above.
III. PROCEDURES ADOPTED UNDER THE CODE
From time to time, AIM's Committee shall adopt Procedures to carry out
the intent of the Code. Among other things, the Procedures require
certain new employees to complete an Asset Disclosure Form, a Brokerage
Accounts Listing Form and such other forms as deemed appropriate by the
Committee. Such Procedures are hereby incorporated into the Code and are
made a part of the Code. Therefore, a violation of the Procedures shall
be deemed a violation of the Code itself.
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IV. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
A. Each employee shall have and maintain knowledge of and shall
comply strictly with all applicable federal and state laws and all
rules and regulations of any governmental agency or
self-regulatory organization governing his/her actions as an
employee.
B. Each employee shall comply with all laws and regulations, and
AIM's prohibition against insider trading. Trading on or
communicating material non-public information, or "inside
information", of any sort, whether obtained in the course of
research activities, through a client relationship or otherwise,
is strictly prohibited.
C. Each employee shall comply with the procedures and guidelines
established by AIM to ensure compliance with applicable federal
and state laws and regulations of governmental agencies and
self-regulatory organizations. No employee shall knowingly
participate in, assist, or condone any act in violation of any
statute or regulation governing AIM or any act that would violate
any provision of this Code, or of the Procedures adopted
hereunder.
D. Each employee shall have and maintain knowledge of and shall
comply with the provisions of this Code and any Procedures adopted
hereunder.
E. Each employee having supervisory responsibility shall exercise
reasonable supervision over employees subject to his/her control,
with a view to preventing any violation by such persons of
applicable statutes or regulations, AIM's corporate procedures, or
the provisions of the Code, or the Procedures adopted hereunder.
F. Any employee obtaining evidence that an act in violation of
applicable statutes, regulations or provisions of the Code or of
any Procedures adopted hereunder has occurred shall immediately
report such evidence to the Chief Compliance Officer of AIM. Such
action by the employee will remain confidential, unless the
employee waives confidentiality or federal or state authorities
compel disclosure. Failure to report such evidence may result in
disciplinary proceedings and may include sanctions as set forth in
Section VI hereof.
V. ETHICAL STANDARDS
A. Employees shall conduct themselves in a manner consistent with the
highest ethical and fiduciary standards. They shall avoid any
action, whether for personal profit or otherwise, that results in
an actual or potential conflict of interest with AIM or its client
accounts, or which may be otherwise detrimental to the interests
of the members of AIM or its client accounts.(1)
B. Employees shall act in a manner consistent with their fiduciary
obligation to clients of AIM, and shall not deprive any client
account of an investment opportunity in order to personally
benefit from that opportunity.
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(1) Conflicts of interest generally result from a situation in which an
individual has a personal interest in a matter that is or may be competitive
with his or her responsibilities to other persons or entities (such as AIM or
its client accounts) or where an individual has or may have competing
obligations or responsibilities to two or more persons or entities. In the case
of the relationship between a client account on the one hand, and AIM, its
officers, directors and employees, on the other hand, such conflict may result
from the purchase or sale of securities for a client account and for the
personal account of the individual involved or the account of any "affiliate"
of such individual, as such term is defined in the 1940 Act. Such conflict may
also arise from the purchase or sale for a client account of securities in
which an officer, director or employee of AIM has an economic interest.
Moreover, such conflict may arise in connection with vendor relationships in
which such employee has any direct or indirect financial interest, family
interests or other personal interest. To the extent of conflicts of interest
between AIM and a vendor, such conflicts must be resolved in a manner that is
not disadvantageous to AIM. In any such case, potential or actual conflicts
must be disclosed to AIM and the first preference and priority must be to avoid
such conflicts of interest wherever possible and, where they unavoidably occur,
to resolve them in a manner that is not disadvantageous to a client.
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<PAGE> 4
C. Without the knowledge and approval of the Chief Executive Officer
of AIM Management, employees shall not engage in a
business activity or practice for compensation in competition with
the members of AIM. Each employee, who is deemed to be a "Covered
Person" as defined in the Procedures adopted hereunder, shall
obtain the written approval of AIM Management's Chief Executive
Officer to participate on a board of directors/trustees of any of
the following organizations:
o publicly traded company, partnership or trust;
o hospital or philanthropic institution;*
o local or state municipal authority;* and/or
o charitable organization.*
* These restrictions relate to organizations that have or intend
to raise proceeds in a public securities offering.
In the relatively small number of instances in which board
approval is authorized, investment personnel serving as directors
shall be isolated from those making investment decisions through
AIM's "Chinese Wall" Procedures.
D. Each employee, in making an investment recommendation or taking
any investment action, shall exercise diligence and thoroughness,
and shall have a reasonable and adequate basis for any such
recommendation or action.
E. Each employee shall not attempt to improperly influence for such
person's personal benefit any investment strategy to be followed
or investment action to be taken by the members of AIM for its
client accounts.
F. Each employee shall not improperly use for such person's personal
benefit any knowledge, whether obtained through such person's
relationship with AIM or otherwise, of any investment
recommendation made or to be made, or of any investment action
taken or to be taken by AIM for its client accounts.
G. Employees shall not disclose any non-public information relating
to a client account's portfolio or transactions or to the
investment recommendations of AIM, nor shall any employee disclose
any non-public information relating to the business or operations
of the members of AIM, unless properly authorized to do so.
H. Employees shall not accept, directly or indirectly, from a
broker/dealer or other vendor who transacts business with AIM or
its client accounts, any gifts, gratuities or other things of more
than de minimis value or significance that their acceptance might
reasonably be expected to interfere with or influence the exercise
of independent and objective judgment in carrying out such
person's duties or otherwise gives the appearance of a possible
impropriety. For this purpose, gifts, gratuities and other things
of value shall not include unsolicited entertainment so long as
such unsolicited entertainment is not so frequent or extensive as
to raise any question of impropriety.
I. Employees who are registered representatives and/or principals of
AIM shall not acquire securities for an account for which he/she
has a direct or indirect beneficial interest in an initial public
offering ("IPO") or on behalf of any person, entity or
organization that is not an AIM client. All other employees shall
not acquire securities for an account for which he/she has a
direct or indirect beneficial interest offered in an IPO or on
behalf of any person, entity or organization that is not an AIM
client account except in those circumstances where different
amounts of such offerings are specified for different investor
types (e.g., private investors and institutional investors) and
such transaction has been pre-cleared by the Compliance Office.
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J. All personal securities transactions by employees must be
conducted consistent with this Code and the Procedures adopted
hereunder, and in such a manner as to avoid any actual or
potential conflicts of interest or any abuse of such employee's
position of trust and responsibility. Unless an exemption is
available, employees who are deemed to be "Covered Persons" as
defined in the Procedures adopted hereunder, shall pre-clear all
personal securities transactions in securities in accordance with
the Procedures adopted hereunder.
K. Each employee, who is deemed to be a "Covered Person" as defined
in the Procedures adopted hereunder, (or registered representative
and/or principal of AIM), shall refrain from engaging in personal
securities transactions in connection with a security that is not
registered under Section 12 of the Securities Act of 1933 (i.e., a
private placement security) unless such transaction has been
pre-approved by the Chief Compliance Officer or the Director of
Investments (or their designees).
L. Employees, who are deemed to be "Covered Persons" as defined in
the Procedures adopted hereunder, may not engage in a transaction
in connection with the purchase or sale of a security within seven
calendar days before and after an AIM investment company client
trades in that same (or equivalent) security unless the de minimis
exemption is available.
M. Each employee, who is deemed to be a "Covered Person" as defined
in the Procedures adopted hereunder, may not purchase and
voluntarily sell, or sell and voluntarily purchase the same (or
equivalent) securities of the same issuer within 60 calendar days
unless such employee complies with the disgorgement procedures
adopted by the Code of Ethics Committee. Subject to certain
limited exceptions set forth in the related Procedures, any
transaction under this provision may result in disgorgement
proceedings for any profits received in connection with such
transaction by such employee.
VI. SANCTIONS
Employees violating the provisions of AIM's Code or any Procedures
adopted hereunder may be subject to sanctions, which may include, among
other things, restrictions on such person's personal securities
transactions; a letter of admonition, education or formal censure;
fines, suspension, re-assignment, demotion or termination of employment;
or other significant remedial action. Employees may also be subject to
disgorgement proceedings for transactions in securities that are
inconsistent with Sections V.L. and V.M. above.
VII. ADDITIONAL DISCLOSURE
This Code and the related Procedures cannot, and do not, cover every
situation in which choices and decisions must be made, because other
company policies, practices and procedures (as well as good common
sense) and good business judgment also apply. Every person subject to
this Code should read and understand these documents thoroughly. They
present important rules of conduct and operating controls for all
employees. Employees are also expected to present questions to the
attention of their supervisors and to the Chief Compliance Officer (or
designee) and to report suspected violations as specified in these
documents.
For the Boards of Directors:
The AIM Management Group
by: /s/CHARLES T. BAUER
-------------------------------------------------
Charles T. Bauer
AUGUST 17, 1999
-------------------------------------------------
Date
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EXHIBIT o(2)
CODE OF ETHICS
OF
AIM FUNDS GROUP
WHEREAS, AIM FUNDS GROUP (the "Company") is a registered investment
company under the Investment Company Act of 1940, as amended (the "ICA"); and
WHEREAS, Rule 17j-1 under the ICA requires the Company to adopt a
Code of Ethics;
NOW, THEREFORE, the Company hereby adopts the following Code of
Ethics, effective as of the 30th day of June 1992.
I. DEFINITIONS
For the purpose of the Code of Ethics the following terms shall have
the meanings set forth below:
(a) "Access person" means any trustee, officer, or advisory person of
the Company; provided, however, that any person who is an access
person of any investment advisor of, or principal underwriter
for, any registered investment company and who is required by
Rule 17j-1 of the ICA to report his or her securities
transactions to such investment advisor or principal underwriter,
shall not be deemed an access person of the Company.
(b) "Advisory person" means
(i) any employee of the Company, its investment advisor or
administrator (or of any entity in a control relationship
with the Company, its investment advisor or administrator,
as defined in (d) hereof), who, in connection with his or
her regular functions or duties, makes, participates in, or
obtains information (other than publicly available
information) regarding the purchase or sale of a security by
the Company, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and
(ii) any natural person directly or indirectly owning,
controlling, or holding with power to vote, 25% or more of
the outstanding voting securities of any of the Company, its
investment advisor or administrator, who obtains information
(other than publicly available information) concerning
recommendations made by the Company, its investment advisor
or administrator with regard to the purchase or sale of a
security.
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AIM Funds Group
(c) "Affiliated persons" or "Affiliates" means
(i) any employee or access person of the Company, and any
member of the immediate family (defined as spouse, child,
mother, father, brother, sister, in-law or any other
relative) of any such person who lives in the same household
as such person or who is financially dependent upon such
person;
(ii) any account for which any of the persons described in (c)(i)
hereof is a custodian, trustee or otherwise acting in a
fiduciary capacity, or with respect to which any such person
either has the authority to make investment decisions or
from time to time give investment advice; and
(iii) any partnership, corporation, joint venture, trust or other
entity in which any employee of the Company or access
person of the Company directly or indirectly, in the
aggregate, has a 10% or more beneficial interest or for
which any such person is a general partner or an executive
officer.
(d) "Control" means the power to exercise a controlling influence
over the management or policies of a corporation. Any person who
owns beneficially, either directly or through one or more
controlled corporations, more than 25% of the voting securities
of a corporation shall be presumed to control such corporation.
(e) "Security" means any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust
certificate, preorganization certificate or subscription,
transferable share, investment contract, voting-trust
certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, or, in
general, any interest or instrument commonly known as a
"security", or any certificate of interest or participation in,
temporary or interim certificate for, receipt of, guarantee of,
or warrant or right to subscribe to or purchase, any of the
foregoing; provided, however, that "security" shall not mean
securities issued or guaranteed by the Government of the United
States, its agencies or instrumentalities, bankers' acceptances,
bank certificates of deposit, commercial paper and shares of
registered open-end investment companies.
(f) "Purchase or sale of a security" includes the writing of an
option to purchase or sell a security.
(g) "Security held or to be acquired" by the Company means any
security which, within the most recent fifteen (15) days, (i) is
or has been held by the Company, or (ii) is being or has been
considered by the Company for purchase by the Company.
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Code of Ethics of: Page 3
AIM Funds Group
(h) "Beneficial ownership of a security" by any person includes
securities held by: (a) a spouse, minor children or relatives who
share the same home with such person; (b) an estate for such
person's benefit; (c) a trust, of which (i) such person is a
trustee or such person or members of such person's immediate
family have a vested interest in the income or corpus of the
trust, or (ii) such person owns a vested beneficial interest, or
(iii) such person is the settlor and such person has the power to
revoke the trust without the consent of all the beneficiaries;
(d) a partnership in which such person is a partner; (e) a
corporation (other than with respect to treasury shares of the
corporation) of which such person is an officer, director or 10%
stockholder; (f) any other person if, by reason of contract,
understanding, relationship, agreement or other arrangement, such
person obtains therefrom benefits substantially equivalent to
those of ownership; or (g) such person's spouse or minor children
or any other person, if, even though such person does not obtain
therefrom the above-mentioned benefits of ownership, such person
can vest or revest title in himself at once or at some future
time. A beneficial owner of a security also includes any person
who, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting
power and/or investment power with respect to such security.
Voting power includes the power to vote, or to direct the voting
of such security, and investment power includes the power to
dispose, or to direct the disposition of such security. A person
is the beneficial owner of a security if he has the right to
acquire beneficial ownership of such security at any time within
sixty (60) days.
II. IDENTIFICATION OF ACCESS PERSONS
(a) The Company will maintain a list of all access persons and will
notify each access person in writing that such person is an
access person. Once a person has been so identified he or she
shall continue to be an access person until otherwise notified in
writing by the Company; provided, however, if such person is an
access person solely because he or she is a trustee of the
Company, such person shall cease to be an access person at the
time such person ceases to be a trustee.
(b) Each access person will be given a copy of the Code of Ethics at
the time such person becomes an access person.
III. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
(a) Each access person shall comply strictly with all applicable
federal and state laws and all rules and regulations of any
governmental agency or self-regulatory organization governing
his or her activities.
(b) Each access person shall comply strictly with procedures
established by the Company to ensure compliance with applicable
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Code of Ethics of: Page 4
AIM Funds Group
federal and state laws and regulations of governmental agencies
and self-regulatory organizations.
(c) Access persons shall not knowingly participate in, assist, or
condone any acts in violation of any statute or regulation
governing securities matters, nor any act which would violate any
provision of this Code of Ethics or any rules adopted thereunder.
IV. CONFIDENTIALITY OF TRANSACTIONS
(a) Information relating to the Company's portfolio and research and
studies activities is confidential until publicly available.
Whenever statistical information or research is supplied to or
requested by the Company, such information must not be disclosed
to any persons other than as duly authorized by the President or
the Board of Trustees of the Company. If the Company is
considering a particular purchase or sale of a security, this
must not be disclosed except to such duly authorized persons.
(b) If any access person should obtain information concerning the
Company's portfolio (including, the consideration by the Company
of acquiring, or recommending any security for the Company's
portfolio), whether in the course of such person's duties or
otherwise, such person shall respect the confidential nature of
this information and shall not divulge it to anyone unless it is
properly part of such person's services to the Company to do so
or such person is specifically authorized to do so by the
President of the Company.
V. ETHICAL STANDARDS
(a) Access persons shall conduct themselves In a manner consistent
with the highest ethical standards. They shall avoid any action,
whether for personal profit or otherwise, that results in an
actual or potential conflict of interest, or the appearance of a
conflict of interest, with the Company or which may be otherwise
detrimental to the interests of the Company.
(b) Conflicts of interest generally result from a situation in which
an individual has personal interests in a matter that is or may
be competitive with his responsibilities to another person or
entity (such as the company) or where an individual has or may
have competing obligations or responsibilities to two or more
persons or entities. In the case of the relationship between the
Company on the one hand, and its employees and access persons and
their respective affiliates, on the other hand, such conflicts
may result from the purchase or sale of securities for the
account of the Company and for the account of any affiliated
person or from the purchase or sale for the account of the
Company of securities in which an access person or employee of
the Company, or his or her affiliates has an interest. In these
cases, all potential or actual conflicts must be disclosed and
the first preference and priority must be to avoid such conflicts
of interest whenever
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Code of Ethics of: Page 5
AIM Funds Group
possible and, where they unavoidably occur, to resolve them in a
manner not disadvantageous to the Company.
VI. ACTIVITIES AND TRANSACTIONS OF ACCESS PERSONS
(a) No access person shall recommend to, or cause or attempt to
cause, the Company to acquire, dispose of, or hold any security
(including, any option, warrant or other right or interest
relating to such security) which such access person or an
affiliate of such access person has direct or indirect beneficial
ownership, unless the access person shall first disclose to the
Board of Trustees all facts reasonably necessary to identify the
nature of the ownership of such access person or his or her
affiliate in such security.
(b) No access person or affiliate of such access person shall engage
in a purchase or sale of a security (including, any option,
warrant or other right or interest relating to such security),
other than on behalf of the Company, with respect to any
security, which, to the actual knowledge of such access person at
the time of such purchase or sale, is (i) being considered for
purchase or sale by the Company; or (ii) being purchased or sold
by the Company.
(c) The prohibitions of Section VI(b) above shall not apply to:
(i) Purchases or sales effected in any account over which the
access person has no direct or indirect influence or
control.
(ii) Purchases or sales which are nonvolitional on the part of
either the access person or the Company.
(iii) Purchases which are part of an automatic dividend
reinvestment plan.
(iv) Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its
securities, to the extent such rights were acquired from
such issuer, and sales of such rights so acquired.
(v) Purchases or sales which receive the prior approval of the
President of the Company because they are only remotely
potentially harmful to the Company because they would be
very unlikely to affect trading in or the market value of
the security, or because they clearly are not related
economically to the securities to be purchased, sold or held
by the Company.
(d) If, in compliance with the limitations and procedures set
forth in this Section VI, any access person or an affiliate of
such person shall engage in a purchase or sale of a security held
or to be acquired by the Company, first preference and priority
must be given to any transactions which involve the Company, and
the
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Code of Ethics of: Page 6
AIM Funds Group
Company must have the benefit of the best price obtainable on
acquisition and the best price obtainable on disposition of such
securities.
(e) If, as a result of fiduciary obligations to other persons or
entities, an access person believes that such person or an
affiliate of such person is unable to comply with certain
provisions of the Code, such access person shall so advise the
Board of Trustees in writing, setting forth with reasonable
specificity the nature of such fiduciary obligations and the
reasons why such access person believes such person is unable to
comply with any such provisions. The Board of Trustees may, in
its discretion, exempt such access person or an affiliate of such
person from any such provisions, if the Board of Trustees shall
determine that the services of such access person are valuable to
the Company and the failure to grant such exemption is likely to
cause such access person to be unable to render services to the
Company. Any access person granted an exemption (including, an
exception for an affiliate of such person) pursuant to this
Section VI(e) shall, within three business days after engaging in
a purchase or sale of a security held or to be acquired by a
client, furnish the Board of Trustees with a written report
concerning such transaction, setting forth the information
specified in Section VII(b) hereof.
VII. REPORTING PROCEDURES
(a) Except as provided by Sections VII(c) and (d) hereof, every
access person shall report to the Board of Trustees the
information described in Section VII(b) hereof with respect
to transactions in any security in which such access person
has, or by reason of such transaction acquires, any direct
or indirect beneficial ownership in the security (whether or
not such security is a security held or to be acquired by a
client); provided, however, that any such report may contain
a statement that the report shall not be construed as an
admission by the person making such report that he has any
direct or indirect beneficial ownership in the security to
which the report relates.
(b) Every report required to be made pursuant to Section VII(a)
hereof shall be made not later than ten days after the end of the
calendar quarter in which the transaction to which the report
relates was effected and shall contain the following information:
(i) The date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
(ii) The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
(iii) The price at which the transaction was effected; and
(iv) The name of the broker, dealer or bank with or through whom
the transaction was effected.
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Code of Ethics of: Page 7
AIM Funds Group
(C) Notwithstanding the provisions of Section VII(a) and (b) hereof,
no person shall required to make a report with respect to
transactions effected for any account over which such person does
not have any direct or indirect influence or control.
(d) Notwithstanding the provisions of Section VII(a) and (b) hereof,
an access person who is not an "interested person" of the Company
within the meaning of Section 2(a)(19) of the ICA, and who would
be required to make a report solely by reason of being a trustee
of the Company, need only report a transaction in a security if
such trustee, at the time of the transaction, knew or, in the
ordinary course of fulfilling his official duties as a trustee of
the Company, should have known, that, during the 15-day period
immediately preceding or after the date of the transaction by the
trustee, such security is or was purchased or sold, or considered
by the Company or its investment advisor for purchase or sale
by the Company.
(e) Every access person who beneficially owns, directly or
indirectly, 1/2% or more of the stock of any company the
securities of which are eligible for purchase by the Company
shall report such holdings to the Company.
VIII. REVIEW PROCEDURES
(a) The reports submitted by access persons pursuant to Section
VII(b) hereof shall be reviewed at least quarterly by the Board
of Trustees or such other persons or committees as shall be
designated by the Board of Trustees, in order to monitor
compliance with this Code of Ethics.
(b) If it is determined by the Board of Trustees that a violation of
this Code of Ethics has occurred and that the person violating
this Code of Ethics has purchased or sold a security at a more
advantageous price than that obtained by the Company, such person
shall be required to offer to sell to or purchase from the
Company, as the case may be, such security at the more
advantageous price. If this cannot be consummated, then the Board
of Trustees shall take such other course of action as it may deem
appropriate. With respect to any violation of this Code of
Ethics, the Board of Trustees may take any preventive, remedial
or other action which it may deem appropriate. In determining
whether or not there has been, or may be, a conflict of interest
between the Company and any person subject to this Code of
Ethics, the Board of Trustees shall consider all of the relevant
facts and circumstances.
